Garwin & Garwin
[2012] FamCA 296
•4 April 2012
FAMILY COURT OF AUSTRALIA
| GARWIN & GARWIN | [2012] FamCA 296 |
| FAMILY LAW – PROPERTY SETTLEMENT – Assets and Liabilities – Contributions – Where the husband made the greater financial contribution – Where the wife made the greater homemaker contributions – Where the husband’s contributions overall exceeded those of the wife – Adjustments – Where an adjustment is warranted in favour of the wife – Just and equitable. |
| Family Law Act 1975 (Cth) ss 75 & 79. |
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
| APPLICANT: | Ms Garwin |
| RESPONDENT: | Mr Garwin |
| FILE NUMBER: | SYC | 4531 | Of | 2009 |
| DATE DELIVERED: | 4 April 2012 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Justice Loughnan |
PLACE HEARD: Sydney
| HEARING DATE: | 21 February 2012 |
REPRESENTATION
| Counsel FOR THE APPLICANT Husband | Mr J. Millar |
| SOLICITOR FOR THE APPLICANT: | Pearson Family Lawyers |
Counsel FOR THE respondent MOTHER: | Mr G. Gould |
| SOLICITOR FOR THE RESPONDENT: | Armstrong Legal |
Orders
Within 30 days from the date of the making of these Orders and contemporaneously:
a)the wife shall do all acts and things and sign all documents necessary to:
i)resign all directorships and/or positions and/or offices in L Pty Limited; and
ii)transfer to the husband the whole of her right title and interest in the property known as and situated at X Avenue, M in the state of New South Wales being folio identifier Lot … (“the X Ave property”).
b)the husband shall indemnify the wife in respect of any liability she has, or may have, in relation to her having been a director or shareholder of L Pty Limited including liability for any debt to the company, any breach of duty, any taxation liability arising from any dividend or deemed dividend paid or payable to the wife or in connection with her having been a director of the company; and
c)the husband pay to the wife or as she may direct in writing the sum of $4,444,377.
If the husband does not pay to the wife the sum of $4,444,377 in accordance with order 1 then the parties are to forthwith upon that default, do all acts and things and sign all necessary documents to effect a sale of the X Ave property including but not limited to:
a)Placing the property on the market for sale by way of public auction with an agreed real estate agent (“the agent”) and failing agreement with an agent as nominated by the President, or his nominee, of the Real Estate Institute of New South Wales at the cost of the husband.
b)Executing all documents requested by the agent for the sale of the property.
c)The husband shall be responsible for all payments requested by the selling agent prior to the auction.
d)The reserve price for the auction shall be as agreed between the parties and if there is no agreement the reserve price shall be as advised by the agent.
e)In the event that the property does not sell at the first auction then the parties shall make all such arrangements and do all such acts and sign all such documents and the husband pay all moneys necessary to sell the property by public auction every four (4) months from the date of the first auction until the property is sold.
Upon completion of the sale of the property the parties are to cause the proceeds of the sale be applied as follows:
a)to pay all costs, commissions and expenses of the sale and to pay any council and water rates outstanding in respect of the real property;
b)to repay the husband any amounts paid by him pursuant to 2 a), c) or e) above;
c)to the wife, 55.6% of the net proceeds of sale; and
d)to the husband, the balance of those net proceeds.
By consent the parties shall forthwith do all things and sign all documents necessary to require both their signatures for any transactions on the trust account currently held by the wife on behalf of their children, J Garwin and A Garwin.
Other than as is specifically provided for in these Orders, the parties are solely entitled, to the exclusion of the other, to all other property and chattels of whatsoever nature and kind in the possession of each of the parties as at the date of the making of these Orders.
Other than as is specifically provided for in these Orders the parties are solely liable for any debts and other liabilities, including taxation liabilities currently in their name.
Each party shall do all acts and things reasonably required by the other including the signing or execution of all necessary documents to give effect to the provisions of this Order within 14 days of being requested to do so.
In default of any party doing all acts and things and executing all such documents to give effect to these Orders within 14 days of a written request to do so, then the Registrar of the Family Court of Australia at Sydney be appointed to execute all such documents in the name of the defaulting party and to do all such acts and things necessary to give validity and operation to such documents.
Leave is granted to the parties to restore the proceedings within 21 days of the date of these Orders or within such further time as the parties agree in writing, in respect of the wording of the orders, by giving at least 7 days written notice to the Associate to Justice Loughnan and to each other.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Garwin & Garwin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| Family Court of Australia at sydney |
FILE NUMBER: SYC 4531 of 2009
| Ms Garwin |
Applicant
And
| Mr Garwin |
Respondent
REASONS FOR JUDGMENT
Ms Garwin and Mr Garwin lived together for more than 15 years. They could not agree on a settlement of their property. The husband made the overwhelming financial contribution including bringing to the marriage a very substantial initial contribution. The issues for trial include the need to recognise that contribution and the need for and extent of any adjustment to the wife.
Applications
In accordance with a Minute of Orders[1] submitted during the hearing, the wife seeks orders in the following terms:
[1] Exhibit 5
The Court Notes:
1. For the purpose of these Orders:
1.1 "child" means [J Garwin] born [in] August 1994;
1.2 "child" means [A Garwin] born [in] April 1996;
1.3 "child" means [G Garwin] born [in] November 2005;
1.4"child support terminating event" in respect of the child means a child support terminating event as defined by Section 12 of the Act or when the child completes his secondary education, provided that the terminating event shall not occur until the last day of the secondary school year in which the child completes his secondary education, if he attains the age of 18 before he has completed his secondary education
1.5"[L Pty Ltd]" means the company by that name with ACN ….
1.6"[X Avenue, M property]" means the property known as and situated at [M] in the state of New South Wales being folio identifier Lot ….
Orders sought that:
2. Within 30 days from the date of the making of these Orders and contemporaneously:
2.1 the wife shall do all acts and things and sign all documents necessary to:
2.1.1.resign all directorships and/or positions and/or offices in [L] Pty Limited;
2.1.2. transfer to the husband the whole of her right title and interest in the "[X Avenue, M]" property currently in the joint names of the parties.
2.2 Husband shall indemnify the wife in respect of any liability she has, or may have, in relation to her having been a director or shareholder of [L] Pty Limited including liability for any debt to the company, any breach of duty, any taxation liability arising from any dividend or deemed dividend paid or payable to the wife or in connection with her having been a director of the company.
2.3 That, simultaneously with compliance with paragraph 2.1 the husband pay to the wife or as she may direct in writing the sum of $5,141,133.
3.If the husband does not pay to the wife the sum of $5,141,133 to the wife in accordance with paragraph 2.2 within 30 days then the husband is to do all such acts and things and sign all documents necessary to transfer to the wife the whole of his right title and interest in the "[X Avenue, M]" property currently in the joint names of the parties.
4.Pursuant to the Application in a Case filed by the wife on 26 Jul 2011 the husband pay all outstanding arrears of maintenance owing to the wife pursuant to Consent Orders filed on 22nd January 2010.
5.Other than as is specifically provided for in these Orders, the parties are solely entitled, to the exclusion of the other, to all other property and chattels of whatsoever nature and kind in the possession of each of the parties as at the date of the making of these Orders.
6.Other than as is specifically provided for in these Orders the parties are solely liable for any debts and other liabilities, including taxation liabilities currently in their name.
7.Each party shall do all acts and things reasonably required by the other including the signing or execution of all necessary documents to give effect to the provisions of this Order within 14 days of being requested to do so.
8.In default of any party doing all acts and things and executing all such documents to give effect to these Orders within 14 days of a written request to do so, then the Registrar of the Family Court of Australia at Sydney be appointed to execute all such documents in the name of the defaulting party and to do all such acts and things necessary to give validity and operation to such documents.
During the hearing the wife’s counsel said that she would not press for child support orders. Indeed I am not sure that there is a child support assessment and on that basis there would be no jurisdiction in any event.
In accordance with a Minute of Orders provided to my chambers by email on 17 February 2012, the husband seeks the following orders:
1. That within seven (7) days from the date of these Orders, the Wife do all things and sign all documents necessary to resign as director and secretary of [L] Pty Ltd.
2. the Husband do all things necessary pay or cause to be paid to the Wife, or as she directs, the sum of two million dollars ($2,000,000) (“the Principal Sum”) less any partial property settlement paid to the Applicant Wife, and less the Wife’s one half share of the costs of preparing any valuations in this matter, in instalments, pursuant to Order 3 & 4 below and subject to Order 8 below.
3. That within seven (7) days from the date of these Orders the Husband pay to the Wife all cash he holds in the bank, less the amount of $50,000.
4. That within twenty one (21) days from the date of these Orders the Husband do all acts and things and sign all documents necessary to list for sale the property situate at and known as [G Road], [M] being the whole of the land contained in Certificate of Title Folio Identifier … (“the [G] Road Units”). The costs of and incidental to such listing to be borne by the Husband as and when they fall due.
a. The Husband will cooperate in every way with the agent including:
i.Making the key available to the agent;
ii.Allowing inspection of the Property at all reasonable times requested by the agent;
iii.Doing or saying nothing to hinder or prevent a sale being effected:
i. Ensuring the Property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
ii. Signing all documents requested by the agent in relation to the listing for sale of the Property except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
b.In the event the Property is not sold by private treaty within three (3) months after being listed:
i. The Husband will list the Property for sale by public auction with the agent appointed pursuant to paragraph a) of this order;
ii. In the event the bidding at auction does not reach the reserve price, the Husband shall negotiate with the highest bidders or any other interested person and effect a sale of the Property at a price which is not more than five percent (5%) below the reserve price;
iii.If the Property remains unsold after any auction which takes place pursuant to this order the Husband shall do all acts and things and sign all documents necessary to immediately re-list the property for sale by public auction again, on a date nominated by the agent.
Proceeds of sale of the [G] Road Units
c.That upon settlement of the sale of the [G] Road units, the proceeds of sale be paid in the following manner and priority:
i.All costs and expenses of sale including legal costs and disbursements, agents commission, valuer’s fees, and auction expenses and any amount owing by way of mortgage;
ii.The amounts required to pay all municipal and water rates outstanding with respect to the Property;
iii.The balance then remaining will be paid in the following priority:
A. to the Wife the balance owing on the Principal Sum.
B. the balance to the Husband.
5. That within 28 days, the parties will do all acts and things and sign all documents necessary for the Wife to resign as trustee of any bank accounts held on behalf of the parties’ children [J GARWIN], [A GARWIN] AND [G GARWIN] and for the husband to be appointed as trustee of any such bank accounts.
6.That simultaneously with payment of the last instalment of the Principal Sum pursuant to Order 2 or Order 4 and subject to Order 8, each party be declared the sole and beneficial owner of all assets in their names including but not limited to their interest in any business, shares, real estate, money, superannuation, chattels, cars.
7.That simultaneously with payment of the last instalment of the Principal Sum pursuant to Order 2 or Order 4, the Wife transfer all her right title and interest in the former matrimonial home at [X Avenue, M], NSW (“[X Avenue, M property]”) to the Husband.
8.That as between the Husband and Wife, the Wife be declared the sole legal and beneficial owner of jewellery in her possession save for the following items:
(a)A man’s ring with a gold coin feature;
(b)A man’s ring with 9 diamonds;
(c)3 three-carat chunky gold chains of 24 inch length;
(d)3 flexible solid gold chains.
And that the Wife return such items to the Husband within seven (7) days from the date of these Orders and failing to do so, the Principal Sum payable will reduce by an amount of $30,000.
9.That other than as set out in these orders, each party be solely liable for any liabilities in their names as at the date of these orders including but not limited to loans, credit cards, taxes, encumbrances of any nature.
The husband’s Minute also included parenting orders. At the commencement of the trial learned counsel for the husband conceded that the parenting issues could not be pressed.
Documents read
The wife relied on the following documents:
Affidavit of the wife filed 22 December 2011
Financial Statement of the wife sworn and filed 21 February 2012
The husband relied on the following documents:
Document Sworn Filed Primary Affidavit of Husband 17 January 2012 25 January 2012 Supplementary Affidavit of Husband
(sale of G Road property, proceeds of sale, further parenting issues)15 February 2012 16 February 2012 Affidavit of expert witness Dr Z (Husband’s Parkinson disease) 16 February 2012 16 February 2012 Affidavit of C Garwin (Husband’s jewellery) 16 February 2012 16 February 2012 Affidavit of Mr A 5 February 2012 10 February 2012 Financial Statement of Husband 16 February 2012 16 February 2012 Affidavit of Husband (Enforcement proceedings)
14 November 2011 15 November 2011
Short History
The husband was born in 1944 and is currently 67 years of age. The wife was born on in 1967 and is currently 44 years of age. Each of the parties deposes to them commencing to live together in November 1993 however, the wife signed a statutory declaration at the behest of the husband in June of 1994 to the effect that the date of cohabitation was 21 July 1993. Nothing much turns on this discrepancy. The parties were married in November 1995 and they separated on 2 June 2009.
Children
There are three children of the marriage:
J Garwinwho was born in August 1994 and as at the date of the hearing was 17 years of age;
A Garwinwho was born in April 1996 and as at the date of hearing was 15 years of age; and
G Garwinwho was born in November 2005 and as at the date of hearing he was 6 years of age.
The husband also had two adult children from a previous marriage, namely H Garwin and M Garwin.
Disputed facts
The issues seem to be as follows:
·The treatment in the list of assets of $200,000 paid by the husband to the wife under an order for partial property settlement in 2009;
·The extent of the husband’s initial contribution;
·The extent of the wife’s contributions;
·The import of an agreement and a statutory declaration prepared early in the relationship;
·The finding to be made as to contributions;
·The finding to be made as to adjustments.
The Hearing
The hearing was listed for two days. There were virtually no factual disputes and as a consequence the cross-examination was brief. Other than the parties, only the husband’s brother was required for cross-examination. Before 3.30 pm on the first day the submissions were concluded and judgment was reserved. At the conclusion of the hearing an application was made on behalf of the wife for a partial property settlement orders and I ordered that the husband pay $100,000 to the wife within 7 days and noted that the interim orders for financial support continue until the final orders are made.
Background Facts
At the commencement of cohabitation, the husband was employed as a professional and the wife was not in paid in employment. The husband estimated that after allowing for the property settlement with his second wife, he had approximately $5.66 million in net assets.
The husband said that in 1993 he paid approximately $480,000 for jewellery for the wife.
In around mid 1994, the wife signed a Statutory Declaration in regard to the husband’s assets.
In around 1995, the husband purchased several units at G Road, M.
In around May 1995, the parties signed a cohabitation agreement in relation to the husband’s assets in the event of separation.
The parties married in November 1995.
In July 1999, the parties purchased a property at X Avenue, M for $3,020,000.
On 3 February 2000, the company D Investments Pty Ltd was registered. The company has four directors; the husband, the wife, Mr R and his wife Mrs R.
In around 2000, the husband was diagnosed with Parkinson’s Disease.
In May 2001, L Pty Ltd was registered. The husband and wife were the only directors and shareholders. L Pty Ltd then purchased a property at G Road, M for $1,872,000.
In 2004, the husband purchased a Mercedes Benz motor vehicle for $114,000.
On 15 March 2007, the husband registered the business name A Garwin & Co.
In around 2007, the husband said he and the other two shareholders in P Pty Ltd sold that company for $1,900,000. Of the sale proceeds, the husband said he deposited around $130,000 into a term deposit, contributed $100,000 into his superannuation, gifted $100,000 to each of his older sons and spent $160,000 on family bills over a two year period.
On 2 June 2009, the parties separated. The wife and children moved to the wife’s mother home at U. The husband used the term deposit funds to purchase a Mercedes Benz motor vehicle for the wife in the amount of $140,000.
On 30 June 2009, the wife filed an Application for Final Orders thereby commencing these proceedings.
On 21 August 2009, the property at S Street, M was sold for $850,000.
On 24 August 2009, I made the following orders:
1.The parties attend for mediation at times and dates appointed by the Manager Child Dispute Services, if practicable in the Child Responsive model.
2.By consent orders are made in terms of the document headed “Minutes of Order” marked Exhibit 1 and filed herein as set out hereunder:
“1.That within 14 days of the date of these orders the husband pay to the wife by way of partial property settlement the sum of $200,000 or as she directs.
2.That pending further order:
2.1The husband do all things as are necessary to cause a sum of not less than $400,000 from the proceeds of sale of the property at [S Street, M] to be placed in an interest bearing deposit styled account in his name at a bank or financial institution, and
2.2The husband shall give to the wife’s solicitors 21 days notice in writing of any intention to withdraw the funds referred to in Order 2.1 from the said account together with particulars as to the proposed application of such withdrawn funds.
2.3The husband shall give to the wife’s solicitors 21 days notice in writing of any intention to sell, transfer or further encumber any asset or property in his possession or control having a value of greater than $15,000 together with particulars as to the proposed application of funds to be realised from such sale, transfer or encumbrance.
2.4That the husband shall give the wife’s solicitor 21 days notice in writing of any intention to further encumber or increase the borrowing limits of any credit facility or funding facility secured upon any property or asset in his possession or control.
3. That the Court note that the parties agree to the appointment of the following single experts for the purposes of these proceedings:
3.1 [Mr B] as to real estate;
3.2 [Mr A] as to fine art and jewellery.
4. That pending further order, the husband in the first instance shall meet the costs of the reports as to valuation prepared by the single experts, with any contribution by the wife to such cost being determined by the trial judge at the final hearing of this matter.
5. That the application of the wife seeking interim spouse maintenance orders be adjourned to the Judicial Registrar’s duty list at 9.30am on 22 September 2009.
In late 2009, the husband transferred $200,000 to the wife in accordance with the orders dated 24 August 2009.
On 5 September 2009, the wife and children moved to a rental property at M Street, M. The rental payments were $3,389.29 per month.
On 22 September 2009, I made interim orders providing for the husband to pay to the wife $2,300 per week by way of spousal maintenance.
On 21 January 2010, the parties entered into the following interim orders by consent:
1.That order 2 of the orders made on 22 September 2009 be discharged with effect from the week commencing 21 December 2009.
2.That the Husband pay to the Wife or as the Wife directs the sum of $2,000 per week until further order with effect from the week commencing 21 December 2009.
3.If the Husband is required to pay and pays child support to the Wife pursuant to any child support assessment issued on the application of the Wife during the period in which the Husband is making payments in accordance with paragraph 2 of these Orders, then provided the Husband has complied and continues to comply with his obligation pursuant to paragraph 4 of these Orders, the amount of interim spouse maintenance paid by the Husband pursuant to paragraph 2 of these Orders shall be reduced by the amount of such child support paid by the Husband but not the amounts paid by the Husband pursuant to paragraph 4 of these Orders.
4.The court notes that the Husband will continue to pay all school fees incurred in respect of the attendance of the eldest two children [J GARWIN] and [A GARWIN] at their current schools, or at such other secondary schools as they may attend.
5.That the Husband's application for review of the spouse maintenance orders filed on 28 September 2009 be discontinued.
6.That there be no order as to costs.
On 17 March 2010, the parties entered into the following orders by consent:
1.The Husband be and is hereby restrained by injunction in his capacity as director and/or shareholder of [L] Pty Ltd ACN …, a company registered in the State of New South Wales and having its registered office at [R Suburb], New South Wales (“the company”) from doing any act or thing that may cause the real property at [G] Road, [M], in the State of New South Wales being Lot 1 in Deposited Plan … registered in the name of the company, to be sold, transferred, assigned, encumbered or alienated in any manner whatsoever.
2.The Husband be and is hereby restrained by injunction from selling, transferring, assigning, encumbering or alienating his shares in the company.
3.The husband be restrained by injunction from selling, transferring, assigning, alienating or encumbering his interest in [A Garwin & Co], being a business registered in the State of New South Wales, registration number BN …/ABN … and having its registered office at [R Suburb], in the State of New South Wales.
4. The proceedings on the Application in a Case filed 12 March 2010 are adjourned to the Registrar’s Judicial Duty List at 9:30 am on 31 March 2010.
On 31 March 2010, I extended the operation of the orders made 17 March 2010 to 8 April 2010.
On 8 April 2010, I made the following orders by consent:
1. The husband be and is hereby restrained by injunction in his capacity as director and/or shareholder of [L]Pty Ltd ACN … ABN … a company registered in the State of New South Wales and having its registered office at [R Suburb] New South Wales ("the company") from doing any act or thing that may cause the assets of this company including but not limited to the real property at [G] Road, [M] in the State of New South Wales also described as lot 1 in Deposited Plan … and registered in the name of the company to be sold, transferred, assigned, encumbered, alienated or leased in any manner whatsoever except:
a. in the ordinary course of business; or
b. as properly recorded in the books, financial statements and accounts of the company.
2. The husband be and is hereby restrained by injunction from selling, transferring, assigning, encumbering or alienating his shares and/or interest of any nature whatsoever in the company with the exception of the husband's loan account with the company.
3.The husband be restrained by injunction from selling, transferring, assigning, alienating or encumbering his interest in [A Garwin & Co.] being a business registered in the State of New South Wales registration number BN …/ABN … and having its registered office at [R Suburb] in the State of New South Wales until one month after the receipt by the parties of the report of [Mr N] referred to in paragraph 4 of these Orders
4.Mr [N] of [CN] Forensic Accounting Pty Ltd be and is hereby appointed as the single expert witness in these proceedings to provide a report to the Court on the following matters:
4.1valuation of the interests of the husband and the wife in [A Garwin & Co.];
4.2valuation of the interests of the husband and the wife in the company noting that the parties agree that the company be valued on a net asset backing basis;
4.3estimate of the Capital Gains Tax liability payable in the event of disposal by [L] Pty Limited of the real property at [G] Road, [M];
4.4taxation payable in the event of distributions of income and/or capital from [L] Pty Ltd to the husband and/or the wife so as to realise the value of that entity;
4.5Capital Gains Tax in relation to the sale of the properties at [X] Avenue, [M], [R Suburb]
5.Within 7 days of the making of this Order the husband shall provide or cause to be provided to Mr [N] all information requested by Mr [N] as set out in his letter dated 22 January 2010, copy of which is attached to the Application in a Case filed 12 March 2010 as are in the husband's possession, custody or control or which can be obtained by the husband.
6.The husband shall provide or cause to be provided to Mr [N] all documents and information required by Mr [N] for the purpose of preparation of his report as are in the husband's possession, custody or control or can be obtained by the husband.
7.All instructions and information provided to Mr [N] are to be provided with the prior knowledge of the lawyers for both parties.
8.In the event that Mr [N] wishes to obtain information orally from the husband or to have a discussion with him for the purpose of the preparation of his report, notice shall first be given to the wife so that she may, at her choice, arrange for an accountant of her choice to be present for any such discussion in person or by telephone at the wife's cost.
9. Costs of both parties reserved.
In late 2010, J commenced living with the husband. He continued to live with the husband as at the date of the hearing.
Between 14 May 2011 to 4 June 2011, A stayed overnight with the husband for around 8 nights.
From January 2012, the time G has spent with the husband has increased to include one overnight per fortnight. The husband hopes that G’s time with him will increase until his time is shared between the households. For reasons that she articulated but which do not need to be set out here, the wife is opposed to more time, particularly more overnight time. It remains to be seen whether the parenting issues will be prosecuted.
Credit and Submissions
The evidence of the witnesses
There are few issues that fall to be determined largely by reference to the testimony of the parties. Therefore to a limited extent credit is an issue. The following witnesses were called (briefly) for cross-examination.
The wife was not successfully challenged on any issue. She made some concessions in favour of the husband when asked.
The husband was not successfully challenged on any issue. He made some concessions in favour of the wife when asked.
C Garwin is the husband’s brother and he was called to give evidence only as to his involvement is seeking the return of the husband’s jewellery from the wife. He was not successfully challenged but nothing much turns on his evidence.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79, involving four inter-related steps. First, I make findings as to the identity and value of the property, liabilities and financial resources of the husband and wife at the date of the hearing. Second, I identify and assess their contributions within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the husband and wife expressed as a percentage of the net value of the matrimonial property. Third, I identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant; and determine the adjustment (if any) that should be made to the contribution based entitlements established at step two. Fourth, I should consider the effect of those findings and determinations and identify orders that are just and equitable in all the circumstances of the case.[2]
[2] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370.
There is no mention of steps in s 79 but it is convenient to approach the exercise of discretion in a structured way. The Full Court has supported such an approach.[3]
[3] In the Marriage of Hickey above.
The property of the husband and wife at the date of the hearing
The Court is required to make a finding as to the property of the husband and wife. That involves identifying assets, liabilities and financial resources and their values.
There are circumstances whereby assets can be included in the list for division although they no longer exist. The same logic would apply to the exclusion from the relevant list of liabilities, debts that do exist at the date of the hearing. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a)Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b)Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c)In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
The parties settled an agreed balance sheet and there are many items about which there is no dispute as to the inclusion or the value of the asset or liability. As at the point of final submissions the agreed balance sheet was as follows:
Ownership Description Wife/de facto partner’s value Husband/de facto partner’s value ASSETS 1. H&W Former family home at [X] Avenue, [M] per valuation 8,000,000 8,000,000 2. H [R Suburb property] per valuation 1,700,000 1,700,000 3. H Net proceeds of [S] Street, [M] currently in Husband’s control
[Held in Westpac Account - term deposit
…]
as at 16 February 2012296,607 296,607 4. H Interest in [L] Pty Ltd per valuation
(50 ordinary shares)
Assets of [L] Pty Ltd include a block of 10 units at [G] Road, [M]245,000 245,000 5. W Interest in [L] Pty Ltd per valuation
(50 ordinary shares)
Assets of [L] Pty Ltd include a block of 10 units at [G] Road, [M]245,000 245,000 6. H IAG Shares
(1218 shares) (see note)4,628
4,628
7. H Mercedes 2008 Model… 48,200 48,200 8. W Mercedes B180 2011 Model
…25,750 25,750 9. H Interest in [A Garwin & Co.] business per valuation 75,000 75,000 10. H Shareholder loan account with [L] Pty Ltd per valuation and 2011 Financial documents (see note) 2,104,385 2,104,385 11. H ANZ Bank account
…4,248 4,248 12. H Westpac Bank Cheque Account
…1,777 1,777 13. W Wife’s jewellery per valuation 64,410 64,410 14. W Wife’s funds received by way of interim orders (see note) NIL 200,000 Total 13,015,005 LIABILITIES 15. W Wife’s MasterCard (see note) 0 16. H Husband’s MasterCard 0 17. H & W Potential CGT on sale of [G] Road, [M] [Payable by [L] Pty Ltd] (see note) 90,672 90,672 18. H Additional tax payable as result of payment of dividend (see 3.9. [Mr N] valuation) (see note) 43,499 43,499 19. W Additional tax payable as result of payment of dividend (see 3.9. [Mr N] valuation) (see note) 32,798 32,798 20. H Future Sale costs of [G] Road, [M] [estimated, Agent’s commission, legal fees as at February 2012] 30,000 30,000 21. H School fees 0 Total $ 196,969 SUPERANNUATION
Ownership Description Wife/de facto
partner’s valueHusband/de facto partner’s value Member Name of Fund Type of Interest 22. H ANZ (ING administered) Fund of husband Approved superannuation savings account NIL 23. W Wife’s Superannuation ING @ 30.06.2009 20,000 20,000 Total 20,000
FINANCIAL RESOURCES Ownership Description Wife / de facto partner’s value Husband / de facto partner’s value 24. H Land in [southern Europe] (see note) NIL 25.
As to the disputed issues:
The add back of $200,000 to the wife for interim property orders and Paid legal fees
On 24 August 2009 an order was made in terms agreed between the parties which included the following provision:
2. ….
1.That within 14 days of the date of these orders the husband pay to the wife by way of partial property settlement the sum of $200,000 or as she directs.
…
In late 2009, the husband transferred $200,000 to the wife in accordance with that order.
The husband seeks that the $200,000 be included in the relevant list of assets in the hands of the wife. There is force in this submission if only to respect the earlier agreement of the parties. However, as with the husband, the wife has paid legal fees and I indicated to the parties that I would add those fees back. Neither counsel spoke against that course but I note that it was something raised from the bench.
The wife has paid a total of $97,960.90 in legal fees to Adrian Twigg and Co and to her current attorneys and has paid $19,023.78 which is held by her solicitors on account of their fees - Exhibit 6.
Therefore $116,984.68 would be added back on the basis of the reasoning referred to in Omacini above. The question turns to the treatment of the balance of the $200,000, which is about $83,000.
It is the wife’s case that she applied the balance of the fund to living expenses and related purposes. In the normal course there would not be an add back for living expenses. In light of the approach the parties agreed would be taken to the advance I will in this instance add back the remaining $83,000. In summary the entire $200,000 will be added back but no additional add back is then required for the wife’s paid legal fees.
It follows that I will also add back the funds that the husband has applied to his legal expenses. He has paid $107,395.04[4].
[4] Exhibit 6
Partial property settlement order made in favour of the wife on 21 February 2012
At the conclusion of the hearing an application was made on behalf of the wife for a payment of $150,000 in anticipation of a foreshadowed delay in the delivery of judgment. Learned counsel for the wife said that she sought those funds to pay remaining legal fees, to purchase items of property and to meet the ongoing weekly shortfall in her budget. The husband made an alternate proposal. I ordered that the husband pay to the wife $100,000 within 7 days and noted that the interim orders for financial support continue until the final orders are made. In order to accommodate this order the balance sheet will be amended to reduce the figure for the husband’s Westpac account by $100,000 and to add $100,000 to the assets of the wife.
58.Otherwise the assets are agreed.
59.I find that the assets are:
Assets
Value
Former family home at X Avenue, M per valuation – joint $8,000,000 R Suburb property per valuation – husband $1,700,000 Net proceeds of S Street, M currently in Husband’s control
[Held in Westpac Account - term deposit
…]
as at 16 February 2012 minus payment to wife ordered on 21 February 2012$196,607 Payment to wife by way of partial property settlement ordered on 21 February 2012 $100,000 Interest in L Pty Ltd per valuation
(50 ordinary shares)
Assets of L Pty Ltd include a block of 10 units at G Road, M – Husband$245,000 Interest in L Pty Ltd per valuation
(50 ordinary shares)
Assets of L Pty Ltd include a block of 10 units at G Road, M (in wife’s name but to be retained by husband)$245,000 IAG Shares - husband
(1218 shares)$4,628
Mercedes 2008 Model
… – husband$48,200 Mercedes 2011 Model – wife $25,750 Interest in A Garwin & Co. business per valuation – husband $75,000 Shareholder loan account with L Pty Ltd per valuation and 2011 Financial documents - husband $2,104,385 ANZ Bank account
… - husband$4,248 Westpac Bank Cheque Account
… – husband$1,777 Wife’s jewellery per valuation $64,410 Wife’s funds received by way of interim orders of 25 August 2009 $200,000 Add back - Paid legal fees – husband
$107,395.04
Total Gross Assets
$13,122,400.04
Superannuation
60.The superannuation interests are agreed as follows:
Superannuation
Value
Wife’s Superannuation ING @ 30.06.2009 $20,000 Total
$20,000.00
Liabilities:
The liabilities are agreed:
Liabilities
Value
Potential CGT on sale of G Road, M [Payable by L Pty Ltd] - joint $90,672 Additional tax payable as result of payment of dividend (see 3.9. Mr N valuation) – husband $43,499 Additional tax payable as result of payment of dividend (see 3.9. Mr N valuation) (in wife’s name but to be met by husband)) $32,798 Future Sale costs of G Road, M [estimated, Agent’s commission, legal fees as at February 2012] – husband $30,000 Total
$196,969.00
Net assets
The net assets have a value of $12,945,431.04 ($13,122,400.04 + $20,000 - $196,969). Of that $20,000 is in the form of superannuation.
Financial Resources
There is no evidence of financial resources.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the husband and wife. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets.[5] There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties to the marriage in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties.[6]
[5] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1.
[6] In the Marriage of Shewring (1987) l2 Fam LR 139.
As to whether the Court should apply the considerations in s 79(4) to the assets globally or asset by asset, the authorities have it the former approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that:
… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.
Here the parties did not isolate superannuation interests for the purposes of applying s 79(4) to the assets. If I understand the counsel of the Full Court in Coghlan, correctly, I am therefore permitted to adopt the same approach.
Section 79(4)(a) Contributions
The financial contributions were largely made by the husband.
In particular the husband owned very valuable assets when the parties commenced their relationship. He owned:
· SC property
· One half share in BK property
· BY property
· R Suburb property
· Two thirds share in W property
· An interest in P Pty Ltd
· Home contents of the SC property
· An accountancy practice
· Car
· Cash in bank
· Savings account
· Loans owing by friends and family
· An inheritance
At the behest of the husband, on 23 June 1994 the wife signed a statutory declaration in the following terms:
STATUTORY DECLARATION
(Under the Oaths Act, 1900)I, [wife’s name] of [SC property] New South Wales, childcare worker.
do solemnly and sincerely declare That I am aware that [husband’s name] owned the following assets unencumbered prior to the date of 21st July 1993, the date of our co-habitation. I also confirm that I did not contribute any funds to the acquisition of the following assets directly or indirectly and that in the case of dissolution of our co-habitation or marriage I will not claim any proportion whatsoever of the assets listed below.
List of assets owned by [Mr Garwin] prior to the 21st July 1993.
ASSET MY VALUE ESTIMATE [SC property] $2,000.000.00 [B] Crescent, [M] $800,000.00 [S] Street, [K] $250,000.00 1/2 share [BK property] $130,000.00 [BY property] $1,500,000.00 [R Suburb property A] $300,000.00 [R Suburb property B] $300,000.00 1/3 share of [W property] $100,000.00 1/3 share of [W property] in [C Garwin’s] name held in trust for [the husband] $100,000.00 100 shares in [P] Pty Ltd $500,000.00 Furniture and Fittings for [SC property] $100,000.00 [Professional] Practice $150,000.00 Car BMW … $80,000.00 ACTUAL FIGURES Commonwealth Savings Bank, … $110,000.00 Savings Investment Account
Westpac …$65,000.00
Loan to [JA] $5415.00 Loan to [RKS] $149,685.00 Loan to [PM] $20,794.00 Loan to [CGG] $101,971.00 Loan to [CTG] $121,020.00 In February 1994 I was aware that [Mr Garwin] received $26200.00 from his parents estate.
I have confirmed the existence of the above mentioned assets by personally inspecting invoices, bank statements, certificates of title and I am clear in my mind that the above assets exist and are owned by [Mr Garwin] prior to co-habitation.
I also acknowledge that from the above assets the following were disposed by way of divorce settlement to [Mrs C Garwin].
Properties at [B] Crescent, [M]
[S] Street, [K]
and Cash settlement of $200,000.00
All legal fees except for $28,999.00 were paid prior to our co-habitation and the $28,000.00 was paid from the above assets.
As far as I am aware [Mr Garwin] had no liabilities at time of co-habitation.I CONFIRM THAT I HAVE READ AND UNDERSTAND THE CONTENTS OF THIS SATUTORY DECLARATION.
and I make this solemn declaration conscientiously believing the same to be true and by the virtue of the provisions of the Oaths Act, 1990.
DECLARED at Condell Park, NSW
This twenty third
Day of June 1994 ………………………………….. signature of declarant
Before me
In cross-examination the husband said that at that time he invited the wife to contact real estate agents to verify the asserted values of the real property. By the document the wife acknowledged sighting statements and other source documents. There is no evidence that the wife made any enquiries beyond the documents she was shown.
The husband’s interests in the properties at SC, K, BY and W were subsequently sold. In the latter case for about $500,000. I take it that at some time the R suburb properties were also sold.
At the husband’s instigation, on 18 May 1995 the parties signed a cohabitation agreement in the following terms:
COHABITATION AGREEMENT
THIS DEED is made the 18th day of May, 1995
BETWEEN [Mr Garwin] of [SC property] in the State of New South Wales, [Professional] ("[the husband]")
AND [Ms Garvin]- of the same address, Home Duties ("[the wife]")
WHEREAS:A. The parties have been cohabiting in a de facto relationship since 31 July, 1993.
B.At the commencement of cohabitation [the husband] owned assets as listed in Annexure "A" hereof.
C.At the commencement of cohabitation [the wife] owned assets as listed in Annexure "B" hereof.
D. The parties wish to formalise an agreement as to the distribution of assets in the event that they may at some future time cease to cohabit.
NOW THIS DEED WITNESSES:-
1. If at some future time the parties cease to cohabit then:
(a)[The husband] shall be deemed to be the sole owner of any and all of the assets listed in Annexure "A" which are still at that time owned by him;
(b)[The wife] shall be deemed to be the sole owner of any and all of the assets listed in Annexure "B" which are still at that time owned by her;
(c)Interest accrued on any bank account or debt referred to in Annexure "A" or Annexure "B" shall be deemed to be the sole property of the party owning that bank account.
(d)Any assets acquired by the parties either jointly or severally during the time of cohabitation shall be divided as follows:
(i) 80% to [the husband],
(ii) 20% to [the wife].
(e) [The wife] shall not be entitled and hereby agrees not to make any claim against [the husband] in respect of maintenance for herself.
2."Assets" as referred to in paragraph 1(d) hereof shall include real and personal property, debts and choses in action, but shall not include personal clothing and jewellery acquired by either party, insurance and superannuation entitlements, or gifts specifically made by one party to the other. Any such items owned by either party at the time of separation shall be deemed to be the sole property of that party.
3.Personal debts or liabilities incurred by either party shall upon the cessation of cohabitation be deemed to be the sole debt or liability of that party.
4. Any debt or liability incurred jointly by the parties shall upon cessation of cohabitation remain a joint debt or liability in equal shares.
5.Notwithstanding paragraphs 3 and 4 hereof, any debt or liability owing in respect of or secured by any asset taken by a party pursuant to this agreement shall be deemed to be the sole debt or liability of the party taking that asset.
6. If the parties are not cohabiting at the time of death of either party then:
(a)Subject to the approval of the Supreme Court of New South Wales, the other party hereby relinquishes his or her right to make an application in relation to the estate of the deceased party pursuant to the Family Provision Act, 1982 ("the Act");
(b)Each party gives that release in consideration of the other terms of this agreement;
(c)Each party acknowledges that it is to his or her advantage in light of the terms of this agreement to grant the release;
(d)Each party accepts that for the purposes of the Act the provisions of this agreement including this release are fair and reasonable;
(e) Each party covenants that upon the prior death of the other party he or she will make application to the Supreme Court of New South Wales if so requested by the legal personal representative of the deceased party and at the expense of the deceased party's estate for approval of release of rights against the deceased party's estate which he or she would have had under the Act but for this agreement:
7.Each party acknowledges that he or she has received independent legal advice in respect of the terms of this agreement, including the release provisions of paragaph 6, and each party agrees that this agreement is fair and equitable and reflects the contributions made by each party to the acquisition of assets owned by the parties jointly and severally.
8.If at any time the parties decide to vary this agreement in any way, such further agreement shall be a written agreement entailing the same degree of formality as this agreement.
9.This agreement shall continue to bind the parties notwithstanding that the parties may at some future time enter into a formal marriage ceremony.
10.This agreement shall be binding upon the heirs, executors, administrators and assigns of each party.
11.Each party agrees to sign all documents and do all things necessary to give effect to the agreement set out herein.
IN WITNESS WHEREOF the parties have hereunto set their hands and seals on the day and in the year first hereinbefore mentioned.
ANNEXURE "A"
ASSETS OWNED BY [MR GARWIN] AT COMMENCEMENT OF
COHABITATION·Property known as [SC property]
·Furniture and household chattels of approximate value $120,000
·Property known as [R Suburb A property]
·Property known as [R Suburb B property]
·Property known as [BY property]
·One half interest in property known as [BK property]
·Two thirds interest in property known as [W property] (one third being a beneficial interest)
·One third interest in mother's estate in Australia and [southern Europe]
·100 shares in [P] Pty Limited
·Bank accounts:
St George Bank account … - $65,000.00 – beneficial
interest
Westpac account [1] - $2,266.00
Westpac account [2] - $53,000.00
Westpac account [3] - $60,000.00 - beneficial interestANZ cheque account - $12,000.00
·[Professional] practice known as [A Garwin & Co.], including all plant, equipment and furniture
·BMW 525 motor vehicle
·Honda Accord motor vehicle
·Outstanding loans.
[RKS] $65,000.00
[PM] $19,000.00
[JA] $1,300.00
[CTG] $180,000.00
[GCG] $115,000.00
ANNEXURE “B”
ASSETS OWNED BY [MS GARWIN] AT COMMENCEMENT OF COHABITATION
·Jewellery of approximate value $15,000.00
·Commonwealth Bank Keycard account - $400.00
The wife deposes[7] to having savings at the date of marriage of approximately $10,000. The parties were married in November 1995. The husband says that in 1995 the wife owned jewellery that was valued at $15,000 and cash of less than $500. I do not understand the relevance of the financial circumstances in 1995 given that the parties were living together from either July or November 1993.
[7] Paragraph 7 of the wife’s affidavit
In 1994 and 1995 a child care worker in her mid 20’s who left school in Year 9 signed two documents at the behest of her boyfriend / fiancé. He was about 50 years of age and a professional. The documents purport to evidence the state of the parties’ assets at those times and their expectation in relation to property settlement into the indefinite future. Nearly 20 years and three children later the question arises as to the relevance of the Statutory Declaration and the Cohabitation Agreement. The answer is – not much. The documents can only be part of the financial history as they cannot bind the parties or the court.
Given the apparent similarity between the terms of the agreement and the husband’s current proposals I infer that he feels that the agreement might have some bearing on the finding the Court will make on contribution. That point was not argued before me but given the terms of the legislation and the staged approach favoured by the Court, there is no scope for documents such as these to interfere with the Court’s assessment of the respective contributions. As I have noted, the legislation makes no mention of steps or stages and if the exercise of discretion under section 79 is looked at as a single process then presumably during that process there is scope to take the agreement into account under s 75(2)(o) because of s 79(4)(e) and or under the overarching requirement for a just and equitable settlement. Even then I am not sure that the earlier agreements can directly impact the assessment of contributions.
In terms of the approach I have said I will follow, the only influence the documents can have in respect of contribution is to lend support to the unchallenged assertion of the husband as to the assets that he held in 1994 and 1995. As to the values attributed to the assets, the problem relates to the estimates in respect of real estate. The W property was sold at some stage for $500,000. Otherwise there are simply estimates contained in the two documents. Similar estimates made by the husband were struck out of his affidavit on objection made on behalf of the wife.
The husband contends that his net initial contribution was of the order of $5.66 million. The task under section 79 is not entirely mathematical and therefore it is not critical that there be a precise figure found for initial contributions. Doing the best I can, I find that the husband had assets at the commencement of the parties’ relationship which had a value of the order of the husband’s claim.
During the marriage the husband earned income from his professional practice and from his assets. Properties were bought and sold, others were rented out and I take it that there was some income from loans. The husband and the wife both made financial contributions by agreeing to be liable for debts associated with real estate and corporations.
The husband conceded that during the marriage he financially supported his older sons from time to time and his mother and siblings. In particular the husband gave $100,000 to each of his older sons. That support was a diversion of funds from purposes of the parties’ family.
The husband made the overwhelming financial contribution.
Section 79(4)(b) contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions. There is scant evidence of such contributions.
The wife is a director and shareholder of the eponymous L Pty Ltd and twice a year, at the husband’s direction, she signed documents which the husband told her were company returns.
Upon the purchase of the G Road units in 2001 and for a period of approximately 8 months thereafter, the wife undertook the following tasks each fortnight in relation to the units:
· Sweeping the foyers;
· Maintaining general tidiness in the common areas such as picking up papers and other rubbish;
· Mopping the steps;
· Vacuuming common areas; and
· Cleaning the commercial laundry and bathroom areas.
It is the unchallenged evidence of the husband that when he purchased the G Road units he spent significant time renovating the bathrooms and kitchens and supervising the builders.
Therefore each of the parties made non-financial contributions.
Section 79(4)(c) contributions
This provision deals with contributions to the family including contributions in the form of homemaker contributions and contributions to children of the marriage.
It follows from the agreed evidence that the parenting and homemaker role fell largely to the wife.
The wife says that during the marriage she attended to meal preparation for the children, bathing, feeding, nappy changing and night time parenting. She took the children to medical and dental appointments and was responsible for driving the children to pre-school and school and picking them up. She said that the husband drove the boys to sport on Saturdays most weeks and stayed and watched them play. She says that about once a fortnight the husband picked the children up from school if they remained back for sport. The husband makes no criticism of the wife’s parenting save in relation to what he saw as a lenient or permissive approach to J’s behaviour. It follows from that evidence that the parenting task in respect of J at those times was largely left to the wife.
The wife did the shopping, meal planning and preparation, cleaning, cooking, washing and ironing. The wife says that she cooked four days a week on average. She says that during the early years of the marriage the parties entertained the husband’s family and business associates at the former matrimonial home every two or three weeks. The parties did not retain any domestic help. In relation to the household task, I note that the former matrimonial property has 6 bedrooms and 6 bathrooms. The husband is critical of the wife’s performance as a homemaker in that she did not or did not adequately make the beds, do the dishes and left the house in a mess. He says that if visitors were coming he would rush around and tidy up. I gather therefore that he did not undertake all of the ‘neglected’ duties. The husband said that the wife went to lunch with her mother each day. I understood the import of that to be that she thereby neglected her household duties. The husband conceded that the wife undertook all of the cooking but says that was only 2 meals a week with the balance being made up of restaurant meals and take away meals. The husband says that early in the marriage the parties entertained members of the wife’s church and that the wife cooked on those occasions. The husband does not cook and that explains his current expenditure on food.
The husband maintained the swimming pool and except for some periods when the parties engaged the wife’s brother, he mowed the lawns.
It is an agreed fact that the wife undertook the majority of the domestic duties and that she was the primary care giver of the children. I note with the spacing of the birth of the children that the parties had young children in their care for much of their marriage and since separation. The parenting task in respect of J has been challenging. The husband says that he was expelled from 4 private schools in the 18 months prior to separation. He has given evidence about J’s addiction to marijuana. The wife says that A and G are progressing well at school.
At separation on 2 June 2009 the wife and children moved to the home of the wife’s mother at U. In October 2009 she and the children moved to rented premises at M, where she continues to reside as at the date of the hearing. The wife notes that the task of delivering the children to their eastern suburbs school from south western suburb U was an arduous one.
J started living for equal periods with both parents in 2010 and since early 2011 has lived exclusively with the husband. J will be 18 in August 2012. The husband cares for and fully supports J. The wife estimates that A stayed with the husband for only 8 nights since the orders were made and until recently, not at all after 4 June 2011. The interim parenting orders provide for G to spend 4 nights a fortnight with the husband. Until recently he was only spending two afternoons with the husband each fortnight. The husband expects that G will spend every second weekend with him. The wife is resistant to more than one overnight each fortnight because of concerns for G arising out of exposure to J’s addiction to marijuana.
It follows that the main parenting load has continued to fall to the wife since separation. There are issues in respect of J but later this year he will cease to be a child.
Conclusion on Contribution
The parties agree that the contributions by and on behalf of the husband exceeded those by and on behalf of the wife. It is submitted for the wife that the contributions were made in the proportions 62.5% by the husband and 37.5% by her. The husband contends that his contributions were 80% compared to 20% by the wife. There were few relevant disputes in relation to the balance sheet but in each case I accept that the submissions were made on the basis of the different pools contended for by the parties.
The husband came into the marriage with assets of very significant value.
Each of the parties made valuable contributions during the marriage, the husband largely as bread winner and the wife as parent and homemaker.
The facts support the agreed position that the contributions by and on behalf of the husband were greater than those by and on behalf of the wife. This is not a mathematical exercise but it is appropriate to note the dollar effect of possible findings. For example, the contention made on behalf of the husband that his contributions represent 80% compared to 20% by the wife, would result in a difference between the parties of about $7.8 million. It seems to me that such an outcome is outside the legitimate range of discretion available to the Court in this case where the parties cohabited for nearly 16 years and contributions spanned about 19 years.
In my view the appropriate finding is one whereby the husband made 65% of the contributions and the wife, 35%. That puts the husband’s contribution at nearly twice that of the wife. Such a finding would reflect a difference between the parties of about $3.9 million.
The other matters in Section 79
Once contributions have been assessed, the other factors in section 79(4) need to be considered. They are:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the husband and wife.
To a great extent the parties live on income from assets. Apart from the drawings from his professional practice the husband has rental income. The husband proposes that he sell an income producing asset in order to fund a settlement to the wife. On the other hand, if the former matrimonial home is sold then it would be possible for both parties to live comfortably without the need to borrow.
As to the wife, once she is comfortably housed and, subject to receiving proper child support, she will be in a better position to undertake retraining. She has foreshadowed undertaking a secretarial course at a future time and that would enhance her earning capacity.
Otherwise the likely orders need not impact on the earning capacities of the husband and wife.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (a), (b), (c), (g), (h), (j), (k) and (l).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of the parties, the wife and husband are 44 and 67 years of age respectively.
The husband was diagnosed with Parkinson’s Disease in about 2000. Professor Z has been the husband’s treating Neurologist since November 2002. He is Associate Professor in Medicine (Conjoint) at the University …; Senior Staff Specialist in Neurology and Director of the Stroke Unit at … Hospital; and Area Director of Stroke for the … Local Area District. Professor Z was awarded an M.B.B.S. with first class honours at the University of New South Wales in 1980 and won the university medal. He became a Fellow of the Royal Australiasian College of Physicians in 1990; was awarded a Doctorate of Medicine at the University of New South Wales in 1991 and in that same year became a member of the Australian Association of Neurologists.
The husband first presented to Professor Z in November 2002 with a tremor in his left hand and reported no history of any other medical conditions. When he was seen in August 2003 he was complaining that his tremor was more obvious and was started on treatment with an anticholinergic agent. The husband was referred to a speech pathologist in 2005. By 2007 the husband complained that his tremor was always worse when he was under pressure and stressed. He also noticed that if he missed a dose of medication the tremor would increase. By December 2008 the husband complained to his general practitioner that his Parkinson's disease was worse in that he was starting to slow up in his movements generally and therefore he was started on specific antiparkinson medication with Sinemet CR 200/50 mg twice daily. He remained on the Inderal and Artane as well. When Professor Z reviewed the husband in August 2010 he was taking Sinemet 100/25 mg tablets three times a day as well as Artane 2 mg at 8:00am and 2 mg at 8:00pm. His tremor was still a problem when he became stressed and also got worse as he was due to take his afternoon dose of medication. Professor Z last saw the husband on November 4th 2011. At that stage, as always, the husband’s major complaint was his tremor. The husband reported that his gait was normal, his writing had not become smaller and he had no problems turning in bed. On examination at that time he did have parkinsonian features with reduced facial expression and reduced arm swing on the right. No tremor was obvious on that occasion. He had mild cogwheeling rigidity (stiffness) on the right side more than the left side. He also had bradykinesia (slowness of movements) more on the right than the left side. At that stage Professor Z didn't suggest any changes in his medications apart from advising him that he could take an extra Artane tablet if he was going to be in stressful situation to try to damp down his tremor.
The husband has been prescribed Inderal 40 mg tablets two twice daily, Artane 2 mg tablets two twice daily and Sinemet 25/100 mg tablets one three times a day. The side effects of the Artane were continuing dryness of the mouth and the combination of all three of them contributed to his having postural dizziness at times, due to low blood pressure.
The husband told Professor Z that the presence of his tremor particularly with clients caused him significant ongoing anxiety and embarrassed him frequently. Although the husband has developed other parkinsonian features, apart from the tremor these have progressed only slowly to this stage. Professor Z reported that over time the husband’s parkinsonian features might progress to the stage where they do impact on his mobility and adversely affect his activities of daily living at which stage he would need further review for adjustment of his medications. Professor Z reported that at this stage no surgical procedures are needed and most likely would never be appropriate for him unless his tremor became completely disabling and not responsive to medications. Professor Z had not seen the husband since November 2011 and could not report on his current state of health. He said that some patients with Parkinson's disease encounter problems with their antiparkinsonian medications that start 5-10 years after beginning the medication. The effects of the medications can become unpredictable and unreliable.
There is no significant evidence about the wife’s health.
(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 wife’s income is $1,500 per week by way of support from the husband. She lives with the younger boys, A and G, who have no income.
The wife’s expenses are:
| Expense | Amount | |||
| Rent – M | $800 | |||
| Motor vehicle insurance | $27 | |||
| Motor vehicle registration – Mercedes Benz … | $25 | |||
| Credit card payments | $150.00 | |||
| Other expenses. | $2,098.00 | |||
| Type of expense | Total | Wife | Children | |
| Food | $450 | $200 | $250 | |
| Household supplies | $100 | $50 | $50 | |
| Gas | $8 | $4 | $4 | |
| Electricity | $14 | $10 | $4 | |
| Telephone | $33 | $8 | $24 | |
| Motor vehicle – petrol | $80 | $20 | $60 | |
| Motor vehicle – maintenance | $25 | $25 | $0 | |
| Fares and parking | $20 | $20 | $0 | |
| Clothing and shoes | $280 | $130 | $150 | |
| Child activities | $226 | $80 | $146 | |
| Medical dental and optical | $175 | $25 | $150 | |
| Entertainment & hobbies | $250 | $100 | $150 | |
| Educational expenses | $50 | $0 | $50 | |
| Chemist pharmaceuticals | $80 | $30 | $50 | |
| Cleaning | $37 | $25 | $12 | |
| Repairs furnishings and appliances | $50 | $25 | $25 | |
| Dry cleaning and ironing | $30 | $20 | $10 | |
| Books and magazines | $30 | $20 | $10 | |
| Gifts | $100 | $25 | $75 | |
| Hairdressing, toiletries | $60 | $30 | $30 | |
| Sub-total | $2098.00 | $847.00 | $1250.00 | |
| Total | $3,100.00 | |||
The wife has a weekly deficit of about $1,600.
The evidence about the wife’s assets and liabilities is set out earlier in these reasons.
As to the wife’s earning capacity, the wife left school after Year 9 and attained no further educational qualifications. She worked as a child care worker before marriage but has not had paid employment in any capacity since 1994. After these proceedings the wife plans to enrol in a secretarial course at TAFE on a part-time basis. She expects that course to take 2 years and thereafter hopes to obtain employment during school hours.
The parties’ arrangement had the wife out of the paid workforce throughout the marriage in order that she could attend to the children. She has no formal qualifications or relevant vocational experience. We do not live in times of full employment and if and when she completes a secretarial course, there may not be a suitable job readily available. The wife is younger than the husband and is likely to have a modest earning capacity, conditional upon her completing a course. G is only 6 years of age and will require supervision out of school hours for many years.
The husband receives $2,028 per week, made up of $950 in net rental income from the R Suburb properties, and $1,078 in income from his accountancy practice. Apart from J and sometimes, A and G, the husband lives alone.
The husband deposes to the following expenses:
| Expense | Amount | |||
| Income tax | $278 | |||
| Rates and unit levies | $384 | |||
| Health insurance premiums – Medibank Private | $57 | |||
| Motor vehicle insurance premiums – NRMA | $44 | |||
| House and contents insurance premiums – NRMA | $48 | |||
| Motor vehicle registration – Mercedes Benz | $4 | |||
| Mastercard repayments | $25 | |||
| Maintenance / child support | $1,500 | |||
| Other expenses. | $1,867 | |||
| Type of expense | Total | Husband | Children | |
| Food | $725 | $200 | $525 | |
| Household supplies | $5 | $5 | $0 | |
| House repairs | $20 | $20 | $0 | |
| Gas | $5 | $5 | $0 | |
| Electricity | $75 | $75 | $0 | |
| Telephone | $23 | $23 | $0 | |
| Motor vehicle - Petrol | $60 | $60 | $0 | |
| Motor vehicle - Maintenance | $20 | $20 | $0 | |
| Clothing and shoes | $70 | $10 | $60 | |
| Medical dental and optical | $75 | $0 | $75 | |
| Entertainment & hobbies | $0 | $0 | $0 | |
| Holidays | $0 | $0 | $0 | |
| Educational expenses, including fees and levies | $770 | $0 | $770 | |
| Chemist pharmaceuticals | $11 | $11 | 0 | |
| Books and magazines | $3 | $3 | 0 | |
| Gifts | $5 | $5 | $0 | |
| Hairdressing, toiletries | $0 | $0 | 0 | |
| Sub-total | $1867.00 | $437.00 | $1430.00 | |
| Total | $4,207.00 | |||
The husband has a weekly deficit of about $2,200.
As to the husband’s earning capacity, his income comes from two sources. The rental income could remain available to him irrespective of his capacity to work as an accountant. In the latter regard he works from 9.00 am to 3.00 pm. In his affidavit he said that he expected to retire over the next 12 months. The husband did not seem as confident about that in cross-examination. He spoke about the value he has from continuing in his work.
Professor Z thought that it is likely that the husband will have further progression of his tremor and possibly of his other Parkinsonian features. If these are not responsive to medication and continue to be exacerbated by stress then he may find it difficult dealing with clients. Professor Z reported that the likely expenses the husband will encounter will be those related to consultations on a regular basis as well as the cost of his medications. No surgery is anticipated.
I note that at 67 years of age the husband is at or passed the age at which many choose to retire. It is likely that the husband will continue to wind down his work and he could leave the paid workforce in the next year or so.
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
The younger children will live predominantly with the wife. The husband would like to increase the time he spends with them but at this stage that time is limited. The child G is only 6 years of age and for the foreseeable future the major parenting load will fall to the wife.
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the evidence in relation to the expenses of the husband and wife.
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
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;
There is no significant superannuation interest. Neither party receives a Centrelink benefit.
(g)where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
The evidence suggests that the parties enjoyed a comfortable standard of living during the marriage. There was some leisure travel, including overseas travel, particularly in the earlier years of the marriage and the parties were able to send the boys to private schools. The parties regularly ate out and drove luxury cars.
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
After these proceedings the wife plans to enrol in a secretarial course at TAFE on a part-time basis. She expects that course to take 2 years and thereafter hopes to obtain part-time employment during school hours.
(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;
There is no relevant effect.
(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;
There were no relevant submissions on this issue.
The wife undertook the lion’s share of the parenting and homemaker contribution. That is likely to have assisted the husband maintain full-time employment throughout the marriage and since.
(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;
The marriage is likely to have affected the wife’s earning capacity. The wife was largely out of the paid workforce during the marriage. She thereby lost the opportunity to acquire skills and the other benefits of a consistent period in the paid workforce, such as leave entitlements, superannuation, progression or promotion.
(l) the need to protect a party who wishes to continue that party's role as a parent;
The child G is only 6 years of age. The wife drives A and G to and from school and various activities. The wife wants to continue to be available to the younger boys, after school.
(m)if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
As at the date of the hearing, apart from the children, each of the parties lives alone.
(n)the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(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; and
I have referred to the current orders. I have not been provided with a copy of a child support assessment.
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
Nothing comes to attention here.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the husband and wife.
Section 79(4)(f)
I have set out the earlier orders made in these proceedings.
Section 79(4)(g)
I have not been provided with any child support assessment.
Conclusion
The husband argues that there should be no adjustment to the wife but if there is to be any adjustment to her, it should be of the order of 2.5%. The wife seeks an adjustment of 5%.
The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
· Because they are likely to rely on the income from assets, rather than solely from personal exertion, the form of the orders could have an impact on the earning capacities of each of the parties;
· A settlement based on contributions alone would have the husband receive about $3.9 million more than the wife;
· The husband is a successful professional but is at or near retirement age. The husband suffers Parkinson’s disease and there is likely to be a progression of the debilitating tremors and other consequences of the condition and its treatment. He has an unbroken history of paid employment but has reduced his hours in recent years. The wife is 23 years younger than the husband and therefore has the potential for many more years of paid employment than him. However she has no formal qualifications or relevant experience and has been out of the paid workforce for about 18 years;
· The wife is and has been fully reliant on the husband’s support;
· For the foreseeable future A and G will live mainly with the wife. Although J lives with the husband he will be 18 years of age in August 2012; and
· The wife contributed to the husband’s earning capacity and in turn her own earning capacity was adversely affected by the marriage.
Save for the difference in their ages, each of those factors favours an adjustment to the wife. An adjustment in favour of the wife is warranted. The size of the net pool is relevant to the appropriate adjustment. In my view an adjustment of 2.5% is appropriate. In the context of this case such an adjustment represents $323,636 and will mean a difference between the parties of twice that amount.
Just and Equitable
The net assets have a value of $12,945,431.04.
A distribution between the parties of 62.5% to the husband and 37.5% to the wife will leave them with about $8,090,894 and $4,854,537 respectively.
Neither of the parties seeks a splitting order in relation to the wife’s superannuation interest. That leaves any adjustments to be made out of non-superannuation assets.
Of the assets and liabilities that make up the net matrimonial pool, the wife has or has had the benefit of, the following assets :
Assets
Value
Payment to wife by way of partial property settlement ordered on 21 February 2012 $100,000 Mercedes 2011 Model - wife
$25,750 Wife’s jewellery per valuation $64,410 Wife’s funds received by way of interim orders of 25 August 2009 $200,000 Wife’s Superannuation ING @ 30.06.2009 $20,000 Total Gross Assets
$410,160.00
In order to bring her to 37.5% of the net assets, the wife should receive a further $4,444,377 from the joint asset – the former family home at X Avenue, M.
That will leave the husband with having or having had the benefit of:
Assets
Value
R Suburb properties per valuation – husband $1,700,000 Net proceeds of S Street, M currently in Husband’s control
[Held in Westpac Account - term deposit
… as at 16 February 2012 minus payment to wife ordered on 21 February 2012]$196,607 Interest in L Pty Ltd per valuation
(50 ordinary shares)
Assets of L Pty Ltd include a block of 10 units at G Road, M – Husband$245,000 Interest in L Pty Ltd per valuation
(50 ordinary shares)
Assets of L Pty Ltd include a block of 10 units at G Road, M (in wife’s name but to be retained by husband)$245,000 IAG Shares - husband
(1218 shares)$4,628
Mercedes 2008 Model
… – husband$48,200 Interest in A Garwin & Co. business per valuation – husband $75,000 Shareholder loan account with L Pty Ltd per valuation and 2011 Financial documents - husband $2,104,385 ANZ Bank account
… - husband$4,248 Westpac Bank Cheque Account
… – husband$1,777 Add back - Paid legal fees – husband
$107,395.04
Potential CGT on sale of G Road, M [Payable by L Pty Ltd] - joint -$90,672 Additional tax payable as result of payment of dividend (see 3.9. Mr N valuation) – husband -$43,499 Additional tax payable as result of payment of dividend (see 3.9. Mr N valuation) (in wife’s name but to be met by husband)) -$32,798 Future Sale costs of G Road, M [estimated, Agent’s commission, legal fees as at February 2012] – husband -$30,000 Total Assets
$4,565,271.04
In order to achieve the required overall settlement, the husband will retain the balance of the value of the former matrimonial home - $3,555,623.
The husband seeks the opportunity to retain the former matrimonial home at M. The wife seeks a lump sum payment and in default that she retain the M home with, for reasons that are not explained, no adjusting payment to the husband. Given that both parties are living well beyond their incomes and the extent of the payment required to the wife, it is hard to imagine the husband being able to buy the wife out. Nevertheless I will express the orders so that the husband has that opportunity. The wife proposes that the husband have 30 days to buy her out and I will so order. In default of the husband buying the wife out, the home will be sold.
In the event that it is necessary to sell the home, so that the parties share in any loss or profit represented by a difference between the net sale proceeds of the former matrimonial home and the agreed value, I will order that the net proceeds be divided in the proportions that approximate the distribution of the agreed value of the property ($8,000,000) as to $4,444,377 to the wife and $3,555,623 to the husband – that is 55.6% to the wife and 44.4% to the husband.
The husband also seeks the sale of the G Road properties. That sale is neither necessary nor sufficient to achieve the required payment to the wife. The sale costs associated with G Road and the potential CGT obligation are factored into the pool calculations on the husband’s account and no further adjustment is required. I will leave the sale of those properties at the husband’s discretion. I recognise that if the husband chooses not to sell the properties then the allowance for sale costs in the balance sheet works unfairly against the wife.
Events have overtaken the orders sought by the husband to the extent of the order I made at the end of the hearing for a part payment to the wife. That means the sequence of payments proposed by the husband has been achieved in another way.
The husband and wife will retain responsibility for any other debts in their respective names that have not been brought to account in the calculation of the net pool of assets.
Conclusion under Section 79
The parties made valuable contributions during nearly 16 years of cohabitation and since and have built a substantial pool of assets. The husband made a very substantial initial contribution but otherwise the parties shared the work of the marriage in different ways. Because of the assets he owned at the commencement of the relationship the husband made a greater contribution than the wife. A small percentage adjustment is required in favour of the wife to effect a just and equitable settlement of their property.
The wife is the signatory for a trust account for the older children, J and A, which holds about $65,000. The treatment of that account is not an issue in the property proceedings. Nevertheless the parties have agreed that the account be changed to the effect that both parents’ signatures are required to operate on the account. I will make that order.
I will make provision for the parties to bring the matter back before me in relation to the wording of the orders. There will be an issue for the husband as to how he would wish to fund the orders and a specific request was made by his counsel for the opportunity to be heard in relation to the mechanics of the settlement. Therefore leave will be granted to the parties to restore the proceedings for those purposes, within 21 days or within such further time as the parties agree in writing.
I certify that the preceding one hundred and fifty seven (157) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan.
Associate:
Date: 4 April 2012
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Family Law
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Civil Procedure
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Res Judicata
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