Gresham & Gresham (No 2)
[2023] FedCFamC1F 51
•10 February 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Gresham & Gresham (No 2) [2023] FedCFamC1F 51
File number(s): SYC 7914 of 2016 Judgment of: ALTOBELLI J Date of judgment: 10 February 2023 Catchwords: FAMILY LAW – PROPERTY – Assessment of contribution and future needs – Husband contends the wife has made reckless and excessive expenditure for which he should not be responsible – Wife contends her expenditure was reasonable – Husband’s assets include two significant Country Q pension funds – Consideration of whether the Court has jurisdiction to make orders in relation to Country Q pension funds.
FAMILY LAW – CHILD SUPPORT DEPARTURE – Wife’s child support departure application – Where the husband seeks to create a child education fund – Wife’s application and husband’s orders sought dismissed.
Legislation: Family Law Act 1975 (Cth) ss 4(1), 31(2), 75(2), 79, 31(2), 114(3)
Family Law Regulations 1984 (Cth)
Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
C & C [1998] FamCA 143
Charisteas v Charisteas (2021) FLC 94-056; [2021] HCA 29
Crapp & Crapp (1979) FLC 90-615; [1979] FamCA 17
Fields & Smith (2015) FLC 93-638; [2015] FamCAFC 57
Gresham & Gresham [2021] FamCA 111
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Hoffman & Hoffman (2014) FLC 93-591; [2014] FamCAFC 92
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Kowaliw & Kowaliw (1993) FLC 92-342; [1992] FamCA 54
M & M [1998] FamCA 42
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Teal & Teal [2010] FamCAFC 120
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14
Division: Division 1 First Instance Number of paragraphs: 160 Date of last submission/s: 2 February 2023 Date of hearing: 14–18 February 2022, 10 October 2022, 2 February 2023 Place: Sydney Counsel for the Applicant: Mr Rosic on 14–18 February 2022, Litigant in Person on 10 October, and 2 February 2023 Solicitor for the Applicant: Dorter Family Lawyers and Mediators on 14–18 February 2022, Litigant in Person on 10 October, and 2 February 2023 Counsel for the Respondent: Mr Lethbridge SC Solicitor for the Respondent: Watson & Watson Solicitors
Table of Corrections 22 May 2023 The amount of “431,250” at item 48 of the balance sheet at [128] is replaced with “NIL”. 22 May 2023 The amount of “2,522,834” under “TOTAL UNDER LIABILITY” at [128] is replaced with “2,091,584”. 22 May 2023 The amount of “13,254,909.5” under “NET POOL (NOT INCLUDING FINANCIAL RESOURCES)” at [128] is replaced with “13,686,159.50”. 22 May 2023 The amount ofv“13,995,651.5” under “NET POOL (INCLUDING FINANCIAL RESOURCES)” at [128] is replaced with “14,426,901.5”. 22 May 2023 The amount of “9,047,093.50” under “NET NON-SUPERANNUATION/PENSION ASSETS” at [128] is replaced with “9,478,343.50”. 22 May 2023 The amount of “13,995,651.5” under “NET TOTAL ASSETS AND RESOURCES” at [128] is replaced with “14,426,901.5”. 22 May 2023 The amount of “$9,254,487.5” for Pool One at [132] is replaced with “$9,685,737.5”. 22 May 2023 The amount of “$9,254,487.5” and the amount of “$2,799,130.3” at [144] is replaced with “$9,685,737.5” and “$2,885,380.3” respectively. 22 May 2023 The amount of “431,250” allocated as a liability to the Respondent Wife at item 48 at [146] is replaced with “NIL”. 22 May 2023 The amount of “2,447,080” allocated to the Respondent Wife “Total” for liabilities at page 47 is replaced with “2,015,830”. 22 May 2023 The amount of “8,604,189.5” allocated to the Respondent Wife as to “Net Non-Superannuation Assets” at [146] is replaced with “9,035,439.5”. 22 May 2023 The amount of “10,095,877.6” allocated to the Respondent Wife as to “Net Total Assets and Resources” is replaced with “10,527,127.6”. 22 May 2023 The amount of “$8,397,390.60” at [147] is replaced with “$8,656,140.90”. 22 May 2023 The amount of “$10,095,876” at [147] is replaced with “$10,527,127.60”. 22 May 2023 The amount of “$1,698,487” at [147] is replaced with “1,870,986.70”. ORDERS
SYC 7914 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GRESHAM
Applicant
AND: MR GRESHAM
Respondent
order made by:
ALTOBELLI J
DATE OF ORDER:
10 February 2023
Amended pursuant to r 10.13(e) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 on 22 May 2023
THE COURT ORDERS THAT:
1.Within 60 days of the date of these orders, the Applicant wife (“the Wife”) is to pay to the Respondent husband (“the Husband”) the sum of $1,870,986.70
$1,698,486.70.2.Contemporaneous with payment in compliance with Order 1:
(a)The Husband shall do all acts and things and sign all documents necessary to transfer his interest in the property situated at and known as D Street, Suburb E in the State of New South Wales (Folio Identifier …) (“the Suburb E property”) to the Wife;
(b)The Husband shall provide to the Wife a Withdrawal of Caveat …15 in registerable form;
(c)The Wife shall provide to the Husband evidence reasonably acceptable to him that their joint mortgage over the Suburb E property has been discharged and that all amounts owing under the said mortgage has been repaid and indemnify the Husband in respect of any liability in respect of the Suburb E property; and
(d)The Wife be declared the sole legal and beneficial owner of the Suburb E property.
3.The Husband and the Wife be restrained by injunction from further encumbering the Suburb E property pending compliance with these orders.
4.In the event the Wife is unable to comply with Order 1, the Wife and the Husband are to do all acts and things and sign all documents necessary to place on the market for sale and sell the Suburb E property for the best price reasonably available in the following manner:
(a)Forthwith list the Suburb E property for sale by public auction with such agent and auctioneer as the parties may agree to appoint but in default of agreement then such agent and auctioneer as the President of the of the Real Estate Institute of New South Wales shall appoint ("the Agent"), with the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
(b)The reserve price for the purpose of such auction shall be $10,800,000 or such other price as may be mutually agreed upon by the parties;
(c)The parties shall cooperate in every way with the Agent including (without limiting the generality of the forgoing):
(i)Making the key available to the Agent;
(ii)Allowing inspection of the Suburb E property at all reasonable times requested by the Agent;
(iii)Doing or saying nothing to hinder or prevent a sale being affected;
(iv)Ensuring the property, including the grounds, are in neat and clean condition at the time of inspection by the Agent and prospective purchasers; and
(v)Signing all documents requested by the Agent in relation to the listing for sale of the Suburb E property except a Contract or Agreement for sale which has not been authorised by the parties' solicitors;
(d)In the event that the bidding at the auction does not reach the reserve price, the Wife and the Husband or such of them as attended the auction may negotiate with the highest bidder or any other interested person and effect a sale of the Suburb E property at a price which is not more than 10 per cent below the reserve price, or at such other price as the Wife and the Husband agree upon in writing;
(e)If the Suburb E property remains unsold, the Wife and the Husband shall do all acts and things and sign all documents necessary to immediately relist the Suburb E property for sale by public auction again, on a date nominated by the said Agent and at such auction there shall be no reserve price unless otherwise agreed by the Wife and the Husband in writing;
(f)The Wife and the Husband shall each execute a Contract for Sale in the form prepared by the solicitor having the conduct of the sale at the sale price;
(g)The Wife and the Husband shall instruct ZZ Lawyers to act on the conveyance of the Suburb E property or an alternative solicitor as agreed by both the Wife and the Husband in writing; and
(h)Neither the Wife nor the Husband may confer on any Agent without the consent of the Wife and the Husband any right to any sole or exclusive agency in respect of the Suburb E property or to any commission.
5.Upon settlement of the sale of the Suburb E property, and subject to the succeeding orders, the proceeds be divided and applied in the following manner and priority:
(a)In payment of any mortgage with ANZ Bank over the Suburb E property;
(b)In payment of the costs of sale including agent’s commission;
(c)$1,870,986.70
$1,698,486.70to the Husband together with interest on the said sum calculated in accordance with the Family Law Act1975 (Cth), Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) and Family Law Regulations 1984 (Cth), and calculated from the 61st day after the making of these orders;(d)In payment of all amounts due to discharge the loan from AL Finance and secured by Caveat …90; and
(e)The balance to the Wife.
6.From the amount the Husband receives from the sale proceeds in Order 5, the Husband is to forthwith pay the following:
(a)To the Wife’s parents the sum of $70,000 in accordance with consent order 2.2 made on 18 February 2022; and
(b)To Mr AO all amounts owing to Mr AO secured by Caveat …15. The Husband shall do all things necessary to cause the said Caveat to be withdrawn at the time of settlement of the sale of the home.
7.If the Suburb E property sells for any amount above or below $10,800,000, the difference is to be borne or shared (as the case may be) as to 60 per cent to the Wife and 40 per cent to the Husband.
8.With respect to Notation B and C of the consent orders made on 18 February 2022 in relation to the amount owed to the Wife’s parents, the Court declares that the Wife be liable for $517,500 and the Husband be liable for $57,500 and each shall forthwith repay or cause to be repaid the said amounts out of their share of the sale proceeds and to procure a Withdrawal of Caveat …08.
9.Pending the transfer of the Suburb E property to the Wife in accordance with Order 2 above, or settlement of the sale of the said property in accordance with Order 4 above:
(a)The Wife shall have exclusive use and occupation of the said property;
(b)The Wife shall make payment of principal and interest in respect of the mortgage over the said property;
(c)In respect of the said property, the Husband shall make payment of:
(i)Utility accounts including but not limited to gas, electricity, water rates and usage charges;
(ii)Home and contents insurance premiums for the existing policy; and
(iii)Council rates;
(d)The Husband shall pay or cause to be paid all premiums for the current family health insurance policy with R Insurance at the current level of that cover.
10.Within 14 days of the date of the making of these orders, the Wife and the Husband shall do all acts and things (including initiating legal proceedings in Country Q if necessary) and complete all documents as to cause the BB Pension …80 to be split between the Wife and the Husband so that the Wife receives an interest in the BB Pension …80 in an amount equivalent to 30 per cent of the total value (at the time of splitting) of the Husband’s interest in the following:
(a)BB Pension …80;
(b)CC Pension …55; and
(c)VPLC Pension (“the Husband’s Pension Funds”).
11.Any costs or fees associated with implementing this order are to be borne by the Wife as to 30 per cent and the Husband as to 70 per cent.
12.The Wife and the Husband do all acts and things and sign all documents necessary to release the remaining balance of the G Street, City H United Kingdom property sale proceeds from the AP Lawyers Trust Account to an account nominated by the Husband.
The Wife and the Husband do all acts and things and sign all documents necessary to release the G Street, City H United Kingdom property sale proceeds from the AP Lawyers Trust Account to an account nominated by the Husband.13.The Wife and the Husband do all acts and things and sign all documents necessary to transfer any balance remaining in the UK B Bank Investment Bond and the Joint UK Bank Account (AG Bank …04) to an account nominated by the Husband.
14.Within 14 days of the Husband receiving payment of any amount that he is to be paid pursuant to these orders he is to forthwith pay or cause to be paid the outstanding school fees identified in the balance sheet at [146] of the reasons for judgment.
15.Subject to these orders, as between the Wife and the Husband, the Wife shall retain all interest in and entitlement to all other personal property of whatsoever nature and kind in her possession or control, as at the date of these orders including but not limited to, all shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name and all interest in life insurance policies and superannuation funds standing in her sole name including:
(a)Her motor vehicle;
(b)Her bank accounts;
(c)Her personal property;
(d)Her Australian superannuation entitlements; and
(e)All other assets of whatsoever nature and kind presently in her possession or control.
16.Subject to these orders, as between the Wife and the Husband, the Husband shall retain all interest in and entitlement to all other personal property of whatsoever nature and kind in his possession or control, as at the date of these orders including but not limited to, all shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his sole name and all interest, in life insurance policies and superannuation funds standing in his sole name, including:
(a)His motor vehicle;
(b)His P Company Restricted Stock Units and any shares;
(c)His Australian superannuation entitlements;
(d)His personal property;
(e)His credit cards;
(f)His Australian bank accounts;
(g)His 50 per cent interest in J Street, City H, United Kingdom;
(h)Remaining interests in the Husband’s Pension Funds referred to in these orders; and
(i)All other assets of whatsoever nature and kind presently in the possession or control of the Husband.
17.The parties 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.
18.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders then the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
19.Leave is granted to the parties to apply to relist the proceedings on 14 days’ notice to deal with any interpretation, implementation and/or enforcement of these orders.
20.Except as any paragraph of these orders provides to the contrary, each party indemnify the other in respect of any liability including any taxation liability or impost (past, present or future) in their sole name.
21.All previous orders made in this matter before today are discharged.
THE COURT NOTES THAT:
A.In the event that any party notifies chambers within 28 days of the date of these orders of an intention to seek costs arising from this litigation, directions will be made for such a costs application to proceed by way of written submissions.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Gresham & Gresham has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Amended pursuant to r 10.14(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 22 May 2023
ALTOBELLI J:
INTRODUCTION
These reasons for judgment explain the orders made in a dispute between Ms Gresham (“the wife”) and Mr Gresham (“the husband”) about alteration of property interests and child support departure.
BACKGROUND
The wife is the applicant in this case. She was born in Australia and is 50 years old, and describes herself as a homemaker. The husband is the respondent and was born in the United Kingdom (“the UK”). He is 54 years old, and describes himself as a professional. The parties married in 2003 and separated on 16 June 2016.
There are three children of the relationship (“the children”): X aged 15, Y aged 13, and Z aged 11. The children live with the wife, but spend substantial and significant time with the husband.
At the commencement of the relationship, the husband held a number of significant assets including three properties (F Street, City H, G Street (“the G Street property”) and J Street (“the J Street property”)) and two pensions. On his case this amounted to $1,062,140. The wife held some limited savings and superannuation entitlements but did not hold any significant assets at the commencement of the relationship.
The wife was living in Sydney and the husband was living in City H. The wife relocated to City H in late 2003 to reside with the husband where she obtained employment with AQ Company in a professional role with an income of £54,000 per annum. In May 2005, the parties jointly purchased a matrimonial home at L Street, Suburb M (“the Suburb M property”).
In January 2015, the husband accepted employment with P Pty Ltd (“P Company”) requiring him to commence work in Sydney in June 2015. In early 2015, the wife and the children relocated from the UK to Australia.
On 14 May 2015, the husband transferred 99 per cent of his ownership in the G Street property into the wife’s name. In the same year, the husband transferred his interest in two pensions to the BB Pension Scheme (“BB Pension”) and CC Pension Scheme (“CC Pension”) in Country Q.
In June 2015, the husband relocated from the UK to Australia.
In January 2016, the wife and the husband purchased D Street, Suburb E (“the Suburb E property”) for $5,000,000 in joint names with a mortgage from ANZ Bank for $3,500,000.
On 30 October 2015, the wife’s parents loaned $200,000 to the parties to be paid towards the deposit of the Suburb E property. However, this money was ultimately not required by the parties. Out of this money, $100,000 was transferred into a joint account and the other $100,000 was transferred into the wife’s personal WW Bank account.
On 19 January 2016, the wife’s parents advanced the sum of $1,000,000 to the parties to be applied to the purchase of the Suburb E property. The wife’s parents loaned a further sum of $550,000 for the same purpose in the same month.
In February 2016, the wife and the husband sold the Suburb M property and the sum of $2,276,714 was transferred from the UK to Australia. In May 2016, the parties agreed to return the loan of $550,000 to the wife’s parents. This did not take place. On 5 May 2016, the wife withdrew $100,000 from the joint account and on 23 May 2016, she withdrew a further $575,000 and deposited the sum of $675,000 into a newly opened ANZ bank account in her sole name. On 13 July 2017, the wife repaid the sum of $100,000 to her parents.
In summary, the wife’s parents loaned the wife and the husband a total of $750,000 from October 2015 to January 2016 of which $100,000 was paid back on 13 July 2017. Therefore, this results in an amount of $650,000 still owed to the wife’s parents as set out in the consent orders made on 18 February 2022.
There is a long history of litigation in this case, including a successful appeal, which I have traversed in my previous judgment Gresham & Gresham [2021] FamCA 111 at [5]–[13]. In the same reasons for judgment, I made interim property orders that the husband pay the outstanding costs ordered by the Full Court, and that the parties sell the G Street property.
On 29 October 2021, the wife’s parents, Mr and Ms YY (“the wife’s parents”), filed a joinder application seeking to obtain a repayment of various loans. Their claims were resolved by consent on 18 February 2022 on the last day of the final hearing. Orders and notations were made by consent as follows:
NOTATIONS
A.The Second and Third Respondents ask the Court to note that they provided an unconditional gift in the amount of $1,000,000.00 to the Applicant in the proceedings, which was applied and intended to be applied to the purchase of the property at D Street, Suburb E.
B.That the Second and Third Respondent and First Respondent acknowledge that Second and Third Respondent provided to the First Respondent and the Applicant, the amount of $650,000.00 by way of loan.
C.That with respect to repayment of the amount of $650,000.00 referred to above, the Second and Third Respondents agree to abide by the determination of this Court as to both the amount and, as between them, whether it is the First Respondent or the Applicant or both of them should repay any amount so ordered.
D.The Second and Third Respondent acknowledge that over and above the amount of $650,000.00 provided by them, those amounts have been provided to the applicant and that they will accept in full and final satisfaction against any claim against First Respondent in relation to those monies, the amount determined to be paid to them by this Court.
ORDERS
1.Order that the Husband pay to the Second and Third Respondent or as directed by them in writing, the amount of $111,000.00.
2.That the amount of $111,000.00 be paid as follows:
2.1As to the sum of $41,000.00 within 6 months of the date of these orders.
2.2As to the balance from the First Respondent share of the sale proceeds of the property at D Street, Suburb E or,
2.3In the event that the Court declines to order the sale or there is insufficient money available to the First Respondent from that sale then within six months of the date that Judgement is delivered.
3.That otherwise than as provided for in these Orders the Application of the Second and Third Respondents be dismissed.
4.That there is no order as to Cost between First Respondent and Second Respondent and Third Respondent.
RELISTINGS
After the conclusion of the five day trial in February 2022, the last of the written submissions in this case were received on 25 June 2022.
The matter was then relisted for mention on two separate occasions as follows:
(a)By the Court on 10 October 2022 when evidence was sought on the issue of whether the UK pension funds constitute property for the purposes of the Family Law Act 1975 (Cth) (“the Act”); and
(b)The husband filed an Application in a Proceeding on 31 January 2023 to reopen evidence and the wife responded by way of Response to Application in a Proceeding dated 1 February 2023. The matter came before the Court on 2 February 2023 and reasons for judgment in relation to the issues raised were delivered immediately before these reasons.
THE EVIDENCE
In support of her case, the wife relied on the following documents:
(a)Further Amended Initiating Application filed 3 March 2017;
(b)Her affidavit filed 24 December 2021;
(c)Financial statement filed 7 February 2022;
(d)Affidavit of Mr AR filed 11 February 2022;
(e)Affidavit of Dr AV filed 11 February 2022;
(f)Affidavit of Mr HH filed 11 February 2022;
(g)Case outline filed 12 February 2022;
(h)Written submissions filed 21 April 2022;
(i)Written submissions in reply filed 25 June 2022;
(j)Further written submissions filed 15 November 2022; and
(k)Various documents tendered during the proceedings, marked as exhibits A1–A6.
In support of his case, the husband relied on the following documents:
(a)Further Amended Response to Initiating Application filed 13 March 2017;
(b)His affidavit filed 24 December 2021;
(c)Financial statement filed 4 February 2022;
(d)Cost’s notice filed 10 February 2022;
(e)Case outline filed 10 February 2022;
(f)Amended written submissions filed 9 June 2022;
(g)Further written submissions filed 1 December 2022; and
(h)Various documents tendered during the proceedings, marked as exhibits R1–R25.
APPLICABLE LAW
This is an application under s 79 of the Act which relevantly provides:
79 Alteration of property interests
(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
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d)an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(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.
(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.
Section 79(4) incorporates the provisions contained in s 75(2) of the Act, which states:
(2) The matters to be so taken into account are:
(a)the age and state of health of each of the parties; and
(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; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(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; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), 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; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(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; and
(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; and
(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; and
(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; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(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
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In Bevan & Bevan (2013) FLC 93-545 (“Bevan”), the Full Court considered the High Court’s decision in Stanford v Stanford (2012) 247 CLR 108, which provided guidance on how s 79 was to be interpreted and implemented. Bevan endorsed the continuing application of the four-step approach articulated by the Full Court in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 (“Hickey”), but on the basis that it is a shorthand distillation of the words of s 79, as opposed to being a statutory edict. The four steps articulated in Hickey at [39] are:
(1)Identify and value the property, liabilities and financial resources of the parties;
(2)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property;
(3)Identify and assess the other facts relevant under s 79(4)(d)–(g) including s 75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
(4)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
A legal issue that arises in this case is whether I should notionally add back assets to the property pool. In the Full Court’s decision of Trevi & Trevi (2018) FLC 93-858, Murphy J explains at [27]:
The Full Court held in Omacini and Omacini that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
(Footnotes omitted)
CREDIT FINDINGS
Senior counsel for the husband submitted that this was a case where the Court needs to make findings as to the credit of the parties. The Court agrees, albeit reluctantly. There are aspects of the evidence of the husband and the wife where credit findings are necessary because of relevant facts in issue and where it is not possible to make a determination without at least taking into account the credibility of the parties.
The manner in which the husband and the wife each gave evidence in cross-examination was very different. The husband was measured and restrained in his answers. He was almost always responsive to the question he was asked. He was cooperative and courteous with cross-examining counsel. His focus was on the facts, rather than emotion.
By contrast, the wife was pervasively unresponsive in cross-examination. She was prone to give speeches, rather than to answer the question that was asked of her. She was frequently defensive, and sometimes evasive. In cross-examination a distinctive quality of self-entitlement permeated her responses. At times this increased to arrogance. This is relevant to her credit as the Court finds that this quality defined how she interpreted past events (e.g. the characterisation of the $1,000,000 provided by her parents (whether it was a loan or a gift) and the characterisation of her spending after separation). She was a combative witness at times, completely unintimidated by senior counsel for the husband in cross-examination and bordering on aggressive towards him at times. She was insouciant about the matters that she was being cross-examined about and sometimes indifferent to the circumstances of the formality of the hearing. Again, the relevance of these findings is that it manifested an intense subjectivity about past events which undermines her reliability as a historian. It was almost as if the wife was focused on an outcome that she considered just and equitable, and that facts and reality should not get in the way of her achieving that outcome. A few examples will illustrate the Court’s findings.
On day three of the final hearing (the wife’s third day in cross-examination), senior counsel for the husband suggested to the wife that she knew very well that the husband’s case was that the family’s post-separation lifestyle could not be maintained in the same way as it was before separation. She denied this. The Court finds this a disingenuous denial. The litigation history of this case, particularly after it was remitted by the Full Court, strongly supports what senior counsel put to the wife. The interim orders made by McClelland DCJ on 2 April 2019, and the reasons provided, palpably demonstrate the husband’s concern as articulated by senior counsel, and highlight that so much of the maintenance and support the husband was ordered to provide was coming out of capital rather than income. The Court will find that there was a significant amount of post-separation expenditure incurred by the wife that was sourced from borrowed funds in circumstances where the wife sought to make the husband responsible for part of this debt. Much of the wife’s post-separation expenditure can be understood by reference to the Court’s finding above as to the wife’s attitudes which, in turn, inform the Court’s credit findings against her.
There was an issue in relation to the $1,000,000 that the wife’s parents generously provided to the family so that they could acquire the Suburb E property. Throughout the wife’s evidence in cross-examination she insisted that this was a loan rather than a gift, even though her own written submissions filed 21 April 2022 referred to it as a gift. By contrast, the husband has always characterised it as a gift. Ultimately, even her parents conceded that it was a gift. The wife’s evidence in the previous hearing before Henderson J was that the monies were provided by way of gift.
Another example is the wife’s duplicity in respect of a further short-term loan of $550,000 provided by her parents. The sum of $550,000 became available to the parties from the sale proceeds of the Suburb M property. The Court finds that the husband and wife agreed that this amount should be repaid to the wife’s parents. What in fact occurred was that the wife retained the $550,000 herself without the husband’s knowledge or consent. She established a new ANZ bank account specifically for the purposes of receiving the funds. These events occurred on or around 23 May 2016, less than a month before the date of separation. Curiously, the wife sought to distance herself from any impropriety surrounding this transaction by contending that it occurred during the marriage (i.e. before separation). From the Court’s perspective the fact that this transaction took place shortly before separation is an inadequate response to the husband’s allegation, accepted by the Court, that her dealings with the $550,000 were duplicitous.
Senior counsel for the husband made two specific submissions in relation to the wife’s credit. Firstly, he submitted that the wife was a witness prepared to lie for financial advantage. The main example presented related to the $1,000,000 provided by the wife’s parents and her insistence that it was a loan when she had previously sworn that it was a gift and in circumstances where her parents ultimately agreed that it was a gift. The Court agrees that the wife clearly lied about this but acknowledges that she now accepts it is a gift. The benefit that she perceived from lying, financial or otherwise, is not entirely clear to the Court.
The wife’s evidence casts a shadow of doubt over all of her evidence. This does not mean that the wife’s evidence in its entirety should be rejected but rather that the Court must be discerning about her evidence, particularly in relation to financial matters.
The second submission made by senior counsel for the husband was that where the Court is asked to find that on any matter of fact where the husband’s evidence differs from that of the wife, the husband’s evidence is to be preferred. The Court does not accept this submission despite its allure on the facts of this case. A more cautious approach needs to be adopted having regard to the facts in issue, and all of the evidence before the Court. Nonetheless, the Court repeats its observation made above that the Court does need to be discerning about the wife’s evidence, particularly in relation to financial matters.
BALANCE SHEET
At the conclusion of the evidence, the Court was provided with an agreed joint balance sheet which became exhibit R24. This document is reproduced below and, for the purposes of identification, the Court notes that this is the final joint balance sheet provided to the Court by way of email on 23 February 2022 (“the balance sheet”). This document is reproduced below:
ASSETS Ownership Description Wife/de facto partner's value Husband/de facto partner's value 1 Joint D Street, Suburb E 10,800,000 10,800,000 2 Joint G Street, City H UK – Gross Sale proceeds – (£116,677) 218,771 218,771 3 Husband interest in J Street, City H UK– (GBP 195,000) 368,550 182,813 4 Wife Contents – Suburb E 41,910 41,910 5 Husband Contents – Rented premises 4,000 4,000 6 Husband Motor Vehicle 1 24,450 24,450 7 Wife Motor Vehicle 2 3,500 3,500 8 Joint UK B Bank investment bond (GBP 1,587) – 21 September 2021) 4,673 4,673 9 Joint ANZ account #...12 0 NIL 10 Joint ANZ account #...43 0 NIL 11 Joint AW Bank #…/1 NK NK 12 Joint AG Bank #...04 & #...13 (subject to verification) 375 375 13 Wife WW Bank Account #...36 1,918 1,918 14 Wife ANZ account # …73 0 Nil 15 Wife Westpac #...64 0 - 16 Wife Westpac #...38 0 - 17 Wife Westpac #...82 0 - 18 Wife Westpac #...50 0 - 19 Wife XX Bank #...34 9 9 20 Husband ANZ account #...52 (6.09.2021) (subject to verification) 2082 1,161 21 Husband ANZ account #...98 3 3 22 Husband ANZ account #...52 0 - 23 Husband ANZ account #...53 12 12 24 Husband ANZ account #...52 Closed Closed 25 Husband AX Finance Account NK Nil 26 Wife Credit due in respect to wife’s medical treatment 0 Nil 27 Husband Rental Bond 0 Nil 28 Wife Jewellery 5,000 50,000 29 Husband 2 designer Watches and Wedding ring 12,000 7,500 30 Husband B Bank Account ITF X …80 [£15,295.27 at 24.01.2022] 28,678 28,678 31 Husband B Bank Account ITF Y …21 [£10,490.87 at 24.01.2022] 19,669 19,669 32 Husband B Bank Account ITF Z …50 [£5,334,.91 at 24.01.2022] 10,001 10,001 33 Husband ANZ Account #...57 ITF X 1,578 1,578 34 Husband ANZ Account #...27 ITF Y 1,275 1,275 35 Husband ANZ Account #...11 ITF Z 1,291 1,291 36 Wife CBA Account #...81 ITF X 50 50 37 Wife CBA Account #...73 ITF Y 200 200 38 Wife CBA Account #...65 ITF Z 250 250 39 Wife AZ Trust Account (Cannot be an asset – funds from borrowing by wife post-separation to be excluded) NIL NIL Total Assets $ 11,550,245 $ 11,404,086
ADDBACKS Ownership Description Wife/de facto partner’s value Husband/de facto partner’s value 40 Husband Funds retained by husband from sale of Antiques in UK 10,000 400 41 Wife Interim costs to wife from B Bank Account pursuant to Orders 19 October 2018 by McClelland J and Further Orders made 2 April 2019 by McClelland J to be read conjunctively. Wife received funds on following dates:
20 December 2018 - $50,000 (wife’s legal fees – Order 3)
3 April 2019 - $50,000 (wife’s legal fees – Order 3)
April 2019 - $18,932.50 (Paid to wife for medical treatment – Order 2 Husband didn’t comply with orders 19 October 2019 for payment of $40,000 and only paid $18,932.50 upon further orders made 2 April 2019)
7 June 2019 - $30,000 (wife’s legal fees – Order 3 noting the Order on 2 April 2019 was for payment of $45,000)
Funds transferred from B Bank Account to Joint ANZ Account pursuant to Orders.130,000 185,000 42 Wife Interim Orders made 7 May 2018 for payment of $50,000 to the Applicant from Joint B Bank Account. Wife received $47,702.
Wife transferred $17,000 to Trust Account of BA Lawyers May 2018 to August 2018. Balance applied to wife’s living expenses.17,000 50,000 43 Wife In May 2016 – Wife withdrew $575,000 from joint bank account and paid into newly set up bank account in her sole name (less $100,000 repaid to parents) (Wife concedes $161,829 applied to legal fees from borrowings per para 228 of Wife’s affidavit) 161,829 44 Wife In May 2016 – Wife withdrew $575,000 from joint bank account and paid into newly set up bank account in her sole name (less $100,000 repaid to parents) (Wife concedes amounts paid in para 228 (items 68-78 & 120) of Wife’s Affidavit) 39,145 475,000 45 Wife In 2016 – Wife withdrew $100,000 from joint bank account and paid into her WW Bank account in her sole name
On 18 Feb 2016 husband requested and the wife transferred $100,000 into the parties joint ANZ account with the source of funds the $200,000 received from the Applicant’s parents as loan (accepted by the Respondent in the proceedings) to assist with the deposit to purchase the Suburb E property. Wife asserts the funds were spent on reasonable living expenses0 100,000 46 Husband Legal fees paid from capital 110,000 74,500 Total $ 467,974 $ 884,900
LIABILITIES Ownership Description Wife/de facto partner's value Husband/de facto partner's value 47 Joint ANZ mortgage – Suburb E 1,925,580 1,925,580 48 Wife Loan from wife's parents to parties for purchase and deposit on purchase of D Street
as confirmed by Orders made 18 Feb 2022 as between the First Respondent and Second and Third Respondent650,000 NIL 49 Wife Loan from wife’s parents’ post-separation for various items – $409,212 less $165,000 applied to wife’s legal fees 244,212 NIL 50 Husband Loan from Husband’s dad to pay for credit card used by wife – (GBP 5,000) NIL 9,375 51 Joint ANZ Bank account #...43 NIL 394 52 Wife ANZ Credit Card #...36 debt in respect of overseas legal fees 0 626 53 Wife Personal loan owing to Mr BC 25,000 25,000 54 Wife FEE Help debt E 40,000 E 40,000 55 Wife Monies repayable to Services Australia re Family Tax Benefit overpaid 4,000 4,000 56 Joint Monies repayable to HMRC for Child Benefit overpayment NK NK 57 Wife Income Taxation liability with respect to rental income from G Street from 2015 to 2021 financial years not declared by husband NK Nil 58 Wife Taxation liability with respect to proceeds from B Bank Investment Bond NK Nil 59 Wife CGT liability FY 2022 arising from G Street sale FY 2022 NK 2,538 60 Husband CGT liability arising from G Street sale NK 950 61 Husband CGT liability on future sale of J Street (Based on GBP 190,000 sale after expended x50% share) NIL 17,095 62 Husband Tax due to ATO from sale of P Company Shares 0 23,045 63 Wife Loan from AL Finance (previously BD Finance) 0 268,486 64 Husband Legal fees – costs outstanding to Watson & Watson & Bob Lethbridge from 2019 0 109,386 65 Husband Legal fees – costs outstanding to Watson & Watson & Bob Lethbridge in preparation for Feb 2022 case 0 32,151 66 Husband School Fees to Wife’s parents 0 111,000 67 Husband Outstanding school fees – U School 0 5,516 68 Husband Outstanding school fees – JJ School 0 12,738 Total Liabilities $ 2,888,792 $ 802,587.880
SUPERANNUATION Member Name of Fund Type of Interest Wife/de facto partner's value Husband/de facto partner's value 69 Husband P Company Superannuation Accumulation 110,453 110,453 70 Wife Super Fund 1 No …04 Accumulation 96,941 96,941 71 Husband BB Pension (£1,542,451) See below 2,892,096 72 Husband CC Pension (£591,107) See below 1,108,326 73 Husband VPLC Pension (£345,992) See Below 648,735 Total $ 207,394 $ 4,856,551
FINANCIAL RESOURCES Ownership Description Wife/de facto partner's value Husband/de facto partner's value 74 Husband 224 P Company Restricted Stock Units vesting over the next four years until 2025 – Share price USD $291.31 – E 92,007 Nil 75 Husband BB Pension – Account …80 (£1,542,451 - 31.12.2021) 2,915,232 Nil 76 Husband CC Pension – Account …55 (£591,107 - 31.12.2021) 1,117,192 Nil 77 Husband VPLC Pensions (£355,213.41 - 22.10.2021) 671,353 Nil 78 Husband Super Fund 2 Not Known Nil 79 Husband Claim against VPLC Not Known Nil Total $ 4,795,784 $ 0
NET TOTAL ASSETS (including Superannuation; excluding Financial Resources) $ 9,336,821 $ 14,557,657 NET TOTAL ASSETS (including Superannuation; and including Financial Resources) $ 14,132,605 $ 14,557,657
In the notes attached to exhibit R24, the Court is advised the wife and the husband use different GBP to AUD exchange rates. For the purposes of evaluating the parties’ UK assets, the Court will adopt the husband’s exchange rate of GBP1:AUD1.875 rate.
Assets
The first issue for determination is item 3, the husband’s interests in the J Street property. The parties agree that the total value of the property is GBP195,000 which amounts to AUD368,550 (using the husband’s exchange rate). However, the husband contends that he holds a 50 per cent interest in the property on trust for his mother, who survived his father. The written declaration of trust dated 3 November 2004 was in evidence and became exhibit R15. The document was prepared by City H solicitors. It recites that the property was purchased in the husband’s sole name, but financed in part by the capital contribution of his mother. The document speaks for itself.
The wife was aware of the existence of the declaration of trust before the hearing. She nonetheless maintained that the husband owned the entire interest in the J Street property, notwithstanding paragraph 305 of her affidavit in which she deposes to “[Mr Gresham’s] 50% share…”. Further in her affidavit the wife acknowledged that the husband had told her that the property was purchased with his father using funds obtained from the sale of his parents’ holiday home in Country BF. She knew that the husband’s contribution was by way of a £37,000 mortgage, in his name only. She deposed that she only recently came to appreciate that the property was, in fact, purchased in the husband’s sole name.
Notwithstanding the above, the wife would not accept the truth of the husband’s representations to her that he only held a 50 per cent interest. The wife was cross-examined. She said nothing that would assist the Court to understand her contention about the ownership of the property. It was an unhelpful, time-consuming distraction. The Court finds that the husband has a one-half interest in the property at item 3 on the balance sheet, and thus the value contended by him is accepted.
The next contentious item is item 20, funds held in the husband’s ANZ bank account #...52. There is no evidence that will enable the Court to make findings in relation to this item. The husband’s figure will be adopted as an admission against interest.
Items 28 and 29 represent the jewellery of the husband and the wife. There was no evidence about these items so, once again, the figure contended for by the wife in relation to her jewellery and that of the husband in relation to his jewellery will be adopted as admissions against interest.
Items 30–38 represent savings held by the parties in trust for their children. The existence of a trust is an assertion made by both parties. In the circumstance, and given the admission they each make, it must follow that they are not the beneficial owners of the funds held in this account. The items in question should not appear on the balance sheet.
Addbacks
There is an issue about item 40, being funds allegedly retained by the husband from the sale of antiques in the UK. There is no evidence quantifying the wife’s claim at $10,000. Accordingly, the Court will adopt the husband’s value as an admission against interest.
In relation to item 41 the parties agree that at least $130,000 should be added back as this money represents assets accumulated before separation that had been realised and applied to meet legal fees of the wife. However, the husband contended for an addback of $185,000 representing the total amount that the wife received pursuant to a series of interim orders made between 19 October 2018 and 7 June 2019. The wife contends that only the amount that she received and paid to her lawyers, $130,000, should be added back.
Doing the best the Court can, it seems that the husband calculates the figure of $185,000 by totalling the following amounts as described in the balance sheet:
20 December 2018 - $50,000 (wife’s legal fees – Order 3)
3 April 2019 - $50,000 (wife’s legal fees – Order 3)
April 2019 - $18,932.50 (Paid to wife for medical treatment – Order 2 Husband did not comply with orders 19 October 2019 for payment of $40,000 and only paid $18,932.50 upon further orders made 2 April 2019.
7 June 2019 - $30,000 (wife’s legal fees – Order 3 noting the Order on 2 April 2019 was for payment of $45,000)
(As per the original)
The wife contends that she did not receive the $40,000 and the $45,000. In lieu of those amounts, she contends she instead received $18,932.50 and $30,000 respectively. This is correct based on the enforcement application that was heard by McClelland DCJ and in respect of which judgment was delivered on 2 April 2019. His Honour made orders for the husband to pay $18,932.50 (instead of the $40,000) (Order 1) and “up to $45,000” (Order 3). With respect to the latter, the wife contends she received $30,000 and not $45,000 (see item 41 of the balance sheet and paragraph 20 of the wife’s affidavit). The Court accepts this.
The correct figure should thus be $148,932.50.
A similar issue arises in relation to item 42. The husband seeks an addback for all of the interim costs paid pursuant to the orders made on 7 May 2018, but the wife seeks to add back only the amount actually paid to her lawyers, being $17,000. Once again, the wife contends that the balance was applied towards her reasonable living expenses but gives no evidence about this. When all of the evidence of the wife about her post-separation expenditure is considered, including about expenditure not related to items 41 and 42 of the balance sheet, it indicates unreasonable expenditure for which the husband should not be made to share. This is discussed in detail below.
Another issue that arises is that the wife contends she only received $47,702. The husband deposes that he paid the full amount by using a combination of available funds and his earnings. The Court prefers his evidence, over that of the wife, based on credit findings already made. The addback at item 42 should be as contended by the husband.
Item 43 is an addback contended by the wife in the sum of $161,829. She contends this is the amount applied towards her legal fees out of the $575,000 borrowed from her parents that remained in her account after she repaid $100,000 to her parents. As will be seen below, the Court will find that the wife should be responsible for 75 per cent of the $575,000 loan. Any amount the wife spent on legal fees thus came primarily from her own money and should not be added back.
At item 44, the wife concedes an addback of $39,145 which is, in effect, a concession on her part of unreasonable expenditure. The context of this is paragraph 228 of her trial affidavit. Here the wife deposes to the use and application of $675,000 that she had retained from the sale proceeds of the Suburb M property, which funds were to be used to reduce the parties’ indebtedness to the wife’s parents. It is accepted that $100,000 was in fact repaid to her parents. More will need to be said about paragraph 228 of the wife’s affidavit below. The wife was subjected to detailed cross-examination about her expenditure with the husband contending that far more than the conceded $39,145 should be characterised as unreasonable expenditure, and thus should be added back. Rather than allow the addback as conceded by the wife, this will be accounted for in discussing who should bear the liability for the $575,000 loan from the wife’s parents.
The husband contends that the amount that should be added back at item 44 is the entirety of the $575,000 that the wife spent, which excludes the amount of $100,000 repaid to the wife’s parents. In effect, the husband was contending that in the circumstances of this case the entirety of this expenditure was unreasonable. The Court will find that the wife is solely liable for 75 per cent of the $575,000 and the parties are jointly liable for the remaining 25 per cent, so no addback is appropriate.
At item 45, the husband contends for an addback of $100,000, but the wife opposes this, not on the basis that she did not have the funds, but rather that they were spent on reasonable living expenses. Thus, there is no doubt that the wife had $100,000, and that the source of these funds was the wife’s parents, by way of loan. The onus was on the wife to satisfy the Court as to the reasonableness of her expenditure. She has not discharged this onus. The funds in question, however, are already part of the funds the Court has found should be the wife’s sole responsibility as to 75 per cent. Thus, no addback is appropriate.
Item 46 is a conceded addback of the husband’s legal fees paid from capital, save as to quantum. He contends for $74,500, while the wife contends for $110,000. The notes to the balance sheet each party added in relation to this item leads the Court to conclude that the difference relates to tax payable on the capital asset realised to pay the husband’s legal fees. The Court prefers his evidence that the figure is after-tax. In the circumstances the figure of $74,500 will be accepted as an admission against interest.
Liabilities
In item 48, there is a dispute about whether the loan from the wife’s parents of $650,000 should be treated as a liability on the balance sheet. The wife contends that the whole amount should be included (save for a concession about unreasonable expenditure), whereas the husband contends that none of the loan should be included and, in effect, it should be treated as the wife’s personal liability. Save for the $100,000 which the husband conceded in fact paid off the parents’ loan, for the reasons set out below, the Court finds that 75 per cent of the balance should be treated as the wife’s personal post-separation liability.
A significant issue arises in this case as to the allocation of responsibility between the parties of the monies provided by the wife’s parents over and above the $1,000,000. The wife’s case is that this loan, totalling $650,000, should appear on the balance sheet as a liability which is, therefore, shared by both parties. The husband’s case is that he should bear no responsibility for this loan, having regard to the purpose for which the wife used the funds. This issue overlaps with the issue of some of the contended addbacks discussed earlier in these reasons.
The wife’s expenditure
The husband acknowledged that a total of $650,000 remains outstanding to be repaid out of the funds provided by the wife’s parents and applied towards the purchase of the Suburb E property and that $100,000 was repaid for this purpose. However, the husband contends that he provided the wife with money that would have enabled her to repay this loan, but instead she used it for her own purposes. Apart from a concession by the wife as to a relatively small amount ($39,145) as inappropriate expenditure, the wife’s case is that all of the monies in question were used for the benefit of the family, consisting of the children and herself.
At paragraph 228 of the wife’s trial affidavit, she provides a detailed schedule of expenditure in an attempt to explain how the $550,000 was expended, instead of being used to repay her parents. The wife emphasised that paragraph 228 merely reflected her best endeavours to accurately detail how the $675,000 available to her was applied, but not as a forensic exercise. She conceded that some of the figures are estimates. In her written submissions, she also conceded that the list of expenditure was not produced by her as an assertion that the expenses contained therein were all reasonable living expenses (paragraph 72). It was simply an account of the use of the funds in question.
The wife conceded that, for example, $161,829 was applied towards her legal costs and should be added back in addition to the $39,145 previously referred to. The rest, the wife contended, was not expenditure evidencing a course of conduct, whether reckless or otherwise, which had the “overall economic effect or consequence of inappropriately reducing or minimising the asset pool in this case” (paragraph 79 of her written submissions). On her behalf, it was contended that her expenditure on her and the children’s living expenses was not extravagant and did not attract any exercise of discretion by this Court (Kowaliw & Kowaliw (1991) FLC 91 -092).
By contrast, the husband contended that the wife’s expenditure was either reckless or wasteful, or discretionary expenditure made without his knowledge or approval, in circumstances where he was providing for the needs of the family to the best of his capacity and consistent with his legal obligations, having regard to his income and resources. He contended that once the wife applied for and obtained maintenance for herself and child support, his obligation had been satisfied and thus any further debt incurred by the wife for living expenses was personal to her and should not be shared with him. He contends that he was neither aware nor consulted about the wife’s expenditure, and indeed had no control over the expenses being incurred. At paragraph 5.44 of his submissions filed 23 May 2022, senior counsel for the husband stated:
An indulgent parent of a party to a marital dispute may well be prepared to provide funding for expenses their child wishes to make. But the law does not enable generosity to be converted to debt because the beneficiary of that generosity would like it to be so.
The essence of the husband’s case was that if the expenditure was unreasonable, the monies should be repayable by the wife to her parents.
In deciding this issue, the Court must consider the evidence in relation to two important matters: the financial support provided by the husband at the relevant times; and the reasonableness of the expenditure of the wife.
The husband gives extensive evidence about these issues, and unless indicated to the contrary, the Court accepts his evidence. His focus was on the unreasonableness of the expenditure in the context in which it was incurred i.e. at a time when it could not be afforded, and the wife was living well beyond her means.
Based on the wife’s own evidence in cross-examination, in May 2016, the wife had about $660,000 in bank accounts controlled by her (Transcript 15 February 2022, p.33 line 29). By the end of October 2017, only about $7,000 remained (Transcript 15 February 2022, p.33 line 44).
The financial support provided by the husband
Between May and October 2016, the husband was paying all costs associated with maintaining the former matrimonial home, which was occupied by the wife and the children.
In November 2016, some of the husband’s P Company share options vested. The Court accepts his evidence that the money was predominantly spent for the benefit of the family, as well as making a payment towards the mortgage.
In January 2017, the wife vacated the family home and used it as a holiday letting. The amount she received is unclear. She mentioned the figure of $10,000 but the Court has reservations about this evidence. It is an implausible figure given her evidence about what the house was rented out at in 2019 to 2020. The husband, at this time, continued to pay the mortgage and outgoings on the home. That year, and in order to meet both his and the family’s expenses, he sold K Company shares realising over $80,000, and further P Company shares. At paragraph 129 of his affidavit, the husband deposed, and the Court accepts, how the share sale proceeds were used. Where any asset was sold, and the money used towards the payment of his legal costs, the husband has conceded that there should be an addback.
On 6 September 2017, the husband consented to interim orders that were made by Le Poer Trench J. He agreed to pay by way of spousal maintenance the mortgage payments on the former matrimonial home, the utilities, insurance and council rates on the same, as well as health insurance for the family. He deposed that the average monthly cost of these payments was $12,423. This was at a time when his monthly salary, including bonuses but after payment of child support, was $17,740 per month. In addition, he was paying school fees at $5,393 per month. His monthly outgoings for the benefit of the family were $17,816 per month, in excess of his net monthly income.
The husband contends, and the Court accepts, that in order to fund this shortfall as well as his own living costs, he was compelled to sell assets, including the K Company and P Company shares. The Court has already found that the wife was aware that the only way that the husband could fund the payments being made for the benefit of the family was through asset sales.
The relevant period for present purposes is May 2016 to October 2017. The findings of the Court above indicate that all of the husband’s income was being applied towards meeting his obligations to his family both pursuant to a child support assessment, the order of the Court dated 6 September 2017, and further voluntary commitments to, for example, the private school fees of the children.
The husband gives evidence about his financial circumstances in 2018–2021. Orders were made by Rees J on 7 May 2018, McClelland J (as his Honour then was) on 19 October 2018, and by myself on 12 March 2021. The Court is amply satisfied from the evidence that in 2018, for example, the payments to which he was committed for the benefit of the family exceeded his monthly income and in fact could only be funded by further asset sales.
The trend continued in 2019. In January 2019, the wife again used the family home as a holiday letting and retained the funds. She said she only received $7,000 but once again the Court is sceptical about this. Later, in September 2019, she entered into a 12-month lease of the house at $19,066 per calendar month. Towards the end of 2019 Henderson J ordered that, in the circumstances, the husband no longer had to pay spousal maintenance, and the wife had to pay the mortgage out of the rental she received.
In October 2020, the wife’s parents commenced making payments on the mortgage, and then in November 2020, the wife and children returned to occupy the home.
Thus during the relevant period in 2016–2017 this Court comfortably concludes that the husband met all of his legal obligations towards maintaining the wife and the children and, in fact, did more. Moreover, the only way that this could be achieved was by the application of sale proceeds of assets after his monthly income was fully utilised.
Reasonableness of the wife’s expenditure
The focus now turns to the wife’s evidence about how she expended the moneys in question. The onus of proof was always on the wife. Paragraph 228 of her trial affidavit is her attempt to discharge that onus. She was extensively cross-examined about this.
The wife summarised her expenditure under certain headings. For example, car maintenance was $6,200; expenditure on the children was $108,208; donations were $17,300; entertainment was $11,845; food was $15,844; furniture was $41,910; health (massages) was $6,300; expenditure on the house was $31,029; legal fees were $161,829; loan to a third party was $10,000; repayment part loan to the wife’s parents was $100,000; medical was $8,150; office equipment was $3,700; property maintenance was $29,615; travel was $10,775; personal expenditure on the wife was $69,745; expenditure characterised as wife and children was $38,607. She totals this at $671,057.
A number of matters became apparent about this expenditure either from the wife’s affidavit itself, or her cross-examination. For example:
·Some of the expenditure was incurred after October 2017.
·The addback of legal fees paid of $161,829 was conceded if the loan appeared on the balance sheet. There is no add-back for the wife’s legal fees. This means that the wife borrowed her legal fees from her parents. There is no discernible basis for including this liability on the balance sheet. It cannot be treated as a reasonable living expense.
·$100,000 was repaid to her parents, thus reducing that liability. This was reasonable expenditure.
·The wife conceded that expenditure for donations and entertainment, and a loan for $10,000 that she made to a third party, should not be treated as reasonable living expenses, and thus should be added back. The relevant items are numbered 68–78 and 120, and total $39,145.
·$41,910 was spent on buying furniture for the former matrimonial home without consulting the husband. This amount appears at item 4 of the balance sheet as the agreed value of the contents of the former matrimonial home. The expenditure was reasonable and legitimate.
·The wife claims school fees totalling $31,000 for Term 3, 2016 and Term 4, 2017 for the children. The wife offers no evidence about the Term 3, 2016 school fees. By contrast the husband at paragraph 113 of his affidavit deposes to funds from a joint account being used to pay school fees that year. In her affidavit at paragraph 271 she deposes to paying the Term 4, 2017 school fees from funds received as a result of an insurance claim arising from a loss of a diamond earring. Accordingly the wife’s claim to have used the borrowed funds for this purpose is factually wrong, and this expenditure cannot be treated as reasonable.
·Some of the expenditure is described in very general terms (e.g. item 81 additional grocery shopping, $10,500; item 80, food, dining out/takeaway, $4,200; item 27 extra-curricular activities $4,200; and item 114 BM Company bills and credit purchase for X $10,590). Thus a total of $29,490 is not allowed as reasonable.
·At item 3 the wife claims as reasonable expenditure $6,000 for au pairs, but offers no explanation for the reasonable necessity of this given that she deposes to not being in employment until the period August 2021 to October 2021 (paragraph 245 of her affidavit). This is not reasonable expenditure.
·At item 105 the wife engaged cleaners in April 2016 to May 2017 for $6,000. The reasonable necessity for this is not established. For example she does not depose to the use of cleaners during the marriage. This is not reasonable expenditure.
·Other personal expenditure included: beautician ($3,000), skin appointments ($7,100), laser treatment ($560), hair appointments ($3,600), cosmetics and face moisturisers ($4,240), psychic readings ($500), clothes ($15,500), shoes, handbag and glasses ($9,500), perfume ($650), tennis lessons ($1,250), dating apps ($500), gym memberships ($2,200), the total cost of jewellery purchased and repairs (items 145–148: $7,150) less the conceded value of her jewellery ($5,000) i.e. $2,150 and BG Company membership ($1,020). The Court considers all of these excessive personal expenditure the responsibility of which should not be shared by the husband. The total of $51,770 is not considered reasonable in the circumstances.
Thus, during the period May 2016 to October 2017 the wife spent at least $660,000 including her legal fees, repayment of loan, and conceded unreasonable expenses.
Throughout this period, the husband was paying the mortgage and outgoings on the former matrimonial home, child support as assessed, spousal maintenance and school fees. As this consumed the entirety of his net monthly income, joint assets were liquidated. The wife seeks no addback as a result of these asset sales.
It is informative to juxtapose the evidence of both the husband and the wife at certain points in time. For example, in item 167 at paragraph 228 of the wife’s affidavit referring to January 2018, she spent $1,020 on her BG Company membership. At about the same time, on 15 January and 13 February 2018, the husband sold a S Company endowment policy for $33,636, which was spent on a combination of his legal fees (agreed to be added back), the mortgage on the home, school fees, insurance on the home, and tax debts incurred by him as a result of the sale of shares.
In relation to the reasonableness of expenditure, the Full Court in C & C [1998] FamCA 143 said at [46]:
[46]Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. Providing modest support for their adult children or taking not inappropriate holidays for themselves seems to fit comfortably within that description.
The Full Court referred to the need for parties to properly get on with their life. This does not mean that the wife could get on with a lifestyle post-separation which was beyond her means, and which was largely funded by her generous parents, but then expect the husband to subsidise this lifestyle.
In M & M [1998] FamCA 42, the Full Court stated at [2.11]:
[2.11]There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.
Reasonableness or extravagance is a matter for this Court having regard to all the evidence. There are two related issues: firstly, characterising expenditure, or a pattern of expenditure, as excessive and unreasonable; secondly, quantifying the same in the specific context of a particular case. Thus in this case the context is determining to what extent, if any, a liability should be allowed on to a balance sheet with the consequence that it is shared between the parties.
As identified above, the onus of proof was on the wife to disclose to the Court sufficient evidence to allow it to determine the question of the reasonableness of her expenditure in the period in question. The evidence she has given is fragmented and incomplete. The Court’s broader reservations about the wife’s financial evidence have already been noted. The calculations undertaken by the Court above are neither conclusive nor comprehensive. They give but a faint taste of the likely reality rather than an accurate depiction of it. The Court finds unreasonable and extravagant expenditure in the relevant period, in the sense of it being well beyond the family’s means at that period in time.
But how should it be quantified in this case, especially when the party committing the wasteful expenditure is the only one who can accurately inform the Court of the precise nature and purpose of this expenditure, but has not done so? Family law generally eschews a mathematical approach to the assessment of contribution. This principle also applies in the present context. A mathematical approach would not be just and equitable in the present circumstances, for reasons articulated above. Doing the best the Court can on the fragmented and limited evidence of the expenditure in question, but drawing on much broader observations about the evidence including as to the wife’s credibility on financial matters, the Court concludes that 75 per cent of the expenditure in the relevant period was unreasonable and excessive. Thus 75 per cent of the loan from the wife’s parents should be treated as the wife’s personal post-separation liability, to be taken into account generally under s 75(2), and 25 per cent of the said loan will appear on the balance sheet as a liability to be shared between the parties.
Item 49 is a further loan from the wife’s parents after separation. This is the wife’s personal post-separation liability.
In relation to item 50 the wife disputes an alleged loan from the husband’s father to pay for the BH Company credit card used by the wife. The wife deposes that before separation the card was used to meet living expenses, and that after separation the card was used to pay for school fees, as the husband “was threatening not to pay for the school fees” (paragraph 10.0 of the wife’s reply submissions). The husband deals with this at paragraph 110 of his affidavit. He deposes that between 9 October 2016 and 28 November 2016 the wife spent £9,300 on the BH Company card, equating to approximately $15,000. He concedes that much of this was on the children. He did not become aware of the expenditure until his father sent him a statement. The husband deposes that he borrowed £5,000 from his father in order to pay the debt off in full.
It was, in the circumstances of this case, reasonable expenditure of the wife. It is not clear to the Court why the wife did not use funds seemingly available to her at the time. Equally it is not clear to the Court why the husband had to borrow from his father. In the circumstances, the Court exercises its discretion not to include the loan on the balance sheet, whilst acknowledging it as a relevant debt for the purposes of s 75(2) of the Act.
Items 51 and 52 appear to be debts of a relatively minor nature, the purpose of which is not entirely clear. They will not be included in the balance sheet.
Item 53 is the wife’s personal loan obtained in August 2018. At paragraph 165 of her affidavit, the wife deposes that the loan was obtained in circumstances where she had limited access to funds, and was unable to meet her general living expenses and those of the children. The existence of the loan is accepted. It is unclear why it should be included on the balance sheet. The debt will be taken into account in a general sense under s 75(2).
In relation to item 54, a FEE-HELP debt of $40,000, presumably this relates to postgraduate studies through BK University in which the wife enrolled in 2018. In circumstances where the husband was paying spousal maintenance as well as child support it is unclear why this debt should appear on the balance sheet, as opposed to being taken into account for s 75(2) purposes.
Items 59–62 relate to capital gains tax and income tax liabilities. It is by no means clear that these liabilities will actually be incurred and, if so, their quantum. None of the liabilities should appear on the balance sheet, but will be acknowledged in a general sense for the purposes of s 75(2) of the Act.
HOW MANY POOLS OF ASSETS?
In this case there are several distinct categories of assets and financial resources. There are non-superannuation/pension assets which are clearly property for the purposes of the Act. There is superannuation in Australia which is treated as property for the purposes of the Act. There are the Country Q pension entitlements which the Court has found is property for the purposes of the Act. Then there are financial resources which include the husband’s English pension fund and his P Company restricted stock units.
The Court will adopt three pools for the purposes of assessing contribution and future needs. Pool one will consist of all of the non-superannuation/pension assets, together with the Australian superannuation entitlements. Pool two will consist of the husband’s Country Q pension entitlements. Pool three will consist of the financial resources.
Specific comment needs to be made in relation to pool three. The UK pension fund and the P Company restricted stock units are financial resources, not property. Notwithstanding that, the husband in his orders proposes to, in effect, treat the UK pension fund as it if were property, by inviting the Court to allocate to the wife her share in this pension fund but payable out of one of the Country Q pension funds. He does not make this concession in relation to the P Company restricted stock units.
The value of each pool, to the extent that it can be ascertained, is as follows:
Pool one: $9,685,737.5
Pool two: $4,000,422
Pool three: $740,742
ASSESSMENT OF CONTRIBUTION
Contributions are to be assessed holistically (Hoffman & Hoffman (2014) FLC 93-591; Fields & Smith (2015) FLC 93-638). The issue for the Court is whether each party contributed to the maximum of their respective capacities and abilities, within their various roles (Wallis & Manning (2017) FLC 93-759 at [122]).
On behalf of the wife, it was contended that when the contributions of both parties are assessed holistically, both before and after separation, the Court would be satisfied that each party has contributed to the maximum of their respective capacities and abilities within their various roles. The wife’s case acknowledged the initial substantial contribution of the husband, but submitted that the wife’s financial contribution of $1,000,000, being the gift from her parents in 2015 which was used to buy the former matrimonial home, was a similar substantial contribution.
The husband’s case was more nuanced. It is clear to the Court that he did not intend his submissions about contribution to derogate from his case about the wife’s reckless expenditure of money after separation, at a time when he was honouring his legal, and arguably moral obligations, to the full extent of his capacity. As will have become apparent, there are other ways of dealing with this issue that do not interfere with the assessment of contribution.
The husband contended that other than the weight to be attached to the husband’s initial contribution, their respective contributions should otherwise be treated as equal. The husband’s case acknowledges the significance of the $1,000,000 gift from the wife’s parents, and that this should be treated as a contribution through her.
The husband submitted that overall, a contribution should be assessed as to 55 per cent in his favour. In simple terms, he contended that the assets he had at the date of cohabitation (the three real properties and his pension/superannuation entitlements) all warranted an assessment of contribution as to five per cent more to him.
The Court disagrees. Consistent with the Full Court’s decision in Jabour & Jabour (2019) FLC 93-898, this Court must weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation. It is a holistic exercise. The Court must give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. The husband made a greater financial contribution at the commencement of the relationship, whereas the wife’s greater financial contribution was towards the end of the relationship. Each of these diverse contributions were valuable to them. The Court cannot see any warrant for assessing contribution as to 55 per cent, in favour of the husband. Contribution as at the date of trial will be treated as being equal, and will be applied to all pools.
AN ADJUSTMENT UNDER S 75(2)
The wife contended for an adjustment in her favour of 10 per cent under s 75(2) of the Act. Once again, the husband’s submissions in this regard were more nuanced. He did not wish any submission about s 75(2) matters to derogate from his case about the wife’s reckless and wasteful conduct in the post-separation period. Nonetheless, the husband frankly acknowledged that he has a greater earning capacity than the wife, who will have the greater share of the care of the children, notwithstanding the fact that he will have substantial and significant time. Thus, the husband conceded a 10 per cent adjustment under s 75(2) to the wife, but this should only apply to the sale proceeds of the former matrimonial home, and not to the superannuation assets and other financial resources available to him.
It is hard to see the juridical basis of the distinction that the husband draws. The Court infers that the husband’s case is that by giving the wife an extra 10 per cent from the sale proceeds of the family home, such future needs as she has will be adequately satisfied. A 10 per cent adjustment produces a 20 per cent differential as between the parties. If the house were to sell at the agreed value of $10,800,000, after the mortgage and sale expenses were paid, the parties might realise net $8,800,000 of which the wife would receive $5,280,000 and the husband $3,520,000.
Thus, the value to the wife in dollar terms of the s 75(2) adjustment proposed by the husband out of the sale proceeds becomes quite substantial at face value, but less so when viewed holistically, given that the wife will need to reaccommodate the children and herself. Nonetheless, the wife herself acknowledged that she has an earning capacity that has not yet been fully realised. Moreover, her parents have been a very significant financial resource for her, and there is no reason to doubt that this will continue into the future. Her long-term needs by way of retirement benefits will be amply provided through her share of the retirement benefits, including superannuation.
Whilst the husband’s proposal is superficially attractive, if the Court were to apply a 60 per cent alteration of property interests against all assets, the wife would receive an extra 10 per cent of the combined presently agreed values of the husband’s pension entitlements which totals approximately $4.65 million, or an extra $465,000.
The husband is slightly older than the wife. They are both in good health. He has a high income and earning capacity. The wife has an income earning capacity that is not fully realised, but it is highly unlikely that her earning capacity will match that of the husband. She will have the primary care of three children who will enjoy the benefit of substantial and significant time with their father. The husband will enjoy access to financial resources of significant value in the form of his P Company restricted stock units. The wife is engaged in a course of study that she has not completed. Both parties will have debts after these proceedings, not just for legal fees but also to third parties including to her parents. Nonetheless, as previously acknowledged, the wife’s parents are also a substantial financial resource to her.
When all of these matters are considered the wife’s claim to an assessment under s 75(2) of 10 per cent is appropriate particularly when considering the value to the husband of his financial resources. A 10 per cent adjustment produces a 20 per cent differential which, when applied across all pools amounts to: 20 per cent x ($9,685,737.5 + $4,000,422 + $740,742) = $2,885,380.3.
The Court recognizes the possibility that the values identified by the parties as to their assets and financial resources may fluctuate by the time those assets are realised in the hands of one of the parties. The Court observes that the parties had at least two opportunities to apply for leave to adduce fresh evidence about valuation but did not do so. The only asset that may need to be realised is the family home. In this regard orders will be made addressing the contingency of a sale price different to the value on the balance sheet. The other assets that will need to be split is the pension funds. In order to do justice and equity between both parties the relevant values will be that at the date of splitting.
A JUST AND EQUITABLE ORDER
In order to assess the justice and equity of the proposed alteration of property interests between the parties it is helpful to visualise how the assets will be divided between them. The table below anticipates the finding the Court will make that a 30 per cent allocation to the wife of the English and Country Q pensions is just and equitable.
Wife Husband Description Value Description Value Assets 1 D Street, Suburb E 10,800,000 2 G Street, City H UK – Gross Sale proceeds – (£116,677) 218,771 3 Interest in J Street, City H UK– (GBP 195,000) 182,813 4 Contents – Suburb E 41,910 5 Contents – Rented premises 4,000 6 Motor Vehicle 1 24,450 7 Motor Vehicle 2 3,500 8 UK B Bank investment bond (GBP 1,587) – 21 September 2021) 4,673 9 ANZ account #...12 0 10 ANZ account #...43 0 11 AW Bank …1 NK 12 AG Bank #...04 & #...13 (subject to verification) 375 13 WW Bank Account #...36 1,918 14 ANZ account # …73 0 15 Westpac #...64 0 16 Westpac #...38 0 17 Westpac #...82 0 18 Westpac #...50 0 19 XX Bank #...34 9 20 ANZ account #...52 (6.09.2021) (subject to verification) 1,161 21 ANZ account #...98 3 22 ANZ account #...52 0 23 ANZ account #...53 12 24 ANZ account #...52 Closed 25 AX Finance Account NK 26 Credit due in respect to wife’s medical treatment 0 27 Rental Bond 0 28 Jewellery 5,000 29 Two designer watches and wedding ring 7,500 30 N/A kids trust - 31 N/A kids trust - 32 N/A kids trust - 33 N/A kids trust - 34 N/A kids trust - 35 N/A kids trust - 36 N/A kids trust - 37 N/A kids trust - 38 N/A kids trust - 39 N/A kids trust - Total 10,852,337 Total 443,758 Addbacks 40 Funds retained by husband from sale of Antiques in UK 400 41 Interim costs to wife pursuant to Orders 19 October 2018 by McClelland J and Further Orders made 2 April 2019 by McClelland J 148,932.50 42 Interim Orders made 7 May 2018 for payment of $50,000 to the Applicant from Joint B Bank Account. 50,000 43 In May 2016 – Wife withdrew $575,000 from joint bank account 0 44 In May 2016 – Wife withdrew $575,000 from joint bank account 0 45 In 2016 – Wife withdrew $100,000 from joint bank account 0 46 Legal fees paid from capital 74,500 Total 198,932.5 Total 74,900 Gross Non-Superannuation Assets 11,051,269.5 Gross Non- Superannuation Assets 518,658 Liabilities 47 ANZ mortgage – Suburb E 1,925,580 48 Wife’s share of loan from wife's parents to parties as confirmed by Orders made 18 Feb 2022 as between the First Respondent and Second and Third Respondent x 75 per cent NIL 48A (Joint share of loan from wife's parents to parties as confirmed by Orders made 18 Feb 2022 as between the First Respondent and Second and Third Respondent x 25 per cent) x 60 per cent 86,250 (Joint share of loan from wife's parents to parties as confirmed by Orders made 18 Feb 2022 as between the First Respondent and Second and Third Respondent x 25 per cent) x 40 per cent 57,500 49 Loan from wife’s parents’ post-separation for various items – $409,212 less $165,000 applied to wife’s legal fees NIL 50 Loan from Husband’s dad to pay for credit card used by wife – (GBP 5,000) NIL 51 ANZ Bank account #...43 NIL 52 ANZ Credit Card #...36 debt in respect of overseas legal fees NIL 53 Personal loan owing to Mr BC NIL 54 FEE Help debt NIL 55 Monies repayable to Services Australia re Family Tax Benefit overpaid 4,000 56 Monies repayable to HMRC for Child Benefit overpayment NK 57 Income Taxation liability with respect to rental income from G Street from 2015 to 2021 financial years not declared by husband Nil 58 Taxation liability with respect to proceeds from B Bank Investment Bond Nil 59 CGT liability FY 2022 arising from G Street sale FY 2022 NIL 60 CGT liability arising from G Street sale NIL 61 CGT liability on future sale of J Street (Based on GBP 190,000 sale after expended x 50 per cent share) NIL 62 Tax due to ATO from sale of P Company Shares NIL 63 Loan from AL Finance (previously BD Finance) NIL 64 Legal fees – costs outstanding to Watson & Watson & Bob Lethbridge from 2019 NIL 65 Legal fees – costs outstanding to Watson & Watson & Bob Lethbridge in preparation for Feb 2022 case NIL 66 School Fees to Wife’s parents NIL 67 Outstanding school fees – U School 5,516 68 Outstanding school fees – JJ School 12,738 Total 2,015,830 Total 75,754 Net Non Superannuation Assets 9,035,439.5 Net Non Superannuation Assets 442,904 Superannuation 69 PCompany Superannuation 110,453 70 Super Fund 1 No …04 96,941 71 BB Pension (£1,542,451) x 30 per cent 867,628.8 BB Pension (£1,542,451) x 70 per cent 2,024,467.2 72 CC Pension (£591,107) x 30 per cent (amount to be transferred from the BB Pension) 332,497.8 CC Pension (£591,107) x 70 per cent 775,828.2 73 VPLC Pension (£345,992) NIL Total 1,297,067.6 Total 2,910,748.4 Financial Resources 74 224 P Company Restricted Stock Units vesting over the next four years until 2025 – Share price USD $291.31 – E92,007 75 BB Pension – Account …80 (£1,542,451 - 31.12.2021) NIL 76 CC Pension – Account …55 (£591,107 - 31.12.2021) NIL 77 VPLC Pension (£345,992) x 30 per cent (amount to be transferred from the BB Pension) 194,620.5 VPLC Pension (£345,992) x 70 per cent 454,114.5 78 Super Fund 2 NIL 79 Claim against VPLC Pension NIL Total 194,620.5 Total 546,121.5 Net Non-Superannuation Assets 8,604,189.50 Net Non-Superannuation Assets 442,904 Net Superannuation/Pension Assets 1,297,067.6 Net Superannuation/Pension Assets 2,910,748.4 Net Financial Resources 194,620.5 Net Financial Resources 546,121.5 Net Total Assets and Resources 10,527,127.6 Net Total Assets and Resources 3,899,773.9
The wife’s 60 per cent entitlement is calculated by reference to all three pools given the husband’s concessions about his English pension funds being shared with the wife by way of additional payment out of one of the Country Q pension funds. The Court acknowledges the distortion that is created by the inclusion of the P Company restricted stock units, but the value the parties attribute to this is less than 1 per cent of their total net worth. The wife’s 60 per cent entitlement is $8,656,140.90. As the calculations above show, she receives $10,527,127.60 which means a payment to the husband of $1,870,986.70. She should have the opportunity to retain the home, failing which it is to be sold. If it sells for more than the balance sheet value, the additional amount should be divided 60:40 in accordance with these reasons.
The Court must make an order that is just and equitable: Charisteas v Charisteas (2021) FLC 94-056 at [27].This means ensuring that the type of order (including its form and structure) is just and equitable. In this case this means considering the effect on one party (the husband) of retaining the majority of the superannuation and pension assets: Teal & Teal [2010] FamCAFC 120 at [70].That is the outcome proposed by the wife. The practical effect of the order proposed by the wife would be to leave her with the opportunity to retain the family home, but to leave the husband in rented accommodation with few readily realisable assets to use for the purposes of acquiring his own home, as opposed to renting. Of course, if the husband retires at age 60, he will have access to substantial superannuation and pension entitlements. In very simple terms, the effect of the orders proposed by the wife is that her short-term needs for accommodation are met to a much greater degree than her long-term financial needs on retirement. Conversely, the effect of the orders proposed by the wife is that the husband’s short-term needs are addressed to a much lesser degree than his long-term needs.
By contrast, the effect of the husband’s proposal is that the wife would receive 50 per cent of the value of the pension entitlements, thus not only making provision for her long-term financial needs on retirement, but also providing funds to meet his short-term needs. It must be remembered that the wife’s short-term accommodation needs for the children and herself can be adequately met in ways that do not necessarily involve the retention by her of the current family home.
The orders proposed by the wife are not just and equitable in the sense that they disproportionately meet her short-term needs at the expense of those of the husband, and inadequately meet her long-term financial needs on retirement. On her proposal she would be left with almost all of the tangible, realisable assets. The Court is not prepared to do so. The husband’s proposal for her to receive 50 per cent of the pension entitlements is also, in the view of this Court, not just and equitable in the circumstances. However, the Court is satisfied that an allocation to the wife of 30 per cent of the pension entitlements is a just and equitable apportionment of the same, and balances short and long term needs.
Focusing on the overall impact of the orders, however, based on the evidence, the Court considers that an alteration of property interests in favour of the wife in an amount of 60 per cent is as just and equitable as the circumstances permit, applied across all pools.
An order altering property interests cannot, by definition, effect a financial resource which, in this case, is primarily the VPLC Pension. A 60 per cent adjustment in the wife’s favour can, however, be implemented on the basis that the husband retains this financial resource at the value agreed by the parties, with the wife receiving what is, in effect, an adjustment in her favour out of property that can be subject to an order. In effect, this was the husband’s own proposal as regards his English pension fund i.e that the wife would receive a greater share from the Country Q pension funds.
The challenge is in how to implement such an order in the circumstances of this case where such a large proportion of the assets consist of overseas pension entitlements. The English pension fund can only be accessed by the husband. The Court is satisfied that the Country Q pension funds constitute property but also recognises that accessing these funds will not only be delayed until such time as each party becomes entitled, but potentially involves delay and expense (particularly if Court proceedings in Country Q are in fact required).
THE CHILD SUPPORT DEPARTURE APPLICATION
The effect of the wife’s child support departure application is to require the husband to pay periodic child support as assessed from time to time, the cost of the children’s current medical health insurance and 80 per cent of all school fees for the children at their existing schools including tuition, excursion fees, incidental sporting costs, the cost of all books, uniforms and extracurricular activities. The wife proposed that the periodic and non-periodic child support paid by the husband would account for 100 per cent of the annual rate of child support payable by him.
The husband opposes the child support departure and seeks an order that $240,000 out of the sale proceeds of the family home be paid into a children’s education account. For the first four years, a maximum amount of $50,000 will be applied to the children’s school fees and expenses, and in the event that there is a shortfall, this will be paid as to 70 per cent by the husband and 30 per cent by the wife. For the next two years, $20,000 would be applied towards the school fees and expenses, with any shortfall again being borne as to 70 per cent by the husband and 30 per cent by the wife. For any remaining secondary school years thereafter, the husband would pay 100 per cent of the school fees and expenses. On the husband’s proposal, the school fees and expenses includes tuition fees, books, equipment and extracurricular activities, participation in which has been agreed by both parties.
The Court does not accept the husband’s proposal to establish the children’s educational account. The Court recognises the children are presently 15, 13 and 11. On the husband’s proposal, the wife is paying 60 per cent of the $240,000 that will constitute the children’s education account. The Court does not regard this as just and equitable, or otherwise proper, given the disparity in the financial circumstances of the parties, even with the proposed alteration of property interests discussed above.
The difficulty with the wife’s proposal is that it does not take into account her earning capacity. The wife’s own evidence was that she had been interviewed for professional positions at salaries between $90,000–150,000 per annum (Transcript 15 February 2022, p.64 line 45). She agreed with the proposition in cross-examination that within the next 12 months, she would be employed with a salary in that range (Transcript 15 February 2022, p.65 line 5). The wife presented throughout her evidence as articulate, intelligent, assertive and capable. It is more likely than not that she will have the capacity to earn this income in the near future. This would make the child support departure order proposed by her unjust and inequitable, and not proper.
The Court thus declines to make the child support departure application sought by the wife, and the orders sought by the husband for a child education fund. In this case, as inconvenient as it may well be for the parties, it is better that child support be determined having regard to their circumstances at the time. In any event, the Court notes that the financial circumstances of both the husband and wife could easily fluctuate depending on entitlement to pension and superannuation funds. Moreover the husband has been paying school fees long before he was required to by Court order, and the impression formed of the evidence is that this is a priority for him. The Court acknowledges that there were times when school fees were paid as a result of asset sales but, in context, this was at a time when the husband was having to pay substantial other commitments for the family, including the mortgage on the family home. The wife’s parents also generously assisted with school fees. The school fees in this case are substantial—$90,668 in 2021. There is no doubt that the wife’s parents continue to be a financial resource for her, as they have paid school fees, as recently as 2021.
THE ORDERS
The orders that the Court makes in this matter in order to implement these reasons for judgment use as a template the orders proposed by both the wife in her Amended Minute of Order filed 18 February 2022 and the husband’s Minute of Order annexed to his Case Outline filed 10 February 2022.
The wife will be given an opportunity to retain the family home even though a substantial payment is due to the husband. The Court has noted that she has a substantial resource available to her through her parents, and this may render the seemingly improbable into something possible. She will be given 60 days to make the payment. Orders will be made for sale of the home should she not make the payment based on the husband’s Minute of Order. The application of the net sale proceeds will need to take into account the interests of and amounts due to various third parties who have lodged caveats, and the orders will reflect this. The allocation to the wife of a 30 per cent interest in the total value of the husband’s pension entitlements in Country Q and England will be implemented as the husband proposes i.e. by allocating to the wife a greater share in the BB Pension. Specific orders will be made in relation to payment of the debt to the wife’s parents in the shares allocated by the Court. Where an order that was proposed by either the husband or the wife has not been made, this means the Court has consciously turned its mind to the proposed order and determined that it is not appropriate given the Court’s findings in this case.
I certify that the preceding one hundred and sixty (160) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 10 February 2023
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