H and H
[2003] FMCAfam 282
•4 June 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| H & H | [2003] FMCAfam 282 |
| FAMILY LAW – Property – initial contributions – redundancy – husband has lifetime pension – whether tax payable on distribution of superannuation is a matrimonial liability. |
Family Law Act 1975, ss.4, 75(2), 79(4)
Child Support (Assessment) Act 1989
Family Law Superannuation Regulations 2001
In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626
In the Marriage of Ferraro (1993) FLC 92-335
In the Marriage of Clauson (1995) FLC 92-595
Russell v Russell (1999) FLC 92-877
Pierce v Pierce (1999) FLC 92-844
Burke v Burke (1993) FLC 92-356
Hauff v Hauff (1986) FLC 91-747
Rosati v Rosati (1998) FLC 92-804
| Applicant: | J L H |
| Respondent: | P J H |
| File No: | SYM108 of 2003 |
| Delivered on: | 4 June 2003 |
| Delivered at: | Wollongong |
| Hearing date: | 3 June 2003 |
| Judgment of: | Ryan FM |
REPRESENTATION
| Counsel for the Applicant: | Mr R. Maurice |
| Solicitors for the Applicant: | Rita Thakur & Associates |
| Counsel for the Respondent: | Mr W. Moss |
| Solicitors for the Respondent: | John Dawson & Associates |
ORDERS:
That within three months of the date of these orders the husband pay the wife the sum of $175,239.90.
That simultaneously upon payment by the husband to the wife of the money due pursuant to order (1) the wife shall transfer to the husband the whole of her right, title and interest in the property situate at and known as 18 G Avenue, C East, being the whole of the land contained in Lot 62 in Deposited Plan 3.
In the event that the husband fails to comply with order (1) the parties shall forthwith do all acts and things and sign all documents necessary to sell the property situate at and known as 18 G Avenue, C East for sale by private treaty with a real estate agent at a price to be agreed upon between the parties and failing agreement to be determined by the president of the Real Estate Institute of New South Wales or his nominee.
That the proceeds of sale pursuant to Order (3) above be disbursed as follows:
(a)firstly, in payment of the costs of sale including the real estate agents and legal fees;
(b)in payment of any outstanding rates and charges;
(c)in payment of 62 per cent of the nett balance to the husband from which he must pay the wife $45,089.90; and
(d)the remaining 38 per cent to the wife.
That the husband shall continue to pay all rates and taxes incurred for the C East property as and when they fall due until whichever of the following events first occurs:
(a)He complies with order (1).
(b)The completion of the sale in accordance with order (4).
That the husband shall forthwith sign all such documents as are necessary to transfer to the wife the whole of his right, title and interest in the following:
(a)Hyundai Sonata registration number XXX.
(b)The parties’ caravan.
That unless otherwise specified in these orders, each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
That if either party refuses or neglects to sign, within fourteen (14) of the written request to do so, any document necessary to give effect to the terms of these orders, a Registrar or such other office or person as may be appointed by the Federal Magistrates Court of Australia is hereby appointed pursuant to the provisions of section 106A of the Family Law Act 1975 to execute such documents on behalf of those parties.
That all exhibits tendered in the proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
That the solicitor who issued any subpoena uplift the documents produced within seven (7) days and return them to their owner.
That all outstanding applications are dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT WOLLONGONG |
SYM108 of 2003
| J L H |
Applicant
And
| P J H |
Respondent
REASONS FOR JUDGMENT
The proceedings
These are proceedings for the adjustment of property pursuant to s.79 of the Family Law Act 1975. When the matter was called on for hearing the parties indicated that the concurrent competing residence applications had resolved. By consent, final parenting orders were made in accordance with terms of settlement[1].
[1] Exhibit A
In essence, the parenting orders provide that the parties' two daughters will live with the husband and shall have contact with the wife in accordance with the children's wishes from time to time. These orders reflect the living arrangements made after the parties separated in August or September 2002.
J H (“the applicant”) started these proceedings when she filed an application in the Family Court of Australia on 17 October 2002. She later filed an amended application. However, she finally petitioned the court for orders that gave the husband the opportunity to acquire her interest in the former matrimonial home upon the payment of a sum of money. Otherwise, she asked that she have the Hyundai Sonata, a caravan at Gerroa and retain her superannuation. In addition, she wanted credit card debts totalling about $2058 treated as joint matrimonial liability.
The effect of her application was that the husband would have 62 per cent of the matrimonial assets compared with her 38 per cent.
P J H (“the husband”) moved on his response filed on 10 December 2002. During final addresses his counsel indicated that the husband agreed with the general structure of the orders proposed by the wife. He did not agree that he should pay her 50 per cent of the net value of the former matrimonial home, but rather a lesser sum that reflected a 70 per cent adjustment of the assets in his favour. He indicated that he would draw down his superannuation moneys in order to pay the wife her s.79 entitlement. This would incur a tax liability of $11,021. He wanted the Australian Tax Office liability to be treated as a joint matrimonial debt. The wife opposed this course. She accepted that the ATO liability, if it were incurred, would be the amount asserted.
Credit
I am satisfied that Mr and Mrs H both put considerable effort into preparing their matter for trial. They steered away from matters that could have been distracting and focussed on those matters that were relevant to the decision that I must make.
There were points of disagreement between them about the factual circumstances of separation and also some of their early history. This was particularly so in relation to the wife's employment and the contributions that each party made at different times as a home maker and parent.
This is not a case where I felt either party attempted to deliberately mislead the court. Rather, over a long marriage, incidents have faded into insignificance and the parties’ individual recollections of particular time frame, differs somewhat. Both attempted to give me an honest account of their marital history. Where they disagreed they tended to disagree about matters of perception. In some respects I accept that those facts more intimately involving one party rather than the other and are more likely to be accurately recorded by the person who was involved. This means, for example, that I generally preferred Mrs H’ account of her own employment history because it was her employment history. Otherwise, there did not appear to be factual disputes that required adjudication.
Background
The wife was born on 18 September 1955 and the husband was born on 4 February 1956. The parties started their relationship in 1980 and in about mid 1981 the husband started to stay at the wife's rented flat quite extensively.
It is the husband's case that he and the wife lived together from 1981 until they separated in August 1984.
The wife used her $10,000 property settlement made with her first husband to furnish her rented flat and towards her living expenses. At this time she owned a Holden Torana and the husband had a 1977 Holden as well as some savings.
During this first period of cohabitation the husband contributed money from his wages towards his food costs and it appears that the parties otherwise maintained essentially separate finances. The parties became engaged to marry during this period, but separated in either late 1984 or early 1985. At separation the husband returned to live with his parents.
The parties resumed their relationship in 1986 and bought their home at 18 G Avenue, C, in November 1986. Its purchase price of $69,500 was met from $35,000 drawn from the husband's savings and a $40,000 interest-free loan provided by the husband's father, E H. Of the $35,000 taken from the husband's savings $29,000 was spent on completion of the purchase and the balance on legal fees and stamp duty costs.
In addition to her household furniture the wife still owned the Holden Torana when the parties resumed cohabitation. It was sold shortly after they resumed living together for about $2000. The sale proceeds paid out a loan attached to the car. Other than his savings and a Ford sedan the husband had no assets of value, nor any liabilities. B employed him as a leading hand, having joined the company as an apprentice boilermaker in 1972.
I accept his evidence that he started to contribute to a superannuation fund with B in 1972 and that he did so continuously until he stopped work in 1996. Thus, when he resumed cohabitation in 1986 he had been a member of his superannuation fund for almost fourteen years. It must have had a real value at that time.
When the parties resumed cohabitation in 1986 the family unit included the wife's son, Timothy. Timothy was born on 18 July 1980. I infer that he had lived with the parties during their first period of cohabitation. When Timothy was born the wife had already separated from her first husband. There is no evidence that Timothy has ever had any contact with his biological father. In 1987 or 1988 the wife and the husband formally adopted Timothy.
At the time the parties resumed cohabitation the wife worked part-time as a nurse at BA Hospital. She stopped work in about June 1987 taking twelve months paid leave. Her leave entitlements comprised paid maternity and long service leave. K was born on 25 September 1987. I accept the wife's evidence that she returned to full-time work in late 1988 and was earning about $300 per week. Whilst she was at work either her mother or the husband's parents took care of K. There is no suggestion that they required payment for the care of their grand daughter.
The wife stopped work again just before S was born on 18 May 1990. When S was about six weeks old the wife returned to work on a permanent part-time basis at the I Retirement Trust. She worked mostly on weekends. This meant that the husband cared for K, later also S, when she could no longer accompany the wife to her work place. Over the years the wife's hours of work increased changing from weekend to regular weekday work.
In 1991 the wife received a $10,000 or $11,000 inheritance from the estate of an aunt. All of her inheritance was spent on improvements to the home and living expenses.
The parties borrowed $20,000 from City Coast Credit Union in 1995. Those funds were used for the construction of a pergola, bathroom renovations, purchase of a television and other furniture.
In October 1993 the husband suffered an eye haemorrhage. B retrained him on full pay so that he acquired computer and other skills that later enabled him to become a Safety and Welfare Officer with the company. At some stage after this, but before 1996, the wife's work became an effectively full-time position.
In 1996 the husband suffered another eye haemorrhage. This degenerative condition has left him legally and physically blind. He has no central field and little peripheral vision. There is no treatment or cure for his condition and it will continue to deteriorate. On 12 July 1996, because of his sight impairment, the husband accepted a voluntary redundancy from B and collected his superannuation. Upon his retirement B paid him $82,294 (gross). This payment comprised $56,524 by way of voluntary redundancy, $7,624 long service leave, $8,717 termination bonus and $9,429 in accrued annual leave.
In annexure N to his affidavit the husband reveals that on 30 September 1996 B Superannuation paid him $129,266.15. Those moneys were rolled over into a suite of investment funds as follows:
·BT Funds Management, $19,000;
·Permanent Trustee CMAADF Growth Fund, $9,000;
·MLC Life, $19,000;
·BZWIM Australia, $18,000;
·AGESTBC, $18,000;
·Perpetual Trustee, $18,000; and
·CUSCAL, $28,266.15.
Because of the circumstances of his retirement the husband became eligible to receive a lifetime annual pension of $26,668. He has received this pension continuously since his retirement.
The redundancy, long-service leave and termination payments were applied as set out in par 28 of the husband's affidavit. I accept that the parties purchased a 1996 Hyundai Sonata. The purchase price was $28,360. After the trade-in the parties paid $24,360 from the retirement funds. They discharged the loan to the City Coast Credit Union, which then stood at $18,950. About $18,000 was repaid to B for the B shares that the husband had taken up during his employment with the company. They purchased an above ground pool for $4795 and spent $3280 on decking that surrounded the pool. The balance of the redundancy moneys was spent on household expenses including family holidays.
The invested moneys have been transferred between funds in accordance with advice taken from Symes Warner and Associates. Not only have the funds increased in value, they have done so notwithstanding capital withdrawals totalling $17,000 identified in paragraph 33 of the husband's affidavit.
The husband's sight impairment required the family to reorganise itself. He was unable to drive after his first haemorrhage in 1993 and as time passed his capacity to do heavy work or manage many previously mundane daily activities diminished. The wife tried her utmost to minimise the effect of the husband’s disability so the family could all live as normal a life as possible. They have been remarkably successful in this venture.
This meant that the wife needed to reduce her working hours to a regular three days each week. She assumed almost exclusive responsibility for transporting the family and the household tasks the husband was unable to perform. With time he was able to manage his surroundings so that he did all of the grocery shopping, was able to take the children to places by public transport and performed a significant role as a home maker and parent. Comparatively however, the wife's responsibility in the home overall had increased.
In January 2002 the wife started a degree in nursing.
The parties separated in late August or September 2002. Since separation their daughters have continued to live with the husband in the former matrimonial home. Timothy has been living independently of his parents since he left home in 1999.
At separation the parties had the following assets:
·Former matrimonial home at 18 G Avenue, C;
·1996 Hyundai Sonata;
·Caravan and its attachments on site at Gerroa;
·2000 fully paid B shares;
·IMB savings accounts in the husband's name valued at approximately $5200;
·IMB accounts in the wife's name valued at approximately $2000;
·A full complement of furniture and furnishings;
·Wife's entitlement in her HESTA Superannuation Fund; and
·Superannuation roll-over entitlements in the seven investment funds to which I have already referred.
Since separation, K and S’s contact with the wife has been irregular. Both parties agree that their daughters have been upset by the breakdown of their marriage and like many children in similar circumstances, they have tried to play their parents off against each other. For example, they have refused to go on contact, yet in March 2003 both girls chose to stay with their mother after K had a fight with her father. They returned to their father in late March 2003.
Both parties have re-partnered. The husband's partner S C and her 17-year-old son moved into the former matrimonial home in mid-February 2003. Ms C has recently started part-time work as a nurse, working about 16 hours in her first week.
One month after separation, the wife moved into her partner's home at Barrack Heights. In February 2003, she and K N bought a home at 51 B Drive, Albion Park for which they paid $335,000. They borrowed the full purchase price as well as the stamp duty. Mr N sold his Barrack Heights home in April 2003. He discharged a $150,000 mortgage secured against Barrack Heights and paid $50,000 by way of capital reduction to the mortgage secured against Albion Park. Thus far the wife has not made any financial contribution to Albion Park.
Relevant law
The approach to the determination of an application under s.79 is well established by authority in the In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; and In the Marriage of Clauson (1995) FLC 92-595. The process ordinarily involves a four-part procedure. Firstly identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s.79 (4)(a) to s.79 (4)(c) and the effect of any proposed order upon the earning capacity of either party.
I must then evaluate the matters contained in s.75 (2) in so far as they are relevant and any other order made under the Family Law Act 1975 affecting a party or child and any child support under the Child Support (Assessment) Act 1989. That a party to the marriage is to provide or might be liable to provide in the future for a child of the marriage. In determining what order the Court should make under s.79 the Court must be satisfied in all the circumstances that it is just and equitable to do so in s.79 (2). It is the justice and equity of the actual orders that the Court must consider: Russell v Russell (1999) FLC 92-877.
An important issue in this matter is the assessment of the weight that should be attached to the parties' initial contributions. In Pearce v Pearce(1982) FLS 91-276 the Full Court of the Family Court stated:
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached in all the circumstances to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case by the husband, regard must be had to the use made by the parties of that contribution.
Another important issue has been the nature and significance of the husband's redundancy package. Fogarty J addressed this issue in Burke v Burke (1993) FLC 92-356. At page 79,763 Fogarty J said:
“Consequently, the standard for redundancy entitlements is linked to years of service. In summary, redundancy awards generally provide for a payment of a minimum number of weeks salary plus a set number of weeks paid per year of service with a qualifying period and a set maximum amount. A redundancy payment is capable of being regarded as a contingent right analogous to insurance, which is intended to provide an accumulated safeguard against loss of wages and other benefits during an employee's working life and which can be turned into a cash payment should the employee's position become redundant.”
For the purpose of s.79 of the Family Law Act 1975 that contingent right is therefore an accruing potential financial resource of the employee which is transposed into property where the condition for its payment arises. Further Fogarty J said in the same case:
An employer's obligation under an award to provide redundancy pay is part of the employee's indirect remuneration arising from his or her employment. By analogy of the decision of this Court in Hauff v Hauff (1986) FLC 91-747, regarding superannuation entitlement the circumstances, that no direct financial contribution was made by the employee's spouse to the entitlement. No actual deprivation is suffered or established by the non-contributing spouse do not inhibit the conclusion that the non-employee spouse has made a contribution to the redundancy entitlement under s.79 (4)(c), during the period of the marriage that relates to the relevant period of employment.
The extent to which the non-employee spouse has so contributed to the property or resources as the case may be is constituted by the right to redundancy pay would be a question of fact to be determined in the ordinary way in each case.
Later, in that decision, the court also examined long service leave entitlements and Fogarty J said this:
“As with the potential redundancy the employer's obligation to provide long service leave is part of the employee's indirect remuneration arising from his or her employment to which the non-employee spouse may have made a contribution under
s 79(4)(c) during the period of the marriage that related to the relevant period of employment. Where the entitlement has in fact been taken as a capital sum and provided it is still represented in other assets it is property to which s 79 applies and to which the contribution by the other party should be assessed in the ordinary way.”
Assets and liabilities as at the date of hearing
I turn now to make findings in relation to the value of the parties' assets and liabilities as at the date of this hearing. Exhibit B comprises a joint list of assets agreed between the parties. It is as follows:
| Assets as at the date of hearing | $ |
| 18 G Avenue, C | 342,500 |
| Bank account (H) | 1,600 |
| B B shares (H) | 17,200 |
| 1996 Hyundai Sonata (W) | 7,000 |
| Caravan and contents (W) | 13,000 |
| Furniture (H) | 5,695 |
| TOTAL ASSETS (excluding superannuation) | 366,995 |
| Liabilities as at the date of hearing | $ |
| ATO liability | 11,021 |
| TOTAL LIABILITIES | 11,021 |
| NETT ASSETS | 366,955 |
| Superannuation as at the date of hearing | |
| HESTA superannuation (W) | 19,291 |
| Superannuation (H) | 158,269 |
The parties’ superannuation, as I have indicated, has an agreed value.
An issue that must be considered is the $26,000 annual pension received by the husband. Both counsel agreed that by virtue of ss.90MC and 90MD of the Family Law Act 1975 the husband’s lifetime pension is property for the purpose of ss.4 and 79. The intent of s.90MA when read in conjunction with s.90MC is to extend the definition of matrimonial cause so that the characterisation of an eligible superannuation interest is changed to make it an asset for the purpose of s.79.
While I have evidence of the amount that the husband will receive annually there is no evidence of the value of the fund calculated in accordance with the Family Law Superannuation Regulations 2001. As a consequence, I am unable to make findings as to its value. I agree with counsel that as neither party wanted to adjourn the proceedings for the purposes of further valuation I could properly address this issue in s.75 (2).
A further issue that requires adjudication is the treatment of the potential tax liability should the husband draw upon his superannuation. I accept his evidence that he will need to draw down upon his superannuation in order to fund his purchase of the wife’s interest in the matrimonial assets. He may attempt to take a mixture of borrowings and draw down part but not all of the moneys payable.
I anticipate that he will take advice from his financial planners in relation to the course that is best suited to the circumstances.
Even so it is unlikely, in my opinion, that he will be able to borrow the majority of the moneys that he needs to pay the wife and I must consider the tax issue. The court has clear evidence about the amount of tax that would be payable should the husband draw down on the funds. It seems to me that in these circumstances the principles outlined in Rosati v Rosati (1998) FLC 92-804 applies in relation to whether or not the potential tax liability should be taken into account.
In Rosati (supra) the Full Court speaks in terms of the probability of the sale of an asset and hence incurring a capital gains tax liability. However, with superannuation the issue is access to it by the member and after a split in some cases, a non-member spouse. Provided the member lives until retirement the triggering event for the assessment of tax must occur. Does this mean that the court must take into account the potential tax liability? In my view it does not. Rosati (supra) emphasises that each case turns on its own facts.
Because the super splitting legislation mandates the valuation methodology, tax other than un-deducted contributions tax and surcharge tax identified in the last member's statement, will not affect the value of the asset. Tax may be a relevant liability as distinct from the value of the superannuation. Here I am satisfied that the husband is likely to incur a tax liability in the amount identified by his financial advisers. Applying the Rosati (supra) principles I am satisfied that I should treat it as a matrimonial liability.
The wife has credit card debts of approximately $2058. Both parties agree that at separation she had some small credit card debts, the value of which I do not know. The gravamen of the wife’s evidence was that she has used her credit card since separation on personal expenses for herself and for her family unit established with Mr N. I accept the submissions made by counsel for the husband that in these circumstances the credit card debts should be treated as a personal liability of the wife's and not taken into account in assessing the asset pool.
Applying s.79 (4) to the relevant facts
There was considerable focus upon the evaluation of the parties' contributions. This is moderately surprising given that the husband asserts that the parties' contributions should be assessed as 60 per cent to him and 40 per cent to the wife. Whereas the wife submits that the court would assess them at 62 per cent to the husband and 38 per cent to her, a 2 per cent differential.
The husband was an employee of B from 1972 continuously until 1996, a period of 24 years. During that period, he and the wife lived together cumulatively for 13 years. I accept that throughout the entire period of his employment with B the husband continued to contribute to his superannuation fund, either directly or by way of employer contributions. Overall his contributions to the fund as at 1996, because of the duration over which they were made, significantly exceeds the wife's.
However, although she was not employed by B, the wife also made an important contribution to the superannuation in the sense that it was clearly a joint venture by which both planned to provide for their retirement. When the funds were taken in 1996, the parties thereafter contributed equally to their growth. That is the increase from $129,000 to $158,000. When the capital withdrawals from the fund are taken into account it grew by about $46,000.
I approach the husband's redundancy including its entire non-superannuation component in the same way. The wife made a
s.79 (4)(c) contribution to the redundancy payment during the period of cohabitation that coincides with the husband's employment at B. Consistent with my earlier findings because the husband was employed by B for 24 years, during which the parties cohabited for only 13,
I am satisfied that he made a significantly greater contribution to its acquisition than the wife.
Unfortunately, I did not have evidence of the value of the husband’s superannuation at the start of cohabitation. The important issue is that his superannuation interest is recognised as having accrued to a significant extent during periods when the parties did not cohabit.
I have already made findings as to the value of the parties’ assets and liabilities when they started to live together and do not repeat them. The husband’s savings enabled the parties to acquire their home earlier than would otherwise have been the case. However, this is not a family that would have not been able to find the money some time later to buy a home. These parties impressed me as people who have always worked hard to maximise their family’s financial future. Throughout the course of their cohabitation they both worked to the fullest extent possible in the home and as paid employees. Had the husband not made his initial contribution they would have needed to rent for a longer period and perhaps both would have needed to work longer hours. Acquiring their home when they did meant that their money worked immediately for them, not for landlords, for example and that they could use their money to the betterment of family life in the real sense. They were able to manage their scheme of repayments to Mr H senior, in a way that appeared to have been beneficial to them and readily accommodated by him.
I accept that both parties contributed all of the income received by them from various sources to the betterment of the family during their cohabitation. This includes, inter alia, income from employment, the wife’s inheritance and the husband’s father’s interest-free loan that was later repaid.
As to the parties' non-financial contributions I am satisfied that throughout cohabitation the parties made an equal contribution. Both gave detailed evidence about the work that each did about the home, improving it and maintaining it. The husband's efforts were assisted by his father. Over the years, after the parties acquired their home in 1986, both parties worked hard on the grounds, painting the interior and generally improving it. I assess their contributions in this sense as equal.
In relation to the contributions as a home-maker and parent, I am satisfied that until 1996, the wife made a significantly greater contribution than the husband did. She had primary responsibility for the management of the home and the children. The husband helped to the extent that his working hours permitted and he contributed in a real way. Between 1996 and separation in late 2002, the wife's responsibility as a home-maker and parent increased significantly. Not only did she need to continue to manage the home in the way that she had prior to 1996, but she also took on extra responsibilities in aiding the husband as he adjusted to the impact of his sight impairment. He tended to minimise, in my opinion, the effects this disability had on him, particularly in those early years after 1996 within the context of the daily running of the family. I accept the wife's evidence as to the extra effort required of her, which effort, I am satisfied she gave willingly to the betterment of the family. In saying this, I do not minimise the effort the husband has made in trying to ensure that not only does his life continue to be fruitful despite his impairment, but also that to the extent that he could possibly manage it, he continued to make a valuable and important contribution as a husband and as a father.
On balance however, I am satisfied that overall the wife made a significantly greater contribution throughout the marriage as a home-maker and parent than the husband did. In the Marriage of Ferraro (supra) makes it clear that I must treat this contribution in a meaningful way.
Since separation, a period of about nine months, the husband has been exclusively responsible for the care of the children. He has made a significant contribution as a home-maker and parent since then. The wife pays child support of about $30 per week. I am satisfied, when I take all of these factors into account that as at the date of this hearing, the contribution should be assessed as to 60 per cent by the husband and 40 per cent by the wife.
Section 75(2)
I have already made findings about the age and state of health of the parties. Other than the husband's sight impairment, both parties are in good health and they are of an equivalent age. The husband's sight will continue to deteriorate and it is difficult to know how that will affect his day to day life. He has made an extraordinary adaptation to the disability that he has suffered. I anticipate that he will continue to approach life in a way that is personally rewarding, ambitious to ensure that he can enjoy life to the full and contribute to those who comprise his family. However, the effect of his loss of eyesight is a factor that I must take into account in his favour pursuant to the subsection.
Both parties identify in their financial statements and oral testimony their income, property and financial resources. I have already made findings in relation to the property and financial resources and do not repeat them. I accept their evidence in relation to their income.
The wife has the capacity for gainful employment and has been associated with nursing for nearly 30 years. She is not currently entitled to work as an enrolled nurse and for this reason is undertaking further tertiary studies that with a further two and a half years of study, will enable her to work as an enrolled nurse. At present she has suspended her studies and intends to return to them as soon as her circumstances permit. She will be about 50 years old when she starts work as a nurse. I accept her evidence that as a nurse, she will earn significantly greater income than she does now. However, given her age, I infer that she will be able to work for no more than about 15 years.
I have, in dealing with s.79 (4), indicated that I would take into account under s.75 (2) the husband's pension entitlement. Mr Moss submitted that the pension entitlement had limited significance. In essence, he saw that because it was not indexed, its value in real terms would diminish over the years meaning it could not be seen as a significant factor that weighed in favour of the wife. He emphasised that the wife had death and disability cover provided by her HESTA fund, which he said, should be offset as an equally valuable resource. I do not agree because death or disability cover is in effect a contingent right. An entitlement becomes payable upon the occurrence of certain trigger events. Unless those trigger events occur, the cover is not paid out. There is nothing in this case that suggests the wife is likely to become eligible to take disability cover. In those circumstances, the fact that the wife has death and disability cover has little, if any, relevance to the proceedings.
I accept the wife's counsel's submission as to the significance of the husband's pension entitlement. He has a reliable life long entitlement to an income, which gives him reasonable financial security. I am satisfied that his pension must be treated as a factor that weighs significantly in the wife's favour.
The husband, I am satisfied, is unlikely to return to paid employment. This means he will not have the opportunity other than from management of investments to grow his investments. The probability is that his superannuation entitlements will be used to pay out the wife. By comparison, she will have the opportunity to acquire superannuation by virtue of her capacity to work in the paid workforce.
The husband will have the continuing care of the children. They are 15 and a half and 13 years respectively. Teenagers as a general proposition are expensive and the husband sets out the commitments that he has to support not only himself but also his daughters. I am satisfied that his future care of the children is a factor that requires adjustment in his favour.
Although both parties cohabit with partners, neither of them have a responsibility at this time to support any other person. Both have established relationships comparatively recently and the future of those relationships is to a considerable extent uncertain. I am not satisfied that as a consequence of cohabitation I should make any adjustment in favour of either party.
Since separation, the husband has had the continued occupation of the matrimonial home whilst the wife has lived independently. To some extent, both have suffered a reduction in their standard of living. The wife, until recently, has not had her own home to live in and the husband has not had the wife's income contributing to the day to day expenses of the family. However, in the circumstances of separation, both have maintained a living that is reasonable.
I have already made findings about the outcome of the s.79 orders, the effect of which is that the husband will have 60 per cent on contributions based entitlement and the wife will have 40 per cent.
The wife pays child support in a modest amount that does not contribute in a meaningful way to the costs that the husband actually incurs in meeting the children's expenses day by day. He has borne the financial brunt of the care of the children since separation. I accept that that has been moderated to some degree because he and the children have lived in the home and he has not needed to pay significant housing costs.
However, the probability is that while the wife continues to study she will not pay any meaningful child support over the next two and a half years. By this time K will have turned 17½ and S will be 15½. Accordingly, the child support that she will pay is modest compared to the costs that the husband will incur.
I am satisfied that when I look at the cumulative effect of the findings I have made in relation to s.75 (2) there should be a 2 per cent adjustment in favour of the husband.
The consequence of the orders will be that the husband will have the home worth $342,000, his savings at $1600, his B shares at $17,200 and the household furniture at $5695. Total non-superannuation assets of $366,995. When I add in his superannuation, he will have assets of $525,264, from which I deduct $11,021 payable to the ATO, a net figure of $514,243.
The wife will have non-superannuation assets comprising her car and caravan totalling $20,000 and superannuation of $19,291, being a total of $39,291. Sixty-two per cent of the net assets is $308,545.48 and 38 per cent is $214,530.90. Therefore, the husband must pay the wife $175,239.90. This will exhaust all of his savings.
If it is necessary for the house to be sold, although it has an agreed value, the net proceeds cannot be known. If I take the house out of the equation. I am satisfied that I should also take the tax liability payable on the husband realising his superannuation entitlements out of the equation. That is because the house will only be sold if the husband decides not to draw down on his superannuation and does not have another fund that he can access. Excluding the house, the husband will have total assets of $182,764. The wife's assets are unchanged. The total figure is $222,000.55. Sixty-two per cent of those assets is $137,674 and 38 per cent is $84,380.90.
When I deduct the $39,291 that the wife has, excluding the house and the ATO liability, the husband must pay $45,089.90. If the house is sold, the net proceeds will be distributed 62 per cent to the husband from which he must pay $45,089.90 by way of further adjustment to the wife.
Section 79(2) is this just and equitable?
The final stage of the process is to consider whether this outcome is just and equitable. In my opinion it is. These parties lived together for 19 years when the two periods of cohabitation are added together. Their marriage was a joint venture in the truest sense of the word. Both of them took paid employment to the extent that they could, balancing work and family. The husband had made a significantly greater initial contribution than the wife, an important contribution that was enhanced by his father's interest free loan.
Throughout the course of cohabitation and until 1996, the husband worked full-time and he contributed all of the money he earned to joint matrimonial purposes. He made a greater contribution to the acquisition of her superannuation entitlement than the wife - in addition, he worked hard to complement the wife's care of the children and made a significant non-financial contribution to the maintenance and improvement of the property.
The wife worked hard beside him. Her contribution as a home maker and carer was significant and became even more substantial after 1996. Her earnings were modest compared to the husbands, but she contributed all of the income she earned and her inheritance to joint matrimonial purposes. Neither of these parties wasted the money they received and both worked hard to ensure that any skills and assets that they brought into the marriage worked to the betterment of their family to the fullest extent possible.
That the outcome of the proceedings has resulted in a 62 per cent adjustment to the husband and 38 per cent to the wife, I am satisfied is just and equitable. When I stood back and considered the s.75(2) factors, there were particular factors that required careful consideration; the husband's continued care of the children and the fact that he will probably never return to the paid workforce; the fact that the husband has a lifetime pension of $26,000 and that the wife will be able to work as an enrolled nurse in about two and a half. All of these factors contribute to my comfortable satisfaction that the 62 per cent, 38 per cent dichotomy is the appropriate one to order in the circumstances of this case.
For these reasons, I make the orders identified at the start of this judgment.
I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate:
Date: 31 July 2003
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