Hannouch & Hannouch
[2023] FedCFamC1F 344
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hannouch & Hannouch [2023] FedCFamC1F 344
File number(s): SYC 4501 of 2018 Judgment of: CHRISTIE J Date of judgment: 5 May 2023 Catchwords: FAMILY LAW – FINAL PROPERTY – Where the parties shared a long marriage – Where the wife made majority non-financial contributions and the husband made majority financial contributions – Where the parties initial contributions and contributions throughout the relationship and post-separation were equal – Where the earning capacity of the husband and his financial resources were significant compared to the wife’s - Where the future needs of the wife warranted an adjustment in her favour. Legislation: Family Law Act 1975 (Cth) ss 79 and 75 Cases cited: AJO v GRO (2005) FLC 93-218; (2005) 33 Fam LR 134
NHC and RCH (2004) FLC 93-204; (2004) 32 Fam LR 518
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Division: Division 1 First Instance Number of paragraphs: 85 Date of hearing: 15 – 17 March 2023 Place: Sydney Counsel for the Applicant: Mr Livingstone Solicitor for the Applicant: Lawpoint Lawyers Counsel for the Respondent: Ms McMahon Solicitor for the Respondent: David H Cohen & Co ORDERS
SYC 4501 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HANNOUCH
Applicant
AND: MR HANNOUCH
Respondent
INDEPENDENT CHILDREN'S LAWYER
order made by:
CHRISTIE J
DATE OF ORDER:
5 May 2023
THE COURT ORDERS THAT:
1.Within 14 days of the date of these orders, both parties take all necessary steps and execute all necessary documents to appoint a registered Surveyor to prepare an application for subdivision of the property situated at and known as 1 B & 2 B Street, Suburb C, folio identifier … (“the Suburb C Property”) in accordance with the Development Consent issued by D Council dated April 2016 but in the absence of agreement, by such Surveyor as may be determined by the Proper Officer of the Institution of Surveyors NSW or their nominee (Application for Subdivision).
2.Within 14 days of receipt of the Application for Subdivision, the parties take all necessary steps and execute all necessary documents to obtain the consent of the local council and the mortgagee of the Suburb C Property to the Application for Subdivision.
3.Within 14 days of receipt of the consent referred to in Order 2 above, the parties take all necessary steps and execute all necessary documents to lodge the Application for Subdivision with NSW Land Registry Services and each of the parties take all necessary steps and execute all necessary documents to promptly respond to and comply with any requisition that arises from such application.
4.Each of the parties be equally liable for the costs incurred in complying with Orders 1, 2 and 3 including any lodgement and registration fees provided that each party shall be separately liable for any legal fees incurred by that party in obtaining independent legal advice in respect of the Application for Subdivision and registration thereof.
5.Within 21 days of approval of the application for subdivision the husband and wife shall do all acts and things and sign all documents necessary to list the property known as and situated at 1 B and 2 B Street, Suburb C, folio identifier … for sale by public auction as set out in the following manner:
(a)The parties to appoint a real estate agent within seven days;
(b)The listing price for the sale shall be as recommended by the agent;
(c)If the Suburb C property fails to sell within three months, the parties shall do all necessary acts and things to list the property for sale by private auction, the reserve price for the auction shall be as agreed between the parties and failing agreement as recommended by the agent;
(d)The parties shall instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties and in the absence of agreement, such solicitor as may be appointed by the President for the time being of the Law Society of New South Wales, the costs of such appointment to be borne equally by the parties; and
(e)The husband and wife shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the key available to the agent;
(ii)Signing all documents requested by the agent in relation to the listing for sale of the Suburb C property;
(iii)Allowing inspection of the Suburb C property at all time as requested by the agent;
(iv)Doing all necessary repairs or improvements as recommended by the agent, and agreed by the parties, and the costs of which is to be borne equally by the parties;
(v)Doing or saying nothing to hinder or prevent a sale being effected;
(vi)Ensuring the Suburb C property, including the grounds, are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(vii)Ensuring the Suburb C property is insured at full replacement value.
6.Upon completion of the sale of the Suburb C property, the parties do all acts and execute all documents necessary to cause the proceeds of sale to be paid as follows:
(a)In payment of such sum as required to discharge the mortgage on the Suburb C property;
(b)In payment of all agent’s commissions, marketing expenses, auctioneer expenses (if any) and solicitor’s costs and disbursements referrable to sale;
(c)In payment of all municipal and water rates outstanding with respect to the Suburb C property;
(d)In payment of any Capital Gains Tax payable upon the sale of the Suburb C property;
(e)The balance to be divided in such a manner so as to ensure:
(i)If there has been a payment under Order 6(c) or the husband has failed to make any payments of the mortgage secured on the loan in the period preceding discharge then any payment made under Order 6(c) or any mortgage payments, penalties or interest included in the figure at 6(a) shall be deducted from any amount paid to the husband pursuant to Order 6(e)(iii) and the calculation of the wife’s entitlements shall be 62 per cent of the amount which would have been available but for the husband’s default ;
(ii)62 per cent of the net proceeds of the sale to go to the wife; and
(iii)The balance to the husband.
7.Orders 7 to 11 inclusive of these orders are binding on the Trustee of Superannuation Fund 1 (“the Superannuation Fund”).
8.The Court notes the intent of Orders 7 to 11 inclusive is that the wife’s entitlement from the Superannuation Fund immediately after the operation of these orders is a fixed sum of $228,717.50.
9.Pursuant to s 90XT(1)(a) of the Family Law Act 1975 (Cth) (“the Act”), whenever a splittable payment becomes payable in respect of the husband’s interest in the Superannuation Fund, the wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using a base amount calculated as $228,717.50 and there be a corresponding reduction in the entitlement of the husband to whom the splittable payment would have been made but for these orders.
10.Order 9 has effect from the operative time and the operative time for such order is four business days after the service of a sealed copy of these orders made by the Court on the Trustee of the Superannuation Fund.
11.The Trustee of the Superannuation Fund, in accordance with the obligations set out under the Act and the Regulations, do all such acts and things and sign all such documents as may be necessary to calculate the entitlement of the wife and transfer the splittable payment to a new interest in the Superannuation Fund for the wife in accordance with these orders and to give effect to these orders.
12.Within 42 days of the date of these orders, the parties shall take all steps necessary to close the joint bank account with Westpac Banking Corporation account number: …21, BSB: … and distribute the balance to the wife.
13.Each party be declared as the sole owner in law and equity of all items of personalty, chattels and financial resources in their name, possession or control not otherwise dealt with in these orders including but not limited to bank accounts, motor vehicles, any choses in action and superannuation benefits.
14.Except as provided in these orders:
(a)The wife hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife; and
(b)The husband hereby indemnifies the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband.
15.Except if any paragraph comprising these orders provides to the contrary, each of the parties release the other from all debts owing from one to the other.
16.Both parties shall promptly do all acts and things and execute all documents and authorities in writing as are necessary to give effect to all or any of the provisions of the paragraphs comprising these orders.
17.The parties have liberty to apply as to the implementation or enforcement of these orders.
18.If the wife or the husband shall refuse or neglect to execute any document necessary to give effect to these orders, then within seven days after the same shall have been tendered to him or her for that purpose: A Registrar of the Federal Circuit and Family Court of Australia, upon proof by affidavit of such refusal or neglect, is hereby appointed to execute any such document on behalf of either party hereto and if in his or her opinion it shall be necessary so to do to settle the same and do all such other acts and things and execute all such other documents as shall be necessary to give full force and effect hereto and shall execute and do the same accordingly.
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 Hannouch & Hannouch has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
These are final property proceedings between Ms Hannouch, the applicant wife, and Mr Hannouch, the respondent husband.
At the hearing, the wife relied on the following documents:
(a)An Outline of Case Document filed 10 March 2023;
(b)An Amended Initiating Application filed 24 March 2021;
(c)An affidavit of Ms Hannouch filed 7 October 2022;
(d)An affidavit of Ms Hannouch filed 1 March 2023;
(e)An affidavit of Mr E, single expert valuer, filed 13 March 2023 and annexing the Valuation Report of 1 B and 2 B Street, Suburb C; and
(f)A Financial Statement filed 23 February 2023.
At the hearing, the husband relied on the following documents:
(a)An Outline of Case Document filed 15 March 2023;
(b)A Response to Initiating Application filed 13 March 2023;
(c)An affidavit of Mr Hannouch filed 7 October 2022; and
(d)A Financial Statement filed 27 February 2023.
The wife seeks orders for property adjustment at the conclusion of the parties’ relationship. The husband also seeks orders.
The parties were able to resolve parenting matters on a final basis and orders were made by consent on 13 March 2023. In broad terms those orders provide the parties’ three younger children will spend six nights with their father and eight nights with their mother each fortnight during school term and the school holidays will be divided equally. Under the orders, the parties’ son W is permitted to spend time with either parent in accordance with his views from time to time.
BACKGROUND
The husband was born in 1981 and was almost 42 years of age at the time of hearing.
The wife was born in 1984 and was 38 years old at the time of hearing.
The parties have four children: W (born 2008), X (born 2010), Y (born 2014) and Z (born 2016).
In or around mid-2005 the parties commenced to live together at the home of the wife’s parents.
Around the same time, the parties purchased 1 B Street, Suburb C for $420,000 (subject to a loan of $360,000). That property was occupied by tenants.
In 2006 the parties married and in late 2006 commenced to reside in rented premises at Suburb F.
In 2015 the parties demolished the property which was located at 1 B Street, Suburb C and constructed two duplexes on the land. In 2016, development consent was granted for subdivision of 1 B and 2 B Street, Suburb C (“the Suburb C property”). Despite subdivision being approved, the property was never subdivided and the two duplexes remain on one Title.
In late 2016 the parties moved into the newly constructed duplex at 2 B Street, Suburb C and the other duplex was tenanted.
The parties disagree about the date of separation but regardless of the date, they continued to reside in the same premises until late 2018. On 25 June 2018 the applicant wife withdrew $80,000 from the parties’ mortgage and applied it to a combination of legal fees and living expenses.
In mid-2018, orders were made that provided for the wife to reside in 2 B Street, Suburb C and for the husband to meet the mortgage payments as well as the council and water rates on both properties.
In mid-2020 the husband sought and obtained a mortgage holiday in respect of the mortgage secured over the Suburb C property. The wife was unaware that he had done so.
In 2022 the wife commenced study to obtain a qualification. She is due to complete this qualification this term.
In August of 2022 the husband commenced cohabitation with his current partner Ms G.
THE LAW
It is necessary to first identify the legal and equitable interests of the husband and wife, consider what (if any) liabilities each of them has and consider any superannuation and financial resources in the names of the husband, the wife or either of them.
Having assessed the assets available for adjustment as between the husband and wife, it is then necessary to have regard to the matters set out in ss 79(4) and 75(2) of the Family Law Act 1975 (Cth) (“the Act”) insofar as they are relevant to the facts in this case.
An analysis of the matters set out in ss 79(4) and 75(2) of the Act will determine what order (if any) is appropriate to do justice and equity as between the parties.
The assessment of contributions is usually approached in a holistic fashion with the recognition that it can be difficult to weigh financial contributions against non-financial contributions and the Court will be cautious to make sure that non-financial contributions are not undervalued in the process.
At the conclusion of the process, s 75(2) of the Act directs the Court to consider the parties prospective financial circumstances to ensure that the orders are appropriate in all the circumstances.
In this case it is necessary to have regard to the guiding principles which emerge from the decisions in AJO v GRO (2005) FLC 93-218, NHC and RCH (2004) FLC 93-204 and Trevi & Trevi (2018) FLC 93-858 about the treatment of notional property including monies applied to the payment of legal fees.
CONSIDERATION
The issues which arose in the circumstances of the trial are as follows:
(a)What are the net assets available for adjustment as between the parties?
(b)Should the pool of assets include notional assets?
(c)What were the initial contributions of the parties?
(d)How should the Court treat the amounts withdrawn by the wife from the parties’ mortgage after separation?
(e)How should the Court treat the amounts withdrawn by the husband from the parties’ mortgage contrary to the orders of 30 August 2018?
(f)Has the husband provided financial support for the children in accordance with the assessment in the period post-separation?
(g)What weight should be attached to the income disparity as between the parties?
(h)Do the parenting orders which have been made require the Court to consider an adjustment in the favour of the wife?
The assets, liabilities, superannuation and financial resources which the parties contended ought be adjusted are as follows:
Ownership Description Wife’s value Husband’s value ASSETS 1. Joint 1 B & 2 B Street, Suburb C $ 2,800,000 $ 2,750,000 2. Joint Westpac bank account ending in #...21 $ 1 $ 1 3. Husband Westpac bank account ending in #..31 $ 3 $ 3 4. Husband Household contents $ 5,000 $ 5,000 5. Husband Motor Vehicle 1 $ 5,000 $ 5,000 6. Husband Motor Vehicle 2 $ 4,000 $ 4,000 7. Husband Firearm 1 $ 350 $ 350 8. Husband Firearm 2 $ 550 $ 550 9. Husband Equipment $ 1,500 $ 1,500 10. Wife Westpac bank account ending in #...61 $ 1.10 $ 1.10 11. Wife Westpac bank account ending in #...75 $ 1,011.79 $ 1,011.79 12. Wife H Bank account ending in #...72 (50% interest) $ 5 $ 5 13. Wife Household contents $ 8,000 $ 8,000 14. Wife K Business $ NIL $ 1,278 15. Wife Westpac bank account ending #...28 (W) $ NIL $ NIL 16. Wife Westpac bank account ending #...01 (X) $ NIL $ NIL 17. Wife Westpac bank account ending #...36 (Z) $ NIL $ NIL 18. Wife Westpac bank account ending #...99 (Y) $ NIL $ NIL 19. Wife Motor Vehicle 3 $ 2,300 $ 2,300 20. Husband Cryptocurrency $ 3,000 $ 3,000 Total: $ 2,830,721.89 $ 2,781,999.89 ADDBACKS 21. Husband Funds withdrawn from parties’ mortgage by husband in breach of order 30.8.18 $ 67,013.45 $ 23,939.88 22. Wife (Part) Funds withdrawn from the parties’ mortgage account by the wife on 25 June 2018 to pay for legal fees to 10.3.23 $ 32,430 $ 80,000 23. Husband Legal fees paid by husband to 9 March 2023 $ 184,216 $ NIL 24. Wife Funds withdrawn by wife to meet living expenses $ 1,400 $ 4,000 Total: $285,059.45 $107,939.88 LIABILITIES 25. Joint Mortgage on Suburb C $ 841,309 $ 841,309 26. Husband Westpac Visa Credit Card $ NIL $ NIL 27. Wife Westpac Business Gold Credit Card $ 2,295 $ 2,295 Total: $843,604 $843,604 SUPERANNUATION Member Name of Fund Type of Interest Applicants value Respondents value 28. Husband Superannuation Fund 2 Defined Benefit $ 482,922.70 $ 482,922.70 29. Wife Superannuation Fund 3 Accumulation $ 25,488 $ 25,488 Total: $ 508,410.70 $ 508,410.70 Net Assets: $ 2,780,588.04 $ 2,554,746.47 Determining the identity & value
Suburb C
The Court, at the request of the parties, appointed a single expert property valuer to value their property at Suburb C. At present the property has a duplex and is on one Title. The valuer, whose opinion was not challenged, expressed the view that the property was worth $2,800,000, if sold individually after subdivision, or $2,750,000 if sold without subdivision. The wife asks that I include the Suburb C property in the schedule of assets at the higher value, the husband at the lower value. The wife seeks that the parties complete the subdivision. The husband seeks orders that the property be sold un-subdivided.
The wife had obtained a quotation from a surveyor about the fees involved in obtaining the subdivision. The fees would not exceed the estimated uplift. The husband did not advance any particular basis for acceptance of the lower valuation or selling the property without subdivision. Accordingly, I will make orders which both require the parties to complete the subdivision and assume the higher property value.
Value of Just Creates
The wife has a business. She recorded the value of that business as NIL. The husband asks the Court to find that it should be included in the balance sheet at a value of $1,278. He says (and the wife does not dispute this) that the 2022 partnership tax return for the business (exhibit 18) shows net assets of $2,556 (described as tables and stands purchased in 2019). Since that business operates as a partnership between the wife and her business partner the husband says that the business has a value to the wife equivalent to half the net assets. Inclusion of an asset in partnership accounts at a particular value is not evidence of value. Given the (modest) income of the business it would be unsafe to attribute a value to it based on the value of its assets recorded in partnership accounts current as at 30 June last year. I find it is likely that the partnership has nominal value to the wife and is best understood as a vehicle through which she has earned income as opposed to an entity with other than nominal value. I propose to exclude it from the balance sheet.
Long service leave and annual leave
The wife’s counsel submitted that the husband’s long service leave and annual leave should be considered a financial resource.
The husband’s payslip which became exhibit 10 in the proceedings revealed that he had annual leave totalling 846.66 hours and long service leave totalling 604.25 hours. His payslip also indicated an hourly rate of pay of $97.9879. Applying those figures, it would appear that, if one were to conduct the mathematical calculation, his annual leave would be worth $82,962.45 (or more if he is entitled to a leave loading) and his long service leave would be worth $59,209.20. The husband gave evidence to the effect that there was a limit to the amount that he could take as a cash settlement. I find that the capacity of the husband to take paid leave is in and of itself a financial resource. However, the husband is entitled to take leave and it is part of his conditions of employment. I note that it is particularly significant in the circumstances of this case because, whilst the husband has been accruing entitlements to leave over a very long period of time, he has not been taking leave. It stands to reason then that, to the extent that there has been care provided to the children, it has been provided by their mother who has not been in full time paid employment. The husband then carries forward, post-separation, this entitlement to paid leave which is of value to him (as a financial resource) and I will make an adjustment in that regard when I come to consider s 75(2) of the Act.
Notional Assets
The “add backs” or notional assets which the parties asked me to include in the balance sheet fell into two categories:
(1)legal fees; and
(2)amounts withdrawn from the parties’ mortgage.
As discussed below it is difficult to determine with precision how legal fees have been paid (whether from capital or income) and important, in considering whether to treat monies which no longer exist as though they were assets, that there is not a double counting of monies applied to legal fees and monies applied to other expenses.
Treatment of paid legal fees
The husband’s paid legal fees as at the date of hearing, as set out in his costs notice (exhibit 2) were $141,206.71. In addition to that the husband had legal fees which were outstanding and estimated future legal fees. The costs notice referred to monies held in trust in the sum of $43,010.
In cross-examination the husband said that the monies held in trust were paid by his mother. The documents tendered in his case support that submission. I am satisfied on the basis of the evidence that the monies in trust were monies provided by the husband’s mother and ought not be included in my assessment of the parties’ assets.
Paid legal fees may be considered a notional asset of the party who made the payment in appropriate circumstances.
The wife’s paid legal fees, as per her costs notice (exhibit 1), were in the sum of $145,628.42. Of those, $118,046.09 were sourced from the wife’s father and $32,430.58 were described as having been paid by the wife herself.
Monies spent post separation
The wife sought to include in the pool of assets available for adjustment as between the parties, amounts of money which had been expended by the husband in the post-separation period and accordingly, were not available to the parties for division between them.
The first amount which the wife sought to include in the balance sheet was an amount of $67,013.45 described as funds withdrawn from the mortgage by the husband in breach of the orders of 30 August 2018.
The husband, through his counsel, accepted that the amount of money which he had withdrawn from the mortgage contrary to the obligations imposed upon him by the orders of 30 August 2018 was the sum of $67,013.45. The husband contended that, in circumstances where he had paid monies to the mortgage over and above those which he was obliged to pay at different periods, the net effect of his failure to comply with the orders is that he retained $23,939.88 which should have been applied to the mortgage. For that reason, he consents that that amount should be included as a notional asset in the balance sheet. One of the difficulties with the argument and making findings about the proper amounts to be included or not included is that the wife also seeks to include as a notional asset in the balance sheet legal fees paid by the husband in the sum of $184,216.
In circumstances where it is plain that some of the monies which the husband took from the mortgage, or otherwise did not apply to the mortgage, ended up being reflected in his paid legal fees, to include both amounts would be to run the very real risk of double counting those funds. It is plain to me from the exhibits that the husband paid his lawyers some amounts directly from the parties’ mortgage. On 30 August 2018, the husband withdrew two amounts from the home loan totalling $15,389.70. Those amounts were paid to his lawyers. The husband also received $15,000 (pursuant to the 30 August 2018 court orders) on 14 March 2019 which amounts were applied to legal fees. It is otherwise unclear to me precisely the source of funds which the husband used to apply to his legal fees. I accept it was a combination of his earnings, monies he borrowed and monies which he took from his savings and/or, as already outlined, from the parties’ mortgage. Doing the best I can, I think it would be appropriate to treat the following amounts as notional property of the husband:
(a)$23,939.88 (funds withdrawn from the parties’ mortgage, including the two payments set out above as applied to legal fees); and
(b)$15,000 (partial property settlement).
The husband might otherwise be considered to have applied his income to his paid legal expenses which have not been funded by monies from his mother.
It follows that the amount I should include as an addback or notional asset in the husband’s hands is $38,939.88, since those came from the parties’ funds as opposed to the husband’s income.
Wife’s withdrawal of $80,000
It is necessary to consider the funds withdrawn by the wife. I propose to take this course: it is plain that, from the $80,000 which she received, she applied $32,430.58 to her legal fees. That amount should be added back. The husband sought that I add back the whole of the $80,000. The wife had a shortfall between her income and her expenses (without taking into account her legal fees). The withdrawal was made on 25 June 2018. The hearing took place in March 2023, five years later. Based on the shortfall set out in the wife’s affidavit, the remainder of the $80,000 would not have been sufficient to meet her living expenses. That factor, in my view, would make it unjust and inequitable if I were to have regard to money which the wife has used for her support, and that of the children, post-separation, as though that money were still in her possession. I do not propose to include the remainder of the funds as a notional asset or addback.
Where the assets which the parties included in their joint balance sheet were of no value or nominal value I have deleted them from the pool.
Cryptocurrency
The husband bought cryptocurrency after separation. The exact amounts purchased and sold were never made clear. Ultimately the parties accepted that I should include a figure of $3,000 as representative of cryptocurrency which the husband had at the time of trial.
It follows from the above findings that the pool of assets, liabilities and superannuation available for adjustment is as follows:
Ownership Description Value ASSETS 1. Joint 1 B & 2 B Street, Suburb C $ 2,800,000 2. Husband Household contents $ 5,000 3. Husband Motor Vehicle 1 $ 5,000 4. Husband Motor Vehicle 2 $ 4,000 5. Husband Firearm 1 $ 350 6. Husband Firearm 2 $ 550 7. Husband Equipment $ 1,500 8. Wife Westpac account ending #...75 $ 1,012 9. Wife Household contents $ 8,000 10. Wife Motor Vehicle 3 $ 2,300 11. Husband Cryptocurrency $ 3,000 Total: $ 2,830,712 LIABILITIES 12. Husband Funds withdrawn from the joint mortgage account $ 38,940 13. Wife Legal fees (including amounts drawn from mortgage) $ 32,430 14. Joint Mortgage on the Suburb C property $ 841,309 15. Wife Westpac Business Gold Credit Card $ 2,295 Total: $ 914,974 SUPERANNUATION 16. Husband Superannuation Fund 2 $ 482,923 17. Wife Superannuation Fund 3 $ 25,488 Total: $ 508,411 Net Assets: $ 2,424,149 Contributions
The parties started living together in 2005 and were married in 2006. They assumed separate residences in 2018 and their proceedings for financial orders were listed for determination in March 2023. Hence the period during which each made contributions of a financial and non‑financial nature encompasses the 13 years of their relationship and about five years post separation.
At the commencement of the relationship neither party had any assets of significance.
In 2005 both parties approached Westpac for a loan. The loan application (exhibit 3) describes the purpose of the loan as “purchase first home”. At this stage both parties indicated to the bank that they were living with their respective parents. They were both employed, the husband as a technician and the wife in the beauty industry.
The husband had savings disclosed to the bank in the sum of $34,000. The wife had savings and a car disclosed to the bank with a collective value of $15,000. The husband had a HECS debt in the sum of $22,880. Accordingly, the parties’ net assets as the commencement of the relationship were modest and modestly favoured the wife.
Each of the parties continued in their paid employment after marriage. The husband has always worked as an employee and consistently earned more than the wife.
The wife has worked both as an employee and self-employed. The wife gave evidence and was cross-examined about the income earned by her and from the businesses which she ran. As it emerged from the cross-examination, it became plain that the wife’s income earning capacity was significantly compromised by the arrival of the parties’ children for whom she provided the principal day to day care.
While the husband gave extensive evidence (and there was extensive cross-examination) about the manner in which his income was, from time to time, applied to the business expenses of the wife, I am not confident that this is relevant to the exercise of my discretion. I am obliged to consider the husband’s personal exertion income as a contribution by him and I do. Only if there was cogent evidence which demonstrated that the money once earned was dealt with in a manner that was reckless, wanton or negligent would it become necessary to understand precisely how it was applied, in what quantities and for what purposes. I find that both parties applied the money they earned to the expenses of the family as they arose.
It is plain that the husband made the chief financial contribution during the parties’ marriage while the wife made the chief non-financial contribution and each contributed to the best of his or her ability in their respective spheres such that, at the end of the relationship, I can comfortably find that their contributions were equivalent and the contribution based entitlements accordingly equal. It is neither productive nor necessary in a long relationship to weigh the scales from year to year to determine whether one or other of the parties has made a greater contribution. This approach would run the risk of devaluing non-financial contributions and depart from the authority which requires that contributions be considered holistically.
There is a dispute between the parties about when the relationship ended.
The wife’s affidavit material talks about temporary separations but says the parties separated on a final basis on 17 June 2018. The husband records the date as 17 June 2018 in his Case Outline and November 2016 in his affidavit. Both parties agree that the husband and wife ceased to reside under the one roof in late 2018. The separation date is not material in my ultimate assessment of contributions.
The husband rented L Street, Suburb J from late 2018. The rent payable by the husband was $1,260 per fortnight. The husband met that rent.
The parties maintained similar contributions after separation. The husband continued to make the greater financial contribution, while the wife continued to make a greater parenting contribution. Accordingly, there is nothing in the manner in which the parties contributed in the period after they separated on a final basis which would cause me to revisit the conclusion that their contributions should be assessed as equal.
On 30 August 2018 orders of the Court were made which provided for the wife to have exclusive occupation of the parties’ property at Suburb C and spouse maintenance.
Orders 5 to 7 of the orders provided:
5. The parties be restrained from encumbering, further encumbering or otherwise dealing with the property or the parties’ investment property situate at and known as [1 B and 2 B Street, Suburb C] folio identifier […] otherwise than to allow the Respondent to drawdown the sum of fifteen thousand dollars ($15,000.00) from the [M Finance] line of credit/mortgage.
Maintenance
6. The parties be restrained from utilising the rental income derived from [1 B Street, Suburb C] other than for the purposes of servicing the Westpac mortgage account BSB […] Acc […75].
7. a. Subject to order 6, the Husband, by way of spousal maintenance, pay all instalments in respect of the Westpac mortgage account BSB […] Acc […75] and all council rates and water rates related to [1 B and 2 B Street, Suburb C] as and when they fall due.
b. The Husband shall within seven (7) days obtain home and contents insurance in joint names for the [Suburb C] properties and keep that policy current.
One of the issues the parties asked me to determine was whether the husband had complied with that order and, in the event that he had not complied with that order, what consequences (if any) flowed from his failure.
The order obliged the husband to apply the rents received from the tenants to the mortgage. The order obliged the husband to pay the mortgage.
The husband provided the Court with an Aide Memoire (exhibit 21) which detailed the mortgage transactions between 30 August 2018 and 30 May 2022 (the date upon which the property ceased being tenanted). The amount of rent which the husband received during that period (calculated at $700 per week for 104 weeks and $750 per week for 91 weeks) totalled $141,050. The payments made by the husband into the mortgage totalled $184,123.57. While the husband paid in excess of the amount required towards the mortgage, he also made withdrawals (other than those sanctioned by court order) totalling $67,013.45. The net effect of the withdrawals is that the husband only paid $117,110.12 towards the mortgage when the orders required him to pay at least $141,050 (being the application of the whole of the rents). The shortfall is therefore $23,939.88. Both parties accepted the correctness of this figure. The appropriate way to deal with this is to consider that the husband has had the benefit of those funds and include them as a notional asset (as discussed above).
Although the wife raised the husband’s payment of child support, the evidence at the conclusion of the trial did not establish that he had been derelict in his duty to support the children.
Accordingly, I conclude that the parties’ contributions considered from the time of the commencement of their relationship until the time of hearing are such that I would regard their contribution based entitlements to assets and superannuation as equal.
Section 75(2) factors
The relevant s 75(2) matters which emerged from the evidence were the income disparity between the parties, the length of the marriage and the impact on the wife’s income and earning capacity, the fact of the husband having entered into a de facto cohabiting relationship and the financial resource of the husband’s leave entitlements.
The wife is retraining. Her current minimal income comes from a business which she runs from home.
The husband continues in employment with N Limited where he has worked for 18 years. His salary, according to his financial statement is $4,136 per week.
The husband did not fill in those parts of his financial statement filed 27 February 2023 which referred to other income earners in his household. The husband did say in his affidavit material that he lives with his partner Ms G. Ms G has had some limited paid employment but the Court did not have any information directly from her or in the husband’s case in chief. The information about the “financial circumstances of the relationship” emerged only during cross-examination. This is unfortunate. That said, I did not form the view that Ms G had significant means or earned significant income. The evidence which was ultimately given was to the effect that the husband had paid for an airfare for her. From the information available to me I am not confident that the financial circumstances of the husband’s cohabitation with Ms G support the making of an adjustment in favour of either party.
As set out above it is agreed that the husband has fairly substantial annual leave and long service leave entitlements, some of which may be paid to him as a lump sum but all of which may be enjoyed by him as a financial resource. The wife has no similar entitlements.
The wife has three sources of financial support – the first is her business. In her financial statement she estimated the weekly income as $150. That is supplemented by $113 in Family Tax Benefits and $518 in Child Support with the total weekly income for support of the wife and the parties’ four children when they are in her care of $781 per week.
It is apparent that the parenting responsibility undertaken by the wife during the parties’ relationship had an impact on her capacity to earn income and accordingly, on career progression or the establishment of a viable business, with income sufficient to support the wife and the children.
The wife is undertaking study towards a qualification. It is appropriate that the wife retrain. There was no information about the income she is likely to earn when she is qualified. I do not think the submission on behalf of the husband to the effect that, when she is qualified, the income disparity is likely to be minimal, is credible. The husband has worked in his skilled role for 18 years, the wife will be newly qualified. The income disparity will remain significant although I accept not as stark as present.
The husband’s capacity to meet legal fees from income post separation is a practical demonstration of the parties’ income disparity.
The wife gave evidence of her ill health. The health of a party to the marriage will be relevant to the assessment of what orders are just and equitable where the health issues impact on capacity to work or have other financial consequences. The wife says she has been unable to consult her treating psychiatrist because she cannot afford the gap fee. There was no challenge to the wife’s evidence about her health and I accept that evidence.
Having reached the conclusion above, that the parties contribution based entitlements to their shared property should be considered equal, it is necessary, having regard to the matters I have considered under the heading “section 75(2)”, to make an adjustment from that position of equality to recognise the significant disparity in the parties’ financial circumstances at the end of the this long relationship. The parties started living together when the wife was about 21 years old and the husband 24 years old. They are now 38 and almost 42 and have four children between the ages of 14 and seven.
The superannuation splitting orders will address, to some extent, the period of time out of the workforce for the wife. But it is necessary to address the income disparity, the care arrangement for the parties’ children, the husband’s leave entitlements and the wife’s health related expenses. The appropriate overall division as a consequence is one which sees the wife receive 60 per cent of the net pool of assets and superannuation and the husband 40 per cent.
Taking into account the property that will remain with each of the husband and wife the effect of that division will be:
Husband Wife Asset Value Asset Value Sale proceeds of the Suburb C property $ 734,994.10 Sale proceeds of the Suburb C property $ 1,223,696.90
Household contents $ 5,000 Westpac account ending #...75 $ 1,012 Motor Vehicle 1 $ 5,000 Household contents $ 8,000 Motor Vehicle 2 $ 4,000 Motor Vehicle 3 $ 2,300 Firearm 1 $ 350 Firearm 2 $ 550 Equipment $ 1,500 Cryptocurrency $ 3,000 Total: $ 754,394.10 Total: $1,235,008.90 Liability Value Liability Value Funds withdrawn from the joint mortgage account $ 38,940 Legal fees (including amounts drawn from mortgage) $ 32,430 Westpac Business Gold Credit Card $ 2,295 Total: $38,940 Total: $34,725 Superannuation Value Superannuation Value $ 254,205.50 $ 254,205.50 Total: $ 969,659.60 Total: $ 1,454,489.40 ORDERS
The parties agreed that there should be a superannuation splitting order and that the Trustee of the husband’s superannuation fund had been accorded procedural fairness in respect of the orders sought concerning superannuation splitting. The wife’s application sought a superannuation split such that she receive 75 per cent of the parties total superannuation assets by way of a superannuation split of the husband’s superannuation fund. During submissions counsel for the husband indicated that the superannuation should be split such that each of the parties have half of the total superannuation.
I have concluded that the parties’ assets and superannuation should be split in such a way as to ensure that the wife receive 60 per cent of the total pool (which includes both assets and superannuation). This can be achieved by the wife receiving a base amount from the husband’s superannuation which means that their superannuation interests would be equivalent. That is, the superannuation will be split 50/50. That will mean that the wife receives more of the parties’ non-superannuation assets to ensure that she receives 60 per cent of the overall pool.
In making the orders for sale and division of the net proceeds I have expressed the amounts to be received in percentage terms to take into account the reality that whatever the single expert opined the actual figure will likely be different.
The wife seeks an order that the parties be required to do all acts and things necessary to complete the subdivision of the Suburb C property prior to sale. The wife says that the single expert evidence supports the conclusion that the parties will achieve $50,000 more if the properties are offered separately. The husband resisted the requirement of subdivision but did not advance any basis for his opposition. Before me (exhibit 24) was a quotation from a surveyor dated 14 June 2022. I accept that the quotation is no longer valid but is the best evidence available to the Court of the likely costs of a subdivision. The fees quoted would be at least $6,545.
I will order that the Suburb C property be subdivided and sold and the husband and wife receive amounts necessary to effect the overall percentage adjustment.
While the joint bank account was excluded from the final balance sheet due to its nominal value, I will make an order that it be closed and whatever may remain in it be transferred to the wife.
I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 5 May 2023
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