Harper and Harper
[2013] FCCA 1657
•18 October 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HARPER & HARPER | [2013] FCCA 1657 |
| Catchwords: FAMILY LAW – Property – section 75(2) factors – business – income earning capacity – addbacks. |
| Legislation: Family Law Act 1975, Pt VIII, ss.4, 72, 74, 75, 79, 81 |
| Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 Bevan & Bevan [2013] FamCAFC 116 |
| Applicant: | MS HARPER |
| Respondent: | MR HARPER |
| File Number: | DGC 2522 of 2012 |
| Judgment of: | Judge Harland |
| Hearing dates: | 5 & 6 August 2013 |
| Date of Last Submission: | 6 August 2013 |
| Delivered at: | Darwin |
| Delivered on: | 18 October 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Williams |
| Solicitors for the Applicant: | JH Legal Pty Ltd |
| Counsel for the Respondent: | Mr Gates |
| Solicitors for the Respondent: | South East Lawyers |
ORDERS
That the Husband pay to the Wife the sum of $152,386.48 (the payment) within 90 days of the date of these Orders.
That simultaneously with compliance with orders 1 and 3:
(a)The Wife do all such acts and things and sign all such documents as may be required to transfer to the Husband at the expense of the Husband all of her right, title and interest in the former matrimonial home;
(b)The Husband indemnify the Wife against all payments and liabilities pursuant to the mortgage to (omitted) Bank encumbering the property together with the (omitted) Bank loan account number (omitted) in the sum of approximately $27,218 and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind and shall do all such acts and things and sign all such documents as may be required to discharge all liability of the Wife pursuant to the said mortgage;
That the Husband do all such acts and things and sign all such documents as may be required to:
(a)Transfer to the Wife his entire shareholding in the (omitted) Pty Ltd and any associated entities (“the company”);
(b)Resign as Director of the company;
(c)Resign from the Office of Secretary and from all other offices he may hold in his company;
(d)Relinquish any right or interest in any superannuation entitlements and long service leave entitlements;
(e)Relinquish any right, title and interest to the Wife or her nominees.
That the Wife retain all of the assets of the company, including but not limited to, bank accounts, plant & equipment save and except that the Toyota (model omitted) be transferred into the Husbands sole name and that the Husband refinance the current loan encumbering the vehicle into his sole name and discharge all liability of the Wife pursuant to the loan; and
That the Husband be and is hereby forever restrained from calling upon any loan account credit in the company and making any claims of whatsoever nature and kind against the company.
That the Wife indemnify and keep indemnified the Husband in relation to any liability howsoever arising out of the operation of the company, including but not limited to, taxation liabilities, bank overdrafts and bank loans.
That the Wife indemnify the Husband and discharge all liability of the Husband in relation to the (omitted) Bank loans account numbers (omitted) and (omitted).
That the Wife procure release from any and all guarantees given by the Husband with respect to (omitted) Pty Ltd and the business trading as (omitted), including the guarantees in relation to the (omitted) Bank loan account numbers (omitted) and (omitted) together with the business (omitted) including the Ford (omitted) and the finance loan encumbering same.
That in the event that the whole of the payment has not been made by the date then the real property be forthwith sold altogether out of Court (“the sale”) and on completion of the sale, the proceeds of sale be applied as follows:
(a)Firstly, to pay all costs, commissions and expenses of the sale;
(b)Secondly, to discharge the mortgage to (omitted) Bank of Australia encumbering the property together with the (omitted) Bank loan account number (omitted) in the sum of $27,218;
(c)Thirdly, so much of the payment as is then outstanding less the discharge figure required to discharge the (bank) omitted loan account number (omitted) together with interest thereon at the rate of 10.5 per centum per annum;
(d)Fourthly, the balance to the Husband.
That pending the payment or completion of the sale:
(a)The Husband have the sole right to occupy the real property and that during such right of occupation the Husband pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the real property as they fall due;
(b)The parties hold their respective interests in the real property upon trust pursuant to these Orders, and
(c)Neither party encumber the real property without the consent in writing of the other party.
That in the event the Wife fails to refinance the business loans by the date, the loans will be paid out from the settlement funds owing to the Wife and accordingly at settlement, the payment will be applied as follows:
(a)Payment in full to discharge account loan number (omitted) in the sum of approximately $35,635;
(b)Payment in full to discharge account loan number (omitted) in the sum of approximately $59,042; and
(c)The balance (if any) to the Wife.
That each party retain their respective superannuation entitlements.
That unless otherwise specified in these Orders and save for the purpose of enforcing any monies due under these or any subsequent Orders:
(a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders (the furniture, personal possessions and jewellery);
(b)Monies standing to the credit of the parties in any joint bank account are to be divided equally between the parties and then closed;
(c)Each party forego any claims they have made to any jewellery currently in the other parties possession.
That within 30 days of the date of these orders the parties are to do all acts and things necessary to divide the joint (omitted) Super insurance policy into two separate policies on their respective lives and in the event that this is not possible then the policy is to be cancelled and the proceeds, if any will be divided equally between the parties.
Each party 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 within 30 days of the date of these orders the parties are to jointly instruct Ms C to prepare their personal tax returns to apportion the personal expenses the business has paid on their behalf as set out in Exhibit A3 in these proceedings.
Each party shall do all such things and sign all such papers and documents that are necessary to give effect to the orders provided that in the event a party unreasonably fails or refuses to sign pursuant to these orders, then a Registrar of the Court pursuant to section 106 (A) Family Law Act 1975 is authorised to sign any such document on behalf of the defaulting party.
IT IS NOTED that publication of this judgment under the pseudonym Harper & Harper is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DANDENONG |
DGC 2522 of 2012
| MS HARPER |
Applicant
And
| MR HARPER |
Respondent
REASONS FOR JUDGMENT
Introduction
These are proceedings for property and parenting orders which were commenced by the wife on 16 August 2012.
At the commencement of the hearing parenting and property issues were in dispute.
The parties were married on (omitted) 2004. They started living together in 2002. They separated on 28 June 2012. There are two children of the marriage: X born (omitted) 2007 aged 5 and Y born (omitted) 2010 aged 3.
It is to the parties’ credit that at the beginning of the hearing they instructed their respective counsel not to cross-examine about the various recriminations each party makes against the other with respect to parenting issues which occurred last year. Counsel agreed that I should place no weight on that material in their affidavits.
The parties were also able to resolve the parenting issues by consent on the second day of the hearing.
It is clear that this has been an acrimonious breakup and that the parties continue to have strong negative feelings towards each other. I have no doubt that it was difficult for them to resolve their parenting dispute. Hopefully it is an indicator that they will be able to work together as parents in the future.
The parties have a business together called (omitted) (“the business”). The parties worked in the business together. The husband is a trained (occupation omitted). The husband worked in the (omitted). The wife managed the (omitted). The parties purchased the business in 2008 for $200,000. The (business omitted) premises are leased.
The wife seeks to keep the business. She says that she has had to work longer hours and has had to hire more staff to cover the husband’s absence. The husband was excluded from the business by court order in October 2012. The husband subsequently found employment as a (omitted).
The parties purchased the property at Property S in 2005 for $280,000. The parties obtained a valuation of the property and agree that it had a value of $450,000. The home loan is currently $184,997.70.
Interim consent orders were made on 2 October 2012. The property orders included:
a)Payment to the husband of $28,600 from the mortgage redraw facility;
b)The husband to vacate the property by 13 October 2012 and the wife to have sole use of the property;
c)The wife is to pay from the business the mortgage, rates ,taxes and outgoings (except for utilities);
d)The property be listed for sale;
e)The wife be entitled to the net profits of the business to the extent necessary to pay the expenses referred to above, the wife’s salary of no more than $850 per week and the husband’s salary for two weeks at $700 per week. Any further profits are to be retained by the business.
The parties attended a conciliation conference in February 2013. At that conference the husband indicated that he wished to keep the property. The wife says she told the husband he was welcome to return to the property provided he took over the mortgage payments.
Interveners
The husband’s parents intervened in the proceedings shortly before the final hearing. Their application had to be dealt with on the morning of the first day of hearing. The application was unnecessary. Both parties’ parents have guarantees over loans with the business. These loans will be discharged as part of the final property orders which will release them from their guarantees.
The letter from the paternal grandparent’s lawyer to the wife’s lawyer dated 12 December 2012 was unreasonable. It was unreasonable of the husband’s parents to seek to be released from their guarantor immediately when they knew that there would be a final hearing with respect to property issues.
Agreed assets and liabilities
The parties have agreed that the pool (except for disputed items discussed under the next heading) are as follows:
Assets
(business omitted) $112,700 Property S $450,000 Toyota (model omitted) $35,000 Ford (model omitted) $26,000 Total Assets $623,700 Liabilities
(omitted) Bank Home Loan $184,997.70 Owing to the wife’s parents $59,042 Owing to the husband’s parents $35,635 (omitted) Bank loan $27,218 Toyota (model omitted) finance $6,106 Ford (model omitted) finance $25,710 Total liabilities $338,708.70 Net asset pool excluding Superannuation $284,991.30 Wife’s Superannuation
(omitted) Super $874.45 (omitted) Bank $10,596.52 Total Wife’s Superannuation $11,470.97 Husband’s Superannuation
(omitted) Super $6,176.55 (omitted) Super $14,619 Total Husband’s Superannuation $20,795.55
Disputed items
There are 3 areas of contention with respect to the pool.
The payment to the husband of $28,600
The husband received $28,600 from matrimonial funds as part of the orders made on 2October 2012 the characterisation of this sum is to be determined hearing. The wife says this sum should be added back as a partial property settlement to the husband. The husband says this was a lump sum spouse maintenance payment and should not be added back except for the sum of $4,440.00 which the husband spent on a (omitted) watch. The husband conceded that this should be added back even though during cross-examination he asserted that he bought this watch for his son who is just 3 years old. The husband says he had to pay bond and had to buy new furniture.
The husband says that he used about $25,000 of the $28,000 he received on buying new furniture and household items as well as the (omitted) watch for $4,400. This is in addition to the furniture that he took from the home which included a bed, the children’s beds and several other items. I do not accept that was necessary expenditure. He says he took the bed because the orders said that he could take it but that they had been planning to buy a new bed and he wanted a new bed. This is an example of his pettiness. I find that he took more furniture than what he admitted to.
The wife says that the husband did not need to spend the amount he has on furniture items given that he took the parties’ bed from the property and then also bought a new bed.
The BAS debt
Exhibit “A2” is the business’ integrated client account from the Australian Taxation Office showing an amount owing as at 12 August 2013 of $16,461.93.
The wife argues that the BAS debt for the first half of 2013 of $16,461.93 should be added to the liabilities of the business. The husband says in doing so would be double counting as this is an ongoing liability of the business which was factored in to the business valuation.
The valuation of the business carried out by the single expert Mr W of (omitted) takes into account at appendix 2 the fact that there was a BAS owing to Australian Taxation Office the valuation reflects the fact that these as well as other liabilities are owing. They appear in the current liabilities section of the balance sheet.
I accept the husband submissions that to include the current amount of BAS owing of $16,461.93 would be double counting. This is an ongoing liability of the business in that the amounts will vary. The current amount owing is not hugely different to the amount reflected in the valuation. It reflects the fact that the business has been doing a similar amount of trading since separation.
The treatment of the personal expenses the business paid on the parties behalf
There is a potential tax debt as a result of the personal expenses the business has paid on behalf of the parties in the sum of $24,184. The calculation for the figures are set out in Exhibit “A3” being a letter from the business Accountant Ms C.
Historically the business has paid for the party’s personal expenses including the mortgage, car expenses, life insurance premiums, speech pathology and child care. At the end of each financial year these expenses have been added equally to the party’s taxable income.
The wife’s position is that the same should occur for the 2013 financial year.
The husband agrees that the home loan repayments, speech pathology and motor vehicle expenses should be shared between them. During cross-examination the husband conceded that the life insurance premiums, assuming it includes his life insurance, should also be included. There is nothing to suggest that it is not the same amount as the previous year. The parties have a joint life insurance policy which they are seeking to be severed. In these circumstances, it is appropriate that this expense be shared.
There is a small expense for ‘services’. There was no cross-examination about this. It is clear that it was the parties’ practice for the business to pay personal expenses for the parties. There is no reason why this amount should not be shared.
Although he has been excluded from the business, the husband continued to receive benefits from the business.
The remaining figure in dispute is the childcare expenses. The husband says that he should not have to contribute to the childcare fees that the wife incurs because he is available to look after children. I do not accept that argument. Historically the parties have paid for the childcare from the business. The husband was not working for a period but was looking for work and found work. There were issues in dispute between the parties about what the appropriate parenting arrangements would be.
The father’s counsel submitted it would be unfair to add half the childcare fees to the husband’s income, as has been done in the past, because it would potentially push him up into another income bracket when he had no choice in the children attending childcare.
It is speculation as to whether or not it will increase the husband’s income brackets. In any event in my view it is just and equitable for the parties to share those expenses as they have historically.
Other adjustments
The husband complains in his affidavit and that the wife breached the orders made on 2 October 2012. Order 8 of those orders requires the wife to pay the mortgage from the business, the rates taxes and outgoings of the property except for utilities. Those orders also provide the wife to have sole occupation of the former matrimonial home and the home to be placed on the market for sale. The wife was to have sole control and day to day operation of the business. The husband complains that the wife paid the mortgage from the joint account rather than from the business. He seeks an amount of $8,114.01 be added back.
In February 2013 the wife reduced the amount she paid to the mortgage. She says that the orders made in October 2012 did not state how much she has to pay. She is correct. She also says that she realised that she had inadvertently been paying the mortgage twice as she had forgotten about the payments set up from the joint account. Approximately $8,000 was paid from the joint account to the mortgage. She was still paying the minimal amount for the mortgage after February 2013.
After the husband moved out of the former matrimonial home he moved in with his parents and had little in the way of overheads. He took out a lease in March 2013. He did not give a copy of the lease to the wife’s solicitors as they requested. The husband knew at that time he could move back into former matrimonial home on the basis that he paid the mortgage. He says he could not afford to pay the mortgage. His rent is $870 a month. He did put any proposal to pay that amount towards the mortgage to live in a home rather than pay rental elsewhere. It would have cost him an additional $400 a month to move into the home and pay the mortgage. The timing seems very odd that the husband would find that he could no longer stay at his parents but rent a property after he knew that the wife was now agreeing with his proposal that he retain the home rather than it be sold in accordance with the orders which were made in October 2012.
He says he had started negotiations at the time that the wife said he could move back in. He did not have to enter into that rental agreement. The husband was also less than frank about the arrangement as the property is actually owned by his parents although he has rented the property through a real estate agent. He says he could not move into the home because he would have to break the lease. He conceded that the lease is a month to month lease. I do not accept the husband evidence on this issue. His bitterness towards the wife seems so deep that he would rather incur further cost in renting a property rather than moving into the home which he now wishes to retain and pay the mortgage because that would have meant that the wife was no longer having to pay the mortgage from the business.
The husband’s conduct in relation to the former matrimonial home has been unreasonable and in the circumstances I do not propose to add back the amount he seeks or to make any adjustment for it.
I also note the husband will also receive the benefit of the work the wife carried out on the home if he retains it.
Contributions
The parties agree that their contributions during the relationship were equal. The focus on the dispute focused on section 75(2) adjustments and add backs.
Section 75(2) factors
Both parties seek an adjustment for section 75(2) factors in their favour.
At paragraph [36] of the wife’s trial affidavit the wife says that she believes that the husband can earn far more than she can as a qualified (omitted) and as an employee rather than an owner (omitted). These are mere assertions. I have no evidence before me to support these assertions. I place no weight on these statements.
The wife also refers to the husband receiving a cash deposit of $12,000 on his credit card on 16 January 2013. He was not cross-examined about this.
She says at paragraph [47] she has not been able to pay herself the maximum wage she is allowed to because that would leave a shortfall in the business. Again I do not have evidence of this.
At paragraph [56] the wife refers to deciding to carry out improvements on the property to get it into a saleable state before selling it. She says she spent approximately $3,300. She sent receipts to the husband but he refused to contribute to those works. It appears from that paragraph that the wife did not consult with the husband about undertaking these works prior to arranging for the work to be done. The husband says that work was unnecessary.
The husband says the wife will continue to receive the benefit of the income from the business. He says that although he is a fully trained and qualified (omitted) it is difficult to obtain work although he has been able to obtain full-time work with (omitted). He says he is earning approximately $60,000 a year but the position is temporary although at the time of the hearing he was in the process of renegotiating his contract. He says the wife is able to earn a higher income than him in business. He asserts that she will be able to earn up $50,000 per annum as the company will not be paying his wages and motor vehicle expenses. The husband’s assertion ignores the fact that the wife needs to hire a (omitted) as she did not have those qualifications. Unfortunately I do not have any evidence as to what wage the wife will need to pay a (omitted) or other staff.
During the course of the proceedings the husband indicated that he changed his mind and now wanted the opportunity to retain the former matrimonial home. The wife has indicated that she is happy for the husband to retain the home but thought that he should move back into the home and pay the mortgage pending the property hearing. The husband failed to do that, which meant that the wife had to continue paying the mortgage from the business. The husband says he failed to do so because he had obtained alternative accommodation and had responsibilities under a residential lease. Significantly the husband makes no mention in his affidavit of the fact that the property he rents is owned by his parents.
The wife’s argument is that she should receive an adjustment in her favour based on the following factors:
a)She does not have any formal qualifications or training whereas the husband does;
b)She is taking the business with its vulnerabilities’, strengths and weaknesses;
c)She has the primary care of the two children;
d)To date she has not received child-support from the father;
e)The small size of the pool.
She seeks an adjustment is 65% of the pool.
The husband’s position is that as the wife is retaining the business she will in fact be able to earn a higher income than him. He says the wife would receive a slight loading in her favour for having care of the children for most the time. Where in his case the section 75(2) adjustments would be much smaller.
Historically after taking into account the personal debts of the parties paid by the business the parties have each received $70,000 from the business in 2012. This is a significant increase from previous years.
The wife conceded in cross-examination that the business is a steady consistent income earning entity.
The wife’s evidence with respect to the wages she will have to pay was unsatisfactory. This is an issue which should have been dealt with more comprehensively as it has a direct impact on her argument that she should receive a greater percentage of the pool.
During cross-examination the wife raised issues of additional costs in the business, the wages and having to hire a full-time (omitted) so that she could have more time with children on the weekend. She conceded that she did not raise this in her affidavit.
After these court proceedings the wife will have less expenses to pay from business as she will not be paying for the husband’s car. The husband will also be paying child support. The husband asserted in his affidavit that the wife would have an income of approximately $150,000 a year as she would no longer be paying him a wage and would not be paying for his car. The husband’s assertion ignores the fact that she will have to pay for a (omitted). The husband’s evidence is that he is receiving approximately $60,000 a year. I do not have any evidence from the wife as to how much it would cost for her to employ a (omitted). The husband’s wage gives some guidance. I accept that the wife will receive a greater income from the business than she has previously. In my view the wife is downplaying the extent of income she will receive from the business and the husband is exaggerating it. The wife says that she either has to pay for extra staff (omitted) and she will be in the (omitted) or pay for (omitted). I accept that that is the case.
The husband’s evidence appears that he will be assessed child support of $426 a month.
During cross-examination the husband agreed that he would pay in addition to whatever other child support he is assessed to pay, half the children’s school fees and half the speech pathology fees. He agreed to enter into a child-support agreement. I have no evidence before me as to whether or not the parties have entered into that child-support agreement, therefore cannot take this into account. Understandably the solicitors were reluctant to draft a child-support agreement on the run, particularly given their obligations with respect to giving independent legal advice. That is entirely reasonable and I am not critical of the solicitors.
My impression of the husband is that he would do whatever he could to be obstructive towards the wife including paying rent rather than living in the house and paying the mortgage, which would have benefited him as well as the wife.
The husband could not bring himself to make the smallest concession with respect to the wife. For example he was asked to accept that the wife works very hard he answered “she works.” When it was put to him again that she works very hard he said he didn’t know. When pressed he eventually said he would give her “a certain amount of credit.”
The husband says that the improvements the wife had done to the home were not necessary. The wife was not cross-examined about the works. She is also not seeking an order of reimbursement of half the costs.
The husband took the Toyota (model omitted) which the wife says was used in the business to pull a trailer to take items needed for (omitted) jobs. The husband denies this. I find that the husband would have taken whichever car he thought inconvenienced the wife the most.
It is clear that this was an acrimonious breakup and that both parties feel negatively towards the other and it is filtered through in their decision-making and attitudes throughout this case.
The husband’s counsel referred to the $5,000 in the business bank account. The wife says this is the business working account. The suggestion is that this should be taken into account in addition to the business valuation. I decline to do this. It is not unusual for a business to have a working account and the amount in the account is half of a typical week’s takings.
Legal principles
Part VIII of the Family Law Act1975 is the part of the Act dealing with property, spousal maintenance and maintenance agreement. The major provisions relating to marital property division are contained in sections 79(1); 79(2); 79(4); & 75(2) of the Act.
Pursuant to section 79(1) the court is authorised to make such order as it considers appropriate in order to alter the interest of the parties to a marriage in relevant property.
The expression “property” is defined in section 4(1) in relation to the parties to a marriage or either of them as meaning “…property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.”
Pursuant to section 79(2) the court is actively prevented from making such an order unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitory words “shall not” in the relevant section.
Section 79(4) provides the mechanics of how a court is to make an order altering marital property interests.
Paragraphs (a); (b); and (c); categorise contributions made by marital partners, which are relevant. Paragraph (d) directs the court to take into effect of any order upon the earning capacity of either party to the marriage.
Paragraph (e) directs the court to consider a list of matters contained in section 75(2), which are germane to spousal maintenance or the prospective positions of the parties concerned by reference to their respective financial resources, means and needs. Finally, paragraphs (f) and (g) apply to child support and previously made parenting orders, as relevant. There is some overlap between these various provisions and not all will be applicable in every case.
Until recently, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled with a preferred approach as set out by the Full Court in Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39].
The High Court has recently considered the operation of section 79 in the matter of Stanford v Stanford [2012] HCA 52. In the case, the majority stated at [35]-[36] that:
“It will be recalled that s 79(2) provides that "[t]he 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". Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [Footnotes omitted]
The High Court set out three fundamental propositions with respect to the application of section 79, which can be summarised as follows:
1.Firstly, in order to ascertain whether it is just and equitable to make a property settlement order, it is necessary to identify the existing legal and equitable interests of the parties in the property. The High Court emphasised the word existing.
2.Secondly, although section 79 gives the court a broad power to make property settlement orders it may not be exercised in an unprincipled fashion. There must be no assumption that the parties’ interests are or should be different to their existing interests.
3.Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has the right to a property adjustment order. The court must give separate consideration to section 79(2) in addition the matters referred to section 79(4).
In Stanford and Stanford the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of section 79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation.
The High Court also pointed out that what is just and equitable is different in every case.
Stanford and Stanford casts doubt on the correctness of adding back notional amounts to the pool for the purposes of property settlement. The Full Court confirmed this in Bevan and Bevan [2013] FamCAFC 116 and noted that section 75(2)(o) provides ample scope to ensure there is a just and equitable outcome between parties taking into account any disposal of assets.
The Court should adopt a two pool approach referred to in C v C (2005) FLC 93-220 with superannuation assets separately due to the superannuation constituting a significant percentage of the total pool.
Application of legal principles to the facts of this case
After I reserved my decision the Full Court of the Family Court handed down the decision of Bevan & Bevan. I invited the parties to make further submissions in light of that decision. Neither party chose to do so.
In my view in light of the comments in Stanford & Stanford and Bevan & Bevan notional sums should not be added back to the pool but should be taken into account pursuant to section 75(2)(o).
The parties have consented to parenting arrangements where the children will spend five nights a fortnight with their father during school terms and half the school holidays. This results in a small section 75(2) adjustment in the wife’s favour.
I am comfortably satisfied in the circumstances of this case that it is just and equitable to make orders adjusting the parties’ property interests. Section 81 of the Family Law Act1975 is significant here. The business and the former matrimonial home are currently in joint names. Neither party can move on until this is addressed.
The parties have consented to parenting arrangements where the children will spend five nights a fortnight with their father during school terms and half the school holidays. This results in a small section 75(2) adjustment in the wife’s favour.
I am not satisfied that the husband’s income will be greater than the wife’s. I am also not satisfied that the wife’s income will be as high as the husband argued. The evidence was unsatisfactory on this issue. I am satisfied that the business is steady and the wife will earn a higher income than she has been able to previously particularly because she will not have the husband’s car and life insurance. This justifies a small adjustment in favour of the husband.
I do not accept that the husband needed the $28,600 for his own maintenance. This amount was to be characterised at the final hearing. The principles with respect to maintenance are well established in case law and in sections 72, 74 and 75(2). Whilst it is true the husband was unemployed for a period and so may have needed some funds to support himself, it is also the case the husband saw fit to spend part of this money on a luxury watch and on furniture he did not need and will continue to have the benefit of.
Based on the husband’s demeanour in the witness box I am satisfied that the husband was happy to spend this money knowing that this money came from the mortgage and that the wife was responsible for its payment. I do not have sufficient evidence about just how the husband spent this sum. Whilst I accept some was used for his maintenance much of it was not. This requires an adjustment in favour of the wife.
I have already addressed the issue of the joint account and the funds in the business account. I will not repeat my comments about the personal expenses.
In submissions the wife’s counsel referred to there needing to be an adjustment in the wife’s favour because of the vicissitudes of life in taking the business, child-support and the need to rehouse herself. I was not pointed to an authority nor can I find an authority that an adjustment should be made because either party has chosen to take on a business. There is no evidence before me to suggest that the business is not doing as well as it has previously, adding facts and examination of the parties’ tax returns would suggest the opposite.
With respect to the issue of child support this is not a case where the husband has been assessed and has refused to pay, or has persistently been in arrears, the fact is that he was given a nil assessment.
I have no doubt that the husband will not pay more than what he is assessed to pay but that is not something that means an additional adjustment should be made in the wife’s favour.
The wife also submitted that she needs to rehouse herself and the children and that the small size of the pool she should receive a further adjustment because of this.
I am not persuaded that there should be an additional adjustment to the wife because of the modest size of the asset pool. If there was a large disparity in income earning capacity as well as a small pool this submission would carry more weight.
The parenting arrangement is one where the parents both have the care of the children for significant periods. The wife will have care of the children for a greater period of time during school terms. This requires a small adjustment in the wife’s favour.
Conclusion
Both parties have acted in a petty manner during these proceedings. A classic example is with respect to the ring and the ride on mower the easy solution would be for the parties to exchange those items. However neither was willing to take a common sense approach and those items will remain where they lie.
The parties agree that the husband be given the opportunity to retain the home and the wife shall keep the business.
The parties have agreed that in order to address the disparity in the parties’ superannuation the husband will pay the wife an additional $3,000 in his cash adjustment to her. Presumably this sum recognises that she can be able to spend it straight away whereas he cannot access his superannuation for many years. The total superannuation pool is modest at $32,266.52.
The pool of realisable assets is small. The superannuation pool is also modest. The wife has just under 36% of the superannuation pool. To give her an equal amount of superannuation she would need to receive a split of $4,662.19. It is not possible to make a split for amounts until $5,000. In those circumstances the proposal of the parties that she receive an additional $3,000 in cash to make up for this imbalance is just and equitable.
The wife will receive her car subject to the finance on it. There is hardly any equity in that car. The wife will receive the business. She will need to pay the loans owing to her parents and the husband’s parents.
The husband will receive the Toyota (model omitted) subject to the finance on it. He will also keep the former matrimonial home and will need to refinance the mortgage on the home and discharge the (omitted) Bank business loan which is secured over the home. He will need to make a payment to the wife of $152,386.48. This represents the wife receiving an additional 10% for section 75(2) factors taking into account the findings I have made above.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of Judge Harland
Date: 18 October 2013
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
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Remedies
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Costs
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Injunction
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