Haslam and Haslam - [2018] FCCA 734

FEDERAL CIRCUIT COURT OF AUSTRALIA

HASLAM & HASLAM

[2018] FCCA 734

Catchwords:
FAMILY LAW – Property – long marriage – no children – unequal financial contributions – wife has greater earning capacity – 5% adjustment for s.75 (2) factors.

Legislation:

Family Law Act 1975, ss.44, 75,79

Cases cited:

In Marriage of Browne and Green (1999) 152 FLR 417

In Marriage of Kowaliw (1981) FLC 91-092

Kennon v Kennon (1997) 139 FLR 118

Applicant:

MS HASLAM

Respondent:

MR HASLAM

File Number:

DNC 409 of 2014

Judgment of:

Judge Young

Hearing date:

21 March 2017

Date of Last Submission:

11 April 2017

Delivered at:

Darwin

Delivered on:

27 March 2018

REPRESENTATION

Counsel for the Applicant:

Ms L Morgan

Solicitors for the Applicant:

Hunt & Hunt Lawyers

Counsel for the Respondent:

Ms V Farmer

Solicitors for the Respondent:

Withnalls Lawyers

ORDERS

Leave is given to institute proceedings.
Within 28 days the wife is to transfer to the husband her interest in the property located at Property A, Victoria described in Certificate of Title Volume (omitted) Folio (omitted) (“the Property A house”) and the parties are to do all things necessary to obtain a discharge of the mortgage over the Property A house (“the Property A mortgage”).
Contemporaneously with the transfer in order 2 the wife is to pay the husband the sum of $65,142 with that sum to be used, first, to discharge the Property A mortgage and, secondly, if there is any surplus, to pay the husband.
In the event of any shortfall between the amount payable pursuant to order 3 and the amount required to discharge the Property A mortgage the husband is to pay that shortfall.
The parties are to confer about the sale of the (omitted) shares but in default of agreement the (omitted) shares are to be sold within 28 days and the proceeds of sale to be applied, first, to discharge any margin loan or other security in respect of the shares, secondly, the costs of sale, and, thirdly, to be divided equally between the parties but with the husband’s share to be applied to discharge the Property A mortgage (if necessary) before any distribution to him.
Within 28 days the wife is to do all things necessary to transfer her interest in the (omitted) bank joint account (item 7 in the table of assets in the reasons for judgment) to the husband and the account is to be closed.
Within 28 days the husband is to do all things necessary to transfer to the wife his interest in the (omitted) investment (item 8 in the table of assets in the reasons for reasons for judgment).
Within 28 days the husband is to do all things necessary to transfer into the wife’s possession her chattels in storage ((omitted)) and to transfer into her possession the (omitted) painting.
Otherwise the parties will retain all chattels, including jewellery, money and choses-in-action currently in their possession and indemnify the other party for any liability in respect of those things.
Each party is to retain to their own use and benefit all interest in their own superannuation funds.
The husband is to retain, free of any interest of the wife, ownership of (business omitted) and his interest in (business omitted).
The wife is to retain her interest in her Queensland house.
The parties are to have liberty to apply for ancillary orders.

IT IS NOTED that publication of this judgment under the pseudonym Haslam & Haslam is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

DNC 409 of 2014

MS HASLAM

Applicant

And

MR HASLAM

Respondent

REASONS FOR JUDGMENT

This is an application for alteration of property interests pursuant to s.79 of the Family Law Act 1975 (the “Act”). The applicant also sought an extension of time pursuant to s. 44 (3) of the Act. This was not opposed and time will be extended because to refuse the extension would cause hardship to the applicant.
Background and contributions
Although the parties are divorced I will, for convenience, refer to them as the “wife” and the “husband”. The wife is 52 years old. She was born in (country omitted). The husband is 50 years old and was born in Australia. The parties began living together in 1992 in Australia and married in (omitted) 1993. The parties separated in 2013 and divorced in 2014. There are no children of the marriage.
At all material times the husband has been employed in his own (omitted) business.
The wife completed a degree in (qualifications omitted) in (country omitted) in 1992 and, as noted, began living with the husband in Australia shortly thereafter. Her employment history before 1997 was not canvassed in much detail. She said she worked in Australia in some relatively short-term employment and then as a (occupation omitted) from 1995. She said she obtained her (qualifications omitted) as a (occupation omitted) in Australia in 1996. The husband claimed that she did not work at all until 1996. He said she was studying for the (omitted) examination with a view to obtaining (qualifications omitted) as a (occupation omitted) and he financially supported her. The husband did, however, concede that the wife worked in a (employer omitted), presumably as an (occupation omitted), before she obtained her (qualifications omitted) as a (occupation omitted). He said she commenced working as a (occupation omitted) in (omitted) 1997. The evidence is conflicting but, on balance, I consider that the husband is a slightly more accurate historian. I find that the wife was employed full-time as a (occupation omitted) from (omitted) 1996 until she became a (occupation omitted) in (omitted) 1997 following her (qualifications omitted) as a (occupation omitted). I find that before (omitted) 1996 the wife was employed in some intermittent employment and was engaged in study for her (omitted) examinations. The husband claimed that he was the sole income earner for the first four years of the relationship. Although I am not satisfied that is the case, I find that the husband provided, at least, significant financial support to the wife from the beginning of the relationship in 1992 or early 1993 until she found full-time employment in (omitted) 1996.
In 1998 the parties purchased a home in Property A, Victoria, in joint names for $225,000. The wife said that $135,000, secured by mortgage, was borrowed but she does not otherwise identify the source of the balance of the purchase moneys. The husband agreed about the purchase price but he said that $150,000, secured by mortgage, was borrowed. He said that he contributed $112,000 from his pre-relationships savings. Even allowing for stamp duty and conveyancing fees there appears to be some discrepancy between the expenditure claimed by the husband of $262,000 and the purchase price of $225,000. Nevertheless, it was not challenged by the wife that the husband applied significant pre-relationship funds to the purchase of the home.
The Property A house was the subject of other disputes between the parties. The home is undergoing a major renovation, with the work being largely undertaken by the husband himself. This, on the evidence of both parties, has been ongoing for some years. The wife claimed that the husband has failed to apply himself to the work. She went as far as to allege that the husband has deliberately left work undone so as to reduce its value. She characterised this as “waste”.
The husband said that the renovation has been extensive and complex. He said that he has been distracted by the present litigation and this has led to delay. He also said that he has experienced some mental health problems and that has also contributed to delay.
In my view, it is not necessary to resolve these particular conflicts beyond observing that there is no evidence of waste, by which is meant a deliberate, reckless or negligent running down or dissipation of an asset or assets: In Marriage of Browne and Green (1999) 152 FLR 417, [41] – [49], approving the formulation of Baker J in Marriage of Kowaliw [1981] FLC 91-092. While the ongoing renovation work appears to have taken a long time, it is clear from the claimed expenditure of the parties that it is indeed extensive and complex. It may also be that the husband has not vigorously applied himself to the work. However, in the absence of evidence that the delay has been in bad faith and has had a negative effect on the value of the property, I see no reason to treat these matters as reducing the husband’s contribution.
The wife claimed that she had contributed $356,000 to the cost of the renovations from her income. She annexed a list to her trial affidavit showing various payments to the parties’ joint cheque account equalling this amount. However, there was no evidence about how these funds were disbursed from the cheque account, so I found the list of limited probative value. However, the husband acknowledged that the wife had contributed about $300,000 to the cost of the renovations between 2010 and 2013. Accordingly, I am satisfied that the wife contributed approximately the amount claimed to the cost of renovations.
The husband claimed that he contributed about $600,000 to the cost of the renovations. There was no real particularisation of this claim. However, the husband provided a schedule of particular items of expenditure on the renovation of “almost $250,000” for 2015 and 2016. In fact, the schedule showed expenditure of $243,937. He said that “if required” he could produce additional invoices totalling approximately $30,000 for 2015. These invoices were not produced. However, this evidence was not challenged by the wife.
I am not satisfied that the husband’s claim of contributing about $600,000 in cash to the renovation is correct. No particulars were provided beyond those mentioned above. Further, a detailed valuation of the husband’s (omitted) business, (business omitted), showed the husband received a modest income in the years examined by the valuer. He received wages or salary of $74,800 in 2013, $30,000 in 2014, $89,600 in 2015 and $110,000 in 2016, plus statutory superannuation contributions. The operating profit or loss of the business was a loss of $73,425 in 2012, a loss of $28,421 in 2013, a loss of $81,074 in 2014, a loss of $857 in 2015 and a projected profit of $217,853 in 2016. I am not satisfied that the husband’s business has produced sufficient profit to unable to pay the amount claimed.
The wife contributed some of her labour and time to the renovations but it was not in dispute that the bulk of the work was performed by the husband. The husband did not attempt to quantify the value of his labour and his skill as a (omitted) to the renovation work. Regardless, it is clear that the husband has made a major contribution to the renovation work in cash and in skill and labour. If the husband’s initial cash contribution to the purchase price is taken into account, I am satisfied that the husband has made a somewhat greater contribution to the Property A house than the wife.
The house has been valued at $1,225,000. The property is subject to a mortgage debt of $65,000. The wife claimed that the mortgage was paid out some years ago but the husband increased the indebtedness to pay for his own vehicle. The husband said that a loan had been taken out to pay for a car for the wife but this was paid out in 2006/7. He said that the loan had been redrawn to pay for a vehicle for him. He said about $22,000 was attributable to this car loan. The parties seem in substance to agree about this issue. In any event I do not see it has any real bearing on the issues for determination relating, as it does, to transactions before separation. The husband said the balance of the mortgage indebtedness, about $43,000, related to borrowings for share purchases which are reflected in the present value of the parties’ share portfolio. This was not challenged by the wife.
In about 2010 the wife moved to the Northern Territory to work as a (occupation omitted). She worked in a remote area and was paid various benefits including a Remote Housing Benefit by her employer. She said that in the 2015/2016 financial year she earned $339,274. She asserted that throughout the marriage she earned about three times the income of the husband and she said that it was because of her higher income that the parties were able to accrue their assets. Neither the wife nor the husband provided detailed evidence about their earnings other than for recent years. In any event, I do not accept that the wife’s bald and general statement is correct. For one thing, it is clear that the Property A home was a result of joint financial and non-financial contributions. Another significant asset of the parties is their share portfolio. The evidence did not directly deal with the source of the money for the initial share acquisitions. However, the husband said that from about 2009/2010 he was responsible for all payments on the margin loan of between $200 and $300 a week from, he implied, his business income. It is implicit in the statement that a part or all of the initial share acquisitions were made with borrowed funds. This was confirmed by the position of the parties at trial when the value of this fund was agreed at $530,175 and the margin loan at $210,661. The husband said that after the GFC in 2008, he took over management of the share portfolio. He said that the management of this fund should be seen as part of his contribution. Regardless of this, (and there was no evidence to permit an assessment of the quality of the husband’s management of the share portfolio), it would appear that the share portfolio was significantly, if not entirely, the product of acquisitions funded by borrowing against the value of the shares. These would appear to have been joint borrowings and there is nothing to suggest that the fund should be seen as anything other than the product of equal contributions.
I accept that the wife had a greater earning capacity, particularly once she moved to the Northern Territory where she received a significantly higher salary than she had received in Melbourne. It appears that the wife’s greater earnings were principally reflected in contributions to her superannuation and in savings of approximately $700,000 at separation. The husband claimed this latter amount was removed from “our bank accounts following separation”. In any event, I am satisfied that this amount of cash, regardless of the actual accounts in which it was held, reflects cash savings generated largely by the wife’s employment as a (occupation omitted). After separation the wife used these savings to purchase a home in Queensland. This was agreed to be worth $957,000 with an associated mortgage debt of $201,152. The equity in the property significantly reflects the savings of around $700,000 built up as a result of her greater earning capacity.
At the time of trial the wife’s superannuation fund was worth $694,128. The husband’s superannuation was worth about $99,000 at trial. There was no evidence to suggest that the superannuation funds were anything other than accumulation funds. I see no great difference between the contribution of the parties to their superannuation and other assets. I propose to treat both as part of a single pool.
Another asset that requires mention is the husband’s incorporated (omitted) business, (business omitted). This business is the alter ego of the husband. The husband is apparently the only employee. It appears that he employs subcontractors when he requires assistance. The valuer retained by the parties said the company had net liabilities of $77,726. After a loan owed to the husband by the company was taken into account, he said the husband’s net interest in the company was a deficit of $13,571.
The husband also has a 20% interest in a company, (business omitted), which operates a (business omitted) in Melbourne. His net interest was valued at $71,859.
The wife asserted that the parties kept their finances separate during the relationship. I reject that claim. It is clear from the evidence that there was a joint financial enterprise between the parties in respect of much of their asset base, particularly in relation to the Property A house and the joint borrowings for the share portfolio. The wife also gave evidence that at times she had injected some cash, in the region of $20,000, into the husband’s business when it required operating capital. Nevertheless, I accept that in the later years of the marriage the wife made a greater financial contribution. Against this needs to be balanced the husband’s greater financial contribution in the early years of the marriage when he supported the wife as she studied for her (omitted) qualifications. It also needs to be remembered that the husband’s cash injection into the purchase price of the Property A home, although at the beginning of a long marriage, was a strategic injection which allowed the parties to benefit from a home subject to a relatively low mortgage and to capital appreciation over the years. There was no evidence to suggest that the non-financial contributions of the parties were anything other than equal. The husband and the wife both made generalised claims of family violence but I am not satisfied that any family violence, even if the claims are accepted, has made either parties’ contribution more onerous or difficult: Kennon v Kennon (1997) 139 FLR 118. I find that the contributions of the parties were 57% by the wife and 43% by the husband to both non-superannuation and superannuation interests.
The asset pool
The parties substantially agreed on the value of their assets and the extent of their liabilities but some assets require further explanation. The motor vehicle used by the husband is owned by his company and its value is taken into account in the company valuation. The parties own a (omitted) investment that the wife seeks to retain for herself. This was not valued but she provided an estimated value and I have treated it as an admission against interest. In submissions, the wife attached some correspondence from the manager of the (omitted) investment casting doubt on its value but as it was not evidence in an admissible form, I will ignore it. The wife asserted that the husband has a wine collection of similar value to the (omitted) although that was not valued. The husband denied the wine collection was of significant value and in the absence of evidence of its value I do not give it any value in the balance sheet. Similarly, the wife estimated the value of her jewellery and artworks and I have treated that is an admission against interest. There was no evidence of the value of any similar chattels in the possession of the husband. Counsel for the wife submitted that one party should be ordered to make two collections of the chattels with the other party to choose one. I am not satisfied that this is a practicable proposal given that there is no schedule of any of the chattels in the possession of the parties and no means by which the court could adequately enforce the order. However, it was the agreed position of the parties that many of the wife’s chattels are in storage in Melbourne and those chattels should be made available to her. The wife also evinced special interest in something described as the “(omitted) painting”. There was no evidence of its value. That should be transferred to her.
The wife asserted that the husband’s entitlement to long service leave should be taken into account as an asset. There is no evidence that the company has made any provision for this and as the company is simply the alter ego of the husband it is difficult to see how, in practical terms, he is to gain a benefit. I am not satisfied that it has any value.
The husband said that there should be an “add-back” of an amount of $12,500 for the wife’s legal fees which were said to have been redrawn on her mortgage. The wife conceded that part of the sum was used to pay legal fees but ultimately there was no evidence of the precise amount so used. This was almost 4 years after separation. Further, there was no evidence from the husband about how he has paid his legal fees. I am not satisfied that an “add-back” would be fair in those circumstances.
Section 75(2)

Both parties asserted that they suffered mental health issues but neither party provided any independent evidence to support their claims. Otherwise both parties are in apparent good health. The parties have particular skills and there is no reason why they cannot continue in gainful employment until they reach retirement age. The husband submitted that, in particular, there ought to be an adjustment under s.75(2) to account for the wife’s greater earning capacity. I am satisfied that she has a significantly greater earning capacity than the husband and I propose to make an adjustment of 5% for that factor. In money terms this is the equivalent of $157,450. This will mean that the amount payable to him by the wife is approximately equal to the wife’s equity in the Property A house plus a little more than $65,000. The effect of this will enable the husband to retain the Property A house and to allow the discharge of the joint mortgage, releasing the wife from liability.

Assets	Wife	Husband	Total
1	Property A house - joint	$612,500	$612,500
2	Queensland house	$957,000
3	(business omitted) – deficit	($13,571)
4	(business omitted) (20%)	$71,859
5	(omitted) share portfolio	$265,087	$265,087
6	Money in bank - wife	$16,192
7	Joint (omitted) Bank account	$2,500	$2,500
8	(omitted) investment	$15,000	$15,000
9	Motor vehicle - wife	$37,200
10	Jewellery and artworks - wife	$9,000
11	Jewellery and artworks - husband	No value
Total	$1,914,479	$953,375	$2,867,854
Liabilities
12	Property A house - mortgage	$32,500	$32,500
13	Queensland house - mortgage	$200,154
14	(omitted) share portfolio margin loan	$105,330	$105,330
15	(omitted) account - overdrawn	$7,000
16	Husband’s Visa card debt	$30,000
($337,984)	($174,830)	($513,812)
Net assets	$1,576,495	$778,545	$2,355,040
Superannuation
17	Wife's (omitted) Super	$694,128
18	Husband's (omitted) Super	$99,833
$694,128	$99,833	$793,961
Total	$2,270,623	$878,378	$3,149,001
If 52%/48% division	$1,637,481	$1,511,520	$3,149,001
Required transfer to husband of cash or value	($633,142)	$633,142

This division will be achieved by a transfer of the wife’s net interest in the Property A house worth $580,000 to the husband plus an adjusting payment of $53,142. If the wife is to keep the entire (omitted) investment as she wishes, the husband will need to transfer his interest to her and she will need to transfer another $15,000 to the husband or $68,142 in total. There is a figure of $5,000 in a joint account. If the wife transfers her interest, $2,500 in this amount to the husband, this will require a net payment by her to the husband of $65,642.
This amount is to be paid to the husband at settlement of the transfer of the wife’s interest in the Property A house and to be used to discharge the joint mortgage.
In relation to the (omitted) share portfolio the wife submitted, on the basis of advice from (omitted), that it will be necessary to pay out the margin loan before any transfers. It would appear unlikely that the husband is able to refinance the entirety of the margin loan. I propose to let the parties confer about this. The default position will be an order for sale of the shares and the equal division of the proceeds of sale after payment of the margin loan. I will give the parties liberty to apply in relation to this issue and for ancillary orders.
I did not receive evidence or submissions about the incidence of capital gains tax. Any CGT will lie where it falls.
Otherwise the parties will retain the chattels currently in their possession, including the wife’s chattels in storage which are to be hers and the (omitted) painting. They will each retain their superannuation.
The division leaves the husband with comparatively little superannuation. However, the husband was keen to retain the Property A home and some or all of the (omitted) shares. In those circumstances this is the only practicable way of achieving that.

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Judge Young

Date: 27 March 2018