Hatzis & Hatzis

Case [2021] FedCFamC1F 16

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Hatzis & Hatzis [2021] FedCFamC1F 16

File number(s): ADC 787 of 2017
Judgment of: MEAD J
Date of judgment: 3 September 2021
Catchwords: FAMILY LAW – PROPERTY – Where the parties are unable to agree upon a final division of their property – Where the parties were in a relationship for approximately seventeen to eighteen years and married for approximately fourteen years – Where there is dispute as to the approach to be taken by the Court as to the asset pool – Where the husband promotes an “asset by asset” approach and the wife a “global” approach – Where the Court determined the asset pool was best assessed “globally” – Where there was also dispute as to the asset pool available for distribution between the parties – Where applications for ‘add backs’ were made – Where the parties are also in dispute as to liabilities to be taken into account in assessing the asset pool available for distribution – Where the parties respective contributions are assessed under s 79(4) of the Family Law Act 1975 (Cth) – Where the parties are found to have contributed equally – Where the Court made certain findings under s 75(2)(o) of the Family Law Act 1975 (Cth) – Where adjustment is made on account of s 75(2)(o) factors in favour of the wife.
Legislation: Family Law Act 1975 (Cth) ss 4(1), 75(2), 75(2)(o), 79(4)
Cases cited:

Anson & Meek (2017) FLC 93-816

C & C [1998] FamCA 143

DJM and JLM (1998) FLC 92-816

Edgehill & Edgehill [2007] FamCA 1102

Gollings & Scott [2007] FamCA 397

Holland & Holland (2017) FLC 93-798

Jabour & Jabour [2019] FamCAFC 78

Kowaliw & Kowaliw (1981) FLC 91-092

Norbis & Norbis (1986) FLC91-712

Omacini & Omacini (2005) FLC 93-218

Polonius & York [2010] FamCAFC 228

Stanford & Stanford (2012) FLC 93-518

Townsend & Townsend (1995) FLC 92-569

Division: Division 1 First Instance
Number of paragraphs: 308
Date of hearing: 2, 3, 4 September 2019, 2 December 2019, 17 March 2020, 22 April 2020 and 8 May 2020 (in Chambers)
Place: Adelaide
Counsel for the Applicant: Mr Richards
Solicitor for the Applicant: Resolve Divorce Lawyers
Counsel for the Respondent: Ms Pyke QC
Solicitor for the Respondent: Belperio Clark

ORDERS

ADC 787 of 2017

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS HATZIS

Applicant
AND:

MR HATZIS

Respondent

ORDER MADE BY:

MEAD J

DATE OF ORDER:

3 SEPTEMBER 2021

THE COURT ORDERS THAT:

1.In full and final settlement of any claim that either party may have or hereafter have against the other for settlement of property and alteration of interest in property:

(a)The husband do pay to Resolve Divorce Lawyers Trust Account on account of the wife the sum of $305,582.00 (“the Settlement sum”) on or before 15 October 2021 (“the Settlement date”);

(b)That contemporaneously with the payment referred to in paragraph 1(a) hereof the wife transfer to the husband for his sole use and benefit absolutely…

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AGLC
Hatzis & Hatzis [2021] FedCFamC1F 16
Case
[2021] FedCFamC1F 16
Decision Date

CaseChat Overview and Summary

The case of Hatzis & Hatzis involved a dispute between the husband and wife regarding the distribution of their assets following their separation. The court was tasked with determining the asset pool available for distribution, assessing the parties' respective contributions to that pool, making any necessary adjustments, and ensuring the distribution effected justice and equity between the parties. The court considered the evidence presented by both parties, including their financial statements, affidavits, and additional oral evidence. The wife had been employed full-time before the marriage and took maternity leave after the birth of their children, returning to part-time work later. The husband had various assets prior to the marriage, and the parties had jointly built their former matrimonial home.

The court identified several legal issues, including the determination of the asset pool, the assessment of contributions under section 79(4) of the Family Law Act 1975, adjustments under section 75(2) of the Act, and the final distribution of assets. The court examined the wife's argument that certain funds withdrawn by the husband post-separation should be "added back" to the asset pool due to the husband's inability to justify their expenditure. The husband argued that the funds were reasonably used for personal and child-related expenses. The court also considered the wife's claim that the husband's superannuation should be adjusted before equalisation.

In its reasoning, the court found that an adjustment in favor of the wife of 1% was warranted due to the factors under section 75(2)(o) of the Act. The court concluded that the net asset pool should be apportioned 51% to the wife and 49% to the husband. The wife was to retain assets valued at $1,888,721, and the husband was to retain assets valued at $1,814,654. The court ordered the husband to transfer $471,609 to the wife to effect the outcome deemed just and equitable. Additionally, the court addressed the equalisation of superannuation interests, resulting in a transfer from the husband's fund to the wife's fund, reducing the required payment to $305,582.

The court made specific orders regarding the distribution of assets and the equalisation of superannuation interests to ensure the final distribution effected justice and equity between the parties. The husband was required to transfer assets to the wife, and the superannuation interests were equalised, resulting in a transfer of $166,027 from the husband's fund to the wife's fund. These orders reflected the court's determination based on the evidence and the applicable legal principles.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Each party gave brief additional oral evidence-in-chief and was cross-examined. Each parties’ counsel tendered eleven exhibits as part of their clients’ respective cases.Background Mr and Mrs Hatzis married in 2002 at which time the wife was aged 29 years and the husband was 28 years of age. Both parties had been engaged in employment for some years prior to marriage. Both parties had acquired certain assets prior to the date of marriage. In 1993 the husband had purchased a property at D Street, Suburb E. In addition, by the time of marriage the husband owned a Motor Vehicle 3, a share portfolio, an interest in a managed portfolio investment fund and had savings and superannuation interests. The wife had an interest in a trust known as the K Unit Trust, an interest in a property on S Street, Adelaide, a Motor Vehicle 4 and superannuation interests. The parties commenced living in the property they had built at B Street, Suburb C (‘the former matrimonial home’) following their marriage in 2002. They had jointly commenced saving for this property in 1998. At or about the time of marriage the wife commenced fulltime employment as a manager at T Company. The first of the parties’ two children, X, was born in 2006. The wife took unpaid maternity leave until late 2006. She returned to her employment on a part‑time basis, initially working from home two days per week and then when X was six months old returning to her place of work for two days per week. In 2008 the wife was made redundant from that position and commenced employment as a manager at U Company. The parties’ second child, Y, was born in 2008. Thereafter the wife took maternity leave for a period of five months but during that period she returned to work for one month to complete a tender. She returned to work on a part-time basis in 2009 for two days per week, increasing to three days per week when Y was three years old. When the wife returned to part-time work after X’s birth her mother provided day-care for X on those two days each week. Following her return to part-time work after Y’s birth childcare was provided for both X and Y by the wife’s mother on one day per week and the children attended childcare on one day per week. When Y was three years of age the husband’s mother also commenced providing day-care for the children on one day per week, enabling the wife’s part-time work to increase to three days per week. The wife’s mother continued to provide day-care on one of the other days and the children attended childcare on the third day. Neither the maternal nor the paternal grandmothers were paid for assisting with the care of the parties’ children at any time. In 2014 the wife ceased employment with U Company and commenced employment on a fulltime basis as a manager at V Company. The parties separated on 30 June 2016. The wife continued her employment at V Company until 2017 at which time she was made redundant. She resumed employment in 2017 on a 0.8 basis as a manager at W Company which employment continued until July 2018. The wife commenced employment as a manager at Z Company in 2018 and remained in that employment at the time of trial.

Evidence

Evidence Before The Court

In order to assess the parties’ competing proposals the Court must:(a)determine the asset pool available for distribution;(b)consider and make findings as to the parties’ respective contributions to that pool in accordance with the provisions of section 79(4) of the Family Law Act 1975 (Cth) (‘the Act’);(c)consider and make any necessary adjustments to those findings taking into account the relevant matters under the provisions of section 75(2) of the Act; and(d)having considered these matters and in arriving at a determination as to the distribution of the parties’ assets, the Court must be satisfied that such distribution effects justice and equity as between the parties.The evidence The wife relied on the following documents:(a)Amended Initiating Application filed 8 August 2018;(b)trial affidavit filed 8 August 2018;(c)affidavit in response to husband’s trial affidavit filed 5 September 2018;(d)updating trial affidavit filed 1 August 2019; and(e)financial statement filed 1 August 2019. The husband relied on the following documents:(a)Further Amended Response to Initiating Application filed 1 August 2019;(b)trial affidavit filed 22 August 2018;(c)updating trial affidavit filed 31 July 2019; and(d)financial statement filed 31 July 2019. Each party gave brief additional oral evidence-in-chief and was cross-examined. Each parties’ counsel tendered eleven exhibits as part of their clients’ respective cases.Background Mr and Mrs Hatzis married in 2002 at which time the wife was aged 29 years and the husband was 28 years of age. Both parties had been engaged in employment for some years prior to marriage. Both parties had acquired certain assets prior to the date of marriage. In 1993 the husband had purchased a property at D Street, Suburb E. In addition, by the time of marriage the husband owned a Motor Vehicle 3, a share portfolio, an interest in a managed portfolio investment fund and had savings and superannuation interests. The wife had an interest in a trust known as the K Unit Trust, an interest in a property on S Street, Adelaide, a Motor Vehicle 4 and superannuation interests. The parties commenced living in the property they had built at B Street, Suburb C (‘the former matrimonial home’) following their marriage in 2002. They had jointly commenced saving for this property in 1998. At or about the time of marriage the wife commenced fulltime employment as a manager at T Company. The first of the parties’ two children, X, was born in 2006. The wife took unpaid maternity leave until late 2006. She returned to her employment on a part‑time basis, initially working from home two days per week and then when X was six months old returning to her place of work for two days per week. In 2008 the wife was made redundant from that position and commenced employment as a manager at U Company. The parties’ second child, Y, was born in 2008. Thereafter the wife took maternity leave for a period of five months but during that period she returned to work for one month to complete a tender. She returned to work on a part-time basis in 2009 for two days per week, increasing to three days per week when Y was three years old.

Decision

Reasons for decision

Taking all of those matters into account and considering the size of the asset pool I am satisfied that there should be an adjustment in favour of the wife of 1 per cent on account of the s 75(2)(o) factors.CONCLUSION For the reasons given I intend to apportion the nett asset pool referred to in paragraph 181 of these reasons as to 51 per cent to the wife and 49 per cent to the husband. That will result in the wife retaining nett assets valued at $1,888,721 and the husband retaining nett assets to the value of $1,814,654. For the purposes of these proceedings I find the assets retained in the possession or control of the wife as at the date of trial to be as follows:·Motor Vehicle 1 - $12,000;·K Unit Trust - $147,000;·Personalty - $17,370;·Partial property settlement as per order made 20 September 2017 - $89,274;·Further partial property settlement - $850,000;·GG Super Fund - $333,487,Total: $1,449,131. For the purposes of these proceedings the assets in the possession or control of the husband as at the date of trial are as follows:·Suburb C property - $750,000;·Suburb E property - $450,000;·Motor Vehicle 2 - $10,000;·Personalty - $28,870;·F Bank Saver Account - $202,300;·Partial property settlement as per order made 20 September 2017 - $89,274;·L Managed Fund - $100,960;·Shares - $46,015;·HH Super Fund - $656,961;·GG Super Fund - $8,579;Total: $2,342,959 The wife remains liable for Capital Gains Tax of $32,019 reducing the nett value of the assets she has retained to $1,417,112 and the husband remains liable for Capital Gains Tax of $56,696 reducing the nett value of the assets he has retained to $2,286,263. To effect the outcome I have determined as set out in paragraph 297 the husband will be required to transfer assets to the wife to the value of $471,609. He will therefore retain nett assets to the value of $1,814,654 and the wife will retain nett assets to the value of $1,888,721, a difference of $74,067. Both parties were agreed that their superannuation entitlements should be equalised, the only difference being the husband’s position that in undertaking that calculation, the value of his superannuation should be reduced by $59,686. I have already addressed that issue under my consideration of asset pool and rejected that position. The total amount of the parties’ superannuation therefore for the purposes of these proceedings is $999,027. An equalisation of those interests would result in a split from the husband’s HH Super Fund to the wife in the sum of $166,027, in circumstances where the wife’s superannuation interest as at trial was deemed to be $333,487 and the husband’s combined interest at trial deemed to be $665,540. Such a transfer of superannuation entitlement will reduce the amount the husband will be required to pay to the wife to the sum of $305,582 to effect the outcome that I have determined in all of the circumstances to be one that effects justice and equity as between the parties. For those reasons I make the orders as set out at the commencement of these reasons for judgment.

Ratio Decidendi

Legal Principle Established

Although little if any evidence was adduced by either party about the matter, it would appear that in the F Bank Saver Account …40 from which the $850,000 was paid to the wife there was, as at the time of trial, a balance in the joint names of the parties in the amount of $202,300. This sum is reflected in the case outline documents of both counsel.Husband’s expenditure of matrimonial funds post-separation It was the wife’s position that various sums should be “added back” to the asset pool on the basis of having been funds prematurely distributed to the husband post-separation; the expenditure of which he had been unable to properly explain and justify. This issue was addressed in paragraph 10.3 of the written submissions of the wife’s counsel. I have already addressed the husband’s L Managed Fund and the sale of the FF Company shares. There is no dispute about the inclusion of the partial property settlement retained by the husband in the sum of $89,274 being included in the list of assets. At separation the parties’ assets included a O Bank Term Deposit in the sum of $260,148. I have referred to that asset in paragraph 74 of these reasons. It was from that account that each party received a partial property settlement in the sum of $89,274 in accordance with an order made on 20 September 2017. The total sum remaining in the account at that time was $178,548. This was $81,600 less than the amount in the account at separation, which had occurred some fifteen months earlier. It was put to the husband in cross-examination that the sum of $96,000 was withdrawn by him from his O Bank Term Deposit #...30 between the date of separation and 20 September 2017, with those funds having been transferred to his O Bank Ultimate Account. He agreed that at the time the balance of the account was divided equally between the parties on 20 September 2017 they each received the sum of $89,274 (rounded). The husband agreed in cross-examination that all withdrawals from that account from the date of separation to 20 September 2017 were made at his direction. It was put to him that the total of the withdrawals was $96,000. I am satisfied that the difference between the balance in the account at separation and that as at 20 September 2017 differed by $81,600. The husband opposed any amount being “added back” to the asset pool from the funds held in that investment at separation. It was his position that he did not resume employment for some thirteen months after separation (August 2017) and that it was reasonable, particularly in circumstances where the wife continued in her employment during that time, that the funds that were utilised by him other than with respect to the partial property settlement were used for personal expenses, expenses relating to the children whilst they were in his care, and upkeep expenses for both the former matrimonial home and the Suburb E property. In addition to the wife’s position that the funds should be “added back” because of lack of any reasonable explanation for their expenditure, it was also her position that the funds had been “wasted” in circumstances where the husband had resigned from a well-paid job at BB Company in 2016 when the contract under which he was employed had an expiry date of September 2017. The salary pursuant to the terms of that contract was initially $150,000 per year plus superannuation in accordance with the Commonwealth Superannuation Guarantee legislation.