Hatzis & Hatzis
[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 and at his expense in all things all of her estate and interest both at law and in equity in the former matrimonial home situate at and known as B Street, Suburb C in the State of South Australia being the whole of the land comprised and described in Certificate of Title Volume … Folio …;
(c)In the event that the husband fails to comply with the terms of paragraph 1(a) hereof then and in such case interest shall accrue on such sum as shall remain outstanding as at 15 October 2021 at the rate of 5% per annum until such sum shall be paid in full;
(d)Pending payment of the Settlement sum and/or any interest accrued thereon pursuant to the terms of paragraph 1(c) hereof the husband be restrained and an injunction is hereby granted restraining him from:
(i)selling, mortgaging or in any other way encumbering the properties at B Street, Suburb C and D Street, Suburb E;
(ii)reducing the balance of the funds in the parties joint F Bank Saver Account number #...40,
SAVE AND EXCEPT for the purpose of giving effect to the terms of these orders;
(e)That the wife otherwise retain all real estate and personalty currently in her possession or control for her sole use and benefit absolutely free of any claim by the husband including but not limited to:
(i)the house property at H Street, Suburb G;
(ii)all household furniture, chattels, effects, jewellery, motor vehicles, and other items of personalty not otherwise specified herein;
(iii)her shares, savings and investments including any interest in any trusts SAVE AND EXCEPT for her interest in the parties’ joint F Bank Saver Account number #...40; and
(iv)her superannuation entitlements including the sum referred to in paragraph 1(i)(i) hereof;
(f)That the husband otherwise retain all real estate and personalty currently in his possession or control for his sole use and benefit absolutely free of any claim by the wife including but not limited to:
(i)the house property at B Street, Suburb C subject to the conditions in paragraph (1d) hereof;
(ii)the house property at D Street, Suburb E subject to the conditions in paragraph (1d) hereof;
(iii)all household furniture, chattels, effects, jewellery, motor vehicles, and other items of personalty not otherwise specified herein;
(iv)his shares, savings and investments together with the entirety of the funds standing to the credit of both parties in F Bank Saver Account number #...40; and
(v)his superannuation entitlements subject to paragraph 1(i) hereof;
(g)That contemporaneously with the settlement date the wife do all such things and sign all such documents as shall be necessary to effect a transfer of her interest in the funds standing to the credit of the parties jointly in F Bank Saver Account number #...40 to the husband;
(h)That both parties pay and discharge all past, present and future debts and liabilities incurred in their sole names to the exoneration of the other of them and indemnify the other of them with respect thereto.
(i)That with respect to the husband’s interest in J Super Fund (Account ID …52) (“the fund”):
(i)in accordance with s 90XT(4) of the Family Law Act 1975 (Cth), a base amount of $166,027.00 is allocated to the wife out of the husband’s interest in the fund;
(ii)in accordance with s 90XT(1)(a) of the Family Law Act 1975 (Cth):
A.the wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
B.the husband’s entitlement and the entitlement of such other person to whom a splittable payment may be made out of the husband’s interest in the said fund, is correspondingly reduced;
C.the Trustee of the said fund (“the Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
1.calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001, the entitlement for the wife created by subparagraph 1(i)(i) of this order;
2.pay the entitlement whenever the Trustee makes a splittable payment from the husband’s interest in the said fund into a nominated superannuation fund or bank account of the wife’s choosing;
(iii)paragraph 1(i)(i) of this order shall have effect from the operative time;
(iv)the operative time shall be four (4) days after service of these orders on the Trustee;
(v)this order binds the Trustees of the fund.
(j)After service of the payment split notice in accordance with Part 5 of the Southern State Superannuation Regulations 2009 (hereinafter referred to as “the said Regulations”) the wife shall do all acts and things and sign all such documents as may be necessary, including but not limited to exercising the wife’s request in accordance with the said Regulations for the rollover or transfer of the transferrable benefits out of the husband’s interest in the said fund to the wife’s GG Super Fund (member number …) in accordance with the said Regulations.
(k)That all extant applications be otherwise dismissed.
(l)Liberty to either party to apply as to consequential orders.
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 a pseudonym Hatzis & Hatzis has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
Mr and Mrs Hatzis are unable to reach agreement as to the division of their matrimonial property.
At the time of trial the applicant wife was aged 47 years and the respondent husband aged 46 years.
The parties married in 2002 and separated on 30 June 2016. They did not cohabit prior to marriage. They have two children X and Y, who at the time of trial were aged 13 years and 11 years respectively.
Proceedings
Proceedings between the parties commenced by way of an Initiating Application filed by the wife on 28 February 2017. She sought parenting and financial orders.
On 22 August 2017 the parties entered into consent orders providing for the children to live with the wife for nine out of fourteen nights per fortnight, and with the husband for the other five nights per fortnight during school term time, and with each parent for equal time during school holidays.
On 3 November 2017 the matter was listed for trial on 19 September 2018 with three days allowed. The wife filed her original trial affidavit together with an Amended Initiating Application and financial statement on 8 August 2018. The husband filed an Amended Response, trial affidavit and financial statement on 22 August 2018. The wife’s affidavit in reply was filed on 5 September 2018. That trial date was later vacated and the matter was relisted for trial on 15 May 2019 with priority.
On 31 January 2018 the wife had filed an application in a case seeking an order for partial property settlement in the sum of $1 million. On 23 February 2018 an order was made by consent, inter alia in the following terms:
That by consent and by way of partial property settlement and pursuant to section 79 of the Family Law Act 1975 (as amended) the parties do all such things as are necessary to cause the sum of $650,000.00 presently held in the joint F Bank account number …40 to be paid to an account nominated by the wife, such sum to be brought to account in its totality as part of the asset pool for division between the parties, in the final determination of these proceedings, and to be credited in its entirety against the wife’s settlement by way of final order for property settlement.
On 10 April 2019 the matter was transferred from the Federal Circuit Court of Australia to the Family Court of Australia. At a hearing on 13 May 2019 the matter was listed for trial on 2 September 2019. In addition each party was ordered to file and serve an updating trial affidavit and, if necessary, updating financial statements, on or before 1 August 2019. The husband filed an updating affidavit and financial statement on 31 July 2019 and an Amended Response on 1 August 2019. The wife filed an updating trial affidavit and financial statement on 1 August 2019.
The matter proceeded to trial on 2 September 2019 and at the conclusion of the evidence on 4 September 2019 the Court ordered written submissions. On 2 December 2019, after each party’s counsel spoke to their written submissions, judgment was reserved. On 18 February 2020 an application in a case was filed by the husband relating to his changed employment circumstances that occurred shortly after the conclusion of the trial. On 8 May 2020 an order was made in chambers by consent detailing the further evidence to be adduced by the husband.
I apologise to the parties and to their legal representatives for the delay in delivery of this judgment.
Parties competing proposals
Both parties sought orders for settlement of property.
The orders sought by the wife were as follows:
1.That pursuant to Part VIII of the Family Law Act 1975 (as amended) (‘the Act’), in full and final settlement, satisfaction and redemption of any claim that either party may have against the other for settlement of property and alteration of interest in property the asset pool be divided so as to affect a 60/40 per cent split of the asset pool in favour of the wife:
1.1Within (30) days (‘the Settlement Date’) the husband pay to the wife or her nominee the sum equivalent to 60 per cent of the net asset pool taking into consideration those assets to be retained by the wife (‘the Settlement Sum’);
1.2 Contemporaneously with the Settlement Sum being paid:
1.2.1The 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 real property situate at and known as B Street, Suburb C in the state of South Australia being the whole of the land more particularly described in Certificate of Title Volume … Folio … (‘the Suburb C Property’);
1.3 Pending the Settlement Sum being paid or completion of the Sale:
1.3.1The husband have the sole right to occupy the Suburb C Property, and that during such right of occupation the husband pay all all (sic) rates and taxes and like apportionable outgoings of the Suburb C Property as they fall due;
1.3.2Neither party encumber the Suburb C Property without the consent in writing of the other party;
1.4That within thirty (30) days the husband shall transfer to the wife all husband’s estate and interest in the Motor Vehicle 1 (registration number …) and the wife shall thereafter have the sole use of the vehicle:
1.5That within thirty (30) days the parties shall do all acts and things necessary to clause (sic) the joint account with the F Bank (account number …40) with the wife to retain any credit balance and with the husband to be restrained from causing or allowing the balance of the account to be decreased pending the parties’ compliance with these orders:
1.6That henceforth the property in the following shall vest in the wife absolutely free from all further claim or demand or right or entitlement of the husband unless otherwise provided for herein
1.6.1 The settlement sum;
1.6.2The partial property settlement received by the wife pursuant to Consent Order made 20 September 2017 and Consent Order made 23 February 2018;
1.6.3The Motor Vehicle 1 (registration number …);
1.6.4 Her interest in the K Unit Trust;
1.6.5The entire balance of her F Bank Saver Account …40 and any other bank account in her sole name;
1.6.6The entire balance of the joint F Bank Saver Account …40;
1.6.7 Her jewellery;
1.6.8 All furniture and effects in her possession;
1.6.9Any other personal property in her possession not otherwise specified herein;
1.7That henceforth the property in the following shall vest in the husband absolutely free from all further claim or demand or right of entitlement of the wife unless otherwise provided for herein:
1.7.1The real property situate at and known as B Street, Suburb C in the state of South Australia being the whole of the land more particularly described in Certificate of Title Volume … Folio …
1.7.2The real property situate at and known as D Street, Suburb E in the state of South Australia being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
1.7.3The Motor Vehicle 2 (registration number …);
1.7.4 His L Managed Fund (M Company);
1.7.5 His shares;
1.7.6 His interest in N Pty Ltd;
1.7.7The entire balance of the O Bank Term Deposit Account …30 (being the remainder of funds received by the husband by way of Consent Order dated 20 September 2017);
1.7.8The entire balance of his interest in the O Bank Ultimate Account …59;
1.7.9The entire balance of his interest in O Bank Cash Management Account …39’
1.7.10His interest in F Bank Business Account …40
1.7.11 The Recreational boat;
1.7.12 His Jewellery;
1.7.13All furniture and effects at the former matrimonial home, including the wine;
1.7.14Any other personal property in her possession not otherwise specified herein;
1.8The wife do indemnify the husband and keep her forever indemnified with respect to any and all liabilities in her sole name, including but not limited to her F Bank Loan Account …40 and her F Bank Credit Card …49;
1.9The husband do indemnify the wife and keep her forever indemnified with respect to any and all liabilities in his sole name, including but not limited to the husband’s ANZ Credit Card …35.
2.The following shall apply to the husband’s interest in HH Super Fund (‘the said fund’) (account number …52):
2.1That a base amount equivalent to sixty (60) per cent of the parties superannuation interest is allocated, as required by s 90MT(4) of the Family Law Act 1975 (Cth), to the wife out of the husband’s interest in the said fund;
2.2That in accordance with s 90MT(1)(a) of the Family Law Act 1975 (Cth):
2.2.1The wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth); and
2.2.2The husband’s entitlement, and the entitlement of such other person whom a splittable payment may be made to payments out of the husband’s interest in the said fund is correspondingly reduced;
2.3That the trustee of the said fund (‘the trustee’) shall do all such acts and things and sign all such documents as may be necessary to:
2.3.1Calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth) the entitlement for the wife created by paragraph 2.1 contained herein; and
2.3.2Pay the entitlement whenever the trustee makes a splittable payment out of husband’s interest in the said fund.
2.4That paragraph 2.1 and 2.2 contained herein have effect from the operative time and the operative time is 4 (four) days after service of this Order upon the trustee.
2.5That after service of the payment split notice pursuant to r 7A.03 of the Superannuation Industry (Supervision) Regulations 1994 (Cth), the wife shall do all such things and sign all such documents as may be necessary, including but not limited to, exercising her request pursuant to r 7A.06(1) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) for the rollover or transfer [of] the transferable benefits out of the husband’s interest’s in the said fund to the wife’s GG Super Fund (member number …) in accordance with r 7A.12 of the Superannuation Industry (Supervision) Regulations 1994 (Cth).
2.6That the husband shall pay the wife’s costs of and incidental to this application.
These proposed orders were set out in annexure “A” to the wife’s Amended Initiating Application filed 8 August 2018.
The final orders proposed by the husband were set out in his Further Amended Response to the wife’s Amended Initiating Application filed 1 August 2019. The orders he sought were as follows:
1.That the husband retain for his sole use and benefit absolutely with no adjustment to the wife the following assets namely the property situated at D Street Suburb E, the L Managed Fund (M Company), his shares (save and except the P Company shares), the funds in the O Bank Term deposit …30 the funds in the O Bank Money extra cash management account …39 and the funds in the O Bank Statement account …59
2.That the wife retain for her sole use and benefit absolutely with no adjustment to the husband her interest in the K Unit Trust subject to its mortgage.
3.That the balance of the assets of the parties be adjusted between them in such manner as to effect an equal division.
4.That from the balance of the net proceeds of sale of the Suburb R property the CGT assessed to both parties to be paid prior to further distribution to the parties.
5.That the post separation liabilities of the parties be paid by each of them without adjustment between them.
6.That the wife do all things necessary to transfer her interest in the property at B Street, Suburb C in the State of South Australia to the husband for his sole use and benefit absolutely.
7.That the parties do otherwise retain all real and personal assets in their name and/or possession and be liable for any and all liabilities in their own names.
8.That each party retain their own superannuation subject to the superannuation splitting Order ordered herein.
9.The following shall apply to the interest of the husband in the HH Super Fund (client ID …, account ID …52) (the Fund):
9.1A base amount of ninety-six thousand seven hundred sixty-one dollars ($96,761.00) is allocated, as required by Section 90XT(4) of the Family Law Act 1975 (Cth), to the wife out of the husband’s interest in the Fund.
9.2In accordance with paragraph 90XT(1)(a) of the Family Law Act 1975 (Cth):
9.2.1The wife is entitled to be paid the amount calculated using the allocation of $96,761.00 in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001.
9.2.2The entitlement of the husband and any other person to whom a splittable payment may be made to payments out of the husband’s interest in the Fund is correspondingly reduced.
9.3The trustee of the Fund shall do all such acts and things and sign all such documents as may be necessary to:
9.3.1Calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001, the entitlement of the wife.
9.3.2Pay the wife the entitlement whenever the trustee makes a splittable payment out of the husband’s interest in the Fund.
9.4These Orders have effect from the operative time and operative time is seven (7) days after service of this Order on the trustee.
10.That the wife, at her own expense, remove the caveat lodged over the property at D Street, Suburb E in the State of South Australia.
11. That the wife do pay the husbands costs of and incidental to these proceedings.
The parties no longer share or intend common use of their property and are not in agreement as to how it should be divided. Each party seeks specific orders altering their interests in property.
The wife proposes that the Court assess the parties’ competing applications adopting a “global” approach whereas it is the husband’s position that the matter should be determined on an “asset by asset” approach.[1]
[1] Norbis & Norbis (1986) FLC 91-712 (‘Norbis & Norbis’).
The parties cohabited for some 14.5 years following their marriage in 2002, separating on 30 June 2016. They commenced contributing to the acquisition of joint property some four years prior to commencing cohabitation.
I am satisfied in those circumstances that it is just and equitable to make an order adjusting the property interests of the parties, including their interests in superannuation.[2]
[2] Stanford & Stanford (2012) FLC 93-518.
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.
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.
At the time of marriage the husband continued to be employed by AA Pty Ltd. The husband had been employed by the company and its predecessors since 1998. In 2014 the husband was made redundant from that employment and shortly thereafter he commenced employment at BB Company as a manager. He remained in that employment until 2016 when he resigned at the invitation of BB Company.
Between 2016 and August 2017 the husband was self-employed and derived limited income from the business CC Company. In August 2017 the husband commenced employment as a manager at DD Company, which employment was terminated in 2019. At the time of trial the husband was unemployed.
Following upon the conclusion of the trial hearing and on 8 May 2020 an order was made by consent in the following terms:
1.Pursuant to paragraph 1 of the Orders sought in the Husband’s Application in a Case filed on 18 February 2020 the Husband is granted leave to adduce further evidence as follows:
1.1The Husband is employed by way of a temporary assignment for the period commencing 4 December 2019 and concluding 30 June 2020;
1.2He has earned $19,099 gross/$13,565 net over a period of eight weeks;
1.3He has no entitlement to sick or holiday pay.
2.The Wife’s Response to Application in a Case filed on 12 March 2020 be dismissed.
At separation the wife was required to vacate the former matrimonial home by the police and an interim intervention order was made prohibiting her from attending at the home for sixty days. It appears neither the husband nor the police pursued any charges against the wife.
Following upon separation the wife and children initially resided at the home of the wife’s parents, then in rental accommodation and from mid-December 2018 in a property purchased by the wife at H Street, Suburb G. The husband remained living in the former matrimonial home at Suburb C up to and inclusive of the date of trial. That property had been freehold since 2006.
Asset by asset or global approach to application for property settlement
The parties were in dispute as to whether the Court should adopt an “asset by asset” or a “global” approach to their respective applications for property settlement. It was not in dispute that both approaches to the exercise are legitimate.[3]
[3] Norbis & Norbis.
It is true that the “global” approach is more often adopted by the Court but that is not to say there are not matters where the “asset by asset” approach is more appropriate.
It was the position of the wife that in this particular matter the facts supported a “global” approach to the consideration of the factors under section 79(4).[4]
[4] Family Law Act 1975 (Cth).
It was submitted by her counsel that the parties’ marriage was not a short marriage but rather continued over a period slightly in excess of fourteen years between 2002 and 30 June 2016, that it was not a marriage where the parties strictly divided and kept their assets separate from the other or a case where the Court was required to consider the parties’ competing interests a long time after separation.[5]
[5] Polonius & York [2010] FamCAFC 228 at [92] to [93].
He further submitted there was no basis for quarantining assets as proposed by the husband and referred to the decision of Jabour & Jabour [2019] FamCAFC 78 where the Full Court said at [136]:
Whatever was the value of the property at the commencement of the relationship its significance has been largely lost given the myriad of the contributions by each of the parties to their various business ventures, through their employment and care of the family over a long relationship, including the contributions made to the retention of the property… There is no doubt that they both worked hard and over many years they both contributed to the full extent of their capacity within the roles each took within the marriage… it is important that this miscellany of other s 79(4) factors is not accorded a subsidiary role in the assessment of contributions.
He submitted that the parties’ contributions could be brought to account and accorded their appropriate relevance by the Court adopting a “global” approach.
The husband’s position by contrast was that the Court should approach the matter on an “asset by asset” basis. His counsel submitted that the husband proposed the assets each party had at the commencement of the relationship and retained during the relationship should be assessed as assets to which the other party had made no contribution,[6] and that each party should retain those assets as their sole property with any attendant liability. It was put to the Court that such an approach would be consistent with the husband’s case with respect to the wife’s post-separation financial dealings.
[6] Written submissions of the husband dated 30 October 2019 – page 19.
She further submitted that the assets acquired during the course of the relationship should be treated as a separate pool of assets to which the parties contributed equally.[7]
[7] Written submissions of the husband dated 30 October 2019 – page 19.
Counsel referred the Court to the Full Court decision in Anson & Meek (2017) FLC 93-816 where Murphy J in [24] of his reasons quoted [31] of the Full Court’s reasons in Holland & Holland[8] wherein it said:
31.Thus, the nature of a particular interest or interests in property and when and how it was acquired, utilised, improved or preserved may be very relevant to each or all of three central questions: should a s 79 order be made at all; whether contributions should be assessed ‘globally’ or ‘asset by asset’ or by reference to two or more ‘pools’; and, what is the nature and extent of each party’s contributions. However, there is no basis for excluding from consideration any property in which the parties have an existing legal or equitable interest.
[8] (2017) FLC 93-798.
I am not satisfied that there is any particular circumstance relating to the facts of this case that would suggest that justice and equity would be better served by determining the matter on an “asset by asset” approach rather than a “global” approach.
The parties were in a lengthy relationship, commencing sometime prior to 1998 and concluding on 30 June 2016. That is a period in excess of eighteen years. During that period of time they conducted themselves in such a manner as to suggest common purpose including the acquisition, conservation and preservation of assets as well as undertaking their parenting role with respect to their two children.
It may be that the husband had premarital assets of a greater value than the wife. It may have been that they kept separate bank accounts save as to those accounts directly related to the acquisition of and ongoing costs relating to their purchase of jointly owned real estate.
They may have had different views as to appropriate expenditure of income earned during their respective periods of employment. Both parties worked hard. Overall they earned a very similar amount of income during the period of cohabitation, particularly taking into account the periods of maternity leave and part-time work undertaken by the wife in the children’s early years.
No doubt the Suburb E property purchased by the husband in 1993 was maintained by the husband’s parents. Both parties gave unchallenged evidence as to assistance provided by their respective families from time to time in many ways such as you might expect from supportive extended families. This assistance included, in particular, that given to them with respect to child care over a significant period by the wife’s mother and later by the husband’s mother.
Even if the Suburb E property was at all times self-sustaining during the period of cohabitation and accounted for additional income from rent, and taking into account that the husband’s investment fund and share portfolio remained relatively untouched during the course of cohabitation, the wife’s interest in the K Unit Trust also provided additional income over the entirety of the period of cohabitation. Overall the parties acted in concert and demonstrated joint enterprise to create the best life possible for themselves and their family.
I find that justice and equity can be better served by the Court approaching the matter with a “global” perspective, with proper consideration to be given to all aspects of the parties’ respective contributions.
Asset pool
I must now turn to the question of identifying and valuing the property of the parties.
Section 4(1) of the Act contains a definition of the word “property” with respect to the parties to a marriage in the following terms:
…in relation to the parties to a marriage or either of them – means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion…
The property and the financial resources of the parties to property settlement litigation will usually be considered as at the date of the trial.[9]
[9] Omacini & Omacini (2005) FLC 93-218 at p79,616 [16] (‘Omacini & Omacini’).
In some matters property that existed at the date of separation but no longer exists at the time of trial has been “added back” to the list of property available for distribution between the parties, sometimes referred to as “notional” property.
In Omacini & Omacini the Full Court said at [30]:
To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist…
and went on to discuss those three categories, namely:
(a)“where the parties have expended money on legal fees” citing DJM and JLM (1998) FLC 92-816 at 85,262;
(b)“where there has been a premature distribution of matrimonial assets” citing Townsend and Townsend (1995) FLC 92-569 at 81,654; and
(c)quoting Baker J in Kowaliw & Kowaliw (1981) FLC 91-092 at 76,644:
…where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or…acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value…
In [31] of the same judgment, the Court went on to say:
As the Full Court said in Browne v Green (1999) FLC 92-873 at 86,360:
`44. We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction — a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.'
In this case arguments were advanced on behalf of both parties with respect to the concept of “add backs” arising from the treatment of property by one or other of the parties post‑separation.
The parties separated on 30 June 2016. The wife’s first trial affidavit was filed on 8 August 2018 and the husband’s on 22 August 2018.
As best as can be ascertained from their evidence the property of the parties at the date of separation on 30 June 2016 consisted of:
·B Street, Suburb C (joint names);
·Q Street, Suburb R (joint names);
·D Street, Suburb E (husband’s name);
·Motor Vehicle 2 (husband’s name);
·Motor Vehicle 1 (wife’s name);
·Interest in K Unit Trust (wife’s name);
·O Bank Term Deposit #...30 (husband’s name);
·O Bank Term Deposit #...84 (husband’s name);
·L Managed Fund (husband’s name);
·Share portfolio (husband’s name);
·O Bank Account #...59 (husband’s name);
·F Bank Offset Account (joint names);
·Recreational Boat (husband’s name);
·Jewellery (both parties);
·Wine (husband);
·Furniture and effects (both parties);
·Superannuation entitlements (both parties).
There may well have been other bank accounts in the names of the parties and each party had separate credit cards, but no specific evidence was adduced by either party that would help clarify the position.
It would appear that both parties had liabilities in their respective names at separation but no evidence was adduced as to the amounts owed by either of them at the date of separation with respect to credit cards or any other liabilities. There was no evidence adduced as to the outstanding mortgage amount owing on the Suburb R property.
At the time of trial the only property of the parties, to which I have referred in paragraph 68 of these reasons, that remained “intact” were the house properties at Suburb C and Suburb E, the husband’s Motor Vehicle 2, the wife’s interest in the K Unit Trust and the parties’ respective superannuation entitlements.
The Suburb R property had been sold, the wife’s Motor Vehicle 2 had been sold and the parties had separately dealt with their various shares, savings and investments in such manner as they deemed appropriate post-separation.
After separation household furniture and effects were divided between the parties. The parties were in dispute as to the value of the personalty retained by the other of them but ultimately at trial adopted the valuations of EE Valuers dated July 2019 with respect to the values of the boat, jewellery, wine and other personalty they each retained.
It was the wife’s case that as at the date of separation the amount standing to the credit of the husband in the O Bank Term Deposit #...30 was $260,148. The husband took no issue with that evidence in paragraphs 51, 52 and 96 of his trial affidavit filed 22 August 2018.
It was the wife’s evidence that as at 30 June 2016 the husband had another O Bank Term Deposit #...84 with a balance of $18,434 which evidence was not disputed by the husband. There was $8,077.90 in the husband’s O Bank Ultimate Account as at 30 June 2016.
Exhibit W8, being account statements relating to the parties’ joint F Bank Offset Account, indicate a balance of $16,284.72 as at 30 June 2016.
There was no evidence adduced as to the value of the husband’s L Managed Fund or his share portfolio as at the date of separation.
At the time of trial the parties were agreed as to the value of certain of the assets namely:
Item # Asset Agreed Value 1 B Street, Suburb C (joint) $750,000 2 D Street, Suburb E (husband) $450,000 3 Motor Vehicle 2 (husband) $10,000 4 Motor Vehicle 1 (traded in by wife) $12,000 5 K Unit Trust (wife holds 2.5% interest) $147,000 6 Personalty (husband) $28,870 7 Personalty (wife) $17,370 8 F Bank Saver Account number …40 (joint) $202,300 9 Partial Property Settlement as per order 20 September 2017 (wife) $89,274 10 Partial Property Settlement as per order 20 September 2017 (husband) $89,274
The parties were not otherwise agreed as to the value of certain other assets or to the overall composition of the asset pool, in accordance with their different positions as to the “asset by asset” or “global” approach to be taken by the Court. I have however for the reasons given determined that I will decide the issues on a “global” approach.
There was also much criticism and complaint on the part of each party towards the other of them as to how matrimonial assets and income earned by each of them were dealt with in the period between separation and trial.
Both of the parties in this matter had a history of significant employment both prior to and during the period of the marriage, with both parties employment generating significant remuneration. For the most part this pattern continued post-separation until the date of trial.
Referencing that particular issue, in C & C [1998] FamCA 143 (‘C & C’) at [45] and [46] the Court said:
45.…In a case involving the magnitude of the assets of this case, in our view it is unreasonable to conduct a microscopic examination of each of the parties’ items of post-separation expenditure with a view to determining whether or not it is appropriate that they be brought into account in dividing up the asset pool between them…
46.Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post‑separation in a manner that is consistent with properly getting on with their lives…
In Edgehill & Edgehill [2007] FamCA 1102 (‘Edgehill & Edgehill’) the Full Court was required to consider the issue of whether or not the wife’s post-separation expenditure should be “added‑back” into the asset pool where it was asserted that there was no explanation of that expenditure. In [57] and [58] the Court said:
57.The treatment of post separation earnings and income, as well as disposal by one party post separation of assets acquired during the parties’ marriage, has been considered in a number of cases, in particular in Chorn & Hopkins (2004) FLC 93‑204…and more recently in SMB & MFB [2006] FamCA 46 and Gollings & Scott [2007] FamCA 397. In Chorn & Hopkins the Full court considered post separation expenditure by parties, particularly expenditure for legal costs. In their discussion, at para 21, their Honours referred to the principle established in Townsend & Townsend (1995) FLC 92-569, namely that where ‘one party has disposed of an asset which could be described as a ‘matrimonial asset’ in the sense that it was an asset which was owned by one or both of the parties at separation and in which the other party would have a legitimate interest’ a trial Judge could, in the exercise of his or her discretion, ‘add back’ such an asset as a notional asset to the pool of property to be divided between the parties.
58.In Gollings the Full court dealt specifically with post income expenditure by the husband, and confirmed the principles established in earlier cases that parties are entitled to get on with their own lives post separation, and generally post separation expenditure for reasonable living expenses should not be brought to account…
At separation the husband was unemployed. He had resigned from his position at BB Company in 2016 at the invitation of BB Company in circumstances where the alternative was an investigation into his conduct at work. The husband remained unemployed until 22 August 2017. His original contract with BB Company was for a period concluding on 28 September 2017, at an initial annual salary of $150,000 plus superannuation.[10] Upon resignation he was advised by correspondence to him from BB Company dated 2016 that he would be paid four weeks salary. He also continued to receive the rental income from the Suburb E property.
[10] Wife’s trial affidavit filed 8 August 2018 – annexure A.
During the period 2016 to 2017 the husband undertook work as a private contractor through the N Pty Ltd. The husband’s evidence as to his earnings during that period was unclear at trial. At the hearing on 2 December 2019 his counsel tendered financial reports and the trust tax return with respect to N Trust[11] through which the husband earned the CC Company income. These suggested a distribution to him in the 2018 financial year of $27,829 with allowable deductions of $6,761, resulting in nett income from that entity of $21,068. By the end of the second month of that financial year the husband had commenced well-paid remuneration with DD Company.
[11] Exhibit H12.
The husband’s income in the previous financial year ended 30 June 2017, which covered the majority of the time he earned income through the N Pty Ltd (CC Company) was estimated by him to be $37,000.[12] This evidence was effectively in accordance with the evidence adduced by the wife in paragraph 49.3.1 – 49.3.6 of her affidavit filed 8 August 2018.
[12] Husband’s trial affidavit filed 22 August 2018 – paragraph 33.
The husband remained resident in the former matrimonial home following upon separation and was responsible for the maintenance in respect of the Suburb E and Suburb C properties. Both properties were freehold.
The wife continued to be employed post-separation and deposed to paying board in the sum of $400 per week for the children and herself whilst residing with her parents. Between November 2016 and the purchase of a property in H Street, Suburb G in December 2018 she deposed to paying rental of $515 per week. The wife continued to receive and retain the income from her interest in the K Unit Trust in the sum of approximately $500 per month.
L Managed Fund
The parties were not agreed as to the value to be ascribed to the husband’s L Managed Fund.
The L Managed Fund was referred to in paragraph 10 Item 6 of the wife’s initial trial affidavit filed 8 August 2018 wherein she ascribed a value to that asset of $99,407. In paragraph 12 of that same affidavit the wife deposed to the husband having the L Managed Fund at the commencement of the relationship but to her being unable to ascribe a value to the asset at that time.
In the husband’s trial affidavit filed 22 August 2018 he deposed in the schedule contained in paragraph 19 thereof to the value of the L Managed Fund prior to the parties’ marriage being $26,400, with a value of $106,000 as at the date of the filing of the affidavit. In the wife’s updating trial affidavit filed 1 August 2019 she ascribed a value of $109,000 to the L Managed Fund.
In the husband’s updating trial affidavit filed 31 July 2019 he deposed in paragraph 7 to having cashed in a portion of the L Managed Fund for a sum of $65,000, with $46,961 of those funds remaining in his O Bank Account. He deposed to cashing in part of the investment in circumstances where:
I needed to secure cash to fund CGT on the sale of Suburb R property, which is overdue, and fund my general living expenses and maintenance costs of maintaining Suburb C and Suburb E properties whilst I am unemployed.
He deposed in paragraph 8 to being advised by his accountant that he would have to pay Capital Gains Tax on the sale of part of the L Managed Fund in the sum of $19,329.
In his financial statement filed on the same day he deposed to the remaining L Managed Fund having a value of $54,000, and to having $46,961 in his O Bank Account #...59.
The husband was cross-examined about the sale of part of the L Managed Fund. It was his evidence that the $18,000 difference between the sale price of $65,000 and the amount remaining in his bank account of $46,961 was utilised for living expenses for he and the children, as well as upkeep expenses on an aging home.
It was put to him that his evidence was that he had “cashed in” $65,000 worth of the L Managed Fund so that he had funds to pay Capital Gains Tax on the sale of the Suburb R property.[13] He replied that was not the case and that the funds were used for living expenses because he had been unemployed for six months. He agreed however that payment of Capital Gains Tax was one of the purposes of the sale of part of the fund, which accorded with his affidavit evidence.
[13] Husband’s affidavit filed 31 July 2019 – paragraph 7.
He agreed at trial that he had not paid any of the Capital Gains Tax relating to the sale of the Suburb R property from those funds and that only $4,000 remained in that account. He agreed that in addition he still had a Capital Gains Tax liability of approximately $25,000 arising from the estimate of $19,000 with respect to the sale of the L Managed Fund and approximately $5,500 with respect to the sale of a parcel of FF Company shares.
When counsel for the wife put to him that having sold part of the investment for $65,000 he had reduced the asset pool and made no reduction in the above estimated Capital Gains Tax liability of $24,809 or the Capital Gains Tax liability for Suburb R he agreed that was the case.
It was the wife’s position that the amount of $119,000 should be attributed to the value of the L Managed Fund. This is comprised of the total of the $65,000 drawn down by the husband from the fund partly, on his evidence, to pay Capital Gains Tax on the sale of the Suburb R property and FF Company shares but apparently utilised for general living expenses, together with the $54,000 being the amount the husband deposed the fund was drawn down to following upon the partial sale.[14]
[14] Husband’s financial statement filed 31 July 2019 – Part M – paragraph 59.
It was the husband’s position that the parties’ property settlement dispute should be determined by way of the “asset by asset” approach in which circumstances he was proposing that he would retain without adjustment to the wife the L Managed Fund consisting of $54,000, being the amount to which it was drawn down after the partial sale, together with the nominal sum of $46,961 being the amount remaining in O Bank Account #...59 prior to the utilisation of those funds by the husband.
These amounts total $100,961, a difference of approximately $18,000 between the parties’ respective positions. The two amounts are expressed as separate line items in the husband’s counsel’s written submission but as a one line item in that of the wife’s counsel. When referring to the L Managed Fund asset I am referring to the amount received from the partial sale together with the value of the remaining investment.
The wife argued that the amount of $65,000 received from the partial sale is the appropriate amount that should be brought to account in circumstances where the Court cannot be satisfied on the evidence of the husband what became of those funds. I am mindful that the investment was sold down at a time that the husband was unemployed.
I do not consider that it was unreasonable for him to utilise some $18,000 on general living expenses. I am satisfied in the circumstances of this case that the lack of particularity in the husband’s evidence regarding that expenditure concerned a relatively small part of the funds obtained by him and that a “microscopic” examination of that expenditure is neither desirable nor necessary.
For the purposes of the calculation of the gross asset pool I intend to include the L Managed Fund at $100,960, being $54,000 remaining after the drawdown together with the amount of $46,961 (rounded to $46,960) initially deposited in the husband’s O Bank Account #...59 following upon the drawdown.
It is the case of the husband that there is an attendant liability that should also be taken into account in the sum of $19,329, being the estimated amount that would be due and payable by the husband for Capital Gains Tax following upon the sale of the L Managed Fund. I will address that issue in my consideration of appropriate liabilities to take into account in calculating the nett asset pool.
Shares including FF Company share sale
The parties were not in agreement as to the value to be ascribed to the husband’s share portfolio. By the time of trial, that excluded the FF Company shares he had owned as at separation but sold in 2019.
In paragraph 5 of the husband’s updating trial affidavit filed 31 July 2019 he deposed to having sold the FF Company shares for $13,039 and that his accountant had estimated he would have to pay Capital Gains Tax of $6,510 as a result of that sale. In paragraph 8 of the same affidavit he deposed to a Capital Gains Tax liability on the sale of those shares in the sum of $5,480.
In paragraph 6 of the same affidavit he deposed to spending the funds from the FF Company shares sale on living expenses as a result of being unemployed. It was the husband’s position that in those circumstances the amount he received from the sale of those shares should not be included in the asset pool but he sought the Capital Gains Tax liability be brought to account when assessing the parties’ nett asset position.
I do not consider that the expenditure arising from the sale of the FF Company shares, apparently relating to general living expenses, was unreasonable or reckless. Although it reduces the value of the asset pool, the sale occurred some 2.5 years after separation. Again the principles to which I have referred with respect to parties being able to get on with their own lives after separation, referred to in the cases of C & C and Edgehill & Edgehill, are applicable to this scenario. In those circumstances I do not intend to include the amount the husband received in my calculation of the asset pool.
As with the L Managed Fund I will address the issue of the accompanying Capital Gains Tax liability when considering what liabilities should be taken into account with respect to a calculation of the nett asset pool.
It was the husband’s position as set out on pages 12, 33 and 38 of his counsel’s written submissions that the value attributable to the remaining shares should be $46,015. This accords with his evidence in paragraph 38 of his financial statement filed 31 July 2019 by which date he had sold his FF Company shares.
In paragraph 18 of the husband’s affidavit filed 22 August 2018 he specified the shares that comprised his share portfolio prior to the parties’ marriage, as well as the additional P Company shares acquired during the marriage. He ascribed values to those various shares as at 11 August 2018. Neither party was cross-examined in any detail about the issue.
On pages 2 and 30 of the wife’s counsel’s written submissions a value of $48,873 at 1 August 2019 was ascribed to the husband’s remaining shares based on the husband’s identification of the shares referred to in the previous paragraph.
In circumstances where the husband was not cross-examined as to any discrepancy between the figure of $46,015 and $48,873 I propose to include in the list of the parties’ assets available for distribution the husband’s shares at the value of $46,015.
Wife’s Suburb G house
The parties were also in dispute as to whether the sum of $850,000 received by the wife post‑separation should be included in the calculation of the asset pool “in totality”,[15] or whether the value of the wife’s house property at H Street, Suburb G should be included as an asset as proposed by the wife with the attendant liabilities of her two Commonwealth Bank of Australia home loans to be taken into account.
[15] Written submissions of the husband dated 30 October 2019 – page 5.
In 2008 the parties had purchased a property at Q Street, Suburb R. I will refer to the details concerning the purchase of that property later under my consideration of contributions. Its relevance however at this stage, is that on 31 January 2018 the wife filed an application in a case seeking payment to her in the sum of $1 million by way of partial property settlement from the funds standing to the credit of the parties following upon the sale of the property in December 2017. It was common ground that the nett proceeds of that sale were in the sum of approximately $1,041,399.
On 23 February 2018 an order was made inter alia in the following terms:
1.That by consent and by way of partial property settlement and pursuant to section 79 of the Family Law Act 1975 (as amended) the parties do all such things as are necessary to cause the sum of $650,000.00 presently held in the joint F Bank account number …40 to be paid to an account nominated by the wife, such sum to be brought to account in its totality as part of the asset pool for division between the parties, in the final determination of these proceedings, and to be credited in its entirety against the wife’s settlement by way of final order for property settlement.
Later in 2018 negotiations were entered into between the parties’ solicitors as to the possible release of a further $200,000 from the same account to the wife by way of partial property settlement.
Notwithstanding an apparent agreement, on which the husband ultimately “reneged”, the account was in the joint names of the parties and the wife was able to remove the additional $200,000 from the account in December 2018 without further reference to the husband, resulting in her receiving a distribution of $850,000 from the settlement funds prior to the hearing of this matter.
On 19 December 2018 the wife purchased a property at H Street, Suburb G. The property cost $1,150,000 with the total settlement price including Stamp Duty totalling $1,218,914. The wife deposed to those facts in paragraph 8 of her trial affidavit filed 1 August 2019 as well as to the purchase being funded utilising $750,000 of the $850,000 she had received by way of partial property settlement together with monies borrowed from the Commonwealth Bank of Australia in the sum of $468,914.
It was the husband’s position that the appropriate amount to include in the list of the parties’ assets was the amount of $850,000 comprising the partial property settlements to which I have referred, and that the value of the wife’s house property should be excluded as should the accompanying mortgage liabilities which the wife deposed in her financial statement filed 1 August 2019 to being $462,553 and $47,482 respectively.
In paragraph 24 of the wife’s trial affidavit filed 1 August 2019 she deposed to her solicitor writing to the husband’s solicitor on 30 May 2019 proposing that the parties agree for the purposes of trial the value of the Suburb G property at $1,150,000, being the purchase price as at December 2019, to which she alleged the husband had not responded. The property was not formally valued prior to trial and the wife relied on that value at the hearing.
It was submitted on behalf of the husband that if the approach promoted by the wife was adopted by the Court the overall result in practical terms would be that rather than the Court taking into account the “totality” of the $850,000 received by the wife by way of partial property settlement prior to trial the amount that would effectively be taken into account would be $639,000, a difference of some $211,000.
This issue is illustrative of the problems faced by the Court if every aspect of the parties’ financial conduct following upon the breakdown of a marriage or relationship is dissected in minute detail rather than allowing the parties to “get on with their own lives”[16] and making their financial decisions based on their own particular circumstances. It must not however mean that one or other of the parties has carte blanche to spend money or dispose of assets owned by the parties at separation to the detriment of the other of them.
[16] Gollings & Scott [2007] FamCA 397.
The wife had an unfettered discretion to purchase whatever home she chose for the children and herself. Following upon the parties’ separation the wife worked mostly on a fulltime basis up until the time of trial apart from a period of three or four months. She chose to utilise $750,000 of the total of $850,000 partial property settlement funds towards the purchase of the property. The remaining $100,000 was utilised primarily, together with income she earned and monies expended by way of a loan and on credit card, towards extensive refurbishing, renovating and painting the new house property.
These were all expenses the wife was perfectly entitled to incur, but I find that if her approach was adopted it would not properly reflect in a just and equitable manner the true value of the partial property settlement afforded to the wife. I find that it is appropriate to adopt the approach of the husband, namely, to include in the list of the parties’ assets the wife’s partial property settlement obtained from the sale of the Suburb R property in its totality in the sum of $850,000.
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.
It was the wife’s position that the husband had embarked on a course of conduct at his employment, in that he had engaged in a personal relationship with another employee of BB Company and had falsified his work records, leading BB Company to give him the options of resigning immediately to avoid any inquiry into his behaviour or being subject to such an inquiry.
It was the wife’s position that having engaged in such conduct leading to him accepting immediate resignation and no inquiry, that he had lost the benefit of approximately sixteen months’ salary and superannuation benefits which in turn resulted in him expending matrimonial assets unnecessarily.
It was the husband’s position that the Court could not rely on the evidence adduced by the wife with respect to BB Company records in circumstances where they were inadmissible and where his evidence was that he was given an opportunity to resign, there was no investigation conducted and he was not happy in his workplace in any event.
I find it is not necessary to determine the admissibility or otherwise of that evidence. The husband’s own evidence was entirely unsatisfactory as to the circumstances under which he left his employment at BB Company so abruptly.
His evidence regarding the matter was contained paragraphs 61, 62 and 63 of his affidavit filed 22 August 2018. That evidence was in response to the evidence contained in paragraph 19.1 of the wife’s first trial affidavit filed 8 August 2018. He agreed he resigned from his position at BB Company as Manager y 2016 having been advised on that date of a complaint about his conduct and his option to either resign or proceed to a formal investigation.
He deposed to having been significantly unhappy within his position at that company and said he had already commenced looking for work elsewhere. He deposed to deciding not to accept the offer of an investigation but rather use a national award he had received for his work at BB Company together with his experience to try and consult. He deposed to never having seen any of the allegations or results of the investigation and never being provided with an opportunity to respond to them because the investigation did not proceed. He deposed to only receiving that information because of a subpoena issued by the wife and to the material produced pursuant to subpoena never having been tested and not accurately reflecting what took place.
In cross-examination the husband agreed that when signing the contract to commence work with BB Company in 2014 the term under the contract continued to 2017 and the job was as a fulltime Senior Manager exclusively working for BB Company for 37.5 hours per week to occur between the hours of 8.00 am and 6.00 pm Monday to Friday of each week on an initial salary of $150,000 per year plus superannuation.
He agreed that in 2016 he had received a letter, although he said he was not sure whether it was the particular letter being shown to him during cross-examination, but denied that he had been told by an authorised officer of BB Company that the company had serious concerns as to wilful misconduct on his part.
It was the nub of his evidence in cross-examination that he had never had a chance to refute any of the allegations contained in documents produced by BB Company. When the Court asked the witness whether his evidence was that the conversations as to the concerns held by BB Company regarding his falsifying of records had not happened, he replied that no details had been furnished to him and he had “had a gutful” and decided to resign. He agreed that he was not suggesting he had not been given an opportunity by BB Company to refute what was being put to him but rather, he had decided to resign.
In answer to further questions from the wife’s counsel he denied that he had been told as early as 2016 by BB Company of the allegations against him with respect to false diary entries, but agreed that it had been put to him i2016 that he had had lunches with “Ms MM”. When it was further put to him that BB Company had told him that their observations failed to reveal evidence of him having undertaken substantial work he denied that had been the position and said that he had “transformed the place”. He said that it had not been put to him by BB Company that the locations he had been on at various times did not match his work diary entries.
When asked by the Court why he thought that BB Company had asked him to resign forthwith or be subject to an investigation, his answer was to the effect that there had been a “target on his back” from day one. He agreed with the proposition of the wife’s counsel that he had been given a “one-off” window to resign, and said the option had been to resign or be the subject of a formal investigation and that in circumstances where he had been through a formal investigation before he took the option to resign as he had been employed to “bring about substantial change”.
His evidence in cross-examination about having seen the letter from BB Company in 2016 was vague and avoidant as were his answers with respect to whether or not a transcript had been prepared of the meeting he had with BB Company that day. He repeated his assertion that he had been a “target” of the management at BB Company. In answer to further questions in cross‑examination he said that he had not appeared before the Board as requested on one occasion to answer an allegation about discrepancies in his records because he had been bleeding through his shirt. He said this was as a result of a “mauling” by his wife and he was in no position to appear as required because he had to leave the building.
He agreed nothing of the sort had appeared in any of his affidavit material and that the subpoenaed material obtained by the wife had been available to him for some two weeks prior to him filing his trial affidavit. He further agreed that he had failed to respond in any detailed manner to the material annexed to the wife’s affidavit and obtained by her by way of subpoena to BB Company and further, that he had said nothing about the “mauling” incident because he loved his wife.
Overall, the husband’s evidence with respect to the issue of him being given the option by BB Company of resigning on the day (in 2016) or being the subject of a formal complaint about allegations regarding falsifying of work records was entirely unconvincing. On the husband’s own evidence I am satisfied that he was well aware of why he was given the options in 2016, and that he took the option to resign immediately in circumstances that related to his knowledge of the alleged false work entries as opposed to any suggestion that he was unhappy in his workplace.
This finding should not be interpreted in any way as a finding that the husband was guilty of what was to be alleged against him by BB Company if an investigation had proceeded but rather, rejecting the suggestion of the husband that he had decided to leave because he was unhappy at that employment. He did not put before the Court evidence of any other reasonable explanation for having taken the option to resign at that time thereby resulting in an income loss of something in the realm of $200,000 income including superannuation. He did not adduce any evidence that would suggest he had an option of earning similar income by alternate means at that time or at least in the foreseeable future. The husband had a history of continuous employment, significant salaries relating to his employment and he took up well‑remunerated employment again but not until 2017, some fifteen months later.
I am satisfied that both that issue and the issue of the “adding back” of the $81,600 expended by the husband in a period of fifteen months post-separation are best addressed not by way of “adding back” but rather, by consideration of the impact on the matter generally under s 75(2)(o) of the Act.
The wife further argued that the amounts standing to the credit of the husband in his O Bank Term Deposit #...84 with a balance of $18,434 at separation, and the further sum of $8,077.90 in his O Bank Ultimate Account at separation, should also be “added back” to the pool as funds having been utilised by the husband post-separation without any proper or reasonable explanation as to that expenditure. Again, I am satisfied that that matter can be better addressed under s 75(2)(o) of the Act.
The wife argued that certain other funds had been expended by the husband post-separation without reasonable explanation, but I am not satisfied that there is evidence that suggests any other funds existed at separation than those to which I have already referred.
There were certainly significant cash withdrawals made by the husband from various accounts as well as a transfer of $30,000 allegedly to a “home loan” which loan or investment account I find did not exist. The husband’s evidence about that transaction was entirely unsatisfactory.
Nevertheless, I find that this again would be an issue of dealing with individual transactions of the husband post-separation during which time both he and the wife were earning significant income for significant periods. I find that it is no more appropriate to attempt to dissect this expenditure on the part of the husband than it is to bring to account the wife’s financial conduct post-separation, save to the extent that such conduct on the part of either of them may impact on the matrimonial pool of assets. I have made my determinations with respect to some of those issues and intend to deal with the balance in my consideration of s 75(2)(o) of the Act.
For those reasons I find that the parties’ gross assets comprise the following:
Item # Asset Agreed Value 1 B Street, Suburb C (joint) $750,000 2 D Street, Suburb E (husband) $450,000 3 Motor Vehicle 2 (husband) $10,000 4 Motor Vehicle 1 (traded in by wife) $12,000 5 K Unit Trust (wife holds 2.5% interest) $147,000 6 Personalty (husband) $28,870 7 Personalty (wife) $17,370 8 F Bank Saver Account number …40 (joint) $202,300 9 Partial Property Settlement as per order 20 September 2017 (wife) $89,274 10 Partial Property Settlement as per order 20 September 2017 (husband) $89,274 11 Husband’s L Managed Fund $100,960 12 Husband’s shares $46,015 13 Wife’s further partial property settlement as per order of 23 February 2018 and additional $200,000 withdrawal by the wife $850,000 TOTAL VALUE OF GROSS ASSETS $2,793,063 Superannuation entitlements
In addition to the gross assets to which I have referred the parties each had superannuation entitlements as at trial.
It was the husband’s position that for the purpose of calculation of the asset pool the value of his superannuation entitlements should be reduced by $59,686 being the value he ascribed to his superannuation at the commencement of the parties’ cohabitation.
It was the wife’s position as set out on page 23 of her counsel’s written submissions that a value of $35,000 should be ascribed to the husband’s superannuation entitlements as at the date of commencement of cohabitation in circumstances where disclosure has provided that as at 2002, some eleven months after cohabitation, the husband’s superannuation balance was $41,994. The husband did not challenge the assertion of the disclosure value as at 2002 being $41,994.
It was the wife’s unchallenged position as set out on page 25 of her counsel’s written submissions that disclosure with respect to her NN Super Fund entitlements evidenced a balance of $26,073 at 30 June 2001.
The husband’s superannuation figure as disclosed was for a date some eleven months after the parties commenced cohabitation. That of the wife was at a date some seven months prior to cohabitation.
As I have said previously, although the parties only commenced cohabitation at the time of their marriage they had been in a relationship for some years prior to the commencement of cohabitation, the marriage was of significant length and both parties had worked hard to contribute to their overall financial position both during the course of their relationship and during their marriage.
I am satisfied that there should be no adjustment in favour of the husband on account of the value of his superannuation as at the date of the parties’ marriage being the date cohabitation commenced.
I find that the superannuation interests of the parties for the purpose of the calculation of the asset pool are:
Item # Superannuation interest Agreed Value 1 GG Super Fund as at 30 June 2019 (wife) $333,487 2 HH Super Fund as at 30 June 2019 (husband) $656,961 3 GG Super Fund as at July 2019 (husband) $8,579 TOTAL VALUE OF SUPERANNUATION INTERESTS $999,027
Overall, the gross asset pool of the parties therefore totals $3,792,090.
Liabilities
In the event that the Court adopted a “global” approach to the question of distribution of the parties’ assets, it was the position of the husband that the liabilities to be taken into account should be quantified at $156,695. Those liabilities comprised the following:
Item # Liability (as promoted by the husband) Value 1 K Unit Trust (wife) $62,500 2 Suburb R sale Capital Gains Tax (wife) $32,019 3 Suburb R sale Capital Gains Tax (husband) E$37,367 4 FF Company shares Capital Gains Tax (husband) E$5,480 5 L Managed Fund drawdown Capital Gains Tax (husband) E$19,329 TOTAL $156,695
I have already taken into account the liability of the wife in the sum of $62,500 in respect of the K Unit Trust by including in the gross asset pool the nett figure of $147,000 for the value of that asset, being an agreed value.
It was the position of the wife that if the Court did not accept her position with respect to including the value of her Suburb G property as at the date of trial and adding back the sums proposed by her in respect of monies retained by the husband, that the liabilities to be taken into account should be as follows:
Item # Liability (as promoted by the wife) Value 1 ANZ Platinum card as at 16 July 2019 (husband) $1,875 2 F Bank Loan Account as at 1 August 2019 (wife) $30,014 3 F Bank Platinum card as at 1 August 2019 (wife) $18,025 4 Suburb R Capital Gains Tax (wife) $32,019 5 Suburb R Capital Gains Tax (husband) E$37,367 TOTAL $119,300
The parties were agreed that it was appropriate to include in the calculation of the nett asset pool their respective Capital Gains Tax liabilities relating to the Suburb R property. I agree such an approach is appropriate.
It was the wife’s position that the liabilities incurred by the husband by way of Capital Gains Tax in respect of the sale of the FF Company shares and the L Managed Fund drawdown should not be included in the calculation of the nett asset pool in circumstances where the husband deposed to needing to:
(a)drawdown on the L Managed Fund to:
“…secure cash to fund CGT on the sale of the Suburb R property, which is overdue, and fund my general living expenses and maintenance costs of maintaining Suburb C and Suburb E properties whilst I am unemployed”;
and
(b)sell the FF Company shares to obtain funds for living expenses as a result of being unemployed.
It was the wife’s position that both of those transactions had reduced the asset pool and unnecessarily incurred combined Capital Gains Tax liabilities of $24,809. This had not been paid from either those sale proceeds or from the husband’s income by the time of trial.
It was the wife’s position that at the time the husband drew down on the L Managed Fund the Capital Gains Tax liability with respect to the Suburb R property had not yet been incurred as he had not completed the taxation returns for the 2018 financial year. Accordingly, the Suburb R Capital Gains Tax was not overdue as deposed to by the husband.
By the time of trial the wife had entered into an arrangement with the Australian Taxation Office with respect to payment of the Capital Gains Tax liability she incurred as a result of the sale of the Suburb R property. I therefore only need to address the parties’ dispute with respect to the issue of the outstanding $24,809 arising from the share sale and the L Managed Fund drawdown.
The wife deposed to the value of her superannuation interests as at 30 June 2001, some eight months prior to the commencement of cohabitation, being $26,073. This evidence was not challenged.
The husband’s pre-cohabitation contribution of the Suburb E property and the wife’s pre‑cohabitation contribution of her interest in the K Unit Trust, both of which assets were in existence at the date of trial and both of which had increased in value, as well as having been self-sustaining during the period of the parties’ marriage, were significant and similar contributions. Both parties had benefitted from the sale of the motor vehicles they had each owned prior to cohabitation.
Both the Suburb E property and the K Unit Trust generated income for the parties during the period of cohabitation. The parties benefitted significantly from proceeds arising from the sale of the wife’s initial interest and the parties’ joint interest in the S Street property. The interest in the wife’s sole name was acquired prior to cohabitation and she was not challenged in respect of her evidence that that original interest accounted for $45,000 of the $75,000 sale proceeds realised in 2006.
There is no doubt that the husband’s share portfolio and L Managed Fund had both increased significantly in value over the period of cohabitation from, for the purposes of these proceedings, approximately $25,000 to approximately $101,000 in the case of the L Managed Fund and from approximately $20,000 to approximately $46,000 in the case of the shares.
I am satisfied that both parties made valuable and significant pre-cohabitation contributions to the asset pool that I have found to be available for distribution between them upon the breakdown of their marriage.
During the three to four years of the parties’ relationship prior to commencing cohabitation they had commenced a pattern of joint financial enterprise with respect to saving for and building the former matrimonial home. Their respective financial interests in the Suburb E property and the K Unit Trust had generated income for each of them, which continued throughout the period of approximately 14.5 years of cohabitation, and provided a further source of funds during the time they continued to build up their joint assets.
Both parties benefitted from the sale of their motor vehicles by a reduction in their joint mortgage and by way of part of the purchase price of a motor vehicle utilised throughout the period of cohabitation. Both parties benefitted from the sale proceeds of the S Street property, more than half of which was generated from the wife’s unchallenged pre-cohabitation interest in that property. Both parties will ultimately benefit from the increase in value of the husband’s share portfolio and L Managed Fund.
I do not consider it necessary or helpful to try and calculate an exact “dollar figure” to compare the parties’ pre-cohabitation contributions. In circumstances where they both made significant such contributions, where the period of financial joint enterprise between the parties was in existence for somewhere between seventeen and eighteen years, and where the parties are agreed that their contributions during the period of cohabitation were equal, I am not satisfied that the adjustment of ten per cent in his favour sought by the husband in respect of these contributions would afford justice and equity as between the parties.
Upon commencing cohabitation following their marriage the parties lived in the Suburb C property throughout the period of their relationship until separation on 30 June 2016.
During the period of the parties’ cohabitation the wife earned approximately $2,075,739. During the same time period the husband’s earning totalled $2,226,295. This evidence was not in dispute.
After their marriage both parties deposited varying amounts from their wages into a joint offset account from which mortgage payments were made such that the Suburb C mortgage was discharged in full by approximately 2006. The parties otherwise maintained separate bank accounts, save that for a brief period they shared a credit card account.
At trial it was clear that there was considerable conflict between the parties as to the use to which each of them put their earnings during the period of the relationship.
Between July 2006 when the mortgage over the Suburb C property was extinguished and in 2008 the parties had acquired joint savings of approximately $203,000. That figure did not appear to be in dispute although the parties were in dispute as to how much each contributed to that fund.
I am not satisfied that anything turns on that issue in light of the concession of both parties to an assessment of equal contribution during the period of cohabitation.
In 2008 the parties purchased a property at Q Street, Suburb R. On the wife’s case the property cost $813,000, and on the husband’s case $856,000 inclusive of stamp duty. The Suburb R property was purchased as an investment and was rented out during the period of the marriage. It was sold in December 2017 for $1,217,000, with nett sale proceeds of $1,041,399.
Between September 2008 and the date of separation being 30 June 2016 the parties both contributed varying sums each month into a joint offset account from which payments were made towards the mortgage on that property.
At separation the mortgage payments were in advance in the amount of approximately $16,000. The husband’s evidence was that the rental income for the property at that time was approximately $2,060 per month. It appeared that post-separation until late 2016 or early 2017, neither party contributed any significant funds to the joint offset account from which those mortgage payments were made. The husband’s evidence in cross-examination was to the effect that post-separation some of the funds withdrawn from his Term Deposit #...30 were used to pay the Suburb R mortgage payments at approximately $3,000 per month and sometimes more. He said that funds from that same account were also used to make payments on the wife’s Motor Vehicle 1.
When asked if the car payments were approximately $1,500 per month he replied “about that”, and said that he was contributing approximately $4,500 per month from the time of separation until firstly the car was paid off in January 2017, and continuing at the rate of approximately $3,000 per month with respect to the mortgage.
When it was put to him that neither of the parties had in fact paid into the offset account for a significant period of time post-separation he replied that he had and was able to generate a significant surplus in the account. He confirmed that at separation the offset account was in credit to the extent of approximately $16,000 and that the mortgage payments were $3088.50 per month. He confirmed that the car payment was $1,049 per month. He agreed with the proposition that the total of the mortgage and car payments each month, according to the offset account statement, was $4,137.
He was cross-examined about various withdrawals from the offset account post-separation including car payments, mortgage payments and a payment for a service on the wife’s motor vehicle. He denied that all of those payments were made from funds paid in advance into the offset account prior to separation. After further extensive cross-examination regarding the funds in that account, the various credits from rental, and payments made out of the account he conceded that the total nett contribution by him to the offset account for the seven month period up to January 2017 totalled $480 rather than something like the $25,000 as previously suggested by him.
Exhibit W8 was the F Bank Offset Account Statements in the parties’ joint names between 24 May 2016 and 18 January 2017. The husband conceded that the wife stopped contributing to the mortgage account in about December 2016. The statements clearly indicate that other than rental income in that period of time the wife contributed a total of $1,330 to the offset account, with the husband contributing the same amount save and except that on 10 December 2016 he credited $1,500 to the account and withdrew the same amount on the same day.
I am satisfied that neither party made any payments to the offset account after December 2016.
Although the wife’s evidence, which was not disputed by the husband, was that from the date of separation until the sale of the Suburb R property in December 2017 each party received and retained one half of the rental income from the property (in the sum of $231 per week each), the evidence would suggest that it is more likely that such income was received by them between December 2016 and December 2017 when the house was sold.
The sale of the Suburb R property generated nett proceeds of $1,041,399. Post‑separation the wife received from those funds the initial sum of $650,000 by way of consent in or about February 2018. These funds were utilised by her in December 2018 to buy her Suburb G property, together with a further $200,000 she had withdrawn without the consent of the husband from the parties’ joint account.
It was the common position of the parties that their contributions during the period of cohabitation should be assessed as equal. Both parties worked hard for the majority of the period of cohabitation both in the paid workforce as well as inside and outside their home. In addition, they both gave unchallenged evidence as to assistance provided to them by each of their families including with respect to maintenance of the Suburb E property and unpaid childcare for their children. Both parties provided care for their children.
Following the parties’ separation on 30 June 2016 the wife resided at the home of her parents and retained the primary care of the parties’ children. In November 2016 she and the children moved into private rental accommodation paying $515 per week rent until she purchased the property at H Street, Suburb G on 19 December 2018. In addition to her earnings post-separation the wife continued to receive income from her interest in the K Unit Trust in the sum of approximately $500 per month.
Following upon separation the husband remained living in the former matrimonial home at Suburb C which was freehold. In addition, he continued to receive the rental from the Suburb E property.
The husband had ceased his employment at BB Company as a manager in 2016. He resigned with immediate effect at the invitation of BB Company in preference to his conduct in his workplace being formally investigated. His contract with that employer had been due to conclude in 2017. Between 2016 and 2017 the husband was self‑employed and derived limited income from the business CC Company.
In 2017 the husband commenced employment as the Manager at DD Company where he continued to work until his contract was terminated in 2019. At the time of trial the husband was unemployed, prior to taking up further employment in 2019 as previously referred to in these reasons.
Final parenting orders were made by consent on 22 August 2017, some thirteen months after the parties separated. Essentially the orders provided for the children to spend five nights per fortnight with their father and nine nights per fortnight with their mother during school term time and otherwise equal time with each parent during school holidays. The order also provided for the children to spend time with each of their parents on special occasions and to be able to travel with their parents. I find both parties made valuable post-separation contributions towards the care and nurture of their children.
As I said previously, in the event that the Court adopted a “global” approach to the matter it was submitted by the husband’s counsel that initial contributions should be weighed as to ten per cent in the husband’s favour.[23]
[23] Written submissions of the husband dated 30 October 2019 – page 38
It was submitted on behalf of the wife that the contributions of the parties overall should be regarded as equal, including their pre-cohabitation contributions.[24]
[24] Written submissions of the wife - page 22
Taking all of the matters to which I have referred into account I find that the parties’ contributions pre-cohabitation, during the marriage and post-separation should overall be assessed as equal.
Section 75(2)
At the time of trial the wife was aged 47 years and the husband was 46 years of age.
There was no evidence adduced to suggest either party suffered health problems.
At the time of trial the wife was employed as a manager at Z Company. Her total weekly income as deposed to in her financial statement filed 1 August 2019 was approximately $3,132 per week. Her income from her employment comprised wages, a car allowance, key performance indicator payments and commission.
The wife worked throughout the period of the marriage save for short periods of maternity leave. There were periods of part-time employment following the births of the parties’ two children.
I am satisfied that she has always undertaken gainful employment as evidenced by income earned by her during the period of the marriage and post-separation.
At the time of trial the husband was unemployed but shortly after he obtained employment at least for the period 4 December 2019 to 30 June 2020. He earned an average weekly income of $2,387 for the first eight weeks of that employment.
The husband’s work history and income earned during the period of cohabitation was also indicative of him undertaking appropriate gainful employment. He worked throughout the period of the marriage save and except for the last five or six weeks prior to separation following upon his resignation from BB Company in 2016.
From 2016 he was self-employed until 2017, earning minimal income as the principal consultant of CC Company. The husband commenced employment with DD Company in the role of manager in 2017 which employment terminated in 2019. The husband was unemployed at the time of trial and resumed contract employment on or about 4 December 2019 resulting in a period of unemployment of just over nine months.
At the time of trial both parties had the physical and mental capacity for appropriate gainful employment.
Following upon the parties’ separation on 30 June 2016 the parties negotiated with respect to parenting issues such that on 22 August 2017 consent orders were entered into providing for the children to live with the husband for five nights per fortnight and with the wife at all other times. Their time with each of their parents during school holidays was to be shared equally. Those orders were still in place at the time of trial.
Neither party adduced evidence as to their commitments necessary to enable them to support themselves and the children whilst in their respective care but it was clear on the evidence that both parties have the financial capacity to meet those expenses.
Neither party have a responsibility to support any other person and neither are entitled to any Commonwealth Pension Allowance or Benefit or are of an age to access their superannuation entitlements.
Both parties were enjoying a standard of living that in all the circumstances was reasonable at the time of trial.
The husband remained living in the unencumbered former matrimonial home at Suburb C and although unemployed at the time of trial was in receipt of rental income from the Suburb E property and resumed employment shortly after trial. Historically the husband had earned significant income in each of his fields of employment and he resumed highly paid employment at least on a contract basis in 2019.
The wife was also enjoying a standard of living that in all the circumstances was reasonable, having purchased a property in Suburb G in which she and the children resided and maintaining her highly paid employment.
I am not satisfied that the factors referred to in section 75(2)(h) to (m) inclusive are relevant to this matter.
Both parties have paid child support to the other of them at various times following upon the breakdown of the marriage. This has been calculated on the basis of the parties’ respective incomes and the care arrangements for the children, to which I have already referred.
Exhibit W2 comprised correspondence from the Child Support Agency to the wife dated 20 July 2019. The correspondence contained the decision relating to a change of assessment sought by the wife by application received by the Agency on 4 February 2019.
The result of the application was that the annual rate of child support payable by the wife for the period 1 July 2018 to 10 April 2019 was decreased to NIL with the annual rate of child support payable by the husband to be increased to $6,322, then decreased to $5,122 and then reverting to $6,322. The decision also increased the child support payable by the husband to the date of the decision by $4,669 and decreased the child support payable by the wife to the same date by $6,065.
The overall effect of the decision as referred to on the final page of the correspondence was that there would be an increase in the level of child support provided by the husband and a decrease in the level of child support payable by the wife.
That correspondence was followed by an assessment for the period 26 August 2019 to 30 June 2019 providing for the wife to pay to the husband an annual child support amount of $9,208 for the period of the assessment.
It appeared to be common ground at trial that neither party had accrued any arrears with respect to child support.
In paragraphs 128 to 154 of these reasons I referred to the wife’s claim that various sums should be “added back” to the list of assets available for distribution between the parties. This was argued on the grounds that the husband had expended certain monies post-separation from accounts in his name that existed at separation and had been unable to give any credible evidence to the Court as to what had become of those substantial funds. I have already addressed the “add back” argument with respect to the husband’s L Managed Fund and the sale of his FF Company shares when calculating the asset pool.
The additional amounts that the wife sought to be included were funds expended by the husband from his O Bank Term Deposit #...30, his O Bank Term Deposit #...84, his ANZ credit card #...44, his O Bank Suburb E Account #..39, and his O Bank Ultimate Account #...59.
In addition, and as referred to in paragraph 134 of these reasons, the wife also claimed that the husband’s unsatisfactory evidence regarding his resignation from a well-paid job at BB Company resulting in significant loss of income post-separation should also be regarded by the Court as a relevant factor to justify the “add backs”.
As set out in paragraph 150 hereof I determined that those issues were best addressed not by “adding back” funds to the asset pool but by consideration of the impact on the matter generally under s 75(2)(o) of the Act, which enables the Court to take into account “any fact or circumstance which, in the opinion of the Court, the justice of the case requires”.
It is important to ensure that the wife’s claims in respect of these issues do not “double count” the husband’s expenditures post-separation from assets held by him at separation. I make that comment as two of the amounts sought to be taken into account are the funds standing to the credit of the husband in the O Bank Term Deposit #...30, claimed by the wife to be $96,000, and a further $30,000.[25]
[25] Written submissions of the wife – pages 7 and 8.
At separation that account held the sum of $260,148. In September 2017, fifteen months after separation, the sum of $178,548 remained in that account. This sum was then distributed equally between the parties as partial property settlement. The amount in the account at the time of that distribution was $81,600 less than the amount in the account at the date of separation. In cross-examination the husband agreed that all withdrawals from his Term Deposit Account between separation and 20 September 2017 were made at his direction and that the funds had been transferred to his O Bank Ultimate Account.
One of the items that the wife sought to be “added back”, or in the alternative taken into account under s 75(2)(o), was expenditure from the husband’s O Bank Ultimate Account in the sum of $155,590. She also sought the same approach with respect to $26,954 expended from an ANZ credit card of the husband’s and $9,500 apparently in the husband’s O Bank Suburb E Account.
In paragraph 68 of these reasons I specified as best as I could ascertain on the parties’ evidence the property that existed at the date of separation. That property included funds in O Bank Term Deposit #...30 in the name of the husband, as well as funds in O Bank Term Deposit #...84 and O Bank Ultimate Account #...59 also in the husband’s name. The F Bank Offset Account was in the parties’ joint names.
In paragraph 148 of these reasons I referred to the husband’s evidence with respect to the circumstances whereby he came to resign from BB Company in 2016. I found that his evidence about the matter was entirely unconvincing and that his decision to take the option to resign immediately was made against a backdrop of his knowledge of the alleged false work entries that were to be investigated. I also rejected the husband’s evidence that he resigned from BB Company because he was unhappy in the workplace.
In paragraph 149 I found his decision to resign from BB Company in 2016 resulted in an income loss to him of approximately $200,000 including superannuation, in circumstances where his contract with that entity was not due to expire until 2017. I am mindful however that the parties separated some six weeks after the husband resigned from his position with BB Company such that the majority of the loss of income resulting from his decision to resign was borne by him post-separation. I am not satisfied that of itself made any significant difference to the asset pool available for distribution between the parties save as to the impact on that pool as a result of the husband reducing same for personal living expenses in the period following separation.
In paragraph 133 I set out the husband’s position with respect to the wife’s claim for “add backs”, namely that as a result of circumstances of unemployment it was reasonable for him to expend funds in his possession and control at separation to pay for personal expenses, expenses relating to the children whilst in his care and upkeep expenses for both the former matrimonial home and the Suburb E property. The husband’s evidence about that expenditure was vague. He acknowledged that he made numerous cash withdrawals from those accounts.
I am not satisfied that it is appropriate to take into account the expenditure of funds over and above those held in the possession or control of the husband at separation. I find however that an adjustment is appropriate in favour of the wife on account of the expenditure of funds by the husband post‑separation from monies standing to his credit in O Bank Term Deposit #...30 and O Bank Term Deposit #...84. This expenditure was made in circumstances where the husband embarked on a period of unemployment following upon allegations of improper conduct in his workplace that he was not prepared to have investigated.
I find that the funds that were expended by the husband in those circumstances were:
·O Bank Term Deposit #...30 - $81,600; and
·O Bank Term Deposit #...84 - $18,434,
totalling: $100,034.
No evidence was adduced with respect to the $9,500 allegedly in the husband’s O Bank Suburb E Account at separation, nor was it an agreed position.
I find the $30,000 referred to in paragraph 10.3.1.1.2 of the wife’s counsel’s submissions formed part of the partial property settlement $89,274 paid to the husband from that account at the same time as the partial property settlement to the wife in September 2017, and accordingly it should not be “double counted”.
I am not satisfied that I can take into account the amount the wife claimed the husband expended post-separation from his O Bank Ultimate Account #...59. It was the husband’s evidence in cross-examination that cash withdrawals made from his O Bank Term Deposit #...30 were paid into that Ultimate Account and then withdrawn from that account. I accept that evidence.
The actions of the husband in expending the monies to which I have referred had the effect of reducing the asset pool available for distribution between the parties.
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.
I certify that the preceding three hundred and eight (308) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Mead. Associate:
Dated: 3 September 2021
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