Helbig & Pietri
[2023] FedCFamC1F 258
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Helbig & Pietri [2023] FedCFamC1F 258
File number(s): SYC 6431 of 2020 Judgment of: CHRISTIE J Date of judgment: 6 April 2023 Catchwords: FAMILY LAW – FINAL PROPERTY – Where the parties signed consent orders for final property settlement – Where the parties recommenced their relationship after the final property consent orders were made – Where the parties subsequently ended their relationship on a final basis – Where the husband now seeks to have the consent orders set aside under s 79A of the Family Law Act 1975 (Cth) – Where the application is not opposed but the wife says the original orders should be determinative of issues which predate them – Where the wife made the more significant financial contribution – Where the parties made non-financial contributions of similar value – Where the husband provided assistance to the wife through care of her children from a previous relationship in the manner discussed in Robb and Robb – Where the income disparity between the parties is significant. Legislation: Family Law Act 1975 (Cth) ss 75, 79, 79A Cases cited: Kowaliw v Kowaliw (1981) FLC 91-092; [1981] FamCA 70
Mowatt & Mowatt [2016] FamCA 807
O’Hurley & O’Hurley (2008) FamCAFC 57
Preston & Preston (2022) FLC 94-108; [2022] FedCFamC1A 157
Robb and Robb (1995) FLC 92-555; [1994] FamCA 136
Waters and Jurek (1995) FLC 92-635; [1995] FamCA 101
Division: Division 1 First Instance Number of paragraphs: 92 Date of hearing: 6 - 8 March 2023 Place: Sydney Counsel for the Applicant: Mr Mando Solicitor for the Applicant: Antonenas Legal Counsel for the Respondent: Mr Lethbridge, SC Solicitor for the Respondent: Mills Oakley Lawyers ORDERS
SYC 6431 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR HELBIG
Applicant
AND: MS PIETRI
Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
6 April 2023
THE COURT ORDERS THAT:
1.The orders of 27 December 2012 are set aside.
2.Within 60 days, Ms Pietri, the wife, pay to Mr Helbig, the husband, or as he may direct, the sum of $912,638.
3.Simultaneously with the payment in Order 2:
(a)The husband shall do all such things and sign all such documents as may be necessary to transfer to the wife the whole of his right, title and interest in the property situated at and known as B Street, C Town in the state of New South Wales being all of the land comprised in folio identifier … (“the C Town property”); and
(b)The wife shall do all such things and sign all such documents as may be necessary to cause the mortgage secured against the C Town property to be discharged.
4.The wife shall:
(a)Be solely entitled as between the parties to her interest in the properties situated at:
(i)D Street, Suburb E in the state of New South Wales being all of the land comprised in folio identifier …; and
(ii)F Street, Suburb E in the state of New South Wales.
(b)Be solely liable as between the parties for the mortgage secured against D Street, Suburb E and shall indemnify the husband and keep him indemnified in respect of all liability arising in respect of the said mortgage;
5.In respect of the entity G Pty Ltd within 21 days of the date of these orders the husband and the wife do all such things and sign all such documents as may be necessary to give effect to the following:
(a)The husband to resign as a director of G Pty Ltd;
(b)The husband to transfer to the wife her … ordinary shares in G Pty Ltd and the husband shall otherwise relinquish any right, title and interest in G Pty Ltd;
(c)The wife shall indemnify the husband and keep him indemnified in respect of any liability arising in respect of G Pty Ltd.
6.In respect of the entity H Pty Ltd within 21 days of the date of these orders the husband and the wife shall do all such things and sign all such documents as may be necessary to give effect to the following:
(a)The wife to transfer to the husband her … A Class Shares and … Ordinary Shares in H Pty Ltd and the wife shall otherwise relinquish any right, title and interest in H Pty Ltd; and
(b)The husband shall indemnify the wife and keep her indemnified in respect of any liability arising in respect of H Pty Ltd.
7.In respect of the entity J Pty Ltd as trustee for the K Trust, the husband shall relinquish any right, title and interest in K Trust and the wife shall indemnify the husband and keep him indemnified in respect of any liability arising in respect of K Trust.
8.Within 14 days of the date of these orders the husband and the wife shall do all such things and sign all such documents as may be necessary to cause the joint L Bank account ending #...46 to be closed and the balance of funds held in that account to be paid to the wife in a bank account nominated by the wife.
9.Except as otherwise provided in these orders, the wife shall be solely entitled as between the parties to her interest in:
(a)The property at M Street, City N, Western Australia;
(b)Losses arising from P Pty Ltd;
(c)Q Company Partnership;
(d)Cash at bank;
(e)Motor Vehicle 1;
(f)The wife’s superannuation entitlements in Superannuation Fund 1, Superannuation Fund 2 and Superannuation Fund 3;
(g)Household contents and personal effects; and
(h)Any other asset or financial resource in the wife’s name, possession or control.
10.Except as otherwise provided in these orders the husband shall be solely entitled as between the parties to his interest in:
(a)Cash at bank;
(b)Motor Vehicle 2;
(c)The husband’s superannuation entitlements with Superannuation Fund 4;
(d)Household contents and personal effects; and
(e)Any other asset or financial resource in the husband’s name, possession or control.
11.Other than as provided in these orders the wife shall be solely liable as between the parties, and shall keep the husband indemnified in relation to:
(a)The wife’s income tax liabilities;
(b)The wife’s credit card facility/ies; and
(c)Any other liability held in the wife’s name.
12.Other than as provided in these orders the husband shall be solely liable as between the parties and shall keep the wife indemnified in relation to:
(a)The husband’s Commonwealth Bank credit card facility; and
(b)Any other liability held in the husband’s name.
13.Each party shall do all acts and things and sign all documents necessary including providing all consents to give effect to these orders in the time limits prescribed in these orders.
14.In the event either party fails to execute any deed, document or instrument necessary to give effect to these orders, the Registrar of the Federal Circuit and Family Court of Australia, Sydney be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with certification of such failure by way of affidavit.
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 has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
The applicant husband, Mr Helbig, filed an application for relief under s 79A of the Family Law Act 1975 (Cth) (“the Act”) to set aside final consent orders in respect of property. He then seeks orders for property adjustment under s 79 of the Act.
Ms Pietri, the respondent wife, filed a Response in which she sought orders pursuant to s 79 of the Act.
At trial, the husband relied on the following material:
(a)An Outline of Case Document filed 2 March 2023;
(b)An Amended Initiating Application filed 1 March 2023;
(c)An affidavit of Mr Helbig filed 23 December 2022; and
(d)A Financial Statement filed 23 December 2022.
The wife relied on the following material:
(a)An Outline of Case Document filed 24 February 2023;
(b)A Response to Initiating Application filed 24 November 2020;
(c)An affidavit of Ms Pietri filed 23 December 2022;
(d)An affidavit of Ms R filed 23 December 2022;
(e)An affidavit of Mr S filed 23 December 2022;
(f)An affidavit of Mr T filed 23 December 2022; and
(g)A Financial Statement filed 23 December 2022.
A single expert valuer, Mr U, provided a report and addendum report which were relied upon by the parties. He attended the trial and was cross-examined.
BACKGROUND
The husband and wife married in 2009 and separated in April 2012. The parties applied for consent orders on 19 December 2012 for final property adjustment which were made orders of the Court on 27 December 2012 (“the final consent orders”).
In 2013 the parties reconciled and later recommenced cohabitation in late 2014. On 29 April 2020 they separated on a final basis and divorced on 13 August 2021.
There are no children to the marriage. The husband has an adult child to a previous relationship and the wife has three adult children to a previous marriage. All of the younger children were, from time to time, members of the parties’ household. The evidence did not resolve the dispute about whether the wife’s oldest child lived with the parties but nothing turns on this dispute.
The husband commenced proceedings in the Federal Circuit Court of Australia (as it then was) on 14 September 2020 and sought orders for property adjustment such that, what he described as the “matrimonial asset pool”, should be divided 60/40 in the wife’s favour.
The wife initially submitted that the Court would not entertain the husband’s application which effectively sought s 79A relief but ultimately made no submissions supportive of the conclusion that the Court had jurisdiction to make a subsequent s 79 order between the same parties, to the same marriage, absent s 79A. As the wife sought s 79 orders adjusting the parties’ assets, she ultimately conceded that it was necessary to set aside or vary the original orders.
At the hearing, the following final joint balance sheet was agreed by the parties and marked as exhibit 25:
ASSETS Ownership Description Wife's value Husband’s value Wife D Street, Suburb E 3,250,000 3,250,000 Joint B Street, C Town 1,500,000 1,500,000 Wife F Street, Suburb E – 40% share 479,600 599,500 Wife M Street, City N WA 0 360,000 Wife Shares in J Pty Ltd 1,204 Not Known Wife K Trust 200,010 Not Known Joint Shares in G Pty Ltd 30,452 30,452 Joint Shares in H Pty Ltd NIL Negligible Wife
WifeInterest in V Pty Ltd (26.3% interest)
Interest in P Pty Ltd0 Not Known
Not KnownWife Interest in Q Company (Partnership) NIL 1,206,383 Husband Loan owed by H Pty Ltd 21,489 21,489 Wife Loan owed by K Trust 601,316 32,604 Wife W Bank account #...05 13,870 13,870 Wife Commonwealth Bank account #...93 1,776 1,776 Joint L Bank account #...46 1,478 1,478 Wife ANZ Bank Account #...11 113,749 113,749 Wife ANZ Bank Account #...38 194,068 194,068 Husband Commonwealth Bank account #...16 3,040 3,040 Husband Commonwealth Bank account #...27 2,339 2,339 Wife Motor Vehicle 1 40,000 40,000 Husband Motor Vehicle 2 34,000 14,500 Wife Jewellery 20,000 30,000 Husband Collectibles 30,000 7,000 Wife Household effects 20,000 70,000 Husband Household effects 5,000 5,000 Total $ 6,563,391 $ 7,497,248 LIABILITIES Ownership Description Wife’s value Husband’s value Wife Mortgage to ANZ Bank secured against D Street, Suburb E (loan #...45) 2,089,424 2,089,424 Joint Mortgage to L Bank secured against B Street, C Town (loan #...37) 800,141 800,141 Wife Income tax/PAYG liability 460,000 460,000 Total $ 3,349,565 $ 3,349,565 SUPERANNUATION Member Name of Fund Type of Interest Wife’s value Husband’s value Wife Superannuation Fund 1 Self-Managed Superannuation Fund 884,553 884,553 Wife Superannuation Fund 2 Accumulation interest 43,091 43,091 Wife Superannuation Fund 3 Accumulation interest 65,048 65,048 Husband Superannuation Fund 4 Accumulation interest 242,017 242,017 Total $ 1,234,709 $ 1,234,709 NET TOTAL ASSETS (including Superannuation) $ 4,448,535 $ 5,382,392 THE LAW
Section 79A of the Act operates to create a discretion to set aside final orders, including orders made by consent, if the provisions of the section are engaged.
Section 79A provides:
(1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b) in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
(c) A person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or
(d) In the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substation for the order; or
(e) A proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;
The court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
(1A) A court may, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
….
It follows that I am being asked to either vary or set aside the existing s 79 order. That would enable the consideration of the making of another order under s 79 of the Act. Before such an order could be made, it would be necessary to have regard to all relevant provisions of ss 79 and 75(2) of the Act.
CONSIDERATION
It is necessary to consider the nature, composition and value of the assets, liabilities and superannuation at the time of trial as an initial step before considering what, if any, adjustment to the parties’ existing interests is necessary, having regard to the matters in the Act.
The parties reached agreement about the identity of assets (as set out above) but remained at odds about the value of some items. Where the parties were in dispute I have considered the evidence and made findings.
F Street, Suburb E
This property was purchased by the wife and the trustee of her self-managed superannuation fund (“the SMSF”) in 2022. The wife does not deal with this in her affidavit. The title to the property at the time of trial reflected ownership by the wife and the SMSF in equal shares (exhibit 25). The wife completed the joint balance sheet to reflect her understanding of the instructions she provided to her lawyers at the time of the purchase, namely that the title was to be held as tenants in common with the SMSF holding a 60 per cent interest and the wife holding a 40 per cent interest. As the wife’s senior counsel submitted, since the property is held by the wife and by the SMSF in which she is the only beneficiary, the question of whether the value is reflected in one asset or the other is not material to the assessment of the overall pool of assets and superannuation. I accept that submission. Accordingly, the appropriate figure for the wife’s interest is $479,600.
M Street, City N
The husband includes in the balance sheet an amount of $360,000 as representing the value of what he submits is the wife’s interest in a property at M Street, City N, Western Australia (“the City N property”). This property is registered in the wife’s name and that of her sister. The wife gave evidence that the property is and has always been beneficially held by her mother. Further, she said that if the property is required to be sold during her mother’s lifetime, the funds will be applied to her mother’s living expenses. If it remains unsold at the time of her mother’s death then it will form part of her mother’s estate and be divided between the four siblings. The wife was not challenged about the beneficial ownership of the property and I accept she holds it with her sister on behalf of her mother. It will not be included in the pool of assets which may be the subject of adjustment.
Shares in J Pty Ltd
The wife has shares in a private company J Pty Ltd. This company is the corporate trustee of the K Trust (“the Trust”), a discretionary trust which is a vehicle for the receipt of the wife’s income from Q Company. The wife has attributed a value of $1,204 to the shares in this company (separate from the value to be attributed to the Trust). The husband recorded the value of the shares as “Not Known” and did not challenge the wife on the value attributed by her. I will therefore adopt the value contended for by the wife.
K Trust
A single expert was appointed to value the parties’ interests in a number of entities. Mr U’s report deals with the Trust. The trustee of the Trust is J Pty Ltd. The wife is the sole director of the trustee company. The wife has the power of appointment. The specified beneficiaries of the trust are the wife, the husband, Mr X, Mr S, Ms R and Mr Y (the husband’s child). General beneficiaries include J Pty Ltd.
The wife has attributed a value of $200,010 to her interest in the Trust in the joint balance sheet. That figure represents the value of her capital contribution to the Q Company Partnership (actually shown as $200,000 in her financial statement and the single expert report). She also says the Court should include a figure of $601,316 as monies which are owed to her by the Trust – such sum being the Q Company current account minus payment received by her since 30 June 2022. The husband says he does not know what the value of the Trust is. He separately seeks to attribute to the wife’s interest in the Q Company Partnership a value of $1,206,383 (being a combination of the Q Company current account as at 30 June 2022 and the capital account). That figure is taken from the single expert report. Since the wife’s interest in the Q Company Partnership is recorded as an asset of the Trust, I do not intend to consider the partnership separately.
The Trust records a loan to the wife (effectively undistributed entitlements). Mr U attributed a value to the loan as at 30 June 2022 of $1,238,987.49. The husband, curiously, included it in the joint balance sheet with a value of $32,604. The wife said it was $601,316 (such sum being the Q Company current account minus payment received since 30 June 2022).
It is necessary to be careful not to include both a value of the Trust and a value of the monies owed to the wife. It is necessary to understand the way in which the current account operates in order to appreciate the issue.
The wife sought to reduce the figure attributed to the current account by deducting those amounts paid to her since 30 June 2022. This approach fails to appreciate, as Mr U confirmed in cross-examination, that it is necessary to pick a point in time to value the entity since merely deducting payments to the wife does not acknowledge that her entitlements to further payments will have also accrued in the same period.
It follows that the evidence supports adopting the figure contained in the single expert report for 30 June 2022 acknowledging that the actual figure at hearing may be, and indeed probably is, different. Therefore, the figure I will adopt for the value of the Trust is $1,206,383.
V PTY LTD AND P PTY LTD
The Trust owned shares (26.58 per cent) in a private company called P Pty Ltd. That ownership was transferred from the Trust to the wife after the business failed.
V Pty Ltd is an asset of P Pty Ltd.
The single expert prepared an addendum to his report (exhibit 22) concluding that neither P Pty Ltd nor V Pty Ltd have any value.
Counsel for the husband cross-examined Mr U about the conclusions in his report. Mr U agreed with the theoretical proposition that, if either of the entities had intellectual property, then that intellectual property could be valued. There is no evidence before me to allow me to conclude that either entity has intellectual property of value or otherwise. Accordingly, I accept the conclusion of the single expert about the value to be attributed to the shareholding in these companies, namely NIL.
As noted elsewhere in these reasons, the losses occasioned by the collapse of these two companies are now a financial resource of the wife.
Motor Vehicle 2
The husband owns Motor Vehicle 2 which he listed in his financial statement at $14,500. The parties did not agree as to the value but in final submissions senior counsel for the wife accepted that, absent any other evidence, the husband’s statement against interest as to value was the appropriate figure.
Wife’s jewellery and household effects
The wife listed jewellery with a value of $20,000 and household effects with a value of $20,000 in her financial statement. The husband did not initially accept these figures but conceded during submissions that, absent other evidence, these were the appropriate figures for inclusion in the balance sheet.
Husband’s collectibles
The husband gave an estimate as to the value of a collection. He provided a minute of order (exhibit 19) after the evidence had concluded. In that minute of order he sought that “[t]he Wife do all acts and things to return to the Husband his […] collection”.
The wife sought an order [that]:
other than hereinbefore provided the Husband shall be solely entitled as between the parties to his interest in:
8.1 …
8.2 …
8.3 […] collection …
Unfortunately there was no evidence in either parties’ case about the location of this collection. It may be that the wife has the collection as the husband believes but in order to make an order that a party provide an item or items of property to another party, I would have to be satisfied on the basis of evidence that the first party was in possession of the items. In the absence of evidence I cannot be satisfied. It follows that it is appropriate to remove the item from the balance sheet. Obviously, should the items exist then nothing in these reasons or the consequent orders should prevent those items being provided by the wife to the husband voluntarily.
It follows from the above findings that the assets, liabilities and superannuation of the parties available for adjustment (if appropriate) are as follows:
ASSETS Ownership Description Value Wife D Street, Suburb E 3,250,000 Joint B Street, C Town 1,500,000 Wife F Street, Suburb E – 40% share 479,600 Wife Shares in J Pty Ltd 1,204 Wife K Trust (Q Company Partnership) 1,206,383 Joint Shares in G Pty Ltd 30,452 Joint Shares in H Pty Ltd NIL Husband Loan owed by H Pty Ltd 21,489 Wife W Bank account ending #...05 13,870 Wife Commonwealth Bank account ending #...93 1,776 Joint L Bank account ending #...46 1,478 Wife ANZ Bank Account ending #...11 113,749 Wife ANZ Bank Account ending #...38 194,068 Husband Commonwealth Bank account ending #...16 3,040 Husband Commonwealth Bank account ending #...27 2,339 Wife Motor Vehicle 1 40,000 Husband Motor Vehicle 2 14,500 Wife Jewellery 20,000 Wife Household effects 20,000 Husband Household effects 5,000 Total: $6,918,948 LIABILITIES Wife Mortgage to ANZ Bank secured against D Street, Suburb E 2,089,424 Joint Mortgage to L Bank secured against B Street, C Town 800,141 Wife Income tax/PAYG liability 460,000 Total: $3,349,565 SUPERANNUATION Wife Superannuation Fund 1 884,553 Wife Superannuation Fund 2 43,091 Wife Superannuation Fund 3 65,048 Husband Superannuation Fund 4 242,017 Total: $1,234,709 NET TOTAL ASSETS: $4,804,092
The wife initially contended that the Court would not necessarily set aside the original consent orders. However, consistent with authority, if the parties have final orders under s 79 of the Act, the power to make orders under s 79 in respect of those parties to that marriage is exhausted. Only if the existing orders are set aside or varied does the Court obtain jurisdiction. The wife sought orders under s 79 and accordingly it is necessary to approach the matter through s 79A of the Act.
I accept that the resumption of cohabitation alone will not, without more, demonstrate consent by conduct such as to attract the discretion conferred by s 79A(1A): O’Hurley & O’Hurley (2008) FamCAFC 57.
However, even if I find that the orders should be set aside or varied, that does not mean that I should disregard the fact that the orders operated in the circumstances of this case to divide the parties’ assets as at December 2012, such that there is no dispute that each received specific assets.
The husband received a payment from the wife of $370,000 and the proceeds of sale of the Motor Vehicle 3 the wife had bought him as a birthday present. He also retained his superannuation entitlements.
However, it is not as simple as drawing a line under the first period of the parties’ marriage and cohabitation and concluding that, whatever the husband may have been entitled to by reason of the matters in s 79(4) and s 75(2) was provided, and that period is now of no relevance.
In Mowatt & Mowatt [2016] FamCA 807 his Honour Justice Johnston said:
53. In determining the matters upon which the parties have been unable to agree, I propose to proceed in accordance with the guidance provided by the Full Court in Gitane & Velacruz (2008) FLC 93-371. At page 93-371 their Honours (Bryant CJ, Warnick and Boland JJ) said as follows:
… There may only be one final property order. If an initial final order is varied, there will still be only one order. In the making of a variation, s 79 principles would necessarily apply as the order retains its essential character – a final order made under s 79.
54. Accordingly, I propose to proceed in accordance with the usual pathway and principles for determining applications for s 79 orders but not losing sight of the fact that the 2008 orders have been made.
I accept that is the correct approach.
During the first period of the parties’ marriage the husband sold a property at Z Street, Suburb AA (“the Z Street property”) to the wife’s superannuation fund. He used the funds he received to provide the wife with money which she used to retire debt and retain her property at AB Street in Suburb AA (“the AB Street property”).
The husband and wife entered into a loan and profit share agreement (“the LPSA”) which, in summary provided:
(a)The husband loan the wife $300,000;
(b)The wife apply that sum to the mortgage secured over the AB Street property;
(c)Upon the sale of the AB Street property, or at the request of the husband, the wife repay the husband the sum of $300,000 plus 40 per cent of the increase in the value of the property; and
(d)No legal or equitable interest in the property be conferred on the husband.
I accept that, had the parties complied with the terms of this agreement, the husband would have received the protection the agreement envisaged, namely that he would have swapped his equity in a piece of real property for an agreement which tied his entitlements to any increase in value of another piece of real property. However, when the relationship ended, the parties, as part of their consent orders, terminated the LPSA and the husband was paid out.
The wife retained the AB Street property and her superannuation fund retained the Z Street property. The husband then made an investment in an entity described in the evidence as AC Company of $334,000. The husband lost the majority of his investment. The wife says she indicated to the husband that the investment posed risks but she also accepted that she had told the husband that the documents, which created security, provided protection. On its face, the wife accepted that the documents providing security appeared genuine. The wife did not submit that the husband’s decision to invest ought be considered waste in the sense that term is understood in Kowaliw v Kowaliw (1981) FLC 91-092.
When the parties commenced living together again on a full time basis in late 2014 there is little controversy that the husband’s assets were:
(a)Monies the wife assisted him in due course to recover from AC Company;
(b)Some savings; and
(c)His superannuation entitlements.
The wife owned:
(a)The AB Street property; and
(b)Her interest in the SMSF.
The wife submitted that I should regard these assets as the parties’ initial contributions to the second relationship. In a factual sense this is accurate but it may have the effect of under valuing the husband’s contributions to the relationship since it fails to appreciate the beneficial nature of the earlier transactions.
The fact that the husband sustained the investment loss at a time when the parties were not living together does not mean that it is necessarily just and equitable he bear that loss alone as though he had not made the contributions to the assets in the wife’s name. This is particularly so when viewed in light of later financial losses of both parties, discussed below.
Initial Contributions
In order to properly approach the contributions of the parties it is necessary to revisit the position at the time of their first period of cohabitation. At the commencement of the parties’ cohabitation in 2008 the husband says he owned the following assets:
(a)His entitlements under the LPSA - $300,000 plus any amount pursuant to the profit sharing clause;
(b)Superannuation - $95,000; and
(c)Motor Vehicle 4.
There was no challenge to this evidence and I accept that it is an accurate statement of the husband’s assets at this time.
The wife argued that the assets of the husband in late 2008 were not relevant to the exercise that was to be undertaken because the husband’s contributions had been taken into account when the parties separated on the first occasion and implemented their consent orders.
At the commencement of cohabitation in 2008 the wife says she had the following assets:
(a)The AB Street property - $1,500,000 subject to a mortgage of $800,000;
(b)A motor vehicle - $25,000;
(c)J Pty Ltd - $700,000; and
(d)The City N property – held on trust for her mother.
I accept the wife’s evidence that in the period between early 2012 and late 2014 the parties spent holidays together and some nights together. The husband said that the parties had reconciled in or about mid-2012 and began living together about five days per week by late 2012/early 2013. I accept that during this period the husband maintained separate premises even on his own case. This is significant. The focus of the inquiry is squarely on what contributions each party was making rather than how many nights they spent together. I accept that, while they were each maintaining separate households, the capacity for each to make significant non-financial contributions for the benefit of one another was significantly diminished. After they returned from their holiday in September they assumed the same residence.
Financial contributions
From late 2014 until separation, the wife’s personal exertion and investment income well exceeded that of the husband. In the main, the parties conducted their finances separately but that was not always the case.
Between 2016 and 2019 the wife split her income with the husband. This had the effect of reducing the tax which was payable on the income that she earned in those four tax years.
In early 2016 the husband and wife signed a contract to purchase, in their joint names, a property “off the plan” located in Suburb AD. The wife paid the deposit in the sum of over $200,000. In the months that followed the husband made payments to the wife on account of this investment in a total sum of $31,000. The deposit was 10 per cent of the purchase price of over $2,000,000. The parties did not complete the purchase and the deposit was lost. The husband’s loss was smaller than that of the wife but, relative to his assets and income, significant to him. It is plain that he could not have engaged in the transaction save for the fact that his wife had funds available to pay the initial amount.
The wife suffered further financial losses towards the end of the relationship in respect of companies in which she had an interest independently of the husband. The wife had invested $1,304,000 in P Pty Ltd which investment was lost.
Towards the end of the parties’ relationship they jointly acquired a property at B Street, C Town (“the C Town property”). The funds to acquire this property came from the wife’s income and from a mortgage in the parties’ joint names. The property was purchased in the parties’ joint names. I accept that the mortgage payments came from the wife’s funds. The husband’s role as a joint mortgagee is a contribution, albeit not one of the same significance as the wife’s contributions as both mortgagee and the person responsible for meeting the mortgage and other outgoings.
Taking a holistic approach to the assessment of contributions does not mean ignoring the fact that the wife’s financial contributions to both periods of the parties’ cohabitation were greater than those of the husband.
Non-financial Contributions
The fact of the husband having attended to maintenance of the gardens and the exterior of the parties’ properties was not in issue in the proceedings. The wife and her witnesses all agreed that he had made contributions of this nature. Those contributions relate predominantly to work undertaken to the garden at the home where the parties lived in Sydney. The husband also undertook similar outside work over a short period of time at the end of the relationship when he undertook the watering, mowing, fire preparation and other activities at the C Town property.
The parties agree that the husband transported the wife to and from the railway station each work day.
The wife undertook non-financial contributions predominantly within the home including almost all cooking. The parties agree that the shopping for the household was a task they shared.
I am unable to determine the parties’ dispute about the extent of the husband’s cleaning and washing on the evidence available to me.
It is important not to approach the assessment of contributions in too pernickety a fashion. The parties’ non-financial contributions were of a different nature but of equivalent value to them as a household. They should be afforded equivalent weight in my assessment of contributions.
The husband submitted that he has also made non-financial contributions to the parenting of the wife’s children in the sense those contributions have been discussed in Robb and Robb (1995) FLC 92-555 (“Robb”). While I am considering this submission under the heading non-financial contributions, I am conscious that, if any adjustment is appropriate by reason of such contributions, it is a matter for consideration under s 75(2)(o) of the Act. The husband claims to have made a contribution to the welfare of the wife’s children. Unlike in Robb, the husband’s contributions here are almost solely non-financial. Both parties concentrated, unnecessarily, on the nature and quality of the relationship between the husband and the step-children. The proper focus is on the nature and extent of the contribution (if any). The evidence suggests that in the period 2008 to 2012 the wife’s children Ms R and Mr S were members of the parties’ household. During school term they spent time in the home of their father each alternate weekend and for half of school holidays. Ms R was six and Mr S was 12 when the parties commenced cohabitation. They attended a local primary school. During the second period of the parties’ cohabitation Ms R was a member of the household until 2017 as was Mr S until in or around late 2015 or early 2016.
Having heard the evidence of the husband and that of Ms R and Mr S I accept that the husband was the adult at home in the household when the children returned from school. He was the one who was providing adult supervision since his work gave him this availability. I accept that he directed the children to attend to chores in the afternoon when they returned from school. I accept Ms R’s evidence that their mother was not usually home until the husband collected her from the railway station at about 7.00 pm. This is significant in the context of this case. In the years 2008 to 2012 the wife was initially working at AE Company where she had hoped she would be made a partner. In early 2010 she began as a partner with AF Company. The wife’s evidence was that she worked both during the work day, after dinner and intermittently on weekends. The wife gave evidence that she would usually finish work at 5.00 pm and start working again at 8.30 pm. Both of her children gave evidence that she would usually arrive home at 7.00 pm. This accorded with the husband’s evidence. I accept there may have been occasions when the wife finished work at 5.00 pm but on balance the evidence of the husband who collected her from the train station and the children is more likely to be accurate.
The husband also had work holidays which coincided with the children’s school holidays although I accept that the children spent half of all school holidays with their father and their mother would have been available during some of their school holidays. The need to have an adult present in the household would have decreased as the children got older and so the husband’s welfare contributions were greater in the earlier period of the relationship when the children were young.
The work hours required, initially by the wife’s employer and then by her role as partner, are such that I accept the submission that she could not have made those work related contributions without the support of her spouse. The wife, Ms R and Mr S are critical of the husband as someone who requested the children to undertake housework rather than undertaking it himself. The evidence does not allow me to find that it was inappropriate for the husband to request the children undertake tasks in the home.
In approaching the evidence about the husband’s role in the household of the parties over the two periods of the parties’ cohabitation, I have had in mind the necessity to afford proper weight to the non-financial contributions of a spouse. In Waters and Jurek (1995) FLC 92-635, the Full Court made the following general statement at 82, 379 which has, with some adaptations, broad application here to the issues of contributions and s 75(2) factors:
In most marriages, there is a division of roles, duties and responsibilities between the parties. As part of their union, the parties choose to live in a way which will advance their interests - as individuals and as a partnership. The parties make different contributions to the marriage, which the law recognizes cannot simply be assessed in monetary terms or to the extent that they have financial consequences. Homemaker contributions are to be given as much weight as those of the primary breadwinner.
On separation, the partnership, and the division of roles and responsibilities which it produced, comes to an end. Individually, the parties are left largely in the personal situations that the marriage has assigned to them. However, the world outside the marriage does not recognize some of the activities that within the marriage used to be regarded as valuable contributions. Home-maker contributions, for example, are no longer financially equal to those of the breadwinner. Post-separation, the party who had assumed the less financially rewarded responsibilities of the marriage is at an immediate disadvantage. Yet that party often cannot simply turn to more financially rewarding activities. Often, opportunities to do so are no longer open, or, if they are, time is required before they can be accessed and acted upon.
When the marriage ends, especially where that marriage has been a long one, one cannot separate the parties as individuals from the people they became in the context of the marriage relationship, and the allocation of roles, duties and responsibilities which it entailed. In some cases, an adjustment is called for because it would be unjust for the roles and activities of a party, which were recognized until separation, and which largely determined or influenced the personal development of that party and the arrangements between the parties, to suddenly count for little, while those of the other party, which were of equal significance during the marriage, to now have a far greater financial impact outside the home - in circumstances where it was the joint decision of the parties that that be the way in which they would conduct their affairs, and where that decision was made in the expectation of the relationship continuing.
An order under s.79 would be unjust and inequitable in its operation if it failed to address the manner in which the value of the parties' roles, adopted in the course of, and for the purposes of, the marriage, can be altered by the fact of separation. Those roles can be instantaneously converted into liabilities. The equality of the parties' positions is terminated.
The above dicta apply here to the parties whose decisions and contributions during the relationship have had consequences for them which extend beyond the relationship.
This approach is not one which assumes equality of contributions. Such an assumption is contrary to law. What is required is, as the appellate court in Preston and Preston (2022) FLC 94-108, noted at [29], “to instead holistically weigh the entirety of the parties’ financial and non-financial contributions according to the unique facts and circumstances of the case at hand (Norbis v Norbis at 523, 532–533 and 541; Dickons v Dickons (2012) 50 Fam LR 244 at [23]–[26]; Chapman & Chapman (2014) FLC 93-592 at [100]; Jabour & Jabour (2019) FLC 93-898 at [59]–[69]; Horrigan & Horrigan [2020] FamCAFC 25 at [35]–[48])”.
I will consider the contribution based factors and the matters pursuant to s 75(2) of the Act together below.
Consideration of matters arising under s 75(2) of the Act
The matters which need to be reflected in the assessment of any adjustment to take into account the parties’ respective future needs are the income disparity between them (s 75(2)(a)), the assets which the wife will retain under these orders (s 75(2)(n)), the extent to which the husband has contributed to the wife’s income, earning capacity, property and financial resources (s 75(2)(j)), a standard of living for each party that in all the circumstances is reasonable (s 75(2)(g)) and the husband’s contributions to the welfare of the wife’s children (s 75(2)(o)).
The wife is aged 57. In 2025 she will turn 60. The single expert report sets out an excerpt from the Q Company Partnership agreement as follows:
-The members acknowledge that the goodwill ascribed to the Partnership and the Business is nil (clause 2.4)
-Unless the Equity Members otherwise resolve by Special Resolution, a Related Partner (eg the equity partner) of an Equity Partner and its related Member (the equity partner’s discretionary trust) must retire from the Partnership on 30th June following the 60th birthday of such Related Partner (Clause 13.1(a))
-On retirement, termination or death a former equity partner is entitled to be paid (Clause 14.1)
(i) Capital Account: The amount of the Capital Account Balance as at the Retirement Date of the former Equity Member
(ii) Current Account: the amount (if any) standing to the credit of the Former Equity Member’s Current Account as at its Retirement Date
(iii) Share of current year profit
(iv) Other amounts owed by the Partnership on Retirement Date
(As per the original)
In the wife’s Financial Statement she says she calculated her income in the following manner:
I have calculated my income for 22/23 based on my points allocation and bonus I received, though the [Q Company’s] profit retention, so it is more likely to be an overestimate of the current income. My estimated remuneration of the financial year ended 30 June 2023 is $828,946.24, calculated as follows:
•$758,946.24, being the sum of $948,682.80 from the points allocation (being 15.6 points x $60,813 per point) minus 10% for retained earnings and minus another 10% for the bonus pool;
•plus $175,000 bonus.
•less $105,000 distribution to three other beneficiaries of [K Trust],
•Divided by 52 to obtain a weekly amount.
(As per the original)
Both Ms R and Mr S are beneficiaries of the K Trust. It is plain, from the evidence, that, to the extent that their mother has been responsible, as director of the trustee company, for making a distribution of trust income to them, they have not retained that income. Accordingly, deducting the $105,000 from the wife’s income does not accurately record her income. The annual figure should more properly be $933,946.24 or a weekly amount of $17,960.50.
I must also take note that to the extent that the wife’s interest in the Q Company Partnership appears as an item of value in the balance sheet (as an asset of the Trust) it represents (save for the capital account) her earnings and so I have had regard to that fact when approaching the issue of income disparity in the next few years so as to make sure that any adjustment does not overstate the income disparity and run the risk of “double dipping”.
It is also important to consider that the wife has significant losses which she will be able to utilise to offset taxation liabilities. There is no quantification of the effect of this in the evidence but it will provide her with a greater net income.
The husband currently earns $60,000 per annum. He anticipates obtaining further qualifications to equip him to earn a larger salary. His previous employer was paying him $90,000 per annum. In cross-examination the husband indicated he left that position because he was concerned that the business which employed him was in peril at least in part, according to the husband, because of the owner’s behaviour. It was plain from the cross-examination that the wife is suspicious that the husband may have a plan to acquire an interest in his current employer and/or an increase in his salary after the conclusion of these proceedings. The evidence does not allow me to make a finding that that will be the case. I accept that the husband’s income may increase as he attains further qualifications and greater experience. However, the income disparity will remain, on any version, stark.
Given the ages of the respective parties it is important to understand that they will at some point retire. The wife says she is likely to continue part-time work even if her partnership is not extended by special resolution. But it is not unreasonable to anticipate that she will retire at some point in the years which follow. Accordingly, in approaching the disparity in personal exertion income, it is important to appreciate that this situation is not one which will necessarily persist for decades.
On behalf of the wife it was submitted that the income disparity between the parties would not result in an adjustment in the husband’s favour because the intention of s 75(2)(a) was not social engineering. I accept that the intention of the Act is not redistribution of income. Instead, where it is necessary to do justice and equity between the parties to a marriage, an adjustment may be made which has regard to the income disparity between them. Here the income disparity is very significant. While I accept there are two distinct periods of cohabitation, these parties’ first commenced cohabitation in 2008 and ceased living together on a final basis in 2020. I am entitled to have regard, and do have regard, to the provisions of s 75(2)(g) of the Act to the extent that it refers to “a standard of living that in all the circumstances is reasonable” for both of the parties to this marriage.
ORDERS
The effect of the orders sought in the wife’s application would be to leave the husband with the following assets:
ASSETS Description Value Shares in H Pty Ltd NIL Loan owed by H Pty Ltd 21,489 Commonwealth Bank account ending #...16 3,040 Commonwealth Bank account ending #...27 2,339 Motor Vehicle 2 14,500 Household effects 5,000 Total: $46,368 SUPERANNUATION Superannuation Fund 4 242,017 Total: $242,017 NET TOTAL ASSETS: $288,385 sh at $14,500 1984 Toyota Supra motor vehi
While the wife would have:
ASSETS Description Value D Street, Suburb E 3,250,000 B Street, C Town 1,500,000 F Street, Suburb E – 40% share 479,600 Shares in J Pty Ltd 1,204 K Trust (Q Company Partnership) 1,206,383 Shares in G Pty Ltd 30,452 W Bank account ending #...05 13,870 Commonwealth Bank account ending #...93 1,776 L Bank account ending #...46 1,478 ANZ Bank Account ending #...11 113,749 ANZ Bank Account ending #...38 194,068 Motor Vehicle 1 40,000 Jewellery 20,000 Household effects 20,000 Total: $6,872,580 LIABILITIES Mortgage to ANZ Bank secured against D Street, Suburb E (loan # …45) 2,089,424 Mortgage to L Bank secured against B Street, C Town (loan # …37) 800,141 Income tax/PAYG liability 460,000 Total: $3,349,565 SUPERANNUATION Superannuation Fund 1 884,553 Superannuation Fund 2 43,091 Superannuation Fund 3 65,048 Total: $992,692 NET TOTAL ASSETS: $4,515,707
Senior counsel for the wife submitted that this would be appropriate having regard to the facts, in particular the existence of the earlier consent orders and the subsequent intention of the wife to adhere to them and remain bound by them. He submitted that if, contrary to the wife’s primary submission, the Court were minded to adjust the assets of the parties such that the husband received something more than as set out above, such an amount would be measured in tens of thousands of dollars as opposed to hundreds of thousands of dollars.
The husband will, by agreement, transfer to the wife his interest in both the C Town property and shares in G Pty Ltd, the value of which is referrable to the plant and equipment at C Town. The equity in the C Town property is approximately $700,000.
Neither party put a submission to me that I should consider the superannuation pool separately from the non-superannuation pool and, accordingly, I will make a determination referable to the net assets and superannuation taken as a whole.
I accept that in moving from words to figures it is acceptable to do so by reference to a dollar figure or by reference to a percentage of the net assets of the parties.
The total net assets of the parties together with their superannuation total $4,804,092.
I find that, in the circumstances of this case, as set out above and paying attention to both contributions and matters picked up by s 79(4)(e) of the Act, the appropriate recognition of the relevant statutory considerations requires that the husband receive a payment from the wife such as to ensure he retains 25 per cent of the assets and superannuation. In circumstances where neither party sought a superannuation splitting order, that will be achieved by ordering that the wife pay the husband a cash amount and making a declaration that he retain the assets and superannuation set out at [85]. Given that the husband has $288,385 in superannuation and property in his name, the amount which will be paid to the husband by the wife is $912,638. I accept that it may be necessary for the wife to borrow funds to make such a payment and my orders will allow time for those arrangements.
I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 6 April 2023
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