Higgins and Higgins
[2013] FCCA 549
•18 June 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HIGGINS & HIGGINS | [2013] FCCA 549 |
| Catchwords: FAMILY LAW – Property – application for property settlement – just and equitable – property and liabilities – “add-backs” – contributions by the parties – assessment of the weight of initial contributions – gifts or loans from respondent’s parents regarded as contributions by the respondent – adjustments under s.75(2) of the Family Law Act 1975 (Cth) – child support – where respondent has a child support debt – where two of the parties’ three children reside with the applicant. |
| Legislation: Family Law (Superannuation) Regulations 2001 Part 6 Federal Circuit Court Rules 2001 r.21.2 |
| DJM & JLM [1998] FamCA 97; (1998) 23 Fam LR 396; FLC 92-816 Essex & Essex [2009] FamCAFC 236; (2009) FLC 93-423 Gosper & Gosper (1987) 90 FLR 1; 11 Fam LR 601; FLC 91-818 Higgins & Higgins [2012] FMCAfam 815 Higgins & Higgins [2012] FMCAfam 1503 Hickey & Hickey [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 Jones v Dunkel (1959) 101 CLR 298 Kessey & Kessey (1994) 18 Fam LR 149; FLC 92-495 Pellegrino & Pellegrino (1997) 22 Fam LR 474; FLC 92-789 Pierce & Pierce [1998] FamCA 74; 24 Fam LR 377; FLC 92-844 Stanford v Stanford [2012] HCA 52 |
| Applicant: | MS HIGGINS |
| Respondent: | MR HIGGINS |
| File Number: | SYC 5083 of 2010 |
| Judgment of: | Judge Scarlett |
| Hearing dates: | 4 and 5 October 2013 |
| Date of Last Submission: | 6 November 2013 |
| Delivered at: | Sydney |
| Delivered on: | 18 June 2013 |
REPRESENTATION
| Solicitors for the Applicant: | Marsdens Law Group |
| Counsel for the Respondent: | Mr Rosic |
| Solicitors for the Respondent: | Aitken Lawyers |
ORDERS
Within fourteen (14) days of the date of these Orders, the Applicant and the Respondent shall do all acts and things necessary to sell the property situate at and known as Property C in the State of New South Wales, being the whole of the land in Folio Identifier [omitted].
The parties are to list the property for sale by private treaty at a selling price of $850,000.00 or such other figure as the parties shall agree.
The parties are to agree on a Real Estate Agent to sell the property and in default of agreement the Agent is to be nominated by the President of the Real Estate Institute of New South Wales or his/her nominee.
The Respondent must co-operate in every way with the selling Agent including:
(a)Making the keys available to the Agent;
(b)Allowing inspection of the property at all reasonable times;
(c)Ensuring the property is in a neat and clean condition at the time of any inspection; and
(d)Signing all documents as requested by the Agent in relation to the listing of the property for sale.
The Applicant and the Respondent are to agree on a Solicitor to act on the sale of the property and in default of agreement the Solicitor is to be nominated by the President of the Law Society of New South Wales.
Upon completion of the sale of the property the proceeds of sale are to be paid and distributed in the following manner and priority:
(a)In payment of all monies owing under any mortgage secured over the property;
(b)In payment of all council and water rates outstanding;
(c)In payment of real estate’s commission and advertising expenses if any;
(d)In payment of all solicitor’s costs of acting on the sale; and
(e)As to the balance remaining:
(i)The sum of $622,179.00 to the Applicant; and
(ii)The balance to the Respondent.
The Respondent is to retain to the exclusion of the Applicant all items of personal property in his possession or control including but not limited to:
(a)All bank accounts, shares and debentures;
(b)All items of furniture and furnishings currently in his possession;
(c)His interest in (omitted) Pty Limited;
(d)His interest in (omitted) Pty Ltd;
(e)His interest in the Higgins Family Trust and (omitted) Family Trust;
(f)His interest in (omitted) Pty Ltd;
(g)The Higgins Family Trust; and
(h)(omitted) Trust; and
(i)Any other item of personalty currently in his possession or control.
The following seven (7) Orders are binding on the Trustee of the Respondent’s (omitted) Superannuation Fund.
The base amount of $85,000.00 is to be allocated to the Applicant in accordance with these Orders out of the interest of the Respondent in the (omitted) Superannuation Fund member number [omitted].
In accordance with Section 90MJ of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the interest of the Respondent in the (omitted) Superannuation fund member number [omitted] the Applicant shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount and there is to be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these Orders.
Order (12) has effect from the operative time.
The operative time for the purposes of Order (11) is four (4) business days after the date of service of these Orders upon the Trustee of the Respondent’s (omitted) Superannuation Fund.
The Respondent shall within fourteen (14) days of becoming entitled to receive a superannuation benefit from the (omitted) Superannuation Fund provide to the Trustee of the (omitted) Superannuation Fund all such forms as may be necessary to enable it to determine the nature and quantum of the superannuation entitlement and any other related information it may reasonably require.
In the event that superannuation split to the Applicant under these Orders can be rolled over into a separate account the Applicant, each of the parties shall do all acts, sign all necessary documents and take all action to facilitate and implement that rollover.
Each party and the Trustee shall have liberty to apply in relation to the implementation of these Orders affecting the superannuation interest.
The Applicant is to retain to the exclusion of the Respondent:
(a)All bank accounts, shares and debentures;
(b)All items of furniture and furnishings currently in her possession;
(c)All motor vehicles currently in her possession;
(d)Her interest in any superannuation fund; and
(e)Any other item of personalty currently in her possession or control.
The Applicant is to indemnify the Respondent and keep him indemnified in respect of:
(a)Any monies owing under the loan to purchase her motor vehicle;
(b)A debt owing to her mother Ms E;
(c)Any monies owing on her MasterCard account;
(d)Any amount owing to the Australian Taxation Office under an income tax assessment in her name;
(e)Any amount by her to Centrelink;
(f)Any amount owing to the (omitted) Bank in respect of a personal loan in her name; and
(g)Any other debt owing in her name.
The Respondent is to indemnify the Applicant and keep her indemnified in respect of:
(a)Any amount owing to the Australian Taxation Office under an income tax assessment in his name; and
(b)Any other debt owing in his name.
As provided by section 81 of the Family Law Act these Orders are intended to operate to determine the financial relationships between the parties and avoid further proceedings between them.
The Applicant and the Respondent are to do all things and give all consents and execute all deeds, documents and instruments necessary to give effect to these Orders within the times required by these Orders.
In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to any of these Orders then a Registrar or Deputy Registrar of the Court is appointed under section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar or Deputy Registrar being provided with a verification of the refusal or neglect by way of affidavit.
IT IS NOTED that publication of this judgment under the pseudonym Higgins & Higgins is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 5083 of 2010
| MS HIGGINS |
Applicant
And
| MR HIGGINS |
Respondent
REASONS FOR JUDGMENT
Applicant
This is an Application by the wife for orders for settlement of the property matters between the parties. The Respondent husband opposes those Orders. However, both parties seek orders to sell the former matrimonial home at Property C, although they differ as to the way the net proceeds should be divided.
The parties each seek a superannuation splitting order, but again they differ as to the terms of that order.
Orders Sought
The orders that the Applicant seeks are set out in an Amended Minute of Order handed up in Court on 5 October 2012. The orders sought are:
1. This Order is made by way of alteration of property interests pursuant to Section 79 of the Family Law Act 1975.
2. That the parties forthwith do all things and sign all documents necessary to cause the property situate at and known as Property C, NSW (herein referred to as “the Matrimonial Home”) folio identifier (omitted) to be sold by private treaty at the earliest possible date at a price to be agreed upon between the parties and failing such agreement at a price to be determined by the President of the Real Institute of New South Wales (or any successor of it) or his/her nominee.
3. That within 28 days of the date of these Orders the Respondent Husband shall discharge the following liabilities owing to:
3.1 (omitted) Bank home loan (account number [omitted]);
3.2 (omitted) Bank line of credit (account number [omitted]); and
3.3 (omitted) Bank line of credit (account number [omitted])
4. That the Respondent Husband shall indemnify and keep indemnified the Applicant Wife in relation to the liabilities referred to in Order 3 above together with all payments in respect of statutory rates and charges and any other sums due or accruing in respect of the Matrimonial Home.
5. That the proceeds from the sale of the Matrimonial Home be disbursed in the following manner and priority:
5.1 Payment of agents commission and advertising expenses and legal expenses of the sale;
5.2 Payment of costs incurred, if any, in relation to determination of value or selling price by the by the President of the Real Estate Institute of New South Wales or his/her nominee.
5.3 The balance then remaining to be divided as to:
5.3.1 40 per centum of any amount greater than $800,000.00 payable to the Respondent Husband; and
5.3.2 the balance to the Applicant Wife; or
5.3.3 100 per centum to the Applicant Wife in the event the amount is less than $800,000.00 and the Respondent Husband shall pay to the Applicant Wife an additional 40 per centum on any amount less than $800,000.00.
6. That if the Matrimonial Home is not sold by private treaty within a period of 3 months of the date of these orders, then the parties forthwith do all acts and things necessary including executing all documents necessary to cause the property to be sold by public auction at the earliest possible date at a reserve price to be determined by the President of the Real Estate Institute of New South Wales (or any successor to it) or his/her nominee and to disburse the proceeds of the said sale in accordance with Order 5.
7. That in the event the liabilities referred to in Order 3 above are not discharged within 28 days of the date of these Orders, and are discharged from the sale of the Matrimonial Home, then the total amount discharged will be a debt owing and payable by the Respondent Husband to the Applicant Wife and the Respondent shall pay interest to the Applicant Wife at the rate prescribed by the Family Law Rules from the due date until payment is made in full.
8. That:
8.1 the Court allocates, as required by Section 90MT(4) of the Family Law Act, a base amount of 80% to the Applicant Wife out of the Respondent Husband’s interest in the (omitted) Super (member no [omitted])(“the Fund”).
8.2 in accordance with Section 90MT(1)(a) of the Family Law Act, the Court:
8.2.1 creates an entitlement on the part of the Applicant Wife to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
8.2.2 makes a corresponding reduction in the entitlement to the Respondent Husband, or such other person to whom a splittable payment may be made, would have had in the fund but for these Orders.
8.3 whenever the Trustee of the fund makes a splittable payment out of the Respondent Husband’s interest in the fund, the Trustee shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in paragraph 8.2 of these Orders in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001.
8.4 these Orders have effect from the operative time and the operative time is 14 days from the date of these Orders.
9. That 50% of the photographs of the children currently in the Respondent Husband’s possession shall be divided between the parties and the Respondent Husband shall do all things necessary to facilitate that division within 7 days of the date of these Orders.
10. That in the event the Respondent Husband has not complied with the previous paragraph within 7 days from the date of these Orders, then:
10.1 within a further 7 days the Applicant Wife shall prepare 2 lists comprising, each list to comprise in total approximately 50% of the value of those furniture, furnishings and effects and that list shall be delivered to the Respondent Husband within that further 7 days;
10.2 the Respondent Husband shall then, within a further 7 days select one of those lists and inform the other party of that decision;
10.3 within a further 7 days each party shall then do all things necessary to facilitate the physical distribution of the photographs of the children to ensure they are distributed between the parties as per the selection of the list referred to above.
11. That the parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these Orders in the time periods prescribed.
12. That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the Court be appointed, pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
The property Orders sought by the Respondent are set out as proposed orders 4 to 25 in the Respondent’s Case Outline:
4. That within fourteen (14) days of the date of these Orders, the Applicant and Respondent shall do all acts and things to sell the property known as and situated at Property C in the State of New South Wales, Folio Identifier [omitted] (“the Property C property”).
5. That [name omitted] at [omitted] (“the Agent”) be appointed as the sole Agent to act on behalf of the parties for the sale of the Property C property and it be listed for sale at a listing price of $850,000 by private treaty.
6. That the Respondent shall co-operate in every way with the Agent including (without limiting generally the foregoing):
6.1 making the keys available to the Agent;
6.2 allowing inspection of the Property C property at all reasonable times as requested by the Agent;
6.3 ensuring the Property C property including the grounds are in a neat and clean condition at the time of inspection by the Agent and prospective purchasers;
6.4 signing all documents as requested by the Agent in relation to the listing of the sale of the Property C property except a contract or Agreement of Sale which has not been authorised by the parties’ solicitors.
7. That the Applicant and Respondent appoint (omitted), Solicitors, at (omitted) to act on the sale of the Property C property and the Applicant and the Respondent shall give all instructions to (omitted) for the preparation of the Contract for Sale.
8. That the Applicant and the Respondent shall execute the Contract for Sale in the form prepared by (omitted) at a price agreed between the parties or at a price obtained at any auction.
9. That the Applicant and Respondent shall jointly instruct (omitted) and such instructions shall be in writing. No verbal instructions shall be accepted by (omitted) and/or the Agent from the parties and/or any third parties.
10. That in the event the Property C property is not sold by private treaty within a period of three months from the date of listing, then:
10.1 The parties shall list the Property C property for sale by public auction with the Agent;
10.2 the reserve price for the purpose of the auction shall be $800,000;
10.3 In the event that the bidding at the auction does not reach the reserve price, the parties may negotiate with the highest bidder and any other interested person and effect the sale of the Property C property at a price which is not more than 1% below the reserve price;
10.4 If the Property C property remains unsold, the parties shall do all acts and things and sign all documents necessary to immediately re-list the Property C property for sale by auction again on a date nominated by the agent. The reserve price for the auction referred to in 10.2 above is to be agreed to by the parties, failing agreement the parties shall appoint the President of the Property Institute of New South Wales or his/her nominee to determine the reserve price of the Property C property and the parties shall be bound by the determination. The parties shall share equally the cost of any such valuation and shall be paid from the proceeds of sale of the Property C property.
11. That upon completion of the sale of the Property C property pursuant to these Orders or otherwise, the parties agree to do all acts and things necessary to cause the proceeds of the sale to be paid and distributed in the following manner and priority:
11.1 In payment of fees due for the nomination of the real estate agent, real estate agent’s commission and legal costs and disbursements incurred in relation to the said sale;
11.2 In payment of fees due to the nomination of valuer and valuation fees if necessary;
11.3 Adjustment of rates if any;
11.4 Payment of all monies owing to any mortgagee in relation to any loans secured by the mortgage registered on the title of the Property C property;
11.5 Then the balance to be distributed as follows:
11.5.1 An amount to equal 50% to both parties to be paid by way of bank cheque to Aitken Lawyers or its nominee on behalf of the Respondent and to be paid by way of bank cheque to Marsdens Law Group or its nominee on behalf of the Applicant.
12. That the Respondent retain to the exclusion of the Applicant all assets, shares, interest and liability currently in his power, possession or control including but not limited to:
12.1 (omitted) Services Pty Limited;
12.2 (omitted) Services;
12.3 The Higgins Family Trust & (omitted) Family Trust;
12.4 (omitted) Pty Ltd;
12.5 The Higgins Family Trust; and
12.6 (omitted) Trust.
13. That paragraphs 14 and 30 (inclusive) of these Orders are binding on the Trustee of the Husband’s (omitted) Superannuation Fund.
14. That the base amount of $85,000 (“the base amount”) be allocated to the Applicant in accordance with these orders out of the interest of the Respondent in the (omitted) Superannuation Fund, member number [omitted] (“Respondent’s super fund”).
15. That pursuant to section 90MJ of the Family Law Act (“the Act”) whenever a splittable payment becomes payable in respect of the interest of the Respondent in the Respondent’s super fund, the Applicant shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using the base amount and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these Orders.
16. That paragraph 17 has effect from the operative time.
17. That the operative time for the purposes of paragraph 16 of these Orders is four (4) business days after the date of service of these Orders upon the Trustee of the Respondent’s super fund.
18. That the Respondent shall within fourteen (14) days of becoming entitled to receive a superannuation benefit from the Respondent’s super fund, provide to the Trustee all such forms as shall be necessary to enable it to determine the nature and quantum of the superannuation entitlement and any other related information it may reasonably require.
19. That in the event that the superannuation split to the Applicant pursuant to these Orders can be rolled over into a separate account to the Applicant, each of the parties hereto shall each do all acts, sign all necessary documents and take all action to facilitate and to implement that rollover.
20. That there be liberty to apply to each party and the Trustee in relation to the implementation of these Orders affecting the superannuation interest.
21. That except as provided for in these orders, each party is to otherwise retain all property, resources including superannuation in their possession, custody and/or control.
22. Save and except as to these Orders provide to the contrary, each of the parties shall, by these orders, mutually release the other from all debts owing from one to the other.
23. That the parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these Orders in the time periods prescribed.
24. That pursuant to Section 81 of the Act, these Orders are intended to operate to end all financial relationship including spousal maintenance and rental payments between the parties and are an attempt to avoid further proceedings between them.
25. That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to this Order, the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act 1975 to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal by way of Affidavit.
Background
The parties commenced living together in (omitted) 1993 and were married on (omitted) 1994. They separated on 28 January 2010, according to the Applicant, and she moved into a unit in February 2010. The Respondent asserts that the date of separation was not until 25 June 2010.
There are three children of the marriage:
a)X, who was born on (omitted) 1995 and is now aged seventeen years and ten months;
b)Z, who was born on (omitted) 1997 and is now aged fifteen years and ten months; and
c)Y, who was born on (omitted) 2001 and is now aged eleven years and six months.
X and Y live with their mother and Z lives with his father, as a result of orders made on 13 August and 5 October 2012[1].
[1] Higgins & Higgins [2012] FMCAfam 815; Higgins & Higgins [2012] FMCAfam 1503
The Respondent remains living in the former matrimonial home at Property C.
The Applicant has re-partnered. She has been living with a man named Mr F since (omitted) 2011. They now have a child of their own, a little girl called W, who was born on (omitted) 2011.
When the parties commenced living together, they rented a home unit in (omitted).
In (omitted) 1994 the Respondent’s parents entered into a contract to purchase a house at Property K for $205,000.00. The parents borrowed an amount of $170, 000.00 to help fund the purchase. The parties themselves applied a gift of $40,000.00 towards the purchase and made the repayments on the mortgage.
The parties commenced living in the home in (omitted) 1994.
In (omitted) 1995 the Respondent’s parents reduced the amount owing on the mortgage to $124,536.00.
The Respondent’s father, [name omitted], died on [omitted] 1996. The title to the property in Property K passed to the Respondent’s mother, Mrs Higgins.
The parties entered into a contract to purchase a house at Property O, for $295,000.00 on 10 February 1998. The Respondent’s mother sold the property at Property K for $245,000.00. Settlement took place on 3 March 1998 and the Respondent’s mother made the net proceeds of the sale, an amount of $134,971.23, available to the parties to assist in the purchase of the property at Property O. The parties borrowed the sum of $160,000.00 from the (omitted) Bank to provide the balance required to purchase the property.
The Respondent was working as a [omitted]. In 2002 he and another [occupation omitted] named Mr E commenced working together as (omitted) and formed a company called (omitted) Pty Ltd for that purpose.
The Respondent received an amount of $100,000.00 from his mother, which the Applicant claims was a gift. The Applicant claims that the amount was received in 2005 and that the Respondent’s mother gave a similar amount to each of his sisters. The Respondent, however, claims that this amount was a loan and was not received until about March 2007.
In 2006 the Applicant commenced studying for a degree in (omitted).
On 27 October 2006 the parties entered into a contract to purchase a house at Property C, for $697,500.00. They sold the house at Property O, for $495,000.00.
On 19 January 2007 the sale of Property O and the purchase of Property C were settled. The parties borrowed the balance of purchase money for the Property C property from the (omitted) Bank.
The parties had formed a family trust, although they differ on the exact name of the Trust. In 2009 the Trust purchased a block of land in (omitted). The value of the land is approximately $62,500.00.
Also in 2009 the Applicant commenced working as a (omitted).
In July 2010 the Applicant returned to the Respondent a Mazda (omitted) motor vehicle. The Respondent used a (omitted) line of credit secured against the home at Property C to purchase a Suzuki (omitted) motor car for the Applicant and to pay to his mother the sum of $100,000.00. He asserts that this was to repay a loan, but the Applicant denies that any money was owing to the Respondent’s mother.
On 12 August 2010 the Applicant commenced proceedings for property and parenting orders.
In approximately February 2011 the (omitted) Bank made a demand for payment of an amount of $37,500.00. The Respondent asserts that his mother lent him that amount to pay to the bank.
The Applicant filed an Application for Divorce on 18 May 2011. On 30 June 2011 the Court made a Divorce order, effective after one month.
Evidence
The Applicant relied on the following:
a)her Amended Application filed on 14 September 2012;
b)her affidavit of 9 August 2012;
c)her affidavit of 22 August 2012;
d)her affidavit of 6 March 2012, as to paragraphs 12 to 101 inclusive and 112 to 160 inclusive;
e)her Financial Statement of 9 August 2012;
f)the affidavit of Mr F sworn on 24 August 2012;
g)the affidavit of Mr A of 4 September 2012; and
h)the affidavit of Mr B of 12 September 2012.
Only the Applicant and Mr B were required to give oral evidence.
The Respondent relied on the following:
a)his affidavit of 15 July 2011 at paragraphs 1 to 11 and 131 to 207;
b)his affidavit of 20 April 2012 at paragraphs 1 to 30;
c)his affidavit of 17 May 2012;
d)his affidavit of 24 August 2012;
e)his affidavit of 18 September 2012;
f)the affidavit of his solicitor, Brendan Manning, of 14 August 2012;
g)the affidavit of Mr E of 18 September 2012;
h)the affidavit of Mr G of 31 August 2012;
i)the affidavit of Mr G of 18 September 2012;
j)the Respondent’s Financial Statement of 17 May 2012.
Only the Respondent and Mr G were required to give oral evidence.
The proper approach to determination of a property application
The way a court approaches property matters has been set out by the Full Court of the Family Court in Hickey & Hickey[2]. In that decision, the Full Court held at [39] that the approach involved four inter-related steps:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties…and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters…including…the matters referred to in s 75(2) so far as they are relevant…Fourthly, the Court should …resolve what order is just and equitable in all the circumstances of the case.[3]
[2] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143
[3] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 at [39] per Nicholson CJ, Ellis & O’Ryan JJ
The Court should also have regard to the decision of the High Court in Stanford v Stanford[4], where the majority (French CJ, Hayne, Kiefel and Bell JJ) set out the way a court hearing a property application should deal with the requirement in subsection 79(2) of the Act that prescribes:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
[4] [2012] HCA 52
Their Honours held at [36]:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible top chart its metes and bounds. And while the power given by s. 79 is not “to be exercised in accordance with fixed rules”, nevertheless three fundamental propositions must not be obscured.[5]
[5] Stanford v Stanford [2012] HCA 52 at [36]
The three fundamental propositions are:
37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s. 79(1)(a) itself, which refers to “altering” the interests of the parties to the marriage in the property” (emphasis added)…
38. Second, although s. 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion…
…
40. Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s. 79(4).[6]
[6] Ibid at [37]-[38], [40]
Clearly, the decision in Stanford v Stanford means that the Court must consider the requirements of s.79(2) before embarking on the four-step process set out in Hickey & Hickey[7], or at least before taking the second step, identifying and assessing the contributions of the parties. In other words, satisfaction that it is “just and equitable” to make an order is a condition precedent to considering the matters referred to in s.79(4). First, the Court must be satisfied that it is just and equitable to make an order at all.
[7] supra
It would follow that the Court must consider whether it is just and equitable to make a particular order when the Court is considering “what order (if any) should be made under s.79. Thus, the requirements of s.79(2) must again be borne in mind, in my view, after the Court has undertaken the third step in the process, as the Full Court of the Family Court had held in Hickey.
Just and Equitable
Applying the decision of the High Court in Stanford[8], the first matter to be considered is whether it is just and equitable to make an order under s.79 at all. In my view, it is just and equitable, as the parties are now divorced and the Applicant has now re-partnered. Their communication is poor and acrimonious.
[8] supra
There is a need to make such orders as will finally determine the financial relationship between the parties and avoid further proceedings between them (see Family Law Act, s.81).
The Parties’ Property and Liabilities
The parties are at issue in respect of a number of matters concerning their property and liabilities. The issues appear to be (or to have been):
a)The value of the Respondent’s interest in (omitted) Services Pty Limited;
b)Whether there is a debt owing to the Respondent’s mother as a result of the sale of the property at Property K, in about 1998;
c)Whether the receipt by the Respondent of $100,000.00 from his mother in 2007 was a gift or a loan which needs to be repaid;
d)The Applicant contends that the drawdown of the parties’ (omitted) loans by the Respondent in two instalments of $18,000.00 and $95,750.00, of which the sum of $100,000.00 was paid by the Respondent to his mother, represents a premature distribution of $100,000.00 which should be added back; and
e)Whether the legal fees of $153,351.00 paid by the Respondent should be added back.
The Valuation of (omitted) Services Pty Ltd
The Applicant relied on the evidence of Mr B, a Chartered Accountant with [omitted] Chartered Accountants of [omitted], Sydney. Mr B swore an affidavit on 12 September 2012 to which he annexed an updated valuation for the business (omitted) Services Pty Ltd.
Mr B’s valuation is comprehensive and detailed. A summary of his findings is set out in a table and sub-paragraphs 2.1 to 2.10 of his affidavit:
2.1 The following table summarises my opinions contained in this report:
(here followed a table)
2.2 I refer to table 1 and note:
2.3 In my opinion the value of the (omitted) business based on the draft financial statements at 30 June 2012 is $637,500. I have determined the value of the business based on the consolidated operation of (omitted) Pty Ltd and the service partnership operated by the Higgins Family Trust and the (omitted) Family Trust;
2.4 In my opinion the value of (omitted) Services Pty Limited based on the draft financial statements at 30 June 2012 is $745,150 and is inclusive of the intangible assets of the (omitted) business;
2.5. In my opinion the value of the husband’s 50% interest in (omitted) Services Pty Limited is $353,946;
2.6 In my opinion the value of the service partnership of the Higgins Family Trust and the (omitted) Family Trust based on the financial statements provided is $124,277. The Higgins’ interest in the partnership is $117,392, and should be reflected in the value of the Higgins Family Trust;
2.7 In my opinion that value of the Higgins Family Trust is $10.00;
2.8 In my opinion the value of (omitted) Pty Ltd based on the draft 201 financial statements is $2 and the value of the 50% interest of each of Mr and Mrs Higgins is $1 each;
2.9 The 2010 financial statements of Higgins Family Trust disclose that the husband is owed an unpaid present entitlement of $88,320. This should be reflected as an asset of the husband to the extent that this remains unpaid;
2.10 Included in the liabilities of (omitted) Pty Ltd are employee obligations relating to the husband totalling $18,523 (sick leave $6,606 and annual leave $11,706). These may represent financial resources of the husband and should therefore be included in his financial statement.[9]
[9] Affidavit of Mr B 12.9.2012 at [2]
Mr B was cross-examined by Mr Rosic for the Respondent. Mr B was an impressive witness, very assured and clear. His evidence was not shaken in cross-examination.
The respondent relied on the evidence of Mr G, a (omitted). Mr G swore affidavits on 31 August, 18 September and 2 October 2012.
Mr G’s affidavit of 31 August annexes three valuations:
a)Valuation of (omitted) Services Pty Limited;
b)Valuation of the Higgins Family Trust and (omitted) Family Trust; and
c)The Higgins Family Trust.
In an introduction to his valuation of (omitted) Services Pty Limited, Mr G made these statements:
The subject company trades as a (omitted) company specialising in the (omitted) for the (omitted).
Such work is gained by tender and is controlled by a contract for a set period with no option of renewal.
Continuity of contract must be retendered thus creating a great deal of uncertainty as to future income and in fact the future administration of the business, eg. Staffing.
Such an arrangement prevents the use of (omitted) methods and it is my opinion that the value of such a company can only be assessed on the basis of what it will bring on the “open market”, eg. buy an income.
Unlike most companies which have growth potential this company faces diminution of turnover at the expiry of each contract and would have to rely upon the retendering process.[10]
[10] Affidavit of Mr G 31.8.2012 Annexure “A” page 2
Mr G noted that the company appeared to have sustained a loss for the year ended 30 June 2011 of $426,872.00 and expressed the opinion that:
Based upon the potential benefits and the known loss on trading I do not believe that a purchaser would be at all interested in buying the business but purely the assets and they would negotiate their own contracts as they fall due.
One further option would be for (omitted) to be permitted by the (omitted) to assign the three contracts which have a residual value of $1,518,749 as at 30 June 2012.
A purchaser may consider paying say 25% of the contract value, i.e. $380,000.00 in order to obtain the benefit of $1,129,749 over the ensuing 20 months and get their foot in the door with the (omitted).
In his valuation of the Higgins Family Trust and the (omitted) Family Trust, Mr G noted that they each had an interest in a company called (omitted) Pty Ltd which is purely a (omitted) company and said:
As this entity is purely a medium for moving money and has no trading income in its own right its value is, therefore, confined to its assets which as at 30 June 2011 were:-
Cash 124,139
Real Estate at Valuation 121,146
General pool assets 68,019
Gross Asset Value $313,304
Gross value to proprietors in accordance with the asset value is:-
$313,304
The Higgins Family Trust maintains a 50% interest I this entity.[11]
[11] Affidavit of Mr G 31.8.2012 Annexure “B” page 4
Annexure “C’ to the affidavit of Mr G is a valuation of the Higgins Family Trust. His view is:
This trust is a non trading entity utilised as purely an internal medium for the distribution of property transferred from the trading company.
It has no assets and does not derive income from any other service.
I am of the opinion that the ‘Higgins Family Trust’ is not saleable in the open market and accordingly has no market value.[12]
[12] Ibid Annexure “C” page 1
Mr G’s affidavit of 18 September 2012 annexes a Critique Report of Mr B’s valuation. He disagrees with Mr B’s conclusion that the business “with such an insecure future” has a market value of $745,150. He agrees with Mr B that the Higgins Family Trust has no value.
Having heard the oral evidence of both experts, I prefer that of Mr B. I agree with the Applicant’s submission that Mr B’s report is:
17.1 comprehensive;
17.2 well reasoned;
17.3 relies on information which is properly sourced; and
17.4 sets out his conclusions in a way which can be clearly understood; and
17.5 adopts the valuation method which one generally expects to find with profitable businesses that are continuing to operate, namely the Capitalization of Future Maintainable Profits.[13]
[13] Applicant’s Submissions at [17
In accepting the above submission, and preferring Mr B’s report, it should not be inferred that I adopt the criticisms of Mr G’s Report contained in paragraph [18] of the submission, which appeared to me to be rather harsh.
Whether a debt is owed to the Respondent’s Mother
It was asserted by the Respondent that the net proceeds of sale of the property at Property K were owed to the Respondent’s mother, due to the circumstances of the purchase of the property. However, this claim was not maintained at the trial. As Mr Reeve points out in his written submission on behalf of the Applicant, there is no evidence from the Respondent’s mother about any loan or gift to the Respondent. As there has been no explanation as to why the Respondent’s mother is not on affidavit, a Jones v Dunkel[14] inference can be drawn that her evidence would not take the Respondent’s case further.
[14] (1959) 101 CLR 298
A similar situation arises with the issue of an amount of $100,000.00 that was provided to the parties by the Respondent’s mother in about 2007. The Respondent’s counsel has conceded that this ought not to be treated as a debt.
In each case, the money from the Respondent’s mother should be treated as a contribution on the Respondent’s side.
The drawdown of the (omitted) Loans
The Respondent drew down two amounts of money from the parties’ (omitted) joint accounts, $18,000.00 and $95,750.00. The Respondent paid $100,000.00 to his mother. As Mr Reeve submits, this money should be treated as an add-back.
Legal Fees paid by the Parties
The Applicant’s evidence is that she has expended $7,244.00 on legal fees. The Respondent has paid the amount of $153,351.00.
The Applicant submits that these amounts should be added back, relying on the decision in DJM & JLM[15] . The Respondent concedes that the principle applies, referring to the decision of the Full Court of the Family Court in Essex & Essex[16], but submits that there is no evidence that the Respondent’s expenditure on legal fees has come from anything other than his post-separation earnings. There is no evidence of mortgages being increased or the sale or disposal of marital assets. The submission continues:
If funds used to pay legal fees have been generated by a party post separation from his own endeavours or received in his own right as a gift or inheritance, they would generally not be added back as a notional asset.
In this case the husband has borrowed funds from his mother (from $100,000.00 repaid in 2010) to pay some of his legal bills in addition he has used post separation income and borrowing from his business partner that are not listed as matrimonial liabilities.[17]
[15] [1998] FamCA 97; (1998) 23 Fam LR 396; FLC 92-816
[16] [2009] FamCAFC 236; (2009) FLC 93-423
[17] Respondent’s Submission page 15
Again, if it is the case that the Respondent borrowed substantial sums of money from his mother and from his business partner, Mr E, what evidence is there to substantiate this claim?
Mr E deposed in his affidavit of 18 September 2012:
11. To date I have lent money to Mr Higgins from the company profits to help cover legal costs. However following his continued poor performance and escalating court fees I have stopped this practice which resulted in Mr Higgins requiring to access his mortgage for continued legal support.[18]
[18] Affidavit of Mr E 18.9.2012 at [11]
With respect, this evidence is less than satisfactory. Mr E’s affidavit does not say how much money was lent to the Respondent and when. This information should have been readily ascertainable.
Again, there is no evidence from the Respondent’s mother and no explanation.
I am not satisfied that the evidence is sufficient to establish the Respondent’s contention.
Both amounts of money expended on legal costs will be added back.
Non-superannuation Asset Pool
A Joint Balance Sheet was provided to the Court on the final day of the hearing.
I find the value of the non-superannuation asset pool to be:
a)Property C $800,000.00
b)(omitted) Pty Ltd $0
c)(omitted) Pty Ltd $353,946.00
d)Higgins Family Trust $0
e)Higgins & (omitted) Family Trust partnership $0
f)Respondent’s entitlement from Family Trust $88,520.00
g)Applicant’s furniture $5,000.00
h)Respondent’s furniture $5,000.0
Applicant's Holden (omitted) $33,313.00
Total $1,285,779.00
Add-backs
The following amounts are to be added back to the asset pool:
a)Respondent’s legal fees paid to date $153,351.00
b)Applicant’s legal fees paid to date $ 7,244.00
c)Amount paid to Respondent’s mother $100,000.00
d)Partial property distribution 24.8.2012 $ 25,500.00
Total $286,095.00
The total of the non-superannuation assets, therefore, is derived by adding the totals at [65] and [66] above: $1,571,874.00
Liabilities
I find the parties’ liabilities to be:
a)Property C mortgage $139,507.00[19]
[19] This figure includes the CBA lines of credit
b)(omitted) Pty Ltd $ 0
c)Applicant’s car loan $33,313.00
d)Debt to Applicant’s mother Ms E $6,600.00
e)Applicant’s MasterCard $4,000.00
f)Respondent’s 2011 income tax $55,000.00
g)Applicant’s 2011 income tax $48,458.00
h)Applicant’s Centrelink debt $3,500.00
Applicant's (omitted) Bank personal loan $3,950.00
Total liabilities $294,328.00
Superannuation
I find the parties’ superannuation to be:
a)Respondent’s (omitted) Super entitlement: $107,684.59
b)Applicant’s (omitted) Super entitlement: $35,867.00
Total superannuation $143,551.59
The gross value of the parties’ non-superannuation asset pool is $1,571,874.00.
The liabilities amount to $294,328.00.
By deducting the total liabilities from the total of non-superannuation pool, the net value of the non-superannuation asset pool stands at $1,277,546.00.
The total of the parties’ superannuation stands at $143,551.00.
The net total, combining the net non-superannuation asset pool with the superannuation pool, amounts to $1,421,097.00.
The Parties’ Contributions
In my view the parties’ contributions favour the Respondent. The Applicant had little in the way of assets at the commencement of cohabitation, whilst the Respondent had a car and an amount of $20,000.00 in savings. The Respondent worked throughout the marriage. The Applicant undertook tertiary studies and commenced work in the (omitted) profession in 2009. It was the Applicant who undertook most of the care of the parties’ three children during the period of cohabitation.
What takes the ratio of contributions away from an even division between the parties is the substantial assistance the parties received from the Respondent’s mother and his late father. The parties received substantial assistance between 1994 and 2007, which came in the following forms:
a)The purchase by the Respondent’s parents of the house at Property K in 1994;
b)A gift of $40,000.00 to the parties, which was used to help fund the purchase;
c)The reduction by the parents of the amount owing on the mortgage over the property;
d)The Respondent’s mother’s contribution towards the purchase of the parties’ house at Property O, in 1998 by leaving in the net proceeds of sale of Property K, a sum of $134,971.23; and
e)The gift by the Respondent’s mother of a sum of $100,000.00 in 2005 or 2007.
The assistance provided by the Respondent’s parents should properly be regarded as contributions made on behalf of the Respondent (see Gosper & Gosper[20], Kessey & Kessey[21] and Pellegrino & Pellegrino[22]).
[20] (1987) 90 FLR 1; 11 Fam LR 601; FLC 91-818
[21] (1994) 18 Fam LR 149; FLC 92-495
[22] (1997) 22 Fam LR 474; FLC 92-789
Whilst some of the assistance from the Respondent’s parents took place between 1994 and 1998, this does not mean that the Court would necessarily find that the effluxion of time means that the weight of these contributions has so diminished as to be minimal. The Full Court of the Family Court (Ellis, Baker and O’Ryan JJ) held in Pierce & Pierce[23] that the trial judge had failed to make an adequate assessment of the weight of the initial contribution, holding at [30]:
There is an obligation on the trial judge not only to identify the relevant contributions but also to assess them. In this case, his Honour failed to adequately, or at all, assess these contributions. In our view he failed to properly weigh the greater initial contribution of the husband, with all the other relevant contributions, and seems not to have had regard to the use made by the parties of the husband’s greater contribution.
[23] [1998] FamCA 74; (1998) 24 Fam LR 377; FLC 92-844
In this case, there were contributions from 1994 to 2007, which not only enabled the parties to obtain their first home, albeit registered in the names of the Respondent’s parents, but also assisted them to purchase their later homes.
In a marriage where the parties cohabited from (omitted) 1993 until February 2010, a period of approximately seventeen years, the early contributions should still be given some weight and the contribution of $100,000.00 from the Respondent’s mother, either in 2005 or 2007, depending on the accounts of the parties, should be given a significant amount of weight.
The child X has lived with the Applicant since separation, whilst the two boys have both lived with their father. However, Y now lives with his mother as a result of the orders of this Court made on 13 August 2012.
The Respondent has had the benefit of living in the former matrimonial home since the parties separated. The Applicant, however, has had to rent other accommodation.
Taking all these matters into consideration, I find that the contributions favour the Respondent.
The parties’ contributions are assessed as 45% by the Applicant and 55% by the Respondent.
Other factors taken into account under subsection 79(4)(d) to (g)
Paragraph (d) of subsection 79(4) requires the Court to take into account the effect of any proposed order on the working capacity of either party. There does not appear to be any effect on the working capacity of either party.
Paragraph (e) of subsection 79(4) requires the Court to take into account the matters referred to in subsection 75(2) of the Act so far as they are relevant.
The Applicant was born on (omitted) 1973 and is therefore 40 years of age. She appears to be in good health. The Respondent was born on (omitted) 1969. He is about to attain the age of 44 years on the (omitted) of this month. He also appears to be in good health.
The Applicant is employed a (omitted) and earns approximately $52,000.00 per annum. Her earning capacity is unlikely to increase significantly, as she is dependent on pay increases in her employment. The Respondent has been earning approximately $60,000.00 per annum, although he has said he could earn considerably more.
The Applicant has the care and control of two children of the marriage who are under the age of 18 years. The parties’ daughter, X, and their son Y both live with the Applicant.
X has lived with her mother throughout these proceedings and is not seeing her father at all. She is almost an adult. She will turn 18 on (omitted) this year.
The parties’ son Y was born on (omitted) 2001. He is therefore 11 years and 7 months old. He will continue to require the support of his mother for a number of years to come. Y spends alternate weekends with his father, not being the weekend that Z spends with his mother, from after school on Friday until Monday morning.
The Respondent has the care and control of one child under the age of 18 years, the parties’ other son Z. He was born on (omitted) 1997 and is about a month short of his sixteenth birthday. Whilst the Court ordered that Z should spend alternate weekends with his mother, from after school on Friday until Monday morning, a total of three nights each fortnight, he is apparently spending more time with her. Mr Reeve submits that Z is in fact spending five nights each fortnight with his mother, as he has elected to spend one extra night a week with her.
The Applicant has a commitment to support another child whom she has a duty to maintain, her young daughter W, who was born on (omitted) 2011. W is the daughter of the Applicant and Mr F, with whom she now lives.
The Respondent does not have a commitment to support any other child.
There is no evidence that either party has an entitlement to a pension, allowance or benefit. They both have superannuation interests.
The Respondent’s standard of living appears not to have changed since the parties separated, as he still continues to live in the former matrimonial home. The Applicant lives relatively modestly, as both she and Mr F earn relatively modest incomes.
The Applicant is now cohabiting with Mr F in a de facto relationship. He is employed by [omitted] and earns approximately $58,000.00 per annum.
The Respondent has been assessed to pay child support for the Applicant. The Child Support Assessment tendered in evidence shows an annual amount of child support $1,543.00. The weekly rate is $29.57. However, the Respondent has been less than assiduous in meeting his obligations. A Certificate under sub-section 116(2) of the Child Support (Registration and Collection) Act 1988 (Cth) shows that he had a child support debt of $1,078.58 as at 20 August 2012.
There are no other relevant matters under s.75(2) of the Act that need to be taken into account.
Under paragraph (f) of s.79(4), the Court is required to take into account any other orders made under the Family Law Act affecting a party to the marriage or a child of the marriage. Orders were made on 13 August 2012 (Higgins & Higgins[24] and 5 October 2012 (Higgins & Higgins[25] in relation to parenting matters.
[24] [2012] FMCAfam 815
[25] [2012] FMCAfam 1503
The result of those Orders is that:
a)The Applicant is to have sole parental responsibility for the child X;
b)The parties are to have equal shared parental responsibility for the children Z and Y;
c)X and Y are to live with the Applicant; and
d)Z is to live with the Respondent.
X does not spend time with her father. Z spends time with his mother and Y spends time with his mother as detailed in paragraphs [89] to [92] above.
The issue of child support as referred to in paragraph (g) has already been covered in paragraph [98] above.
It appears clear that, from a consideration of the above matters, an adjustment of 10% in favour of the Applicant is appropriate.
Thus, I assess the parties’ entitlements at 55% to the Applicant and 45% to the Respondent. However, the Court must still consider whether the orders to be made, if any, are just and equitable.
Whether the proposed orders under s.79(4) are just and equitable
I am satisfied that orders under s.79 of the Act should be made. Subsection 79(2) requires the Court to consider whether, in all the circumstances, it is just and equitable to make those orders.
The former matrimonial home at Property C, needs to be sold. Both parties seek an order to that effect.
Conclusions
The net asset pool amounts to $1,421,097.00.
The Applicant is entitled to 55% of the value of the net asset pool, which amounts to $781,603.00 to the nearest dollar.
The Respondent is entitled to 45% of the value of the net asset pool, which amounts to $639,494.00 to the nearest dollar.
The Applicant will retain the following:
a)Her furniture, valued at $5,000.00;
b)Her Holden (omitted), valued at $33,313.00;
c)The amount she has paid for legal costs, being $7,244.00;
d)Her superannuation, valued at $35,867.00.
Total $74,424.00
The Applicant will be responsible for the following:
a)The amount owing on her car loan $33,313.00
b)The debt to her mother Ms E $6,600.00
c)Her MasterCard debt $4,000.00
d)Her income tax debt $48,458.00
e)Her Centrelink debt $3,500.00
f)Her (omitted) Bank personal loan $3,950.00
Total $99,821.00
In order for the Applicant to obtain her entitlement of $781,603.00, the Respondent will need to pay to her a sum of $707,179.00.
The Respondent will retain:
a)His interest in (omitted) Pty Ltd $0
b)His interest in (omitted) Pty Ltd $353,946.00
c)His interests in Higgins Family Trust $0
d)His interest in Higgins & (omitted) Partnership $0
e)His entitlement from the Family Trust $88,520.00
f)His furniture $5,000.00
g)His legal fees paid to date $153,351.00
h)The sum paid to his mother Mrs Higgins $100,000.00
i)The partial property distribution on 24 August 2012 $25,500.00
j)His superannuation $107,684.59
Total $808,501.59
The Respondent will be responsible for his income tax debt.
The net proceeds of sale of the former matrimonial home will be unlikely to be sufficient to meet the amount required to be paid to the Applicant under these Orders. I note that the Respondent has submitted that a superannuation splitting order should be made in favour of the Applicant, allocating to her a base amount of $85,000.00. I propose to make that order. The balance due to the Applicant will be made up out of the net proceeds of sale of the former matrimonial home.
Costs
If either party seeks to pursue an application for costs, he or she may do so by way of a written submission, to be filed and served on the other party within 28 days, which is the time allowed by the Rule 21.02. A further 14 days will be allowed for any written submission in reply.
I certify that the preceding one hundred and seventeen (117) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Date: 18 June 2013
0
7
5