HOBSON & HOBSON

[2019] FamCA 564

FAMILY COURT OF AUSTRALIA

HOBSON & HOBSON [2019] FamCA 564

FAMILY LAW – PROPERTY SETTLEMENT – assessment of contributions – marriage of ten years – two children of the marriage – where husband made a significant contribution at commencement of cohabitation – consideration of s.75(2) of the Family Law Act1975 factors – justice and equity.

Family Law Act 1975 (Cth) ss 75(2), 79(2)

Browne v Dunn (1893) 6 R 67
Chorn v Hopkins (2004) FLC 93-204
Fields & Smith (2015) FLC 93-638
Jabour & Jabour [2019] FamCAFC 78
Rosati & Rosati (1998) FLC 92-804
Trevi & Trevi (2018) FLC 93-858

APPLICANT: Ms Hobson

RESPONDENT: Mr Hobson

FILE NUMBER: MLC 6684 of 2018

DATE DELIVERED: 2 September 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Melbourne

JUDGMENT OF: Hartnett J

HEARING DATE: 13 - 14 June 2019

WRITTEN SUBMISSIONS RECEIVED: 5 July 2019, 19 July 2019, 7 August 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Brown QC with Mr Fuller

PROFESSIONAL FOR THE APPLICANT: Coote Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Puckey

Order

1. All extant applications be adjourned to 16 September 2019 at 9.30am for the making of final property orders.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hobson & Hobson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 6684 of 2018

Ms Hobson

Applicant

And

Mr Hobson

Respondent

REASONS FOR JUDGMENT

Background

1. These proceedings commenced on 15 June 2018 upon the Applicant wife (‘the wife’) making application for final property orders.  The Respondent husband (‘the husband’) likewise sought final, but differing, property orders to adjust the parties’ property as between them. Both parties implicitly agreed that it was not just and equitable for there to be no property adjustment in favour of the wife.  

2. The husband was born in 1963 and he is now aged 56 years. He is a self-employed professional. For the financial year ending 2018 his net taxable income was $1,535,038. The husband’s expectation at trial was that his net taxable income for the year ending 30 June 2019 would be approximately $1.1-1.2 million. The husband is in good health.

3. The wife was born in 1977 and she is now aged 41 years. She is a professional and works on a part-time basis for DD Company. She is in receipt of income in the sum of approximately $120,000 per annum gross. The wife is in good health.

4. The Court finds, for the reasons set out hereafter, the parties commenced to live together in about August 2004 in the husband’s residence at B Street Suburb EE in the State of Victoria (‘the B Street property’). They were married in 2006 and their two children, twins, X and Y were born in 2007 (‘the children’). They are now 12 years of age.

5. Separation occurred on 31 October 2015 when the wife left the former matrimonial home situate at P Street Suburb C in the State of Victoria (‘the former matrimonial home’). The parties’ cohabitation period was approximately 10 years and 10 months.  A divorce order was made in 2018.

6. In the amended initiating application filed by the wife on 17 April 2019, the wife sought that the parties’ total net assets, including their superannuation entitlements, be divided equally between them. She maintained this position of equality of division throughout the trial. The wife proposed to give effect to such division by way of proposed orders which are annexed to these reasons and marked ‘Annexure One’. However, during the course of the trial the wife indicated, through her Senior Counsel, that she was amenable to the Court fixing the payment sum the husband should pay to her, and leaving thereafter an opportunity to the husband to structure the means by which he would make such payment, albeit with such payment to be received in a timely way. She was not, therefore, opposed to the making of orders sometime after the delivery of reasons to afford to the husband this opportunity which he sought.  Accordingly, the Court shall deliver these reasons for judgment prior to the making of final orders.

7. The wife relied upon the following documents:-

   a)amended initiating application filed 17 April 2019;

   b)affidavits of  Ms Hobson sworn 16 April 2019 and 21 May 2019;

   c)financial statement of Ms Hobson filed 17 April 2019;

   d)affidavit of Ms D, the wife’s mother, sworn 21 May 2019; and

   e)written submissions filed 5 July 2019 and 7 August 2019.

8. The husband, in his response, sought orders as they appear in ‘Annexure Two’ to these reasons. At the conclusion of the trial the husband sought to make a payment to the wife based upon the wife receiving up to 25 per cent of the net property excluding superannuation. With respect to the parties superannuation interests, the husband sought to allocate 40 per cent of the combined superannuation of the parties, accumulated during cohabitation only, to the wife.

9. The husband relied upon the following documents:-

   a)response to initiating application filed 14 May 2019;

   b)affidavit of Mr Hobson sworn 14 May 2019;

   c)financial statement of Mr Hobson filed 14 May 2019;

   d)affidavit of Ms E sworn 15 May 2019; and

   e)written submissions filed 19 July 2019.

10. The parties relied on some supplementary oral evidence for their evidence-in-chief. They were each cross-examined during the final hearing and gave evidence honestly and to the best of their ability.  They were each credible witnesses. The evidence of Ms D and Ms E was not challenged and is accepted by the Court.

Date of Commencement of cohabitation

1. There is a dispute as to the commencement date of cohabitation. The wife’s evidence was that the parties commenced cohabitation in November 2003. The husband’s evidence was that the parties commenced cohabitation in January 2005, or possibly December 2004. In an earlier affidavit of the husband he had deposed to simply “late” 2004. The Court finds on the evidence that neither of the parties proposed times is established.

2. It was not disputed that the parties met each other for the first time in June 2003 at a lunch. Nor was it disputed that the parties commenced a relationship which ceased in about September 2003, and which was then rekindled in late November 2003. In February 2004, on the husband’s evidence, the parties again ceased their relationship. On the wife’s evidence, “some tiff, certainly not a break up” occurred. In any event, by March 2004, the parties’ relationship was either continuing or resumed, the husband moving the wife’s admission in the Supreme Court of Victoria in March 2004.

3. The husband’s evidence was that in November 2003, the wife was living at her mother’s home. The wife disputed that. Her evidence was that at that time she was residing with a friend (who had returned from overseas) in a rental premises in Suburb F. Her evidence was that she and her friend, as co-tenants, had taken a 12 month lease which commenced in July or August 2003. Her further evidence was that she and her friend continued payments of the lease in respect of that tenancy until its expiration in July or August 2004. At that time, the wife moved the remainder of her personal belongings to the husband’s B Street property, she having earlier moved much of her clothing to that premises because of the frequency with which she stayed at the husband’s residence, namely every night or nearly so. She did not see her friend and co-tenant after cessation of the lease.

4. The unchallenged corroborating evidence of the wife’s mother, Ms D, as to the wife’s living situation in the second half of 2003, was as follows:-

   I returned from a visit to my son in [Country G] in June 2003. [Ms Hobson] had been left in charge of our home. As I recall, a short while after my return, around the mid-year school holidays, employed at the time, [Ms Hobson] moved into an apartment with a friend who had recently returned from overseas. [Ms Hobson] felt she was earning enough money to be able to move out of home and begin to live independently.

5. The wife’s evidence confirmed that she had been caring for her mother’s home in mid-2003 whilst her mother was overseas, and that her mother’s absence at that time also coincided with the husband and wife first meeting in June 2003.

6. Counsel for the husband cross-examined the wife as to her recall of the husband having stayed in her rental premises in Suburb F on one night in November 2004, and as to the wife’s co-tenant providing her with, at around that time, a ceramic bowl as a birthday gift. Counsel had initially suggested the husband’s recall of a “party” for the wife’s birthday, but in the face of the wife’s very clear recall that she only ever had two parties in her life, one for her 21^st and another for her 30^th birthday, Counsel conceded he might have “misled” the wife and that there was no “party”. These matters of the husband’s overnight stay in Suburb F, and the gift of a ceramic bowl, had not appeared in the affidavit evidence of the husband, either earlier or later in time. They were simply not pleaded. The husband however at trial, attempted to establish, as was put by his Counsel, that the lease entered into by the wife with her co-tenant in respect of the Suburb F property was in fact from July/August 2004 to July/August 2005, in particular because of the husband’s recent recall of these matters. The wife vehemently denied, as far as she could recall, both matters as put by the husband.

7. The evidence of the wife and her mother is accepted by the Court as to the wife entering into a lease in respect of her occupation of a rental property in Suburb F, which lease terminated in July or August 2004. The husband’s evidence as to cohabitation commencement was that the wife “moved into the house [the B Street property] because she lost her roommate”. The parties then had, as one residence, from August 2004, the B Street property in which they cohabited until the time of settlement of the husband’s purchase (in March 2005) of J Street Suburb R in the State of Victoria (‘the J Street property’). 

8. Both parties in the giving of their evidence attempted to retrace their steps in arriving at their chosen dates of cohabitation. The husband’s late ‘unpacking’ of events to provide him with what he claimed was a clear recall of events in 2004 does not allow the Court to make any finding on the balance of probabilities going to what he claimed, and, in particular, when faced with the evidence of the wife and her mother. The end of the lease in about August 2004, the movement of the totality of the wife’s belongings, and the commencement of the parties contributing in their respective ways to the one household signalled the beginning of an ongoing commitment, cohabitation and joint endeavour.

Asset Pool At Trial

1. The assets and liabilities of the parties at trial were as follows:-

ASSET	OWNER	VALUE
T Street Suburb H Balance of purchase price & Stamp duty and transfer fees Deposit paid by Husband	Husband	$7,300,000 (purchase price at 11 April 2019) ($7,005,224) $730,000
P Street Suburb C sale costs & expenses	Husband	$5,800,000 (valuation dated 31 May 2019) ($94,000)
U Street Suburb K CGT liability sale costs & expenses	Husband	$2,600,000 (Imperial valuation dated 14 May 2019) ($423,472) ($48,000)
B Street Suburb EE CGT liability Sale costs & expenses	Husband	$1,675,000 (Imperial valuation dated 16 May 2019) ($186,000) ($33,000)
L Street, Town MM CGT liability Sale costs & expenses	Wife	$1,200,000 (Imperial valuation date 15 May 2019) ($70,500) ($30,000)
Mortgage finance	Husband	($3,676,228)
Husband’s bank accounts at 8 May 2019	Husband	$1,360,000
Wife’s term deposit	Wife	$1,071,466
Wife’s watch and car from inheritance funds	Wife	Value unknown
Bank savings	Wife	$478
Service Trust	Husband	$9,000
Family Trust	Husband	$2,917,314 (valuation date 31 March 2019)
Vehicle 1	Husband	E$75,900
Vehicle 2	Husband	E$24,150
Vehicle 3	Husband	E$12,300
Vehicle 4	Husband	E$8,500
Chattels There is no expert evidence as to the value of the parties’ chattels.	Husband	E$18,000
Chattels There is no expert evidence as to the value of the parties’ chattels.	Wife	E$5,000
Personal effects of each of the parties	Husband and Wife	Value Unknown
Net Total Assets: (including the deposit only in respect of T Street Suburb H and excluding any value for chattels)	$12,922,908

Superannuation
KK Superannuation	Wife	$113,647
JJ Superannuation Fund	Husband	$2,190,423
GG Super	Husband	E$5,132
Total:	$2,309,202

Matters Going to the Asset Pool of the Parties

1. Both the husband and wife proposed that all real properties be sold so as to provide for a settlement payment to the wife and provide to the husband the means by which to complete his purchase of T Street Suburb H in the State of Victoria (‘the T Street property’). The costs of doing so were agreed between the parties as were the CGT liabilities in respect of each of the real properties. It was further agreed that based on the principles in Rosati & Rosati [1998] FamCA 38 (‘Rosati’) it was appropriate to include such liabilities.

Wife’s Inheritance

1. In 2016, the wife’s father passed away. The wife and her brother inherited their father’s estate in equal shares. By 2017, the wife had received from her father’s estate the total sum of approximately $1,449,000 less her one half share of the costs. Her evidence was that she received approximately $1,360,000. The wife gave evidence that she had purchased a watch and a Vehicle 5 with some of these inheritance monies. She had also, at the time of trial, approximately $1,071,000 in a term deposit account maturing in November 2019. Her evidence was that she had spent the balance of the inheritance monies on legal fees (approximately $100,000); the costs of her rental accommodation to adequately accommodate the children; and otherwise on credit card payments and other necessary living expenses. This raises the issue of whether any of these amounts should be notionally added back to the asset pool.

2. The primary authority for the add back of legal fees is Chorn v Hopkins (2004) FLC 93-204 at [56] – [60]. Relevantly:-

   56. In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.

   …

   58. If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.

3. The Court finds, as submitted by Senior Counsel for the wife, it would be unjust and inequitable for the wife’s legal fees to be added back to the parties’ asset pool. The inheritances monies were clearly received post-separation. They were a contribution solely by the wife.  Additionally, the husband has had the benefit of meeting his legal fees, when he has incurred them, from his income. For both parties, their respective legal costs have been met, not by matrimonial monies, but by sources of funds generated independently of each other.

4. The wife’s expenditure otherwise, on credit card payments, rental accommodation and living expenses, will also not fall into a category of a notional asset that should be added back to the asset pool of the parties.

5. The wife's expenditure has not been unreasonable. Reasonably incurred expenditure does not usually come within accepted categories of addback.[1] The husband has had the benefit of residing in the former matrimonial home since separation in October 2015, a period of nearly four years. He has met the necessary mortgage and outgoings expenses in respect of that occupation. The wife has incurred rental expenses. The wife gave evidence that her most recent rental accommodation was more suitable for the children’s needs and is an expense of approximately $8,000 per month. This is reasonable in the context of the standard of living of the parties and their children during the relationship.

   [1]Trevi & Trevi (2018) FLC 93-858, [29].

6. In any event, and contrary to the husband’s position in his Case Outline filed 5 June 2019, an addback of the wife’s total inheritance funds was ultimately not sought by the husband on the basis however that a similar approach should be adopted in respect of his purchase of the T Street property.

T Street property

1. The T Street property settles on 17 December 2019.  It is unchallenged evidence that the wife was not informed of the husband’s intention to purchase this property.  On 11 April 2019 the husband entered into the contract for the purchase of the T Street property. He paid the 10 per cent deposit from savings accumulated by him after separation. The monies remaining to settle the T Street property, approximately $6,600,000, are due in December 2019. The husband estimates that, including stamp duty and transfer costs, there will be an additional amount of $405,224 due. He argued his equity in the property is thus approximately $300,000. In fact that will be the equity he has when the purchase settles, in the event he obtains a loan for the entire remainder of the purchase price and stamp duty and transfer costs.

2. The husband thus sought to include the value of the T Street property at $300,000 and not $730,000. His submission was further that as the deposit paid by him arose from post-separation income and savings, the discretionary inclusion of an add-back should not occur.[2] The Court in the exercise of its discretion disagrees with this submission.

   [2]Chorn & Hopkins (2004) FLC 93-204.

3. What the husband essentially seeks to do is have the wife contribute to the husband’s stamp duty liability. That is unreasonable in all the circumstances which will include the wife’s need to purchase a suitable home for herself and the children and to pay stamp duty in respect of such purchase.

4. The husband unilaterally purchased the T Street property. There remains $730,000 paid as a deposit. The husband did not consult with the wife in circumstances where to complete the purchase he will be required to sell real properties to which the wife made contributions, both direct and indirect, those properties being the former matrimonial home and the L Street property. The wife is thus making a very real contribution to the husband’s purchase of the T Street property. 

CGT Liability

1. The husband sought to include in the asset pool a potential capital gains tax liability of approximately $71,540 for the sale of shares held by W Pty Ltd as trustee for the Hobson Family Trust (‘the Family Trust’). He deposed that the realised and unrealised capital gains of the Family Trust were $152,212.[3] He calculated a liability of approximately $71,540 if those gains were distributed to him from the Family Trust. The wife does not cavil with the husband’s calculation of the liability.

   [3] Affidavit of Mr Hobson filed 14 May 2019, [27]

1. The husband stated that it was his intention to dispose of the Family Trust assets in full or part in order to fund a settlement to the wife and the settlement of the purchase of the T Street property.

2. In Rosati the Full Court stated at [6.36], relevantly, as follows:-

   It appears to us that although there is a degree of confusion, and possibly conflict, in the reported cases as to the proper approach to be adopted by a court in proceedings under s.79 of the Act in relation to the effect of potential capital gains tax, which would be payable upon the sale of an asset, the following general principles may be said to emerge from those cases:-

   (1) Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.

   (2) If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.

   (3) If none of the circumstances referred to in (2) applies to a particular asset, but the Court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the Court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, may take that risk into account as a relevant s.75(2) factor, the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur.

   (4) There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.

3. In accordance with Rosati the husband argued the liability will be incurred and must therefore be taken into account.[4]

   [4]Rosati & Rosati (1998) FLC 92-804, [6.36]

4. However, to meet any order for a payment to the wife, the husband's evidence was that, in part, he intended to loan funds. His evidence was that he would be able to loan funds of approximately $4,500,000 to be applied by him to meet an order and/or settle the T Street property. The balance of any payment to be made to the wife by Court order would be met from the proceeds of the sales of the real properties or by implication some of them. He has already the benefit of tax and realisation costs by agreement as the parties envisaged the necessity for the sale of these assets.

5. The Court is satisfied that there is no significant risk of the husband having to liquidate the Family Trust shares in the short to mid term to make a payment to the wife. If the husband in his capacity as director of the trustee company wishes to liquidate the shares, that is a matter for him.

6. Further, the Court finds as submitted by Senior Counsel for the wife, the husband’s intention or wish to use the sale proceeds of the trust’s investments to meet the balance of the purchase price of the T Street property does not meet the test required by the principle in Rosati,[5] which requires an expense to be generated because of Court order. The purchase price due at settlement does not arise because of a Court order, but rather because of the husband’s choice to purchase the property.

   [5](1998) FLC 92-804

Superannuation

1. The value of the husband’s superannuation entitlements of $2,195,555 is in part comprised of $864,094, being the current value of contributions being made during marriage until separation together with their accumulations. The balance is constituted by the husband’s pre-cohabitation and post-cohabitation superannuation entitlements and their accumulations.

Contributions at Commencement

1. In July/August 2004, the husband was a senior junior counsel. He was well established financially. He was in receipt of a gross income of approximately $660,000 in the previous financial year. The wife had no significant assets or financial resources and was in receipt of a modest income as a first year lawyer. The wife made no financial contribution to the husband’s acquisition, some seven or eight months after cohabitation, of the J Street property (in March 2005).

2. At the commencement of cohabitation the husband also had significant assets. His assets and liabilities and those of the Family Trust controlled by him, subject to paragraph 41 hereafter, were:-

   a)U Street, Suburb K Victoria (‘the U Street property’) (valued at 30 April 2004) $1,100,000;

   B Street, Suburb EE, Victoria (valued at 30 April 2004) $790,000;

   b)mortgage with CBA secured against property (as at 30 June 2004) ($772,046);

   c)Mortgage Interest Saver Account (‘MISA’) offset account CBA $551,536;

   d)CBA cash management account (…52) (as at 21 July 2004) $13,663;

   e)CBA streamline account (…02) (as at 31 August 2004) $6,617;

   f)shares gifted to the Family Trust on 2 July 2003  $134,326;

   g)cash rolled into the Family Trust in 2003 and 2004 up to and including August $289,422;

   h)units gifts to the Family Trust on 9 March 2003 from M Limited value unknown;

   i)units gifts to the Family Trust on 9 March 2003 from V Pty Ltd value unknown;

   j)units gifts to the Family Trust on 12 March 2003 from N Limited value unknown;

   k)Shares held with Z Limited. Value at August 2004 unknown.

   Such shares were gifted by the husband to the Family Trust in 2006. Value at March 2006 $465,000;

   l)Vehicle 6 purchased in 2003 for $78,000;[6]

   m)household furniture value unknown

   The total amount is $2,656,518.

   [6] Affidavit of Mr Hobson sworn 14 May 2019, [10].

3. By way of explanation of, and alteration to, the above paragraph:-

   a)items (a) to (g) were not challenged by the wife;

   b)In respect of item (h) the husband accepted in cross-examination that the cash position of the Family Trust at November 2003 was approximately $169,422. That figure was partially comprised by amounts of $69,939.88; $20,000; $19,438.16; and $200 as set out in a Deed of Gift of 16 July 2003; 10 October 2003; 21 August 2003 and 16 August 2004, respectively.[7] Additionally, further cash gifts had been made to the Family Trust by the husband as follows:-

   i)a monthly gift of $15,000 commencing 14 August 2003 for a period of six months from December 2003 to May 2004 and totalling $90,000; and

   ii)a monthly gift of $10,000 commencing 14 June 2004 for a period of three months from June 2004 to August 2004 totalling $30,000;

   the total amount being $289,422.

   c)in respect of item (f), there was no evidence before the Court as to the value of the Z Limited shareholding of the husband at the commencement of cohabitation. The husband stated in evidence that he “would anticipate there was growth in this shareholding between 2003 and 2006” but added that he “could be factually wrong”. The evidence as to the shareholding in the preceding year shows a growth in the value of the holding. It is likely this very real contribution was something less than the sum of $465,000 in August 2004, a matter the Court takes into account; and

   d)in respect of item (m), the only evidence before the Court as to the husband’s motor vehicle was its purchase price. Whether it was owned outright or was fully or otherwise encumbered is unknown. The Court does not include it as a meaningful contribution at commencement.

   [7] Exhibit ‘H 7’ of the Affidavit of Mr Hobson sworn 14 May 2019.

4. Thus the quantum of the husband’s initial contribution was something less than, but in the vicinity of $2,578,518.

5. Together with the above assets, the HH Statement (as at 30 June 2004) of the husband was tendered in evidence providing evidence of the husband’s withdrawal benefits of $330,538 at that time.

Additional matters as to contribution at commencement

1. The U Street property was purchased by the husband on 24 February 1996. The husband resided in the property until his move to the B Street property in April 2000. Since April 2000 the U Street property has been continuously rented with its income exceeding its costs in each taxation year.  This surplus income has been applied by the husband to the benefit of the family during cohabitation and subsequently. This income arises directly from the husband’s initial contribution. The property is currently leased with such lease expiring in December 2019.

2. The parties departed the B Street property around July/August 2005 after the husband’s signing of the contract to purchase the J Street property on 19 March 2005. Since the parties departure from the B Street property it also has been continuously rented and its income also exceeds its expenses. This surplus income has been applied likewise to the benefit of the family. This income arises directly from the husband’s initial contribution. The property is currently leased with such lease expiring in January 2020.

3. The husband settled the Family Trust on 1 July 2003. He is the sole director of the corporate trustee of the Family Trust and sole shareholder of that trustee.

Contributions during Cohabitation

1. Each of Senior Counsel for the wife and Counsel for the husband conceded that during the parties’ cohabitation, the contribution made by each of the parties was equal. Senior Counsel opened the wife’s case in such manner and interrupted Counsel for the husband’s cross-examination of the wife to repeat the concession made earlier. Counsel for the husband put to the wife that his case was put on the basis that the respective contributions of each of the parties during the cohabitation period should be treated as equal. During the trial both Counsel affirmed their respective concessions. There was no challenge to the wife’s role as primary caregiver to the parties’ children and primary homemaker, and no challenge to the husband’s role as primary income earner.

2. The husband’s closing written submissions reveal however that he now seeks a contribution assessment (of the relationship period) of 60/40 per cent in his favour. There are a number of problems with the husband’s revised approach, including, fundamentally, the contents of paragraph 47 above. Each of Senior Counsel and Counsel relied on the other’s representation in their cross-examinations of the other party. It was not put to the wife that she was incorrect or embellishing her evidence-in-chief about the extent of her non-financial and homemaker contributions, nor of her primary care contributions. Indeed, the husband described her in respect of the latter as “a great mother” and a “very good parent”.

3. The concession of equal contributions impacted on the manner in which the final hearing was run. As Senior Counsel for the wife submitted, it would be a denial of procedural fairness, and unjust, to permit the husband to now deny equality of contributions in these circumstances. The Court agrees with that submission.

4. Even were that not so, on the evidence, the Court finds an equality of contribution by each of the husband and wife during the period of their cohabitation. In particular in respect of the wife’s contribution:-

   a)the wife undertook her roles as primary caregiver to the parties’ children; primary home-maker; and part-time professional in the workforce, with diligence, great care and pride. All her efforts were directed to the welfare of the family;

   b)the parties’ twins were born two months premature in 2007 and remained in hospital for seven weeks. The wife spent considerable time with the children (and hospitals involved) during that very stressful period for both parties. The husband also assisted when he could. Following the children’s return home, the wife remained at home caring for them. The husband took some short time off work following their birth to assist in the care of the children. Thereafter, the wife remained at home and the husband was gainfully employed providing income for the family’s needs. He assisted the wife in the care of the children when he was able. He reduced his work load in those early years to be more present for the wife and children;

   c)in July 2009, the wife secured a maternity leave contract position and returned to work three days a week for a period of six months. She arranged for the children to be placed in childcare and from her salary she paid the costs associated with their care. At the expiration of that contract of employment, the wife resumed her role of being in the home providing for the needs of the children, the husband and the household.  As she said in her evidence, which is unchallenged (as to her role) it “was to care for the twins and manage the home”;[8]

   d)the wife returned to work in August 2012 in the clinical risk team at her 2009 employer, DD Company. She worked for 28 hours per week over a four day period and has continued to work to the present time on the same basis. The wife is able to work from home on one or sometimes two days each week, and during many of the school holidays.  The wife’s working hours and conditions are tailored to enable her to care for the children;

   e)the wife made each of the homes occupied by the family, inviting and comfortable places for the family to live in. She did, with enthusiasm, what was required of her with respect to the renovation undertaken by the parties in the J Street property, and enjoyed assisting in the design of an award-winning bathroom;[9]

   f)the wife chose furniture and artwork for the former matrimonial home, with the assistance of her mother. She paid for some of that furniture from funds she had saved, and likewise paid for the installation of an in-ground trampoline for the children. Additionally, when the parties decided to undertake an extensive process to remove a fig tree from the former matrimonial home, the wife made herself available to provide access to people who needed to inspect the tree prior to its removal. The wife also arranged for the home to be listed with a location agent for advertising and television commercial purposes and carried out the necessary activities required to have a film crew at the home on approximately three occasions.  The remuneration from these commercials was applied by the wife for the benefit of the family. 

   [8] Affidavit of Ms Hobson sworn 21 May 2019.

   [9] Affidavit of Ms D affirmed 21 May 2019, [12].

5. The husband throughout cohabitation continued to be gainfully employed and earning a considerable income. That required him to work long hours. He applied all of his income to the benefit of the family. He cared for the children outside his working hours and was a loving and dedicated father. He returned home to see the children each evening albeit in the later years he was mostly absent at their dinner time. The wife commenced to prepare two meals each night, one for herself and the children, and the other for the husband, to accommodate the husband’s longer working hours.  The husband’s application of his income saw the acquisition of the J Street property; the former matrimonial home; and the L Street property during the cohabitation period.

6. The husband also made the contributions of his income, his care of the children, and contribution to the family home, with diligence, great care and pride.

7. The husband’s submission that there should be a 60/40 per cent assessment in his favour of the ‘cohabitation assets’ because of: [10]

   a)his very high income derived from his practice established prior to the relationship (but lower than it would have otherwise been if he had pursued his career earlier than he did);

   b)his substantial not ‘token’ contributions as a joint homemaker and parent; and

   c)the investment income derived from his property acquired prior to the relationship (the rent received during the cohabitation period from U Street property and B Street property and the tax returns received by reason of the Family Trust were applied to acquire, conserve and or improve the Cohabitation Assets)

   is firmly rejected.

   [10] Written submissions of the husband filed 19 July 2019, [44].

8. The husband, in seeking to elevate his financial contributions over those contributions of the wife gives insubstantial and ‘token’ weight to the wife’s contributions contrary to the authorities. As submitted by Senior Counsel for the wife, the husband’s argument is akin to a ‘special skills’ type argument which no longer has a place in Australian law. As was said by the Full Court in Fields & Smith (2015) FLC 93-638:-

   42. It will be clear from the passages that we have referred to that his Honour rejected an argument that there was a particular type of contribution that related to “special skills” or “special talents”, with the result that such a finding  “is productive of a particular finding, or range of findings in respect of contribution”. Full Court decisions have supported that view (see Kane & Kane [2013] FamCAFC 205, Hoffman & Hoffman [2014] FamCAFC 92) and the jurisprudence can be fairly said to be settled. In particular, the Full Court in Hoffman said:

   52.          In each case, we consider that the point being made is that there is no principle or guideline (or indeed anything else emerging from
   s 79), that renders the direct contribution of income or capital more important – or “special” – when compared against indirect contributions and, in particular, contributions to the home or the welfare of the family…

   (emphasis in original)

   43. If it is necessary to make the point again, and to highlight it for the purpose of this appeal, we add our endorsement to what has been made clear in the authorities referred and to the Full Court’s comments in [52] of Hoffman, that the words of s 79 do not provide endorsement for any category of contribution related to any class of property (for example, high wealth) being, by virtue of that category or class, more valuable or important that another. In each case the contributions made by the parties must be evaluated in the context of the facts particular to that case.

   …

   134. As we have already said at [42] and [43] the notion, if there ever was one, that for some reason the wealth of parties itself, particularly in relation to business interests, should axiomatically mean that the party involved in the business is entitled to more, and according to senior counsel for the husband in this case, significantly more, has been put to rest. It should also be said that it significantly devalues the role of homemaker and parent that the High Court said in Mallet v Mallet (1984) 156 CLR 605 at 623 per Mason J should be given “substantial and not merely token weight”. The husband’s case in seeking 70 per cent of the assets does not give appropriate credence to the importance of these contributions.

9. Further, the husband seeks to argue a strict separation of the parties’ finances which cannot be sustained. Whilst the parties did not pool their income in a joint savings account, there was evidence of the shared use of credit card facilities. The wife met certain, albeit minor, expenses of the family and the husband otherwise was generally responsible for the totality of the family expenses. This was reasonable and to be expected where the husband had a significant income and the wife had primary care of the children, earning also an income but which was restricted by her need to be available for the children.

1. Additionally, the husband sought out insolvency protection advice and as a consequence when the L Street property was purchased, it was registered in the wife’s name for asset protection purposes. The Family Trust entity was used as a vehicle to distribute income to the wife between 2007 and 2016 for taxation reasons. The T Street property will be funded at settlement in late 2019, for the most part, by the proceeds of sale of the real properties the subject of these proceedings, which of course include the former matrimonial home and the L Street property. Each of these matters involved an intermingling of the parties’ finances.

Contributions Post Separation

1. In the post separation period the husband had the benefit of his considerable income relative to the wife, and of the asset holdings of the parties albeit that required him to attend to repayment of debt in relation thereto. The husband:-

   a)paid the deposit on the T Street property of $730,000 from his savings;

   b)further reduced the parties net mortgage financed position by $929,113;

   c)acquired the Vehicle 1 and Vehicle 4 motor vehicles;

   d)made a total of $95,000 in further superannuation contributions to his own fund/s;

   e)provided monies to the wife totalling $42,000 up until early August 2017;

   f)paid all expenses in relation to the former matrimonial home and the L Street property, including all rates, utilities, land tax, insurance and maintenance;

   g)paid all of the costs and expenses of the children apart from day-to-day living expenses when the children were with the wife. These expenses are estimated to exceed  $100,000 in 2020; and

   h)paid for comprehensive family health cover for the children.

2. In the post separation period, the wife invested some part of her inheritance monies in the sum of approximately $1,071,000 and there would have been an increase in her superannuation entitlements, although in a sum unknown.

3. Upon separation the wife left the former matrimonial home and commenced to rent a two bedroom apartment in Suburb F. The children remained living in the former matrimonial home in the primary care of the husband. The wife continued to be involved in the care of the children during the school term by collecting them from school each day, taking them to their extra-curricular activities, and preparing their dinner and supervising them until the husband returned home each night. The wife was assisted by her mother in respect of some of the provision of that care. Otherwise the husband was assisted by an au pair whom he engaged. The husband had the care of the children for the most part in the school holidays at the end of December 2015/ early 2016. From about February 2016, the wife had the care of the children each Tuesday overnight and in January 2017, the children commenced to spent alternate weekend overnight time with the wife. In about mid 2017 the parties agreed on a five nights out of fourteen (with the wife) arrangement which persisted until December 2018 when the wife introduced a regime of shared care of the children.

4. It was conceded by the wife that the husband was primarily responsible, in both a practical and financial sense, for the care of the children from separation until December 2018, a period of just over three years.

Section 75(2)

1. X is attending AA School in Suburb C and is in year six at that school. Y currently attends BB School Suburb CC and is in year six at that school. The parties have agreed that X will commence at O School in 2020 and that Y will continue her secondary schooling at BB School Suburb CC. The parties are both involved in the care of their twins, such that the children will continue to spend week about with each of their parents, a regime that has been in place since December 2018, and otherwise spend time as agreed between the parties, to facilitate, for instance, holiday periods, when each parent may seek to have the children in their respective care for more extended periods of time.

2. The husband’s income and earning capacity vastly exceeds that of the wife. The husband’s submissions suggest the wife is not exercising her income earning capacity. This argument falls foul of the principles in Browne v Dunn (1893) 6 R 67. It was not put to the wife that she was under exercising her capacity. Her evidence was that she is employed on a part-time basis and works approximately four days per week. Her work is structured so that she is available to tend to the children’s needs. She continues to be involved with their activities even when they are living with the husband. She is the one who is responsible for collecting the children from school in the event of illness or emergency.[11] She will continue to perform that role. As submitted by Senior Counsel for the wife, the nature of the wife’s employment is not unreasonable in the circumstances of the parties’ pre-separation arrangements, the children’s ages, and the children’s commitments. The Court is satisfied the wife exercises her earning capacity appropriately.

   [11] Affidavit of Ms Hobson filed 21 May 2019, [53].

3. The husband will continue to solely and generously provide for the children’s schooling and extra-curricular expenses, and to provide for the children’s needs when they are in his care. These expenses will be met by his income which includes current outstanding fees when received. The husband’s debtors are quantified at $374,790 gross. Such sum is, as submitted by Counsel for the husband, subject to uncertainties about recovery, but even if all of these fees were recovered, they would amount to no more than $171,624 net because they include GST (10%) which the husband is required to remit to the Australia Taxation Office; will be subject to deductions for clerking fees (4%); and tax and Medicare levy at the husband’s marginal rate (47%). The husband’s debtors all post-date separation by a significant period. The husband will continue to derive an income from his future personal exertion and collection of outstanding fees.

4. The parties are each likely to have a significant capital base following an adjustment of their property interests. As was observed by the Full Court in Jabour & Jabour [2019] FamCAFC 78 at [134], in a case where there is a significant capital base available to each party, s.75(2) of the Act adjustments are less significant.

5. The discrepancy between the parties’ respective superannuation entitlements is currently $2,081,908 in the husband’s favour. An adjustment of these entitlements in the same percentage as the asset pool will still result in the husband having available to him significantly more superannuation entitlements than the wife.

Further Matters

1. A piano, gifted to the wife by her aunt, remains in the former matrimonial home. The piano should be returned to the wife’s possession and ownership, and there should be some division, by agreement, between the parties of the chattels including furniture and artwork in the former matrimonial home and at Town MM.

2. There will be leave to the husband to tender the documents sought to be tendered by him at the conclusion of the trial being the CBA home loan and offset account statements for the period ending 31 December 2003. In that regard I would adopt as my reasons the final submissions for the husband as set out on page 7 at paragraphs 8.4.3 and 8.5.

Conclusion

1. It is just and equitable for the Court to make an adjustment order.[12]

   [12]Family Law Act 1975 (Cth), s 79(2).

2. The global approach in respect of the division of the parties’ property is appropriate in the circumstances of this case.

3. The Court determines that taking into account the significant disparity in the parties initial contributions and to a far lesser extent the disparity in the parties’ contributions after separation, the contributions should be assessed as 30 per cent to the wife and 70 per cent to the husband.

4. The husband will earn income considerably in excess of the wife including income from his investments. He will however have the financial support of the children to a far greater extent than the wife, and is nearly 15 years older than the wife.

5. Taking the s.75(2) of the Act matters into account a further adjustment of 4 per cent to the wife is appropriate.

6. The wife will receive 34 per cent of the net assets of $12,922,908 and superannuation of $2,309,202 (total $15,232,110). That is the wife will receive $5,178,917.40 of the net assets.

7. It is just and equitable to make orders that reflect these reasons. The parties will now have an opportunity to propose orders which shall implement these findings.

I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hartnett delivered on 2 September 2019.

Associate:

Date:  2 September 2019

ANNEXURE ONE

1.  All previous Orders be and are hereby discharged.

Assets retained by the Husband and Wife

2.  The Wife retain to the exclusion of the Husband:-

2.1  Her inheritance valued at $1,071,466, and consisting of:-

2.1.1 ANZ account (account ending …69) with an approximate balance of $18,216;

2.1.2 ANZ account (account ending …26) with an approximate balance of $750;

2.1.3 ANZ account (account ending …78) with an approximate balance of $1,000,000;

2.1.4 Vehicle 5 valued at $37,500; and

2.1.5 Her watch valued at $15,000.

2.2 Funds held in her own personal bank account (account ending …35) with an approximate balance of $478;

2.3 Her superannuation entitlements held with KK Super.

3. The value of the assets to be retained by the Wife pursuant to paragraph 2 hereof (net of superannuation) be fixed at $1,071,944.

4.  The Husband retain to the exclusion of the Wife:-

4.1. His 10% deposit paid for the purchase of the property situated and known as T Street, Suburb H, valued at $730,000;

4.2. His various bank accounts with an approximate balance of $1,359,560;

4.3. His interest in the LL Trust valued at $9,000;

4.4. His interest in the Hobson Family Trust valued at $2,917,314;

4.5. His Vehicle 1 valued at $96,900;

4.6. His Vehicle 2 valued at $38,650;

4.7. His Vehicle 3 valued at $21,500;

4.8. His Vehicle 4 valued at $11,200; and

4.9. His debtors valued at $453,305.

5. The value of the assets to be retained by the Husband pursuant to paragraphs 4 hereof be fixed at $5,637,429.

Sale of properties

6.  On or before 1 August 2019, the parties do all such acts and things and sign all documents necessary to place the real properties situated and known as:

6.1. P Street, Suburb C, Victoria;

6.2. U Street, Suburb K, Victoria;

6.3. B Street, Suburb EE, Victoria; and

6.4. L Street, Town MM, Victoria (collectively referred to as the Properties) on the market for sale (the sales).

7. The Properties be sold on such terms and conditions as may be agreed between the parties in writing and in the absence of such agreement:

7.1. On a 60 day settlement;

7.2 With a reserve price to be agreed between the parties in writing and failing agreement as nominated by the selling agent;

7.3. With an agreed selling agent appointed on or before 15 August 2018 and in the absence of agreement, by the date as nominated by the then president of the REIV with the costs of seeking such nomination to be borne equally between the parties; and

7.4. With a marketing campaign as agreed between the parties, and in the absence of such agreement, as recommended by the selling agent.

8. The proceeds of sale of the Properties shall be distributed at settlement of the sale as follows:

8.1. First, to pay all costs, commissions and expenses of the sale;

8.2. Secondly, to pay all agreed costs to prepare the properties for sale including maintenance, gardening, house cleaning and staging;

8.3. Thirdly, to discharge all mortgages, including the Line of Credit, encumbering the properties;

8.4. Fourthly, such sum as to be agreed between the parties to be held on trust by the Wife's solicitors, Coote Family Lawyers, to meet the Capital Gains Tax arising from the sale of the properties, and failing agreement, the parties jointly appoint, at their joint expense, an accountant to provide an estimate of the likely Capital Gains Tax payable on the sale of the properties and such sum be held on trust to meet the parties Capital Gains Tax.

8.5. The balance then remaining to be divided to effect an overall distribution of the net asset (excluding superannuation) of 50% to the Wife and 50% to the Husband.

9. The net assets referred in paragraph 8.5 shall be the sum of the figures in paragraphs 3 and 5 hereof together with the net proceeds of sale of the Properties.

10. The parties have liberty to apply to the Court with respect to the sale of the Properties.

11. Pending the sale of the Properties:

11.1. The Husband have the sole right to occupy the Suburb C property;

11.2. The Husband pay all mortgage repayments, rates and taxes for the properties as and when they fall due;

11.3. The parties hold their respective interest in the properties on trust pursuant to these orders; and

11.4. Neither party encumber the properties without the consent of the other party in writing.

Tax Returns

12. On or before 30 July 2020, the parties complete and lodge their respective Individual Tax Returns for the financial year ending 30 June 2020 to assess their respective Capital Gains Tax liability, with each of those liabilities to be paid from the funds held on trust pursuant to paragraph 8.4 hereof.

13. In the event there is a surplus of funds after discharging the parties respective Capital Gains Tax liability, the funds be divided in the proportions of 50% to the Wife and 50% to the Husband.

Superannuation

14. Having been afforded procedural fairness in relation to the making of these orders, paragraphs 14 to 18 of these Orders are binding upon the Trustee of JJ Superannuation Pty Ltd ("the Fund") ("the Trustee").

15. In accordance with section 90XT(4) of the Family Law Act 1975 the base amount to be allocated to the Wife out of the interest of the Husband in the Fund is $1,043,454 ("the base amount").

16. In accordance with s 90XT(1)(a) of the Family Law Act 1975:

16.1. The Wife is entitled to be paid from the Husband's interest in the Fund, using the base amount, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

16.2. The Husband's entitlement in the Fund is correspondingly reduced.

17. Paragraph 15 has effect from the operative time and the operative time is four business days from the date of service of a sealed copy of these Orders on the Trustee.

18. The Trustee shall do all such acts and things and sign all such documents as may be necessary to:

18.1. Calculate, in accordance with the requirements of the Family Law Act 1975, the entitlement created in paragraph 16 of these Orders; and

18.2. Pay the entitlements whenever a splittable payment becomes payable from the Husband's interest.

19. After service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 ("the SIS Regulations"), the Husband shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the Wife's request in accordance with the SIS Regulations, for the rollover or transfer of the non-member spouse interest to a complying superannuation fund of the Wife's choosing in accordance with the SIS Regulations.

20. Unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent Orders:

20.1. each party be solely entitled to the exclusion of the other to all property (including choses-in-action) owned by or in the possession of such party as at the date of these Orders;

20.2. each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;

20.3. monies standing to the credit of the parties in any joint bank account are to become the property of the Wife and each of the parties shall do all acts and things and sign all documents necessary to transfer the funds in such accounts to the Wife and thereafter close any joint account/s;

20.4. insurance policies remain the sole property of the owner named thereon;

20.5. any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

AND THE COURT NOTES THAT

A. Pursuant to section 81 Family Law Act 1975, The parties intend these orders shall as far as practicable finally determine the financial relationships between them and avoid further proceedings.

ANNEXURE TWO

1. The Husband relinquish any interest in the real property at L Street, Town MM, Victoria to the Wife.

2. The Husband transfer his interest in the Vehicle 2 registration number … to the Wife.

3. Within 6 months of the date of final orders, the real property at P Street, Suburb C Victoria be sold and the net proceeds of that sale be divided as between the Husband and Wife in the proportions that this Court finds to be just and equitable given paragraphs 1 and 2 above and 4 below.

4. The Husband cause the trustee of the Husband's self-managed superannuation fund to transfer to the Wife's superannuation fund that proportion of the Husband's fund that this Court finds to be just and equitable have regard to the total value of the superannuation held by the parties and their respective contribution to their fund.

5. Such further or other orders that this Court considers appropriate.