Hogan & Hogan
[2008] FamCA 41
•5 February 2008
FAMILY COURT OF AUSTRALIA
| HOGAN & HOGAN | [2008] FamCA 41 |
| FAMILY LAW – PROPERTY SETTLEMENT – significant contributions by husband’s parents during marriage through loans and distributions from family trust – contributions otherwise equal – contribution of parties assessed 72.5%/27.5% in favour of husband due to his parents’ contributions – 25% adjustment in wife’s favour due to s 75(2) factors – assets divided 52.5%/47.5% in favour of wife – whether just and equitable – wife seeks to retain former matrimonial home – whether practicable for wife to retain home – wife required to pay husband in excess of $450,000 if she retains home – clear difference in financial positions of parties – no basis for making adjustment – wife to be given opportunity to retain home – property to be sold in default. FAMILY LAW – SPOUSAL MAINTENANCE – parties agree wife entitled to spousal maintenance – consideration of length of time appropriate for husband to pay spousal maintenance – wife currently studying – whether husband should only pay spousal maintenance until wife obtains Honours Degree or continue to allow wife to commence PhD – appropriate rate of spousal maintenance if to continue – consideration of scholarship money wife to receive – Order: husband to pay spousal maintenance until 30 June 2009 to allow wife to commence PhD – amount of spousal maintenance to be reduced on receipt of scholarship by wife. |
| Family Law Act 1975 (Cth) ss 72, 74, 75 & 79 |
| Pierce and Pierce (1999) FLC 92-844 Waters and Jurek (1995) FLC 92-635 |
| APPLICANT: | Mr Hogan |
| RESPONDENT: | Mrs Hogan |
| FILE NUMBER: | ADF | 2239 | of | 2003 |
| DATE DELIVERED: | 5 February 2008 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 26-28 November 2007, 25 January 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Berman |
| SOLICITOR FOR THE APPLICANT: | Howe Martin & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Holland |
| SOLICITOR FOR THE RESPONDENT: | Norman Waterhouse |
Orders
That within six [6] weeks of the date of this order the husband do transfer to the wife all of his right, title and interest in the parties’ former matrimonial home situated at and known as …K and being the whole of the land comprised and described in certificate of title register book volume ….
That contemporaneously with the said transfer referred to in paragraph (1) hereof:
(a)The wife pay to the husband the sum of FOUR HUNDRED AND FIFTY-FOUR THOUSAND NINE HUNDRED AND FOURTY-SEVEN DOLLARS [$454,947.00];
(b)The husband discharge in full mortgage no. … to the Commonwealth Bank and any mortgage to the husband’s mother registered on the title to the said property;
That forthwith the wife:
(a)Resign as a director of S Nominees Pty Ltd and transfer to the husband or his nominee all of her shares therein;
(b)Assign to the husband any credit loan account that she may have in S Nominees Pty Ltd or the S Trust;
(c)Transfer to the husband her interest in the jointly owned AMP shares;
(d)Transfer to the husband her interest in the Volvo motor vehicle.
That the parties otherwise retain as their sole property absolutely free of any claim, demand, interest, right or entitlement of the other of them:
(a)All other items of personal property currently in their possession or control;
(b)Their respective entitlements to superannuation.
That the husband indemnify the wife against:
(a)The payment of all debts and liabilities of any nature whatsoever of his professional practice, S Nominees Pty Ltd, the S Trust, C Pty Ltd, the C Trust, or arising from the operation of any such business, company or trust, and including in particular any credit loan account of M Hogan in any of the said entitites;
(b)The payment of any debit loan account of the wife in S Nominees Pty Ltd and/or the S Trust;
(c)The payment of any loan to the husband or to the parties from the husband’s mother or the husband’s late father;
(d)The repayment of any loan or lease liability in relation to the said Volvo motor vehicle;
(e)The repayment of the loan from the Commonwealth Bank secured by the said mortgage registered on the title to the said property at K.
That in default of payment of the said sum as prescribed in paragraph (2)(a) hereof the said property at K be sold on such terms and conditions as the parties may agree and in default of agreement as determined by this Honourable Court, and from the net proceeds of sale the husband receive such sum as shall then be outstanding pursuant to paragraph (2)(a) hereof together with interest thereon calculated at the rate fixed by the Family Law Rules, and the wife receive the balance.
That the parties do all acts and deeds and sign all such documents as are necessary to give full force and effect to the terms of this order provided that if either the husband or the wife shall refuse or neglect to execute a document necessary to give such force and effect to this order within seven [7] days after the same shall have been tendered to him or her for that purpose then and in such case a Registrar or Deputy Registrar of the Family Court of Australia upon proof of such refusal or neglect is hereby appointed to execute and if in his or her opinion it shall be necessary so to do to settle the same and do all such acts, deeds and things as shall be necessary to give full force and effect thereto, and shall execute the same accordingly.
That the husband do pay to the wife spousal maintenance in the sum of EIGHT HUNDRED DOLLARS [$800.00] per week from the date hereof until 13 July 2008, and thereafter until 30 June 2009 in the sum of THREE HUNDRED DOLLARS [$300.00] per week.
That each party have liberty to apply as to consequential orders as to property settlement.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Strickland delivered this day will for all publication and reporting purposes be referred to as Hogan and Hogan.
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADF 2239 of 2003
| Mr Hogan |
Applicant
And
| Mrs Hogan |
Respondent
REASONS FOR JUDGMENT
Factual background
I have before me for determination competing applications for property settlement and spousal maintenance. The parties have previously resolved the issues relating to the care of their children. However, apart from where the children live I cannot see that there have been final orders made about these issues. I raised this matter with counsel on 25 January 2008 and I was informed that consent minutes of order finalising all children’s issues will be presented to the Court when I deliver this judgment.
On 23 September 2003 the wife filed an Amended Form 3 Application seeking final orders as to the children’s issues and with respect to property settlement. At the time of trial though the wife sought the following orders:
2.1That on or before 10 January 2008 the husband do transfer to the wife all of his right, title and interest in the parties’ former matrimonial home situated at and known as [K] being the whole of the land comprised and described as certificate of Title Register Book [….]
2.2That contemporaneously with the transfer referred to in paragraph 2.1 hereof the husband do:-
2.2.1Pay to the wife a sum of $……..
2.2.2Arrange for the discharge in full of Mortgage numbered […] of the Commonwealth Bank and any mortgage to the husband’s mother over the said property.
2.3That the wife do resign from her Directorship in [S] Nominees Pty Ltd and transfer to the husband all of her shares therein and any moneys owed to her by the [S] Trust together with her interest in the AMP shares.
2.4That the parties otherwise retain as their sole property all other items of personal property presently in their possession.
2.5That each party hereinafter be responsible for their own debts and indemnify and do keep indemnified the other with regard thereto.
2.6That the husband do pay to the wife from the date hereof spousal maintenance in the sum of $800.00 per week until 30 June 2009.
2.7That the parties do all acts and deeds and sign all such documents as are necessary to give full force and effect of the terms of this order provided that if either the husband or wife shall refuse or neglect to execute a document within seven days after the same shall have been tendered to him or her for the purpose of section then and in such event a Registrar or Deputy Registrar of the Family Court of Australia upon proof of such refusal and neglect is hereby appointed to execute and if in his or her opinion it shall be necessary so to do and settle the same and do all such acts, deeds and things as shall be necessary to give the full force and effect thereto and shall execute the same accordingly and the party in default shall pay the other party’s costs as agreed or taxed.
The husband filed a Form 3A Response to Initiating Application on 18 September 2003 seeking final parenting orders and the following property orders:
3.1That in full and final settlement of any claim which either party may have for settlement of property and alteration of interest in property, the husband do pay to the wife such sum as this Honourable Court deems fit.
3.2That the wife’s application for lump sum or periodic spousal maintenance be dismissed.
3.3That the wife do pay the husband’s costs of and incidental to these proceedings.
3.4Such further of other orders as this Honourable Court deems fit.
At the time of trial the husband did not further specify the orders that he sought beyond indicating that the wife could retain the following assets:
4.1The former matrimonial home at K.
4.2The wife’s furniture and household effects apart from the items of personalty that the husband seeks.
4.3The wife’s jewellery.
4.4The wife’s savings at separation.
4.5The income tax refund received by the wife.
4.6The wife’s AMP superannuation entitlement.
and the husband would take the AMP shares and the Volvo motor vehicle.
On the husband’s case that would then require the wife to pay to the husband an unspecified amount of money.In relation to the issue of spousal mainentance, the husband now proposes that the current order continue until the wife completes her 500 hours placement on 31 May 2008. However, if the payment of maintenance is to continue until 30 June 2009, the husband proposes that the amount be reduced to allow for the wife receiving a scholarship of $26,000.00 per annum tax free to enable her to undertake her PhD.
Factual Background
The husband was born in March 1960 and is now aged 47 years.
The wife was born in December 1964 and is now aged 43 years.
The husband married his first wife in 1981. They separated in 1982 and in October 1984 a decree nisi of dissolution of the marriage was granted.
In 1982 the Hogan Family Trust No 2 was established by the husband’s parents.
The husband graduated from University in 1983.
The parties met in March 1984. At the time the wife was a full time student studying for a Bachelors Degree. The husband was working in a practice at North Adelaide.
On 19 December 1983 the husband’s father lent the husband $200,000.00, repayable on demand.
In late 1983 the husband paid $25,000.00 to buy into the practice at North Adelaide.
In July 1984 the husband purchased an interest in a practice at G for $125,000.00. This included equipment, goodwill and a one third interest in the real estate.
The parties married in January 1985. Following their marriage the parties lived in rental accommodation in P.
In March 1985 the parties purchased a property in P in their joint names. According to the husband, the purchase price was $132,339.86, financed by way of a loan from the husband’s father of $100,000.00 and a further loan of $65,000.00 obtained from the Westpac Bank.
In 1985 the husband incorporated S Nominees Pty Ltd, with the husband and wife as the directors and shareholders. S Nominees Pty Ltd became the trustee of the S Trust, a service trust established for the husband’s practice.
The parties’ first child, a son, M, was born on 4 July 1985 and is now aged 22 years. Due to the pregnancy and birth of this child, the wife did not continue her studies.
In 1986 S Nominees Pty Ltd purchased a building in North Adelaide in an equal partnership with Mr R, a partner in the husband’s practice. The building was to be used as consulting rooms for the practice. According to the wife the purchase price was $336,000.00. The husband’s parents provided a loan of $200,000.00 to S Nominees Pty Ltd to facilitate the purchase. This loan was repaid in June 1993 but the same amount was then lent to the husband again.
In 1987 the parties purchased the former matrimonial home in K from the wife’s parents. According to the husband, the P property was sold for $139,446.00 and the mortgage to the husband’s father was discharged. The former matrimonial home was purchased for $275,522.00.
In 1987 the husband, his brother, and his sister, were appointed directors and shareholders of E Nominees Pty Ltd, trustee of Hogan Family Trust No 2.
In 1989 the parties’ commenced renovations to the former matrimonial home. The husband borrowed $160,000.00 from his father to fund the renovations, and this loan was secured by a registered mortgage and repaid in monthly instalments.
On 1 February 1990 the husband’s father lent the husband $75,000.00 repayable at the rate of $450.00 per month.
The parties’ second child, D, also a son, was born in December 1990 and is now aged 17 years.
In January 1992 the husband, his brother and sister were made directors of E Pty Ltd, an investment company established by the husband’s parents in 1972.
In 1992 the husband commenced a relationship with his former wife. The relationship lasted for approximately 8 months. The parties separated for approximately 12 months, and the husband left the former matrimonial home. He resided in rental accommodation at W.
In 1996 the husband’s business partner sold his interest in the G practice. The parties purchased the G property and also the goodwill from this partner. According to the husband, $282,000.00 was borrowed from the Commonwealth Bank to purchase the property and another loan of $68,000.00 was obtained to purchase the goodwill. $227,000.00 was secured against the G property and the remainder against the former matrimonial home. The G property was leased back to B Investments Pty Ltd.
In 1997 the husband sold his interest in the North Adelaide property, but continued to conduct his practice at the premises as a tenant. The husband says at this time the wife commenced working in the practice to assist him on a part time basis. According to the wife though she was involved in the North Adelaide practice doing book work and later assisting in reception on a part time basis from approximately 1986 until August 2002.
In March 1997 the parties’ daughter, A, was born and is now aged 10 years.
In 1998 the husband moved from the North Adelaide premises and conducted his practice from shared rooms. At this time the parties were again renovating the former matrimonial home and the husband borrowed $115,000.00 from the Commonwealth Bank for this purpose.
On 3 December 1998 the husband’s parents signed Deeds forgiving the two loans of $200,000.00 each made to the husband.
The parties’ youngest child, Y, their third son, was born on 14 May 1999 and is now aged 8 years.
In 1999 the husband relocated his practice to new premises in North Adelaide and took out a loan with M Pty Ltd to purchase equipment and to fit out the new premises.
The husband says that in 2000 he sold his G practice, the proceeds of sale being applied towards retirement of most of the parties’ loans. According to the wife, in 2001 the husband sold his interest in the B Unit Trust to the other professionals in the practice, but the parties continued to own the G property until its sale in February 2003.
The husband’s father died in May 2002. In his will the husband’s father forgave the outstanding balance of the $75,000.00 loan provided to the husband.
The parties separated on either 11 or 12 June 2003. The husband left the former matrimonial home and moved to rental accommodation.
On 23 August 2003 the wife filed a Form 3 Application seeking parenting orders, property settlement and spousal maintenance.
On 16 September 2003 the wife made an application for child support.
On 18 September 2003 the husband filed a Form 3A Response.
On 19 September 2003 Judicial Registrar Forbes made a final order by consent that the children D, A and Y reside with the wife. The Judicial Registrar also made a number of interim orders by consent by way of injunction and he made an order by way of urgent periodic spousal maintenance during the adjournment that the husband pay the wife $800.00 per week, make all mortgage and other payments with respect to the former matrimonial home, and maintain the health cover of the wife and children.
On 23 September 2003 the wife filed an Amended Form 3 Application.
The parties attempted a reconciliation between December 2003 and May 2004.
In early 2004 the husband sold the station wagon used by the wife and purchased a new Volvo motor vehicle for her.
In February 2004 the wife commenced a degree at the University of South Australia.
In June 2004 the husband’s mother ceased all distributions to the husband from the income of the Hogan Family Trust No. 2.
On 25 June 2004 the parties’ son, M, was appointed as a director of S Nominees Pty Ltd. The wife states she was not present at the meeting confirming the appointment of M and she had no knowledge of the appointment.
On 4 September 2004 the husband’s mother commenced to advance loans to the husband of various amounts. By 2007 the total amount lent was $312,928.00, and this is repayable on demand.
On 3 December 2004 the decree nisi of dissolution of the parties’ marriage became absolute.
In December 2004 the husband’s mother purchased a home in K and the husband commenced to reside at the property paying a commercial rent.
On 26 May 2005 the husband incorporated C Pty Ltd. The husband is the sole director and shareholder of this company.
In July 2005 the S Trust ceased operating and the C Trust, with C Pty Ltd as trustee, commenced to operate as the service trust to the husband’s practice.
On 22 August 2005 Senior Registrar Kelly made orders by consent that the husband pay the wife interim spousal maintenance of $800.00 per week, pay all mortgage installments in relation to the former matrimonial home and maintain the family’s health cover.
On 12 October 2005 Murray J made orders by consent that the husband be restrained from exercising his power of appointment pursuant to the S Trust Deed to replace the trustee of the trust and from terminating any service agreement between the trust and husband, and requiring that the husband give notice of all proposed meetings of S Nominees Pty Ltd.
The current circumstances of the parties
The wife
The wife lives in the former matrimonial home at K with the children D, A and Y. At the time of the trial the wife’s partner of six months was also living there, but the wife said that she had or she was about to end their relationship.
The wife is completing the final year of an Honour’s Degree at the University of South Australia. She has been awarded a scholarship to enable her to undertake her PhD but first she needs to complete a further 400 hours of placement in her field. She intends to complete that by 31 May 2008 and then commence her PhD on 14 July 2008. It will take her three years to complete this doctorate and the scholarship will provide her with $26,000.00 per year tax free and she will be able to work for two days each week at the university. She does not intend to seek employment after she completes her placement.
The wife’s income comprises spousal maintenance of $800.00 per week less the lease repayments of $1,175.00 per month on the Volvo that she drives, child support of $396.00 per week and a family tax benefit of $101.00 per week.
The husband pays the mortgage repayments in relation to the former matrimonial home. He also covers the children for health care, he pays their school fees, he pays for their school books, and he pays the fees for some of their extra curricula activities.
The children all attend B School with D about to start year 12, A Year 6 and Y Year 3. As a result of the husband paying the children’s school fees his child support payment is reduced by 30%.
A has suffered from an anxiety disorder, and since January 2007 she has been attending a psychiatrist, Dr L. However, she has improved and she has not seen Dr L for two months.
The husband
The husband lives in a house property at K that he rents from his mother. He pays $360.00 per week.
The husband continues to practice from rooms in North Adelaide. The C Trust acts as a service trust to the practice. The trustee is C Pty Ltd of which the husband is the sole director and shareholder.
The adult child M lives with the husband and is employed by him as an assistant. M also has an interest in the husband’s profession. He will be starting a two year course an a related field in Sydney this year.
The three infant children spend time with the husband on alternate weekends from Friday to Sunday and then for dinner every second Monday. They also spend some time with the husband during school holidays.
The husband is a director and shareholder of E Pty Ltd and a shareholder of M Pty Ltd. These are companies which are controlled and operated by his mother and his aunt respectively. He receives dividends of $15,000.00 per annum from E Pty Ltd but he receives no payment from M Pty Ltd.
The issues in dispute
Property settlement
By the conclusion of the trial the only issue about the assets and liabilities of the parties was the value of the husband’s shareholding in M Pty Ltd. The wife says it is $112,000.00 and the husband says it is $33,000.00.
The wife also sought to include in the asset pool the husband’s loan account in M Pty Ltd of $21,117.00. The husband said nothing about this, and I propose to include it given that it is clearly an asset of his.
The parties were in agreement that their respective superannuation entitlements with AMP should be included in the one pool with all other items of property.
In relation to the respective contributions of the parties, although they had dealt with them in minute detail in their affidavits of evidence in chief, at trial it was agreed that apart from the contributions made by the husband’s parents the respective contributions of the parties were equal. Thus I do not need to address anything specifically other than the husband’s parent’s contributions. These comprise substantial loans made during the marriage some of which were then forgiven, as well as distributions to the husband from the Hogan Family Trust No. 2 and dividends paid to the husband by E Pty Ltd.
The husband says that the contributions should be assessed at 75%/25% in his favour but the wife says that it should be 60%/40%.
In relation to the relevant Section 75(2) factors the husband says that there should be a 15% adjustment in favour of the wife but the wife says that it should be 35%. The parties are in effect agreed as to which factors are relevant, but it is a question of what weight is given to each relevant factor.
The husband says that the wife should exercise her earning capacity as soon as she graduates, and that should not be delayed until she completes her PhD if she undertakes the same.
The husband also says in effect that the wife’s current partner should be making a proper contribution to the household expenses. The wife says though that their relationship either has or is about to end. The husband says that that is not the case.
The wife asserts that once these proceedings are concluded the husband’s mother will resume making distributions to the husband from the income of the Hogan Family Trust No. 2. These distributions ceased upon separation. The husband says that it is up to his mother if and when distributions will resume, and her evidence is that she has not decided what she will do.
There was also an issue as to whether the wife should retain the former matrimonial home as part of her entitlement to property settlement or whether it should be sold with the wife purchasing a smaller house property from her share of the proceeds and investing the balance. The wife wants to retain the home despite her inability to date to maintain the same, to attend to necessary repairs, and to meet the expenses associated with the property.
In the end result the husband is not insisting that the house property be sold, but he makes the point that the wife’s desire to retain the home should not be permitted to prejudice his position. In other words, if the wife is to retain the home then the fact of her financial difficulties in maintaining, repairing and meeting expenses should not be used to increase her entitlement to property settlement.
Finally, there is a dispute as to who should have certain items of personalty currently in the former matrimonial home. The husband wants the following items:
76.1The desk chair in the study.
76.2The chest of drawers in the bedroom.
76.3The dining table and 12 chairs.
76.4A couch and tub chair in the sitting room.
76.5An antique French provincial standard lamp.
76.6White 3-seater couch.
The wife wants to retain these items for herself, although she said the husband could have the white 3-seater couch.
Spousal maintenance
The issues here are firstly whether the husband should continue to pay spousal maintenance beyond the time when the wife is able to obtain employment. The husband says that he should be only required to pay spousal maintenance until 31 May 2008 when the wife completes her placement. The wife says that maintenance should continue until 30 June 2009 to enable her to commence her PhD.
The second issue is that if spousal maintenance is to continue to 30 June 2009, what should the amount be once the wife commences to receive a scholarship. The wife has been awarded a scholarship which will provide her with $26,000.00 tax free per annum. The husband proposes that the spousal maintenance should be reduced by the weekly amount of any scholarship that the wife receives. Although the wife in her cross examination was not prepared to concede this, ultimately in his final address her counsel agreed that that was an appropriate approach.
Finally, although the husband queried the contribution, or rather the lack of contribution to the household expenses by the wife’s current partner, in the end result he did not ask that that be taken into account in assessing the appropriate amount to be paid for spousal maintenance once the wife was receiving a scholarship. To repeat though the wife’s case is that her partner will not be living at her home for very much longer.
The principles to be applied
Property settlement
The provisions of Section 79 of the Family Law Act define the court's power and obligations in determining applications for property settlement. The court has a discretion to make orders altering the interests of parties in property, provided the court is satisfied that such orders are appropriate, just and equitable.
The court is obliged by the provisions of Section 79(4) of the Family Law Act1975 to take into account the following matters:
81.1The financial and non-financial contributions made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them (sub-paragraph (a) and (b)).
81.2The contribution made by a party to the marriage to the welfare of the family, including any contribution made in the capacity of homemaker or parent (sub-paragraph (c)).
81.3The effect of any proposed order upon the earning capacity of either party to the marriage (sub-paragraph (d)).
81.4The matters referred to in Section 75(2) so far as they are relevant (sub-paragraph (e)).
81.5Any other order made under the Act affecting a party to a marriage or a child of the marriage (sub-paragraph (f)).
81.6Any child support payable (sub-paragraph (g)).
Accordingly, in assessing the entitlement of each of the parties for property settlement, there is both a retrospective element relating to the contributions of each of the parties and a prospective element relating to matters referred to in Section 75(2).
According to guidelines established through a series of leading decisions, the court should determine the following matters on the evidence, that is:
83.1Firstly, the court must determine the assets, liabilities and financial resources of the parties to the marriage.
83.2Secondly, the court must consider all relevant contributions of each of the parties, and, where possible, the court should assign an entitlement of each of the parties arising as a result of those contributions.
83.3Thirdly, the court should then consider the prospective components of the claims of each of the parties arising as a result of the provisions of Section 75(2). The court should then identify what alteration, if any, should be made to the entitlement of each of the parties earlier assessed on account of contributions having regard to the relevant Section 75(2) factors.
83.4Fourthly, the court takes a step back and considers whether the proposed orders are just and equitable.
Spousal maintenance
The relevant sections of the Family Law Act 1975 in relation to this issue are as follows:
Section 72
(1)A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Section 74
(1)In proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part.
Section 75
(1)In exercising jurisdiction under section 74, the court shall take into account only the matters referred to in subsection (2).
(2)The matters to be so taken into account are:
(a)the age and state of health of each of the parties;
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain;
(e)the responsibilities of either party to support any other person;
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
(l)the need to protect a party who wishes to continue that party’s role as a parent;
(m)if either party is cohabiting with another person—the financial circumstances relating to the cohabitation;
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party;
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties.
(3)In exercising its jurisdiction under section 74, a court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.
(4)In this section:
party means a party to the marriage concerned.
The evidence
The wife was represented by Mr Holland. The wife gave evidence and was cross examined. She relied on her affidavits filed on 9 March 2006 and 2 May 2007 and her financial statements filed on 9 March 2006 and 28 November 2007.
The husband was represented by Mr Berman. The husband gave evidence and was cross examined. He relied on his affidavits filed on 9 March 2006 and 2 May 2007, and his financial statement filed on 9 March 2006.
The husband called two witnesses, namely, his mother, who filed an affidavit on 27 April 2007 and his aunt who also filed an affidavit on 27 April 2007. They both gave evidence and were cross examined.
One of the single expert witnesses appointed in this case, namely Mr McN, accountant, was required for cross examination. Mr McN provided three reports dated respectively 15 March 2006, 19 April 2007, and 5 November 2007. In the first and the third reports Mr McN provided his opinion of the value of the husband’s practice. In the second report he provided his opinion of the value of the husband’s shares in E Pty Ltd and M Pty Ltd.
The wife gave her evidence reasonably well, and in general terms I found her to be a reliable and credible witness. However, it was plain that she did not like the husband and that coloured her evidence on occasion. There were also some instances of the wife not telling the husband about issues in relation to the children and not telling either the husband or this Court until the hearing of her own intentions. For example, she did not tell the husband that she was taking A to a psychiatrist, and she did not reveal her plans to undertake a PhD until the hearing.
The one area where I do not believe the wife’s evidence is in relation to her partner. They met in June 2006, and at the time of the hearing they had been living together for six months. However, the wife’s evidence was that she had told him to leave, which he did, but he then returned after one night, and because of the children’s attachment to him and the need for her to finalise her thesis, she put off telling him to leave again. She said though that she would be doing this in the very near future. However, I do not accept this, and I find that the wife intends to continue her relationship with her partner and they will remain living together. She was evasive about her discussions with him and I simply do not accept that she wants him to leave.
As with the wife, the husband gave his evidence reasonably well, and in general terms I found him to be a reliable and credible witness. However, he too did not much like the wife, and he was clearly angry and bitter following the separation. He unjustifiably terminated the wife’s ability to use the husband’s credit card and froze the joint cheque account. He also removed her as a signatory to the business cheque account, stopped paying her money from his account, reduced the limit on the David Jones’ Account and subsequently removed her as a card holder, and he closed the bankcard that the wife had the use of during the marriage. This left the wife and the children without any income and having to use what money the wife had in the bank.
In June 2004 the husband also appointed the child M as a Director of S Nominees Pty Ltd, not only without the knowledge of the wife but also at a meeting where it was falsely stated that the wife was present.
The husband then, again without the knowledge of the wife, arranged for the income of the S Trust to be allocated between M and himself.
In May 2005, the husband also incorporated another company, C Pty Ltd without telling the wife, and then in breach of orders made on 12 October 2005 the husband operated his practice through this company in lieu of S Nominees Pty Ltd.
The husband’s mother was principally cross examined as to her reasons for ceasing making distributions to the husband through the Hogan Family Trust No. 2 after the separation, and as to when she would resume making these distributions. She was candid in saying that she ceased the distributions to prevent the wife from benefiting from the trust, but I do not accept her evidence that she has not considered when she will resume making her distributions. She clearly dislikes the wife and thus it is understandable that she does not want her to benefit from the trust, but once the proceedings are finalised that reasoning cannot hold. She attempted to suggest that the husband had squandered money as well and that he would have to show “fiscal responsibility” before she would resume distributions, but I find this evidence was nonsensical and I do not accept it. I find that she will resume making distributions to the husband once the final orders are made in these proceedings.
The husband’s aunt was briefly cross examined. The only relevant point to come out of her evidence is that she says that currently she has no intention of changing how dividends are declared on the shares in M Pty Ltd.
Mr McN was primarily cross examined as to his opinion of the value of the husband’s shares in M Pty Ltd. In his report dated 19 April 2007 he concluded that the value was $33,000.00. However, in his oral evidence he conceded that if the Court found that his aunt will not change her current approach to the declaration of dividends, and in particular that she will not cause all or a substantial proportion of the profits of the company to be paid to her by way of dividend then the value of the husband’s shares would be $112,000.00.
The wife submits that I can make the finding referred to, but I do not agree. Nothing in the evidence of the husband’s aunt changes the critical factors for Mr McN in concluding that the value is $33,000.00. In other words, there has never been any dividends paid to anyone other than the aunt, she can make whatever decisions she wants, and in particular she can cause all the profits of the company to be paid to her by way of dividends, and in that event the husband’s shares would be of no value and that risk remains. The fact is that the lower end of the scale is not $33,000.00, but nil. Thus I find that the appropriate value of the shares is $33,000.00.
The assets, liabilities and financial resources of the parties
At the commencement of cohabitation – 13 January 1985
The evidence as to what each party had at this time was sketchy to say the least, but doing the best that I can, the husband had an interest in a professional practice at North Adelaide for which he had paid $25,000.00, and an interest in a practice at G as well as a one third share in the ownership of the property from where the practice operated, all of which he purchased for $125,000.00. The husband had borrowed money from the Westpac Bank and he had received a substantial loan of $200,000.00 from his father. There is no further detail of these assets and liabilities though. In addition, the husband had a Nissan car that he had purchased for $20,000.00 and some furniture.
The wife herself says that at this time she had no property with the exception of some personal effects.
At the date of separation – 11 June 2003
The assets and liabilities were as follows:
Assets
The former matrimonial home at K N/KThe furniture and household effects N/K
1989 station wagon N/K
BMW motor vehicle N/K
Honda motor vehicle N/K
The wife’s jewellery N/K
The wife’s savings $2,128.00
The husband’s savings $2,212.00
Joint AMP shares N/K
The wife’s AMP superannuation entitlement N/K
The husband’s AMP superannuation entitlement N/K
The husband’s professional practice N/K
The husband’s shares in E Pty Ltd N/K
The husband’s shares in M Pty Ltd N/K
The husband’s loan account in M Pty Ltd $21,117.00Liabilities
Mortgage to Commonwealth Bank N/KMortgage to the father’s mother N/K
Lease liabilities on motor vehicles N/K
Credit and store card accounts N/KIn relation to these assets and liabilities I make the following comments:
102.1Following the separation the wife remained living in the former matrimonial home with the children and the husband resided in rented accommodation. After approximately one week the eldest child M went to live with the husband and he has remained there ever since. The husband continued to pay the mortgage and the rates and taxes in relation to the former matrimonial home.
102.2The husband retained the BMW motor vehicle and the Honda motor vehicle, and the wife retained the station wagon. All of these vehicles were subsequently sold.
102.3The wife retained all of the furniture and household effects in the former matrimonial home at K.
At the date of the hearing
The relevant assets and liabilities of the parties are as follows:
Assets
The former matrimonial home at K (agreed) $1,525,000.00The wife’s furniture and household effects (agreed) $34,702.00
The wife’s jewellery (agreed) $10,000.00
The wife’s AMP superannuation entitlement (agreed) $11,361.00
The wife’s bank account at separation (agreed) $2,128.00
The wife’s income tax refund (agreed) $36,215.00
The husband’s furniture and household effects (agreed) $10,000.00
The husband’s Land Rover motor vehicle (agreed - net value) $6,000.00
The husband’s AMP superannuation entitlements (agreed) $134,139.00
The husband’s bank account at separation (agreed) $2,212.00
The husband’s shares in E Pty Ltd (agreed) $341,000.00
The husband’s shares in M Pty Ltd $33,000.00
The husband’s practice (agreed – net value) $153,154.00
Joint AMP shares (agreed) $1,584.00
Net proceeds of sale of Honda motor vehicle
obtained by husband (agreed) $6,000.00
The husband’s loan account in M Pty Ltd $21,117.00The gross value of the Volvo motor vehicle (agreed) $26,000.00
TOTAL $2,353,612.00
Liabilities
Mortgage to Commonwealth Bank (agreed) $33,198.00
Mortgage to the husband’s mother (agreed) $53,159.00
Volvo finance (agreed) $43,237.00Loss on sale of BMW motor vehicle (agreed) $6,000.00
TOTAL $135,594.00NET $2,218,018.00
In relation to these assets and liabilities I make the following comments:
104.1The husband operates his professional practice from leased premises in North Adelaide. Until July 2005 the S Trust acted as service trust to the practice. The trustee was S Nominees Pty Ltd. The husband, the wife and subsequently M were the directors of this company and the husband and the wife were the shareholders. In July 2005 the husband incorporated C Pty Ltd as trustee of the C Trust, and that trust is now the service trust to the practice. The husband is the sole director and shareholder of C Pty Ltd.
The wife and M have credit loan accounts in the S Trust, and the husband and W have credit loan accounts in the C Trust. The agreed value of the husband’s practice does not include these loans, and it is agreed that the husband will indemnify the wife against payment of the loans due to M.
104.2The husband is a director of and shareholder in E Pty Ltd which is an investment company set up in 1972 by the husband’s parents. The husband receives dividends from this company each year and since 2002 the amount has been $15,000.00 per annum.
104.3The husband is a shareholder in M Pty Ltd which is also an investment company set up in 1972 by the husband’s aunt. The husband has never received any dividends from this company although he has a credit loan account of $21,117.00.
104.4The husband is a director and shareholder of E Nominees Pty Ltd which is the trustee of the Hogan Family Trust No. 2. However, there is no question that that trust is controlled by the husband’s mother and that she determines who receives distributions and who does not.
104.5Since the separation the husband’s mother has advanced further loans to the husband totalling nearly $313,000.00. These are not advances on distributions through the Hogan Family Trust No. 2, and they are loans repayable on demand. They have been used by the husband for the purposes of his practice and to pay taxation liabilities. However, it is agreed that these loans should not be included in the asset pool of the parties.
Similarly, since the separation the wife has borrowed $15,000.00 from a friend, obtained a loan through Bank SA to pay off her credit cards and received $10,000.00 from her parents to assist with the running costs of the former matrimonial home. However, the wife’s Master Card debt is again up to $10,667.00, she owes $780.00 on her David Jones’ account, and council rates, water rates and utilities are all outstanding. It is agreed though that these liabilities are not to be included in the asset pool of the parties, just as with their respective legal fees.
104.6The wife wishes to retain the former matrimonial home despite her inability to date to attend to the maintenance and repair of the same and to meet all expenses in relation to the property. The husband suggests that the house property should be sold, with the wife purchasing a smaller property with her share of the proceeds, and then paying off her debts and investing any balance. I will refer to this again later in these reasons.
104.7It is agreed that the husband will take the Volvo motor vehicle and meet the lease repayments in relation thereto.
104.8It is agreed that the wife will transfer to the husband her interest in the jointly owned AMP shares.
104.9Although the values of the furniture and household effects of each party are agreed there is still the issue of the items of personalty that the husband seeks. I have set out in paragraph 76 the items in dispute, and I now make the following findings:
104.9.1I accept the wife’s evidence that the desk chair is the only chair in the study and the husband failed to provide any basis for him having the same.
104.9.2I also accept the wife’s evidence as to the chest of drawers in the bedroom, namely that she keeps her clothes there. Again, the husband failed to provide any reason why he should have this item.
104.9.3Similarly, I accept the wife’s evidence that if the dining table and chairs are taken by the husband, the wife will not have a table and chairs. Again, the husband failed to provide any basis for him having these items save and except his bald assertion that the wife has another table and chairs available.
104.9.4I make the same finding and comment in relation to the couch and tub chair.
104.9.5I find the antique French provincial standard was a wedding anniversary gift to the wife from the husband and thus the wife should retain this.
104.9.6With the white 3-seater couch, the wife said that the husband could have it although she would have to replace it. However, the husband did not seem to pursue this in the knowledge that the couch had mildew.
Thus, I find that all of the items sought by the husband should remain with the wife.
Contributions of the parties pursuant to Section 79(4) of the Family Law Act 1975
Both parties agree that apart from the contributions made by the husband’s mother and his later father the respective contributions of the parties should be assessed as equal. On that basis it is then a question of what effect the contributions made by the husband’s mother and late father should have. The husband’s counsel submitted that significant weight should be attached to these contributions given the amounts of money involved and the use that the parties made of them. Indeed the husband’s case is that as a result the percentage should be 75%/25% in the husband’s favour. The wife’s case though is that because of contributions such as her greater non-financial contribution, including the need to give more attention than otherwise to A because of her health issues post-separation, such as her work in the husband’s practice, such as the sacrificing of her career (although that is more a Section 75(2) factor than an aspect of contribution), and in general the respective contributions of the parties themselves to the “accumulation of their substantial assets”, the weight accorded to the contributions of the husband’s mother and his late father should not be any greater than an additional 10%. Now, I find this submission curious given that the wife’s contributions in all respects have already been taken into account in assessing the respective contributions of the parties apart from the contributions of the husband’s mother and his late father. In any event, it is still a matter of weighing up all relevant contributions, and although there is no denying that by their joint enterprise the parties have accumulated assets, I find that significant weight should be given to the contributions made by the husband’s mother and his late father.
The wife’s counsel also submitted that the contributions by the husband’s mother and his late father had been “eroded” by the contributions made by the wife. However, in response to this I need do no more than quote from the Full Court decision in PIERCE and PIERCE (1999) FLC 92-844, at p.85,881:
“28. In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband regard must be had to the use made by the parties of that contribution…”
The contributions made by the husband’s mother and his late father were as follows:
107.1From 1997 to 2004 the distributions from the Hogan Family Trust No. 2 totalled $786,331.00. There were distributions made from 1985 to 1996, but the husband did not have these records.
107.2Between 1985 and 2007 the husband received dividends from E Pty Ltd totalling $227,000.00.
107.3Between 1983 and 2002 substantial loans totalling approximately $735,000.00 were made to the husband and over $400,000.00 in total was subsequently forgiven.
The husband says, and I accept, that all of the funds received by way of trust distribution and dividend were used for the benefit of the family. For example, the money was spent on “general living expenses, the payment of tax, the purchase of household goods and furniture, school fees, holidays and life expenses”. The loans were used to fund the purchase of real estate and the husband’s practice, all of which of course benefited the family.
In addition of course, included in the asset pool was the value of the husband’s interests in E Pty Ltd and M Pty Ltd. None of the assets of these companies originated from or were contributed to by the husband or the wife. The wife’s counsel suggested that the wife made a non-financial contribution to the husband’s interests in these companies, but I cannot see any basis for this suggestion, and I reject it.
In my view, giving appropriate weight to all these contributions results in an overall percentage division of 72.5%/27.5% in favour of the husband.
Section 75(2) of the Family Law Act 1975
I now turn as Section 79(4)(e) of the Act dictates to the individual matters that need to be taken into account pursuant to Section 75(2). The only sub-paragraphs that are relevant are (a), (b), (c), (d), (e), (g), (m) and (na). Although the wife’s counsel submitted that sub-paragraphs (g), (j) and (k) were to be considered, I do not agree. They relate to maintenance and not property settlement.
(a) the age and state of health of each of the parties;
The wife is now 43 years of age and no issue was raised about her current health. The husband is 47 years of age and similarly there was no issue raised about his health.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
According to the wife’s financial statement filed on 28 November 2007 the wife’s weekly income comprises $101.00 by way of family tax benefit, $396.00 by way of child support and spousal maintenance of $800.00 less the repayments for the Volvo motor vehicle of $1,175.00 per month. In addition, she claims that her partner who earns $42,500.00 per year contributes a total of $166.00 per week to her expenses.
According to the husband’s financial statement filed on 9 March 2006 his income totalled $2,841.00 per week comprising dividends of $192.00 and income from his practice of $2,649.00. Although the husband did not update these figures in his evidence he agreed that his income from the practice was increasing. Indeed, according to the profit and loss summary prepared by Mr McN, the husband’s net profit doubled between 2006 and 2007, and the combined net profit of the practice and the service trust was $243,107.00 by the end of June 2007. Further, the independent evidence indicated that the husband was now receiving approximately $288.00 per week by way of dividends from M Pty Ltd.
I have also found that once these proceedings are completed the husband will once again receive distributions of income from the Hogan Family Trust No. 2. Prior to the distributions ceasing at separation they averaged approximately $100,000.00 per year.
To repeat, the wife is completing her final year of an Honours Degree at the University of South Australia, and she will be awarded the degree this year. She will then be able to obtain employment at a salary of approximately $45,000.00 per year. However, she intends to undertake a three year PhD course and she has been awarded a tax free scholarship of $26,000.00 per annum to enable her to do this. If she successfully completes her PhD her earning capacity will increase.
The husband continues to operate his practice at North Adelaide, and he has invested in new plant and equipment with the assistance of his son W. His future earnings are obviously secure.
Both parties clearly have the mental and physical capacity for appropriate gainful employment, but whether the wife completes her PhD or not, there is no doubt that the husband will continue to earn far more than the wife can ever hope to. In addition, the husband will continue to receive substantial dividends and distributions through his family well into the future.
The wife also has the three youngest children living with her, and their needs have to be considered in the context of the wife’s ability to work and earn income. For example, for her to work full time the children will have to be placed in care for at least some of the time.
Thus, there is a significant disparity that needs to be taken into account here, not from the point of view of equating or attempting to equalise the parties’ respective incomes, but from the point of comparing their respective financial positions and what demands they each have to meet.
In relation to the property of the parties, I have set the same out in paragraph 103 above. I repeat though that that schedule does not include all of their current liabilities and I have identified the same in paragraph 104.5 above.
As a result of my findings on contributions, the husband is entitled to more of the net assets than the wife, and this disparity also needs to be taken into account in the same way that I have referred to above.
In relation to financial resources, the wife’s counsel submitted that a relevant resource of the husband’s is the provision of a house for him to live in by his mother. However, although the husband chose the house, and it was then purchased by his mother, the husband pays a commercial rent and there is no evidence to suggest that the house will be his some time in the future. Thus I do not consider that that can be classified as a financial resource of the husband’s.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years:
The three youngest children live with the wife and they have done so since separation. They have spent time with the husband on a regular and frequent basis pursuant to the consent orders made on 19 September 2003.
W of course turned 18 years of age on 12 July 2003, just after separation. Thus, he cannot be a subject of consideration under this factor.
The wife has the primary responsibility for the care and support of the children outside of the time that they are with the husband. The husband though pays child support at the assessed rate, discounted by 30% on the basis that he pays their school fees, and that obviously goes some way to meet the children’s financial needs.
The responsibility that the wife has is still a significant one, and it is not just a matter of attending to their physical and financial needs. There are also the social and moral implications of having to care for and raise three children of different ages at different stages of maturity and with different outlooks and requirements (Collins & Collins (1990) FLC 92-149, at pp.78,043-78,048; Waters & Jurek (1995) FLC 92-635, at pp.82,376-82,378).
D of course is now 17 years of age, but A and Y are still quite young, and there are many years of dependency and guidance to come. A’s recent bout of anxiety is testament to that. This places a significant burden on the wife and that needs to be properly recognised.
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
The wife referred to this factor in her outline of case document but it seems to me that it has no relevance here. The wife submitted that, “The husband will have no difficulty supporting himself or the children of the marriage. The wife it is clear from her financial circumstances will have considerable difficulty.” However, that is not what this sub-paragraph is about. In my view it is an oft misunderstood sub-paragraph because the meaning of the same is not readily apparent. In most cases, and this is one of them, it can safely be ignored. There is no specific evidence of the relevant commitments of each of the parties.
(e) the responsibilities of either party to support any other person;
Neither party made any submission in relation to this factor. Of course, M lives with his father but he is working and can be considered independent and self-supporting.
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
This is an important factor. The husband has and will continue to have the financial ability to maintain a high standard of living, but the wife is not in that fortunate position. Certainly she will be able to enjoy a comfortable standard of living with the income and the property she will have, but whether it will be reasonable in all the circumstances is the question. In my view, the answer is that it will not be, given the income and property of the husband and the standard of living that he can enjoy. Thus, this needs to be taken into account here.
(m) if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
The wife is cohabiting with her partner and I have found that that will continue.
The wife’s aprtner is employed by a Research Trust, and he earns $42,500.00 per annum. He lives with the wife and the children in the former matrimonial home and he has done so since approximately six months before the trial.
In her examination in chief the wife said that her partner made no contribution to the household expenses, but in her cross examination she said that he pays for his share of the food, and in particular he paid the “grocery bill” every second week. Then, in her subsequently tendered Financial Statement she claimed that he paid $150.00 per week towards household expenses and paid $16.00 per week for a Foxtel subscription.
I have already found that I do not accept the wife’s evidence surrounding her partner, and this extends to the evidence of his contribution to the household expenses. Even if the wife’s further attempt at getting it right is in fact what he pays I do not consider that it is a sufficient or adequate contribution in the circumstances.
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage;
Although the wife first obtained a child support assessment in September 2003, for reasons that she explained in her affidavit of evidence in chief she did not pursue the assessment until August 2004. Since then there have been a number of assessments made, at least one reassessment, and a number of objections lodged. The husband though has always paid the amount of child support that he has been required to, and there is no issue that he will continue to do so into the future.
Conclusion on Section 75(2) factors
The wife’s counsel submitted that there should be a 35% adjustment in the wife’s favour for the relevant Section 75(2) factors. The husband’s counsel submitted that the adjustment should be 15%.
I consider that there should be an adjustment of 25% in the wife’s favour. All but one of the relevant Section 75(2) factors support an adjustment in her favour, and particularly the husband’s greater earnings and earning capacity, and the wife’s ongoing responsibility for the care and support of the three children under 18 years of age.
Section 79(4)(d), (f) and (g) of the Family Law Act 1975
Next, I am obliged to consider the effect of any proposed orders upon the earning capacity of either party (Section 79(4)(d)); any other order made under the Act affecting a party to the marriage or a child of the marriage (Section 79(4)(f)); and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide or has provided to a child of the marriage (Section 79(4)(g)).
In relation to the first matter, the evidence does not indicate that the earning capacity of either party will be affected by the proposed orders.
In relation to the second and third matters, I have already taken them into account and there is nothing further to be addressed.
Conclusion
The net assets of the parties should be divided 52.5% to the wife and 47.5% to the husband.
Just and equitable
Pursuant to Section 79(2) of the Act the Court cannot make an order unless the Court is satisfied that in all the circumstances it is “just and equitable” to make the order. To assess that I need to stand back and consider the practical affect of my proposed orders (Waters & Jurek, supra; JEL and DDF (2001) FLC 93-075; Phillips & Phillips(2002) FLC 93-184).
The net asset pool comprises a monetary equivalent of $2,218,018.00. Thus the effect of my findings is that the wife is entitled to net assets to the value of $1,164,459.00 (to the nearest dollar) and the husband is entitled to net assets to the value of $1,053,559.00 (to the nearest dollar).
The wife has had, currently has, and seeks to have the benefit of assets totalling $1,619,406.00 calculated as follows:
Assets
The former matrimonial home at K $1,525,000.00
Furniture and household effects $34,702.00
Jewellery $10,000.00
AMP superannuation entitlement $11,361.00
Bank account at separation $2,128.00Income tax refund $36,215.00
TOTAL $1,619,406.00
The husband has had, currently has and seeks to have the benefit of net assets totalling $684,969.00 calculated as follows:
Assets
Furniture and household effects $10,000.00
Land Rover motor vehicle $6,000.00
AMP superannuation entitlements $134,139.00
Bank account at separation $2,212.00
Share in E Pty Ltd $341,000.00
Shares in M Pty Ltd $33,000.00
Professional practice $153,154.00
AMP shares $1,584.00
Net proceeds of sale of Honda motor vehicle $6,000.00
Loan account in M Pty Ltd $21,117.00Volvo motor vehicle $26,000.00
TOTAL $734,206.00
Liabilities
Volvo Finance $43,237.00
Loss on sale of BMW motor vehicle $6,000.00
TOTAL $49,237.00NET $684,969.00
In relation to the two mortgages registered on the title to the former matrimonial home at K, the husband’s position is unclear as to who should be responsible for their repayment. However, the husband has been paying both mortgages and in my view he should continue to take responsibility for them. One of the mortgages secures a loan by the husband’s mother and late father, and the other secures a loan from the Commonwealth Bank which was taken out to fund the purchase by the husband of his then partner’s goodwill in the practice at G. Thus, if I add these liabilities to the husband’s side of the ledger his net assets reduce from $684,969.00 to $598,612.00.
Thus, if the parties each retain their respective assets and liabilities the wife will have to pay to the husband the sum of $454,947.00. However, this creates an obvious problem for the wife in that on her evidence the bank will lend her $300,000.00 on the basis of the child support and spousal maintenance that she has been receiving. Her options then are to seek to borrow more or sell the house property. The husband’s counsel submitted that the house should be sold as part of the orders for property settlement given the difficulties that the wife has had to date in maintaining and repairing the house and meeting the expenses, and further suggested that the wife would be better served in any event by purchasing a smaller home, paying her debts and investing the balance of any funds that she received. In the end result though the husband had no objection to the wife retaining the home as long as it did not prejudice his position. The wife was adamant that she wanted to retain the home and thus despite my concern about whether that is practicable, I will give her that opportunity. If she is able to do that then she will have that house available to accommodate herself and the three children. She will also have her furniture and household effects, her jewellery and her AMP superannuation entitlement. However, she will not have a motor vehicle, she would have a significant mortgage as well as the debts referred to in paragraph 104.5 above, and she will have her legal fees to pay.
On the other hand, the husband will have his furniture and household effects, his Land Rover motor vehicle, his AMP superannuation entitlements, his shares in E Pty Ltd and M Pty Ltd, his practice, the AMP shares, his loan account in M Pty Ltd, the Volvo motor vehicle, and $454,947.00 from the wife. His liabilities will of course total $135,594.00 as referred to above, and his other debts including the loans of $313,000.00 from his mother and his legal fees will need to be paid.
On this basis there is a clear and obvious difference in the respective financial positions of the parties, but, and this is the point that the husband’s counsel makes, the wife’s financial position will result from her desire to retain the former matrimonial home, and that is her choice and it cannot provide a basis for any variation to the percentage or to the figures. It must also not be forgotten that although the wife will not have any ready cash, her entitlement is represented by the equity that she will have in the former matrimonial home whereas the husband will have ready cash but he will not have a house property. He will continue to rent his mother’s property at K.
Further, as I have said on many occasions previously, one party seemingly achieving a better result than the other party is not a basis for making an adjustment to that result. Any assessment of whether it is just and equitable to make the orders proposed must be undertaken in the knowledge of the basis of the proposed orders.
Thus, in my view there is nothing unjust or inequitable about the orders that I propose.
Spousal maintenance
There is no dispute about the wife’s current entitlement to spousal maintenance. The issues are for how long it is to continue, and if it is to continue beyond when she completes the further 400 hour placement by the end of May 2008, which the husband opposes, should it continue until 30 June 2009 as the wife seeks, and if so, at what rate.
The current order is still the order made on 22 August 2005 and that provides as follows:
“1. That by way of interim spousal maintenance and pending the final hearing of issues of property settlement and spousal maintenance the Husband do:
(a) Pay the sum of Eight Hundred dollars ($800.00) per week to the Wife, to be paid on the Monday of each week;
(b) Pay all mortgage instalments in respect of the former matrimonial home;
(c) Maintain the current private family health cover.”
As referred to above the husband by agreement has been deducting the Volvo lease repayment in the amount of $800.00, and the net payment to the wife is in fact $573.00. However, as a result of the proposed orders for property settlement the wife will be transferring her interest in the Volvo motor vehicle to the husband, and thus there will be no basis for the husband to deduct the lease payments any longer. The husband will have the vehicle and he will continue to make the repayments. Accordingly, the full amount of $800.00 per week will be paid to the wife by way of spousal maintenance. I note that the husband does not suggest that there should be any reduction in the amount paid as a result of what the wife’s partner of several months should be contributing to the wife’s expenses.
The husband’s case is in effect that he should only have to pay spousal maintenance until the wife has graduated and is able to obtain employment. It seems that that will be at the end of May 2008.
For the wife’s part she wants the husband to continue the payments until 30 June 2009 on the basis that she will be undertaking her PhD as from 14 July 2008. I note that she does not seek that the payments continue for the full three year period that will be required for her to gain this qualification.
The evidence relating to the PhD course is sketchy, but it is now common ground that the wife will commence that course on 14 July 2008 and she has been awarded a scholarship of $26,000.00 tax free per annum. In addition she will be able to work for the University for two days each week. On this basis the husband says that if spousal maintenance is continued beyond May 2008 the amount of the scholarship should reduce the amount of spousal maintenance paid. To repeat, the wife did not concede this in her cross examination, but ultimately her counsel did in his final address. However, no figure was suggested.
In my view the husband should pay spousal maintenance of $800.00 per week until the wife completes her placement on 31 May 2008, and she should continue to receive spousal maintenance thereafter to allow her to embark on gaining her PhD. Her evidence which is unchallenged is that with a PhD she will be able to command a higher salary in her chosen field, and in my view she should have that opportunity given the sacrificing of her career to allow the husband to advance his during the marriage. However, in doing the best I can on the evidence, the amount of spousal maintenance should be reduced by the amount of the scholarship that she receives. In other words, on the basis of a scholarship of $26,000.00 tax free per year the spousal maintenance should be $300.00 per week, and it is reasonable that it should continue until 30 June 2009. For completeness, I note that there was no suggestion that the husband cannot afford to meet this payment, and further that apart from whether the wife should continue to receive spousal maintenance beyond the awarding of her Honours Degree there was no dispute that the wife was in need of spousal maintenance, and the amount of $800.00 per week has been consistently viewed as the benchmark in this regard. Thus, I will make orders for spousal maintenance accordingly.
I certify that the preceding
159 numbered paragraphs are
a true copy of the reasons herein of the
Honourable Justice Strickland
the 5th day of February 2008.
……………………………………….
Associate
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Family Law
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Equity & Trusts
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