Horton and Horton

[2010] FamCA 160

FAMILY COURT OF AUSTRALIA

HORTON & HORTON [2010] FamCA 160

FAMILY LAW – PROPERTY SETTLEMENT

APPLICANT: Ms Horton

RESPONDENT: Mr Horton

FILE NUMBER: NCC 2257 of 2007

DATE DELIVERED: 5 March 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Newcastle

JUDGMENT OF: Cohen J

HEARING DATE: 16-17 December 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Batey

SOLICITOR FOR THE APPLICANT: MARK IRELAND

COUNSEL FOR THE RESPONDENT: Mr Moss

SOLICITOR FOR THE RESPONDENT: EVERINGHAM SOLOMONS

Orders

1. That within one month the husband shall pay to the wife $256,843.

2. That it is hereby declared that except as required to be performed in Order 1. all moneys, chattels, real estate, choses in action or other rights held by or in the name of a party are the sole property of that party and the other party has no interest at law or in equity in that property.

3. That costs are hereby reserved.

4. That liberty to apply is reserved to each party in respect of the implementation of Order 1.

IT IS NOTED that publication of this judgment under the pseudonym Horton & Horton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: NCC 2257  of 2007

MS HORTON

Applicant

And

MR HORTON

Respondent

REASONS FOR JUDGMENT

1. This is an application by the wife for orders for property settlement. In opening, her counsel said that the parties’ contributions to their present net assets were equal but that those assets should include $20,000 allegedly spent by the husband post separation without explanation or justification. As the wife agreed that s75(2) factors favour the husband to the extend of seven per cent, she sought 43 per cent of the parties’ property. That property was said to include the notional $20,000. Her claim is that the $20,000 should be part of the assets available for division because it has already been advanced to the husband in anticipation of the receipt of his share of them.

2. The husband asked for 70% of the net assets currently held by the parties. This does not include any of the claimed notional assets which should, according to the wife, be included. He says that he has contributed to the current net assets to the extent of 60% and that he should receive an additional 10% pursuant to s75(2) of the Act.

3. The parties commenced living together in July 1989, were married in October 1992 and separated between 23 and 26 December 2005. There are two children of the relationship, both boys, born respectively, in January 1997 and April 2000. Thus, at the time of hearing the boys were aged nearly twelve years and about seven years and eight months. The wife was at that time about 39 years old and working as a manager at a restaurant at B and living in B. The husband is about the same age as the wife. He used to be a public servant but his employment ceased in September 2006. He was unemployed when the hearing took place but was receiving workers compensation payments and supplementing those by working with animals. He lived in D with his parents and the parties’ children. The children see the wife on the weekends during each school term, for most of the school holidays at the end of terms one and two and for about half of the other school holidays. This has largely been the situation since separation, although formal orders entrenching it were not made until 20 May 2008. When the parties commence living together they had no significant assets.

4. Before stating what I regard as the other relevant facts, I should say something about how  I have determined these where there is a dispute over them or the wife does not know the actual situation but cannot admit what the husband claims it to be because she mistrusts him. I regard the wife as a truthful witness. Where her version conflicts with that of the husband, I have accepted her version because I do not regard the husband as a witness of truth. He impressed me as being cunning and devious and as lacking in candour unless he perceived the truth as advancing his interests. The general impression he gave me was confirmed when I felt he deliberately lied during cross examination about specific matters.

5. These impressions were consistent with the wife’s claim that he had been caught out in a deliberate attempt to deceive her about his assets and resources during the conduct of the proceedings but before the hearing commenced. In a letter dated 22 October 2006, his solicitor wrote to the wife’s solicitor and said, inter alia, “our client does not yet know whether he is eligible for the “special risk” payout.” This referred to his discharge from the public service for disability which he alleged was due to injury he suffered by being exposed to “special risk” in the course of his duties. The letter of 22 October 2006 concluded with an offer of settlement. Annexure K to the wife’s affidavit sworn 13 August 2008 is a copy of a tax record form relating to a special risk payment to the husband of $125,935 less tax which was withheld of $15,887. This was based on the proportion of the $125,935which was subject to taxation; it being $50,434. Thus, the husband received $125,935 – $15,887 = $110,048 as a special risk payment.

6. The tax form states the date of payment. The year of payment in the annexure is not discernable, but the payment was made on 15 September. The husband’s last day of service was 15 September 2006 and the tax form is signed on behalf of the public service on 2 February 2007. It is nearly certain that the husband received the $110,048 on 15 September 2006. When his solicitor’s letter of 22 October 2006 was written it is extremely likely that the husband had received that sum or knew, at least approximately, what it was.

7. In the unlikely event that he did not know how much he had received, he could have found out by enquiry of the solicitor who was acting for him in relation to his employment rights. That solicitor was not in the same firm as the solicitor who wrote the letter of 22 October 2006, so no adverse inference against the solicitor who wrote this letter can be drawn. In fact, the husband was not satisfied by the payment and appealed against it. The appeal was settled in April 2008. As a result, in May 2008, he received an additional $54,923.99 clear of tax. It is likely that the husband, by 22 October 2006, knew he was not satisfied with the $110,048 payout and was considering an appeal. Nothing about this prospect was mentioned in the letter of 22 October. However, he could not have known by 22 October 2006 what he might receive in addition to the $110,048 although he must have known he might be eligible for a further payment for the special risks he had been subjected to.

8. Without the misstatement in the letter of 22 October being corrected, the husband and wife agreed to terms of settlement on 19 April 2007 and an application for consent orders was filed in the Newcastle Registry on 9 May 2007. For the purpose of this application, the husband disclosed his superannuation entitlements by way of an accumulation interest as amounting to $127,318 and that on 11 April 2007, when he signed the application, he had $20,500 in bank deposits. He disclosed no workers compensation entitlements or special risk payments or entitlements. In fact, on 11 April 2007 he had $110,271.30 in an account of the Commonwealth Bank. When he signed the application he must have know this because $110,000 had been transferred into his account only a few weeks earlier, on 5 March 2007. It should not be assumed that this $110,000 was paid into the account by or on behalf of the husband’s employers or his superannuation fund on that date. The wife’s solicitor seems to have made that assumption which is highly likely to be erroneous. It is much more likely that the husband transferred it from one account to another or that his solicitor transferred it to the husband’s account with his knowledge.

9. On 16 May 2007 the husband received his superannuation payment. It amounted to $504,889.17 after tax of $38,674 and came from the Public Service Superannuation Scheme. It defies belief that the husband might have believed it was going to be $127,318 when he signed the application for consent orders. The misrepresentation about his superannuation $127,318 makes it perfectly clear that the husband had made enquires about his rights. In Appendix D to the report of Mr G, an accountancy expert, is the husband’s annual superannuation membership statement. The original of this would have been sent to the husband at the end of 2006. In it there is reference of a withdrawal benefit entitlement of $127,318. The husband is much more likely to have seen this figure in this statement rather than to have been told of it by April or May 2007. The statement, however, goes on to list other prospective benefits which might be payable including one for $481,186.74calculated up to 30 June 2006, if that the husband were to return with “total and permanent” invalidity and $234,786.18 for retirement for “partial and permanent” invalidity on the same date.

10. The husband must have, by late 2006, known that as he had been discharged for nothing less than partial and permanent invalidity in September 2006; that is, inability to perform his duties, he would receive considerably more than $127,318; not less than $362,104 before tax.

11. It is much more probable than not that when he signed the application for consent orders he knew he would soon receive more than $350,000 in superannuation after deductions for tax. Fortunately for the wife, the application for consent orders was rejected by the Court. Overall, the husband’s credit during the hearing was greatly damaged by the deceptions he had already attempted to mislead the wife and the Court with despite his subsequent admission about the special risk payment and superannuation payment by his solicitor on 10 October 2007.

12. The husband commenced his public service career in mid 1998, about a year before the parties started to live together. That he had done so is a contribution to his earning capacity which he brought into the relationship and must be given credit for.

13. He has listed his approximate gross earnings as a public servant from the time the cohabitation started 2003. His listed gross earnings from employment during the period were:

JUL-DEC 1989	$10,500
1990	$24,000
1991	$26,000
1992	$27,000
1993	$30,000
1994	$30,000
1995	$32,000
1996	$33,500
1997	$35,000
1998	$37,000
1999	$40,000
2000	$42,000
2001	$45,000
2002	$50,000
2003	$55,000
_____________
$517,000

1. In 2004 the husband says he earned between $57,000 and $60,000. However, he went on sick leave in September 2004 and thereafter was paid $800 per week gross until be was discharged in September 2006. I have assumed that if the $800 per week he was paid from September 2004 to the end of the year is including, his gross income was about $57,000 for 2004. The $800 per week continued from the commencement of 2005 until 15 September 2006 when the husband was discharged from the public service. Thus, he probably earned $41,600 in 2005 and, for the 37 weeks of 2006 until his discharge, earned an additional $29,600 gross. Then, until the hearing, he received workers compensation payments increasing from $376.50 per week to $533 per week probably amounting to $53,200 for the 117 weeks from mid September 2006 until hearing in mid December 2008. His total gross salary until hearing from the time cohabitation started was about $698,400.

2. He received payments consequent upon discharge as follows:

15 September 2006	$110,048	Net special risk payment
October 2006	$33,899	Net long service leave payment
16 May 2007	$504,889	Net superannuation
21 August 2008	$54,923	Net balance of special risk payment
total	$703,759

1. He has not earned or received anything else related to his employment as a public servant except interest on moneys received as compensation for his loss of employment, his injury, his holiday pay and his superannuation. I cannot calculate with any certainty the interest he earned by I shall take it into account. At the time of hearing he was earning about $312 per week in interest but claimed in his statement of financial circumstances of 25 July 2007 to not know how much interest he was then earning. As the major interest earnings came from the superannuation he received in May 2007, the $312 per week or thereabouts would not have been earned for much more than a year. $312 per week for a year is $16,224. Thus he brought at least $1.418m into the relationship to the time of hearing. His earnings, if any, from working with animals are to be added to this.

2. The wife was working for a restaurant throughout the period of the relationship. She still works with that organisation. She commenced working at the restaurant early in the 1989 (where 1999 appears in the evidence it is obviously a misprint) financial year and earned approximately these amounts from 1990-91 to 2005-06:

90-91	$23,500
91-92	$25,000
92-93	$27,500
93-94	$35,000
94-95	$42,000
95-96	$44,000
96-97	$47,500
97-98	$50,000
98-99	$56,400
99-00	$59,000
00-01	$54,250
01-02	$58,000
02-03	$65,500
03-04	$71,000
04-05	$67,500
05-06	$75,200
_____________
$801,350

1. The husband’s evidence suggests that the wife was only earning at the rate of about $8,000 per annum in the 1989-90 financial year. It is likely that she earned substantially more than this, if less than she earned the next year. She probably earned about $20,000 in 1989-90. In the wife’s principal affidavit there is an annexed wage slip for 6 May 2008 to 12 May 2008. This discloses that she had earned $71,878 gross to 12 May in the 2007-08 financial year. Her income was, on average, $1,597 per week gross or about $83,000 per annum gross. It is therefore likely that, in the prior financial year, 2006-07, she earned approximately $79,000 gross and in the period to mid December 2008 from 1 July 2008 about $38,300 for the 24 Weeks involved. Her gross earnings from cohabitation to trial are about $1,021,000.

2. The wife’s employment brought her some benefits in addition to her wage. She has contributed at a very low rate to superannuation, yet it is worth $70,397. Her employer must have made contributions to it. When she swore her affidavit in August 2008, the wife held stock options which had vested worth $8,621 and a right to $7,055 worth of stock which had not yet vested but which must be regarded as a resource. She should be given credit for contributing these amounts from her employment, although in the agreed balance sheet of 17 December 2008 (Exhibit D), they are not mentioned. It is likely that the vested options have been sold and are otherwise reflected in the agreed balance sheet. The options which had not yet vested were due to vest in 2009. She had, by August 2008, already recovered about $55,000 to $60,000 (say $57,500) from the sale between August 1996 and 2006 of stock options recovered from her employer.

3. The wife also contributed to the family assets by receiving two lump sum payments. She inherited $56,000 from a relative in 2002-03 and in 2004 recovered a compensation payment of $35,000 for a sexual assault she had suffered as a child. Her total monetary contribution over the relevant years has been $1,255,573. As a little more than half of the husband’s contribution was received between 15 September 2006 and the time of hearing, this later contribution has a real value compared to his earlier contributions and the wife’s overall contributions which is less that it superficially appears to be.

4. There is one aspect of contribution which I have not dealt with. It involves the wife’s claim that the husband has earned significant amounts from doing work with animals. Paradoxically, if he has and the proceeds have been used for living or have found their way into assets, although the husband denies significant earnings, a finding against the husband might have benefited him. It will not because of an agreement between the parties that with the exception of the contributions of the wife of her inheritance and victims compensation payment and the husband’s lump sum payments which resulted from his early retirement, their contributions have been equal. His earning from working with animals, if significant, will only effect my assessment of any adjustment necessary for s75(2) factors. It is, nevertheless, convenient to canvass the issue at this stage and to bear in mind that the assessment of an adjustment for s75(2) must be made after considering not only the relative contributions of the parties but also by measuring the extent of those contributions.

5. The husband asserts that the work with animals is merely his hobby. He said when asked in cross examination if he had advertised his services that he had not done so for a long time. He was then confronted with an advertising flyer with his current price list which had been printed in the year of the hearing. The impression he gave me was that he had lied about advertising in an attempt to understate his earnings from the work. He admitted having spent $10,000 on supplies, but I do not consider this to be evidence of his having turned his hobby into a viable business. Many people spend large sums on their passionate interests and I accept that he husband is passionate about this interest. However, he applied for an ABN for his business activities. He has earned significant amounts from it. In 2004 he earned $5,000 doing a project for an organisation and admitted averaging about ten jobs per year at about $680 - $700 per job. He said he applied for the ABN because he had been advised he needed one because he hoped to turn over $20,000 per annum. As it is common knowledge that an ABN is only required if turn over is $50,000 or more, I find it difficult to believe the husband hoped for $20,000 only or that he was of only turning over an average of about $6,800 - $7,000 per annum. He said he hoped to make more out of the work one day when he has enough skills.

6. I think it is more probable than not that he is already making more than he has admitted and have little doubt that the husband is already in business working with animals. I am not satisfied he is making a great deal of profit from it; certainly not as much as might involve a $50,000 turn over per annum. I am not satisfied that the husband has hidden any of the proceeds of this business and assess his income since ceasing to work as a public service to have been about $10,000 per annum gross on average. To the extent that the wife contributed to the $10,000 which he used to purchase equipment and cared for the children at the time when he did the work involved in these earnings, she has indirectly contributed to his income. That income adds about $40,000 net to his gross earnings of $1.418m making a total of $1.458m.

7. As has been said, the parties have agreed on their assets and liabilities and, with the specifically nominated exceptions, that their contributions have been equal. One must still appreciate the extent of those contributions before one can then make allowances for the contributions which the parties excepted from their agreement. In addition to direct financial contributions one must consider the parties’ respective indirect financial contributions and their contributions as homemakers and parents.

8. Before doing this, I should mention some of the evidence which has been given about financial contributions. This is to the effect that certain monies brought into the relationship have been used for specific purposes; presumably, to satisfy the Court that the immediate contributor is given credit for those contributions. I shall give each contributing party credit for contributions of this nature the Act, pursuant to s79(4)(a), requires direct and indirect contributions to the acquisition, conservation or improvement of property.

1. Nevertheless, there is a potential risk inherent in measuring these contributions. The risk is of double counting. Because I shall give each party credit for bringing the funds the parties used to make contributions to specific property into the relationship, to also give credit for the specific contributions from those funds towards the property would be to double count. I shall endeavour not to make such an error. It is, then, not necessary to specifically examine the use of part of any funds but toward the acquisition, conservation or improvement of particular property where I have already credited the party with the use of all those funds. With one exception, it is not suggested that any fund has been misused or wasted. It is agreed that the moneys brought into the relationship were used for family purposes and/or are reflected in property which is still available for division. I shall give credit to the parties for bringing in all their earnings, inheritances, windfalls and moneys derived either directly or indirectly from their jobs, but shall not give credit twice where some of this money was specifically used, for example, to pay mortgage debts, purchase real property or to earn interest. I shall give credit, too, to the party who has brought funds into the relationship which were used for day to day living; for example on food, and cannot be the subject of easily obtainable records to measure the extent of the contribution in this manner. This type of contribution would also be doubly counted if any attempt is made to measure it in distinction from and addition to any measure of the funds, e.g. wages, from which the expense came. It should be appreciated that when a party uses specific property that use frees other funds to be used in other ways by the parties; ways which are not necessarily able to be specifically recognised. These uses can be regarded as indirect contributions if the property has not also been regarded as a contribution or the contributions which created it has not been counted. The corollary must also be acknowledged. Where funds are expended for day-to-day living, other funds are freed to be used to make identifiable contributions. Expenditure on day-to-day living can be an indirect contribution to the acquisition etc of property.

2. During the course of the relationship the parties made the common major purchases of homes and motor cars. No special skill or expertise was involved. Among other contributions, the parties’ efforts to earn wages were often tied in with their home purchases. A significant part of the effort which was put into bringing home a wage was that involved in travel to and from work.

3. Originally the parties lived in regional New South Wales. They purchased their home there in 1992 for $90,000. It was sold in 1996 for about $110,000 after the wife’s employment was transferred from that regional town to W in the Blue Mountain region. The husband, who had also been working in regional New South Wales, obtained a transfer to W. The parties bought a home at E in 1993. It is close to W and about 45 minutes drive from Katoomba. The home cost $88,000. Much of its cost was borrowed. Most of this debt was discharged on the sale of the regional property.

4. The wife worked at W for one year. In November 1994 she was transferred to B. E is about 60km from B. It would take her about the same time to drive from E to B as it would take the husband to drive to Katoomba. The wife made the trip each way to work until the parties moved to B in about 2001. The wife has been based at B ever since. She still lives in B, having purchased a unit there in mid 2006.

5. The E home was sold in about 2000 for approximately $110,000. By this time there was nothing owing on it. Land in B was then purchased for $56,000. During 2000 and 2001 the parties built a home on it which cost about $170,000. This property was eventually sold after separation for $393,000. After payment of the mortgage debt on it, $170,000 remained. Most of this fund was banked and later divided between the parties. What remains of it is reflected in the parties’ cash holdings and property.

6. The burden of travel to work from E which originally fell on both parties was soon removed from the husband. By 1996 he had been transferred to an office which is quite close to E. Two years later he was transferred to W which is a short drive from E. He remained at W until he ceased working in 2004. For 4 years or a little more before this until his retirement, he must have commuted between B and W.

7. There is not much information about the parties’ respective contributions by homemaking and parenting. The wife says and I accept that she took responsibility for most of the homemaking. She did all the shopping and house work including cooking, whereas the husband only mowed the lawns occasionally. The parties sometimes employed someone to do them until separation.

8. The husband’s role as a parent has been substantial. Of necessity, he must have done a lot of the housework which was involved in caring for the children. On separation, the children mostly lived with him. By January 2006, the parties had agreed that the children would live with the husband and the wife would have contact with them on alternate weekends. The husband then moved with the children to his parents’ home in D. One can assume that his homemaking for the children was somewhat alleviated by residence with his parents. His mother then provided a significant amount of care for the children. As that care must have been done on behalf of the husband, it is not necessary to be more specific. Prior to separation, the husband must have developed a close relationship with the children by providing their care. As both parties originally worked, but the husband had more shift work and eventually gave up work, it is likely that immediately before separation he provided much more of the care of the children than the wife. Nevertheless, the inference created by the evidence is that, earlier, the wife was their principal carer. This situation probably continued until not long before the husband ceased working in 2004.

9. Because the children were born respectively in early 1997 and at Easter 2000, it is likely that, to date, the parties have contributed about equally to their care, the wife having the major role before the husband’s retirement and the husband the major role thereafter. The wife took paid maternity leave when each child was born. She has always paid child support since January 2006. It commenced at $150 per week and had risen with the CPI ever since to the point where she now pays about $161 per week.

10. The parties have largely agreed on the identity and value of their property. They are only in dispute over $20,000 which the wife says has not been accounted for by the husband and should be added to the net sum to be divided between the parties and regarded as an advance to the husband of his share. The $20,000 is calculated by collating the husband’s lump sum contributions after separation and taking his major expenses from these and comparing the balance with what is now held on his behalf. He has not specifically accounted for this $20,000. He says, and I accept, that he spent it on ordinary living in the 3 years between trial and separation. I am satisfied that this is likely to be the case because of his limited weekly income for much of the time. Despite supplementing his worker’s compensation income from working with animals and later earning income from interest, his income has probably usually been less than that of the wife. Yet she has spent funds on living at a rate which resulted in her indebtedness increasing by more than $20,000 between separation and trial. I cannot be satisfied that either party has committed any waste, nor am I satisfied that there is any basis for adding back all or any of the $20,000 which the wife says the husband has not accounted for.

11. Thus, the parties’ financial position is:

Husband’s land, D	$40,000
Husband’s interest in land D2	$30,000
Husband’s interest in land D3	$21,250
Husband’s shed	$17,000
Husband’s controlled monies account	$494,196
Husband’s Commonwealth Bank of Australia Account	$99,000
Husband’s Car	$2,500
Husband’s Home contents	$400
Husband’s Paid legal fees	$30,000
_____________
Husband’s net total	$734,346
Wife’s Westpac account	$6,500
Wife’s Term deposit	$45,000
Wife’s Car	$30,000
Wife’s Home contents	$2,000
Wife’s Paid legal fees	$30,021
Wife’s Superannuation	$70,398
Wife’s Credit card debt	($11,000)
Wife’s Westpac loan	($23,000)
_____________
Wife’s net total	$149,919
_____________
Parties’ total net assets	$884,265

1. After living without waste from the start of their time together until trial, the parties’ accumulated net assets and notional assets are worth $884,265 which came from the parties’ earnings and the like and the lump sums paid to them. The wife’s contribution is from homemaking and parenting and the efforts she put into working, including travel to work as well as the wages she received on a weekly basis, plus her employer’s contribution to her superannuation and by way of stock options and her lump sum injections into the family; her compensation payment of $35,000 in 2004 and her inheritance of $56,000 in 2002/3. Her care of the children and homemaking enabled the husband to work at relevant times.

2. The husband’s contribution is from parenting and that aspect of homemaking it involves as well as from his income from working as a public servant, the travel he undertook, the worker’s compensation he was paid and the contributions his employer made to his superannuation in lump sum payments associated with his retirement. He also must be given credit for the earnings he obtained from working with animals.

3. There is no evidence that the wife’s inheritance or victim’s compensation payment were contributed to by the husband. Her earnings must, to some extent have been indirectly contributed to by the husband, including those after separation, because of the support he provided to her, especially after he ceased working in 2004, in his care of the children.

4. The issues over the lump sums the husband received as a consequence of his retirement may be more complex and the consequences less clear. I shall consider each contribution separately.

5. The special risk payment of $110,048 which was made to him on 15 September 2006 was based on the risk inherent in his employment which, in consequence, resulted in him losing that employment and possibly earning capacity. The husband took the risk and could not have received it unless he had worked as a public servant. The wife’s care of the children helped him to undertake this work. That care would not be a large contribution to the risk payment if, as a matter of law it can be regarded as an indirect contribution. The risk the husband took and the fact that he lost his job due to it and consequently lost future earning capacity would make his contribution to the $110,048 much more significant than any indirect contribution by the wife. The $54,923 he received in August 2008 is to be seen in the same light.

6. The husband’s superannuation payment consists of many parts. $71,804 before tax is the benefit the husband received from contributions by sacrificing income. $137,014 before tax came from the employer’s contributions and $32,907, called basic benefit, is attached to both of the former benefits. All three of the above elements of the $504,889 the husband received after tax are the immediate contributions of the husband which were able to be made due to his ability to work as a public servant. To some extent, especially after the children were born, this was the result of the wife’s assistance by way of her homemaking and parenting. The wife has therefore made an indirect contribution to the receipt of those moneys, although not a large one.

7. There are two other components of the $504,889. One is interest from the date the husband’s entitlement to the whole sum, apart from interest, until payment. The other is what has been called Additional Benefit. It amounts to $247,603 gross. It is regarded by Mr G as an insurance payout. It was wholly the result of the husband, during his employment, contributing to what amounts to disability insurance. It was calculated by taking into account what the husband would have earned until ordinary retirement at 58 years and other factors, the most significant one for my purposes being points accumulated as a result of past contributions while a member of this optional fund. Although the payment was the result of the optional contributions to this insurance in the year he retired; 2006, which was about $4.60 per month on average in 2005/06, the benefit is based on yearly average contributions by the husband over the whole of his membership of the optional fund. The husband’s additional benefit was based on 17.17 years membership. He made contributions to it from about the start of cohabitation to the date of the hearing. Those contributions came from his income. It could be argued and it may be thought that his entitlement to the additional benefit is partly the result of the wife’s indirect contributions to his earnings just as income he received from week to week is.

8. The husband has submitted that both the special risk payments and the special benefit should be treated as being solely contributed by the husband without any element of indirect contributions by the wife. He relies on Aleksovski v Aleksovski (1995-96) 20 FamLR 894 which he claims supports his proposition. He argues that this case is authority that common law damages both for past and future economic loss and for past and future pain and suffering which are contributed to property available for division under s79 of the Family Law Act by the plaintiff in the common law action cannot have any element of indirect contribution by the plaintiffs’ spouse and that the two types of payment here are equivalent to or analogous to common law damages. It was also submitted that the majority in an unreported decision of the Full Court of the Family Court of Australia, K & K Appeal No. EA61 of 2003 supports the husbands’ point on indirect contribution.

9. I do not agree with the submission made about K & K. At paprgraphs 77. and 78, in a joint judgement, Holden and Warnick JJ. said:

   “77. In our view, his Honour erred in failing to assess the wife’s contribution to the whole of the husband’s damages award in assessing that contribution on the basis of relating it to what the position might have been had her claims been determined prior to the husband receiving his damages award.

   78. These errors have resulted in the wife’s contribution being seriously devalued, thus producing a result which is manifestly unjust to the wife. We would therefore allow the appeal.”

10. Irrespective of what might also have been said by their Honours, from this it is perfectly clear that they regarded the opposite to what the husband now submits to determine the issue. Finn J, equally as clearly, purported to agree with the majority (Baker and Rowlands JJ) in Aleksovski. Baker and Rowlands JJ held that in a damages award the portion of it compensating pain and suffering SHOULD be regarded as the sole contribution of the person who was awarded the damages. It also clearly said that with damages for economic loss, a direct contribution to marital property from such damages MAY be regarded as the sole contribution of the party suffering that loss. The word “may” permits the alternative to be the case with damages for economic loss; i.e., that the plaintiffs spouse may be regarded as having contributed to those indirectly. In the same case, Kay J. said at page 119:

    “With a lottery windfall, the issue of other contributions is easier to emphasise. With damages for pain and suffering or with an inheritance, the other s79 considerations required to alter the ownership of that fund need to be all the more powerful before it could be said to be just and equitable and proper to make such an order.”

11. This infers that such an order can be made. The order referred to is one which settles the particular property on the basis that there has been indirect contributions to it. This clearly is consistent with what was said by the majority in K & K. However, Finn J’s apparent agreement with Baker and Rowlands JJ does not seem to be an actual agreement because, in K & K, she appears to have held that “the whole of a damages verdicts arising from a personal injury claim is, as a general rule, to be treated in property settlement proceedings as a contribution by the party who suffered the injury.” I do not think this is what Baker and Rolands JJ held. I prefer what they held and regard myself as bound to in view of the judgments of Holden and Warnick JJ and of Kay J.

12. The special risk payment has no particular relationship to either damages for pain and suffering or damages for economic loss. It is much more like a wages payment such as an overtime loading. I regard both Aleksovski and K & K, because they deal with damages, as distinguishable from the case here on the issue of the special risk payment. If it is not, I am of the view that because of the similarity it has to wages it has been contributed to indirectly by the wife to a significant if not great extent. After all, it is a risk payout and the husband took the risk.

13. The Additional Benefit payment has two aspects which I regard as important. One is that it is really an insurance payment based on the payment of premiums. As, for most of the time the husband was in the scheme, the wife contributed indirectly to the moneys used to pay the premiums, she has contributed indirectly to the insurance payout. The other is the character of the benefit paid. It is not for any aspect of pain and suffering. It is a calculation of a sum to compensate for future loss of earning capacity. As such, it arises from the husband’s ability to earn while he was a public servant. An important factor in calculation of the payout is the wage the husband was receiving when he was retired from the public service. The wife contributed to his wage indirectly and, it follows, to his entitlement to the payout he received. He was able to be a public servant because she did housework and cared for the children. If the payment had actually been damages for future loss of earnings or loss of earning capacity, I would have decided that the wife had contributed indirectly to the same extent to that type of contribution by the husband. I have no doubt that the insurance payout for additional benefit is like a payment of damages for future economic loss and find that Alekosvski and K & K do apply by analogy to it, but that both permit me to regard the wife as having made an indirect contribution to it.

14. As a result of these findings, the whole interest component must also be regarded as including a modest contribution by the wife.

15. The long service leave payment of October 2006 was the husband’s statutory entitlement to pay in lieu of leave taken based on his length of service. The entitlement to long service leave is the result of the accumulation of a right which commenced at the beginning of employment even though the right to take that leave or cash in lieu of it did not arise until some years of employment had elapsed. Here the husband’s ability to work has been significantly assisted by the wife once she gave birth to the parties’ first child in January 1997. Subsequently, she contributed to this in a significant but not very substantial way and therefore contributed in a like manner to the accumulation of his long service leave rights.

16. On the above figures, the husband has contributed $1.485m of the $2,740,573 contributed by both parties to the current net assets. This amounts to about 54 per cent by the husband and 46 percent by the wife. Nevertheless, the application of these figures to assign contributions creates distortions for three reasons. One is that, while the wage figures are gross, the lump sum payments to both parties are clear of tax. This aspect increases the husband’s contribution. The second reason has already been mentioned. It is that all receipts of money should be considered with a factor for the time the receipt was received and the effect of inflation or the relative value of a dollar when it was received. This is a factor which undermines the weight of the large lump sums contributed by the husband because they were contributed relatively recently. The third reason is that non-financial contributions must also be taken into account and in doing so the respective financial contributions are diluted.

1. A weighing of all matters so far referred to results in the conclusion that the husband has contributed to the current net assets to the extent of 52 per cent and the wife 48 per cent.

2. Both parties were about 39 years old at the time of hearing. Considering her work history, age and her managerial position, the wife is likely to work until she is about 60 years old. She has a good level of physical and mental capacity to and is likely to continue to earn income and accrue benefits at the value she was earning and accruing them at the time of hearing. There is no evidence to suggest she is other than in good health and her child care obligations are not so onerous they are likely to cause significant loss of earning capacity. She will have the care of the children only on alternate weekends and one weekday evening during school term, for all the school holidays except the Christmas holidays and for half the Christmas holidays. In effect, less than 30 percent of the time. In the younger child’s case, care will continue until April 2018; that is, for about nine and a half years from the time of hearing. In the older child’s case, it will continue until January 2015 (about 6 years). In each instance duties needed to care for them generally will diminish over time.

3. The wife is earning about $990 clear of tax each week. Her rented flat at $300 per week is obviously sufficient to house the children, but no doubt she will wish to purchase a home with her share of the parties’ property. That home, whether a house or flat, will have to be sufficiently large to cater for the two boys. Of her capital, $70,400, approximately, will not be available until it is able to be drawn on for retirement. The wife’s unpaid legal fees are $45,000. If I take these fees and the $30,000 which she has paid to her lawyers into account, there will be a conflict with s117 of the Act, because to do so will introduce an element of contribution by the husband to the wife’s legal costs without an order under s117 being made. Yet, I cannot fail to recognise that the wife will not have the $75,000 involved. I cannot reconcile the conflict, but shall take account of the realities involved to the best of my ability.

4. The parties have executed a child support agreement which requires the wife to pay child support of $161 per week. In the circumstances that she is likely to need the whole of her liquid share of the parties’ property and is likely to have to borrow more to purchase suitable accommodation, she will have no income from investment and, even with the additional financial benefits she is likely to receive from her employer, her wage will leave her little or nothing to save for the future above her contributions to superannuation if she is to live at a standard which is reasonable given her past way of life.

5. The obvious question to be answered about the husband is his earning capacity. As he is likely to remain the children’s primary carer and will have the children for more than 70 per cent of the time, his parental obligations will inhibit his earning capacity unless he continues to live at D with his parents. To the time of hearing, his mother, who was then 64 years old, assisted with the children.

6. Apart from the impediment to earning that his child care obligations may create, I am not satisfied the husband has any other impediment of significance despite having retired unfit from the public service. This organisation, in New South Wales, is notorious for retiring able bodied relatively young men with large disability payments and I can take judicial notice of this. It may or may not be that they are no longer psychologically fit for the work, but usually they have little difficulty entering the workforce and often do work where their training is advantageous.

7. I have formed a very dim view of the credit and honesty of the husband. The evidence about his fitness to work reinforces this view. He has not worked since September 2004 and has been unemployed since September 2006. He has made no proper effort to find part or full time work, having admitted to doing nothing more than applying by letter to obtain labouring work without success. He received no replies. One cannot know how many letters he sent, but this method of seeking employment does not appear genuine. He would be much more suited to other types of work. He told the Court he intends to register with Centrelink. One cannot understand why he did not do so much earlier. It is not because he has been unfit according to the one piece of acceptable evidence about his current fitness to work. It is a Workers Compensation determination made on 1 September 2008, only a short time before the hearing. His medical assessment upon which the determination was made was carried out by Dr V, an approved medical specialist for the Workers Compensation Commission. Dr V assessed the husband as having a 1 per cent psychological impairment and no physical impairment in relation to his ability to work. There is no suggestion that he could only do part-time work. When the husband was interviewed by Dr V he only mentioned one when asked of his concerns. It was about the proceedings in this Court. Yet he told Dr V that he is only able to work part time in areas other than public service and would like to be employed in lawn mowing or animal services. I accept that the husband is no longer fit for the public service. I do not accept he cannot easily do full time work in many other fields outside animals and lawn mowing which are likely to be much more lucrative than either. I do not regard his assessed one per cent psychological disability as likely to be significant in any job other than as a public servant. There is no basis for any conclusion that he can only do part-time work

8. When the matter was heard I was informed that the husband’s income from Worker’s Compensation had been recently raised to $1,000 per week approximately from its previous level of $550 per week. In fact, it had been about $533 per week not $550. The $1,000 is probably a gross amount. The increase, I was told and accept, was because the husband had commenced to look for work. One wonders what this means. His evidence is only of prior attempts which were written applications for labouring jobs. I was also told the $1,000 per week would last for one year if he kept looking for part-time work for the year and could get 4 successive medical certificates lasting three months each that he is fit for part time work. The inference from this evidence is that he falsely claims he is only fit for part time work doing labouring, a situation that is highly unlikely to be available. Presumably, he assumes that he will not get work for one year and has no intention to gain employment during that period. From the husband’s demeanour when giving this evidence, I have little doubt that the husband intends not to get a job for as long as he can receive the higher benefit, but on reverting to Workers Compensation payments of $550 per week or the like at the end of one year, he will suddenly become fit and find suitable full time work or commence to operate a small business. Of course, he will at all times continue to engage in his hobby and continue to earn from it and attempt to expand it, which he may well do, to a worthwhile full time business.

9. I regard the husband as having the capacity to earn which, even with the impediment of his obligations in caring for the children, would provide him with an income at least as high as that of the wife, but probably substantially higher. I expect him to continue working until he is at least 60 years old and, in addition, earning from work with animals. He is likely to do this relatively lucrative hobby for many years after that. His earning capacity is strengthened by his single-mindedness, cunning and manipulativeness.

10. The husband is entitled to be given credit under s75(2) for the larger proportion of care he will provide for the children when compared with the care the wife will provide. The impediment to his earnings created by his obligation to care for the children during ordinary working hours is not likely to be great. He owns land at D and the liquid part of his share of the parties’ net assets ought to be enough or close to enough to build a house upon the block he chooses and to furnish it, each to a level which is appropriate and reasonable in view of his past standard of living and need to provide a suitable home for the children. He may have to borrow a small sum, but not much. He is likely to be able to continue to engage his mother in helping care for the children after school etc. when he will need to work.

11. The husband’s paid legal fees which have been attributed to him as an advance on his share of the property division amount to $30,000. I shall treat these in the same manner as I shall treat the wife’s paid legal expenses. The husband has no debts and no fund which is not immediately available to him. He has two blocks of land. He is likely to build on that worth $30,000 and can sell the other worth $21,250 despite only being a part owner if he needs to do so.

12. Currently, the husband’s major outgoings on living costs are $350 per week he pays his mother for board and for income tax. Once these proceedings are determined, the income the husband has received from the cash he has on deposit will not be forthcoming. His tax will be at much the same rate as that of the wife, but higher commensurate with his likely earnings. The $160 per week he receives in child support should adequately meet more than half his outgoings on the parties’ children.

13. Bearing in mind all the s75(2) matters I have referred to, I do not consider that there should be a substantial increase in the husband’s share of the parties’ property available for division over the proportion based on his contribution. There should be a small increase for the extra care he will give the children and the very small impediment it will impose on his earning capacity which is largely set off by his greater earning capacity than the wife and her greater liability for legal costs and the unavailability of her superannuation. However, I shall take into account that the husband has no further superannuation entitlement and will have to create it to a greater extent than the wife will hers.

14. In my assessment, an additional two per cent in favour of the husband for s75(2) factors is appropriate. This means that, of the net and notional property of the parties, the husband should recover 54 per cent and the wife 46 per cent. Of the net $884,265 in value of their property, $477,503 should go to the husband and $406,762 should go to the wife. Accordingly, from the money held by or on behalf of the husband, the sum of $256,843 should be paid to the wife to achieve that division. I shall make an order for this to occur because I regard that order to be just and equitable in all the circumstances.

15. The orders of the Court should be:

    1.That within one month the husband shall pay to the wife $256,843.

    2.That it is hereby declared that except as required to be performed in Order 1. all moneys, chattels, real estate, choses in action or other rights held by or in the name of a party are the sole property of that party and the other party has no interest at law or in equity in that property.

    3.That costs are hereby reserved.

    4.That liberty to apply is reserved to each party in respect of the implementation of Order 1.

I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen.

Associate:     

Date:              5 March 2010