Hosking and Hosking

[2007] FamCA 203

FAMILY COURT OF AUSTRALIA

HOSKING & HOSKING [2007] FamCA 203

FAMILY LAW - PROPERTY SETTLEMENT - SUPERANNUATION - Claim for splitting order of superannuation of husband who is undischarged bankrupt – Order made

Family Law Act 1975 (Cth)

APPLICANT: Mr Hosking

RESPONDENT: Mrs Hosking

FILE NUMBER: MLF 967 of 2004

DATE DELIVERED: 2 March 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Moore J

HEARING DATE: 2 March 2007

REPRESENTATION

THE APPLICANT APPEARED ON HIS OWN BEHALF

COUNSEL FOR THE RESPONDENT: Mr Wood

SOLICITOR FOR THE RESPONDENT: Serafini & Hill

Orders

1. The wife pay to the Intervener the sum of $217,250 on or before 27 April 2007.

2. Within 14 days of the making of these orders:

   (a)The trustee in bankruptcy and/or the husband each do all such acts and things and sign all such documents as may be required, including production of the duplicate Certificate of Title, to transfer to the wife at the expense of the wife all of his right title and interest in the real property situate at and known as T and being the whole of the land more particularly described in Certificate of Title Volume … Folio …; and

   (b)the transfer in paragraph (a) hereof be held in escrow until the date referred to in order 1.

3. That contemporaneously with the payment referred to in order 1:

   (a)The intervener provide to the wife a withdrawal of his caveat on the Title to the real property;

   (b)The wife indemnify the intervener and the trustee in bankruptcy and the husband against all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.

4. In the event that the whole of the payment has not been made by the date, then the husband, the wife and the trustee in bankruptcy forthwith sign all documents and do all things necessary to transfer to the intervener the real property referred to in order 2(a) to be held on trust for sale and the real property be forthwith sold altogether out of Court and the proceeds of the sale be applied:

   (a)firstly to pay all costs, commissions and expenses of the said trust transfer and the sale;

   (b)secondly to discharge any mortgage and any other encumbrance affecting the real property;

   (c)thirdly so much of the payment as is then outstanding together with interest thereon at the rate of 10% per annum adjusted monthly from the date to the intervener;

   (d)fourthly the balance to the wife.

5. Pending the payment or completion of the sale in order 4:

   (a)the wife have the sole right to occupy the real property and that during such right of occupation the wife pay all rates and taxes and like apportionable outgoings of the real property as they fall due;

   (b)the parties all hold their respective interests in the real property upon trust pursuant to these orders;

   (c)no party encumber the real property without the consent in writing of the other parties.

6. Liberty is reserved to any party to apply with respect to the terms and conditions of and execution of the sale.

7. These orders shall bind the Trustee of the N Retirement Fund and these orders shall take effect from the operative time being the fourth business day after the date of service of these orders upon the Trustee.

8. The member spouse is the husband

9. The non-member spouse is the wife.

10. The base amount to be allocated to the non-member spouse out of the interest of the member spouse in Policy Number … in the N Retirement Fund is $16,930.

11. In accordance with Section 90MT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable in respect of the superannuation interest of the member spouse in the N Retirement Fund, the non-member spouse will be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount of $16,930 and there being a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these orders.

12. Liberty is reserved to the parties and to the Trustee of the N Retirement Fund to apply with respect to the implementation of these orders effecting the superannuation interest.

13. The solicitors for the wife serve a sealed copy of these orders upon the Trustee of the N Retirement Fund.

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

    (a)each party be solely entitled to the exclusion of the other to all other property (including chooses-in-action) in the possession of such party as at the date of these orders, the furniture, personal possessions, and like chattels in the real property being deemed to be in the possession of the wife;

    (b)save as specifically provided herein each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;

    (c)insurance policies remain the sole property of the beneficiary named therein;

    (d)each party is to be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

FAMILY COURT OF AUSTRALIA AT  

FILE NUMBER: MLF967/2004

MR HOSKING

Applicant

And

MRS HOSKING

Respondent

REASONS FOR JUDGMENT

Proceedings

1. What is to be determined is the wife’s claim for a splitting order against the husband’s superannuation entitlement which is agreed to be worth $27,088. 

2. He was declared bankrupt in December 2005 and any non-superannuation property to which he had an entitlement vested in the trustee in bankruptcy who has been involved in the proceeding but has elected not to participate in the hearing today.  Another party to the proceedings, Mr F, is a secured creditor of the husband’s and his claim relates to monies said to have been advanced in February 2004.  Mr F and the wife have agreed that he will be paid the sum of $217,250 in satisfaction of his claim and they ask that orders be made giving effect to their agreement.  The trustee in bankruptcy has notice of it and has elected not to be heard.  The upshot is that the wife will be entitled to retain the balance of the non-superannuation assets. 

Evidence

1. The evidence has not been extensive and the cross-examination quite limited.  Mr Wood, counsel for the wife, made a submission that the husband’s evidence should be approached with caution for reasons it is not necessary to elaborate here but included the husband’s concession that he had not been truthful about his financial circumstances in swearing his financial statement because he had omitted to make any mention of the loan he had obtained from Mr F.  It may very well be that caution is warranted but in the circumstances to be dealt with here that is not of any great moment. 

Background

1. The husband (50) and the wife (49) were married in May 1982.  They have three children: K (23) born in December 1982; N (22) born in August 1984; and C (17) born in April 1989.  They separated for several months in 1991 but their final separation was in December 2003.

2. It appears they had no assets when they married.  The wife was employed as a secretary and the husband was working as a bricklaying labourer.  They lived in rented premises for the first two years or so. 

3. He later worked as an insurance salesman and sold car parts, but in due course he established a business undertaking mechanical repairs.  This was the first of a number of businesses he operated in partnership with others over the years.  At one stage they bought out a partner, the wife’s brother, with borrowed funds.  Early in 2003 the husband sold their interest in the business, as I apprehend it for about $300,000, and the money was used to pay out the mortgage they had by that time and to pay out loans related to the purchase of motor vehicles.  The upshot of the sale, it is not disputed, is that the wife has been left with a debt to the Australian Taxation Office now standing at $18,358. 

4. After the marriage she continued to work until before the birth of their first child and from that point she worked around the birth of the children and their care in various fields, including at times in the business. 

5. In 1984 they moved into a home owned by the wife’s father where they remained for the next 11 years before they bought their first home.  In all likelihood they paid rent only for a short time but it is also probable that they did some work on the property over the years and installed some household items. 

6. In 1995 or thereabouts they purchased their first home at G for $225,000.  Most of the money required was borrowed from a bank. 

7. In or about 1996 the husband received $27,000 inheritance from his late father’s estate.

8. In 1997 they sold the G home and purchased another property at D for $285,000.  The sale proceeds of the G property was used towards the purchase and they borrowed the balance required from a bank. 

9. In 2000 or thereabouts they sold the D property for $445,000.  In the meantime, some improvements had been carried out.  They then purchased a home at T for $322,000 and that is the home that is still retained.  Subject to the caveat lodged by Mr F after the loan arrangements between him and the husband, the property is unencumbered. 

10. When they separated in December 2003 the husband left the home.  He took with him antiques left to him by his father and wine which he estimates to have been worth $6,000. 

11. He was out of work until the middle of 2004 when he commenced another business.  He made about $800 per week from the business until August 2005 when it went into decline and ultimately voluntary administration.  His bankruptcy followed in December 2005.  In January 2006 he obtained work as a labourer part time and that remains his situation.  He says the work is not regular and he makes between $200 and $400 per week after tax.  He has paid no child support since separation but about $700 or $800 was taken from his account for child support at one point.  The husband now lives with his partner, who is not in paid work, in rented premises at L. 

12. The wife has remained living in the home with the children.  She has obtained some work and undertaken courses through Centrelink to position herself in the paid workforce and she is now working full time as a framing stylist for an optical store earning $32,500 per annum. 

13. The wife attempted during 2003 to sell a leased motor vehicle she had retained but she was not able to do so until December 2003.  She received $27,000 but was left with a debt to the financier of $12,000 from the transaction.  She took out a personal loan from a bank for $12,000 to pay out the debt.  She had also borrowed $8,000 from her brother to make repayments to the financier. 

14. Faced with these financial difficulties she successfully applied to withdraw her superannuation entitlements and she received $8,000 which she used to reduce the debt to her brother and pay living expenses.  She still owes her brother $2,000.  She also has a debt of $12,000 for school fees for the youngest child who has just completed his secondary education.  In the meantime, she has contributed through employment to another superannuation fund which is now worth about $2,800. 

Assets and liabilities

1. The only current non-superannuation asset is the home which has an agreed value of $490,000. 

2. The wife’s debts are as follows:

   (i)       personal loan  $12,000

   (ii)      school fees  $12,000

   (iii)     debt to brother   $2,000

   (iv)ATO  $18,350

   Total:  $44,350

   The net value of non-superannuation assets, therefore, is $445,650.

3. The superannuation is:

   (i)       the husband’s entitlement     $27,088

   (ii)      the wife’s entitlement            $2,800

   Total - superannuation assets          $29,888

4. The total value of net assets, superannuation and non-superannuation is $475,538. 

Evaluation of contributions

1. It will be apparent that I have organised the assets and liabilities into two lists by separating out the superannuation entitlements.  This approach, rather than taking a global view, is more convenient in this case because of the bankruptcy and obligation to pay Mr F an agreed sum of money within a certain period, the default provision being sale of the home. 

2. Mr Wood submits that the history of the marriage as briefly outlined earlier bears no remarkable hallmarks.  To the extent that the husband received an inheritance in the course of the marriage, that can be offset against the rent free accommodation provided by her family over many years.  To the extent that the husband took wine with him at separation, along with the antiques he inherited, that can be offset against the value of the furniture retained by the wife.  Overall, he submits that contributions to the date of separation should be seen as equal.  The husband conceded that apportionment and I agree it is an appropriate evaluation. 

3. Mr Wood also contends there should be an apportionment in the wife’s favour by reason of her contributions in the three years post-separation.  These relate to her care of their youngest child who was 14 years of age at separation and the financial support she provided over those years without any assistance of any note from the husband.  Of course it is also to be remembered that she is the sole contributor to the superannuation fund she has established post separation. 

4. To test that submission it is necessary to look at the impact of both the F debt agreement and the bankruptcy.  It is conceded that the wife is not to bear any responsibility for the loss of the funds to Mr F and the agreement that he is to be paid the sum referred to earlier means that of the non-superannuation assets the husband can [notionally] be seen as having had his entitlement to $217,250, leaving the wife with an entitlement to $228,400 against which the trustee in bankruptcy presses no claim.  This represents an apportionment between them of 48.75% and $51.25% of the non-superannuation net assets respectively or, to put it another way, a differential of 2.5% or, translated into monetary terms, about $11,141. 

5. In my opinion, that differential is insufficient to recognise her post separation contributions to child care and child support.  It follows, being the only other asset available, that recourse has to be had to the husband’s superannuation if her contributions are to be properly recognised and a splitting order has to be made in her favour. 

6. In my opinion, a fair base amount would be $16,930 or 62.5% of the husband’s superannuation entitlement.  While that amount is to be taken in superannuation entitlement and is not therefore immediately available to her, it is an acceptable addition to the $11,141 differential that would remain her lot if no splitting order were made.  It will leave the husband with superannuation entitlement amounting to $10,158.

7. I am satisfied their contributions would be properly recognised if the wife were to receive the home, retain her own superannuation, pay the debt agreed to Mr F, take responsibility for the other debts discussed, and have a splitting order in her favour of a base amount of $16,930. 

Section 75(2) factors

1. It remains to consider whether any adjustment should be made for relevant s 75(2) factors, though of course any adjustment could only be made by increasing the base amount of the splitting order. 

2. Both are of a similar age and neither appears to have any health difficulties.  The wife’s income is currently higher than his but by the same token he is only working part time.  Both have re-partnered, but there is nothing of any relevance here arising from those relationships.  The wife does have the ongoing care of the youngest child but he is 18 years of age in April and that does not really add any weight to the balance. 

3. In my view no adjustment is required.  The disproportion between their overall entitlements is really attributable to contributions post-separation and not to any differential in their current positions or likely future circumstances. 

Just and equitable

1. The husband will retain a superannuation entitlement of just over $10,000 but he will have his debt to Mr F paid in the amount agreed.  The wife, on the other hand, will retain all of the remaining non-superannuation net assets and be entitled to retain her own modest superannuation plus a splitting of the husband’s superannuation for a base amount of $16,390.  In my opinion, this would be a just and equitable outcome consistent with the obligation under s 79. 

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Moore

Associate: 

Date:  2 March 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as HOSKING & HOSKING