HOWLES & HOWLES
[2009] FamCA 1091
•13 November 2009
FAMILY COURT OF AUSTRALIA
| HOWLES & HOWLES | [2009] FamCA 1091 |
| FAMILY LAW - PROPERTY – value of husband’s employee share options both vested and unvested – whether an asset or a financial resource – monies held in a trust - direct profit shares received by the husband – significant differential in the parties’ earning capacities – husband residing overseas – wife in Australia with the primary care of the parties’ child |
| Family Law Act 1975 (Cth) |
| APPLICANT: | Mr Howles |
| RESPONDENT: | Ms Howles |
| FILE NUMBER: | SYC | 8335 | of | 2007 |
| DATE DELIVERED: | 13 November 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Justice Fowler |
| HEARING DATE: | 23-24 September 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Anderson |
| COUNSEL FOR THE RESPONDENT: | Mr Richards |
Orders
Within 35 days husband pay to the wife the sum of $180,821.77.
Within 35 days the husband do all such acts and things as may be necessary to transfer to the wife all his right, title and interest in and to the property situate at and known as E property in the State of New South Wales, being the whole of the land comprised in Folio Identifier … (“the former matrimonial home”).
Contemporaneously with the payment referred to in Order 1 hereof the wife do all acts and things necessary to discharge the mortgage in favour of the M secured on the title of the former matrimonial home or otherwise remove the husband as a mortgagee and procure a release from the M Bank in favour of the husband and keep indemnified the husband against all monies secured by such mortgage.
The husband is to do all such acts and things as may be necessary to transfer to the wife all his right, title and interest in the M Bank Account held jointly in the names of the husband and wife.
Upon receipt of the invoice issued by N Forensic Accounting Pty Ltd in the sum of $938.30 the husband and wife equally share in the cost of that invoice as and when it is due.
Unless specified in these orders, each party is otherwise entitled to retain absolutely to the exclusion of the other all property of whatsoever nature or kind and including superannuation interests, owned by that party and held in the name or possession of that party as at the date of these orders.
In the event the wife fails to comply with Order 3 herein then the husband and wife shall do all such things as may be necessary to procure the sale of the former matrimonial home for the best price reasonably obtainable and for that purpose each of them shall do all such things and sign all such documents for the purposes of selling that property at the earliest possible time.
From the proceeds of sale the following amounts shall be paid in the following order and priority:
(a)in payment of the costs of the sale, including agents fees and commissions and legal expenses
(b)in payment of an amount necessary to discharge the current mortgage on the former matrimonial home and
(c) in payment of the balance to the wife.
If either party refuses or neglects to sign within fourteen (14) days of a written request to do so any documents necessary to effect the terms of these Orders, the Registrar of the Sydney Registry of the Family Court of Australia is hereby appointed pursuant to the provisions of Section 106A of the Family Law Act 1975 to execute such documents on behalf of such party.
Leave is granted for either party to restore on 7 days notice in the event of any difficulties in relation to the sale of the former matrimonial home.
IT IS NOTED that publication of this judgment under the pseudonym Howles and Howles is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 8335 of 2007
| Mr Howles |
Applicant
And
| Ms Howles |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings before the Court are ones in which the parties seek orders altering their interests in property and a settlement of property.
In issue, in addition to those matters common to such applications is, significantly, whether and if so how and at what value, certain contingent entitlements and benefits of the husband arising out of his employment ought to be considered by the Court. Such a consideration arises in circumstances where the contingency has not been fulfilled and possibly may never be.
Background Facts
Where in this judgment I make statements of fact they are, unless otherwise specified, my findings of fact.
In 1965 the wife was born in New Zealand and is now aged 44 years.
In 1972 the husband was born in New Zealand and is now aged 37 years.
The parties met while studying at university in New Zealand in 1994.
In September 1994 the husband and wife commenced to live together with the wife’s two children, namely G, born in July 1989 and M, born in April 1991, who were born of her prior marriage to Mr D.
In November 1994 the husband and wife commenced part-time work with H Company. The wife purchased a Honda Civic car using the husband’s Datsun motor vehicle as a trade-in to complete that purchase.
In 1996 the wife commenced employment with N Company.
In early 1997 the wife sold her property at R in New Zealand (“the [R] property”).
In February 1997 the husband commenced employment at the M Bank.
In 1997 the husband and wife and the wife’s two children moved to Australia to live.
In July 1997 the parties’ daughter, B, was born and the wife ceased her then employment.
In July 1998 the husband and wife were married.
From January to June 1999 the wife worked with a company, C Company, and in July 1999 commenced working for K Company, which employment ceased in December 2000.
In November 2000 the husband and wife purchased a house at X (“the [X] property”), for the sum of $183,000.
In February 2001 the wife commenced part time employment with S Company.
In June 2001 the husband’s taxable income was $98,950 and he also received a profit share from his employer in the sum of $39,257.
In October 2001 the wife ceased her employment with S Company.
In May 2002 the X property was sold for $238,000.
In May 2002 the parties purchased the property at E (“the former matrimonial home”), for $330,000.
In August 2002 the husband and wife added an extension to the former matrimonial home at a cost of about $190,000 and which was paid for, inter alia, by an advance secured by the mortgage charged on the property and from bonuses received by the husband in the sum of $90,000.
In June 2003 the husband’s taxable income had risen to $122,851. The husband received a profit share from his employer in the sum of $70,000.
In June 2004 the husband’s taxable income was asserted to be $106,212 and he received a profit share of $142,000.
By June 2005 the husband’s taxable income had risen to $150,873.
At the beginning of 2006 the children M and G moved in with their father.
For the year ending June 2006 the applicant’s income had risen to $218,405.
In July 2006 the husband, wife and child moved to the United Kingdom in order that the husband could pursue his career with his employer, the M Bank Ltd, as a senior Manager.
In December 2006 the husband and wife separated and the wife returned to Australia with B.
In April 2007 the wife commenced employment with P health services provider and earned approximately $55,000 per annum.
In July 2007 the wife and B took up residence in the former matrimonial home.
On 4 December 2007 the husband sold 3,000 options, which were granted on 28 August 2003, and received proceeds of $150,363.57.
On 30 June 2008 the husband and wife were divorced.
In December 2008 the wife resigned from her employment and subsequently gained employment as a medical representative with a pharmaceutical company and earns $1,115 per week.
The wife also deposed to having received child support from the husband in the sum of $327 per week.
The husband paid the mortgage instalments on the former matrimonial home during the period the wife occupied it. It appears that the origin of some of the funds used to pay both child support and mortgage payments came at least in part from the realisation of entitlements of the husband, which accrued to him prior to separation but which were paid post separation.
The Issues
The nature, extent and value of the property of the parties or either of them, including of certain contingent assets of the husband with no present value or a speculative value. It is in issue whether the assets held by the husband in the Howles Family Trust (“the Trust”) ought properly be treated as held by him for the purpose of effecting a just result, given that under the terms of the Trust deed pursuant to which they are held, it is conceded that they could be applied to the benefit of the husband.
How and whether certain expenditure of the husband since separation might be taken into account.
What was the value of the contributions of each of the parties to the acquisition, conservation and improvement of that property both directly and indirectly and financially and otherwise.
What were the contributions made to the welfare of the family by each of the parties.
By what amount, if any, and for what reasons, should any division of property between the parties based on a consideration of their contributions of the type set forth above be adjusted upon a consideration of any of the relevant matters set out in section 75(2) of the Family Law Act (“the Act”).
What further adjustment should otherwise be made upon a consideration of what then is just and equitable between the parties.
Property matters
The first step I must undertake is to identify the property of the parties or either of them available for division between them.
The Balance Sheet
The Court at the hearing was provided with a balance sheet for its consideration, and which was Exhibit 11, set out hereunder.
It was agreed that the Nissan Car would be removed from the balance sheet. On that basis the figures have been recalculated by the Court, and are set out in brackets alongside the original figures provided by the parties.
| No. | Non Superannuation Assets | Wife’s Value ($) | Husband’s Value ($) | Notes |
| 1. | E Property (joint) | 629,000 | 629,000 | Agreed |
| 2. | M Bank Account (joint) | 6,000 | 6,000 | Agreed |
| 3. | ANZ Bank Account (h) | 16,400 | 16,400 | Agreed |
| 4. | CBA Bank Account (w) | 126 | 126 | |
| 5. | HSBC Savings Bank Account (excluding Trust) (h) | 90,185 | 90,185 | Agreed |
| 6. | 2377 M shares @ $57.63 – 23.9.2009 (h) | 136,986.51 | 136,986.51 | Agreed |
| 7. | M Vested Options (net) (h) | 17,113 | ||
| 8. | Retained Discretionary Profit Share (DPS) (h) | 73,552 | ||
| 9. | 2009 Jaguar (h) | 57,904 | 57,904 | Agreed |
| 10. | Household contents – UK (h) | 8,000 | 8,000 | Agreed |
| 11. | | | | |
| 12. | Household contents – Sydney (w) | 15,900 | 15,900 | Agreed |
| 13. | Howles Family Trust (HSBC Bank Accounts) (h) | 155,877 | ||
| Sub-Total (Non-Super Assets) | $1,219,043.51 [$1,207,043.51] | $972,501.51 |
| No. | Add-backs to property pool | Wife’s Value ($) | Husband’s Value ($) | Notes |
| 14. | Paid Legal Fees – Husband (including funds in trust Account) (h) | 83,843.15 | 54,180.65 | |
| 15. | Paid Legal Fees – Wife (w) | 12,500 | 12,500 | Agreed |
| 16. | Amount Paid to N Forensic Accounting Pty Limited (w) | 7,592.61 | Quantum Agreed | |
| 17. | Amount paid from N Forensic Accounting Pty Limited (joint) | 4,930.75 | Quantum Agreed | |
| 18. | Amount paid from Y Company (joint) | 3,300 | Quantum Agreed | |
| 19. | Mortgage repayments (joint) | 37,560 | Quantum Agreed | |
| 20. | Monies transferred from joint CMT account (w) | 31,500 | Quantum Agreed | |
| 21. | Bonus payments/sale of shares/exercise of Options received by husband post separation not accounted for (h) | |||
| Sub-Total | $96,343.15 | $151,564.01 |
| No. | Liabilities | Wife’s Value ($) | Husband’s Value ($) | Notes |
| 22. | Mortgage (joint) | 412,951 | 412,951 | Agreed |
| 23. | Student loan from New Zealand Government (h) | 44,601.41 | Quantum Agreed | |
| 24. | Tax on Options (h) | 18,000 | ||
| 25. | Student loan from New Zealand Government (w) | 16,599 | Agreed | |
| 26. | Credit cards – wife (w) | 15,700 | 15,700 | Agreed |
| 27. | Credit cards – husband (h) | 10,209 | 10,209 | Docs sought |
| 28. | Car loan (h) | 47,600 | 47,600 | |
| Sub-Total (Liabilities) | $486,460 | $565,660.41 |
| Total Non-Superannuation Assets | Wife Asserts ($) | Husband Asserts ($) |
| Non-super assets | 1,219,043.51 [1,207,043.51] | 972,501.51 [960,501.51] |
| Plus add-backs | 96,343.15 | 151,564.01 |
| Less liabilities | 486,460 | 565,660.41 |
| Total | $828,926.66 | $558,405.11 |
| No. | Superannuation Assets | Wife’s Value ($) | Husband’s Value ($) | Notes |
| 29. | AMP Signature Super (h) | 63,738 | 63,738 | Docs sought |
| 30. | Hesta (w) | 4,423 | 4,423 | Agreed |
| Sub-Total (Super) | $68,161 | $68,161 |
| Total Superannuation and Non-Superannuation Assets | Wife’s value ($) | Husband’s value ($) |
| Non-super assets | 1,219,043.51 [1,207,043.51] | 972,501.51 [960,501.51] |
| Plus superannuation | 68,161 | 68,161 |
| Plus add-backs | 96,343.15 | 151,564.01 |
| Less liabilities | 486,460 | 565,660.41 |
| Total | $897,087.66 | $626,566.11 |
| No. | Financial Resources | Wife’s value ($) | Husband’s value ($) | Notes |
| 31. | Unvested M Bank Options (net) (h) | 42,023 | - | |
| 33. | Qantas Frequent Flyer Points (177,652) (h) | 2,500 | N/K | |
| 34. | Virgin Atlantic Velocity Point (105,384) (h) | 1,500 | N/K | |
| Sub-Total (Financial Resources) | $46,023 | |||
| Total Property, Superannuation and Non-Superannuation and Financial | Wife’s value ($) | Husband’s value ($) | ||
| Non-super assets | 1,219,043.51 [1,207,043.51] | 972,501.51 [960,501.51] | ||
| Plus superannuation | 68,161 | 68,161 | ||
| Plus add-backs | 96,343.15 | 151,564.01 | ||
| Plus financial resources | 46,023 | - | ||
| Less liabilities | 486,460 | 565,660.41 | ||
| Total | $943,110.66 | $626,566.11 |
The significant areas of dispute between the parties are as follows:
Whether the options exercised by the husband post-separation become part of the assets to be divided
It seems to me that the Court should not depart from the usual practice of including in the pool of assets to be divided all those assets of which the parties stand possessed at the date of the hearing. Not to do this would be to ignore the Act which requires the Court to make, if just and equitable to do so, an order which alters interests of the parties in property of either or both of them.
That does not mean that assets which were acquired since separation might not be treated differently to those acquired during cohabitation if the contributions to them are different. However, the Court will not ignore them as if they do not exist. That approach is subject also of course to the approach of the Court in the decided authorities in relation to the spending of capital post-separation on the necessities of life.
It is not, however, my practice to create an artificial balance sheet in which assets formerly but not presently held form a part, save for paid legal costs.
Accordingly, these matters will be adjusted in my consideration of issues arising under section 75(2) and will not form part of my deliberation on the extent of the assets of the parties.
Under section 75(2) I may take into account the grant of options and profit shares as evidence of earning capacity when considering the relative earning capacities of the parties.
I may alternatively take the options and profit share schemes into account under the provision of section 75(2)(o) if the justice of the case requires it to be taken into account.
Incidents arising from the husband’s employment
I am asked to include in the balance sheet a number of incidents of the husband’s employment as follows.
(a) Discretionary Profit Share
The husband receives from time-to-time a profit share which is not immediately payable, with the payment of that amount being deferred until a later date. It is part of the scheme which has been established by his employer, namely that the payment of discretionary profit shares can only be made if, at the due date for payment, the husband remains an employee of the company.
These profit shares, when they are not due for payment, are at best a contingent asset of the husband and since the condition precedent to their payment has not been fulfilled as at the date of the hearing, I take the view that I cannot regard such profit shares as an asset of present value. That is not to say that I can, or should, ignore the contingent entitlement, nor will I.
The unpaid profit share is a contingent entitlement which, by reason of its contingency, cannot be presently and accurately valued and will thus be included in the balance sheet as an asset of indeterminate value, that is to say they are assets of no current value.
As with other matters whilst it escapes listing at present value in the balance sheet comprising the property of the parties because of its contingent nature, it does not escape inclusion in a consideration of what is just and equitable. I propose to take it into account in my consideration of those matters under section 75(2) or in my overall determination of what is just and equitable.
(b) The husband’s employee share options
The second incident arising from the husband’s employment that I am asked to consider is certain options held by the husband in M Group Limited, some of which are vested and some of which are not.
During submissions counsel for the wife referred to item 7 on the balance sheet, namely the husband’s vested options and said that the value of $17,113 ascribed to them represents a value after tax, and which figure is agreed. That figure appears at Appendix “D” to Mr U’s Report, and refers to the first alternative value, that being a valuation assuming that the husband’s employment continued until the expiry of all options. It was this scenario that counsel for the wife submitted should be adopted.
These options provide the husband with the right to purchase shares in the company by whom he is employed at a fixed price prior to the expiry of the option, and subject to conditions and restrictions imposed by the employer.
These options were the subject of a single expert report prepared by Mr U, Chartered Accountant. Mr U was jointly appointed by the parties as an expert in this matter for the purpose of valuing the husband’s share options. In doing so Mr U said:
“… I believe it is important to consider not just the value of the employee share options, but also their nature, form and characteristics. In particular consideration should be given to the different components of the total “value”, being the intrinsic value and the time value. The period over which the employee share options vest and the impact of vesting on the value to the employee should also be considered.”
Mr U goes on the define his terms as follows (original emphasis):
“… the intrinsic value is the value that can be immediately realised by the employee subject to satisfying vesting conditions [emphasis added]. Whereas the time value is an assessment of the benefit to the employee if they continue to hold the option. The options vest over different periods of continued employment. Should the employee cease employment prior to certain options vesting, those options will provide no benefit to the employee.”
Mr U goes on to value the vested and unvested options as at three dates in terms of their pre-tax values on three bases. The valuation date is 17 August 2009.
The first alternative provided assumes continued employment until the date of the exercise of the options. I do not propose to take this value into account in determining the value of what the husband holds since there is no way of predicting the longevity of his employment.
Mr U goes on to provide valuations based on continued employment at other dates, namely 17 August 2010 and 17 August 2011, and excludes the value of options which vest after that date.
Having given those figures, Mr U observes that the husband will likely be required to pay taxation on the value of the options when he receives the benefit of the options. The husband is presently taxed on the highest marginal rate and the rate is calculated by the expert at 46.5% including Medicare levy and at the rate of 45% without the Medicare levy, if the husband is not obliged to pay that levy by reason of his residence in the United Kingdom.
Mr U further confirms that the underlying share price will have a significant impact on the value of the options. As at the date of the valuation the share price was $45.37. He also, however, notes the fluctuations in the share price from $15.75 per share to $55.21 per share.
Options of the nature of those held by the husband in this matter are,
Mr U says, the subject of a number of restrictions and conditions which differentiate them from listed options, namely:
(a)The grant date is the date upon which the options are awarded to the employee. At this time the employee can choose to pay income tax on the options or defer the payment of any income tax until the option is exercised.
(b)The employee is unable to exercise the options until the date the options vest. This is usually at least one year after the options were granted. The options may also vest in tranches, for example 25% per year for each of the next four years.
(c)The expiry date is the date upon which the ability to purchase the underlying share will cease. This period is, Mr U says, usually five to ten years and which is a much greater period than most listed options.
(d)The exercise of an option refers to the process of purchasing the underlying share at the exercise price. The exercise price is the fixed price at which the holder can acquire the share over which the option is held and is sometimes called the underlying share.
(e)Both employment restrictions and trading restrictions are usually attached to the exercise of these options.
In the case of the husband’s options the options expire some five years after they were granted to the employee and the vesting schedule for the options is one third on 1st July, two, three and four years after the options were granted. There is a possibility for acceleration of the vesting period.
The options only vest with the husband’s continued employment. Where an employee dies or ceases employment it is at the discretion of the “Executive Committee” to determine if the options lapse.
An employee cannot transfer the benefits of the options, except in circumstances such as the death of the employee of transfers from or to a controlled company, where the “Executive Committee” has given approval. Although the options may be sold to an approved third party the employee is likely only to receive the intrinsic value of the option.
In addition, the options once vested can only be exercised in “staff trading windows”, being from the ex-dividend date for the underling share in May and June until the end of August and from the ex-dividend date for the underlying shares in November and December until the end of February in each year.
Mr U’s affidavit described the methods of valuation based on assumptions as to continued employment and share price. None of these assumptions in relation to non-vested options, in my opinion, renders any future value based on them reliable. It is notorious that there can be significant movement in employment and of recent times employment in the banking sector has been the subject of significant change. Also, it is not possible to predict the future value of shares on which value, the value of the option depends.
For the reasons outlined above I will consider the husband’s unvested options as a financial resource of the husband, because of the contingencies involved, and as discussed above in these reasons, but will include the vested options as an asset in the balance sheet.
Add backs
The parties sought to be added back into the pool of assets a number of items.
(a) Paid legal fees
The husband and wife each seek that their paid legal costs be included as an add back, and I will so order. The husband and wife each tendered a costs disclosure letter, and which was made Exhibit 12.
I have added back the sum of $83,843.15 as that being the sum which represents the husband’s paid legal fees - comprised of paid fees of $54,180.65 and an amount of $29,662.50, which is currently held in the solicitor’s trust account and which the husband has instructed be used to meet his legal costs.
(b) Mortgage repayments and monies transferred from joint CMT Account
I decline to add back into the balance sheet the mortgage repayments met by the husband on the former matrimonial home and monies transferred from the joint CMT Account because they represent assets applied to meet the necessities of life of the parties post separation.
(c) Costs of the single expert
An email from N Forensic Accounting Pty Ltd, and which is Exhibit 13, indicates an invoice will be issued for a further amount of $938.30 in respect of the single expert’s costs. The husband sought that the expense be shared jointly by the parties, whilst the wife sought that it be paid by the husband. I find that it is an expense which should properly be met by both parties, and I will so order.
Counsel for the husband indicated that the initial invoice of Mr U of $7,592.61 was paid by the husband, and it appears the invoice of $4,930.75 was also paid by the husband.
The amount paid to Y Company, item 18 on the jointly prepared balance sheet, was paid by the husband.
I will take into account that the husband has met these costs of the single expert in assessing s75(2) considerations.
Liabilities
Each of the parties has student loans. Evidence was given that proceedings might not be taken against the parties by the New Zealand government until perhaps after death. That is a matter for the creditors and non-recovery is not a certainty. Accordingly, I propose to include them as liabilities.
I find that the assets and liabilities of the parties are as follows:
| Non Superannuation Assets | ($) |
| E Property (joint) | 629,000 |
| M Bank Account (joint) | 6,000 |
| ANZ Bank Account (h) | 16,400 |
| CBA Bank Account (w) | 126 |
| HSBC Savings Bank Account (excluding Trust) (h) | 90,185 |
| 2377 M shares @ $57.63 – 23.9.2009 (h) | 136,986.51 |
| M Vested Options (net) (h) | 17,113 |
| Retained Discretionary Profit Share (DPS) and unvested options (h) | Indeterminate value |
| 2009 Jaguar (h) | 57,904 |
| Household contents – UK (h) | 8,000 |
| Household contents – Sydney (w) | 15,900 |
| Sub-Total (Non-Super Assets) | $977,614.51 |
| Add-backs to property pool | ($) |
| Paid Legal Fees – Husband (including funds in trust Account) (h) | 83,843.15 |
| Paid Legal Fees – Wife (w) | 12,500 |
| Sub-Total | $96,343.15 |
| Liabilities | ($) |
| Mortgage (joint) | 412,951 |
| Student loan from New Zealand Government (h) | 44,601.41 |
| Tax on Options (h) | 18,000 |
| Student loan from New Zealand Government (w) | 16,599 |
| Credit cards – wife (w) | 15,700 |
| Credit cards – husband (h) | 10,209 |
| Car loan (h) | 47,600 |
| Sub-Total (Liabilities) | $565,660.41 |
| Total Non-Superannuation Assets | ($) |
| Non-super assets | 977,614.51 |
| Plus add-backs | 96,343.15 |
| Less liabilities | 565,660.41 |
| Total | $508,297.25 |
| Superannuation Assets | ($) |
| AMP Signature Super (h) | 63,738 |
| Hesta (w) | 4,423 |
| Sub-Total (Super) | $68,161 |
| Total Superannuation and Non-Superannuation Assets | ($) |
| Non-super assets | 977,614.51 |
| Plus superannuation | 68,161 |
| Plus add-backs | 96,343.15 |
| Less liabilities | 565,660.41 |
| Total | $576,458.25 |
| Total Property, Superannuation and Non-Superannuation and Financial | ($) |
| Non-super assets | 977,614.51 |
| Plus superannuation | 68,161 |
| Plus add-backs | 96,343.15 |
| Less liabilities | 565,660.41 |
| Total | $576,458.25 |
Section 79(4) contributions to date of separation
Initial Contributions
At the commencement of cohabitation the wife owned a property at
R in New Zealand and a motor vehicle which was purchased in the year preceding the commencement of cohabitation, for $NZ7,000. The wife also had superannuation entitlements worth $NZ2,000. The husband says he and the wife each had a student loan.
The husband had, at the commencement of cohabitation, a car and personal effects which he says were of little value. He says that in 1994 when the wife wished to purchase a car, he provided his vehicle as a trade-in.
At the commencement of cohabitation the wife says she was responsible for meeting the household expenses. In 1994 the wife completed her studies and commenced part time work for H Company in November of that same year. The husband says he was in receipt of payments from the New Zealand student loan scheme in addition to undertaking casual work with H Company between 1994 and 1996. He contends that he paid for his own expenses and provided money for joint entertainment expenses.
The husband says that between October 1993 and July 1996 the wife’s former husband paid child support for the two children, that amount being NZ$10,000 at most.
The husband’s evidence is that the funds used for the deposit on the X property came from the joint bank account of the parties.
Other Contributions
The wife’s R property was sold approximately two years following the commencement of cohabitation, with the parties having lived there for some two years prior to its sale. The wife contends that the net proceeds of sale of approximately $NZ23,000 were applied for the benefit of the parties, and in particular for the wife and her children to relocate to Sydney and for the parties’ start-up costs in Sydney, including securing rental accommodation and meeting subsequent rental payments, purchasing furniture and a car and with the balance used to purchase Telstra shares for the sum of $AUD2,000.
The wife was employed in various positions, including undertaking part time work for H Company and as a merchandiser for a pharmaceutical company before commencing as a Sales Representative in August 1996 with an annual salary of approximately $NZ34,000. The wife ceased paid employment when B was born, before gaining various part-time jobs at an hourly rate, between July 1999 and December 2000 and again in February 2001 to October 2001.
At that time the wife ceased paid employment until she commenced employment as a Liaison Officer for P health services provider between April 2007 and December 2008, with an annual salary of $55,000.
The wife contends that she contributed all the income from her employment to the benefit of the family and that the parties borrowed $4,000 from the wife’s father as part of the deposit for the X property. The wife’s father filed an affidavit in these proceedings, which further says that the sum of $4,000 was repaid to him after two years. The husband says the parties received a loan from the wife’s father for approximately $5,000 and which was repaid from the husband’s income.
It is not disputed that the husband was the primary income earner during the marriage. It is the husband’s evidence that he also contributed his annual bonuses to the parties’ finances and also towards the renovations to the former matrimonial home. The husband says that his earnings were used to meet the mortgage repayments on the former matrimonial home. The husband also received three profit share payments from M Bank, as previously set out. Tax was payable on those amounts.
During the period of cohabitation the wife had the primary responsibility for looking after the children. The wife’s evidence is that she was responsible for the cooking, cleaning and maintenance of the house, but says that the husband sometimes did the vacuuming. The wife says that she hired someone to attend to the maintenance of the garden. The husband says he assisted with the housework, often doing the washing up, the vacuuming and cooking meals. He says he often undertook such household chores at weekends, and that he did so in the mornings with the assistance of M and G as they grew older.
It is the wife’s position that she was responsible for caring for the children, particularly in circumstances where she contends that the husband worked long hours, leaving at 6.45 am and returning home at 9.00 pm. In his affidavit material the husband similarly says that he worked long hours, and that this commitment was reflected in his earnings, and further says his commute to work was a lengthy one. He says he was not required to work weekends, and that this time was spent undertaking activities with the family.
During the period that the parties resided in New Zealand, the wife’s two children, M and G, spent every second weekend with their father. The children relocated to Australia with the husband and wife, and resided with them until early 2006.
The husband says that the child support payments made by M and G’s father did not fully meet the children’s expenses and in particular says that additional expenses, including school excursions, clothing and orthodontic costs were paid for by the husband. He also says that he took a keen interest in M and G’s lives, in particular their sporting activities, primarily rugby and attending weekend matches and the practice games, coaching, and travel associated with their sporting commitments. The husband says he continues to have association with M and G.
During the parties’ marriage the husband says the wife purchased four horses, the purchase price, and associated costs and equipment being paid for from savings.
Section 79(4) contributions post separation
The husband currently resides in the United Kingdom. The wife lives in Sydney with her three children, including the child of the marriage, B. Since separation the wife argues that she has almost solely been responsible for B’s care. The husband spends time with the child when he visits Australia, which, on the wife’s evidence, is approximately every three to four months. In his affidavit filed 15 April 2009 the husband says he typically spends two weekends at a time with the child four or five times per year and for approximately three to four weeks during her school holidays.
The wife is otherwise responsible for B’s care, including cooking and cleaning for her, taking her to and from school, overseeing her homework and taking her to extracurricular and social activities.
The husband pays child support as assessed in the sum of $327 per week. When the wife returned to Australia in December 2006, the husband says that the furniture and possessions which the parties had taken with them to London were shipped back to Australia and are in the former matrimonial home.
The husband deposes to having continued to meet the mortgage repayments on the former matrimonial home since separation. On his evidence the property was rented until in or about July 2007, following which time the wife moved into the property. The husband says that in addition to child support and the costs of the child’s two horses, which he estimates in his affidavit filed 15 April 2009 to be approximately $50 per week, the husband also pays for clothing and other items, including a mobile phone. In her affidavit filed 19 January 2009 the wife contends that the husband pays only for the horses’ food.
The husband says that for a period he has also paid for the upkeep of the wife’s two horses since separation, and which cost he estimates in his affidavit filed 15 April 2009 to be approximately $160 per week, but said he was no longer meeting those costs.
Conclusion based on contribution
All in all I assess the contributions of the parties to the acquisition, conservation and improvement of the property of the parties to the marriage or either of them including such property which is no longer the property of the parties to the marriage or either of them, and their contribution to the welfare of the family, to be equal.
Section 75(2) considerations
By reason of the husband residing overseas, the wife has the primary care of the child, and they have had the benefit of occupation of the former matrimonial home.
The wife argues that the husband has the benefit of being able to exercise the options and/or the benefit of the proceeds of their sale in addition to bonus payments and entitlements in the Discretionary Profit Share.
Dr A, General Practitioner, filed an affidavit on behalf of the wife, and at Annexure “A”, a letter dated 24 June 2009, says that the wife has been under her care since 2004 and suffers chronic anxiety and depression. The wife further contends that in early 2003 she commenced seeing Associate Professor V at … Hospital.
The husband’s earnings from his employment are significantly higher than those of the wife. In addition, the husband received bonus payments, a profit share allocation and entitlements to equity award units. The husband deposes, in his Financial Statement filed 21 September 2009 to earning a total average weekly income of E$6,388.82. In the Financial Statement filed 18 June 2009 the wife deposed to earning an average weekly income of $1,442.
In relation to the Qantas Frequent Flyer Points and Virgin Atlantic Velocity Points, counsel for the husband argued that it is not possible to value the points, and it was conceded by the wife that there was no evidence of value before the Court. Consequently, I have excluded those items from the balance sheet and treat them as a financial resource of the husband, since he will have the benefit of redeeming those points, if he is so disposed or able to do so in the future.
As previously discussed, the husband has unvested options with M Group Limited, and it is my intention to treat those as a financial resource of the husband.
The husband has an interest in the Trust. Under the Deed of Settlement, which was Exhibit 6, the husband as Trustee has the discretion to distribute the income of the Trust as is permissible by law and subject to that may, until the distribution date, apply or set aside the income of the Trust to or for all or such one or more of the beneficiaries exclusive of the other or others.
The trustee has the power to alter the beneficiaries of the Trust. So, for example, it would be open to the husband to transfer (having so nominated it as a beneficiary), to a corporation under his ownership and control, the assets of the Trust to be used for his benefit or make the like alterations and distribution of assets to a trust of which the husband is a beneficiary and can control to his benefit.
Whilst the husband asserts that the Trust is to provide for the children B, M and G, who are listed as beneficiaries, I find that the Trust is the alter ego of the husband, and that he has the power to benefit himself from the funds it holds. I will, therefore, take it into account as a financial resource of the husband.
Both parties have a liability for unpaid legal fees.
Conclusion on section 75(2)
For all the reasons referred to above and particularly in the circumstances where the husband’s earning capacity is vastly superior to that of the wife I allocate a further 20% to the wife.
Overall division of assets
The above determination will see the wife receive 70% of the parties’ assets and the husband receive 30%.
Just and equitable
The division of assets would see the wife receive $403,520.77 worth of nett assets and the husband receive $172,937.48 worth of assets and his financial resources.
In the circumstances of this case I determine that result to be just and equitable.
Orders which should be made
I propose orders which will give effect to the following division.
The wife will receive:
| Assets | ($) | ($) | |
| · E Property | 629,000 | ||
| · M Bank Account | 6,000 | ||
| · CBA Bank Account | 126 | ||
| · Household contents - Sydney | 15,900 | 651,026 | |
| Addbacks | |||
| · Paid Legal Fees – Wife | 12,500 | ||
| Superannuation | |||
| · Hesta (w) | 4,423 | ||
| Plus | |||
| · Amount payable by the husband to the wife | 180,821.77 | ||
| Total Assets | $848,770.77 | ||
| Liabilities | |||
| · Student loan from New Zealand Government (w) | 16,599 | ||
| · Credit cards – wife (w) | 15,700 | ||
| · Mortgage | 412,951 | 445,250 | |
| Total Liabilities | $445,250 | ||
| Net Assets | $403,520.77 | ||
The husband will receive:
| Assets | ($) | ($) |
| · ANZ Bank Account | 16,400 | |
| · HSBC Savings Bank Account (excluding Trust) | 90,185 | |
| · 2377 M shares @ $57.63 – 23.9.2009 | 136,986.51 | |
| · M Vested Options (net) | 17,113 | |
| · 2009 Jaguar | 57,904 | |
| · Household contents – UK | 8,000 | 326,588.51 |
| Addbacks | ||
| · Paid Legal Fees – Husband (including funds in trust Account) | 83,843.15 | |
| Superannuation | ||
| · AMP Signature Super | 63,738 | |
| Total Assets | $474,169.66 | |
| Liabilities | ||
| · Student loan from New Zealand Government (h) | 44,601.41 | |
| · Tax on Options (h) | 18,000 | |
| · Credit cards – husband (h) | 10,209 | |
| · Car loan (h) | 47,600 | 120,410.41 |
| Plus | ||
| · Amount payable by the husband to the wife | 180,821.77 | |
| Total Liabilities | $301,232.18 | |
| Net Assets | $172,937.48 |
I certify that the preceding one-hundred and twenty-two (122) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.
Associate:
Date: 13 November 2009
Key Legal Topics
Areas of Law
-
Family Law
-
Equity & Trusts
Legal Concepts
-
Remedies
-
Costs
-
Injunction
0
1