Hua and Hua
[2010] FMCAfam 502
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HUA & HUA | [2010] FMCAfam 502 |
| FAMILY LAW – Property – seventeen year marriage – assessment of contributions – assessment of s.75(2) factors – both parties seeking an adjustment in their favour – both parties seeking first option to retain the former matrimonial home. |
| Family Law Act 1975, ss.75,79 Family Law (Superannuation) Regulations 2001, r.29 |
| C & C (2005) FLC 93-220 Efthimiadis & Efthimiadis (1993) FLC 92-361 Hickey and Hickey and AG for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143 Pierce & Pierce (1999) FLC 92-844 |
| Applicant: | MS HUA |
| Respondent: | MR HUA |
| File Number: | PAC 1131 of 2008 |
| Judgment of: | Terry FM |
| Hearing date: | 18 December 2009 |
| Date of Last Submission: | 20 September 2010 |
| Delivered at: | Newcastle |
| Delivered on: | 21 September 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Maddox |
| Solicitors for the Applicant: | O. Neimanis & Co |
| Counsel for the Respondent: | Ms Campbell |
| Solicitors for the Respondent: | John McEncroe & Company |
ORDERS
That within sixty (60) days of the date of these orders the wife pay to the husband the sum of $180,200.00.
That contemporaneously with the payment referred to in Order 1 the husband do all acts and things and sign all documents required to transfer to the wife at the expense of the wife the whole of his right title and interest in [S] (“the [S] property”).
That if the wife fails to comply with Order 1 the husband shall within a further sixty (60) days pay to the wife the sum of $174,800.00.
That contemporaneously with the payment referred to in Order 3 the wife do all acts and things and sign all documents required to transfer to the husband at the expense of the husband the whole of her right title and interest in the [S] property.
That if the husband fails to comply with Order 3 the wife and the husband do all acts and things necessary and execute all deeds, documents, instruments and writings necessary to sell the [S] property on the following terms:
(a)the property be listed for sale with a real estate agent agreed between the parties;
(b)in the event that the parties cannot agree on the nomination of such agent they shall jointly approach the President of the Real Estate Institute of New South Wales and accept his or her nomination of a real estate agent to sell the property;
(c)in the event the parties are unable to agree on a listing price, the time of listing, the method of sale and conditions of such sale in respect of the property they shall accept the recommendations of the real estate agent appointed pursuant to these orders for the sale of the property in respect of each such matter;
(d)upon completion of the sale the proceeds of sale shall be applied as followed:
(i)firstly to pay all costs, commissions and expenses incurred in respect of the sale;
(ii)secondly to pay all outstanding municipal rates and other levies due in respect of the property;
(iii)thirdly to pay the remaining balance as to the 50% less $2,700.00 to the wife and $50% plus $2,700.00 to the husband.
That until compliance by the wife with Order 1 or until compliance by the husband with Order 3 or until completion of the sale of the [S] property, whichever is earliest, the wife shall have sole right occupy the [S] property and shall pay the rates and outgoings as they fall due.
That the husband and wife do all acts and things required to sell the IAG and AMP shares and divide the proceeds of sale equally between them.
That the husband and wife do all acts and things and sign all documents required to sell the [A] Investment and to divide the proceeds equally between their children [X] and [Y].
That upon the parties providing evidence that procedural fairness has been accorded to the Trustee of the [P] Superannuation Scheme (PSS) a splitting order will be made in respect of the wife’s PSS superannuation entitlements allocating a base amount of $49,587.26 to the husband.
That unless specified in these orders and except for the purpose of enforcing payment of any money due under these orders or subsequent orders, each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in possession of each party and superannuation standing in their respective names.
That in the event that either party refuses or neglects to comply with the provisions of these Orders the Registrar of the Federal Magistrates Court of Australia at Parramatta is hereby appointed to execute all deeds and documents in the name of the defaulting party.
IT IS NOTED that publication of this judgment under the pseudonym Hua & Hua is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAC 1131 of 2008
| MS HUA |
Applicant
And
| MR HUA |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Hua and Mr Hua separated in 2006 after a seventeen year marriage. They cannot agree on a division of their property.
The pool consists principally of the former matrimonial home and superannuation.
At the hearing the parties were a considerable distance apart in their proposals. The wife’s case was that she should receive “between 67.5% and 80%” of the pool and that the husband should receive “between 20% and 32.5%”.[1] The husband proposed that he receive 60% of the pool and the wife 40%.
[1] Wife’s affidavit filed 18 November 2009 paragraph 63
Both parties sought first option to retain the former matrimonial home.
The Evidence
The wife relied on her amended application filed on 18 November 2009, her affidavits filed on 30 May 2008 and 18 November 2009 and her financial statement filed on 25 November 2009.
The husband relied on his response filed on 6 August 2008, his affidavits filed on 6 August 2008 and 18 November 2009 and his financial statement filed on 18 November 2009.
Both parties were cross-examined.
At the commencement of the hearing the husband sought leave to file an affidavit sworn by the parties’ daughter [X], who is 18. I received this affidavit subject to upholding objections to the evidence in it about the intentions of [Y], the parties’ younger child, as to where he might live in the future.
[X] was not required for cross-examination.
Neither party initially sought a superannuation splitting order, but it became clear during the hearing and was conceded by the parties that given the size of the superannuation pool relative to the non-superannuation pool, the fact that both parties were a long way from retirement and the fact that the wife had three times more superannuation than the husband, making a superannuation splitting order was really the only way to do justice and equity between the parties.
Neither party had a valuation of their superannuation available at the hearing nor had procedural fairness been given to the Trustee of the wife’s superannuation fund, from which the split would have to come.
The parties were slow to accept that obtaining a valuation of the wife’s superannuation interest in accordance with the Regulations was a necessary precondition to the making of a splitting order, and this has caused some delay in the delivery of this judgment.
In C & C[2] the Full Court after an extensive review of the legislative provisions said as follows:
“It is relevant to say at this point that we agree with the views expressed by the Full Court in paragraph 89 of its decision in Hickey, to the effect that there is no requirement on parties to obtain a valuation in accordance with the Regulations (at least if no splitting order is sought at the outset of the trial). However, as we have indicated in the last paragraph, if in the course of hearing the matter, the Court reached the conclusion that a splitting order was required for the purpose of achieving a just and equitable order, then a valuation under the Regulations would have to be obtained.”
[2] C & C(2005) FLC 93-220
The wife is a member of PSS, a defined benefit fund. R.29 of the Family Law (Superannuation) Regulations 2001 provides that:
Method for determining gross- value – defined benefit interest
(1) If the whole of the superannuation interest is a defined benefit interest, the gross value at the relevant date of the interest is to be determined in accordance with this regulation.
(2)If:
(a) under regulation 38, the Minister has approved a method or factors to be used to determine the gross value of the interest; and
(b) evidence is before the court in the relevant proceeding of the contents of a statement issued by the trustee of the plan in which the interest is held, being a statement that states the gross value of the interest determined in accordance with the approved method or factors;
the gross value of the interest at the relevant date is the value of the interest stated in the statement.
(3) If:
(a) the Minister has not approved, under regulation 38 , a method or factors to be used to determine the gross value of the interest; and
(b) evidence is before the court in the relevant proceeding of the contents of a statement issued by the trustee of the plan in which the interest is held, being a statement that states the value of the interest determined in accordance with the method set out in Schedule 2;
the gross value of the interest at the relevant date is the value of the interest stated in the statement.
(4)If no evidence is before the court in the relevant proceeding of the contents of a statement mentioned in paragraph (2) (b) or (3) (b), the gross value at the relevant date of the interest is to be determined using:
(a) if, under regulation 38, the Minister has approved a method or factors to be used to determine the gross value of the interest -- the approved method or factors; or
(b) in any other case -- the method set out in Schedule 2.
PSS does not provide valuations of superannuation interests to its members, it only provides information which can be used to determine the value. The Minister has approved a method for determining the value of PSS interests and it was essential that the wife’s superannuation be valued in accordance with this method.
It was also desirable that the husband’s interest be valued, because the value of his superannuation needed to be taken into account in calculating the base amount for a superannuation splitting order. The husband is a member of an accumulation fund and he obtained a valuation of his superannuation from his fund, [U] Super.
The following evidence was eventually provided about the value of the parties’ superannuation entitlements:
·Letter from [U] Super dated 20 July 2010 giving the value of the husband’s interest in that fund as at 30 July 2009 and 20 July 2010.
·Letter from Aria dated 29 June 2010 providing the information needed to undertake a valuation of the wife’s interest in the [P] Superannuation Scheme (PSS).
·Letter from Supersplitting dated 2 September 2010 providing a valuation of the wife’s PSS interest as at 18 December 2009.
The evidence of the parties
I had concerns about aspects of the evidence of both parties.
The wife did not disclose in any of her documents that she was earning extra income as an [omitted]. She admitted it during cross-examination when confronted with bank statements but her answers when she was asked about how much she was earning from this source were evasive, vague and unconvincing.
The husband did not disclose a relevant matter namely the death of his father in November 2009 but for reasons given later in the judgment, I do not consider that anything turns on this.
The husband’s evidence about the nature of his relationship with Ms F strained credulity. It is difficult to accept that the husband is not in a relationship with Ms F.
Background
The husband and wife met in 1983. In 1986, while they were in a relationship but before they commenced cohabitation, they jointly purchased a block of land at [S]. They paid off the land and then borrowed to build a house. Only once the house was completed in February 1989 did they commence cohabitation. The [S] property became their home for the remainder of their relationship.
The parties married in September 1989 and they have two children: [X], born in June 1991, now 19 and [Y], born in February 1996, now 14.
The parties were both employed throughout the marriage, although for a lengthy period the wife worked part time to fit in with her parenting responsibilities. The wife was employed as a [omitted]. The husband [is employed as an occupation omitted].
In 2001 the parties purchased an investment property at [C], borrowing the entire purchase price.
The parties separated on 1 August 2006. The wife remained in the [S] home with [X] and [Y]. The husband left the home and obtained alternative accommodation. He spent time regularly with the children.
In October 2007 the parties sold the [C] property. They divided the net proceeds of sale ($44,000.00) equally between them. Once the [C] property was sold the [S] property became unencumbered.
The husband filed for divorce in March 2008 and two months later the wife filed an application for a property settlement.
The law applicable to the resolution of disputes about property settlement
Pursuant to s.79 of the Family Law Act1975, a court can make such orders as it considers appropriate altering the parties’ interests in property. s.79 (2) provides that the court shall not make an order under this section unless it considers it just and equitable to do so.
The procedure usually adopted in determining applications for property settlement is:
i)to identify and value the assets and liabilities of the parties;
ii)to assess the contributions of the parties under s.79(4)(a), (b) and (c) and to express those contributions as a percentage;
iii)to consider the matters set out in s.79(4)(d),(e),(f) and (g), which include the matters in s.75(2), so far as they are relevant, and to determine whether any adjustment should be made as a result to the contribution based entitlements;
iv)to consider the effect of those findings and resolve what orders are just and equitable in all the circumstances of the case.
In my view it is appropriate to follow this procedure in the present case.
Assets & Liabilities
The asset pool consists of the following:
Description
Ownership
Value
Property [S] Joint 355,000.00 Wife’s motor vehicle Wife 4,000.00 Husband’s motor vehicle Husband 1,300.00 [I] Shares 1943 Joint 6947.00 [A] Shares 260 Joint 1664.00 Household contents Wife/Joint 3,000.00 Household contents Husband 300.00 TOTAL 372,211.00
Neither party obtained a valuation of the [S] property but they agreed during the hearing that it was worth $355,000.00. The values of the two motor vehicles and the household contents were also in the end agreed. The parties intend to sell the shares and they agreed that the proceeds of sale should be divided equally between them.
There is an additional asset, an [A] Investment valued at $13,000.00, but the parties asked that it not be included in the pool. They each sought an order that it be sold and the proceeds divided equally between their children.
The husband’s counsel submitted that $12,000.00 of the wife’s savings should be included in the pool, although there seemed to be occasions when she was alternatively submitting that the whole of the savings should be included in the pool. At the date of the hearing the wife had $19,312.00 in a Commonwealth Netbank Saver Account as well as some additional amounts in other accounts.
$12,000.00 of the money in the wife’s account derives from the $22,000.00 the wife received from the sale of [C]. The wife paid $8,000.00 capital gains tax from her share of the [C] proceeds and spent about $2,000.00 on bits and pieces and had $12,000.00 remaining which she left in her bank account.
The wife has built up further savings since. She has received tax refunds and she saved the government stimulus payments paid to herself and the children. The wife said that she had also accumulated money in the account from her wages.
The husband has none of his $22,000.00 left. He said that he also paid $8,000.00 capital gains tax, repaid a friend the sum of $2,000.00 and spent about $2,000.00 on car repairs. His evidence was that he used the rest of his share to pay some big bills although he could not recall the details.
The husband’s counsel submitted that the husband should be treated as having indirectly contributed to the wife’s savings because the wife had been able to conserve the balance of the [C] money and accumulate other savings as a result of having the benefit of living rent and mortgage free in the jointly owned former matrimonial home since October 2007.
The husband in contrast had to pay rent after the sale of the [C] property and had accumulated no savings.
The wife strongly resisted the proposal that some or all of her savings should be included in the pool, perceiving it as fundamentally unfair that the husband should receive a share of her $22,000.00 when he had spent all his, and that he should share in money she had accumulated post separation by choosing to save rather than spend.
In my view it would not be just and equitable to include any of the wife’s savings in the pool. She conserved $12,000.00 of the [C] money by making a conscious decision to save it rather than acquire assets with it or use it for lifestyle purposes, and while the ability to live rent and mortgage free may well have helped the wife accumulate savings, such things as her innate ability to save rather than spend and her willingness to forgo some discretionary expenditure must also have played their part.
I will take the wife’s mortgage free occupation of the home into consideration when assessing post-separation contributions, and I will take her savings into account when considering s.75(2) factors.
The husband was questioned about whether he had any entitlement as a beneficiary of his father’s estate. He admitted during cross-examination that his father had died [in] 2009 and that he was one of the beneficiaries of his father’s estate.
I accept the husband’s evidence however that his father owned very little and that the estate was likely to consist of personal effects, a car which is nearly twenty years old and a couple of hundred dollars in the bank. I accept that nothing of value is likely to flow to the husband as a result of being a beneficiary in his father’s estate.
The husband’s counsel submitted that the husband’s current credit card debt of $2,300.00 should be taken into account as a relevant liability. The husband conceded that this was all post-separation debt, but his counsel argued that he had incurred the debt in the course of supporting himself post-separation.
The husband did not provide any detailed evidence about his expenditure on the card and it would be unjust to the wife to require her to share in the husband’s post-separation spending choices in the absence of that evidence. I do not intend to include the husband’s credit card debt as a relevant liability. The parties have no other liabilities.
I am satisfied that the non-superannuation pool is thus worth $372,211.00.
The parties have superannuation, as follows:
Description
Ownership
Value
PSS valued as at 18 December 2009 Wife 167,191.83 [U] Super valued as at 30 July 2009 Husband 46,634.66 TOTAL 213,826.49
By letter dated 25 June 2010 the husband asked [U] Super to tell him what his interest in the fund was worth as at 18 December 2009, the date eventually agreed by the parties to be the relevant date. [U] Super provided him however with two figures, one for 1 July 2009 ($43,477.16) and one for 20 July 2010 ($50,628.11). Doing the best I can I intend to include the husband’s superannuation in the pool at $46,634.66 being a pro rata value.
The wife argued in her affidavits that her superannuation should be included in the pool at $100,000.00 rather than at its current value.
The wife arrived at this sum (from a superannuation total of $167,453.00). by dividing $167,453.00 by 25 and said that the resulting figure of $6,698.00 represented the amount of superannuation acquired each year. Multiplying this by 17 (the number of years the parties were married) gave a figure of $113,868.00. The wife then deducted $13,000.00 from this amount which she said was a fair allowance for post separation contributions and came up with a figure of $100,000.00 which she said was the amount of superannuation accrued during the marriage.
In closing submissions the husband’s counsel wisely did not pursue an argument along these lines. The superannuation must be placed into the pool at its current value. The wife’s pre-marriage and post separation contributions will be considered when contributions are assessed.
The pool available for division is thus $586,037.49 being $372,211.00 non-superannuation assets and $213,826.49 superannuation.
Contributions
The only significant assets at the time of the commencement of cohabitation in February 1989 were:
i)the jointly owned home at [S] which both parties had worked and saved for over the previous four years;
ii)the wife’s superannuation.
The wife joined her superannuation fund in November 1984. Despite the fact that to an extent at least the parties had “married their fortunes together” in 1986 when they bought and commenced paying off the [S] land, the wife submitted that she should be treated as having brought four years and three months worth of superannuation into the marriage and the husband did not cavil with this proposition.
The husband had no superannuation when cohabitation commenced. He gave evidence that he had used his income to pay off the mortgage on the [S] property when interest rates were high rather than acquire superannuation. If this occurred prior to commencement of cohabitation it would be relevant to an assessment of the weight to be given to the wife’s initial contribution of her interest in superannuation but the husband did not make clear in his affidavit whether this was something which occurred prior to February 1989 or whether it was something which occurred at a later stage.
There was no evidence of the value of the wife’s superannuation at the commencement of cohabitation. A statement dated 1 July 1990, one year and four months after the parties commenced cohabitation, was tendered. It showed that the wife joined CSS on 19 November 1984. Her basic contributions and interest as at 1 July 1990 were $5,134.18 and she had a productivity benefit of $1,253.00.
The form also indicated that if the wife transferred to the [P] Superannuation Scheme (PSS) her “starting credit is estimated to be $19,261.41.”[3] The wife is currently in PSS.
[3] Exhibit A
During the marriage and indeed during the whole relationship each party was employed outside the home and contributed financially to the marriage. The husband was continuously employed full time. The wife worked full time until 1996 and then commenced working part time 20 hours per week. The wife did not resume working full time until shortly before the hearing in December 2009.
Each party made a special financial contribution during the marriage. The wife received $10,000.00 from a damages claim in 1994 which she contributed to general family purposes. The husband received $4,000.00 from his father in 2004, which he used to reduce the mortgage. Neither party suggested that these contributions should affect the assessment of contributions overall.
Each party acquired superannuation during the marriage by way of employer contributions. The wife also made voluntary contributions to her fund but if her post separation contributions of a similar nature are any guide, these contributions were in fairly small amounts, although no doubt made regularly.
As to non-financial contributions and contributions to the welfare of the family, the wife’s evidence was that she did almost 100% of the housework and was responsible for 100% of the care of the children during the marriage. She said that she also worked in the garden, although she conceded that the husband did some gardening and some minor maintenance work and occasionally attended to her motor vehicle.
The wife also said that she had made a greater non-financial contribution to [C] than had the husband.
The husband’s evidence was he made a significant contribution to the parenting of the children and the care of the home. He said that he looked after the children on weekends if the wife was working and that he did all the home maintenance and carried out some renovations to the home. The husband emphasised that he did physical work on the rental property.
I do not accept that the husband made as small a non-financial contribution as the wife maintained, and I accept that he played an important role in attending to tasks around the home and the care of the children.
I accept that the wife did more of the parenting and housework, but she had more time to do it. She worked twenty hours a week from the time of [Y]’s birth in 1996 until separation, while the husband worked full time throughout the marriage.
The wife claimed that her post-separation contributions exceeded those of the husband. She gave evidence that she had paid the rates, water rates and insurance for the [S] property after separation and also paid for some minor repairs to the house and submitted that she should be given credit for this expenditure.
I accept the wife’s evidence that post separation she paid $6,614.84 for rates and insurance, $1,800.00 for repairs, and $1,508.59 for water and sewerage rates. However after the [C] property was sold in October 2007 the wife was able to live at the [S] property without having to pay a mortgage.
The $8,923.43 in outgoings the wife paid over a period of more than two years equate to the wife paying about $78.00 per week for accommodation. During the same period, the husband was paying rent of between $150.00 and $200.00 per week.
I do not consider that the wife is entitled to any adjustment in her favour as a result of post separation contributions to the outgoings and repairs and maintenance and insurance in respect of the home.
The wife had the care of the children post-separation, and she provided the majority of the financial support for them for a period of more than three years. The child support paid by the husband was appropriate given his income but was not a high level of child support.
The wife did have the benefit however of being able to live in the home rent free from October 2007 to December 2009 while the husband paid rent elsewhere, and in my view this offsets any claim she might have to an adjustment in her favour for post-separation contributions to the care of the children.
Assessment of Contributions
It is open to the court to assess contributions globally or on an asset by asset or two pools basis. In the present case I am satisfied that it is appropriate to assess contributions separately to the superannuation and non-superannuation pools. If the wife’s argument about receiving credit for pre-cohabitation and post cohabitation contributions has any strength it is in respect of the superannuation pool.
The wife claimed that her contributions to the non-superannuation pool greatly exceeded the husband’s but I do not accept this submission.
The only non-superannuation asset brought in was the [S] property, and the parties contributed equally to the acquisition of that asset. During the marriage the parties both worked hard in their respective spheres, with the wife doing more of the parenting and the home duties while working part time and the husband doing less of these tasks (although still making a contribution) while working full time.
Post separation the wife contributed more to the financial and non-financial care of the children, but she had the advantage of living mortgage and rent free in the former matrimonial home from October 2007 to the date of the hearing. The husband paid some child support and spent some time with the children and made an indirect contribution to the support of the children and the welfare of the family by allowing the wife and children to live in the home while he paid rent elsewhere.
In my view contributions to the non-superannuation asset pool should be assessed as equal.
In respect of the superannuation pool it was the wife’s case that her contributions exceeded those of the husband.
The wife, a government employee, accrued superannuation from 1984 onwards. It would appear that the husband did not commence accruing superannuation until the early 1990’s when the superannuation guarantee levy was introduced.
There was no evidence of the value of the wife’s superannuation at the commencement of cohabitation although I accept that it was worth $19,000.00 about sixteen months later.
The wife’s superannuation grew during the marriage as a result of employer contributions. She made some voluntary contributions but this was by using money which would otherwise have been available to the family during the marriage.
I am satisfied that after the commencement of cohabitation in 1989 the parties made contributions to various assets including superannuation as part of a joint endeavour and that they should each be treated as having made direct contributions to their own superannuation acquired during the marriage and indirect contributions to that of the other.
The wife’s superannuation has grown substantially since separation. In mid 2006, shortly before separation, her entitlement on her member statement was $135,562.53, and as at December 2009 her superannuation had a value of $167,191.83, although I am conscious that comparing the figure of $135,562.53 from the member statement and the valuation figure of $167,191.83 may be comparing two figures which are not exactly alike.
The increase in the wife’s superannuation was partly because of employer contributions made on her behalf post separation and partly because of her voluntary contributions (for both of which I am satisfied the wife alone should receive credit), but it was also partly because of a growth in the fund as a result of either interest accrued on earlier contributions or as a result of the wife’s length of service as a Commonwealth employee whichever is applicable to this particular fund.
The wife’s voluntary contributions after separation were fairly minimal. She contributed $1,710.78 between 14 December 2006 and 1
May 2008. Using a pro-rata assessment for the period 19 May 2005 to 30 November 2006 the wife’s personal contributions during this period were about $276.00.The husband’s employer also continued to contribute to his superannuation fund after separation. The husband’s fund however is of a different kind to the wife’s and his entitlement has not grown as quickly. He did not make any voluntary contributions post-separation.
I consider it appropriate to assess contributions to a superannuation pool which comprises the superannuation of both parties.
The wife claimed that she should be given credit for both her per-cohabitation and post separation contributions. However her pre-cohabitation contributions were made right at the beginning of a seventeen year marriage.
In Pierce & Pierce (1999) FLC92-844[4] the Full Court said as follows about the treatment of initial contributions:
“In our opinion it is not so much a matter or erosion of contribution but a question of what weight is to be attached in all the circumstances to the initial contribution. It is necessary to weigh the initial contributions by a party with all the other relevant contributions of both the husband and the wife.”
[4] Pierce & Pierce (1999) FLC92-844
All of the contributions made before, during and after the relationship to both funds must be weighed and balanced. The total superannuation pool is worth $213,826.49. An adjustment of 5% in the wife’s favour would give her an additional $10,691.32 and in my view this is an appropriate recognition of the wife’s pre-cohabitation contributions made more than 17 years ago and her post-separation contributions which exceeded the husband’s because the wife was earning a greater income and made some voluntary contributions.
I assess contributions to superannuation pool as being 55% by the wife and 45% by the husband. This would entitle the wife to superannuation to the value of $117,604.57 and the husband to superannuation to the value of $96,221.92.
I am satisfied that contributions to the non-superannuation pool should be assessed as equal and each party is entitled to $186,105.50 in respect of this pool.
Section 75(2) Factors
As required by s.74(4)(e) of the Family Law Act 1975 I now turn to consider the matters in s.75(2). Section 74(4)(f) and (g) have no application and the orders sought will not affect the husband’s income earning capacity. I will consider the issue of the child support when considering s.75(2)(na).
The wife was 43 at the date of the hearing. She is in good health. She works full time as a [omitted] and earns $59,228.00 per annum. The wife has worked for the government for twenty five years and conceded that she might be able to get a promotion at work if she looked for it.
The wife also earns income as an [omitted]. The wife said in evidence that she earned about $50.00 per month or $600.00 per year from this activity.
The husband’s counsel was highly critical of the wife for not revealing her [omitted] income in her financial statement or her affidavits. When questioned about her [omitted] income during cross examination the wife’s answers were fairly vague and even evasive.
I cannot be satisfied about how much the wife is earning from her [omitted] activities and her failure to disclose her income from that source until pressed during cross-examination, together with her vague and even evasive answers, lead me to suspect that the activity is more rewarding for her than the wife is willing to admit.
The husband’s counsel submitted that the wife should suffer a consequence as a result of her failure to disclose the [omitted] income, but was unable to articulate what that consequence should be.
In Efthimiadis[5] the Full Court said as follows about a failure to disclose income:
So far as the wife is concerned, there is no doubt that she should be treated as substantially understating her income…..The circumstances that the wife had a significantly greater income than she deposed to was very damaging to her on issues of credit overall and virtually ensured that she was put out of court as far as Section 75(2) factors was concerned. However, it does not follow that a conclusion should be reached that it was likely that she had other property of significance and her case dismissed on that basis.
[5] Efthimiadis (1993) FLC 92-361
I am satisfied that the appropriate way to treat the wife’s failure to disclose and her evasion in respect of the [omitted] income is to conclude that her overall earning capacity may well be considerably in excess of $59,228.00 per annum.
The wife is entitled to $186,105.50 non-superannuation assets on the basis of contributions and $117,604.57 superannuation. She has no credit card debt and has substantial savings. Some of her savings derive from the proceeds of sale of the [C] property but the rest is from the wife’s tax refunds and government stimulus payments and her post separation efforts to conserve money.
The wife wishes to retain the home and on the basis of contributions she will be required to pay the husband a significant sum in order to do so. The wife said that her borrowing capacity was $160,600.00. However she has substantial savings and common sense suggests that she would be unlikely to lose the home if she had to pay the husband an amount equivalent to 50% or 60% of the non-superannuation pool.
The wife has not re-partnered.
[X] and [Y] live with the wife and have done since separation. [X] has completed Year 12 and is likely to go into the workforce and/or do some further training. I accept that the wife is probably still helping [X] financially but [X] is now 19 (she was 18 at the date of the hearing) and should increasingly become financially independent.
In her affidavit [X] said that she had a wish to live with the husband in the future. [X] is 19 however and any number of things could happen in the future, including [X] changing her mind or moving in with a boyfriend. There was no evidence that the husband might need to support [X] financially in the future.
For the period 21 November 2009 to 30 November 2010 the husband is assessed to pay $29.00 per fortnight or $63.00 per month for [Y]. This assessment was based on the wife’s 2009 taxable income of $46,603.00 and may well reduce once the wife’s actual current income is factored in.
The effect of this is that while [Y] continues to live with the wife the husband will be paying child support in proportion to his income and will make an additional financial contribution when he spends time with [Y], but the reality will be that the wife will be providing the vast majority of the financial support for [Y].
[Y] completed Year 7 in 2009 and was due to start high school in 2010. He may well require financial support for a further five years.
There was a dispute between the parties about whether [Y] would continue to live with the wife. The husband said that [Y] wanted to live with him. I have no independent evidence about this issue. The wife said that [Y] sometimes did not want to visit the husband and said that she would fight to prevent [Y] living with the husband as she did not consider him a good role model.
I cannot resolve beyond doubt the issue of where [Y] will live in the future. The wife is opposed to [Y] living with the husband, but there are no court orders and [Y] has now turned 14, making it unlikely that his parents will have total control over where he lives in the future. Any number of scenarios are possible, including [Y] trialling living with his father but later returning to live with his mother.
The husband is 48. He is employed as a [omitted] and earns $34,164.00 per annum. He does not have any health problems which impact on his ability to earn an income.
The husband has been working for the same company for twenty two years. His evidence was that he was concerned about the security of his employment as a result of a recent change of ownership of the company, but he has a good employment history and has skills and experience as a [omitted]. I am satisfied that the husband has reasonable prospects of obtaining employment in the future even if his current employment ceases.
The husband will be entitled to $186,105.50 non-superannuation assets based on contributions and $96,221.92 superannuation. He has credit card debt of $2,300.00 and no savings.
Since October 2007 the husband has been sharing accommodation with Ms F and her children [K], 3 and [T], almost 2 and he knew Ms F prior to his separation from the wife in August 2006. The husband denied that he and Ms F were in a relationship and said that they lived together for “mutual financial support and support.”[6] He denied that he was the father of either [K] or [T] and said that [T]’s father was one Mr S who sometimes visited [T].
[6] Husband’s affidavit filed 6 August 2008 paragraph 3
I did not find the husband’s evidence about whether he was in a relationship with Ms F at all convincing. However if Ms F and the husband are in a relationship, this only increases the husband’s financial responsibilities, because Ms F is not working and has the care of two young children. If Ms F and the husband are not in a relationship he may be deriving some benefit from having someone to share payment of the rent, but either way I do not consider that the husband’s relationship (or not as the case may be) with Ms F gives the husband any significant financial advantage which should be taken into account in assessing s.75(2) factors.
In my view before I finally determine whether there should be any adjustment for s.75(2) factors, I need to determine the issue of which party is to have first option to retain the former matrimonial home.
The husband said that he should be given first opportunity to retain the home. He said that he could borrow $120,000.00 on his own and up to $180,000.00 if Ms F moved in and rented a room. The husband said that he was keen to obtain a home in the area where the children were living, so that when [Y] came to live with him [Y] could continue to attend the same school.
The wife has lived in the home since separation more than three years ago and she has paid the necessary outgoings and kept the home in good repair. The husband did not mention wanting to keep the home until after the hearing commenced. In my view the wife should be given first opportunity to keep the home. She may find upon further enquiry that she is able to raise the money to pay the husband out. The wife insisted that her borrowing capacity was limited but the letter from the Commonwealth Bank attached to her affidavit did not say that $160,600.00 was all that she could borrow, it simply offered a loan in this amount.[7]
[7] Wife’s affidavit filed 20 November 2009 annexure L
This has some bearing on the issue of where [Y] will live. He appears to prefer living in his current location and attending school in that area and if the wife keeps the home he may well be disinclined to move to his father’s.
The wife sought a 5-10% adjustment in her favour for s.75(2) factors but I do not consider that any adjustment in her favour is warranted. The only issue favouring her is the care of [Y], because if [Y] continues to live with the wife she will continue to provide the majority of financial support for him. However balancing this out is the fact that the wife is in a much stronger financial position than the husband. She earns almost twice as much as he does, and conceded that there were prospects of her obtaining promotions. She receives additional income from her [omitted] activities. She is a careful money manager and has accumulated substantial savings since separation.
The husband sought a 10% adjustment in his favour. In support of his case the husband pointed to his lesser earning capacity. He also relied on the fact that he might well have the primary care of [Y] in the future.
It is true that the wife has a much greater income earning capacity than the husband but his income earning capacity has not been affected by the marriage, nor has the wife’s income earning capacity been increased by events which occurred during the marriage. The wife worked for the predecessor of her current employer for four or five years prior to the marriage. I would not be inclined on that basis alone to make an adjustment in favour of the husband.
If it is was likely that the husband would have the care of [Y] for the next five years then this combined with the wife’s higher income earning capacity would incline me to make an adjustment in the husband’s favour in respect of the non-superannuation asset pool.
However although I cannot finally determine where [Y] is likely to live there is no compelling evidence that he will change residence, especially if the wife keeps the home. If [Y] does go to live with the husband he can at least be assured that the wife, a government employee, will pay a reasonable level of child support.
I take into account that the wife has a greater income earning capacity than the husband but when this is weighed against the fact that she will more likely than not be supporting [Y] for the next five years, the s.75(2) factors in respect of the non-superannuation pool balance out and I do not propose to make an adjustment in favour of either party in respect of this pool.
I can take into account pursuant to s.75(2)(o) any other fact or circumstance and the justice of the case requires me to take into account and a factor which might have favoured the husband had relevant evidence been available is that as a result of my decision the wife will have first option to keep the home. I have no evidence however on which I can make findings about the financial impact on the husband of being required to purchase a home or the financial advantage gained by the wife in keeping an existing home and therefore I do not consider that I can take this matter into account.
There is a small disparity in the parties’ entitlements to superannuation as a result of a division on the basis of contributions, and it is apparent given what has already happened in the three years since separation that the wife is likely to acquire further superannuation much more quickly than the husband. However, the difference in the parties’ situations is not the result of the marriage and it is not the role of the court to engage in social engineering. Both parties are a long way from retirement and I do not consider that justice and equity requires that any adjustment should be made in the husband’s favour from the superannuation pool.
The wife will thus be entitled to 50% or $186,105.50 from the non-superannuation pool and 55% or $117,604.57 from the superannuation pool, and the husband will be entitled to 50% or $186,105.50 from the non-superannuation pool and 45% or $96,221.92 from the superannuation pool.
Whether the orders proposed are just and equitable
The non-superannuation assets in the husband’s possession are his motor vehicle and household contents valued at $1,600.00. I intend to order that the shares be sold and the husband will receive 50% of the value of the shares ($4,305.50 for the purposes of this judgment). He will have a total of $5,905.50 from the pool. If the wife wishes to retain the [S] property she will need to pay the husband $180,200.00.
If the wife cannot pay the husband $180,200.00 then she will regrettably lose the home but I consider it more likely than not that the wife will find a way to keep the home. However I intend to order that if she is unable to obtain sufficient to pay the husband then he have second option to acquire the home, and only if he is also unable to raise the money should the home be sold.
The husband is entitled to superannuation to the value of $96,221.92. I therefore intend to make a splitting order requiring $49,587.26 to be paid to the husband from the wife’s fund.
Procedural fairness has not yet been given to PSS in respect of a splitting order and all I can do is indicate in the orders that I will make the superannuation splitting order in chambers once evidence that the Trustee has been given procedural fairness is provided.
An outcome which delivers 50% of the non-superannuation assets and 55% of the superannuation to the wife will be disappointing to her. It was her case that she should receive a very high proportion of the pool, between 67.5% and 80%. However in circumstances where the parties cohabited for 17 years, worked together for five years prior to that to acquire the home which became their principal non-superannuation asset, both earned income during their marriage and both helped raise two children, and in circumstances where the wife’s income earning capacity exceeds the husband’s, the outcome proposed by the wife cannot be justified.
For all of the above reasons the orders shall be as set out at the beginning of this judgment and I am satisfied that the orders, and the outcome, are just and equitable.
I certify that the preceding one hundred and thirty-five (135) paragraphs are a true copy of the reasons for judgment of Terry FM
Date: 21 September 2010
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