Jayce and Pierce And Anor
[2019] FamCA 955
•12 December 2019
AMENDED PURSUANT TO RULE 17.02A ON 30 APRIL AND 1 MAY 2020
FAMILY COURT OF AUSTRALIA
| JAYCE & PIERCE AND ANOR | [2019] FamCA 955 |
| FAMILY LAW – PROPERTY – Property Adjustment – Where discussion of applicable principles – Where relatively small property pool – Where parties’ contributions to time of trial equal – Where s 75(2) factors significant – Where pool to be adjusted 62.5 per cent to the wife and 37.5 per cent to the husband. |
| Family Law Act 1975 (Cth) ss 75, 79 |
| Bevan & Bevan [2014] FamCAFC 19 Chapman & Chapman [2014] FamCAFC 91 Dench & Dench [1978] FamCA 65 Russell & Russell (1999) FLC 92-877 Scott & Danton [2014] FamCAFC 203 Stanford & Stanford [2012] HCA 52 Teal & Teal [2010] FamCAFC 120 |
| APPLICANT: | Ms Jayce |
| FIRST RESPONDENT: | Mr Pierce |
| SECOND RESPONDENT: | Ms B Jayce |
| FILE NUMBER: | PAC | 3716 | of | 2016 |
| DATE DELIVERED: | 12 December 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 2, 3 and 4 December 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Druitt |
| SOLICITOR FOR THE APPLICANT: | Matthews Folbigg Pty Ltd |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Anderson |
| SOLICITOR FOR THE FIRST RESPONDENT: | Watts McCray (NSW) Pty Ltd |
| SECOND RESPONDENT – SELF-REPRESENTED LITIGANT: | Ms B Jayce |
Orders
The wife’s application for spouse maintenance be dismissed.
That within six months from this date the wife pay to the husband the sum of $48,236.
That in consideration of the payment provided for, the husband shall do all things necessary and sign all necessary documents to transfer to the wife his interest in the home at C Street, Suburb D being the land in Folio Identifier ….
That concurrently with the transfer of the property to her, the wife shall do all things necessary to discharge the present mortgage encumbrances secured over the property at C Street, Suburb D being the land in Folio Identifier … and as and from this date indemnify the husband from all or any liability arising therefrom.
That in default of the wife complying with Order 1 by the due date, the parties including the second respondent do all things necessary to sell the property at C Street, Suburb D being the land in Folio Identifier … for the best price reasonably obtainable and to apply the proceeds of sale as follows:
(a)In payment of agent’s commission and selling costs including legal expenses;
(b)In payment of 46 per cent of the balance then remaining to the second respondent Ms B Jayce; and
(c)In payment of the balance then remaining to give effect to an overall division of property as to 62.5 per cent to the wife and 37.5 per cent plus $5,500 to the husband having regard to these reasons for judgment and taking into account the superannuation splitting order made herein.
That:
(a)The Court allocates, as required by section 90XT (4) of the Family Law Act 1975 (Cth), a base amount of $200,000 to the applicant wife out of the respondent husband’s interest in the Super Fund 1 Plan member number ….
(b)In accordance with section 90XT(1)(a) of the Family Law Act 1975 (Cth), the Trustee of the Super Fund 1 Plan:
(i)Creates an entitlement on the part of the applicant wife to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount allocated in paragraph 4.1; and
(ii)Makes a corresponding reduction in the entitlement to the respondent husband, or such other person to whom a splittable payment may be made, would have had in Super Fund 1 Plan, but for his order.
(c)Whenever the Trustee of Super Fund 1 Plan makes a splittable payment out of the respondent husband’s interest in the Super Fund 1 Plan, the Trustee shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in paragraph 5(a) of this order in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001;
(d)This order has effect from the operative time and the operative time is 4 working days after the service of these orders on the Trustee of the Super Fund 1 Plan; and
(e)This order binds the Trustee of Super Fund 1 Plan.
The parties shall sign all necessary consents as required by the Trustee of Super Fund 1 Plan within seven days of this order so as to facilitate the wife rolling her superannuation interest out of the Super Fund 1 Plan to a complying fund of her choice and the wife shall do all things necessary to do so as soon as practicable.
Liberty to apply as to implementation or enforcement of these orders.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jayce & Pierce has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 3716 of 2016
| Ms Jayce |
Applicant
And
| Mr Pierce |
First Respondent
And
| Ms B Jayce |
Second Respondent
REASONS FOR JUDGMENT
The application for determination is one as to property adjustment as between the applicant wife and the first respondent husband.
Proceedings were listed for final hearing as to both parenting and property adjustment and spouse maintenance as sought by the wife but the parties were sensibly able to resolve parenting issues by consent and the matter proceeded as to the question of property adjustment only.
At the conclusion of the trial, the wife sought not to proceed with her spouse maintenance application and that application will accordingly be dismissed.
During the course of the trial, counsel for both parties contended that the Court should regard the parties’ contributions including initial contributions, contributions during the course of cohabitation and contributions subsequent to separation to date of hearing as equal. It was further contended by both counsel that the only factors that would give rise to any adjustment to the position of contribution equality would be those matters to be considered by the Court in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).
As to parenting, in summary, final orders were made that provided for the husband and wife to have equal shared parental responsibility for the subject children who were at trial aged almost 12 and 10, that the children will primarily live with the mother and that, otherwise, the children will spend substantial and significant time with the father.
As to property, the parties relied upon the following documents:
(a)the wife:
i)her trial affidavit filed 14 May 2019;
ii)her Financial Statement filed 14 May 2019; and
iii)the affidavit of the wife’s mother Ms B Jayce filed 10 May 2019.
(b)the husband:
i)his trial affidavit filed 16 May 2019,
ii)his Financial Statement filed 23 April 2019.
Property Principles
The approach to the determination of an application under s 79 of the Act is set out in Stanford & Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4).
The Court in the application of s 79(2) of the Act needs to conclude that it would be unjust or unfair to leave the parties’ property rights intact.
In many cases such as the present matter, this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
In particular, such a circumstance arises where both parties seek property adjustment orders but are unable to agree as to same. Here the wife seeks an order for adjustment of property so as to end the joint ownership of the matrimonial home as does the husband.
It would, in some circumstances, be unjust or unfair to leave property rights intact where there is common ownership and discrete assets are sought by each. Such is the case in this matter and the parties both agree that their common ownership of property is to be brought to an end so as to reflect their respective contentions as to entitlement.
It is appropriate that property adjustment orders be made.
Otherwise, a consideration of s 79(4) factors as discussed below reveals it would be unjust or unfair to leave the parties’ property rights as they are.
Section 79(4) requires a consideration of the contributions made by the parties as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g), in particular, the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant: (s 79(4)(e)).
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
Context
The parties commenced cohabitation in about August 2003 in a property owned by the husband.
They married in 2004 and separated on a final basis on 6 December 2014.
Hence, the final trial as to parenting and property was almost five years after separation with proceedings having been commenced by the wife in August 2016.
The children referred to above are the only children of the parties’ relationship.
Subsequent to separation, the father has re-partnered and there is one child of his new relationship, that child at time of trial was 16 months of age. The father’s partner has returned to full-time employment subsequent to the birth of their child.
The wife has not re-partnered and resides in the former matrimonial home at Suburb D with the maternal grandmother who by reason of consent orders made on 27 November 2019 is the equitable owner of a 46 per cent interest in that property at C Street, Suburb D. By reason of the consent orders, the husband and wife hold that property in trust as to that interest for the maternal grandmother Ms B Jayce.
Background
Notwithstanding the parties’ contentions as to the equality of contributions throughout the relationship to trial, it is appropriate to shortly consider the history of the relationship so that the Court is satisfied that contributions should be so regarded.
At the commencement of cohabitation, the wife was in employment as a part-time counsellor. The husband at that time was in employment with G Company as a professional having been employed by that company since early 1991. At this time the husband had accumulated Super Fund 1 superannuation of about $43,000.
At this time both parties held interest in real property.
In 1994 the maternal grandmother purchased a property at Suburb E in Sydney for the sum of $245,000 with the purchase price partly funded by way of a mortgage advance. The wife advanced to her mother monies so as to assist her with the payment of stamp duty on the purchase. The wife and her mother resided in this property subsequent to its purchase.
In early 2002, the wife purchased an investment property at F Town, New South Wales. The property was purchased by the wife and her mother as tenants-in-common as to 95 per cent as to the wife and five per cent as to her mother. The wife’s mother was on title so as to assist the wife in obtaining mortgage finance for the purchase. The property was purchased for the sum of $161,000 with a mortgage advance comprising virtually the whole of the purchase price.
The F Town property was tenanted since purchase and until its sale in February 2008. The parties and the wife’s mother attended to some renovation and upkeep of this property in between tenancies. Over the period of the parties’ cohabitation until this property sale, there was a modest shortfall of income over expenditure and this was funded from matrimonial income.
The husband and his former partner purchased a townhouse property at Suburb H in Sydney. This property was purchased in 2002 for the sum of $354,000 with the purchase price partly funded by a mortgage advance of $283,000.
These property interests were held by the parties as at the commencement of their cohabitation in late 2003.
After cohabitation
In August 2004 the husband acquired the interest of his former partner in the Suburb H property. At this time the mortgage on the property was refinanced in the sum of $290,000.
The husband and wife continued to reside in the Suburb H property until 2008.
In February 2008 the wife sold her F Town property with the net proceeds of sale being in the sum of about $58,000. She paid these monies in reduction of the husband’s mortgage over the Suburb H property.
Shortly after in 2008 the husband sold his Suburb H property for $433,000. The net proceeds of sale were in the sum of $156,000 in respect of which sum the wife had contributed $58,000. These funds were applied in reduction of the mortgage secured over the wife’s mother’s property at Suburb E.
Prior to the sale of the Suburb H property and the sale of the wife’s mother’s property at Suburb E the parties jointly purchased the present matrimonial home at Suburb D for the sum of $875,000. The purchase price comprised two mortgage advances: one of $350,000 and one of $545,000. To secure these borrowings the mortgagee took collateral security over the wife’s mother’s property at Suburb E.
In late 2008 the wife’s mother sold her property at Suburb E with the net proceeds of sale being $575,000. Of this sum $156,000 had been contributed by the parties from the sale of the Suburb H property as referred to above. The proceeds of sale of the Suburb E property were applied by the wife’s mother in reduction of the mortgages secured over the Suburb D property.
Thus the wife’s mother’s net contribution of about $420,000 to the Suburb D property has resulted in her equitable interest in the property as referred to above.
There is much evidence relied upon by all parties in relation to various works including repairs and renovations undertaken to the Suburb D property over the years since purchase. It is common ground that some funds were provided by the wife’s mother, other funds sourced from increased mortgage borrowings in 2009 and 2014 and other funds from the husband’s income as the primary income earner within the household.
Both parties concede that their contributions in terms of non-financial contributions and in terms of contributions within the home and as to parenting overall should be also regarded as equal.
Otherwise, it is the concession by both parties that on balance, in particular, having regard to the property dealings above and the contributions of the parties, particularly post separation, including primary parenting of the children by the wife, a modest reduction in the mortgage balance outstanding over the Suburb D property since separation effected by the wife, her continuing occupation of the home for five years since separation and other aspects of contributions should be regarded as equal.
In all of the circumstances, the Court considers that such a concession is appropriate and a proper reflection of contributions in their various guises.
As such, both parties contend that the only issues that arise in relation to any disparity in contribution arises from the provisions of s 75(2) of the Act.
The property pool
At the commencement of the trial the parties provided to the Court a draft balance sheet: Exh “F”. That document was further refined during the course of the hearing and a further draft balance sheet was provided to the Court: Exh “L”.
At the conclusion of the trial, the parties provided to the Court a final balance sheet that comprised various assets and liabilities for adjustment: Exh “V”. During the course of the trial, they had refined the balance sheet so as to exclude extraneous issues relating to the parties’ present assets and liabilities, in particular, reference to legal costs that were inappropriate for inclusion in the final balance sheet for adjustment between the parties.
The final balance sheet comprises the following:
Assets
Joint 54 per cent interest in Suburb D property $891,000
Husband G Company shares $ 15,241
Wife Motor vehicle $ 13,000
Wife Jewellery $ 3,000
Total: $922,241
Liabilities:
Westpac mortgages $381,761
Nett: $540,480
Superannuation
Husband Super Fund 1 $553,910
Wife Super Fund 2 $ 3,977
Total: $557,887
It was contended by both parties that the assets of the parties including superannuation should be included in the one pool for division. There is nothing arising from the factual matters set out above that would make such an approach inappropriate. Thus the overall pool for consideration is in the total sum of $1,098,367.
Regrettably for the parties, this is a matter where the overall asset pool is not significant and that a significant component of the asset pool is the husband’s defined benefit interest in the Super Fund 1 Plan: Exhibits “Q” and “R”. The husband is presently 47 years of age with about 20 years until he can access his superannuation. In the event of a superannuation split and with the consent of the parties, any sum split in favour of the wife will be able to be rolled out by her to a fund of her choice. Yet she at the age of 51 remains many years from when she can also access her superannuation.
Contributions
For the reasons discussed above, the parties’ contributions to the overall asset pool is to be regarded as equal.
Section 75(2) factors
It was contended on behalf of the wife that there should be an adjustment to the contribution based entitlements of 15 per cent in favour of the wife. Such an adjustment would result in an overall 30 per cent disparity in property division between the parties of $329,510.
It was, otherwise, contended by the husband that should there be any adjustment by reason of those factors it should be no more than five per cent thus creating a disparity of 10 per cent between the parties of $109,836.
The wife is presently aged 51 and the husband aged 47. Neither party asserts any significant health issue.
The property and financial resources of the parties are set out above. The husband is in salaried employment with G Company earning an income including bonuses in the order of $175,000 per annum. The wife, on the other hand, operates a small dog grooming business which provides her with a minimal income and she is, otherwise, dependent upon her Centrelink Newstart allowance, Centrelink family tax benefit and child support received from the husband of about $320 per week.
The wife did not proceed with her application for spousal maintenance. She is presently undertaking further education in the area of creative writing. The prospects of this further course of education improving her employment and/or income circumstances, it would appear, are at best problematic. Both children are at school with the children spending time each school fortnight with their father. The Court is comfortably satisfied that the wife has the capacity to obtain some part-time employment to enhance her income circumstances. Yet her prospects of income comparable to that of the husband are poor.
As to the husband, he is in long-term settled employment in which it appears he will remain and in so doing he will continue to accrue significant superannuation benefits.
However, there will be a most significant disparity in the earning capacity and financial resources of both parties into the future. This is a most significant factor in favour of the wife: See Dench & Dench [1978] FamCA 65.
The wife will remain the primary carer for these children now aged 12 and 10 with the husband having substantial and significant time with the children. However, this also is a factor in favour of the wife.
The husband has an ongoing obligation along with his new partner for the support of their new child. He is assisted in that regard by his partner who has returned to full-time employment.
The parties have superannuation entitlements as set out and discussed above with a significant feature being the husband’s defined benefit superannuation entitlement and both parties being quite some years from when they can access their superannuation.
Importantly, the wife’s earning capacity has been diminished by the years that she has remained out of the workforce both during cohabitation as a consequence of her primary role within the home as homemaker and parent and thereafter until hearing where she has had substantially the primary obligation as to parenting although the husband has had substantial and significant time with the children.
The wife has no up-to-date skills that would readily see her return to the workforce. Her evidence is that she would require to completely retrain as a counsellor should she return to that employment that she undertook in the early years of the parties’ relationship. However, that is not to say that she has no obligation to seek to retrain or seek new skills appropriately or indeed return to the workforce in some other capacity on a part-time basis having regard to her continuing obligation with the children. This factor also is significant in favour of the wife.
The wife’s ongoing primary role within the household has facilitated the husband remaining in long-term employment with G Company and progressing from his initial position as a professional to a senior management position in Sydney. He will continue to reap the benefit of his long-term stable employment into the future.
The husband is residing in a de facto relationship with his partner. Following the birth of their child the husband’s partner has returned to employment, he estimating that her annual income is about $168,000: Exh “O”.
The wife’s household comprises herself, the children and the wife’s mother. Whilst not strictly cohabiting, the wife acknowledges that she derives a significant benefit from her mother’s ongoing occupation in the home in which she is, of course, a part owner.
The proposed orders under s 79 as between the parties will deal with the parties’ equity in the former matrimonial home at Suburb D and a splitting order in relation to the husband’s superannuation. The splitting order is as discussed above not such as to provide to either party any immediate benefit and the realisation of any superannuation benefit will need to await each party attaining the relevant statutory vesting age.
The husband pays child support by salary deduction from his income. There may be some adjustment in terms of his liability for same by reason of the new consent to parenting orders but both parties anticipate that it will not be significant.
The husband has paid a significant portion of his legal fees. Some from borrowing, about $100,000 from the sale of G Company shares received by him as part of his employment package and some from his continuing income. On the other hand, the wife has significant unpaid legal fees, having no source from which to pay same.
In considering the various factors under s 75(2), it is considered that a just and equitable adjustment would be not as sought by the wife but as to 12.5 per cent. Such an adjustment would create a disparity between the parties of 25 per cent being $274,591.
Overall
Otherwise, orders to be made will not affect the parties’ earning capacity.
Overall, the parties’ entitlements to property will be as to 62.5 per cent to the wife and 37.5 per cent to the husband. The wife argues for a splitting order as to the sum of $80,000 from the husband’s superannuation in her favour. The husband, for his part, argues for a superannuation split in the sum of $120,000.
The Court needs to be conscious of the circumstance that should the wife retain the significant equity in the matrimonial home that will represent an immediate benefit to her in cash terms whereas should the husband retain the significant proportion of his superannuation his benefit in effect is deferred for many years until the statutory vesting age.
It is thus appropriate to afford to the husband some immediate benefit in terms of a realisation of some equity in the home to which he has made a significant contribution as conceded by both parties. Yet the Court must have regard to the wife’s wish to retain the property to accommodate herself and the children. Her property interest will in effect be her long term “superannuation”.
Balancing these competing considerations is aided by the reality of the small pool for adjustment. The husband’s entitlement is as to 37.5 per cent of the overall pool. Such equates to a monetary sum of $411,887. Yet his superannuation has a value of $553,910. If he splits $120,000 of it to the wife as sought by him (on the basis that should the Court find that a five per cent adjustment under s 75(2) was appropriate), he would have no entitlement to any cash adjustment from the wife in consideration of her retaining the home.
In these circumstances, it is proper that there be a more significant superannuation split to achieve an overall just and equitable result. It is readily apparent that the husband’s prospective superannuation benefits were a factor in these parties’ plans for a secure future. Should there be a superannuation split of $200,000 to the wife then she would be required to pay to the husband an adjustive sum of about $42,736 to acquire his interest in the matrimonial home.
Such a payment will require the wife to refinance the current mortgage encumbrance secured over the home and to borrow a modest further sum to pay to the husband to acquire his interest in the home.
Orders will be made accordingly.
The wife, otherwise, will be required to pay to the husband the sum of $5,500 being her contribution to the costs of the Single Parenting Expert Report. Such sum will be added to the required payment to the husband.
I certify that the preceding seventy eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered 12 December 2019.
Associate:
Date: 12 December 2019
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