K and K
[2003] FMCAfam 180
•12 June 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| K & K | [2003] FMCAfam 180 |
| FAMILY LAW – Property – initial contributions – superannuation – wife proposes a splitting order of her superannuation interests which the husband opposes – wife fails to notify trustee that she seeks a splitting order – s.90 MZD notice mandatory – legislative intent that orders address future needs upon retirement given effect to. PRACTICE & PROCEDURE – Judgment reserved until trustee afforded procedural fairness and given an opportunity to be heard. |
Family Law Act 1975, ss.75, 79
Child Support (Assessment) Act 1989
In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626
In the Marriage of Ferraro (1993) FLC 92-335
In the Marriage of Clauson (1995) FLC 92-595
Russell v Russell (1999) FLC 92-877
Tuck and Tuck (1981) FLC 91-021
McMahon and McMahon (1995) FLC 92-606
Norbis v Norbis (1986) 161 CLR 513
Zyk v Zyk (1995) FLC 92-644
Quinn and Quinn (1979) FLC 90-677
Kerr & Kerr Full Court of the Family Court 11 August 1995 (unreported)
Rosatti (1998) FLC 804
Tomassetti (2002) FLC 93-023
Levick [2003] FamCA 40 (unreported)
| Applicant: | M K K |
| Respondent: | A C K |
| File No: | PAM567 of 2003 |
| Delivered on: | 12 June 2003 |
| Delivered at: | Parramatta |
| Hearing date: | 27 May 2003 |
| Judgment of: | Ryan FM |
REPRESENTATION
| Counsel for the Applicant: | Mr P. Schroder |
| Solicitors for the Applicant: | Smythe & Mallam |
| Counsel for the Respondent: | Mr R. Greenaway |
| Solicitors for the Respondent: | Shaddick Baker and Paull |
ORDERS
Within eight weeks of the date of these orders the wife shall pay to the husband the sum of $23,062.00.
Simultaneously, upon compliance by the wife with Order 1, the husband shall give the wife evidence that all caveats he has lodged against the properties at 29 M Avenue, L and
1 D Avenue, W have been withdrawn.Pursuant to s.90MT(1)(a) of Family Law Act 1975 whenever a splittable payment becomes payable to M K K from her interest in the PSS Superannuation Fund A C K is entitled to a base amount in the sum of $9,750.00 and there is a corresponding reduction in the entitlement M K K would have had but for these orders.
That Order 3 above have effect from the operative time which is
12 June 2003.That having been accorded procedural fairness in the making of these orders, Orders 3 and 4 bind the trustee of the PSS Superannuation Fund.
In the event that the wife fails to comply with Order 1 the parties shall forthwith do all acts and things and sign all documents necessary to sell the property situate at and known as 1 D Avenue, W for sale by private treaty with a real estate agent at a price to be agreed upon between the parties and failing agreement to be determined by the president of the Real Estate Institute of New South Wales or his nominee.
That the proceeds of sale pursuant to Order 6 above be disbursed as follows:
(a)firstly, in payment of the costs of sale including the real estate agents and legal fees;
(b)to discharge the mortgage to the Commonwealth Bank;
(c)in payment of any outstanding rates and charges;
(d)in payment of 80 per cent of the net balance to the wife, from which the wife will pay the husband $2,900.80; and
(e)the remaining 20 per cent to the husband.
That the wife shall continue the repayment of mortgage instalments on the Commonwealth Bank loan and pay all rates and taxes when they fall due until whichever of the following events first occur:
(a)she complies with Order 1; or
(b)the completion of the sale in accordance with Order 7.
That unless otherwise specified in these orders, each party shall be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party at the date of the making of these orders.
That unless otherwise specified in these orders, each party shall be solely responsible for any liability that they currently personally carry and shall indemnify the other party in relation to any claim for payment by the lending authority.
That in default of either or both of the husband and the wife doing all such things and executing all such documents as may be needed to comply with these orders that a Registrar of the Parramatta Registry of the Federal Magistrates Court or such other person appointed by the court is authorised to do all such acts and things and execute all such documents on behalf of either or both of the husband and the wife.
That the husband is restrained from consuming alcohol to excess whilst he has the child A K in his care. Whilst the child is with him for contact, the husband is restrained from consuming more than two standard alcoholic drinks in each 24 hour period.
That all exhibits tendered in these proceedings be returned at the expiration of one calender month unless an appeal is lodged.
That the solicitor who issued any subpoena collects that subpoenaed material and returns it to the owner within seven (7) days.
All outstanding applications are dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM597 of 2003
| M K K |
Applicant
And
| A C K |
Respondent
REASONS FOR JUDGMENT
The proceedings
These are proceedings for the adjustment of property and for an injunction that relates to the welfare of the parties’ only child A W K born 4 January 2000. The wife seeks an order that the husband is restrained from consuming alcohol whilst exercising contact.
The applications
M K K (“the wife”) started the proceedings when she filed an application for final orders on 20 August 2002. Her application was filed in the Family Court of Australia. Later, on 5 February 2003, the proceedings were transferred to the Federal Magistrates Court. She filed an amended application on 31 January 2003. Prior to the hearing her counsel provided an outline of case document that sets out the orders sought at trial. In essence, she sought orders as follows:
·That A live with her;
·That the husband have contact each alternate weekend and at other specified times;
·That the husband be restrained from consuming alcohol and non-prescribed drugs for twelve hours prior to and during contact.
·That the she pay the husband $22,298.00 within three months.
·A section 90MT(1)(a) splitting order in relation to her interest in the PSS Superannuation Fund using a base amount of $7,313.00.
·Otherwise, that each party keeps the assets and financial resources that they currently have.
The effect of the s.79 orders proposed is that she have 85% of the nett assets and that the husband have the remaining 15%.
During the course of the hearing I inquired of the wife’s counsel whether notice that the wife sought a splitting order had been given to the trustee of the PSS Fund in accordance with s.90MZD. Having been advised by counsel that it had been, the hearing proceeded. Later, when I asked for a copy of the notice to the trustee it became apparent that regrettably notice had not been provided and that the assurance had been given in error. Both counsel constructively addressed the difficulty and by agreement the following orders were entered.
1.No later than 5.00 pm tomorrow the solicitor for the applicant wife shall give notice in writing to the trustee of the wife’s superannuation fund of her intention to seek a splitting and flagging order.
2.That the solicitor for the wife submit a copy of the notice given to the trustee to the court, which notice will become an exhibit in the proceedings.
3.That the trustee shall re-list this matter by arrangement with my associate no later than 5 June 2003 if the trustee wishes to be heard in relation to the orders sought by the wife vis her superannuation.
4.The court otherwise reserves its decision.
On 28 May 2003 the court received by agreement a letter forwarded to the trustee of PSS by the wife’s solicitor that day[1]. As the trustee has not sought to list the matter I am satisfied that they have been afforded procedural fairness and that the trustee does not wish to be heard in opposition to the relief sought by the wife viz superannuation.
[1] Exhibit F
A C K (“the husband”) filed his response on 27 September 2002. At that time he sought an order that A live with him and that the properties at W and L be sold. Upon its sale he proposed that the nett proceeds be divided 60% to him and the balance to the wife. Otherwise that each party retain the assets that they have. Prior to the start of the hearing the husband abandoned his application that he have residence of A and hence the affidavit evidence addressed issues concerning contact.
At the start of the hearing the parties compromised all matters concerning parenting orders and invited the court to make orders by consent concerning A[2]. The effect of the orders is that A will continue to live with the wife. Until A starts school the husband shall have contact each alternate weekend and for two one week periods annually. Once A starts school the duration of the weekend contact extends to include Friday evening and block contact extends so that the child will live with his father for one half of each school holiday period. Provision is also made for contact on other special occasions.
[2] Exhibit E
At the conclusion of the proceedings the husband’s counsel indicated that his client sought a s.79 order, the effect of which would be to give the husband slightly more than 50% of the nett assets. It was submitted that the court would disregard specific liabilities and that the husband’s s.79 entitlement would be ordered against non-superannuation assets.
The evidence
The applicant wife relied upon the following evidence:
·Her affidavit filed 9 May 2003 and her oral testimony.
·Her financial statement filed 20 August 2002.
·Affidavit of N K filed 9 May 2003. This witness was not required for cross-examination and I accept his testimony.
·Affidavit of Arnold Shields filed 14 May 2003. As the value of the wife’s superannuation interest was agreed this witness was therefore not required for cross-examination.
The respondent husband relied upon the following evidence:
·His affidavit filed 22 May 2003 and his oral testimony.
·His financial statements filed 27 September 2002 and 22 May 2003.
The wife’s counsel tendered a number of documents that became exhibits.
The issues
The principal issues raised in these proceedings are:
·The likelihood that excessive alcohol consumption will impair the husband’s capacity to adequately care for A during contact.
·The comparability of the parties initial contributions.
·The significance of the husband’s contribution of his workers compensation settlement shortly after cohabitation.
·Whether the husband should take his s.79 entitlement against the immediately available assets only.
·If the husband has his s.79 entitlement ordered against currently available assets and the wife takes the superannuation in its entirety whether that outcome is just and equitable.
·The s.75(2) adjustment that should be made in the wife’s favour as a consequence of her future care of A.
·Whether the husband will provide a reliable and proper level of child support.
·The effect of the husband’s failure to provide evidence of the value of his superannuation interests.
Short History
The wife was born on 4 July 1969 and is thus 33 years old.
The husband was born on 23 January 1971 and is thus 32 years old.
The parties commenced cohabitation in March 1999. They married on 12 June 1999.
There is one child of their marriage, A W K who was born on 4 January 2000.
The parties separated on 22 June 2002. Since separation A has lived with the wife. The husband remained living in the former matrimonial home until he left it during April 2003.
Chronology of relevant events
When the parties commenced cohabitation the wife was employed full time as a call centre operator. She was earning about $38,000 per annum. Although the wife denies it, I accept that immediately prior to cohabitation the husband worked part time. He had stopped full time work about eight months before they started to live together. Once he moved into the wife’s rented unit at Campsie he stopped work.
At the commencement of cohabitation the husband owned a Ford Falcon car, valued at approximately $1,500.00, a Suzuki motor cycle valued at approximately $3,500.00 and furniture and personal effects worth about $1,000.00. The husband had personal loan for monies borrowed from St George Bank for his motor cycle. He had initially borrowed $6,000.00 and says that at cohabitation the loan had about a $4,000.00 outstanding. The wife says that the loan stood at about $7,500.00. This is inconsistent with her evidence that his overall nett asset position was $2,000.00. Apparently, no loan repayments were made between cohabitation in March 1999 and when a letter of demand was received from the bank in about September 1999. I infer that the balance outstanding to St George Bank was in the vicinity of about $4,000.00. The husband also had an interest in a number of superannuation funds in relation to which there is no evidence as to their value. Putting aside his superannuation interests, I am satisfied that as at the commencement of cohabitation the value of the husband’s assets was approximately equivalent to his liability to St George.
At the commencement of cohabitation the wife had no assets of value. She had a small amount of cash and some furniture and had no liabilities. The wife had joined the Australia Post Superannuation Fund on 20 November 1989. Her 1999/2000 tax return reveals that she was employed by C Pty Limited. She was also eligible for long service and paid maternity leave when A was born. From this I infer that she had been in paid employment for sufficient time to establish these entitlements. The evidence does not disclose the value of the wife’s superannuation interest as at the commencement of cohabitation. There is no suggestion that the wife has ever made payments greater than the minimum statutory payments subsequent to cohabitation. Hence it seems that a significant proportion of her current superannuation interest had accrued prior to cohabitation. Although this information could have been easily established, it was not. Thus I am unable to make precise findings about the value of the wife’s assets at the commencement of cohabitation. Taking into account the value of her superannuation, I am satisfied that her assets exceeded the husband’s when they started to live together.
Once they started to live together the parties agreed that the wife would manage their financial affairs. The husband agreed that he was unemployed for several months after cohabitation during which period he underwent a back operation. Complications following the surgery meant that he was unable to return to work for about four months. He said that he received a Centrelink benefit for a brief period after the parties started to live together and he provided the wife with funds to make payments to St George. I do not accept his evidence. Rather, I am satisfied that until he received a lump sum payment in May 1999 he had no income and that the wife paid their rent, food and utilities from her wages. No repayments were made to St George.
On 31 May 1999 the husband was awarded $30,000.00 by way of a workers compensation computation. These monies were paid as compensation for an injury to his left arm that occurred on 9 September 1996. After $3,000.00 was used to pay medical expenses the husband received a bank cheque for the balance of $27,000.00. He gave this cheque to the wife and she paid it into her Commonwealth Bank savings account. The monies were spent entirely on joint matrimonial purposes. This included $10,000.00 by way of deposit on a property at 1 D Avenue, W, (“the former matrimonial home”), $2,169.00 stamp duty on its purchase, $450.00 for a car, honeymoon expenses of $1,000.00, $3,000.00 for furniture, $841.00 conveyancing fees and $2,500.00 for security screens on the former matrimonial home. The balance, I am satisfied was spent on day to day living expenses and other joint expenses.
Prior to the purchase of the former matrimonial home the husband commenced employment with C Communications at Smithfield as a field technician. He worked full time and was required to work away from home during the week. The husband says that he was earning up to $1,400.00 per week while he worked at C. The wife disputes this assertion. This is more than double the income he earned in subsequent employment and in the absence of any corroborative evidence I do not accept that he was earning up to $1,400.00 per week on a regular basis.
In September 1999 the parties purchased the former matrimonial home. The property was purchased in the wife’s sole name. The purchase price was $105,000.00. The parties paid $10,000.00 from the husband’s personal injury claim and $12,000.00 from a gift received from the wife’s father N R as deposit. In order to complete the purchase they borrowed $84,000.00 from the Commonwealth Bank in the wife’s sole name. I do not accept the husband’s evidence that the property was acquired in the wife’s sole name because he was too busy to attend necessary appointments associated with its acquisition. It is clear that he had defaulted on his loan obligations to St George Bank; something likely to be discovered by any prospective lender who undertook a standard credit reference check. I accept the wife’s evidence that the property was acquired in her sole name to avoid difficulties associated with his loan default.
Although he may not have physically handed the wife his entire pay packet, I am satisfied that throughout the course of their marriage the husband gave the wife virtually all of the income earned by him. He kept some small sums for his personal expenses and recreational habits. Apart from this both parties’ entire earnings were applied to joint matrimonial purposes throughout the marriage.
Having acquired their home the parties moved into it and lived there continuously until separation. On 16 December 1999 the wife commenced paid maternity leave. The husband stopped working with C Communications immediately prior to A’s birth. In January 2000 he obtained full time employment with T Limited. The husband says he was earning $35,000.00 per annum (gross) while the wife believes he earned approximately $380.00 per week probably after tax, superannuation and any other deductions were deducted.
During 2000 the wife’s mother moved in with the parties and remained living with them until about mid 2001. Whilst they were at work she cared for A. The wife’s mother did not contribute to the household expenses and was paid for occasional babysitting. This was an arrangement that was mutually beneficial to the parties and the wife’s mother. In financial terms the arrangement favoured the parties as both were able to continue to work and they did not have daycare or other child care expenses to meet.
At the end of her maternity leave the wife returned to work in about March 2000, earning a salary of about $38,000.00 per annum. The husband continued at T Limited until his contract ended in late 2000. Almost immediately he started work with Australia Post as a postal sorting officer. The wife says he was earning about $35,000.00 per annum whilst he believes it was about $27,000.00. In mid 2001 the wife’s mother left their home. At that time the husband was working evening shift and the wife worked during the day. The husband cared for A during the day whilst the wife cared for him at night. In late 2001 the husband was notified that his working hours were to change. This meant that unless one of the parties gave up work A would have to go into full time day care. In spite of the wife’s opposition to it, the husband resigned his employment at Australia Post in late 2001 and took on A’s full time care. A was not yet two years old and the husband did not want A to go into full time day care. He says, and I accept, that full time day care fees were expensive. Because he earned less than the wife did, on balance, his decision to stop work and care for their son on a full time basis was a reasonable one. He did not resume paid employment prior to separation. From that time forward the wife’s income was the family’s only income.
On 25 March 2002 the wife purchased 29 M Avenue, L for $187,000.00. Completion of the purchase occurred in about June 2002. The wife purchased the property as trustee for her father, N R. Her father is retired and was unable to obtain mortgage finance. At his request the wife agreed to purchase the property and raise the mortgage necessary to complete the purchase. The wife and her father executed a Deed of Trust on 7 May 2002[3]. Her father paid the deposit and all costs associated with the acquisition of the property. The wife borrowed $165,000.00 from the Commonwealth Bank which loan is secured by way of mortgage against the L property. Her father has made all instalment repayments pursuant to the mortgage. The wife has paid no money for the acquisition of the L property. I am satisfied that N R is the beneficial owner of the L property. The wife did not tell the husband about her involvement in the L purchase.
[3] Annexure F wife’s affidavit
On 21 June 2002 the wife fled the matrimonial home. She went to L where her father was living and then to Mt Druitt Police Station. The following day she returned to the former matrimonial home and after discussion with the husband collected A. She and A have lived with her father in the L property ever since. After they separated the husband remained in the former matrimonial home. The wife paid all mortgage payments and utility bills thereafter. She terminated the telephone account in November 2002.
The husband had obtained employment as a car detailer which employment he started the Monday following the parties’ separation. After his first day at work he returned to the home and discovered that the wife had been to the home and removed some of the contents. This happened a number of days in a row. I accept his evidence that he became preoccupied about family matters and was unable to focus adequately at work. After two weeks he was asked to leave his employment, which he did. The husband was distressed by the failure of his marriage and attended a local doctor who prescribed medication. He did not want to take medication. He did not look for work, but eventually used his time to obtain a truck licence and plant operator’s ticket. Throughout the period he received unemployment benefits from Centrelink.
At separation the wife applied to the Child Support Agency for an administrative assessment of child support. On 4 July 2002 an assessment issued requiring the husband to pay $283.25 per month child support. The husband received notice of the assessment prior to his resignation. Whilst I do not accept the submission that the husband gave up his employment so that he could avoid the payment of child support, he did not give sufficient regard to his financial obligation to support A, nor contribute to the matrimonial debts when he did so. I do not accept his evidence that he was willing to contribute to the mortgage and costs incurred in relation to the former matrimonial home after separation. He did not make any payments after separation to St George Bank, for example, a loan in his sole name.
After separation the husband made a series of threatening phone calls to the wife which prompted her to make an application for an apprehended violence order on 6 September 2002. On 25 September 2002 a two years apprehended violence order was made for the wife’s protection from the husband. In addition to the s.562BC orders, orders were made that the husband not assault or harass the wife, approach her or enter her place of employment or home.
In April 2003 the husband left the home and started to live as a boarder at K. He has the use of an upstairs part of his landlord’s home. For which he pays $100.00 per week board. On 1 October 2002 the parties entered into interim parenting orders. They agreed that A continue to live with his mother and have contact with his father from 9.00 am Saturday to 9.00 am Sunday each week and from 12.30 pm until 6.15 pm each Wednesday. In accordance with the orders contact continued on a regular basis until 4 January 2003. The husband then stopped exercising contact until the weekend of the
11 March 2003. He had contact that weekend, but has not exercised it since. That weekend when the wife attended to collect A she found the husband leaning against the wall crying. The husband told her that he did not want contact any more. I am satisfied that this is a reflection of his personal inability to deal with separation. In accordance with his stated desire he has not had contact to A since. By agreement contact is to resume immediately.
Relevant law
The approach to the determination of an application under section 79 is well established by authority In the Marriage of Lee Steere and Lee Steere[4]; In the Marriage of Ferraro[5] and In the Marriage of Clauson[6] the process ordinarily involves a multiple part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s.79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in s.75(2) insofar as they are relevant, any other order made under the Family Law Act 1975 affecting a party or child and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child to the marriage.
[4] (1985) FLC 91-626
[5] (1993) FLC 92-335
[6] (1995) FLC 92-595
In determining what order the court should make under s.79, the court must be satisfied in all the circumstances that it is just and equitable to do so [s.79(2)]. It is the justice and equity of the actual orders that the court must consider. Russell v Russell[7].
[7] (1999) FLC 92-877
Both counsel agree that the court should approach the assessment of the parties’ entitlement using a global approach and not an asset by asset approach. The global approach involves the division of the parties’ assets on an overall proportion of the global view of the assets. Tuck and Tuck[8]. The asset by asset approach involves a determination of the parties’ interests in individual items of property. McMahon and McMahon[9]. In Norbis[10] the High Court held that either approach is legitimate, and that in some cases either approach may be adopted in part or in whole. An examination of the reported cases reveals that the global approach is the generally preferred approach and the approach most frequently applied. Zyk v Zyk[11]. The rationale for its predominance is identified in the following passage taken from Norbis[12].
Although it is natural to assess financial contributions under sec. 79(4)(a) by reference to individual assets, it is also natural to assess the contribution of a spouse as home maker and parent either by reference to the whole of the parties’ property or to some part of that property. For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, ie on a global or, alternatively, on an “asset-by-asset” basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient.” per Mason and Deane JJ.
[8] (1981) FLC 91-021
[9] (1995) FLC 92-606
[10] (1986) 161 CLR 513
[11] (1995) FLC 92-644
[12] at p.75,168
The asset by asset approach has been adopted in those matters where the marriage is of short duration and during which the parties have strictly divided and kept their own assets separate from each other. An apparent distinction, even when these two features apply is the importance of s.75(2) factors, including the presence or absence of children of the marriage. In neither McMahon nor Quinn and Quinn[13] was there a child of the parties. See also Kerr and Kerr [14].
[13] (1979) FLC 90-677
[14] Full Court of the Family Court 11 August 1995 (unreported)
In the circumstances of this case I agree that the global approach is the proper way to determine the parties entitlements.
Assets and liabilities as at the date of hearing
The parties reached agreement as to the value of some assets. They were also in agreement as to the quantum of liabilities, but not how those liabilities should be treated. They agree that the wife’s superannuation interest is $48,754.00. I find the parties’ assets and liabilities as at the hearing are as set out in the table below.
Assets as at the date of hearing
$
1 D Avenue, W (agreed)
185,000.00
Ford Falcon (W) 3,000.00 Contents of former matrimonial home NK 100 NRMA shares (w) (agreed) 500.00 Furniture acquired by wife after separation 1,494.00 Total non-superannuation assets
189,994.00
Wife’s superannuation
48,754.00
Husband’s superannuation
NK
Total superannuation assets.
48,754.00
TOTAL ASSETS
238,748.00
Liabilities as at date of hearing
$
Commonwealth Bank mortgage secured on former matrimonial home (W) (agreed)
83,155.00
ANZ Visa Card (W) (agreed)
1,338.00
Citibank Mastercard (W) (agreed)
2,697.00
Buyers Edge Card (W) (agreed)
1,494.00
St George Bank (H) (agreed)
3,500.00
TOTAL LIABILITIES 92,184.00 NETT ASSETS 146,564.00
The wife’s superannuation interest is to be treated as property (s.90MC) and is an eligible superannuation interest that the provisions of Part VIIIB enable to be split between the parties. The wife’s entire superannuation is preserved until she reaches her applicable preservation age and satisfies the conditions of release (usually permanent retirement from the work force). The husband’s superannuation is apparently also preserved until he reaches his applicable preservation age and satisfies the conditions of release. The value of the wife’s superannuation is its gross value and does not take into account taxation of the superannuation benefits. Taxes are payable when a superannuation benefit becomes payable. At this time it is not possible to quantify the amount of tax that will be levied. The amount depends on many factors, including maximum benefit limits, pre 1 July 1983 service, age at receiving the benefit, marginal tax rate after retirement to identify but a few. A split of the wife’s superannuation is likely to be advantageous to both parties as there will be two Reasonable Benefit Limits applicable and thus the threshold before tax is payable is in effect doubled. It seems to me that the principles outlined in Rosatti[15] apply in relation to whether or not the potential tax liability should be taken into account. Extrapolated for the purpose of superannuation assets the factors appear to be:
a)When the preservation age will be reached.
b)When the member spouse is likely to retire.
c)Whether the interest is taken as a lump sum, pension or a mixture of the two.
d)The capacity to quantify tax payable. This will include consideration of the effect of two reasonable benefit limits.
[15] (1998) FLC 804
In Rosatti the Full Court speaks in terms of the probability of the sale of an asset and hence incurring a CGT liability, however with superannuation the issue is access to it by the member (and after a split in some cases a non-member spouse). Provided the member lives until retirement the triggering event for the assessment of tax must occur. Does this mean that the court must take into account potential tax liability? In my view it does not. Rosatti emphasises that each case turns on its own facts. Because the super splitting legislation mandates the valuation methodology tax, other than undeducted contribution tax and surcharge tax identified in the last member statement, will not affect the value of the asset. But tax may be a relevant liability as distinct from the value of the superannuation interest. Alternatively it may be relevant s.75(2) factor “the weight to be attributed to that factor varying according to the degree of the risk and the length of the period within which the sale may occur”.[16]
[16] Rosatti at par 85,043
It is at least 20 years before the wife will reach the age at which she can take her superannuation. This many years away it is impossible to know what her marginal tax rate after retirement will be. I have no evidence about what any tax liability might be. Thus I do not include any notional tax liability.
Within four weeks of separation the wife swore her financial statement in which she identifies her current liabilities. During the marriage she had credit cards with ANZ (Visa) and Commonwealth Bank (Mastercard). Because her financial statement was prepared so shortly after separation I am satisfied that the liabilities identified in it equate to the balance outstanding on her credit cards at separation. In total she owed about $1,500.00. After separation the wife used a buyers edge card to acquire furniture. Her credit cards have been used since separation to meet a shortfall between her income and expenses. In circumstances where she did not receive an appropriate level of child support and also paid expenses on the former matrimonial home, I am satisfied that I should treat the credit card liabilities as at the date of hearing as a joint matrimonial debt. In total they have increased by about $2,500.00. Because I will take into account her payments post separation as a contribution it would be double counting to give full dollar value to both the repayments and also the increased credit card debt (as one funded the other). Similarly, the husband has an outstanding St George debt, which was established prior to cohabitation but in relation to assets that became matrimonial assets. The St George Bank liability is thus a joint liability.
The parties’ evidence about the disposition of the contents of the former matrimonial home is difficult to adjudicate. I accept that the wife took a large portion of the contents of the home in the days following separation. I am also satisfied that she did not empty the house and that the husband retained a proper share of the contents, which included items of value. In the circumstances I am unable to make any findings as to the value of the furnishing retained by the parties at separation nor as at the hearing.
The wife received a share allocation as a member of the NRMA when it de-mutualised. I have no other evidence about her membership, for example whether it was established during cohabitation or previously. In those circumstances I treat the share allocation as a joint contribution.
The wife is the legal owner of the property at 29 M Avenue, L. Her father is its beneficial owner. She is legally responsible to the Commonwealth bank for the mortgage, which currently stands at $167,000.00 approximately. She entered this liability because she is satisfied that her father will pay the mortgage repayments and should he default that he has sufficient assets to meet any shortfall. In the circumstances I have not included the property or the liabilities attached to it in the table of assets and liabilities.
I will address the husband’s superannuation interest under s.75(2)(o).
Evaluation of contributions
At the commencement of cohabitation the wife had an interest in a superannuation fund, the value of which is not in evidence. Otherwise she had no assets of value. The wife was in full time employment throughout cohabitation and contributed the whole of her income to joint matrimonial purposes. She took long service leave and paid maternity leave when she had A, some of which accrued prior to cohabitation. When the parties bought the former matrimonial home her father made a gift of $12,000.00. This was a contribution made on the wife’s behalf. Her financial contribution includes payment for the mortgage and other expenses after separation. The mortgage repayments are approximately $146.00 each week[17]. This means that the wife paid about $6,000 in the approximately 40 weeks that the husband lived in the home in mortgage repayments.
[17] Exhibit B
At the commencement of cohabitation the husband owned vehicles and chattels and had a loan to St George Bank. I accept that his nett asset position was $2,000.00. He also had his superannuation interests, the value of which is not in evidence.
I have already made findings about the husband’s employment history and do not repeat them. When working he contributed virtually all of his income to joint matrimonial purposes. Prior to giving up work to take on A’s full time care he experienced short periods of unemployment during which the wife’s income was the family’s only income. The husband gave up paid employment at the end of 2001 and assumed responsibility for A’s day to day care. Importantly, in May 1999 he contributed the entire proceeds of his workers compensation computation. This is a significant contribution on his behalf, in effect the equivalent of his gross annual salary, for example during the period he worked with Australia Post. Contributed as a lump sum it enabled the parties much earlier than would otherwise have been the case, to acquire the former matrimonial home. Without this lump sum it is unlikely that the parties would have acquired their home when they did. It is thus a significant contribution by the husband. When weighing its significance the court cannot lose sight of the $12,000.00 gifted by the wife’s father that enabled the parties to complete the purchase of the former matrimonial home.
Throughout cohabitation the parties continued to contribute to superannuation in the sense that their salary package included mandatory employer contributions on their behalf. Since separation, other than minimum payments withdrawn from his unemployment benefits for child support, the husband has kept all of the income earned by him for his own purposes. By comparison, the wife has maintained mortgage payments to the Commonwealth Bank and paid for household utilities used by the husband. She has continued to contribute to her superannuation. I am satisfied that the wife made a significantly greater initial contribution (her superannuation) and thereafter throughout cohabitation she made a greater financial contribution which she has continued to make subsequent to separation. When evaluated comparatively her overall financial contributions substantially exceed the husband’s.
The parties have maintained and improved the matrimonial home. During cohabitation the husband landscaped gardens, built retaining walls, levelled the yard, dug out tree stumps, installed a sandpit for A and together they repainted its interior. Other than repainting the interior, to which the parties contributed equally, the balance of the improvements were primarily undertaken by the husband.
The wife claims that her mother’s presence in the home in the year following A’s birth was a significant non-financial contribution made on her behalf. This appears to have been an arrangement that was mutually beneficial. The parties were able to maintain full time employment, confident that A was well cared for in their home and consequently did not need to incur childcare expenses. However, they provided accommodation at no cost to her mother and she lived with them without contributing to food or other household outgoings. On balance I am satisfied that this was a mutually beneficial arrangement and only a small contribution that the wife can now claim.
Since separation the wife’s father has provided her and A with accommodation. This has enabled the wife to maintain the mortgage and other outgoings on the former matrimonial home. Whilst I am satisfied she could not have done so unless she had been able to live in rent free accommodation, because I have already assessed her post-separation contribution by reference to the payments made from her salary, in my opinion it would be counting twice if I valued her financial contribution and also gave her the benefit of a contribution on her behalf which was the reason she could make the financial contribution.
Both parties contributed to the welfare of the family. It would appear that following complications after his back operation the husband convalesced for about four months. There is scant evidence about the household arrangements prior to A’s birth. The wife says that she carried out the majority of household tasks which evidence the husband does not challenge until late 2001. From that point he says that he was A’s prime caregiver and performed the majority of household tasks. I accept his evidence. The period during which he undertook his significant role as home maker and parent was no longer than eight months. Both parties agree that after A’s birth the husband assisted in his care and that he complimented the wife’s and her mother’s care of the child. Since separation, other than during periods of contact, the wife has had exclusive care of A and has made a continuing contribution as a parent. The post separation period is only slightly longer than the eight months during which the husband had a greater role prior to separation. Overall, I am satisfied that the wife has made a slightly greater contribution as home maker and parent compared to the contribution made by the husband.
The orders will not affect the earning capacity of either party.
After separation the wife applied for an administrative assessment of child support. Having initially assessed the husband to pay $283.25 (an amount he has never paid) the CSA issued a lower assessment (at $14.00 per week) that recognised he was unemployed and his only income was Centrelink unemployment benefits. His child support has been deducted at the minimum rate from his benefit. He returned to the paid workforce approximately four weeks ago and has yet to advise the CSA that he has done so. He explained his delay by reference to his need to focus on these proceedings and his general lack of attention to financial matters over a long period. Were he truly motivated to avoid the payment of child support as the wife alleges, it seems unlikely that he would have returned to the paid work force shortly prior to the hearing. Hence I am satisfied that although slow in doing so the husband will eventually pay child support as assessed from time to time. He may well be late and I accept that the wife will find herself being reimbursed after she has met many of A’s expenses from her own resources. It is unlikely that he will ever pay more than the amount that he is assessed to pay.
I find therefore that the parties’ total contributions should be assessed as being 60% by the wife and 40% by the husband. The wife’s initial contribution in the guise of her superannuation interest comprises a significant percentage of the net asset pool. Her direct financial contribution and gift made on her behalf by her father must be given proper weight. So too must the husband’s compensation money and the income he contributed throughout the marriage. Both parties contributed to the acquisition of the home, to its maintenance and improvements. The wife has made a slightly greater contribution as a home maker and a parent and her post separation financial contributions have been significant.
Section 75(2)
Subsection (a) — The wife is 33 years old and in good health. The husband is 32 years old. He suffered an injury to his left arm in 1996. Since then he has been able to resume full time work, including work as a field technician. There is no evidence that suggests his arm injury, nor indeed the consequences of surgery to his back, has had a continuing effect on his health. It was submitted that he has suffered a significant period of depression, the catalyst for which was the parties’ separation. He gives direct evidence about his emotional response to separation and feeling unable to maintain employment or seek it for months after separation. Whilst I accept that he lacked motivation to work, his evidence is insufficient to enable me to conclude that his mental health was somehow compromised or that he has continuing mental health difficulties. I make no adjustment pursuant to the subsection.
Subsection (b) — the wife works full time with Australia Post as a compliance clerk and has previous experience as a mail room supervisor and as a call centre operator. She earns the income identified in her financial statement, corroborated by her taxation returns. She appears to be a diligent and reliable employee and has put considerable efforts into her career. I am satisfied that she will continue to progress her career and will earn an income at least comparable to that which she currently earns indefinitely. The husband has had a more diverse employment history. He has worked as a car dealer, field technician and post sorter for example. In recent years although he has not worked continually with the same employer, the effect of his evidence is that when he wants work he has been able to obtain it. Recently he has obtained trade qualifications which enhance his employment prospects and potentially, albeit to a small degree, the income he can earn. I am satisfied that the husband has the capacity to work full time earning an income at least comparable to that which he currently earns indefinitely. Neither party has assets or financial resources that will be income generating. I make no adjustment pursuant to the subsection.
Subsection (c) — in Clauson the Full Court said: “In addition, it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment mobility and the restriction upon an independent lifestyle which the obligation to care for children usually entails”[18]. A is three and a half years old. Responsibility for his care and since separation has primarily fallen to the wife. Day to day primary responsibility for his care will remain with the wife. His age means he will be dependent upon her for many years to come. Mostly, the wife will take him to and from school and preschool, make arrangements for him during term and eventually ferry him to his activities. Her care will be supplemented by the husband’s continuing role in their son’s life. Nonetheless I am satisfied that there should be an adjustment in the wife’s favour pursuant to the subsection.
[18] at par 81,911
Subsection (d) — the parties have the commitments identified in their financial statements. They are modest indeed. Both incur expenses in relation to their son, precise details of which are not in evidence. The wife’s average income exceeds her expenditure. Although she identifies the mortgage against M Avenue as a fixed expenditure she clearly does not pay it. Because A is more substantially in her care and will continue to be so she expends a greater proportion of her weekly total income on necessary commitments for herself and the child. I make an adjustment in her favour pursuant to the subsection.
Subsection (e) — other than A neither party has responsibility to support any other person. I make no adjustment pursuant to the subsection.
Subsection (f) — neither party currently receives a pension, allowance or benefit from any superannuation fund or scheme. I make no adjustment pursuant to the subsection.
Subsection (g) — subsequent to separation both parties have endured a reduction in their standard of living. The husband remained in the home and felt he could not go to work. The wife supported herself, A and the home. I have already taken into account the husband’s occupation of the home elsewhere and also the financial consequences to the wife of her care of the child. In those circumstances I do not consider it appropriate to make any further adjustment under the subsection.
Subsection (h) to (k) – these subsections do not arise.
Subsection (l) –as I have already indicated A will be more substantially cared for by the wife than the husband. The wife has never worked part-time nor is there any evidence that she plans to work less than full-time in the future. To the extent possible she wishes to continue her role as an employee and meet her parental responsibilities using daycare, family members and other places for childcare. I have already taken into account aspects of the financial consequences of the wife’s care of A to the extent under s.75(2)(b) and (c).
Subsection (m) — the wife lives with her father and has the benefit of his personal and financial support. The husband boards out but does not cohabit with another person. I make no adjustment pursuant to the subsection.
Subsection (n) — I have already concluded that the wife’s s.79(4) based entitlement is 60% as compared to the husband’s 40%. The wife wants the opportunity to purchase the husband’s interest in the home. It is appropriate that she have the opportunity to do so. Because she wants to retain the home she will not incur rehousing costs. There is no evidence about the husband’s plans for the future vis the acquisition of property. Twenty per cent of the non-superannuation assets is $19,562.00 and 20% of the superannuation is $9,750.80. Of the non-superannuation assets the husband has a nett liability of $3,500.00 and will therefore receive a cash adjustment from the wife of $23,062.00. He will carry the St George debt. This is insufficient to enable him to purchase a home without also acquiring a sizeable mortgage. He will have his own superannuation entitlement of $9,750.80 which will be achieved by ordering a split in his favour of the wife’s interest in PSS. The wife will pay the husband the adjusting figure the funds for which will probably be derived by increasing the mortgage. She will have non superannuation assets of $78,248.00 and superannuation of $39,003.20. The husband will retain his superannuation a factor dealt with later under s.75(2)(o). Because the outcome of the s.79(4) and s.75(2) exercise is a splitting of the superannuation interests, no adjustment for potential tax liability is appropriate. I make no adjustment pursuant to the subsection.
Subsection (na) — the husband is assessed to pay child support of $14.00 per week. He has made an inadequate contribution since separation and although he returned to paid work four weeks before the hearing had not told the CSA he has work. The wife’s counsel emphasised that his track record vis the payment of child support is poor and the wife is unlikely to have a proper contribution towards A’s costs in the future. For my part I accepted his evidence that he felt unable to cope after separation and that it has taken him longer to re-establish himself than he would have preferred. As part of his general malaise he gave inadequate attention to his child support obligations, and his responsibilities generally. I accept his evidence that he is motivated to work and that he will pay child support as assessed in the future. However the amount will probably always be modest and insufficient to justify an adjustment pursuant to the subsection. I make no adjustment pursuant to the subsection.
Subsection (o) — the value of the husband’s superannuation was never revealed. Curiously he blamed the wife saying that she had all of his financial records. Such was his lack of attention to his financial affairs over the years he was unable to recall with which financial institution his superannuation funds were held. However with only minimal inquiry he could have found out. All he need do was contact his previous employers to ascertain where it had been paid. He did not do so basically because he could not be bothered doing it. His counsel submitted that I would not see this as symptomatic of his general malaise. I do not. The husband had an obligation to make full and frank disclosure of his financial circumstances and did not do so. He was able to adequately instruct solicitors and present a substantial affidavit. His non-disclosure must be understood in the context that throughout cohabitation the wife managed their financial affairs and was thus privy to the husband’s financial circumstances. She did not claim that he has superannuation nearly as valuable as hers either at the start of their relationship or at its end. Hence whilst I am satisfied that the husband has superannuation the value of which is not disclosed it does not equate to that which the wife has. He cannot access this money for at least 20 years. I am satisfied that I should make an adjustment in the wife’s favour pursuant to the subsection.
Subsection (p) — this subsection does not arise.
Having regard to all of the s.75(2) factors I find it appropriate that there should be an adjustment in the wife’s favour of twenty (20) percent. This outcome reflects the cumulative outcome of the findings I have made pursuant to s.75(2) – see Tomassetti[19]. Any lesser adjustment, given the size of the asset pool, would be notional.
[19] (2002) FLC 93-023
Section 79(2) is this a just and equitable outcome?
Because the court must consider the actual orders not just the percentage distribution under s.79(2), justice and equity in cases where the court may order a splitting or flagging order requires careful consideration of the range of orders available. The husband’s counsel submitted that the wife should have her superannuation and that the husband should take his s.79 interest from the immediately available assets. He did not agree that if one party were to receive all of the immediately available assets while the other was required to wait for the entitlement to be paid from superannuation, then the party receiving the lions share of the currently available assets would receive a lesser percentage when the court undertook the s.79(2) exercise. In my opinion if the court ordered in accordance with the husbands counsel’s approach a reduction would be necessary in order to do justice. Neither counsel addressed how such a discount factor should be calculated.
Counsel for the wife submitted in essence that both parties should have to wait for the superannuation entitlement to be paid out. Superannuation has long been regarded as a joint venture to which parties contribute and plan for their retirement. The intent of the super splitting legislation is to ensure that the artificial divide whereby one party, commonly the husband, has the sole benefit of superannuation saved for during cohabitation, no longer operates. Because of the super splitting legislation the non-member party can share in the benefits of retirement planning through superannuation. Thus the spectre that in retirement the non-member spouse is more likely to live in comparatively parlous circumstances can be redressed. Does this mean that the court must order the distribution of the assets in accordance with the findings otherwise made pursuant to s.79(4) and s.75(2) to both the splittable superannuation and also the available assets? In my opinion it does not. The court is enjoined to consider the particular circumstances of each case and hence deliver individual justice. Thus in some cases it will be appropriate to order that a party take their superannuation entitlement by an adjustment to other assets. This is the approach adopted by Moore J in Levick[20]. Her Honour balanced the factors set out below before deciding that the wife should have a greater percentage of the available assets and a lesser percentage of the splittable superannuation in order to give effect to the appropriate overall percentage distribution. The relevant factors were:
·The purchase price of appropriate accommodation and rehousing costs for both parties.
·The need for a financial buffer for ordinary exigencies of independent living.
·The current level of the parties’ superannuation.
·The probability that the wife would be able to acquire appropriate superannuation benefits from her own future income.
·The husband’s substantial earing capacity and ability to borrow significant sums at favourable rates (from his employer).
[20] [2003] FamCA 40 (unreported)
Applying those factors in Levick the wife’s entitlement to the available assets increased so that she had 66.5% of the non superannuation assets and 40% of the splittable superannuation. Because the husband had to wait 10 years and pay tax on his interest (as did the wife but on a lesser sum) the wife’s superannuation entitlement reduced from 40% to 36.5% equivalent to 3.5% of the other available assets.
I was asked to infer that the husband wished to buy a home and that from his entitlement he will not only need to pay the purchase price of a home, but also stamp duty, legal costs and associated rehousing costs. There was no evidence about his plans to do so or the range of house prices in the area he supposedly wished to buy into. Even if I accepted that he planned to do so there is no suggestion that even with 20% of the available non-superannuation assets that he will have enough to buy a home without borrowing at level he could not probably repay. If that result were ordered he will have considerably less available in superannuation upon retirement. Unless provision for his future retirement is provided in these proceedings the prospect is that he will have inadequate superannuation upon retirement.
In determining the appropriate s.79(2) adjustment I must consider similar issues as they pertain to the wife. She also needs adequate accommodation. Just as the husband does, I accept that she needs every available cent to keep her home and live within her means.
I accept that her stated aim of retaining the home is achievable provided the court orders an adjustment within the range of reasonable exercise of its discretion or the spectrum of the applications. Were it otherwise I would have expected more precise evidence as to her borrowing capacity.
The effect of the orders will mean that the wife will have significant debts to service. She will have the mortgage and also her credit card debts. Additionally she will have to pay the husband $23,062.00. It is probable that the wife has reached the limit of her capacity to service her outgoings. Thus increasing the amount she must pay the husband may result in her capacity to retain the home being put at real risk. That possibility does not determine the issue. It must be balanced with the husband’s obvious need to have as much money immediately available so that he can re-establish himself. There is insufficient evidence to enable me to be satisfied that the greater sum sought will make a material difference to his chances of buying into the market at a level he can afford. I would have needed specific information about median house prices in the region and more particular evidence about his intentions and the limits of his borrowing capacity. Thus while I am satisfied that additional funds improve his prospects of acquiring accommodation I am not satisfied that it puts that outcome within his reach.
Balancing the parties’ need for proper future financial security through superannuation with the effect of the orders that follow from the s.79(4) and s.75(2) exercise, I am satisfied is a just and equitable outcome. No further adjustment is appropriate. Hence the wife will have non superannuation assets that comprise the house, furniture, car and shares which have a total value of $189,994.00. Her liabilities total $88,684.00 that gives her a nett position of $101,310.00. She is entitled to $78,248.00 of the non superannuation assets and so must pay the husband $23,062.00. By way of cross check the husband is entitled to non superannuation assets worth $19,562.00. He has no assets of value and his St George debt leaves him with a nett liability of $3,500.00. $19,562.00 plus $3,500.00 is $23,062.00.
The superannuation splitting orders will have effect from the date of judgment. Upon the split the husband will have the option to remain in the fund or roll-over his interest into another fund. Thus the orders will split the wife’s interest in the PSS. The base amount will be $9,750.00.
In the event that the husband fails to pay the moneys ordered and/or provide the necessary releases then the home will be sold. Although it has an agreed value, the nett proceeds cannot be known. The total position, excluding superannuation and the home (and mortgage) is a negative outcome as the liabilities exceed the assets by $4,035.00. On this basis excluding the home and superannuation the husband’s liabilities exceed his assets by $3,500.00. The wife’s liabilities exceed her assets by $535.00. At 80% of the nett liabilities the wife should carry $6,153.80 and the husband should carry $15,38.00. He in fact carries $3,500.00 which means that the wife must pay him $1,962.00 and 20% of the value of the nett assets which is 20% of $4,994.00 being $998.00. Therefore on the sale of the home when the wife receives her 80% nett there will have to be an adjustment in the husband’s favour paid from the wife’s 80%. The adjusting figure is the amount needed to ensure that the husband receives 20% of the nett non superannuation assets having regard to his liabilities. This adjusting figure is $2,900.80.
Pending settlement the wife must maintain the property and pay rates, taxes and mortgage instalments as and when they fall due. If she defaults the default must be paid out of her share of the proceeds.
Determining the children’s best interests
During his evidence in chief the husband said that he was quite prepared to ensure that during contact he would not consume any alcohol. He made this concession unreservedly and appeared comfortable that in this fashion contact would proceed comfortably. For his part he appeared to understand that the wife was genuinely concerned that he may drink and drive with A in the car. Her concerns seem to derive primarily from her knowledge about his prior drink driving convictions. The husband was convicted on 12 February 1991 of mid range PCA, on 1 May 1992 of low range PCA and driving whilst his licence was cancelled and on 20 February 2001 of low range PCA.[21] The wife also alleged that the husband consumed beer at home, at times to excess. She says that while A is too young to take care of himself she does not want him exposed to the risks of being cared for by someone who is inebriated.
[21] Exhibit D
The husband says he is much more responsible now and that he will not drink to excess while he has A. I accept that this is his genuine intent. It probably has always been his intention to abide the law and not drive when affected by alcohol. It is clear that in the recent past he has needed more than just his obligation imposed by the Crimes Act to limit his tendency to drink and drive. In my opinion both he and the wife will benefit from a clear constraint imposed by this court upon his consumption of alcohol while he has A. Not an absolute embargo as the wife would have it, but a strict limit that will ensure that contact occurs safely. The wife’s counsel submitted that anything less than an absolute embargo increases the prospect of future litigation, an outcome that it undesirable. Philosophically this is so. It is not however necessarily the case. The husband has previously been substantially responsible for A’s care and has had exclusive responsibility for him during contact. The child was appropriately cared for and the risk that he will abuse alcohol to excess I assess as low. The wife is more flexible and intuitive than I feel her counsel’s submission acknowledged. I am satisfied that she would not lightly return to court and would probably only do so if she had clear evidence that the order had been breached and the child potentially put at risk.
Thus when I balance these factors I am satisfied that there should be proper constraints on the husband and not unnecessary ones. This outcome I am satisfied is in the child’s best interests.
For these reasons I make the orders identified at the start of this judgment.
I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate:
Date: 12 June 2003
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