K & K
[2006] FMCAfam 205
•12 May 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| K & K | [2006] FMCAfam 205 |
| FAMILY LAW – Superannuation entitlement with DFRDB – creation of 2 pools – how to assess expectant right for retirement benefits which had accrued but had not crystalised at time of marriage – how to treat advances from husband’s parents – order which achieves justice and equity. |
| Applicant: | K |
| Respondent: | K |
| File No: | BRM 7512 of 2005 |
| Delivered on: | 12 May 2006 |
| Delivered at: | Brisbane |
| Hearing date: | 19 April 2006 |
| Judgment of: | Baumann FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Byrne |
| Respondent: | Self Represented |
ORDERS
On the basis of the asset pools identified and valued as set out in the reasons for judgment delivered today
THE COURT ORDERS:
That the Wife shall, within 60 days from today:
(a)pay to the Husband’s parents, the sum of $60,000;
(b)pay to the husband the sum of $80,000.
(c)assume, refinance or otherwise discharge the parties’ liabilities, being the Home Mortgage; Defence Forces loan; Auction Expenses ($1,500); John Paul College fees ($5,353); Australian Acting Academy fees ($2,280) and all her credit card liabilities (including the debt in respect of the WORLDMARK TRENDWEST investment).
That simultaneously with the payments made by the Wife under paragraph 1 of this Order, the Husband shall:
(a)transfer all his estate and interest in the said home at MOOROOKA to the wife or as she may direct;
(b)pay to the Wife the sum of $11,000 being his share of the TRENDWEST debt.
That the rights and privileges attaching to the “WORLDMARK TRENDWEST” investment shall be shared equally by the parties, and if possible, each party shall sign all documents as may be necessary to effect an equal division of the rights attaching to the investment.
That, if the Wife is unable or unwilling to comply with paragraph 1 of this Order, then the said property at Moorooka shall be sold and the nett proceeds divided to reflect the distribution directed by the reasons for judgment. In this respect, each party shall have liberty to apply to FM Baumann for such orders or directions as may be necessary to facilitate the said sale and distribution.
That in respect of the superannuation interest of the husband in - DFRDB:
(a)in accordance with Section 90MT(1)(b) of the Family Law Act 1975, whenever a splittable payment becomes payable within the meaning of section 90ME of the Act to or on behalf of Mr K from his interest in the Defence Force Retirement and Death Benefits Scheme (DFRDB), Ms K, the non member spouse, is entitled to be paid 20% of the splittable payment and there shall be a corresponding reduction in the amount Mr K would be entitled to received but for these Orders;
(b)the operative time to the order is four business days after the service of the final orders on the trustee of DFRDB.
That save as otherwise dealt with in this order:
(a)the Husband shall retain as his sole property, to the exclusion of the Wife, all other bank account, other superannuation interests, motor vehicle, furniture, chattels and personalty in his possession, power and control at the date of these Orders:
(b)the Wife shall retain as her sole property, to the exclusion of the Husband, all other bank account, other superannuation interests, motor vehicle, furniture, chattels and personalty in her possession, power and control at the date of these Orders.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRM 7512 of 2005
| K |
Applicant
And
| K |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION:
After a 20 year marriage the Applicant wife and the Respondent husband separated in December 2004. The wife commenced proceedings in this Court in September 2005.
Although the initial application also sought parenting orders in respect of the three children of the marriage, L (aged 17), N (aged 15) and C (aged 12), final consent orders in respect of the children were made on 1 November 2005. They provide for the children to live with the mother and for the father to have contact as agreed. The husband currently lives in Canberra for work purposes and exercises contact as often as the distance involved and children’s availability permits.
The property dispute has, to some degree, been fuelled by the conflict between the parties and, as unrepresented persons, the inability to apply principles of law within their own emotion charged perspective of their financial and marital history.
The factual issues which I ultimately had to determine, apart from the weight to be given to the respective contributions and relevant section 75(2) factors, included:
a)Whether acknowledged advances by the husband’s parents constituted a loan.
b)The value to be attributed to the husband’s interest in the Defence Force Retirement and Death Benefits Scheme (“DFRDB”).
c)The value of the former matrimonial home.
d)The appropriate splitting order of the husband’s superannuation benefit.
Principles
The approach to be adopted in determining a property application is well established by a long line of authority, most recently reported and summarised by the Full Court in Hickey (2003) FLC 93-143. It requires the Court to firstly identify, usually at the time of hearing, the net asset pool; then to consider and weigh up the financial and non-financial (direct and indirect) contributions at the commencement of and during the course of the relationship to the hearing; thirdly, as directed by section 79(4)(e) to consider the relevant factors under s.75(2) of the section, and finally, as mandated by section 79(2), the Court shall not make an order unless it is satisfied, in all the circumstances, that it is just and equitable to make the order.
Since the Full Court’s decision in Coghlan (2005) FLC 93-220, trial adjudications are also required to give consideration to whether separate pools of assets ought be created to enable the usual approach set out above, to be applied to the different species of assets (particularly superannuation) which often, in a sense, requires an asset by asset approach.
Evidence
The husband and wife prepared their own material and, as can be expected when neither are legally qualified, their principal affidavits were littered with hearsay, lay opinion and matters of conduct which were of marginal relevance. Their narratives however, gave a genuine feel from their perspectives of issues important to them. Both are clearly still hurting from the breakdown of the relationship and their behaviour in the Courtroom, although respectful of each other, was often emotional and entrenched.
These persons are two very decent citizens who have weathered financial and health challenges whilst raising three very well adjusted, extremely talented and creative children. They look at what remains after both have worked hard and honestly over a long marriage and are disappointed in the available pool. They blame the other’s conduct for this result – however it seems to me that they have always strived to provide the best for their children and often lived beyond their means, relying during such times on high interest loans and credit cards. Neither the husband or wife provides any probative evidence to establish recklessness or waste of a wanton character. They at times did not always make good financial decisions – but such is the roller coaster ride which many marital relationships travel.
They were both believable witnesses and I did not regard either as deliberately seeking to mislead the Court. Where I have made some factual conclusions, few are dealt with on credit issues. I give my foundation for such findings as required.
I should acknowledge that the wife was legally represented at trial. Mr Byrne of Counsel, who was retained by recently instructed solicitors for the wife, was able to make appropriate concessions and his ultimately brief final submissions gave to the unrepresented husband an opportunity to distil the important and determinate issues. I do acknowledge the husband’s Case Outline demonstrated a significant degree of thought and research from public databases.
Pool of Assets
Whilst a number of small bank accounts were excluded the identification of the assets and liabilities was essentially agreed. Those that were not so agreed, I determine as follows on the whole of the available evidence.
House at Moorooka
The parties have attempted to sell this property by public auction through Local Agent and Registered Valuer Trevor Matthews. Mr Matthews has sworn two affidavits, one on 20 March 2006 and one on 13 April 2006. The husband did not require Mr Matthews for cross-examination.
The parties have extensive borrowings (as set out in the liabilities list below) and saw a sale as an option. The wife says they were attracted by the representations of the Real Estate Agent which was to list the property for $1 million to “shock the market”. I made an order with the consent of the parties on 1 November 2005, to list the property for sale.
Mr Matthews, in a formal valuation dated 6 December 2005, opines the value to have been $750,000.00, but made the following reservation:-
“however, to achieve this figure in the market place may prove difficult because of the adverse reasons stated in relation to the location and only exposure to the market, promoted by adequate advertising will determine the highest price achievable”
The “adverse reasons” were identified in the report of this “up-market” home as being “in a location … where the surrounding properties are of a much lower value and it also has the disadvantage of being on a fairly busy road”.
Consistent with a view expressed by the Valuer (in a letter dated 7 December 2005) that “the valuation figure is below expectations of both you and R”, the property was marketed as a private treaty sale from January 2006 followed by an auction on 8 April 2006.
The report by Mr Matthews contained in his letter of 12 April 2006 (attached to his affidavit filed 13 April 2006) speaks for itself. Mr Matthews reported, when suggesting to genuine buyers that the range of $900,000.00 for the property might be appropriate, that they indicated “without exception… that for this type of property, in this position, the expectations of the sellers were not realistic”.
He further said the auction “only served to support the prior indications that the price expectation was too high, as no bids were received”. Mr Matthews reflected on his earlier valuation of $750,000.00 and said that figure “is not achievable” and suggested that “all offers in the range of $630,000.00 to $680,000.00 be considered”.
The wife, in her case outline indicated she accepted a current market value for the property at $650,000.00 (the median figure) and the husband, in what I regard as a genuine acknowledgement of the wife’s desire to retain the property for herself and the children, said he would give the wife the first option at a figure of $650,000.00 to hold the home. This was also a response, in part, to the proposal I raised with the parties that if the value of the property could not be determined or agreed, a “no reserve” auction could be an option the Court might consider to achieve finality.
I regard it as appropriate to allow a current market valuation for the former matrimonial home of $650,000.00.
Funds Received From Husband’s Parents
The parties both agree that in about 1989, the parents of the husband provided funds totalling $80,000.00 which were utilised by the parties to acquire a home in Canberra. Although a quantification of repayments made or benefits provided to the husband’s parents is a little uncertain, I am satisfied that both the wife and husband acknowledge that the net benefit they have received is, at hearing, approximately $60,000.00. This does not take into account the benefit of having the use of these funds in an unsecured form and interest free.
Both the husband and wife gave evidence of some initial health insurance premiums paid; a holiday to Hong Kong in the 1990’s; a car in 2004 and various other sums for the husband’s parent’s benefit.
There is no loan documentation between the parents and the parties for the initial advance of funds. The husband said it was a “verbal contract”. The wife acknowledged the existence of the loan in her financial statement sworn 5 September 2005 where, at item 52, she admitted a liability of $30,000.00 (for her half). This was a document prepared by the wife, a business performance analyst by profession, without the benefit of legal advice. She was unable to explain why she included the sum in the “Hire Purchase/Lease” section although the name of Lender is clearly shown as “Tom and Audrey K”. I am satisfied the wife gave considerable care and attention to this document – for example, the dissection of expenses at Part N, is quite detailed.
The wife says now that she was pressured by the husband into accepting the amount as a debt. I found this hard to accept. This financial statement was prepared in support of the initial Application – the husband had not even been served when she prepared the papers to support her claim.
I can recall this matter arising during a directions hearing before me, prior to and subsequent to the Conciliation conference ordered to take place on 3 January 2006. I was not of the view this issue was in dispute. The husband, when challenged as to why he had not called evidence from his parents, said he also was not aware the debt was disputed.
I cannot discount the prospect that the character of the loan, in the mind of the wife, may have altered with the benefit of legal advice. However, in my view, the wife’s own admission in her self-prepared financial statement is compelling. I also accept the husband’s evidence that the wife was the one who actually arranged for funds totalling $80,000.00 – the husband was prepared to accept assistance of a more modest sum. I also accept it was anticipated when the Moorooka home was to be sold, repayment to his parents would occur. In all the circumstances, in my view the payment made was a loan and not a gift.
I need to then consider if the loan should be included in the pool as a joint liability. I am conscious of the remarks of Evatt CJ in Prince (1984) FLC 91-501 at 99,078 where she said:-
The assessment of debts and liabilities is not necessarily arrived at by a strictly mathematical or accountancy approach in all cases. While some liabilities are charges upon the property which can be accurately assessed at a certain date, others are at large, or have not been precisely determined, e.g. tax liabilities (Kelly and Kelly (No. 2) (1981) FLC 91-108 p. 76,801). In some cases the amount of the liability can only be estimated generally (Albany (supra) p. 75,717). The Court can make an allowance for a particular liability if appropriate to do so. In some cases there are sufficient uncertainties as the alleged liability to lead the Court to disregard it entirely or partly (e.g. a loan from a parent of the party not likely to be enforced; Af Petersens (supra); Quirk (1983) unreported). In other cases, the Court may take the view that because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under sec. 79 as between the parties to the marriage. Such a result could be reached where a spouse had incurred a liability in deliberate or reckless disregard of the other party’s potential entitlement under sec. 79 (Kimber and Kimber (1981) FLC 91-085; Kowallw and Kowallw (1981) FLC 91-092; Antmann and Antmann (1980) FLC 90-908; Af Petersens (supra)). Complex issues can arise in regard to liabilities to third parties (see, e.g. Pockran and Crewes; Pockran (1983) FLC 91-311).
Of course, the Court cannot ignore the fact that there is or may be a liability; the effect is simply that it does not consider that the other spouse should be called upon to in effect ‘contribute’ to the liability by having, that spouse’s fair share in the parties’ property reduced by virtue of its existence. The effect maybe that the party who has incurred the liability will be left to meet it out of whatever funds remain to that party after satisfying the property order made under sec 79 (Af Petersens (supra)).
which was subsequently referred to by the Full Court in Biltoft (1995) 19 FAM LR 91-92 at paragraph 94.
I have taken the view that although I am not certain when the loan will be repaid, it should be. I propose to make an order that allows that to occur, rather than leave the husband with a liability to repay the sum – and the wife the uncertainty of whether the husband repaid the sum or not. I was, in making this determination, comforted by the apparent continued closeness which exists between the husband’s parents and the wife. If the parents intended the funds to be a gift to both parties, then presumably it is open to them after repayment to “gift” any part of the funds received as they so desire.
World Mark Trendwest
This is an investment in a time share resort. The parties both accept it is an “investment” they wish they had not made. Little information is available to the Court as to its real current value (above or below the purchase price of $24,000.00 some years ago), however the sum borrowed on the wife’s credit card to meet this acquisition substantially remains.
I propose to make an order which requires the parties to sign all documents necessary to split the benefit in the Resort time equally, and for the husband to pay to the wife the sum of $11,000.00 being a 50% share of the current credit card debt that relates to the purchase. It seems fair that the “asset” and “liability” be excluded from the pool and the benefit and/or loss equally shared. The wife’s claim for the time share to be equally shared with the children, although perhaps a nice idea, is not an order I would make in property proceedings between the parties only.
The other liabilities and assets set out in the list below were either the subject of valuation (not challenged) or agreed.
Consistent with the discretion afforded to me by the Coghlan (supra) decision, I intend to place the husband’s DFRDB entitlement in a separate Pool. As I will demonstrate, there are separate and different issues which relate to the contributions to that “asset”. The remaining superannuation of the parties represents benefits which have entirely accrued since the marriage; are modest in value; and are more sensibly dealt with, in my view, when aggregated with the other non-superannuation assets.
I can find support in the decision of majority in Coghlan (supra) and also in the case of Wilkinson (2005) FLC 93-222 for my approach. If it is permissible to include small sums of superannuation in the pool with non-superannuation assets, then it seems to me that approach may still be adopted even when a separate pool for a large superannuation entitlement is created. This is justified where, as in this case, a significant proportion of the DFRDB benefit accrued prior to the parties cohabitation (see Wilkinson (supra) at 79,674)
POOL 1:
| Home at Moorooka | $650,000 |
| Furniture (wife) | $15,000 |
| Jewellery (wife) | $5,000 |
| Tax refund (wife) | $4,000 |
| QSuper (husband) | $25,000 |
| Sunsuper (wife) | $31,000 |
| Productivity Benefit Scheme (husband) | $3,145 |
| $733,145 | |
LIABILITIES: | |
Home Mortgage $247,000 | |
DFS loan $14,000 | |
Auction Expenses $1,500 | |
College Fees $5,353 | |
Acting Academy Fees $2,280 | |
Credit cards (wife) $25,000 | |
Husband’s parent’s loan $60,000 | $355,133 |
| $378,012 |
POOL 2:
| Husband’s DFRDB entitlements (as valued) | $428,763 |
| TOTAL POOL | $806,775 |
CONTRIBUTIONS TO HUSBAND’S DFRDB ENTITLEMENT:
Whilst initially the husband contested the valuation of his DFRDB entitlement, after cross-examining the valuer of the interest, actuary Mr Brian Bendzulla, the husband accepted that the valuation was made in accordance with the scheme specific methodology approved by the Attorney-General. As such, the valuation has been determined under the Regulations.
There are some aspects of the current benefit which need to be identified to understand my analysis, namely:
a)The husband joined the DFRDB Scheme in January 1966. The scheme is a defined benefit superannuation scheme that was closed to new members on 1 October 1991. The scheme is administered by Comsuper.
b)
Contributions to the DFRDB Scheme after 1 January 1988 are also entitled to a Commonwealth financial productivity benefit under the Defence Force (Superannuation) (Productivity Benefit) Determination 1988 issued under section 52 of the Defence Act 1903. For Family Law purposes the DFRDB Scheme and the Productivity Benefit Scheme are regarded by the Trustee as two different superannuation schemes (see letter Trustee to wife dated 13 July 2005). The husband’s contributions to this scheme at
8 June 2005 amounted to $3,145.00. This is an accumulation fund. I adopt this figure as the value of the husband’s interest, and it was included in the mostly non-superannuation Pool 1 because –
i)It is not splittable being less than $5,000.00; and
ii)Similarly to the QSuper and Sunsuper entitlements, it accumulated entirely post co-habitation.
c)In the DFRDB Scheme members contribute 5.5% of salary for superannuation purposes. The primary benefit is a combination of an indexed pension and a lump sum payment. The retirement benefit is paid after 20 or more years effective service. Pensions are CPI adjusted annually.
d)The date of valuation adopted was 8 June 2005. This has no significance in the marital history – it merely appears to be the date closest to the request for information being received by the Trustee. No updated information or valuation closer to the date of hearing before me was obtained by either party. It is reasonable to infer in this defined benefits fund, where at least one factor in the valuation is the length of service, that it would have increased since 8 June 2005. In the absence of any evidence it would not be appropriate to speculate in that regard. I therefore adopt the figure set out in Pool 2 above.
e)As at the 8 June 2005, the Trustee has confirmed that if at that date the husband had retired and had taken the maximum commutation under section 24 of the DFRDB Act then the life time indexed pension payable would have started at $23,700.14 per annum. Up to five times pay can be commuted.
f)There is no evidence before me of the value of the husband’s entitlement in the DFRDB Scheme at the date of marriage on 8 December 1984. The date of marriage is one month short of the husband’s 19th anniversary of joining the fund. Although Mr Benzulla was pressed under cross-examination to give an estimate, he clearly felt unable to do so with any degree of confidence. He indicated that the value at the time of marriage would be no more than contributions paid and without any information of those contributions (or the salary on which the contributions were assessed), he could do no better than a imprecise estimate of $20,000.00 - $30,000.00.
g)What is more relevant in my view, was Mr Benzulla’s evidence that although at the date of marriage the value would have been “modest”, 13 months after marriage (when the 20 year service period had been reached) the benefit would have significantly increased – because of the husband’s entitlement from 8 January 1986 to a retirement benefit. No evidence was offered as to the value on 8 January 1986 from which it might have been possible to exactly determine the amount and weight to be applied to the pre-cohabitation superannuation benefit.
h)The husband resigned from the Navy on 11 May 1992 and took a partial commutation and the pension available at that time of between $15,500.00 to $18.500.00.
i)At the end of 2003 the husband was offered a contract with the Royal Australian Navy. Apart from an attractive salary package (which is dealt with below when considering the relevant s.75(2) factors), due to the special provisions that applied to a “re-entered recipient member” into the Scheme, the husband’s total service has been aggregated. The letter from Comsuper to the husband dated 16 August 2005 (annexure 25 to Attachment 4 to husband’s affidavit filed 6 December 2005), said that at 30 June 2005 the husband’s “total period of service” was 27 years 338 days, and his “retirement pay after commutation” would be $23,700.14.
Based on the evidence above, to the date of valuation of the interest
(8 June 2005), the total period of service would have been 27 years 316 days, which I would estimate had accrued approximately as follows:
a.DATE OF JOINING (4/1/1966) TO DATE OF MARRIAGE (8/12/1984) = 18 YEARS 330 DAYS.
b.DATE OF MARRIAGE TO DATE OF FIRST RESIGNATION (11/5/1992) -= 7 YEARS 155 DAYS.
c.DATE OF REJOINING (4/12/2003) TO DATE OF VALUATION (8/6/2005) = 1 YEAR 187 DAYS.
Because of the likelihood of an increase in value of the DFRDB scheme benefit after 8 June 2005 which the husband will obtain the most benefit of, I propose to ignore any post separation accrual (which to the date of valuation is only six months) and to use as a guide periods of service being:
a)19 years pre cohabitation;
b)9 years during the relationship.
In assessing the real value of the husband’s contribution at the time of cohabitation/marriage it would be unfair to ignore the reality of the true value of the 19 years of service – namely that in only one year’s time, an expotential increase in benefit arising from the retirement benefit entitlement would; and did, occur. If the husband had crystalised his benefit at the time of marriage the situation would be different. In a sense, at marriage the superannuation benefit included a contingent financial resource or benefit – contingent on 13 months of further service. That occurred and the benefit crystalised for a time between 1992 and 2003, when no only did the husband take a commuted benefit of approximately $80,000.00 – but also obtained the pension earlier mentioned.
The wife made no contribution to the first 19 years of accrual. As I will soon analyse, and conclude, I would estimate the wife’s contribution (including s.75(2) factors) during the period of the relationship and in the future to be 60%.
I am mindful of the artificiality of applying strict mathematical calculations. In my decision of C v F (2006) FMCA fam 64, I was confronted with a DFRDB benefit where over a period of 30 years service, only 16 years occurred during the relationship (with 12 years occurring post separation). I had in that case, the benefit of a valuation of part of the entitlement at separation.
In my earlier decision I referred to the decision of Coleman J in PJM & STM (2005) FCA 1245 (unreported delivered 23 December 2005) where his Honour (sitting as the Full Court) observed that considering “time served” is an approach the is “less heretical than in earlier times”.
The difficulty in applying a more mathematical approach on a defined benefit fund is obvious – the benefit does not increase over time at a constant rate. It is a calculation which combines years of service, final salary and the like.
The application of mathematical concepts (in a West & Green style) to the gross value of $428,763 and with the contribution variables referred to above would compute to a finding of 80%/20% to the husband.
I think it would be an overly generous apportionment to the husband based on the evidence of Mr Benzulla of the value (on contributions only) of the husband’s interest at the time of marriage.
As best I can on the evidence offered I would find that the respective contributions to the DFRDB Scheme entitlements should be 70/30 in the husband’s favour. I would not make any adjustments for s.75(2) factors to the superannuation which comprise Pool 2.
Contributions Generally – (Pool 1)
During the course of final submissions, Mr Byrne for the wife urged a finding of equality to the date of hearing for all factors under s.79(4) (other than the s.75(2) factors). His submissions was based on a finding that he asserted I should make, that the funds from the husband’s parents should not be a “loan” but a contribution for which the husband deserved credit. Because of my determination to include the parent’s advance as a liability, it follows that the husband’s “credit” for this sum as a contribution should be ignored. This could mean the wife would argue for a greater than equal assessment of all contributions.
The husband’s contribution at the time of marriage (ignoring, as I must, his DFRBD benefits dealt with above), were slightly greater than the wife’s. Both had a home (the husband in Darwin; the wife in Adelaide), but considering these contributions came into the relationship over 20 years ago they have been counter balanced by other contributions.
Both parties had worked hard and were generally in paid employment (save when the wife was devoted to the child rearing and home keeping duties). The husband’s direct financial contributions were superior to those of the wife. He was the major “breadwinner” throughout.
The wife, I would assess, was the major non-financial contributor through her roles as homemaker and parent, played traditionally in a marriage of 20 years duration. I do not ignore the support the husband gave during the two periods when the wife was treated for breast cancer. He was also at various times supported by the wife as he pursued (post 1992) study and public sector employment opportunities.
The husband also supported the wife pursuing, as the children became older, endeavours in real estate, consultancy, marketing and human relations management.
Although the parties showed significant resourcefulness and endeavour, exploring many different work opportunities, they both blame the other for their increasing debt levels and generally poor financial position. As I earlier observed, the evidence does not establish to the requisite standard, any conduct which would persuade me that an adjustment for waste or recklessness should be made.
I take into account the benefit to the parties from certain contributions made by the husband, in particular:
a)the interest free loan from his parents;
b)the benefits which ran from his employment with the RAN , being the low interest Defence Service loan: DSHL and HPSEA benefits and subsidised rental accommodation at different times;
c)the commuted DFRDB benefit received in or after 1992 of which a large proportion would have accrued in the pre-marriage period. The same could be said for the long service and holiday leave benefits paid when he resigned in 1992.
The husband, in his evidence also refers to non-financial support provided by his parents (which I would not regard as more than that given by many grandparents): the redundancy payment; the termination payments (after industrial Court Action) and withdrawals from his QSuper superannuation (some of which occurred post separation). The employee benefits arose from employment during the relationship and have no special character and the same can be said for his call on unpreserved superannuation benefits – really a form of forced saving. The husband conceded, post separation, both probably contributed equally. When I consider all these factors, I believe a small adjustment to the husband is appropriate - a factor of 2.5%.
Section 75(2) Factors
The wife is 8 years younger than the husband, which is, in some ways a “two edged sword”, in that she is capable of working longer to normal retirement age, but her needs are greater because she is likely to live longer.
Although the wife’s evidence about her past health issues was not challenged – the prognosis for a life in full remission for cancer is cautiously optimistic. Of course her past challenges make her, statistically, more vulnerable to further episodes of ill health from cancer.
What can be said however is that both have remunerative employment – with the husband’s package being superior (especially when all the benefits from being an officer in the Navel Reserve are added in). Although the wife has, on her evidence, less opportunity for advancement (this being difficult to access because of her reluctance to divulge the identity of her current employer), it is the husband’s case that his “contract” ceases this year. Although he says he has no security for a Renewal – I got the firm impression from his evidence that he expects a continuation of his contractual arrangements with the RAN. Certainly, as he conceded, completing further courses recently was designed to enhance the prospects of his re-engagement.
I would make a slight adjustment in the wife’s favour for the less remunerative earnings and capacity to earn compared to the husband.
Although the husband has paid, I accept, significant funds in the form of child support (used by the wife, with her own earnings, to meet family expenses, house payments etc), it is still the fact that the wife bears the day to day financial and emotional obligations to the three children. Although L is at University, the wife currently meets a number of his expenses. N (Grade 11) and C (Grade 8) have still a few years of schooling left.
I take into account the husband shall, as a result of my order, which I propose to make, have superior superannuation benefits which could crystalise (with a pension benefit) at any future time of his choosing (now that he is order than 55). Because of the splitting order I shall make, the benefit to the husband is diminished to his current “unsplit” benefit.
The Wife, if she chooses to take up the option she seeks, to purchase the husband’s interest in the home, will have a higher debt level to service than the husband. She will have the benefit of a greater share of the “cash and liquid assets” comprising Pool 1.
When I take all these factors into account, and also the smallness of the non DFRDB assets, I regard an adjustment to the wife, of 12.5% of Pool 1 assets is appropriate. This amount, in real terms to a sum of $47,250 – which I would regard as proper.
Just and Equitable
From the above analysis, the wife would receive 60% of the assets in Pool 1 and a splitting order in respect of the Pool 2 superannuation of 30%.
The husband did not seek any splitting order. In fact he indicated, I think genuinely, that he feels “emotionally attached” to his superannuation. It represents to him his life’s work. He said, if a splitting order was to be made, he thought the wife receiving no more than a 20% split would be appropriate.
The wife, on the other hand, is quite desperate to retain the family home – where the children have lived for 15 years. Again I sense she is somewhat emotionally attached to the home. She may also see some long term potential not reflected in the current value or market appreciation for this property.
The effect of reducing the percentage split of the husband’s superannuation to 20% would be to reduce the wife’s borrowings (and cash payment to the husband) by $42,877. In effect the husband converts cash for superannuation.
In real terms, based on the analysis above, the wife would have a splitting order in her favour for 20% of the husband’s DFRDB benefit and would be required to pay the husband the sum of $80,183, calculated as follows:
| 60% of POOL 1 | $226,807 |
| Being – House | $650,000 |
| Furniture | $15,000 |
| Jewellery | $5,000 |
| Tax Refund | $4,000 |
| Sunsuper | $31,000 |
| $705,000 | |
| Less Debts assumed | $295,133 |
| $409,867 | |
| Less Payment to husband’s parents | $60,000 |
| $349,867 | |
| Less Payment to husband | $123,060 |
| NETT | $226,806 |
| Payment due to husband as above | $123,060 |
| Less adjustment for 10% of DFRDB split | $42,877 |
| $80, 183 |
The husband’s entitlement (being adjusted for 10% of Superannuation) would be calculated as follows:
| 40% of POOL 1 | $151,205 |
| Being: Payment | $123,060 |
| QSuper | $25,000 |
| Productivity Super | $3,145 |
| $151,205 |
I acknowledge that “swapping” $42,877 cash is not equivalent to $42,877 in the DFRDB Scheme superannuation. The DFRDB benefit will, even if the husband was to retire now (which he says he cannot afford to do), will be received by the husband, partly in cash (the increased commutation benefit from having 80% of the Superannuation) and the resultant pension. I also remind myself that it is likely the actual value of POOL 2 has increased since the Valuation date of 8 June 2005.
I also take into account, when considering the justice and equity of the proposed order that:
a)although not in the quantities sought, the parties retain the “species” of asset which they seek;
b)for the wife to retain the home, she would have to borrow about $450,000 calculated as follows:
| Debts assumed | $295,133 |
| Payment to husband’s parents | $60,000 |
| Payment to husband | $80,183 |
| Payment of ½ TRADEWEST Debt | $11,000 |
| $446,316 |
The $450,000 approximately to be borrowed (allowing her to consolidate all debts and for expenses of re-financing) would represent a 70% Debt to Equity ratio.
Furthermore, as at least a guide to whether justice and equity is achieved, on a total Pool of $806,774, the respective entitlements across all the “species” of assets would be:
| Wife | Pool 1 | $269,684 | |
| Pool 2 | $85,752 | $355,436 | (44%) |
| Husband | Pool 1 | $108,328 | |
| Pool 2 | $343,011 | $451,339 | (56%) |
I am comfortable with this overall result which reflected in the order which appears at the commencement of these reasons, and which for the purposes of s.79(2) of the Act, achieves justice and equity for the parties in my view.
I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate:
Date:
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