KALINAS & ALLERTON

[2021] FCCA 263

FEDERAL CIRCUIT COURT OF AUSTRALIA

KALINAS & ALLERTON [2021] FCCA 263

Catchwords:
FAMILY LAW – Property settlement – contributions – s.75(2) factors.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79

Cases cited:

Aleksovski v Aleksovski (1996) FLC 92-705

Griffiths v Kerkemeyer [1977] HCA 45

Jabour & Jabour [2019] FamCAFC 78

Pierce v Pierce (1999) FLC 92-844

Wallis & Manning (2017) FLC 93-759

Robb & Robb (1995) FLC 92-555

Clauson v Clauson (1995) FLC 92-595

Applicant: MR KALINAS

Respondent: MS ALLERTON

File Number: LNC 901 of 2019

Judgment of: Judge McGuire

Hearing date: 19 January 2021

Date of Last Submission: 19 January 2021

Delivered at: Launceston

Delivered on: 17 February 2021

REPRESENTATION

Counsel for the Applicant: Ms C Gibson

Solicitors for the Applicant: Charmaine Gibson

Counsel for the Respondent: Ms R Brown

Solicitors for the Respondent: Legal Solutions

ORDERS

(A)That within forty-two (42) days of the date of these orders the wife shall:

(1)Make a lump sum payment to the husband of $34,187.20;

(2)Transfer and/or vest all her right, title and interest in the     following to the husband absolutely: -

i)the husband's ANZ Progress Saver bank account;

ii)the husband's ANZ access account;

iii)the Motor Vehicle 1 in the possession of the husband;

iv)the motorcycle in the husband's possession;

v)the benefit of the loan to the husband's sister;

vi)all other bank accounts or like investments in the name of or to the benefit of the husband as at the date of these orders;

vii)the husband's superannuation policies and entitlements with Super Fund B, Super Fund C, Super Fund D and Super Fund E; and

viii)all personalty and chattels in the possession of or under the control of the husband as at the date of these orders.

(3)Refinance or otherwise discharge the mortgage registered against the property at F Street, Suburb G in Tasmania and provide a release to the husband accordingly of any liability under that mortgage;

(4)Be solely responsible for and indemnify the husband in respect of any of the assets retained by the wife pursuant to these orders; and

(5)Be solely responsible for and indemnify the husband in respect of any and all liabilities incurred by the wife since separation in either joint names or in her name alone.

(B)That contemporaneously with the payment referred to in order A(1) hereof, the husband shall:

(1)Transfer and/or vest all his right, title and interest in the following to the wife absolutely: -

i)the property situate at F Street, Suburb G in Tasmania and currently registered solely in the name of the husband;

ii)all personalty and chattels in the possession of or under the control of the wife as at the date of these orders;

iii)any bank account or like investment in the name of or to the benefit of the wife as at the date of these orders;

iv)the Motor Vehicle 2 in the possession of the wife;

v)the Motor Vehicle 3 in the possession of or under the control of the wife;

vi)the wife's superannuation entitlement with Super Fund H but subject to these orders.

(2)That the husband be solely responsible for and indemnify the wife in respect of the following: -

i)Any and all liabilities attaching to any of the assets retained by the husband pursuant to these orders;

ii)Any and all liabilities incurred by the husband since separation in either joint names or in his name alone. 

(C)That paragraphs (C)(1) to (C)(7) inclusive of these orders are binding on the Trustee of Super Fund H Pty Ltd, member No. ... (“the Fund”) and it is declared that this order is made in accordance with Section 90XT(1)(a) of the Family Law Act 1975:

(1)That pursuant to Section 90XT(4) of the Family Law Act 1975 the base amount allocated to Mr Kalinas out of the interest of the Applicant in the Fund is $30,000 (“the base amount”).

(2)That in accordance with Section 90XT(1)(a) of the Family Law Act 1975 whenever the Trustee of the fund makes a splittable payment from the interest of the Applicant in the Fund, Mr Kalinas shall be entitled to be paid an amount calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using the base amount and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this order.

(3)That this order have effect from the operative time and the operative time is the fourth business day after the day on which the final sealed orders are served upon the Trustee;

(4)That until the Trustees of the Fund have effected the splittable payment in favour of Mr Kalinas pursuant to order No.(C)(1) herein the Trustee of the said Fund, the Applicant, personal representatives and any other person or persons acting on her or their behalf be and are hereby restrained from disposing of all or any amount payable to Mr Kalinas and/or his personal representatives received by or held in trust for the benefit of him or them;

(5)That a sealed copy of these orders be served upon the Trustees of the Fund within fourteen (14) days of the date of this order;

(6)That there be liberty to apply to each party and the Trustee of the Fund in relation to the implementation of this order affecting the Applicant’s superannuation interest.   

(D)That pursuant to Section 81 of the Family Law Act 1975 the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

IT IS NOTED that publication of this judgment under the pseudonym Kalinas & Allerton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT LAUNCESTON

LNC 901 of 2019

MR KALINAS

Applicant

And

MS ALLERTON

Respondent

REASONS FOR JUDGMENT

Applications

1. These are property settlement proceedings commenced on the husband's Application filed 11 December 2019.

2. The husband's case outline asks for an order whereby the wife pay to him a lump sum of $100,000 in return for which he will transfer his right, title and interest in the former matrimonial home to the wife subject to the mortgage.

3. Where the parties would each be retaining the assets otherwise in their possession this would equate, on my calculations, roughly to a settlement of 77% of the net tangible assets to the husband and 23% to the wife.  However, by the end of final submissions, the husband's Counsel had amended his position to asking for 66% of those net tangible assets.

4. The wife's case is that she make a lump sum payment to the husband of $20,000 which, on the wife's Counsel's argument, amounts to a settlement of some 55% of the current net property pool to the husband and 45% to the wife. 

Background

1. The husband is 57 years of age and the wife 56 years. 

2. The parties commenced a form of relationship in about mid 2003.  The date of commencement of cohabitation is controversial and may rest around the status of that relationship where the husband was imprisoned for a period during 2004 and 2005.  The wife says that the parties commenced cohabitation in 2003 when they ‘moved in together’ whereas the husband says that the cohabitation commenced in 2005 upon his release from prison.

3. The parties married in 2006.

4. There is also disagreement between the parties as to their date of separation.  In late 2018 and early 2019 the husband was suffering a mental health breakdown.  He says the wife locked him out of the home in January 2019.  She says that this was only for one day and that he returned to the home only for the parties to separate in about April 2019.  Little turns, in my view, on the precision of these disputes as to the commencement and demise of the relationship.

5. There are no children of the parties although two children of the wife, now adults, live primarily with the wife during the relevant marriage.  The best evidence is that she received minimal child support and perhaps at a sum of $15 per week from her former husband.

6. During the course of the relationship the wife received no less than three redundancies being $41,219 in 2011; $11,722 in 2012; and $42,744 in 2017. 

7. During the course of the relationship the husband suffered two mental health breakdowns which were attributable to his employment and where he received a workers compensation payout in 2017 of $75,000 and a second payment in 2019 of approximately $348,000 net. The wife continues to live in the former matrimonial home in Launceston.  She is employed as a manager of Employer J with an income of the approximately $80,000 per annum.  The husband is employed as a retail worker with Employer K in City L with the best evidence being of an income of approximately $55,000 per annum.

8. There is no evidence that either of the parties have re-partnered in the sense of either support or dependency. 

The Issues

1. In circumstances where the parties essentially agree the property pool and its value, the major issue for the Court is how to quantify and give weight to the wife's initial contribution of an equity in a residential property together with the status of and weight to be given to the husband's 'contribution' of his workers compensation and damages payments and, in particular, the payment of $348,000 at around the time of the parties’ separation.

2. The husband also raises an issue as to his contribution to the support of the wife's two children in the household during the course of the relationship such properly to be considered under s.75(2)(o) of the Family Law Act 1975 (‘the Act’). 

The Evidence

1. Both parties provided affidavits and sworn financial statements.  They both gave evidence and were cross-examined.  Save for the tendering of some corroborative documents, neither party adduced any further evidence.

2. Both parties gave evidence and responses in cross-examination roughly consistent with their own cases where in this matter there is very little disputed fact and only discrete issues of credit but where the dispute between the parties rests primarily with the weight to be given to their various contributions.  In this sense, each of the parties gave their evidence in a candid and honest fashion but where it is proper to comment that each were cross-examined as to some historical financial facts where a full and proper forensic preparation prior to the trial, and also prior to the mediation some months ago, may have saved these parties from the ordeal of difficult cross-examination and indeed may have assisted them in resolving the matter prior to trial.

Relevant Law

1. Issues of settlement or alteration of parties’ ‘interests in property’ are dealt with under this s.79 of the Act.

2. Section 79(2) provides that the Court should not make any order under this section unless, in all the circumstances, it is just and equitable to do so. In the matter now before me the major asset is the former matrimonial home. This property is registered, for reasons best known to the parties, solely in the name of the husband and, I assume, as is the mortgage secured by that property. This is despite the fact that the parties agree that the wife made significant financial contributions to the purchase, maintenance and improvement of the property as did the husband. The parties are divorced and I am satisfied that their relationship is at an end. In all of those circumstances, and noting the legal ownership of the asset, I am easily satisfied that it is just and equitable to enter into a consideration of altering the parties’ interests in property.

3. The consideration, therefore, for the Court commences with establishing the property pool or the legal and equitable interests of the parties in property. 'Property' includes assets, liabilities and financial resources and for these purposes superannuation is to be 'treated as property' although in reality superannuation entitlements are not able to be crystallised in the sense of an asset.

4. Both parties are agreeable that the Court should consider the property pool on a two-two basis and in fact, agree that there should be a superannuation split of $30,000 from the wife’s entitlement to the husband.

5. The Court is also to attribute value to the elements of the property pool and hence to the property pool itself.

6. The Court next considers the contributions by the parties to the acquisition, conservation and/or improvement of the property.  Contributions may be of a direct financial type or by indirect financial contributions.  Further, there may be contributions of a non-financial type including as homemaker or parent.

7. After a consideration of alteration of the property pool pursuant to the contributions, the Court then considers whether there should be any further adjustment to either of the parties by reason of the matters set out at s.79(4)(d) – (g) including any relevant factors under s.75(2) of the Act.

8. It is generally accepted that at the end of this fluid process which is permeated by considerations of justice and equity, the Court should 'stand back' and consider whether the proposed orders themselves give justice and equity rather than just the simple percentage mathematical distribution.

The Property Pool

1. The parties, to their great credit, effectively agree the property pool as it now stands given that it is generally accepted that the Court should determine that pool and its value as at the date of the hearing.  I find the property pool as agreed between the parties to constitute the following:

ASSETS
F Street, Suburb G, Tasmania	$435,000
Husband’s Motor Vehicle 1	$  40,000
Husband’s motorcycle	$  16,000
Husband’s bank accounts	$127,105
Husband’s household content	$    6,000
Loan to husband’s sister	$  17,000
Wife’s bank account	$    1,300
Wife’s Motor Vehicle 2	$    1,000
Wife’s Motor Vehicle 3	$  24,000
Wife’s household contents	$    9,500
Motorcycle 4 (sold by husband)	$    1,000
TOTAL	$677,905
LIABILITIES
CBA Mortgage (Husband)	$268,871
M Finance (Husband)	$  12,744
TOTAL	$281,615
NET TANGIBLE ASSETS	$396,290
SUPERANNUATION
Super Fund H (Wife)	$116,086
Super Fund B (Husband)	$  28,177
Super Fund C (Husband)	$   1,188
Super Fund D (Husband)	$  12,952
Super Fund E (Husband)	$   2,645
TOTAL	$161,048

Contributions

1. The parties agree that the husband had minimal assets comprising of some small savings and a motor vehicle as at the date of commencement of cohabitation.

2. The wife came into this relationship as the beneficiary of a property settlement with her former husband and primarily with equity in their former home at Town N in Tasmania.  The parties agree the value of that property at the time to be $260,000.  The wife's financial statement sworn and filed in those proceedings six months prior to the final orders disclose a mortgage liability of $67,000 thereby giving equity of $193,000 in the property.  The wife was required to pay $40,000 to the husband at the settlement and she says, and I accept, that she further borrowed to meet her legal costs and sundries thereby giving her a net equity of $120,000 which she introduced to the relationship.

3. Both parties were substantially employed during the relationship although each at various times was out of the workforce.  As mentioned above, the wife took redundancies on at least three separate occasions which caused short periods of unemployment but where her redundancy payments were utilised for the support of the family unit.  Similarly, the husband suffered mental health problems necessitating him being out of the workforce but where he similarly received payments which were contributed to the household income.  Specifically, the husband's initial workers compensation lump sum of $75,000 was received in 2017.

4. Consequently, given all of these factors concluding the payments received by each of the parties and the sources and rationale of these payments, I am satisfied that the contributions by each of them during the course of the relationship were equal.

5. The husband suffered a second major mental health breakdown in late 2018. He was admitted to hospital in early 2019. Unfortunately, this admission coincided with the commencement or actual breakdown of the parties’ relationship.  The husband says that he was locked out of the former matrimonial home by the wife in January 2019.  She says that this was the case but only for one day.  The husband says that he wrote to the wife by email at that time notifying his intention to end the marriage.  The wife says that the email was later retracted or that the husband acted contrary to that intention.  It seems clear, in any event, that the breakdown of this relationship was protracted and took place during the early months of 2019 where, on anyone's view, the relationship had finally come to its end by April 2019.

6. In mid 2019 the husband entered into a Deed of Settlement with his employer resulting in him receiving the net payments of approximately $348,000 such received some time later in 2019.

7. The balance of the husband's workers compensation payments and his $15,000 damages from a motor vehicle accident sit in the property pool above in his bank accounts at a proximally $127,000.  He concedes through his Counsel that he has therefore disbursed or disseminated an amount of approximately $240,000 in a period of approximately 18 months.  Some of those monies are accountable by items in the asset pool such as the husband's motor vehicle.  He says that he has reasonably had to re-establish himself financially and in accommodation following the breakdown of his marriage. He concedes that he has had some four overseas trips including a substantial Country O holiday which may have cost him some $60,000 - $70,000.  He says that the holiday was undertaken as a form of therapy as suggested by his medical practitioners or counsellors but where no evidence in proper form was adduced to allow the Court to give some justification to these claims.

8. The issue, therefore, of the husband's expenditure of some $240,000 post-separation is a vexed one.  On reflection, I prefer and accept the argument of the husband's Counsel which offers firstly that the husband received these monies post-separation and this sense they would have been a contribution by him to the pool with significant weight given its timing[1]. Counsel argues consequently that there is no net detriment to the wife in her case before this Court where the husband would, in any event, have received credit by way of his post-separation contribution or in a more realistic or analogous sense that the Court could consider this simply in the sense of the husband having borrowed those monies independently post-separation and spent them and where he would receive no detriment accordingly. There may, nevertheless, be an impact on any future support issues under s.75(2).

   [1] Aleksovski v Aleksovski (1996) FLC 92-705

9. It follows, therefore, on accepting the argument of Counsel for the husband, that I consider the remaining funds of approximately $127,000 to be a contribution by the husband and consistent with the authority of Aleksovski (supra).

10. The wife's Counsel argued a form of contribution by the wife to the husband's damages payments by way of her care and support of the husband.  This is one of the few areas in which the parties have different versions of history where the husband says that the wife's direct assistance to him was minimal whereas the wife emphasises her assistance. The material before me does not allow me to make a determination of this dispute which, in any event, it is not necessary given that there is no evidence before me that the husband’s compensation payment was particularised with any reference to the principles in Griffiths v Kerkemeyer[2].

    [2] [1977] HCA 45

1. Consequently, and whilst it is important to emphasise that it is the task for this Court to consider the myriad of contributions made by or behalf of each of these parties during the course of this relationship which might have endured for up to 15 plus years, I suspect that the positions taken by each of these parties and their inability to reach settlement is based on differing views as to the weight to be given to the wife's superior initial financial contribution which, of course, provided some impetus for their current wealth in the equity in the former matrimonial home as against the husband's contribution either very late in or soon after the demise of the relationship which currently sits in the bank account at around $127,000.

2. There are other contributions made by each of these parties referenced in their affidavits including the husband meeting the mortgage payments for some months after separation whilst the wife remained in occupation of the former matrimonial home and also by drawing down on his superannuation entitlements during a period of the marriage when the mortgage came into arrears.  Similarly, the wife borrowed $20,000 from an aunt to allow the parties to purchase the current property at F Street, Suburb G which remains a form of contribution although the aunt has since been repaid.  The matters are all noted and considered.

3. The Full Court in Jabour & Jabour[3] emphasised that trial Courts might fall into error in viewing particular contributions by one or other of the parties in isolation and including as to the ‘erosion’ of such contributions.  Rather, the proper course for the Court as stated by the Full Court in Pierce v Pierce[4] in considering the long line of authorities in respect of the issues of weighing an initial contribution against subsequent contributions is as follows:

   In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution.  It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. 

   [3] [2019] FamCAFC 78

   [4] (1999) FLC 92-844

4. Further, in Wallis & Manning[5] their Honours in the Full Court said, consistently with Pierce:

   Yet, that approach must also ensure that the 'myriad of other contributions' and the duration over which, in circumstances in which, the miscellany of other s.79(4) contributions were made is not accorded a subsidiary role.  The essential s.79(4) task is for the ‘trial Judge [to] weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation..

   [5] (2017) FLC 93-759

5. Consequently, and in an holistic consideration, there were many and varied contributions made by these parties, both financially and non-financially, to the property pool as it currently exists.  None of those can be quarantined in consideration.

6. The wife entered this relationship in 2003 or 2005 with approximately $120,000.  That is not an insignificant sum in respect of the property pool as it sits now.   The evidence does not directly assist me as to the utilisation of these funds in circumstances where the parties subsequently together purchased a property (albeit registered in the name of the husband only) but where they borrowed effectively the totality of the purchase monies.  They both give evidence and agree that there were many and varied contributions during the relationship.  The husband's contribution of $127,000 sitting in his bank account occurred at or near the time of separation and is traceable accordingly but again should not be considered in isolation from the myriad of other contributions.

7. In summary, noting my findings as to equality of contributions during the course of the relationship, the length of the relationship and the timing and quantum of the contributions by the wife at the commencement of cohabitation and that of the husband at or near the end of the relationship, together with the quantum of the property pool which, with respect to the parties, is not substantial, I am of the view that there should be an adjustment to the husband on the basis of contributions of 5% of the net tangible property pool excluding superannuation.

Section 75(2) Factors

1. Both parties are currently in employment with the wife's income being approximately $25,000 per annum greater than that of the husband but where the husband has had the use of a financial resource in the sense of a large proportion of his damages payment which was intended to be compensatory of loss of future earnings.  I am not persuaded on the evidence before me that the husband might not have been more prudent in the expenditure of his damages payment with an eye to his own future needs.

2. There are no longer dependent children of this relationship.

3. There is no evidence of either of the parties entering into new relationships of support or dependency.

4. I accept the husband's evidence that the wife's children were generally members of the family unit. The wife's evidence is that she received minimal child support from the children's father. The evidence suggests that the family finances were generally pooled and I accept, therefore, that the husband made contributions to the wife's children which, on the authorities, should be considered under s.75(2)(o) pursuant to the well-known decision of the Full Court in Robb & Robb[6].  I accept that the wife herself contributed substantially to her children's support including financial support.  Nevertheless, she had a legal obligation to do so whereas the husband's 'contribution' in this respect is of a different status. By reason of their ages and the parties commencing cohabitation in 2005, I can find that the children were habitually members of this household for a number of years and, as mentioned above, the financial contribution by their father was minimal. It follows that the contributions of the husband through the household finances were significant.  I note evidence of his indirect support of the wife in her care of the children.  I also note the comments of their Honours in the Full Court in Clauson v Clauson[7] where the Court emphasised that a consideration of s.75(2) factors should have a sense of 'reality' in relation to the quantum of the property pool rather than simple percentage. In this matter the property pool is not of significant quantum. The contribution by the husband was of some significance and continued over many years. Consequently, I am of the view that there should be an adjustment to the husband from the property pool of net tangible assets of 3%.

   [6] (1995) FLC 92-555

   [7] (1995) FLC 92-595

5. I note that the parties are in agreement as to a splitting order of $30,000 from the respondent wife's superannuation entitlement to the husband.  I am satisfied that such an order would be appropriate and just and equitable given the length of the relationship and the relative current superannuation entitlements of each of the husband and the wife. 

Conclusion

1. After consideration of the contributions and the s.75(2) factors, I am satisfied that the husband should receive 58% of the property pool and the wife will receive 42% but in circumstances where the parties agree as to an adjustment of superannuation separate from the tangible assets.

2. I find that the tangible property pool of the parties are valued at $677,905.  The liabilities total $281,615 giving net value of $396,290.  58% of that pool will entitle the husband to assets at value of $229,848.20.  He will retain his ANZ account ($127,000), ANZ access account ($2,105), Motor Vehicle 1 ($40,000), motorcycle ($16,000), contents ($6,000), loan to sister ($17,000) being a total of $208,105 but less the motor vehicle loan ($12,444) giving him net of $195,661 thereby on my calculations obliging the wife to make a cash adjustment to him of $34,187.20.

3. These orders will, of course, result in a transfer of the title of the property at F Street, Suburb G from the husband's sole name to the sole name of the wife with the wife assuming the mortgage liability and obtaining a release accordingly for the husband.

4. Taking into account the length of this relationship, the various contributions, and the circumstances of the parties, I am satisfied that orders in these terms would be just and equitable. 

I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Associate:  

Date:  17 February 2021