Katarin & Katarin
[2024] FedCFamC1F 203
•27 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Katarin & Katarin [2024] FedCFamC1F 203
File number(s): SYC 8508 of 2021 Judgment of: ALTOBELLI J Date of judgment: 27 March 2024 Catchwords: FAMILY LAW – PROPERTY – Final orders – Where parenting matters settled on day three of the final hearing – Allegations of family violence – Where the wife seeks an opportunity to retain the former matrimonial home – Discussion of housing needs for a family – s 75(2) factors – It is determined that the matrimonial pool is to be divided 52:48 in the wife’s favour – Consideration of whether a superannuation splitting order should be made – It is ordered that the husband is to pay the wife $450,000 and the remainder as a superannuation splitting order. Legislation: Family Law Act 1975 (Cth) ss 75, 79
Mental Health and Cognitive Impairment Forensic Provision Act 2020 (NSW) s 14
Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Coghlan & Coghlan (2005) FLC 93-220; [2005] FamCA 429
Gadhavi & Gadhavi [2023] FedCFamC1A 117
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
NHC and RCH (2004) FLC 93-204; [2004] FamCA 633
Phillips & Phillips (2002) FLC 93-104; [2002] FamCA 350
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Teal & Teal [2010] FamCAFC 120
Trevi & Trevi [2018] FamCAFC 173
Warbrick & Warbrick [2021] FamCAFC 60
Division: Division 1 First Instance Number of paragraphs: 79 Date of last submission/s: 15 February 2024 Date of hearing: 12–15 February 2024 Place: Sydney Counsel for the Applicant: Mr Dickson KC Solicitor for the Applicant: Barkus Doolan Winning Counsel for the Respondent: Ms Shea Solicitor for the Respondent: Southern Waters Legal ORDERS
SYC 8508 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR KATARIN
Applicant
AND: MS KATARIN
Respondent
ORDER MADE BY:
ALTOBELLI J
DATE OF ORDER:
27 MARCH 2024
THE COURT NOTES THAT:
A.The following definitions apply for the purpose of these orders:
a.“Suburb C mortgage” means the mortgage owing to Westpac Banking Corporation secured against the Suburb C property, having registered dealing number ….
b.“Suburb C property” means the property situated at B Street, Suburb C in the state of New South Wales being the whole of the land comprised in folio identifier …, together with the improvements, fixtures and fittings erected thereon and/or attached thereto.
c.“Husband” means Mr Katarin born 1976.
d.“Husband’s bank accounts” means all bank accounts held in the name of the Husband or in which the Husband holds an interest (other than for the joint bank accounts) including but not limited to:
i.D Bank Account …67;
ii.D Bank Account …43; and
iii.D Bank Account …37.
e.“Husband’s [vessel]” means the vessel held in the Husband’s name.
f.“Husband’s car loan” means the monies owing to Commonwealth Bank of Australia by way of car loan referable to the Husband’s motor vehicle.
g.“Husband’s contents” means the household contents, furniture, furnishings, and effects in the possession of the Husband.
h.“Husband’s shares” means the Husband’s interest in any publicly listed company, including but not limited to his interest in E Limited, F Group, G Limited, H Limited and J Limited.
i.“Husband’s superannuation entitlements” means the superannuation entitlements held by the Husband with any superannuation fund, including but not limited to his entitlements with Super Fund 1.
j.“Husband’s motor vehicle” means Motor Vehicle 1 registered in the Husband’s name.
k.“Joint bank accounts” means the D Bank Account …37 held in the joint names of the parties.
l.“Parties” means the Husband and the Wife.
m.“Suburb L property” means the property situated at K Street, Suburb L in the state of New South Wales being the whole of the land comprised in folio identifier …, together with the improvements, fixtures and fittings erected thereon and/or attached thereto, of which the Parties are the joint registered proprietors.
n.“Suburb L mortgage” means the mortgage owing to Westpac Banking Corporation secured against the Suburb L property, having registered dealing number ….
o.“Suburb N mortgage” means the mortgage owing to Westpac Banking Corporation secured against the Suburb N property, having registered dealing number ….
p.“Suburb N property” means the property situated at M Street, Suburb N in the state of New South Wales, being the whole of the land contained in folio identifier … together with the improvements, fixtures and fittings erected thereon and/or attached thereto.
q.“Wife” means Ms Katarin born 1980.
r.“Wife’s bank accounts” means all bank accounts held in the sole name of the Wife or in which the Wife holds an interest (other than for the joint bank accounts) including but not limited to:
i.O Bank Account …06; and
ii.O Bank Account …58.
s.“Wife’s contents” means the household contents, furniture, furnishings, and effects in the possession of the Wife.
t.“Wife’s superannuation entitlements” means the superannuation entitlements held by the Wife with any superannuation fund, including but not limited to her entitlements with Super Fund 2 and Super Fund 3.
u.“Wife’s motor vehicle” means Motor Vehicle 2, registration …, registered in the name of the Husband.
THE COURT ORDERS THAT:
Suburb C and Suburb N properties
1.Within four months from the date of these orders (“the Due Date”), the Husband shall do all things and sign all documents as shall be necessary to:
(a)Discharge the Suburb C mortgage and indemnify the Wife in relation to such liability by way of refinance into the Husband’s sole name; and
(b)Discharge the Suburb N mortgage and indemnify the Wife in relation to such liability by way of refinance into the Husband’s sole name.
Cash Adjustment
2.By the Due Date and simultaneously with Order 1, the Husband shall do all acts and things and sign all documents as shall be necessary to pay to the Wife, or as she may direct in writing, the sum of $450,000 (“the Settlement Monies”).
Sale of Suburb N property in default
3.In the event that the Husband fails to comply with Order 1(a), 1(b) or 2 within seven days from the Due Date, then the Husband shall forthwith do all acts and things and sign all documents as shall be necessary to sell the Suburb N property for the best price reasonably obtainable in the following manner:
(a)List the Suburb N property for sale by private treaty with an agent to be agreed between the parties and failing agreement to be selected by the Wife from a list of three agents proposed by the Husband (“the Agent”) with the costs of and incidental to such appointment being borne by the Husband as and when they fall due;
(b)The sale price at which the Suburb N property shall be listed shall be mutually agreed upon by the parties or, in the absence of agreement as recommended by the Agent;
(c)The parties shall each co-operate in every way with the Agent including (without limiting the generality of the foregoing):
(i)Providing the Agent with a copy of these orders;
(ii)Forthwith instructing the Agent in writing to copy both parties in on all correspondence concerning the sale, feedback from prospective purchasers and any offers;
(iii)Making keys available to the Agent;
(iv)Allowing inspection of the Suburb N property at all reasonable times requested by the Agent;
(v)Doing or saying nothing to hinder or prevent a sale being effected;
(vi)Ensuring the Suburb N property, including the grounds, is in a neat and clean condition at the time of inspection by the Agent and prospective purchasers; and
(vii)Signing all documents requested by the agents in relation to the listing for sale of the Suburb N property, including but not limited to an Agency Agreement, except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
(d)The Husband shall instruct a conveyancer to be agreed between the Parties, with such conveyancer to have the conduct of the sale with the costs of and incidental to such appointment being borne by the Husband as and when they fall due;
(e)The Husband shall execute a contract for sale in the form prepared by the conveyancers having conduct of the sale; and
(f)Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the Suburb N property or to any commission.
4.In the event that the Suburb N property fails to be sold by private treaty within three months from the date the Suburb N property is listed for sale in accordance with these orders, then the Husband shall forthwith do all acts and things and sign all documents as shall be necessary to sell the Suburb N property for the best price reasonably obtainable in the following manner:
(a)List the Suburb N property for sale by public auction with the Agent with the costs of and incidental to such appointment to be borne equally by the Parties;
(b)The reserve price at which the Suburb N property shall be listed shall be mutually agreed upon by the Parties or, in the absence of agreement as recommended by the Agent; and
(c)Otherwise as set out in Orders 3(c) to 3(f) inclusive above.
5.In the event the Suburb N property still fails to be sold in accordance with Orders 3 and 4 above following an auction pursuant to Order 4 above, then the Husband shall continue to hold public auctions for sale, no less than once every four weeks, until such time as the Suburb N property is sold.
6.Upon settlement of the sale of the Suburb N property the Husband shall do all acts and things and sign all documents as shall be necessary to cause the proceeds of sale to be applied in the following manner and order:
(a)In payment of the costs of and incidental to such sale;
(b)In payment of the amount required to discharge the Suburb N mortgage, and the Suburb C mortgage in the event the same has not been discharged;
(c)In payment to the Wife, or as she may direct in writing, the Settlement Monies, plus:
(i)Any interest accrued thereon; and
(ii)52% of the amount by which the sale price of the Suburb N property exceeds $2,000,000;
(d)In payment of the balance then remaining to the Husband, or as he may direct in writing.
7.Pending the discharge of the Suburb C mortgage and Suburb N mortgage, the Husband shall be solely liable for meeting all payments referable to these mortgages and shall indemnify the Wife in relation to any liability associated with the Suburb C property and the Suburb N property.
8.In respect of any Capital Gains tax liability that will be accrued in the Husband’s name following such sale:
(a)The Husband file his Tax Return no later than 30 July in the financial year following such sale;
(b)The Husband engage P Accountants to file his Tax Return and conduct any calculation to address any Capital Gains Tax liability following the sale;
(c)The Husband apply any capital loss carried forward to such calculation to minimise the Capital Gains Tax liability and provide the accountant with any information required to calculate the capital gain;
(d)The Parties otherwise be liable for the Capital Gains Tax liability as to 52% to the Wife and 48% to the Husband as and when it arises.
Suburb L property
9.Simultaneous with the Husband’s compliance with Orders 1(a), 1(b) and Order 2, whichever is later, the Wife shall do all acts and things and sign all documents as shall be necessary to discharge the Suburb L mortgage.
10.Simultaneously with the Wife’s compliance with Order 9 above, the Husband shall do all acts and things and sign all documents as shall be necessary to transfer to the Wife all of his right, title and interest in the Suburb L property.
11.In the event that the Wife fails to comply with Order 9 within 14 days from the Husband’s compliance with Orders 1(a), 1(b) and Order 2, whichever is later, then the Parties shall forthwith do all acts and things and sign all documents as shall be necessary to sell the Suburb L property for the best price reasonably obtainable in the following manner:
(a)List the Suburb L property for sale by private treaty with an agent to be agreed between the parties and failing agreement to be selected by the Husband from a list of three agents proposed by the Wife (“the Agent”) with the costs of and incidental to such appointment being borne equally by the Parties as and when they fall due;
(b)The sale price at which the Suburb L property shall be listed shall be mutually agreed upon by the Parties or, in the absence of agreement as recommended by the Agent;
(c)The Parties shall each co-operate in every way with the Agent including (without limiting the generality of the foregoing):
(i)Providing the Agent with a copy of these orders;
(ii)Forthwith instructing the Agent in writing to copy both Parties in on all correspondence concerning the sale, feedback from prospective purchasers and any offers;
(iii)Making keys available to the Agent;
(iv)Allowing inspection of the Suburb L property at all reasonable times requested by the Agent;
(v)Doing or saying nothing to hinder or prevent a sale being effected;
(vi)Ensuring the Suburb L property, including the grounds, is in a neat and clean condition at the time of inspection by the Agent and prospective purchasers; and
(vii)Signing all documents requested by the agents in relation to the listing for sale of the Suburb L property, including but not limited to an Agency Agreement, except a contract or agreement for sale which has not been authorised by the Parties’ solicitors.
(d)The Parties shall instruct a conveyancer to be agreed between the Parties, with such conveyancer to have the conduct of the sale with the costs of and incidental to such appointment being borne equally by the Parties as and when they fall due;
(e)The Parties shall execute a contract for sale in the form prepared by the conveyancers having conduct of the sale; and
(f)Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the Suburb L property or to any commission.
12.In the event that the Suburb L property fails to be sold by private treaty within three months from the date the Suburb L property is listed for sale in accordance with these orders, then the Parties shall forthwith do all acts and things and sign all documents as shall be necessary to sell the Suburb L property for the best price reasonably obtainable in the following manner:
(a)List the Suburb L property for sale by public auction with the Agent with the costs of and incidental to such appointment to be borne equally by the Parties;
(b)The reserve price at which the Suburb L property shall be listed shall be mutually agreed upon by the Parties or, in the absence of agreement as recommended by the Agent; and
(c)Otherwise as set out in Orders 11(c) to 11(f) inclusive above.
13.In the event the Suburb L property still fails to be sold in accordance with Orders 11 and 12 above following an auction pursuant to Order 12 above, then the Parties shall continue to hold public auctions for sale, no less than once every four weeks, until such time as the Suburb L property is sold.
14.Upon settlement of the sale of the Suburb L property the parties shall do all acts and things and sign all documents as shall be necessary to cause the proceeds of sale to be applied in the following manner and order:
(a)In payment of the costs of and incidental to such sale;
(b)In payment of the amount required to discharge the Suburb L mortgage; and
(c)In payment of the balance then remaining to the Wife, or as she may direct in writing.
Superannuation split
15.Orders 16 to 20 have effect from the operative time and the operative time is four business days from service of a certified copy of sealed orders on the trustee.
16.Having been afforded procedural fairness, these orders bind the trustee of Super Fund 1.
17.A base amount of $133,047.76 is allocated, in accordance with s 90XT(4) of the Family Law Act 1975 (Cth) (“the Act”), to the Wife out of the Husband's Super Fund 1 entitlements held in account number …06.
18.In accordance with s 90XT(7)(a) of the Act:
(a)The Wife is entitled to be paid the base amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2007; and
(b)The Husband’s entitlement in the Husband's Super Fund 1, is correspondingly reduced.
19.The trustee of the Super Fund 1, Q Limited (“the trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Act and the Family Law (Superannuation) Regulations 2001, the base entitlement created for the Wife by these orders; and
(b)Pay the entitlement whenever the trustee makes a splittable payment out of the Husband’s interest in the said fund.
Ancillary
20.Within 14 days of the date of these orders, the Husband shall do all acts and things and sign all documents as shall be necessary to transfer to the Wife the Wife’s motor vehicle.
21.Within 14 days of the date of these orders, both Parties shall do all acts and things and sign all documents required to close any jointly held bank accounts, with any sum therein to be divided equally between the Parties.
22.Save as otherwise provided in these orders, the Husband shall be declared the sole owner both at law and equity of:
(a)The Husband’s bank accounts;
(b)The Husband’s vessel;
(c)The Husband’s contents;
(d)The Husband’s shares;
(e)The Husband’s superannuation entitlements;
(f)The Husband’s vehicle, subject to the Husband’s car loan;
(g)Any chattels, goods, furnishings and other property of whatsoever kind or nature which are, as at the date of the orders and in the future, in his possession; and
(h)Any monies, shares, debentures and superannuation entitlements, which stand in his sole name as at the date of the orders and in the future.
23.Save as otherwise provided in these orders the Wife shall be declared the sole owner both at law and equity of:
(a)The Wife’s bank accounts;
(b)The Wife’s contents;
(c)The Wife’s motor vehicle;
(d)The Wife’s superannuation entitlements;
(e)Any chattels, goods, furnishings and other property of whatsoever kind or nature which are, as at the date of the orders and in the future, in her possession; and
(f)Any monies, shares, debentures and superannuation entitlements, which stand in her sole name as at the date of the orders and in the future.
24.Except as specifically provided for by any order contained within these orders to the contrary:
(a)The Husband hereby indemnifies the Wife in respect of any actions, claims, suits and demands as may be made against the Wife in relation to all liabilities in the name of the Husband now and in the future; and
(b)The Wife hereby indemnifies the Husband in respect of any actions, claims, suits and demands as may be made against the Husband in relation to all liabilities in the name of the Wife now and in the future.
25.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders then the Registrar of the Court is appointed pursuant to s 106A of the Act, to execute such deed or instrument in the name of such party and to do all things necessary to give validity and operation to the deed or instrument.
26.Either party is granted liberty to apply on seven (7) days' notice regarding the implementation of these orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Katarin & Katarin has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
INTRODUCTION
These reasons for judgment explain the orders made in a dispute between the applicant husband (“the husband”) and the respondent wife (“the wife”) about alteration of property interests.
BACKGROUND
The husband is 47 years old and describes himself as a full-time manager. The wife is 43 years old and she is a part-time educator. They both reside in Sydney. They commenced cohabitation in 2011, married in 2012 and separated on a final basis on 16 October 2021.
There are two children of the marriage, X who is 10 years old and Y who is 7 years old (“the children”). The parties resolved their parenting dispute on day three of the final hearing with final orders made by consent on 14 February 2024. The wife has sole parental responsibility for the children. The children are to live with her and spend time with the husband in a graduated regime beginning with supervised time each alternate Sunday from 9.00 am to 1.00 pm (stage 1 for three months); then each alternate Sunday from 9.00 am to 3.00 pm (stage 2 for three months); then each alternate Sunday from 9.00 am to 5.00 pm (stage 3). Stage 3 is to continue until, among other things, the husband complies with engaging in treatment with Dr R (psychologist) and Mr S (psychiatrist), and attends upon the Men’s Behaviour Change Program conducted by T Family Services. Thereafter, the children may commence spending unsupervised time with the husband each alternate Sunday from 9.00 am to 5.00 pm (stage 4 for three months); then each alternate Saturday and Sunday from 9.00 am to 5.00 pm (stage 5 for six months); then each alternate weekend from 9.00 am on Saturday until 5.00 pm on Sunday (stage 6 for three months); then each alternate weekend from after school on Friday until 5.00 on Sunday (stage 7 for six months); then each alternate weekend from after school on Friday until the commencement of school on Monday (stage 8).
It is agreed that at the commencement of cohabitation the husband owned three properties in Suburb N (“the Suburb N property”), Suburb C (“the Suburb C property”) and Suburb U (“the Suburb U property”). Pursuant to a jointly appointed expert report, the Suburb N property was worth $850,000 with a mortgage of $197,432.09 and the Suburb C property was worth $350,000 with a mortgage of $92,979.70 as at 30 June 2011. After cohabitation, the husband sold the Suburb U property at a loss of $75,859.
In or about early 2014, the parties purchased a property in Suburb L (“the former matrimonial home”) for $1,382,500. To purchase the property, the husband refinanced the Suburb C property and the Suburb N property and contributed his savings. The husband further alleges that he has been solely responsible for the mortgage repayments on the property, as well as the outgoings since the date of purchase. The wife and the children remain in the former matrimonial home to date.
In late 2021, the husband was arrested and charged with multiple offences involving the wife and the children. In mid-2022, the husband pled guilty to two of the charges and the remaining charges were either withdrawn or dismissed.
COMPETING PROPOSALS
By the time of closing submissions, the husband proposed orders that reflect him receiving 60 per cent of the matrimonial pool. In order to implement this, he proposes that the wife be given an opportunity to retain the former matrimonial home by giving her 42 days to discharge the mortgage in addition to transferring him the amount of $200,000. In the event the wife is unable to do this within the specified period, he seeks that the former matrimonial home be sold to effect the 60:40 split of the non-superannuation matrimonial pool. He also proposes that the parties’ superannuation be equalised such that the amount of $252,262 be transferred from the husband to the wife. Other than the wife’s motor vehicle being transferred into her sole name, he otherwise proposes that each party retain all other assets and liabilities in their current names.
The wife seeks an overall division of 57:43 in her favour. In order to implement this, she proposes that the husband transfer her the sum of $822,000 within four months of the date of the final orders. In the event the husband is unable to comply with this timeframe, she seeks orders that the Suburb N property be sold. Simultaneously with the husband’s compliance with the transfer of sum, she proposes to discharge the mortgage on the former matrimonial home and the parties transfer it into her sole name. In the event she is unable to discharge the mortgage, she proposes that the former matrimonial home be sold. Otherwise, she proposes that each party retain all other assets and liabilities currently in their names.
EVIDENCE BEFORE THE COURT
In support of his case, the husband relies on the following documents:
(1)Second Further Amended Initiating Application for Final Orders filed 8 January 2024;
(2)His affidavit filed 22 January 2024;
(3)Financial Statement filed 1 February 2024;
(4)Outline of Case Document filed 31 January 2024; and
(5)Various documents tendered during the proceedings, and marked Exhibit A1–A8.
In support of her case, the wife relies on the following documents:
(1)Amended Response to Initiating Application filed 16 August 2023;
(2)Her affidavit filed 22 January 2024;
(3)Financial Statement filed 9 February 2024;
(4)Outline of Case Document filed 1 February 2024; and
(5)Various documents tendered during the proceedings, and marked Exhibit R1–R16.
APPLICABLE LAW
This is an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) which relevantly provides:
79 Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d)an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 79(4) incorporates the provisions contained in s 75(2) of the Act, which states:
(2) The matters to be so taken into account are:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In Bevan & Bevan (2013) FLC 93-545 (“Bevan”), the Full Court considered the High Court’s decision in Stanford v Stanford (2012) 247 CLR 108, which provided guidance on how s 79 was to be interpreted and implemented. Bevan endorsed the continuing application of the four-step approach articulated by the Full Court in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 (“Hickey”), but on the basis that it is a shorthand distillation of the words of s 79, as opposed to being a statutory edict. The four steps articulated in Hickey at [39] are:
(1)Identify and value the property, liabilities and financial resources of the parties;
(2)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property;
(3)Identify and assess the other facts relevant under s 79(4)(d)–(g) including s 75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
(4)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
Another legal issue that arises is whether I should notionally add back assets to the property pool. In the Full Court’s decision of Trevi & Trevi [2018] FamCAFC 173, Murphy J explains at [27]:
The Full Court held in AJO and GRO that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
(Footnotes omitted)
Relevant to this case is the first category—that is, the question of adding back expenditure on legal fees. In this regard, the Full Court in NHC and RCH (2004) FLC 93-204 at [55] and [57] states:
55.This decision appears to confirm the principle that where the payment of legal costs can be regarded as a premature distribution of funds (in which both parties have an interest), it is appropriate to add back those costs as a notional asset. It also confirms the principle that where funds have been borrowed to pay legal fees, and such liability is still outstanding, neither the payment of the fees nor the liability should be taken into account. The decision also supports the proposition that where it is determined that a payment of legal fees should be taken into account as a notional asset, any outstanding liability in respect of those fees should also be taken into account.
…
57.If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
THE BALANCE SHEET
The Court received an updated joint balance sheet on 15 February 2024 which was marked Exhibit C1. All values are agreed save for item 35 which is a contended addback. The wife asserts an addback of $250,000 in the husband’s name and the husband only concedes an addback of $115,000.
The fact that the husband withdrew $250,000 is not in dispute.
The husband’s case in relation to this sum has a few inconsistencies. In his affidavit at paragraph 34, he details how he applied those funds: $88,750 in rental payments paid to his mother, $1,470 in storage facility payments, $2,551 for gas, electricity and water usage, $601 for equipment repairs, $123,980 towards his criminal law proceedings and $33,000 for day to day living expenses. The husband was cross-examined by the wife’s counsel on these figures.
By closing submissions, however, the husband’s senior counsel submitted that the sum of $250,000 was applied as follows: $115,000 toward his legal representatives in the family law proceedings, $40,000 toward other fees for these proceedings and $95,000 toward criminal law proceedings.
The husband concedes the addback of $115,000 on account of it being legal fees for these family law proceedings. Counsel submitted that this sum reflects items 1 and 2 in the second table in the husband’s costs notice filed 8 February 2024 (Exhibit A8) which states approximately $104,000 has been paid to his solicitors and $11,000 has been paid to senior counsel. However, it is curious that this sum of $115,000 does not appear in the husband’s affidavit. Nevertheless, this amount is conceded.
In cross-examination, the wife agreed that the husband had paid expenses relating to the litigation for her benefit as well as his. The total is $41,438. The expenses in question appear to be items 3–7 of Exhibit A8. The husband concedes these expenses were paid out of the withdrawn funds, and given the wife benefitted from these expenses, and no specific contrary submissions about this was made by her counsel, this amount needs to be added back.
There is a sum of $93,562 remaining which the husband’s counsel submitted was applied toward his criminal law proceedings. This is directly contrary to paragraph 34 of the husband’s affidavit which states the sum of $123,980 was applied toward his criminal law proceedings from the $250,000 withdrawal. In any event, the Court will address whether the expenditure on his criminal legal fees should be added back.
As a preliminary observation and even though parenting was settled, the Court will consider all of the evidence in this case, provided such evidence is relevant to the determination of an issue in dispute in the property case. The husband’s senior counsel submitted that the husband’s expenditure on criminal law proceedings was not unreasonable. Therefore, the evidence heard by the Court regarding family violence, including the subject of the husband’s criminal proceedings, become relevant. The adjudication on the issue of reasonableness requires reference to this evidence.
In late 2021, the husband was arrested and charged with multiple offences involving the wife and the children. A number of these offences related to the events of late 2021 of which one was withdrawn, and the husband pled guilty to the others. Out of the remaining charges, one proceeded to trial and X, then 7 years old, was required to give evidence under cross-examination, knowing the father would be present and disputing his recollection of events. In relation to this offence, the husband was found not guilty and at [163] of the judgment, the Local Court Magistrate stated as follows:
I have three different versions of events of what happened. I may have suspicions about what had occurred, but suspicion alone is not enough to reach that very high standard of proof of beyond reasonable doubt. In determining the matter on the balance of probabilities, I might reach a different conclusion.
(paragraph 140 of the wife’s affidavit)
In late 2022, the father was placed on a 12-month supervision order, directed to attend treatment programs, and a final Apprehended Domestic Violence Order was issued for a period of 12 months.
The father appealed the severity of the sentence and the appeal was upheld in the District Court in early 2023. The husband’s legal representatives argued that he was suffering from a major depressive disorder. The Court dismissed a number of charges pursuant to s 14 of the Mental Health and Cognitive Impairment Forensic Provision Act 2020 (NSW) and discharged the husband into the care of his general practitioner on the basis that he attends appointments with his treating doctor (every second month), treating psychiatrist (every six months), treating psychologist (every four weeks), accepts medication as clinically indicated and continues to engage in counselling/anger management courses as directed by Dr V. It is important to note that the husband conceded in cross-examination that he had not seen a psychiatrist since these orders were made. Therefore, the husband did not comply with the very conditions on which the District Court declined to punish him.
In assessing the “reasonableness” of the husband’s expenditure of joint funds on his criminal law proceedings, the Court will turn to the wife’s family violence allegations. The CCTV video footage of the events of late 2021 was tendered and marked Exhibit R5. It records Y crying and saying “dad tripped me over”. Then it shows the husband, in an angry state, throwing a chair in the direction of the wife and a toy in the direction of Y. The husband acknowledged in cross-examination that both Y and the wife could have been physically hurt by his actions on that day. He also conceded that despite this, it was not until the first day of the trial in the Local Court (several months after the event) that he plead guilty to charges in relation to this event.
One of the charges that was withdrawn involved an incident in early 2019 where the wife alleges the husband aggressively whipped X with a life jacket. It is conceded that this charge was withdrawn because the husband produced a photograph of X dated early 2019 (Exhibit R10) which shows that he did not have a bruise on his leg on that date. It was argued by the husband’s counsel that the wife was lying about this incident due to this photograph. However, the wife produced the same photograph in these proceedings (Exhibit R9) with a date stamp of late 2018. The husband conceded that early 2019 must have been the date that the wife sent him the photo, rather than the date the photograph was taken. When cross-examined by counsel for the Independent Children’s Lawyer about this event, he simply responded that he “was unaware” and it “was an honest mistake”. The Court was then shown a photograph of X annexed to the wife’s affidavit as “[WK6]” presumably taken after early 2019 which shows bruising in a straight line across his leg. When asked by counsel for his explanation for the bruise, the husband responded “I don’t know, it might be a mosquito bite”.
The husband was also cross-examined about alleged incidents some months later in 2019 where the wife deposes to observing the husband “spin around” and kick out at X with his foot colliding underneath X’s chin (paragraph 80 of the wife’s affidavit). The wife produced photographs that were tendered and marked Exhibit R7 which shows an injury on X’s chin.
The Court is satisfied on the balance of probabilities that, at the very least, the above assaults occurred. There is no plausible explanation for the presence of these bruises, other than that they were caused by the husband, advertently or inadvertently.
The cross-examination of the husband in relation to these events is highly relevant. The husband repeatedly stated that he was traumatised in relation to these events. He gave evidence that being arrested and placed in the back of a paddy wagon in front of his mother was traumatising. He stated that being “apart from the boys” was traumatising for him. It is clear he felt traumatised by the consequences of his own behaviour. However, when asked about the potential impact and trauma of the wife and the children, the victims of his misbehaviour, he did not seem to understand. When asked whether choosing to cross-examine X would have had an impact on their relationship, the husband answered that it would, because X will feel guilty when he grows up and realises that he made a false allegation against the husband. He further stated that he did not want any of the children involved but “fortunately” he was able to get the charge in relation to Y dismissed and “unfortunately” he could not get the charge in relation to X dismissed so it “had to be played out”. It was then put to the husband that X was ultimately there because of a decision he made, and the husband responded that “it stems from a sequence that was created by [Ms Katarin] (the mother) on me. Unfortunately I didn’t have enough evidence so it had to get played out”.
It is palpably clear to the Court that the husband has failed to take responsibility for his own actions and externalised responsibility to the wife herself for reporting his perpetration of family violence on her and the children to the police.
On this basis the Court rejects the submissions made on behalf of the husband that using these funds was not unreasonable. To accept the submission on the facts of this case would mean that the Court endorses the proposition that the wife should pay half of the costs incurred by the husband in the criminal proceedings arising from his assault of her and the children.
The husband has had the benefit of the additional $250,000 whereas the wife has not. Counsel for the wife submitted that if he had sought an interim property distribution instead, the wife would have been entitled to the same amount and it would have been “fair”. The unilaterally withdrawn funds allowed the husband to pay his legal fees and living expenses to date. The wife has had to borrow funds from W Financial Services and her mother to pay her legal fees. There is a significant difference in the husband having had the benefit of these funds. Therefore, the full amount will be added back.
Therefore, Exhibit C1 with the Court’s finding at item 35 is as follows:
Ownership Description Value ASSETS 1 Joint K Street, Suburb L 2,500,000 2 Husband M Street, Suburb N 2,000,000 3 Husband B Street, Suburb C 800,000 4 Husband … ordinary shares in E Limited 30,889 5 Husband … ordinary shares in F Group 2,400 6 Husband … ordinary shares in G Limited [… as at 23.01.24] 15,883 7 Husband … Shares in H Limited [… as at 23.01.24] 880 8 Husband Motor Vehicle 2(registered in the Husband's
name but driven by the Wife)
18,200 9 Husband Vessel 22,500 10 Wife Trailer 0 11 Husband D Bank Account ending …67 [as at 12.01.23] 2,456 12 Husband D Bank Account…37 [as at 12.01.24] 0 13 Husband D Bank Account…43 [as at 12.01.24] 0 14 Husband Motor Vehicle 1 52,980 15 Wife O Bank Account ending …06 [as at 22.1.24] 2,465 16 Wife O Bank Account ending …58 [as at 22.1.24] 2,006 17 Joint Household contents 0 18 Husband Tools, outdoor maintainence equipment, auxillary motor and fishing gear 0 19 Husband J Limited Shares … @ … as at 23.01.24] 1,864 20 Wife Z Financial Services travel bank credits 0 21 - - 0 Total 5,452,523 LIABILITIES 22 Joint Portfolio Loan …41- Suburb L [as at 12.01.23] 830,311 23 Joint Portfolio Loan …75 - Suburb N [as at 12.01.24] 688,977 24 Joint Portfolio Loan …41 - Suburb C [as at 12.01.24] 288,831 25 Husband CBA Loan for Motor Vehicle 1 …16 37,747 26 - - 0 27 - - 0 28 - - 0 29 - - 0 30 - - 0 31 - - 0 32 - - 0 33 - - 0 34 - - 0 35 - - 0 Total 1,845,866 ADDBACKS 36 Husband Legals paid from capital/drawn funds at separation 250,000 Total 250,000 SUPERANNUATION Member Name of Fund Type of Interest Value 37 Husband Super Fund 1 Accumulation 694,365 38 Wife Super Fund 2 Accumulation 178,890 39 Wife Super Fund 3 Accumulation 10,951 Total 884,206 NET POOL (EXCLUDING SUPERANNUATION): 3,856,657 NET POOL (INCLUDING SUPERANNUATION): 4,740,863 ASSESSMENT OF CONTRIBUTION
Assessment of contribution at cohabitation
The initial contributions made by the husband is unchallenged. At the commencement of cohabitation, the husband owned the Suburb N property, the Suburb C property, the Suburb U property, various shares and two vehicles. His senior counsel submitted that not including superannuation, he held assets worth approximately $950,000. This represents 25 per cent of the current non-superannuation pool.
The husband’s senior counsel conceded that apart from initial contributions, contributions (financial and non-financial, homemaking and parenting, direct and indirect) up until the date of the trial should be treated as equal. The wife’s counsel did not dispute this.
The husband contended that contributions should be assessed at 65 per cent in his favour and the wife concedes 57 per cent to him. On the husband’s case, this produces a differential of 30 per cent which equates to about $1.15 million of the non-superannuation assets. On the wife’s case, this produces a differential of 15 per cent which equates to about $540,000.
The Court observes that, even by reference to paragraph 41 of the husband’s affidavit, he gets back more than what he had at the commencement of cohabitation. Given that items 2 and 3 on the balance sheet represent properties the husband owned at cohabitation, there is a rationale apparent here. Conversely, on the wife’s case, the husband only gets back about half of what he brought in.
To assess the significance of the husband’s initial contributions, the Court refers to the recent Full Court decision in Gadhavi & Gadhavi [2023] FedCFamC1A 117 (“Gadhavi”). Unlike Gadhavi, the wife in this case does not contend that her contribution was rendered significantly more arduous by family violence. At [30]–[33], the Full Court said:
30It was not in dispute that the primary judge applied proper principle in determining that the assessment of the impact of the husband’s initial contributions could only properly occur after she assessed “the totality of the parties’ contribution-based entitlement over the entirety of the marriage and post-separation” (at [210]).
31In that respect, in Pierce v Pierce (1999) FLC 92-844 (“Pierce”), the Full Court stated at [28]:
…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.
(Emphasis added)
32To similar effect, in Cabbell & Cabbell [2009] FamCAFC 205, the Full Court stated at [54] that in considering the parties’ contributions, it is necessary to trace the use of those assets and consider the foundation that they laid for the subsequent accumulation of wealth by the parties.
33That is, in evaluating the parties’ contributions, it was necessary for the primary judge to have regard to the context of the husband’s initial contribution and specifically, to the opportunity that initial contribution created and the impact of that initial contribution on the subsequent wealth of the parties as at the date of the hearing.
The husband’s senior counsel likewise submitted that one must look to what became of the assets that were initially brought in by him. The equities in the properties he owned at cohabitation now equate to a value of $1.822 million which reflects nearly half of the pool. Further, it is agreed that the properties brought in by the husband allowed the parties to purchase the former matrimonial home. Therefore, his senior counsel concluded that the husband’s initial contributions are significant as it allowed the parties to be where they are today. The Court accepts this in principle. It is consistent with the wife’s own submission.
The Court acknowledges what is said at [42] in Gadhavi about assessing contributions in a holistic manner rather than utilising an accounting approach as follows:
42Moreover, it has been determined that, in undertaking the task of considering the totality of the parties’ contributions in an holistic manner, it is inappropriate for a trial judge to adopt an ‘accounting’ or ‘scoring’ approach to each separate contribution. As explained by the Full Court in Blandford & Esmore [2022] FedCFamC1A 67 at [14], adopting such an approach is flawed because it “would not only require detailed actuarial calculations with respect to financial contributions (which would rarely be possible on the evidence generally available in property settlement cases), but it would still leave the significant problem of how to convert the qualitative factors in s 90SM(4)(b) [s 79(4)(b)] and s 90SM(4)(c) [s 79(4)(c)] of the [Act]”.
(footnote omitted)
The Court further acknowledges [45] of the same decision which recognises the challenges of adopting a segmented or compartmentalised approach to the assessment of contributions:
45In summary on this issue, senior counsel for the wife is, with respect, quite right in noting that authorities of the Full Court caution against a trial judge adopting a segmented or compartmentalised approach to the assessment of parties’ respective contributions. Further, it is not open to a trial judge to simply carry forward an original contribution as a mathematical proportion of that party’s total contributions.
(footnote omitted)
However, the Court must take care to avoid the mistakes made by the trial judge in Gadhavi as explained by the Full Court in [46]–[47] as follows:
46However, there will also be cases where the leap from words to figures is “so great, and so unheralded by the discussion which precedes it” so as to either or both; “render the reasoning process defective” or result in the conclusion that the ultimate assessment by a trial judge of the parties’ respective contributions is one that is outside the reasonable ambit of discretion and will, as a result, constitute appealable error. We are of the view that this is such a case.
47That is, it is clear that, in weighing various contributions made by each party, the trial judge was not required to quantify those contributions in mathematical or percentage terms. However, on the facts of this particular case, the primary judge was required to explain why the husband’s substantial initial contribution was subsumed by the wife’s contributions such that it was not only wholly negated, but that her contribution based entitlement exceeded his by a differential of 20 per cent.
In this case, the Court is concerned about the husband’s percentage assessment of contribution. Whilst it is expressed as a percentage, it disguises an underlying mathematical approach which returns to the husband what he held at cohabitation. This is contrary to authority and principle when applied to the facts of this case.
The Court has regard to the wife’s counsel’s submission that this was a 10-year cohabitation where the husband was the primary breadwinner and she was the primary homemaker. Any increase in equity of the properties is also a credit to the wife’s homemaking that enabled the husband to work the hours that he did.
On a holistic assessment, the Court determines the husband’s contributions to be at 60 per cent and the wife’s at 40 per cent. This adequately reflects the diversity of important contributions they each made without unreasonably inflating the husband’s initial financial contributions.
The Court does not accept any basis for assessing post-separation contribution separately. Whilst this is mentioned in the wife’s case outline, her counsel did not make any submissions in relation to this. It does not appear to be a serious part of the wife’s case. In any event, although the wife has had sole care of the children since the date of separation, there can be no criticism of the husband’s post-separation financial contributions.
ASSESSMENT OF S 75(2) FACTORS
Turning to the s 75(2) factors, the husband contends for an adjustment of five per cent to the wife whereas the wife contends an adjustment of 14 per cent. The wife’s counsel acknowledged that there is no science behind this figure.
The Court will only address the relevant factors.
The husband has, and will likely always have, a greater income and earning capacity. If the husband gets the adjustment he contends for, he will also have greater property and financial resources compared to the wife. In his Financial Statement, the husband deposes to having a weekly salary of $4,247 (yearly salary of $220,844). He also receives dividends and rent from his investments, increasing his weekly taxable income to $5,943 (yearly income of $309,036). In the wife’s Financial Statement, she deposes to a weekly salary of $984 (yearly salary of $51,168) working two days per week. She also receives child support, increasing her weekly income to $1,525 (yearly income of $79,300). During cross-examination, the wife conceded that there is availability for taking on extra days if she wanted to and her employer would happily take her on full-time. She also conceded that she is willing to work up to four days weekly if it meant she could retain the family home. The husband’s senior counsel submitted that the wife has an earning capacity that is not being fully implemented despite a capacity to do so. However, the Court is of the view that it does not necessarily follow that she will take on the extra days given her obvious, and unchallenged, commitment to parenting the children.
The wife will continue to carry the burden of the majority of parenting during the children’s minority, in accordance with the consent orders that the parties entered into. The children will not begin spending any overnight time with the husband for another one and a half years. The wife wishes to continue in her primary role as a parent, which is facilitated by her employment as a teacher. The Court accepts her desire to not necessarily work full-time if possible so that she can continue in this parenting role.
The husband is paying child support as assessed. As a salary earner on a high income, it is likely that he will continue to provide meaningful child support.
Section 75(2)(o) allows the Court to consider any facts or circumstances which the justice of the case requires to be taken into account. Riethmuller and Smith (Grant Riethmuller and Robin Smith, Family Law (Thomson Reuters, 7th edition, 2022)) state at [19.360]:
Section 75(2)(o)/90SF(3)(r) appears to contain a very wide, catch-all provision. It requires that the court take into account:
any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
At first glance there are two obvious ways of interpreting para (o)/(r). The first is by the application of the literal rule of statutory interpretation, and the second is by the application of the ejusdem generis rule of interpretation. If the literal rule applies, para (o)/(r) means what it says, namely any fact or circumstance which in the opinion of the court the justice of the case requires to be taken into account. If the ejusdem generis rule applies, para (o)/(r) is limited by the general character of the other 18 paragraphs. It is generally recognised that, with the sole exception of para (l), all the other paragraphs concern matters of a broadly economic character. Accordingly, the application of the ejusdem generis rule results in para (o)/(r) being limited to any fact or circumstance of a broadly economic nature which in the opinion of the court the justice of the case requires to be taken into account.
(citations omitted)
Whether s 75(2)(o) is to be interpreted literally, or by reference to the general character of the other s 75(2) considerations, it is the view of this Court that the housing of the wife and the children is a matter of broadly economic character and is thus a relevant consideration.
The wife wishes to retain, if possible, the family home. She gave evidence that in the context of the children experiencing the separation of their parents, she wants to minimise the disruption and dislocation to them by not having to move away from their home, neighbourhood, friends, school, and extracurricular activities. The husband’s senior counsel conceded that it is desirable for the children to remain in the home but submitted it is not persuasive enough to adjust the percentages so that the wife could retain the former matrimonial home. The Court agrees that the percentages cannot be artificially adjusted in such an end-justifies-means approach to allow the wife to retain the former matrimonial home. However, consistent with the decision of the Full Court in Phillips & Phillips (2002) FLC 93-104, it is permissible to assess the practical effect of findings as to entitlement when considering what is a just and equitable outcome. One of the most important practical effects on the wife and the children is whether or not they are able to continue living in the family home.
This Court believes there to be a great risk that, in making orders altering property interests under s 79 of the Act, incorporating as it should consideration of s 75 of the Act, the housing needs of families after separation may not be adequately recognised. The cost of housing is an economic need, as well as a psychological and emotional one. The burden of rehousing a family is often disproportionately shared between spouses, with the parent mainly responsible for the care of the children carrying a burden that is either not, or inadequately met, by the order altering property interests, or through spousal maintenance, child support, or government benefits.
There is an important place for considering the economic interests of the children as part of the economic interests of the mother in making an order altering property interests. Their economic interest is ensuring they are adequately housed, and if possible, that stability of housing is maintained. During the emotional maelstrom of separation, it is preferable, if possible, to minimise, if not avoid, the upheaval and dislocation of residential housing change. The family home is not just a place of physical shelter “but also a focal point for the children’s lives”[1]. When housing standards after separation deteriorate, they are likely to suffer disproportionately. In this regard, Eekelaar [2] may well be correct in expressing concerns (albeit in a slightly different context) about the “very questionable philosophy…[of] an attitude of commercialism towards the determination of domestic rights”.
[1] McDonald, P (editor) Settling up – Property and Income Distribution on Divorce in Australia (Australian Institute of Family Studies, Prentice Hall, Australia 1986) Ch 8 Housing at 151.
[2] Eekelaar, Family Security and Family Breakdown (Penguin Books, Harmondsworth, 1971) at 97.
The Court must consider the proposed orders in real money terms and “look at the reality of the percentage division” (Teal & Teal [2010] FamCAFC 120 at [70]). The husband’s case for a five per cent adjustment produces a 10 per cent differential. On the non-superannuation assets, this is a difference of $385,666 which is only slightly higher than the husband’s gross yearly income. The wife’s proposal for a 14 per cent adjustment produces a differential of 28 per cent. On the non-superannuation assets, this creates a difference of $1,079,864 which is a little over three years of the husband’s gross yearly income.
Based on the findings above, the Court assesses an adjustment for future needs for the wife to be at 12 per cent. This produces a differential of 24 percent, which equates to $925,598 on the non-superannuation pool, or about three years gross income.
Subject to a separate assessment of justice and equity, this would result in an alteration of property interests in favour of the wife as to 52 per cent.
ONE OR TWO POOLS
The husband’s senior counsel submitted that the Court should adopt a two-pool approach.
With regard to superannuation, he proposes that this be equalised. The husband has approximately $694,000 in superannuation and the wife has approximately $189,000, producing a total of $883,000. Equalisation would mean that the wife receives the difference between her existing entitlement and $441,500, that is $252,500. From the wife’s perspective, this superannuation-split meets her long-term needs, but not the short-term needs of the children and herself to maintain, if possible, their existing accommodation. For her, the short‑term needs are paramount.
The wife’s counsel did not make any submissions in relation to whether the Court should adopt a one or two pool approach. However, counsel sought that the wife be paid in cash, rather than superannuation, in order to allow her the opportunity to retain the former matrimonial home.
This is a case where the Court is moving towards making an order altering property interests between the parties as to 52 per cent in favour of the wife. This recognises the initial greater financial contribution of the husband, but equally recognises the greater future needs of the wife. The Court, of course, has considerable discretion about whether to adopt a one or multiple pool approach (Coghlan & Coghlan (2005) FLC 93-220). In this case the Court sees little utility in adopting a one-pool approach. Thus, the 52:48 split is to be applied to both superannuation and non-superannuation assets.
A separate issue is how this principle is implemented on the facts of this case. Here the Court is mindful of the wife’s stated need to retain the family home for the benefit of the children and herself, if at all possible.
In Warbrick & Warbrick [2021] FamCAFC 60 the Full Court considered an appeal in which the appellant husband contended that the primary judge erred by not making the superannuation splitting he sought out of his superannuation entitlements in favour of the wife. The Full Court held at [49]–[51] in rejecting this ground as follows:
49Otherwise, the husband contends that the primary judge erred by not making the superannuation splitting order against his superannuation entitlements in favour of the wife. The assumption being, that if a superannuation splitting order of $40,000 was made in favour of the wife, the husband would have received an additional $40,000 in non-superannuation assets. Be that as it may, at [120] of the trial reasons the primary judge explained why the proposed superannuation splitting order would not be made. Namely, that the wife needed to house herself and the children and she had no capacity for paid employment. Two paragraphs earlier, the primary judge considered evidence as to the wife’s capacity to raise funds so as to acquire the husband’s interest in the family home and the limits of her borrowing capacity.
50The primary judge continued and was satisfied that the wife “should” be able to pay an adjustment of $169,600 [123] and thus, she and the children could continue to live in the home. The net effect of these matters is that the primary judge was not persuaded that he should jeopardise the wife’s and the children’s continued occupation of the family home by making a superannuation splitting order and thus requiring her to borrow more than he was satisfied she could afford to repay. Mindful, no doubt, of his concerns that the husband could not be relied on to pay child support.
51There is no deficiency in his Honour’s reasons and the challenge raised in Ground 15 has not been made out.
The current case has some similarities and differences. Similar to the above case, the wife is 42 years old and she needs to house herself and the children. However, she is in part-time employment with the ability for more work although the Court has found that this does not mean she will necessarily take it on. Further, in this case, the husband can be relied on to pay child support.
In closing submissions for the wife, her counsel stated that she would need approximately $550,000 in cash to be able to keep the former matrimonial home. The wife gave evidence in relation to her borrowing capacity to acquire the husband’s interest in the family home. Unfortunately, her evidence in relation to this was unclear. At paragraph 349 of her affidavit, she states that if she works two days per week, at a net monthly income of $1,771, the maximum she can borrow is $400,000. However, she is currently working two days per week and her Financial Statement states she is receiving a gross weekly salary of $984 per week, which equates to a net monthly income of $3,936. She was uncertain and confused as to the difference in these figures. The Court unfortunately does not know whether the borrowing capacity of $400,000 is based on a net monthly income of $1,771 or her actual monthly income of working two days per week ($3,936). Nevertheless, the Court can only do the best it can on the evidence available.
Paragraph 349 of the wife’s affidavit continues to say that if she is able to work three days per week (at a net monthly income of $2,204) the maximum she can borrow is $530,000 and if she works four days per week (at a net monthly income of $2,818) the maximum she can borrow is $650,000. She states that these estimates take into consideration family tax benefits and child support payments.
The current mortgage on the former matrimonial home is $830,311. On the evidence available, the Court infers that the wife has a borrowing capacity somewhere between $400,000 and $650,000. If the net effect of the final calculation is such that the wife and the children could continue to occupy the former matrimonial home if a superannuation splitting order is not made, the Court must give consideration to this outcome.
A JUST AND EQUITABLE ORDER
Both parties agree that the wife should be given the opportunity to retain the former matrimonial home. Therefore, the Court will explore a scenario where the wife retains the former matrimonial home and the associated mortgage. Both parties seek an order that Motor Vehicle 2 that is currently in the husband’s name be transferred to the wife. This order will be made and the vehicle will be reflected in the table below as the wife’s asset.
Assets to be retained by the husband Value M Street, Suburb N 2,000,000 B Street, Suburb C 800,000 …ordinary shares in E Limited 30,889 … ordinary shares in F Group 2,400 … ordinary shares in G Limited [46.04 as at 23.01.24] 15,883 …Shares in H Limited [3.18 as at 23.01.24] 880 Vessel 22,500 D Bank Account ending …67 [as at 12.01.23] 2,456 Motor Vehicle 1 52,980 J Limited Shares … @ … as at 23.01.24] 1,864 Addback: Legals paid from capital/drawn funds at separation 250,000 Total: 3,179,852 Liabilities to be retained by the husband Value Portfolio Loan …75 - Suburb N [as at 12.01.24] 688,977 Portfolio Loan …41 - Suburb C [as at 12.01.24] 288,831 CBA Loan for Motor Vehicle 1 …16 37,747 Total: 1,015,555 Total: $2,164,297 Superannuation to be retained by the husband Value Super Fund 1 694,365 Total (including superannuation) retained by the husband: 2,858,662 Assets to be retained by the wife Value K Street,Suburb L 2,500,000 O Bank Account ending …06 [as at 22.1.24] 2,465 O Bank Account ending …58 [as at 22.1.24] 2,006 Motor Vehicle 2(registered in the Husband's
name but driven by the Wife)18,200 Total: 2,522,671 Liabilities to be retained by the wife Value Portfolio Loan …41- Suburb L [as at 12.01.23] 830,311 Total: $1,692,360 Superannuation to be retained by the wife Super Fund 2 178,890 Super Fund 3 10,951 Total (including superannuation) retained by the wife: $1,882,201 Pool total: $4,740,863
The Court has determined that the overall division of all assets should be 52:48 in the wife’s favour. This means that the wife should receive $2,465,248.76. Therefore, if the wife retains the former matrimonial home and a superannuation splitting order is not made, the husband will need to pay her the amount of $583,047.76.
If a superannuation splitting order is made, each party will retain the same assets and liabilities as above but the wife will receive 52 per cent of the parties’ overall superannuation and the husband will receive 48 per cent. Therefore, the above table will be amended to reflect this:
Assets to be retained by the husband Value Total: 3,179,852 Liabilities to be retained by the husband Value Total: 1,015,555 Total: $2,164,297 Superannuation to be retained by the husband Value 48% of parties’ total superannuation 424,418.88 Total (including superannuation) retained by the husband: $2,588,715.88 Assets to be retained by the wife Value Total: 2,522,671 Liabilities to be retained by the wife Value Total: 830,311 Total: $1,692,360 Superannuation to be retained by the wife 52% of parties’ total superannuation 459,787.12 Total (including superannuation) retained by the wife: $2,152,147.12 Pool total: $4,740,863
Therefore, in order for the wife to retain 52 per cent of the total asset pool ($2,465,248.76 as calculated above), the husband will still need to pay her the amount of $313,101.64.
Although the wife’s counsel submitted that she would need $550,000 in order to retain the former matrimonial home, the Court has already found that her evidence in relation to this was unclear. The mortgage associated with the former matrimonial home is $830,311. On the evidence available, the Court has concluded that the wife has a borrowing capacity of between $400,000 and $650,000. This means, on the worst case, if she is only able to borrow $400,000, she would have a shortfall of $430,311. If a superannuation splitting is not made, the husband will need to pay her the amount of $583,047.76.
Of course, the impact on the husband of requiring him to pay to the wife $583,047.76 (if a superannuation splitting order is not made) or $313,101.64 (if a superannuation splitting order is made) must be considered. He already has liabilities secured against the properties in his name of just over $1 million. Whilst he may well still have substantial equity in his properties to borrow these funds, the Court must consider his capacity to service such a loan. He led no evidence about this. He was not challenged on his Financial Statement filed 1 February 2024, which indicates a deficit between weekly income and liabilities. This does not prevent the Court from concluding that his stated deficit of $2,941 weekly is implausible. It is likely that it does not reflect the benefit to the husband of the two negatively geared properties that he owns. The Court infers that his mother is now, and may continue to be in the future, a financial resource to him. She has been generous to him in providing accommodation and other financial assistance. Nonetheless, his own proposal is that he pay to the wife about $250,000, so the Court infers he is confident about raising these further funds.
If a superannuation splitting order is not made, the wife will have the opportunity to retain the former matrimonial home. However, the Court is of the view that a payment of $583,047.76 from the husband to the wife is not a just and equitable order. Therefore, the Court will explore a scenario where this sum is reduced to $450,000 with the difference between the two figures arising out of a superannuation split from the husband’s superannuation to the wife’s as follows:
Assets to be retained by the husband Value Total: 3,179,852 Liabilities to be retained by the husband Value Total: 1,015,555 Payment to wife: 450,000 Total: 1,714,297 Superannuation to be retained by the husband Value After superannuation split 561,317.24 Total (including superannuation) retained by the husband: 2,275,614.24 Assets to be retained by the wife Value Total: 2,522,671 Payment from husband: 450,000 Liabilities to be retained by the wife Value Total: 830,311 Total: $2,142,360 Superannuation to be retained by the wife After superannuation split 322,888.76 Total (including superannuation) retained by the wife: 2,465,248.76 Pool total: $4,740,863
As the wife currently has superannuation in the amount of $189,841, she will need an additional $133,047.76 to get to $322,888.76. The Court is of the view that this is a just and equitable order. The husband will be ordered to pay the wife the amount of $450,000 and a superannuation split of $133,047.76 from the husband to the wife. In the circumstances of this case, the Court believes that an order altering property interests in the above terms will be just and equitable to both the husband and the wife. Doing the best the Court can do on the evidence before it, both parties will have a reasonable chance of implementing the orders such that the wife retains the family home and the husband is able to fund the payment to the wife. An extended time frame of four months will be ordered to facilitate this.
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 27 March 2024
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