Kimball and Kimball
[2009] FMCAfam 673
•7 July 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KIMBALL & KIMBALL | [2009] FMCAfam 673 |
| FAMILY LAW – Property – long marriage – assessment of contributions – add backs – no adjustment for section 75(2) factors. |
| Family Law Act 1975, ss.75, 79 |
| C & C (2000) FLC 93-220 Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143 In the Marriage of B v JM Burke (1993) 16 Fam LR 324 In the Marriage of Clauson (1995) FLC 92-595 In the Marriage of Ferraro (1993) FLC 92-335 In the Marriage of Lee Steere (1985) FLC 91-626 Kowaliw v Kowaliw (1981) FLC 91-092 Norbis and Norbis (1986) 161 CLR 513 Parshen & Parshen (1996) FLC 92-720 Pierce & Pierce (1999) FLC 92-844 S & S [2004] FamCA 201 Townsend & Townsend (1995) FLC 92-569 |
| Applicant: | MR KIMBALL |
| Respondent: | MS KIMBALL |
| File Number: | SYC 7818 of 2007 |
| Judgment of: | Sexton FM |
| Hearing dates: | 4 & 5 May 2009 |
| Date of Last Submission: | 5 May 2009 |
| Delivered at: | Sydney |
| Delivered on: | 7 July 2009 |
REPRESENTATION
| Counsel for the Applicant: | Ms D. Harris |
| Solicitors for the Applicant: | Lamrocks |
| Counsel for the Respondent: | Mr J. Levy |
| Solicitors for the Respondent: | Watts McCray Lawyers |
UPON NOTING THAT:
The company known as [B] Pty Ltd is not a party to these proceedings.
The parties intend that the shed situated at the former matrimonial home at Property K, listed as an asset in the financial records of the company, be transferred from the company to the wife as soon as practicable.
The parties intend to do all acts and things and obtain all consents necessary, to effect the transfer of the shed to the wife noting there may be taxation consequences.
THE COURT ORDERS THAT:
In relation to the joint NAB Mastercard debt, the following occur within 14 days:
(a)The wife obtain the discharge figure to close the account;
(b)The wife pay 56% of the discharge figure;
(c)The husband pay 44% of the discharge figure; and
(d)The parties do all things necessary to close the account.
Within 3 calendar months of the date of these orders (the date of settlement) the following occur simultaneously:
(a)The wife pay to the husband by way of property settlement the sum of $179,829.60;
(b)The wife provide the husband with a stamped executed Transfer in relation to the property situated at Property K in the State of New South Wales, being the whole of the land contained within Folio Identifier [1] (“the home”);
(c)The wife do all things necessary to discharge the loans in joint names to National Australia Bank secured by way of mortgage on the home; and
(d)The husband transfer the whole of his right, title and interest in the home to the wife.
Upon each party’s compliance with Orders (5), the wife indemnify and keep indemnified the husband in relation to liabilities in relation to the Property K property whenever and however arising.
Pending the date of settlement:
(a)The wife be responsible for payment of all outgoings on the home, including but not limited to mortgage repayments, rates, insurances and utilities; and
(b)The wife have exclusive occupation of the home.
In the event the wife fails to comply with Order (5)(a) by the due date, the husband and the wife forthwith do all things necessary to effect a sale of the home by private treaty with a real estate agent agreed between the parties or failing agreement within 7 days by an agent appointed by the Real Estate Institute of New South Wales at a price agreed between the parties and failing such agreement at a price to be determined by the President of the Australian Property Institute of New South Wales or his nominee at the husband’s cost.
Upon the completion of the sale, the proceeds to be distributed in the following order and priority:
(a)In payment of all legal costs, commissions, and agent expenses (including advertising expenses) in relation to the sale;
(b)In adjustment of rates and other outgoings in accordance with usual conveyancing practice;
(c)In discharge of the loans secured by way of mortgage to the National Australia Bank registered on the title of the home;
(d)In payment to the wife of 56%;
(e)In payment to the wife of $1133.60; and
(f)In payment to the husband of the balance.
In the event the home has not been sold by or before a date three (3) months from the date Order (5) becomes operative then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally, necessary to procure a sale by public auction of the home upon the following terms:
(a)The auctioneer shall be a real estate agent;
(b)The reserve price shall, unless agreed between the parties, be as proposed by the auctioneer; and
(c)Upon completion of the sale the proceeds shall be distributed in accordance with Order (9) herein.
In the event the home be sold in accordance with Orders (8) – (10)
(a)The wife be permitted to remain living in the home until the date of settlement of the sale; and
(b)The “date of settlement” shall be the date of settlement of the sale.
In relation to the company known as [B] Pty Ltd:
(a)The wife forthwith do all things necessary to transfer her share in the company to the husband, including her share in the loan account held by the parties in the company and thereafter the husband be declared the sole legal and beneficial owner of the shares of the company;
(b)The husband be responsible for discharge of the debt held in the company’s National Australia Bank overdraft account [0], and the husband indemnify and keep indemnified the wife in respect of that debt; and
(c)The husband indemnify the wife and keep the wife indemnified in relation to any claim by the company against the wife arising in relation to the shed located at the Property K property, or in relation to her involvement in the company at any time.
Except as otherwise provided in these orders, the wife retain:
(a)The Toyota Landcruiser registration [U] in her possession;
(b)The shares held in her name;
(c)Bank account proceeds in her name;
(d)The life endowment policy in her name; and
(e)The household contents held by her.
Except as otherwise provided in these orders, the husband retain:
(a)The Holden motor vehicle in his possession;
(b)Bank account proceeds in his name; and
(c)The household contents held by him.
As between the parties, the wife be solely responsible for the following liabilities in her sole name now and in the future, and the wife indemnify and keep indemnified the husband in respect of the same however and whenever arising:
(a)Credit card debts in her name;
(b)Any and all personal loans due and payable to the wife’s mother, Ms D;
(c)Any and all personal loans due and payable to Ms J; and
(d)Any and all personal taxation liabilities of the wife, including but not limited to those which may or may not arise as a result of the sale of investment real estate properties sold by the parties post separation, or arising as a result of the transfer of the garden shed from [B] Pty Ltd to the wife.
As between the parties, the husband be solely responsible for the following liabilities in his sole name now and in the future, and the husband indemnify and keep indemnified the wife in respect of the same however and whenever arising:
(a)All personal loans in the husband’s sole name, including but not limited to that held with ANZ Bank Limited;
(b)Credit card debts in his name;
(c)Any and all personal taxation liabilities of the husband, including but not limited to those which may or may not arise as a result of the sale of investment real estate properties sold by the parties post separation.
There be no alteration to the interest of the husband in the following superannuation funds and the wife forego any claim against those interests:
(a)AMP Endowment Personal Super Plan;
(b)AON Superannuation Master Trust;
(c)Commonwealth Super Option;
(d)MLC Masterkey Superannuation;
(e)Recruitment Super; and
(f)First State Superannuation.
Pursuant to s.90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the wife’s entitlement in the Plan known as the MLC Mastercard Superannuation (Gold Star) Account Number [1], the husband shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using the base amount of $20,000 and there will be a corresponding reduction to the entitlement of the wife that she would have had in the Plan but for this Order.
That order (18) binds the Trustee of the MLC Masterkey Superannuation (Gold Star) Account Number [1] and takes effect from the operative time being the fourth business day after the service of these Orders on the Trustee.
As between the parties, except as provided in Order (18), the wife retain all entitlements held by her as at the date of this Order in the following superannuation funds:
(a)MLC Masterkey Rollover;
(b)MLC Masterkey Superannuation; and
(c)[W Pty Ltd] Superannuation – AMP Signature Superannuation.
Except as otherwise provided in these orders, each party retain all assets in his or her possession or control.
Except as otherwise provided in these orders, the husband and the wife remain liable for any debts, howsoever arising, in their own name at the date of these Orders and in this respect shall indemnify, keep indemnified and hold harmless the other from any liability in relation thereto
In the event either party refuses or neglects to comply with any of the Orders herein, the Registrar of this Court at its Sydney Registry be appointed pursuant to section 106A of the Act to execute, in the name of the husband or the wife as the case may be, all deeds and instruments necessary to give effect to the orders herein, or any of them, and do all acts and things necessary to give validity and operation to the said deeds and instruments.
All exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
With the exception of any application for costs, all outstanding applications otherwise be dismissed and the matter removed from the list of cases awaiting finalisation.
IT IS NOTED that publication of this judgment under the pseudonym Kimball & Kimball is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 7818 of 2007
| MR KIMBALL |
Applicant
And
| MS KIMBALL |
Respondent
REASONS FOR JUDGMENT
Introduction
This case concerns property settlement. After a 20 year marriage, the parties separated in October 2006 when the husband left the former matrimonial home at Property K. Neither party has children.
The wife is 52 and the husband 49 years. They started living together in or around July 1986 and married in October 1986. They separated in October 2006 and divorced in January 2008. Neither party has re-partnered. Since separation, the wife has remained living in the former matrimonial home at Property K and has continued to work full time [in the Information Technology Industry] at [W] Pty Ltd. The husband lives in rented accommodation at [R], and continued to work full time after separation until August 2008, shortly after he was made redundant. Although underemployed for a period immediately after he ceased this employment, the husband obtained full time employment in March 2009 and now works full time at [Z]. The husband also continues to operate the business acquired by the parties during the marriage, a couple of hours a month, through the parties’ company [B] Pty Ltd.
The parties do not agree on the items to be included in the net asset pool available for division between them. In addition, the wife claims to have made the greater contribution to the acquisition, conservation and improvement of the assets of the marriage both before and after separation, and to be entitled to a minor adjustment for future needs as a result of a health issue. The husband claims the parties’ respective contributions should be assessed as equal and there should be no adjustment for future factors. The husband seeks 50% overall and the wife seeks 60% overall of different net asset pools.
Issues
The approach to the determination of an application under section 79 of the Family Law Act 1975 is well established by authority[1]. In the present case, it involves consideration of these questions:
a)What were the assets, liabilities and financial resources of the parties and their values at the time of hearing?
b)What were the financial and non-financial contributions made directly or indirectly by or on behalf of each party to the acquisition, conservation or improvement of the property of the parties?
c)What was the contribution made by each party to the welfare of the family including contributions made in the capacity of homemaker?
d)What is the effect, if any, of any proposed order upon the earning capacity of each party?
e)What matters referred to in sub-section 75(2) of the Act are relevant and what adjustment, if any, should be made as a result of these factors?
f)After consideration of these matters, is it just and equitable to make the actual orders?
What were the assets, liabilities and financial resources of the parties at the time of hearing and their values?
[1] In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595; Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143.
The parties agree to exclude from the list of assets and liabilities available for division, the modest proceeds of their personal bank accounts and the household contents and other chattels held by each of them. They also ask the court to exclude paid legal fees and the debts each party has incurred to meet those fees. I therefore exclude those items. I now deal with the items which were issues at hearing.
Value of shares in company. In or about 1990, the parties established a company known as [B] Pty Ltd which purchased a specialist business as a going concern. The parties later used the company as a service company to reduce their taxation liability. Neither party adduces evidence of the value of the shares in the company as at the date of hearing. During the course of the hearing, the wife’s position changed markedly on how the court should address the company assets and liabilities in the balance sheet.
The latest available balance sheet of the company, as at 30 June 2007, includes plant and equipment at a cost value of $92,575 with depreciation of $76,196. The most valuable items in the depreciation schedule are the storage shed at $23,715, the Landcruiser at $38,245 and software at $9,091. Neither party adduces evidence of market value of any of these assets. The liabilities in the balance sheet include a debt to the parties of $49,710 and a bank overdraft with a balance of $15,823. The balance sheets reveals that the company’s net assets are in the negative as at the end of the 2007 financial year[2].
[2] Exhibit 7
At the commencement of the hearing, Mr Levy for the wife submitted the court should transfer the wife’s share in the company to the husband, and include the loan account of $49,710 as an asset of the husband, and the overdraft account as a liability of the husband. In final submissions, Mr Levy submitted the wife no longer sought to include the $49,710 as an asset. He submitted the husband should have responsibility for repayment of the company overdraft and that the shed erected on the Property K property, listed as an asset of the company, be transferred to the wife, as it is part of the property the wife wishes to retain.
Originally the parties were the sole directors and shareholders of the company. However, the wife played no part in the company after separation and resigned as a director on 25 September 2007. Although no documentary evidence was adduced, each party’s counsel advised at the end of the hearing that the directors are now the husband and the husband’s mother, while the parties remain the sole shareholders.
It is common ground that the company has wound down its business operation and is no longer used by either party as a service company. Having once held a number of viable contracts with large companies, only two contracts remain in place. The company made a loss according to the financial statements for the 2006 and 2007 financial years, the latest figures available[3]. With the exception of the Toyota and the shed, to which I have already referred, none of the assets hold any value for either party. Neither party intends to enforce against the company his/her right to a share of the parties’ loan account. In these circumstances, I agree with counsel that the only figures which must be included in the balance sheet are the Toyota motor vehicle, now held by the wife, and the company overdraft account with the National Australia Bank.
[3] Exhibit 7
Husband’s redundancy. In July 2008, 21 months after the parties separated, the husband was made redundant by his then employer [X]. The husband received a net amount of $50,654.02, part of which was a redundancy payment. The husband’s pay advice for the relevant period states how the net amount the husband received, was calculated[4]. The wife’s counsel submits an amount of $16,154 should be added back to the net pool available for division. Counsel says this sum is calculated by deducting from the payment of $50,654.02 the amount used by the husband to purchase a car ($14,500) and the amount he deposited to the company overdraft account ($20,000). The husband’s counsel submits there is no basis for an add back. In any event, counsel highlights that only $41,650.65 relates to the redundancy and long service leave part of the package[5].
[4] Annexure I to husband’s affidavit sworn 29 April 2009
[5] Annexure I to husband’s affidavit sworn 29 April 2009
The husband received the funds well after separation, but for 5 of the 7 years he was employed by [X][6], the wife indirectly contributed to that $41,650.65. On the authority of Burke’s case[7], as submitted by the wife’s counsel, I accept that the wife has indirectly contributed to the husband’s entitlement to these funds. I will refer to this factor later in these reasons.
[6] From 2001 to 2008
[7] In the Marriage of B v JM Burke (1993) 16 Fam LR 324
However, the question of whether any part of that sum should be added back, is a different issue. It is common ground that the husband bought a car for $14,500 with those funds, an asset included in the net pool, and that the husband deposited $20,000 to the business overdraft account, a debt which must be repaid. The wife also accepts the husband’s evidence that he made substantial mortgage repayments to the loan accounts secured on the parties’ three investment properties, from those funds, which benefited both parties. There is no question here of premature distribution of an asset for the husband’s own use, as in Townsend’s case [8] or of waste, as in Kowaliw’s case[9]. I find no basis in law for an add-back.
[8] Townsend & Townsend (1995) FLC 92-569
[9] Kowaliw v Kowaliw (1981) FLC 91-092
Superannuation. While neither party’s counsel addressed the court on whether the one or two list approach should be taken, both counsel addressed the court as though each party’s superannuation entitlements were part of a single list of assets. On the evidence available to me, I am satisfied the parties accumulated the significant majority of their superannuation entitlements after they commenced living together and since separation. I have therefore adopted the one list approach. The majority of the Full Court in C & C[10] said there is no binding principle as to the exercise of the Court’s discretion in deciding which approach should be adopted:
Nothing we have said in this judgment would prevent a Court in the exercise of its discretion from including a superannuation interest as an item of property in the list of property which is drawn as ‘the first step’ in the determination of proceedings under s79, whether or not a splitting order is sought in those proceedings.
[10] (2000) FLC 93-220
I find the net assets of the parties available for division between them is $574,413, as identified in the following table:
| Assets and liabilities at the date of hearing | $ |
| Former matrimonial home at Property K (JT) | 800,000.00 |
| IAG shares (W) | 4,522.00 |
| Lend Lease shares (W) | 1,485.00 |
| [W] shares (W) | 2,141.00 |
| AMO Endowment Life Insurance Policy (W) | 5,440.00 |
| Toyota motor vehicle (W) | 8,000.00 |
| Holden motor vehicle (H) | 14,500.00 |
| Add back of sale proceeds of husband’s shot gun and shares | 4,553.00 |
| NAB mortgage secured on property at Property K (JT) | (388,720.00) |
| Loan to wife from Ms D (W) | (14,000.00) |
| Citibank Mastercard (W) | (15,333.00) |
| NAB Mastercard - held in joint names | (3,002.00) |
| ANZ Visa (H) | (1,487.00) |
| HSBC Visa (H) | (10,232.00) |
| [B] Pty Ltd Overdraft Account | (18,591.00) |
| [W Pty Ltd] Superannuation (W) | 66,505.00 |
| MLC Masterkey Rollover (W) | 19,809.00 |
| MLC Masterkey Superannuation (W) | 33,333.00 |
| AMP Superannuation (H) | 10,527.00 |
| AON Master Trust (H) | 33,642.00 |
| Commonwealth Superannuation (H) | 8,444.00 |
| MLC Master Key Superannuation (H) | 9,104.00 |
| Retirement Superannuation (H) | 3,026.00 |
| First State Superannuation (H) | 747.00 |
| Total net pool including superannuation | 574,413.00 |
Contributions
The court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties’ assets, as well as to the welfare of the family in an overall sense both before and after separation. The Full Court said in S & S[11]:
There is nothing in the Family Law Act or deriving from binding authority about the application of section 79 that requires a separate assessment of matters occurring post separation in arriving at an assessment of contributions.
[11] [2004] FamCA 201
The parties in the present case separated two and half years prior to hearing. I have therefore found it helpful to evaluate their contributions during the period of cohabitation and again after separation, before assessing their contributions in an overall sense.
Neither party’s counsel asked me to deal with this matter on an asset by asset basis. I find it convenient to adopt the global approach. In Norbis and Norbis[12], the High Court held that either approach is legitimate but also said:
However there is much to be said for the view that in most cases the global approach is the more convenient.
[12] (1986) 161 CLR 513,
Financial contributions during cohabitation
Initial contributions. It is common ground that the wife owned assets of greater value than the husband at the date of commencement of cohabitation.
The husband deposes to holding shares in a service company known as [P] Pty Ltd, owning a motor vehicle, photography equipment, household furniture/chattels and superannuation entitlements. He deposed to having modest liabilities. The wife recalled the husband having liabilities, but adduced no independent evidence of quantum. The parties agree that the wife owned a property at Property H, subject to a mortgage, a Toyota motor vehicle, music equipment and household furniture/chattels.
At the time of commencement of cohabitation in 1986, the parties purchased a property at Property N in joint names using the net $30,000 the wife received from the sale of her Property H unit, and a joint bank loan obtained on the basis of their joint incomes. The wife says she was concerned to preserve the value of her initial contribution to the Property N property in the event the parties separated. On
29 July 1986, the parties therefore entered into a deed of agreement[13] providing that in the event of separation, the property at Property N, or any subsequent property purchased by the parties upon the sale of Property N, would forthwith be sold and the net proceeds divided as to 2/3 to the wife and 1/3 to the husband. The wife said[14], “it has always been my intention that this Deed would be legally recognised in the event of our separation.”
[13] Annexure B to husband’s affidavit sworn 29 April 2009
[14] At paragraph 13 of wife’s affidavit sworn 27 April 2009
Despite the wife’s contention in relation to enforcement of the Deed, the wife in these proceedings does not seek to enforce all the terms of the Deed. The wife seeks an order that she retain the Property K property and not sell it as provided at Clause 2 of the Deed. While the husband does not oppose the wife retaining the Property K home, he does not accept that the wife should be entitled to a greater percentage of the home as a result of the Deed.
While I am satisfied that at the time the parties entered into this Deed, each intended to follow its provisions in the event the marriage failed, I am not persuaded the existence of the Deed impacts on the manner in which the court should assess the wife’s initial contribution. As acknowledged by each party’s counsel, the court is not bound by the Deed’s terms and neither party seeks an order for sale of the Property K property, as provided for in the Deed. The weight to be afforded to initial contributions is comprehensively discussed in Pierce[15] where the Full Court said[16]:
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. In the present case that use was a substantial contribution to the purchase of the matrimonial home.
[15] (1999) FLC 92-844
[16] At paragraph 28
I accept the wife’s counsel’s contention that the Court should give proper weight to her initial contribution of $30,000 to the purchase of the Property N property, when assessing each party’s contributions. The sum of $30,000 was approximately 26% of the purchase price of that property of $114,000. I make an adjustment in favour of the wife as a result of this factor.
Employment. The husband has qualifications in the accounting/finance industry and the wife in information technology. The husband worked in salaried positions and had periods in self-employment during the period of cohabitation. In particular, between 1990 and 1998, the husband was not at all times engaged in full time employment, undertaking full time and part-time contract work, and working in the parties’ business. From 1986 until his resignation from [M] in 1990, the husband was earning approximately $55,000 per annum which included a fully maintained vehicle. For a number of years from 1990, the husband was self employed as a contract [occupation omitted], while operating the parties’ business, purchased at that time. From 1998 until 2005, the husband earned salaries in the range of $38,256 to $67,[in the Finance Industry]. In 2001, the husband’s unchallenged evidence is that he deposited retrenchment monies of $20,000 to the parties’ joint account, and remained unemployed for 8 weeks.
The wife worked full time for almost the entirety of the parties’ marriage, holding various contract positions in information technology. The wife acknowledges the husband’s financial support in the early years of the marriage, when she undertook a 6 month course in Melbourne to qualify as a [omitted] which assisted her career. The husband acknowledges that the wife earned significantly more than him at least between the years 1993 and 1998.
For the last 7 years, the wife has been in full time employment as an IT professional at [W] Pty Ltd, earning at times in excess of $100,000 including bonus payments.
In approximately 1990, at the husband’s suggestion for taxation purposes, the parties purchased a business known as [S] Services and established a company known as [B] Pty Ltd through which to operate the business. The purchase funds and set up costs were paid from a loan of $60,000 from the National Australia Bank secured by the Property N property. At the same time, the parties obtained an overdraft account with the National Australia Bank secured by personal guarantees. With the purchase of the business, the parties acquired a number of [business omitted] contracts which included IBM, 3M, Occidental Insurance and [W]. Each party was appointed a director and each still holds a single share. The parties agree that the husband took responsibility for the day to day operation and management of the business. The wife was also an employee of the company and assisted the husband from time to time by undertaking data entry of accounts.
In 1995, the parties agree they acquired the trading name ‘The [B] Group’ to facilitate the wife earning income from undertaking contract work for the company. In addition, the wife received director’s fees and allowances from time to time, including an amount of $18,000 in the Year 2000. The husband says that while the company was trading, he and the wife regularly paid business expenses on behalf of the company which, as I have already noted, resulted in a shareholders’ loan account. The parties drew on the overdraft account of the company to meet company expenses. In July 2003, the parties borrowed funds from the National Australia Bank to discharge the company loan and to discharge the loan on a motor vehicle purchased by the company some years before.
In 2006, the parties used the husband’s HSBC credit card to buy software and a laptop for the company for $10,000.
The parties agree the company has operated at a loss, or made only a small operating profit, during most of its years of operation. The husband claims the parties jointly agreed to keep the company, while the wife claims to have made it clear to the husband on many occasions after 1997 that they should sell the business because of the losses being incurred.
The husband acknowledges, and I accept, that his income was significantly lower than the wife’s income during the period 1993 to 1998. Although the wife was able to use the company to reduce income tax, which jointly benefited the parties, I accept that during this period the wife was primarily responsible for the parties’ joint expenses, including mortgage repayments, rates and other outgoings on the property. I am also satisfied that the wife has earned the higher income in other years, since then.
However, in the absence of any evidence to the contrary, on the authority of Parshen & Parshen[17], I assume both parties contributed their incomes to the benefit of the marriage.
[17] (1996) FLC 92-720,
Real estate. The parties lived at Property N for most of the period between 1986 and December 1993. They met the mortgage repayments and outgoings on the property from joint funds. In 1987, the husband initially, and later the husband and wife together, lived in Melbourne. The husband was working in Melbourne, and when the wife joined him, as already noted, she undertook full time study in information technology for 6 months to qualify as a [omitted]. The husband supported her during this period. While they were living in Melbourne, the husband’s brother rented the parties’ Property N property to assist the parties to meet their mortgage repayments.
The wife deposes to receiving a redundancy payment of $30,000 in 1991, which she claims to have contributed to the parties’ assets and expenses. However, in the absence of verifying documents, the wife accepted in cross-examination that she may have contributed part of that sum to superannuation. When shown a copy of her taxation return for the year ending June 1992, the wife accepted that the lump sum she received was in fact an amount of $10,343. I am satisfied on the basis of the wife’s evidence that the wife made this lump sum contribution to the parties’ joint funds, and returned to the workforce approximately 6 weeks later.
In December 1993, the parties sold the Property N property for $257,000 and applied the net proceeds of sale to the purchase of the former matrimonial home at Property K for $290,000, a property of approximately 4 hectares. The parties funded the balance of the purchase price using loan funds from the National Australia Bank.
The parties agree that they made significant improvements to the Property K property, though did not agree as to the source of funds used to meet the cost of every item:
a)In December 1993 they engaged a contractor to construct fences around the house paddock to accommodate the dogs at a cost of approximately $5 to 6,000.
b)In early 1994, the husband, with assistance from his father, widened the entrance to the property and added a gate to accommodate the horse float and delivery trucks, at a cost of approximately $2,000.
c)At about this time or in 1995, the parties engaged contractors to lay a concrete slab to accommodate the construction of a 4-bay machinery shed, at a cost of $2 to 3,000. The parties purchased the shed for approximately $16,500 to store horse feed, horse saddles, horse float, trailer, guns in addition to providing a work shop and storage area. The wife says the shed was purchased and constructed by contractors, using company funds largely earned from her contracting work.
d)At about the same time, the parties contracted the husband’s cousin to build a courtyard with a pergola at a cost of $15,000. Some years later the parties engaged contractors to replace the pergola with a color-bond roof and sliding door for an additional $15-$20,000. The wife claims she paid for the courtyard with her earnings.
e)At about this time, the husband built two horse yards with the assistance of a friend and the husband’s father, at a cost of approximately $1500.
f)The wife had an interest in dressage. In 1995, the parties engaged contractors to construct a dressage arena at a cost of $7,500. The husband and a friend spread the sand in the arena. Later the parties turfed the arena at a cost of $1,200. The wife claims this improvement cost $10,000 and that she funded the works from her income from contract work.
g)At about this time, the parties enlarged the dam at the rear of their property to irrigate the arena and garden near the home, at a cost of $6-7,000. The parties then spent an estimated $10,000 to install a large pump to irrigate that area and to complete the electrical work. The parties later improved their irrigation system, providing the labour between them, at a cost of $1,200.
h)At a later time, the parties engaged a fencing contractor to erect a fence around the arena at a cost of $1,200 to $1,600. They later had a path dug around the front of the house at a cost of an estimated $300.
i)The parties undertook some interior renovations with the assistance of the husband’s brother, a licensed carpenter “at mate’s rates” at a cost of approximately $15,000.
j)In 2003, the parties had a swimming pool built with landscaping at a cost of approximately $30,000, by extending their mortgage. The parties purchased plants and shrubs to hide the pool fence.
k)In 2003, the parties arranged for fencing contractors to install a fence in front of the dam at a cost of approximately $1,800. They paid $5,000 to meet half the expenses to fence the northern part of their property. The wife claims to have paid this expense from her earnings. The husband claims the parties jointly met this expense.
l)
In late 2005, the parties extended and renovated the home at a cost of approximately $30,000, engaging the husband’s brother to undertake the renovations and using borrowed funds. The wife says they also replaced a wire fence with a timber paling fence along the western side of the property at a cost of between
$7- 9,000. The husband did not seriously challenge the wife’s claim that she paid for the fence with a bonus she received, though believes that by 2003, the parties were earning similar salaries.
m)In addition to the funds borrowed for the renovations, the parties borrowed a further $30,000 to purchase a ride-on mower for $10,000, and to discharge the loan used to purchase the company.
The husband was reluctant to accept the wife’s claim that she made the greater direct financial contribution to the improvements at Property K, though did acknowledge that at least some of the improvements would have been funded directly from the wife’s earnings. I am not able to make precise findings as to the source of the funds used for each project, but neither am I persuaded it matters. As already noted, I find the wife earned income well in excess of the husband during the period in which the parties undertook at least some of the improvements. However, I am satisfied the parties jointly made decisions about these improvements and each party contributed their earnings to an enterprise they both fully supported.
During the marriage, the parties purchased 3 investment properties in joint names to increase their retirement funds and to reduce their taxable income. The parties agree that all rental income received from each property was paid directly to the loans secured on the properties by way of mortgage, both during the marriage and after separation. It is common ground that the rent received almost covered the mortgage repayments on the first two properties, though not on the third property, and that each party contributed their rental income from each property until sale.
a)The first was at Property W purchased in September 2000 for $115,000, financed by a loan from the National Australia Bank. The parties settled the sale of the property in September 2008 for $175,000, and applied the sale proceeds to the reduction of the mortgage portfolio.
b)The second was at Property F, purchased in 2002 for $247,000, financed by a loan from the National Australia Bank in the sum of $280,000. The parties applied the additional funds borrowed to meet company debts. The parties expended modest funds on landscaping and later on repairs caused by a tenant. The parties sold the property for $278,000 in December 2008, and the net proceeds of $268,394 were applied to the reduction of the mortgage portfolio.
c)The third was located at Property P purchased in February 2004 for $260,000, financed by a loan from the National Australia Bank in the sum of $275,000. The husband says they borrowed additional funds to cover the expenses until they secured a tenant. Until separation, the parties met the shortfall between the rent and mortgage repayments from joint funds. The parties sold the property at a loss in January 2009 for $237,500. This loss is a component of the outstanding loan secured by the Property K property, which the parties agree has been met by the wife since separation.
Other financial contributions. The parties agree that the wife had an interest in horses, particularly dressage, and that she owned a horse until 2002. The parties purchased a trailer and the wife competed in dressage competitions. When at the Property N property, the parties agisted the horse at [T] for 12 months at a cost of $90 a week. In the early 1990’s, the parties bought two dogs and had an interest in dog training. It is common ground that the parties spent joint funds on these hobbies and interests.
I am satisfied that as a result of the wife’s greater initial contribution, and as a result of her greater earnings during a number of years of the parties’ cohabitation, the wife made the greater direct financial contributions to the assets of the marriage during the period of cohabitation.
Non-financial contributions during cohabitation
The wife asks the court to accept that her non-financial contributions were also greater than those of the husband.
At Property N, the wife says she maintained the garden at Property N while the parties shared the maintenance and cleaning of the property. She also maintained the Property N property while she lived there alone before joining the husband in Melbourne.
At Property K, the wife says she selected trees and shrubs for the garden from the time the parties first purchased the property. The wife says she started designing and constructing the garden, spending at least 4 hours every weekend for approximately 2 years, designing, choosing plants, purchasing and planting. The wife claims to have carried the major responsibility for arranging contractors, sourcing quotations and taking time from work to supervise and make necessary decisions about works being undertaken. The wife acknowledges, however, the husband’s contribution to maintaining the lawns, the edges, hedges and to the heavier maintenance of the yards and pool area. The parties agree that they shared household tasks, and enjoyed eating out regularly.
In relation to the investment properties, the wife says she again carried the majority responsibility for selecting the properties, liaising with the real estate agents, the conveyancing solicitors, the bank and doing the running around. The wife says she was responsible for management and made the arrangements for sale. The husband accepts that the wife liaised with the bank, but otherwise claims to have been equally involved in all other tasks connected with the investment properties.
In cross-examination, the wife appeared to soften her claim on this issue. The wife acknowledged that she and the husband both worked very hard at Property K. She acknowledged the husband’s family’s support in undertaking some of the improvements and to the savings made by the husband’s brother working at lower than market rates. The wife also acknowledged that the parties made joint decisions about the investment properties and participated in that investment venture together.
In the absence of any evidence which might suggest the husband was indolent or engaged in other activities while the wife took responsibility for property maintenance and daily living tasks, I am not persuaded the wife is entitled to an adjustment in her favour as a result of non-financial contributions during the period of cohabitation.
Financial contributions after separation
Employment. The parties separated in October 2006. The wife was at the time employed by [W] Pty and continues in that employment. The husband was in full time employment until August 2008, when he was made redundant by his employer and received a redundancy package to which I have already referred. As a result of his redundancy, he deposited an amount of $48,093.69 to his National Australia Bank account on 24 July 2008[18]. He bought a car, other household items, reduced the company overdraft account and met mortgage payments on the investment properties. For a period of 2-3 months, the husband used some of the funds to meet living expenses while earning under $1,000 a month from the parties’ business. From October 2008 until March 2009, the husband contracted as a [omitted] specialist to the Department of [omitted] earning an approximate gross weekly income of $1750. Since March 2009, the husband has been employed by [Z] on a full time basis earning approximately $86,000 per annum.
[18] Exhibit 4
I am satisfied the wife’s superannuation entitlement with [W] has increased by approximately $13,000 after separation. While I have no evidence before me as to the husband’s superannuation position from the date of separation until the date of hearing, given his period out of the workforce, and the wife’s higher earnings, I am satisfied the wife’s superannuation entitlements have increased to a greater extent than those of the husband.
Real estate. It is common ground that until September 2008, the parties continued to contribute to the mortgage portfolio secured by the properties as they had contributed prior to separation. They sold the first investment property in September 2008, the next in December 2008 and the next in January 2009. The wife has remained living in the Property K home, solely maintaining that property. The husband has rented a unit in [R] for $270 a week. He has paid $960 in bond money and $33,840.01 in rental payments[19]. The wife does not challenge his evidence on this issue.
[19] Annexure A to husband’s affidavit sworn on 29 April 2009
There is no dispute that the wife has paid approximately $68,000 towards mortgage repayments since separation, in addition to council rates and insurances on the Property K property. In February 2008, the parties agree that the mortgage facility was in arrears in the sum of $7,500 and there had been a shortfall on the sale of the Property P investment property. The husband does not dispute the wife’s evidence that she paid half the arrears, and then increased her fortnightly payments to meet the other half of those arrears, which included payment for the Property P shortfall.
By the end of the hearing, the parties accepted that since separation, the husband had contributed $50,280 towards the loan accounts related to the parties’ 3 investment properties[20].
[20] Schedule of payments, showing total amended figure of $50,280 – Exhibit 8
Company
. The wife resigned as a director in September 2007, but had no involvement in the company after separation. The husband has continued to operate the company. The husband spends about
45 minutes a month on one contract, and 15-20 minutes twice a week on the other. The wife has purchased the company’s Toyota Land Cruiser for $1,600. The husband anticipates he will wind up the company shortly.
The company has an overdraft account with the National Australia Bank which the parties agree had a debit balance of slightly more than $14,000 at separation, secured by personal guarantees. The husband says he continued to use the overdraft account after separation, to meet business and personal expenses. The husband deposited $20,000 to the account on 29 July 2008[21] from his redundancy package received in July 2008, which benefited both parties. There is no evidence before me as to the balance of the overdraft at that date. The balance of the overdraft account at hearing is $18,591. As already noted, I accept that the wife has made a contribution to 5/7 of the balance (after payment to the overdraft) of the $21,650.65 (the redundancy and long service leave components of the husband’s package).
[21] Withdrawal entry – Exhibit 4
Debts. At separation, the parties had a joint credit card debt to NAB Mastercard, for which they remain jointly liable. The husband had a credit card debt with HSBC, and the wife with Citibank. I have no evidence as to the balance of those accounts at separation. The wife contributed $2,500 towards the husband’s HSBC debt for items she then retained. The company had an overdraft account with a balance of just over $14,000. The husband and the wife have both borrowed funds to meet legal fees and other necessary expenses, the husband from the ANZ bank, the wife from a friend and from her mother. In addition to debts relating to each party’s legal fees alone, each party currently has responsibility for liabilities totalling approximately $30,000, in addition to legal fees not yet paid. I am unable to make precise findings as to how the borrowed funds have been used by each party. However, in the absence of evidence to the contrary, I am satisfied each party has applied the funds for legitimate and necessary purposes.
Disposition of assets. The husband has agreed to add back the net proceeds of sale of shares and a shotgun he sold after separation.
On a weighing of these factors, in particular the wife’s increase in superannuation, her contribution to the husband’s retrenchment and long service leave package and her payment of the mortgage arrears including the shortfall on Property P, I make a minor adjustment in favour of the wife in relation to financial contributions after separation.
Non financial contributions after separation
As already noted, it is common ground that the wife has solely maintained the Property K property since separation, and that she prepared the property for sale in late 2008. I accept that the wife maintained the property to a high standard. However, I have regard to the fact that the husband paid rent on a small unit while permitting the wife to enjoy exclusive occupation of that home after separation, despite the commitment he had also made to the Property K property during the marriage.
I have concluded that the parties’ non-financial contributions after separation should be assessed as approximately equal.
Evaluation of contributions overall
The husband’s counsel submits the parties’ contributions are equal to the date of hearing on the basis of the net asset pool I have decided is available for distribution. The wife’s counsel submits the wife is entitled to a minimum of 57% by way of contributions on a net asset pool figure in excess of the net asset pool I have found available for distribution.
On a weighing of each party’s contributions overall, during the period of cohabitation and after separation, I assess the husband’s contributions at 44% and the wife’s contributions at 56% of the net pool available for distribution.
What is the effect, if any, of any proposed order upon the earning capacity of each party?
The orders I have made will have no effect on the earning capacity of either party.
What matters referred to in sub-section 75(2) of the Act are relevant?
I have considered each of the relevant factors listed in section 75(2) of the Act.
The wife is 52 and the husband 49 years of age. The parties have no children.
Each party deposes to having a medical condition, but neither adduces independent medical evidence as to existence of the medical condition or its impact on that party’s earning capacity.
a)In relation to the wife, there is no challenge to the wife’s claim that she suffers from a thyroid condition known as Hashimotos thyroiditis, which is controlled by medication. This, she says, costs her a net $570 a year, after rebate, and she expects the cost to increase in time. The wife adduces no evidence that her thyroid condition impacts on her capacity to work and earn an income. Her counsel submits that as long as the wife takes her medication, she can continue to work but then “it is something hanging over her head which deeply concerns her and may affect her ability to maintain her current income into the future. And she certainly has the ongoing expense of the medication which is not insignificant.” Counsel submits the wife is entitled to an adjustment of 1-2% for this factor.
b)The husband takes medication for high cholesterol. The husband says he suffered a period of depression after losing his job last year and still sees a psychologist. The husband says he suffers from a condition called labrithistis which causes loss of balance and nausea when he is tired and run down.
c)I am not persuaded either party’s evidence in relation to health issues justifies an adjustment pursuant to s.75(2).
Each party is earning a substantial income and I am satisfied each has the capacity for appropriate gainful employment into the foreseeable future. According to each party’s updated financial statements sworn shortly before hearing, the wife is earning an estimated $107,000 per annum including bonuses; the husband is earning approximately $93,000 per annum. With the exception of the re-financing of the debt on the Property K property, which the wife has chosen to retain, each party will be responsible for debt in a similar sum. I find no basis for any adjustment on these issues.
Neither party is living with anyone else. Neither has a responsibility to support anyone else.
I have given consideration to making an adjustment in favour of the wife as a result of the husband’s failure to disclose the existence of an ANZ bank account in his name, when he affirmed a Financial Statement on 28 May 2008[22]. A party’s obligation to fully and frankly disclose his/her financial position is a fundamental one. The husband says it was an oversight as the account had such a small balance. The account has been subsequently closed. I am satisfied from the ANZ Statement for the period 18 June to 18 September 2008[23] that the amount held by the husband in that account during that period was a small sum, being $46.29. While critical of the husband for such carelessness, I accept the omission was not deliberate, and accordingly make no adjustment against him.
[22] Exhibit 6
[23] Exhibit 5
The wife’s counsel submits the court should make a small adjustment in favour of the wife as a result of the wife’s health problem. However, in the absence of any evidence as to its likely adverse impact on her capacity to earn, I am not satisfied there is a basis for such an adjustment. The wife will therefore receive 56% and the husband 44% of the net asset pool.
Is the result just and equitable?
Section 79(2) provides that:
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.
The Court must be satisfied that the actual orders provide for a just and equitable distribution of the property of the parties.
The wife wishes to retain the Property K property because she has established her network of friends in the area, and her interests and work are nearby. She has two German short haired pointer dogs which require space to exercise. She uses the property for dog training purposes. The wife has made inquiries as to her borrowing capacity and believes she can borrow up to $600,000. By the end of the hearing, the husband had no objection to the wife retaining the home.
The parties agree the husband should receive a $20,000 amount from the wife’s MLC Masterkey (Gold Star) Superannuation Fund by way of a splitting order, as part of his entitlement. I am satisfied the form of order has been approved by the Trustee of the Fund and that such a splitting order is appropriate[24].
[24] Exhibit 19
Given the share in the company will be transferred to the husband, and given the manner in which the husband has dealt with the overdraft account since separation, I agree with the wife’s counsel’s submission that the husband should be responsible for the whole of the company overdraft debt.
The wife will receive net assets with a value of $321,671.28 and the husband net assets with a value of $252,741.72. If the wife is to retain the Property K property, the wife must pay the husband $179,829.60 in addition to the $20,000 from her superannuation fund. If she is unable to make the payment within 3 calendar months, the Property K property will be sold. If the property is sold, for the wife to receive 56% of the net asset pool, she must receive 56% of the assets (including superannuation), excluding the net value of the home ($411,280.00), which is 56% of $163,133 = $91,354.48. The wife already has assets of $90,220.88, so she will need an additional $1,133.60 from the net sale proceeds of the home to achieve 56% of the assets excluding the home. This means that upon settlement of the sale of the home, after payment of the usual sale costs and discharge of the mortgage loan, the wife will receive 56% of the proceeds. The husband will then pay the wife $1,133.60 from his share of the sale proceeds, before the balance of the sale proceeds are paid to the husband.
The husband will have assets and liabilities set out in the following table:
| Assets to be retained by husband | $ |
| Payment from wife | 179,829.60 |
| Holden motor vehicle | 14,500.00 |
| Add back for sale of gun and shares | 4,553.00 |
| ANZ visa card | (1,487.00) |
| HSBC visa card | (10,232.00) |
| [B] Pty Ltd overdraft account | (18,591.00) |
| AMP Superannuation | 10,527.00 |
| AON Master Trust | 33,642.00 |
| Commonwealth Superannuation | 8,444.00 |
| Payment from Wife’s MLC Masterkey Superannuation | 20,000.00 |
| MLC Master Key Superannuation | 9,104.00 |
| Recruitment Superannuation | 3,026.00 |
| First State Superannuation | 747.00 |
| 44% NAB Mastercard debt | (1,320.88) |
| TOTAL | 252,741.72 |
The wife will have the assets and liabilities set out in the following table:
| Assets to be retained by wife | $ |
| Property K | 800,000.00 |
| NAB mortgage secured on property at Property K in joint names | (388,720.00) |
| IAG shares (W) | 4,522.00 |
| Lend Lease shares (W) | 1,485.00 |
| [W] shares (W) | 2,141.00 |
| AMO Endowment Life Insurance Policy (W) | 5,440.00 |
| Toyota Corolla (W) | 8,000.00 |
| [W Pty Ltd] Superannuation (W) | 66,505.00 |
| MLC Master Key Rollover (W) | 19,809.00 |
| MLC Master Key Superannuation (W) (after split to husband) | 13,333.00 |
| Loan to wife from Ms D (W) | (14,000.00) |
| Citibank Mastercard (W) | (15,333.00) |
| 56% NAB Mastercard debt | (1,681.12) |
| Payment to the husband | (179,829.60) |
| TOTAL | 321,671.28 |
I am satisfied that the orders set out at the beginning of these Reasons are just and equitable.
I certify that the preceding seventy eight (78) paragraphs are a true copy of the reasons for judgment of Sexton FM
Associate: Skye Owen
Date: 7 July 2009
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