Kite and Kite
[2009] FamCA 896
•31 July 2009
FAMILY COURT OF AUSTRALIA
| KITE & KITE | [2009] FamCA 896 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage |
| APPLICANT: | Ms Kite |
| RESPONDENT: | Mr Kite |
| FILE NUMBER: | PAF | 1073 | of | 2006 |
| DATE DELIVERED: | 31 July 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | STEVENSON J |
| HEARING DATE: | 21 July 2008 Written Submissions: |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Kearney |
| SOLICITOR FOR THE APPLICANT: | Watts McCray |
| COUNSEL FOR THE RESPONDENT: | Mr Sansom |
| SOLICITOR FOR THE RESPONDENT: | Champion Legal |
Orders
That, within 42 days of the date of these orders, the parties shall do all things and execute all documents necessary to cause the simultaneous occurrence of the following:
1.1the transfer to the wife of the whole of the husband’s interest in the property situate at and known as N in the State of New South Wales, being the whole of the land contained in Folio Identifier … (“the N property”)
1.2the transfer to the husband of the whole of the wife’s interest in all bank savings held in joint accounts
1.3the transfer to the husband of the whole of the wife’s interest in the AMP Ltd Term Life Whole of Life Plan.
That the wife shall indemnify the husband and keep him indemnified against all liabilities of whatever kind arising pursuant to the mortgage registered on the title to the N property.
That the parties forthwith do all things and execute all documents necessary to effect the sale, for the best price reasonably obtainable, of the property situate at and known as B property in the State of New South Wales, being the whole of the land contained in Folio Identifier … (“the B property”) and to distribute the proceeds of sale as follows:
3.1in payment of any capital gains tax arising pursuant to the sale
3.2in payment of real estate agent’s commission and expenses
3.3in payment of legal costs and expenses incidental to the sale
3.4in payment of an amount equal to 53% of the balance then remaining to the husband
3.5in payment of the balance to the wife.
That the wife forthwith make available for collection by the nominee of the husband the scooter and hospital type bed and hoist.
That, otherwise, each of the parties is declared to be solely entitled to all items of property and superannuation presently in his and her possession or control.
IT IS NOTED that publication of this judgment under the pseudonym Kite & Kite is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAF 1073 of 2006
| MS KITE |
Applicant
And
| MR KITE |
Respondent
REASONS FOR JUDGMENT
the proceedings
These proceedings concern settlement of property. Ms Kite (“the wife” commenced the litigation by an application filed on 31 August 2006. The orders which she sought ultimately were set out in written submissions on her behalf dated 5 December 2008. The orders sought by Mr Kite (“the husband”) were set out in an amended response filed on 23 November 2007.
The trial commenced on 21 July 2008 but could not proceed to completion. The wife had concluded her oral evidence and cross-examination of the husband had commenced. Counsel for the husband rightly expressed concern that he was having obvious difficulty in responding to questions. Cross-examination of the husband ceased at that point, with no opposition from the wife.
The husband suffers from secondary progressive multiple sclerosis. As his cross-examination progressed, he appeared to become very tired and somewhat confused. A poignant illustration of the husband’s difficulties came in his last answer. The husband was asked about his intentions for payment of a bond at S nursing home, where he has been a permanent resident since 2007. He said words to the effect:
“I do not intend paying a bond to [S]. I do not intend to remain at [S]. I would like to go back to the matrimonial home.”
Unfortunately, the evidence made it clear that the husband is unable to live independently. The unchallenged evidence of Ms O, the Director of Care at his nursing home, was that he would require continuous 24 hour care from two nurses if he were to live away from a residential facility.
On 25 August 2008 the husband’s brother, Mr R Kite, was appointed as case guardian. The wife consented to this order.
As noted, cross-examination of the husband was unfinished when the trial halted in July 2008. Counsel agreed to conclude the proceedings by way of updating affidavits, the tender of documents and written submissions.
There was consent to the tender of all documents other than extracts of letters exchanged by the parties’ solicitors. This correspondence related, inter alia, to an alleged agreement as to the value of a scooter and a hospital-style bed and hoist. Counsel for the wife sought to tender these extracts, over objection on behalf of the husband.
Counsel agreed that their written submissions should address the issue of the admissibility of these documents and that I would make a ruling in the course of these reasons. I do so below in the context of my findings as to the list of assets.
Background
In this background, statements of fact are to be construed as findings unless indicated otherwise. I understand that there is little or no controversy about the following material.
The husband was born in 1956 and is now 53 years old. The wife was born in 1959 and is now 50 years old. The parties married in 1981 and separated on 25 September 2005 or June 2006. The husband maintained that they separated on 25 September 2005 but continued to live under one roof until June 2006. The wife claimed that there were attempts at reconciliation between September/October 2005 and June 2006, when the final separation took place. In any event, the marriage was of 24 or 25 years’ duration.
There are three children of the marriage, namely:
J born in May 1987 (22)
R born in February 1991 (18) and
C born in August 1992 (16).
J completed a university course in 2007 and has full time employment.
At the date of the marriage the wife was employed as a clerical assistant. She had a small amount of savings, personal effects and a superannuation benefit which she later cashed in for about $4,000.
At this time the husband had almost completed a degree in engineering. He graduated in May 1981 and then began employment as a project manager with T Company. He had savings, a Celica motor vehicle and personal effects at the date of the marriage.
In April 1981 the parties purchased a property at D. I will adopt the description “the [D] property”, as this address was used in certain transfer and mortgage documents annexed to the husband’s affidavit.
The purchase price of this property was $60,000. The parties borrowed $33,000 from the Commonwealth Bank and approximately $20,000 from the husband’s parents. The balance of the purchase money came from their savings.
By about mid-1985 the parties had discharged the mortgage and the loan from the husband’s parents. The wife said that her father gave her $15,000 shortly after the marriage and that these funds were used to reduce these two debts. The husband’s affidavit evidence was that he was “not aware” that the wife received any gifts of money from her parents. In cross-examination, however, he said:
“My wife’s father provided $15,000 when we purchased our first home.”
This evidence came at an early stage in the husband’s cross-examination.
In 1984 the husband was diagnosed with relaxing-remitting multiple sclerosis. His condition has now deteriorated to a stage known as secondary progressive multiple sclerosis. He has been a permanent resident in a nursing home since December 2006.
Despite his illness the husband was able to sustain his employment until 2001. He was successful in his career, achieving regular pay rises and bonuses, and was promoted to the position of engineering manager. This role required interstate and overseas travel.
From 1998 the husband’s condition prevented him from travelling for work purposes, so he arranged to work from home. His role was to sell or relocate globally some $8 million worth of equipment which T Company had written off.
In February 1989 the parties purchased the former matrimonial home at N (“the N property”).They obtained a mortgage loan of $154,600 from the Commonwealth Bank and borrowed $100,000 from the husband’s parents. The stamp duty and acquisition costs came from their joint savings.
Between 1992 and 1993 the parties carried out renovations and improvements to their home at N. In 1993 they discharged the debt to the husband’s parents in full, using funds redrawn on the mortgage facility.
In May 2001 the parties purchased an investment property B (“the B property”) for $240,000. They borrowed all of the purchase money from the Commonwealth Bank. This mortgage has been serviced by rental income from the property.
In July 2003 the parties sold the D property for $649,000. The net sale proceeds amounted to approximately $636,000. The parties reduced the mortgage on the B property by $115,000 and paid $55,000 to discharge all encumbrances on their home at N.
After these two payments the parties were left with savings of approximately $490,000. They deposited $485,000 into a joint BankWest account, and leaving $5,000 in their Commonwealth Bank account.
In October 2003 the parties purchased an investment property at R for $500,000. They borrowed all of this money from the Commonwealth Bank. The rental income from the property was used to service this mortgage.
In September 2005 the wife withdrew $345,000 from the joint BankWest account. She deposited this money into an ANZ Progress Saver account in her sole name. She then transferred the funds to her ANZ Premium Cash Management account, leaving a balance of $141,274 in the joint BankWest account.
In October and November 2005 the husband withdrew $4,000 and $137,938 from the BankWest account. He returned approximately $54,400 to this account in November 2005. The wife then withdrew this money, which she deposited into her ANZ Premium Cash Management account.
In April 2006 the husband wrote a cheque for $36,000, which he handed to the wife. It seems likely that this cheque was drawn on the joint BankWest account. The wife deposited this money into her ANZ Premium Cash Management account.
The wife thus received a total of $439,400 and Mr Kite $50,538 from the proceeds of sale of the D property and other joint savings of the parties. The money taken by the wife generated interest of $9,777, all of which she retained.
The husband worked successfully from home between 1998 and 2001 in his role of selling and relocating equipment. He received favourable performance reviews regularly but was not awarded salary increases or bonuses, as had routinely been the case previously. He was made redundant early in 2001 and offered a payment package which he and the wife regarded as inadequate and unacceptable.
The husband and the wife realised that the company’s failure to award pay increases and bonuses for the three years prior to 2001 would reduce the total and permanent disablement component of the husband’s superannuation benefit. They knew that this payment would be calculated by reference to his final salary.
In 2001 the husband commenced litigation against T Company in the Industrial Relations Commission of New South Wales. These proceedings were settled, on the basis that he received a gross sum of $1,230,950. His employment was then terminated by agreement on 31 January 2002.
In March 2002 the husband placed $1,009,696 in an MLC Masterkey Allocated Pension fund, known as The Universal Super Scheme. He drew $3,800 per month as an allocated pension, which he deposited into a joint account. After an altercation between the parties in October 2005, he caused his pension to be paid into an account in his sole name. The wife could not access the pension money after October 2005.
The balance of the husband’s settlement amounted to $218,095. The parties used these funds to pay his tax of approximately $80,000; to reduce the mortgage on the N property by about $100,000 and to purchase a Honda Odyssey motor vehicle for $30,000.
Costs of the litigation in the Industrial Relations Commission amounted to approximately $20,000. The parties paid this sum either from the settlement money or joint funds or from a combination of these sources.
In June 2006 the wife took a six month lease of a home. She paid a lump sum of $13,647 for a bond and rental in advance, using money which she had withdrawn from the joint BankWest account. The wife and the children lived in the rented premises until December 2006, when they returned to the N property. By this time, the husband had become a permanent resident of a nursing home.
In October 2007 the wife applied for a Child Support Assessment. The husband’s liability was calculated at $811.75 per month, which was reduced to $772.33 per month in July 2008.
The parties sold the R property for $490,000 in April 2008. The shortfall between the sale price and the mortgage was $42,376. The wife paid this amount from funds which she had earlier withdrawn from the joint BankWest account.
Approach to these Proceedings
According to guidelines established through a series of leading decisions, the Court is required to determine the following matters on the evidence:
·firstly, the assets, liabilities and financial resources of the parties to the marriage are to be determined
·secondly, all relevant contributions of each of the parties, within the meaning of paragraphs (a) to (c) of section 79(4) must be identified and weighed against each other
·thirdly, the matters in paragraphs (d) to (g) of section 79(4), particularly paragraph (e) which takes up by reference the provisions of section 75(2) must be considered and a determination made as to what, if any, alteration should be made to the entitlements of the parties earlier assessed on account of contribution
·finally, an order under section 79 must not be made unless the Court is satisfied that, in all the circumstances, it is just and equitable to make the order.
The Evidence and Witnesses
The applicant, the wife, relied on the following affidavits:
1.affidavit of the wife sworn on 20 November 2007
2.affidavit of the wife sworn on 20 November 2007
3.affidavit of the wife sworn on 21 July 2008
4.affidavit of the wife sworn on 23 March 2009
5.Financial Statement of the wife sworn on 20 November 2007.
The respondent, the husband, relied on the following affidavits:
1.affidavit of the husband sworn on 18 April 2008
2.affidavit of Mr Kite Snr (the husband’s father and power of attorney) sworn on 22 April 2008
3.affidavit of Ms O (Director of Care at S Nursing Home) sworn on 24 April 2008
4.affidavit of Mr R Kite (the husband’s brother and case guardian) sworn on 23 March 2009
5.Financial Statement of the husband sworn on 18 April 2008
6.Financial Statement of the husband sworn on 21 July 2008
Only the husband was required to give oral evidence, which, as noted, he could not complete.
There was affidavit evidence from three single experts, none of whom was required for cross-examination. Dr M, a consultant neurologist, provided a report dated 8 November 2007 as to the husband’s medical condition. Ms W, a chartered accountant, prepared a report dated 17 June 2008 which addressed various options regarding the husband’s superannuation fund, with particular attention to tax issues. Mr G, a forensic accountant, provided a valuation of the husband’s superannuation fund as at 24 April 2008. Mr G also addressed various options available to the husband with regard to his superannuation.
There was a substantial decrease in the value of the husband’s superannuation during 2008 and 2009. Mr G valued the fund at $1,037,393 on 24 April 2008. In final written submissions dated 27 and 30 March 2009, counsel agreed that the fund now has a value of $586,887.
I have referred already to the difficulties which the husband obviously experienced as his cross-examination progressed. With respect to him, I treat most of his oral evidence with caution. I have no similar reservations as to the accuracy of his written evidence.
I gained the impression that the wife made a calculated attempt to justify retrospectively her use of the money which she removed from the parties’ joint account. I do not suggest that this part of her evidence was untruthful but it did appear to be deliberately crafted to address a difficulty in her case. Having made that observation, however, I accept that the wife was a truthful witness.
The Assets, Liabilities and Financial Resources
The Assets
The parties agreed as to the nature and value of the following non-superannuation assets:
1.
N property (J)
$650,000
2.
B property (J)
$350,000
3.
Honda Odyssey motor vehicle (W)
$6,500
4.
AMP Term Life Whole of Life Plan (J)
$19,782
5.
Household Contents, Furniture and Effects (W)
$7,000
6.
ANZ Bank shares (H)
$5,670
7.
T Company shares (H)
$65,379
8.
AMP Endowment Plan (H)
$8,200
9.
Wife’s Savings (W)
$197
10.
Husband’s Savings (H)
$6
11.
Joint Savings (J)
$846
12.
Trust Money held by the Wife’s Lawyers (W)
$2,510
13.
Trust Money held by the Husband’s Lawyers (H)
$1,710
14.
Husband’s Paid Legal Fees (H)
$84,039
The parties also agreed on the value of the superannuation assets, as follows:
1.
Wife’s Superannuation
$20,040
2.
Husband’s Superannuation
$586,887
They also agreed as follows:
·the wife’s Nissan Pulsar motor vehicle has a nil value
·the husband’s unexercised share options have a nil value
·the sale of the R property yielded no net proceeds
·the coin collection has “a nominal value”
It is thus expedient to exclude these items from the list of assets.
There was disagreement as to the following assets or suggested notional items of property:
1.
512 AMP shares (J)
$2,463
2.
Proceeds of sale of Goodman Fielder Shares (H)
$26,839
3.
Scooter (H)
$3,500 or $2,000
4.
Hospital Type Bed and Hoist (H)
$8,000 or $2,000
5.
Proceeds of sale of 1,000 T Company shares (H)
$9,826
6.
Proceeds of sale of 10,000 Burns Philp shares (H)
$11,000
7.
Funds removed by the husband from the joint account
$51,538
8.
Funds removed by the wife from the joint account
$270,993
9.
Funds removed by the husband from superannuation entitlements
$40,000
10.
Wife’s paid legal fees
$123,509
I will consider in turn each of these disputed items of property.
AMP Shares
Counsel agreed that the evidence in relation to 512 AMP shares remained unclear at the end of the trial. The issue seemed to be whether the jointly owned shares are currently an asset of the parties and in the possession of the husband.
According to the wife, 357 jointly owned shares and 320 shares in the sole name of the husband were sold after separation as part of a scheme in which AMP bought back all parcels of less than 500 shares. She said that she was not involved in these sales and signed no documents. She alleged that the proceeds were deposited into a joint account and used to pay the mortgage on the R property.
The husband maintained that 869 jointly owned shares and 320 shares in his sole name were sold in October 2006. He said that he had no knowledge of the fate of this money. In cross-examination he said that he could not recall whether any AMP shares remained after these two sales.
No documents were produced to verify the number of jointly owned AMP shares which were sold in 2006. There were only two pieces of evidence to support the wife’s contention that the husband currently holds 512 jointly owned AMP shares. The first was her uncorroborated assertion. The second was a general statement in the affidavit of the husband’s father, sworn on 22 April 2009. The husband’s father said: “I am aware that [the husband] holds other shares, both with AMP and the ANZ Bank as well as [T Company]”. The husband’s father has held his power-of-attorney since 21 November 2006. In my view there was insufficient evidence to establish that the husband currently holds 512 jointly owned AMP shares and I find that the parties own no AMP shares.
Proceeds of Sale of 15,000 Goodman Fielder Shares
In his primary affidavit the husband said that he held an unspecified number of Goodman Fielder shares at the time of separation. A ComSec document was tendered (exhibit 4) which showed that he sold 15,000 Goodman Fielder shares for $26,925 on 7 May 2008.
The husband’s father said in his affidavit that the Australian Taxation Office issued a demand on 4 April 2008 for payment of $19,679 from the husband. This debt related to a superannuation surcharge for the year 2001/2002.
The husband’s father said that he consulted the husband’s accountant and financial advisor about payment of this debt, in his capacity of power-of-attorney. In his affidavit he set out some of the advice which he received from the financial adviser, Ms K. She told the husband’s father:
“I’ve spoken to the ATO about the surcharge levied by them on [the husband’s] super in 2000/2001. The ATO were to notify [the husband’s] super fund at the time but it seems this was never done and now [the husband] doesn’t have any super fund as it’s been rolled over to the pension fund in 200[sic]. The pension fund won’t pay it on behalf of the super fund so [the husband] will need to pay it. I suggest [the husband] sell shares to pay the debt – it will be more cost effective than drawing from the pension fund. I am aware that [the husband] had some Goodman Fielder shares of about $26,000 – I suggest he sell those and pay out the ATO debt.”
No objection was taken to this evidence, which I will thus take into account.
On behalf of the wife it was submitted that this amount of $26,839 should be added back to the list of assets. Firstly, it was suggested that there was no evidence of the source of the payment to the ATO. Secondly, it was suggested that the husband had sufficient money available from the parties’ joint accounts and his superannuation to pay this debt without selling these shares. Thirdly, it was submitted that the husband incorrectly stated in his oral evidence that this money was used to pay his expenses at Y Nursing Home when he had not been a resident at that facility since October 2007. In respect of the last submission, I would observe that the husband was obviously tired and experiencing difficulty in answering questions when he gave this evidence. In my view, it would be dangerous and unfair to him to use this evidence as suggested on behalf of the wife.
I am not persuaded that any or all of these submissions are sufficient to justify an addback of $26,839 to the list of assets. If the tax debt had not been paid, an equivalent liability would now appear in the balance sheet and thus reduce the value of the net pool of property. In fact, the liability would surely be larger with the addition of interest, fines and penalties. The unchallenged evidence of the husband’s father was that he took action as suggested by the husband’s financial adviser. I do not understand why payment of the tax debt with the proceeds of sale of these shares would result in an add-back, as opposed to funds withdrawn from a joint account or the superannuation fund. Finally, the tax debt was incurred during the parties’ cohabitation. For these reasons, I find that it would be inappropriate to add back to the list of assets the proceeds of sale of the Goodman Fielder shares.
There was no submission on behalf of the wife that I should add back to the list of assets a sum of $7,160, being the difference between the net sale proceeds of $26,839 and the tax debt of $19,679. I will thus not do so.
Scooter and Hospital Type Bed and Hoist
In his Financial Statement sworn on 5 December 2006 the husband estimated the value of the scooter at $3,500 and the bed and hoist at $8,000. In his Financial Statement sworn on 21 July 2008 the husband deposed that each of these items had a value of $2,000. On behalf of the wife it was submitted that the husband should be held to the December 2006 figures.
This dispute arose because the wife sought to rely on an alleged agreement as to the value of these items set out in correspondence between solicitors in 2007. Counsel for the wife sought to tender extracts from that correspondence, over objection on behalf of the husband.
The basis of the objection was that the correspondence in relation to the value of these items was contained in letters clearly marked “without prejudice”. It was submitted that these documents were inadmissible because of the operation of section 131 of the Evidence Act 1995. The relevant parts of this section provide that:
Exclusion of evidence of settlement negotiations
(1) Evidence is not to be adduced of:
(a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
(b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
(2) Subsection (1) does not apply if:
(a) the persons in dispute consent to the evidence being adduced in the proceeding concerned or, if any of those persons has tendered the communication or document in evidence in another Australian or overseas proceeding, all the other persons so consent; or
(b) the substance of the evidence has been disclosed with the express or implied consent of all the persons in dispute; or
(c) the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced; or
(d) the communication or document included a statement to the effect that it was not to be treated as confidential; or
(e) the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute; or
(f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue; or
(g) evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence; or
(h) the communication or document is relevant to determining liability for costs; or
(i) making the communication, or preparing the document, affects a right of a person; or
(j) the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or
(k) one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power.
On behalf of the wife it was submitted that the extracts sought to be tendered were not part of an attempt to settle proceedings and are thus immune from the operation of section 131. Counsel for the wife pointed out that the definition of “document” in the Dictionary to the Evidence Act “…includes a reference to… (a) any part of the document”. It was submitted that the fact that a letter may refer to privileged matters does not result in the privilege extending to the whole of the contents of the document. Authority for this proposition was said to be: Redman Constructions Pty Ltd v Tarnap Pty Ltd [2006] NSWSC 173. It was further submitted that the endorsement of the words “without prejudice” does not of itself operate to protect any part or the entire contents of a document: it is necessary to look to the substance of the communication to determine whether privilege arises. Authority for this proposition was said to be: GPI Leisure Corp Ltd v Yuill [1997] 42 NSWLR 225. It was said that the real issue is thus whether the extracts sought to be tendered were “in connection with the dispute”. It was submitted that these communications “clearly” did not fall within that definition.
It seems to me that I am unable to determine whether or not these communications were made “in connection with an attempt to negotiate a settlement of the dispute”, since I have no knowledge of the context in which these extracts appeared in the letters. It may be that acceptance of these estimates of value was an integral part of some overall proposal for settlement of the dispute. I simply cannot tell, in circumstances where I have only minimal extracts from what was obviously much lengthier correspondence. It is impossible for me “to look to the substance of the communication to determine whether privilege arises” when I have only these minimal extracts from much longer correspondence.
If I am mistaken in this view, it seems to me that the extracted correspondence itself determines the issue. It was clear that, by August 2007, there was no agreement as to the value of the scooter and the bed and hoist. On that date the husband’s solicitors wrote:
“We are instructed that our client requires both the hospital type bed and hoist presently held at the [N] property to be valued” and
“similarly our client seeks for the scooter to be formally valued and thereafter will provide instructions as to what should occur with the scooter”.
The reply by the wife’s solicitors, dated 14 August 2007, required confirmation “that [the husband] is resiling from his original position”, meaning the estimates of value to which he deposed in his Financial Statement. The letter went on to suggest that, in these circumstances, the husband should be solely responsible for the valuation fees. I am not aware if there was any response to this letter.
Obviously neither party saw fit to obtain a valuation of these items. I accept the submission on behalf of the hsuband that it was open to the wife to arrange a valuation and seek her costs of this discreet issue.
For these reasons, I reject the tender of the extracts of correspondence between solicitors as to the value of the scooter and hospital type bed and hoist. The best evidence of the value of these items, therefore, is the admission against interest of the husband contained in his most recent Financial Statement sworn on 21 July 2008. I thus find that the scooter and the hospital type bed and hoist each have a value of $2,000.
Proceeds of Sale of 1,000 T Company Shares
In his affidavit the husband deposed that he sold 1,000 T Company shares for $9,825 on 29 February 2008. He did not explain how he spent this money.
In the absence of any explanation from the husband as to the use which he made of these funds, it seems to me that a sum of $9,825 should be added back to the list of assets. It is clear that he sold these shares well after the separation, at a time when there was no intermingling of funds between the parties.
Proceeds of Sale of 10,000 Burns Philp Shares
In his affidavit the husband said that he received $11,000 from Burns Philp on 10 January 2007, following a compulsory acquisition of 10,000 shares. Again the husband did not account for his use of these funds.
In my view this amount of $11,000 should be added back to the list of assets. I make this finding for the same reasons as expressed above in relation to the proceeds of sale of the T Company shares.
Money Retained by the husband from Joint Accounts
It was submitted that the husband “retained” a total of $51,538 following a series of transactions relating to the parties’ joint BankWest account. This figure was calculated as follows:
18 October 2005
Withdrawal by the husband from the BankWest account
$4,000
18 November 2005
Withdrawal by the husband from the BankWest account
$137,938
$141,938
Less:
November 2005
Deposit by the husband into the BankWest account
$54,400
April 2006
Cheque drawn by the husband in favour of the wife
$36,000
$51,538
It was suggested that the husband did not account for his use of this sum of $51,538. It is true that he did not provide a breakdown of this figure.
On behalf of the husband it was submitted that this figure was “artificially arrived at”. I infer that the thrust of this submission was that these four transactions took place over a period of about six months, in circumstances where the husband’s only source of income was his superannuation pension and a small sum from the proceeds of sale of shares.
It was the wife’s case was that the parties attempted to reconcile between September/October 2005 and June 2006. The husband spent some of this period in respite care and a nursing home. According to the wife, therefore, all of these transactions occurred during a period of attempts at reconciliation. I appreciate that the husband maintained that the parties separated finally in September/October 2005. It was common ground, however, that they lived under one roof during this period other than for the husband’s stays in respite care or a nursing home.
It seems to me that there was some support for the wife’s contention that the parties made attempts at reconciliation during this period. They took a cruise together, with their children, in December 2005. At the wife’s request the husband wrote a cheque for $36,000 in her favour in April 2006. These facts suggest to me that there were attempts to repair the relationship until about June 2006, when it became clear that the marriage had finally broken down.
I am not disposed to add back a sum of $51,538. This money found its way into the possession of the husband during a period in which the wife maintained that the parties made attempts to continue their marriage. As noted, the parties lived under one roof except for times when the husband was in respite care or a nursing home. It may have been that there was intermingling of the parties’ funds during this time. The fact that the husband wrote a cheque for $36,000 in favour of the wife suggests that there was some common financial purpose for at least part of this time. I thus find that the sum of $51,538 should not be added back to the list of assets.
Money Removed By The Wife From The Parties’ Joint Account
As noted above, the wife deposited approximately $485,000 from the proceeds of sale of the D property into the joint BankWest account in September 2005. A balance of around $5,000 remained in the parties’ Commonwealth Bank Netbank Saver account.
During September 2005 the wife withdrew a total of $345,000 from the joint BankWest account in three separate transactions. Ultimately she deposited this money into an ANZ Bank Premium Cash Management account in her sole name. This account already had a credit balance of $4,000 to $5,000.
In November 2005 the wife withdrew an additional $54,400 from the joint BankWest account and deposited these funds into her ANZ Bank account. This money had been re-deposited by the husband, after he withdrew $137,938 from the joint BankWest account in November 2005.
In April 2006 the husband gave to the wife a cheque for $36,000 which she deposited into her ANZ Bank account. It seems that this cheque was drawn on the joint BankWest account.
The wife thus received some $435,400 from joint accounts. As noted, she received and retained interest of $9,777 on this money.
The wife attempted to provide a breakdown of her expenditure of this money. She annexed to her affidavits various spreadsheets containing a highly detailed breakdown of expenditure. In the analysis which follows I make no attempt to trace every dollar from these funds expended by the wife. My purpose is to try to identify amounts which should be excluded from the list of assets; sums in relation to which there could be argument and expenditure which should be treated as add-backs.
It seems to me that the wife’s paid legal expenses of $152,042 should be added back to the list of assets. Each of the parties has utilised joint funds to pay legal fees. The husband properly conceded that his paid legal costs should be added back to the list of assets. I apprehend that the concern of the wife was to avoid “double counting”, of paid legal costs and money which she withdrew from the joint accounts.
The wife made some payments from the funds under consideration which were clearly for the joint benefit of the parties and/or for the conservation of their property. It is my view and I find that the following amounts should not be added back to the list of assets:
1. Cost of a cruise for both parties and the children in December 2005 $23,000 2. Mortgage repayments $28,000 3. Shortfall between the proceeds of sale of the R property and the mortgage payout figure $42,377
4. Strata fees for the B property $450 5. Sale expenses for the R property $2,327 6. Council rates $2,109 7. Cost of maintenance of the N property $1,900 8. Insurances $11,661 9. School and university fees $5,092 $116,916 For the purposes of the present exercise, I will round this figure off to $117,000.
In cross-examination the husband said: “It is entirely appropriate for her to have paid [J’s] uni fees and for her support” and “I have no criticism of her applying money for [R] and [C’s] education”. These appropriate concessions by the husband lead me to the view that he would support the wife’s reasonable expenditure of joint funds on the cost of educational and extra-curricular activities for the children. Although there was no breakdown of the sum of $2,809 described as “children’s activities” I am not inclined to add back this amount or the cost of R’s Year 12 dinner. I thus find that the sum of $3,049, which I will round off to $3,000 for present purposes, should not be added back to the list of assets.
As noted, in July 2006 the wife paid $13,647 for a bond and rent in advance for accommodation for herself and the children. She entered into this lease without consulting the husband. It seems clear, however, that the situation in the former matrimonial home had become very tense and uncomfortable for the wife and the children. The husband refused to move to alternate accommodation, so the wife elected to rent a home for herself and the children. It seems reasonable that the wife used joint funds to house herself and the children, while the husband occupied the former matrimonial home. It is likely that this expenditure benefited the children as well as the wife. Accordingly, I find that the sum of $13,647 should not be added back to the list of assets.
The wife claimed that she “repaid” $25,000 to each of the children from the funds under consideration. She alleged that the parties “had always saved money for the children”. She said ‘to my knowledge each child had approximately $25,000’” and “from time to time during the latter years of the marriage [the husband] and I dipped into the children’s savings for day to day expenses, holidays and other household expenses”. The husband was not consulted about this supposed “repayment” to the children.
Bank statements for the children’s ANZ Progress Saver accounts were in evidence (exhibit 6 and annexures to the wife’s affidavit sworn on 23 March 2009). These documents show that C’s account was opened with a deposit of $25,000 on 3 May 2006. There were numerous small deposits and lump sums of $2,270 on 6 September 2006 and $7,000 on 16 January 2007. There were no withdrawals until 11 March 2009, when the wife withdrew $10,000. The balance then remaining was $39,892.
This documentary evidence sits most uncomfortably with the wife’s claim that the parties “always saved money for the children” and that “each child had approximately $25,000”. C had no “savings” until 3 May 2006.
The evidence did not indicate when J’s account was opened. The wife deposited $25,249 on 27 September 2005 into an already existing account. Between 22 July 2005 and 24 April 2008 there were numerous small deposits and a lump sum of $7,000 on 18 January 2007. The balance of $42,550 on 16 July 2007 was reduced to $14.84 by 20 March 2008, after these withdrawals:
16 July 2007 $19,500
3 March 2008 $10,000
4 March 2008 $10,000
5 March 2008 $ 4,975
$44,475
R had an account into which the wife deposited $25,000 on 21 September 2005. There were small deposits between 3 June 2005 and 4 September 2008 and a withdrawal of $20,000 on 15 August 2008, leaving a balance of $21,582. This amount was reduced to nil by 7 January 2009, after these withdrawals:
4 September 2008 $5,000
4 November 2008 $10,000
7 January 2009 $6,695
The wife claimed that she was obliged to “borrow” a total of $51,696 from R and C to meet the day to day living expenses of herself and the children. It seems clear, however, that she dealt with the money lodged in the children’s account as her own. Her evidence was that the children were not aware of the access codes and could not have withdrawn funds themselves. In my view the wife simply diverted approximately $75,000 from joint funds to her ultimate benefit via these accounts in the names of the children. I find that an amount of $75,000 should be added back to the list of assets.
It remains to be determined whether the balance of these funds, being approximately $74,800 should be added back as a notional item of property. I will not include the interest of $9,777 as I do not know what amount of tax, if any, the wife paid on this money.
The wife alleged that she needed to resort to joint funds for the financial support of herself and the children, after the husband placed his pension payments into an account beyond her control in October 2005. It is useful to consider her evidence as to the extent of the day to day expenses of her household.
In her affidavit sworn on 28 April 2008 the wife said that she withdrew $650 in cash each week and spent this money on a variety of items including food, car expenses, tuition/coaching for the children, music lessons, gifts, clothing and household items. In her affidavit sworn on 20 November 2007 she said that she spent a total of $12,902 on “household expenses” between June 2006 and November 2007, which equates to about $185 per week. I infer that the wife included in this category outgoings such as electricity, gas and telephone bills. It thus seems that the day-to-day living expenses of the wife’s household amounted to about $835 per week.
The husband began to pay child support in December 2007. There was thus a period of around two years and two months during which the wife had sole responsibility for meeting the expenses of the household, although there could have been contributions from the husband between September/October 2005 and June 2006. As noted, it was during this period that the wife alleged that there were attempts at reconciliation.
The sum of $74,800 equates to about $740 per week for the period between October 2005 and July 2008. I do not suggest that the wife actually spent this amount from joint funds on a weekly basis. As I have acknowledged, these calculations are somewhat arbitrary but this exercise assists me in forming a view about the reasonableness or otherwise of the wife’s use of these funds.
I am not inclined to add back any amount referable to the period between October 2005 and June 2006, when there did appear to be a level of common purpose at times between the parties. This period consisted of about 36 weeks, for which the figure of $740 per week amounts to approximately $26,600. I find that this sum should not be added back to the list of assets.
Between July 2006 and December 2007 the wife received no child support. Based on the figure of $835 per week, the cost of day-to-day living expenses for her household for that period would have amounted to about $63,460. Her net total wages amounted to some $36,480, leaving a shortfall of around $27,000. Notionally the wife expended approximately $56,200 during this period, adopting the figure of $740 per week as calculated above. It is my view and I find that the difference between $56,200 and $27,000 should be added back to the list of assets. I thus find that a sum of $29,240, which I will round off to $29,200, should be included as a notional item of property in the balance sheet.
Between January 2008 and July 2008 the wife received child support of $812 and later $759 per month. Her net weekly income was thus around $670 or $680. Using an average of $675 per week, the shortfall between the wife’s net income and day-to-day living expenses was about $160 per week or $4,480 for the whole period. Notionally she received approximately $20,720 for this period, which exceeds the sum of $4,480 by $16,240. I find that a rounded off figure of $16,200 should be added back to the list of assets.
I thus find that a total of $45,400 should be added back as an asset, being expenditure for which the wife failed properly to identify as necessary for day to day living expenses. I have also found that her paid legal fees of $152,042 and the payments of $75,000 to the parties’ children should be added back to the list of assets. I appreciate that these calculations do not account for the whole of the money withdrawn by the wife from joint funds. I can do no better on the available evidence.
Credit Card Balance of the Wife
In her affidavit sworn on 23 March 2009 the wife said that her Visa card had a credit balance of $1,490. This amount should be included as an asset in the balance sheet.
Money Withdrawn By The Husband From The Superannuation Fund
On behalf of the wife it was submitted that a sum of $40,000 should be added back to the lists of assets on account of money withdrawn by the husband from his superannuation fund. This money consisted of partial commutations during the 2006-2007 and 2007-2008 financial years. It was contended that the husband failed to account adequately for his use of this money, when he received income of approximately $178,500 from the superannuation fund and also had available funds about $47,700 from the proceeds of sale of the shares.
I have already indicated that I accept that the proceeds of sale of the Goodman Fielder shares were applied to payment of a tax debt. I therefore attach no significance to these funds in the context of this submission.
In my view it is significant that the husband has been a resident of two nursing homes during the period of these superannuation commutations. The cost of his care increased from $2,738 to $5,368 and then to $6,632 per month. He has other recurring costs such as medication, internet connection and personal expenses. He has paid legal fees and child support since December 2007. In these circumstances it seems to me that an amount of $40,000 over two years is a relatively modest sum for the husband to have spent for his own purposes. In these circumstances, I find that this sum of $40,000 should not be added back to the list of assets.
I thus find the assets of the parties to be as follows:
Non-Superannuation Assets
1.
N property (J)
$650,000
2.
B property (J)
$350,000
3.
Honda Odyssey motor vehicle (W)
$6,500
4.
AMP Term Life Whole of Life Plan (J)
$19,782
5.
Household contents (W)
$7,000
6.
ANZ Bank Ltd shares (H)
$5,670
7.
T Company shares (H)
$65,379
8.
AMP Endowment Plan (H)
$8,200
9.
Scooter (H)
$2,000
10.
Hospital type bed and hoist (H)
$2,000
11.
Bank savings (W)
$197
12.
Bank savings (H)
$6
13.
Bank savings (J)
$846
14.
Money held in trust by the wife’s lawyers (W)
$2,510
15.
Money held in trust by the husband’s lawyers(H)
$1,710
16.
Proceeds of sale of T Company shares (H)
$9,826
17.
Proceeds of sale of Burns Philp shares (H)
$11,000
18.
Money withdrawn by wife from joint accounts (W)
$120,400
19.
Husband’s paid legal fees (W)
$84,039
20.
Wife’s paid legal fees (W)
$152,042
21.
Wife’s Visa card credit balance (W)
$1,409
$1,500,516
Superannuation Assets
1.
Wife’s superannuation
$20,040
2.
Husband’s superannuation
$586,887
$606,927
The Liabilities
It was agreed and I find that the mortgage of $142,480 on the B property is the parties’ only liability.
Financial Resources
It was common ground that neither party has a financial resource and I find accordingly.
The Contributions of the Parties
The two main issues relating to contribution seemed to be:
· whether the husband’s $1.2 million settlement should be regarded as a contribution solely attributable to him
· what weight should to be given to the wife’s care of the husband as his illness progressed, in the context of her contribution as homemaker and parent and generally.
During a marriage of 24 or 25 years’ duration, the husband and the wife adopted traditional roles of major income earner and primary homemaker and parent respectively. In addition the wife worked full time from the date of the marriage until 1986 and part-time between 1986 and 1987. She has been employed for three days per week from 1997.
The husband travelled overseas in the course of his employment for several years during the marriage. He acknowledged the additional burden which his absences placed on the wife in a document which he wrote in 2001, about his experiences with multiple sclerosis (exhibit 2). He noted that he was away from home for three to five months each year between 1989 until 1996. He wrote: “this placed an enormous strain on [the wife] to run the household with three small children, handle household maintenance issues, finances, sporting activities, music lessons, et cetera”.
On the other hand, the husband’s absences from home were integral to the progress which he made in his career. He earned a relatively substantial income and received regular bonuses. These complementary roles enabled the husband and the wife to develop their asset base and raise their children.
In her primary affidavit the wife set out a detailed account of her assistance to the husband as his illness progressed and his condition deteriorated. On her behalf it was submitted that this evidence of the difficult circumstances in which she cared for the husband was corroborated by the contents of his 2001 document (exhibit 2). Having carefully read the husband’s writings, I accept this submission. I include in these reasons two extracts from the document which illustrate his recognition of the extent of the wife’s efforts.
The husband wrote:
“…..I am in awe of how well the family copes, especially if I have an off day, which is lately most of the time. They have to cope with not only my disability but also my mood swings, depression and aggression caused by the drugs you need to take.
Carers, particularly family, go through hell and this needs to be recognised and acknowledge[d] every chance possible. I often think that they have more to deal with than I do, especially [the wife]. I do not know how she manages to do all the finances, insurances, rates, water, power, et cetera associated with the house as well as cook, clean and shop for the four of us and hold down a part-time job, three days per week.
Add to this she is always taking the kids to music, tennis practice, karate or band performances. With three kids all at different levels they all go and often different places. She gets involved in school canteens and sometimes parents and citizens associations. Little wonder she is always tired but thankfully healthy.”
He also wrote:
“October, November and December passed without any relapses, which had previously occurred every year. Unfortunately all good things do come to an end and on 5 February 2001 another relapse with both legs simply not working at all.
Serious problem, especially in a two storey house with bedrooms upstairs. Even with [the wife’s] help it was near impossible, so I simply slept downstairs for about a week but there is nothing as comfortable as your own bed, especially as it is a water bed you have had for over sixteen years.
Determined to make it upstairs, we tried with [the wife] lifting each leg on to the next step one after the other, while I used all my upper strength to support most of my weight on the handrail. After making it halfway I sat down and still determined to carry on, went up backwards dragging my involuntary legs.
I suddenly stopped when I heard [the wife] crying. Our eldest daughter, giving her support and a hug suddenly joined her. I was also breaking down but tried to make a joke of it for their sake. I simply could only continue to reach the top to assure them that it was not as bad as it looked, even though in reality it was probably worse as I was physically exhausted.”
I am satisfied that the wife’s efforts and commitment were very significant in the functioning of the family unit as the husband’s condition deteriorated. It is clear that she carried out her homemaker, parent and carer role in arduous circumstances.
I am satisfied that the husband made substantial efforts to sustain his employment for as long as possible, in spite of his illness. He remained in paid work for as long as he could possibly do so. It seems to me that the husband and the wife bravely faced together his health problems and the consequences for their family. It is my view that each did all that they could to make the best of their very difficult situation.
Since the separation the wife has been solely responsible for the care of the children and the maintenance of the parties’ real estate assets. Of course, J was 18 or 19 and R was 15 or 16 when the parties separated. Nonetheless, the wife has made all of the post-separation homemaker and parent contributions.
I have difficulty with the submission that the $1.2 million settlement received by the husband from his former employer should be treated as his sole contribution, despite the fact that the money was largely characterised as a total and permanent disability benefit. Of course the husband is totally and permanently disabled and it was for this sad reason alone that a very substantial sum of money came into the family.
The husband began his employment with T Company three months after the marriage. He worked for this company for almost twenty years, all of which period fell within the parties’ cohabitation. He was able to undertake extensive overseas business travel because the wife accepted additional responsibility on the home front. A consequence was that he advanced in his career and his salary increased progressively. He was able to continue to work for several years after he could no longer undertake business travel, in no small measure because of the wife’s assistance to him.
The significance of these matters is that the quantum of the husband’s settlement was linked to his final salary. Clearly, the wife’s efforts in the home and her care for him were important components of his achievements in the workplace.
The wife’s unchallenged evidence was that the parties discussed the prospect of litigation against T Company when they realised that the company’s failure to award bonuses and salary increases would adversely affect the husband’s ultimate retirement package. She said that she attended conferences with lawyers and court events with the husband. It thus seems to me that the proceedings in the Industrial Relations Commission were a joint enterprise of the parties, undertaken to secure the maximum financial benefit for their family.
Another relevant consideration is the actual wording of the terms of settlement (annexure B to the husband’s affidavit sworn on 18 April 2008). The agreement recorded:
“The sum of $1,230,950 can be configured as tax effectively as possible, in accordance with law and the [T Company] Superannuation plan rules and subject to approval by [T Company]”.
It was thus open to the husband to determine the configuration and characterisation of the settlement money to the best financial advantage for the family.
If it were not for considerations arising from the husband’s illness and the settlement money, I would have little difficulty in concluding that the contributions of the parties were equal. In a long marriage, the parties adopted traditional and complementary roles which enabled them to raise their family and build their asset base.
In my view, the husband’s illness meant that greater efforts were required of each of the parties. As I have already observed, the wife carried out her homemaker, parent and carer role in arduous circumstances. On the other hand, the husband strove to continue his employment for as long as possible, despite the difficulties which he faced. The parties together addressed the implications of his employer’s failure to award bonuses and salary increases. For these reasons it seems to me that they continued their joint and complementary efforts until the time of the separation. To that point, I regard their contributions as equal.
It is true that the wife was solely responsible for the post-separation parenting and financial support of the children from 2006. As noted, however, J was an adult and R was 15 or 16 at the time of the separation.
It should also be remembered that the wife had access to large amounts of joint funds from 2005 and 2006, not all of which I have added back to the list of assets. It is thus my view that the husband made an indirect contribution to the financial support of the wife and the children following the separation. Of course, this contribution increased when he began to pay child support in 2007.
For these reasons I regard the contributions of the parties as equal as at March 2009, when the trial effectively concluded. I am conscious that the wife had sole use of substantial joint funds after separation but I have dealt with this issue as a matter of adding back of assets rather than contribution. I find that the contributions of the parties were equal.
Section 75(2) Factors
I have carefully considered all of the factors set out in section 75(2). I will refer only to those subsections which appear to me to be relevant to these proceedings.
Section 75(2)(a): the age and state of health of each of the parties;
Section 75(2)(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;
The husband is now 53 and the wife is 50 years old. The wife is in good health but the husband suffers from a serious, debilitating illness which means that he requires permanent, full time nursing care.
Dr M offered these opinions as to the husband’s prognosis:
“Although the main focus of demyelinating disease is the spinal cord, it is clear that there are central lesions and by implication a risk of progression of symptoms and signs associated with the intra-cranial disorder. In the interests of all due care, it is appropriate for me to have access to the MRI films which were performed most recently, or alternatively, reports making reference to the MRI data which arose from the last investigations (brain and spinal cord) and, in addition, comment in relation to any change in the lesion load which was noted in the interval between the MRI scans. Those observations have direct relevance on matters of prognosis, both with regard to the speed of progression (deterioration) and to assessment of potential risks for progressive cognitive disorder. Cognitive impairment is a common consequence of demyelinating disease and continues to be a threat, even in individuals with the secondary progressive form of the disease afflicting mainly the spinal cord because, although the lesions are mainly in the spinal cord, it is also clear that the demyelinating process is also continuing centrally and may therefore result in significant and severe cognitive impairment with the passage of time. The MRI scans will assist with regard to further comment regarding that distressing aspect of this disease.
Although the psychologist, Mr […], has commented in his report referred to above, that [the husband’s] cognitive station “…appeared to be sound…”, the report was abbreviated and should not be interpreted as indicating that cognitive impairment is completely absent, or that [the husband] is free of risks of developing progressive cognitive impairment in time. Such impairments may have a number of implications, including added difficulties with both medical and nursing management.”
There was no issue that the husband has no capacity whatsoever for gainful employment. The wife works three days per week and conceded that she could increase her hours if she chose to do so.
Section 75(2)(c): whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
Section 75(2)(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;
Only one of the children of the marriage is aged under 18 years. C was born in August 1992 and is 16 years old. The wife thus has sole responsibility to care for her for approximately two years. The last CSA assessment requires the husband to pay $772 per month for C’s support.
Section 75(2)(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;
The husband is currently a resident in an extra service facility at S Nursing Home.The Director of Care, Ms O, swore an affidavit on 24 April 2008, in which she set out the financial requirements for the husband to continue to live in the extra service facility or alternatively in mainstream care at S Nursing Home. To remain a resident of the extra service facility, the husband has two options:
· if an accommodation bond of $415,000 is paid, fees are $89.94 per day or $2,788 per month
· if a bond of $250,000 is paid, fees are $176.32 per day or $4,238 per month.
Ms O indicated that S Nursing Home would accept a bond of $250,000 from the husband.
The husband has yet to pay a bond, thus he incurs interest of $117.30 per day. His total fees presently amount to $207.24 per day or $6,424 per month.
Ms O outlined an option to transfer the husband into the “mainstream nursing home” at S Nursing Home. He would lose the “extra services” which he receives as a resident of extra service facility. If he pays a bond of $415,000, mainstream care would cost the husband $39.94 per day or $1,238 per month.
Ms O recommended against the option of mainstream nursing care for the husband. She said in her affidavit:
“When [the husband] initially arrived at the [S Nursing Home] he appeared withdrawn and unwilling to participate in any activities outside of his room. This includes things like any meals in main dining area, any group activities, and any bus outings” and
“If [the husband] was required to be transferred to the mainstream nursing home facility and required to share accommodation and generally mix with aged residents that [sic] he may deteriorate and withdraw into himself.”
In his affidavit the husband indicated a level of satisfaction with his accommodation at the extra service facility of S Nursing Home. He said:
“In about mid-September 2007 I obtained a placement at [S] Nursing Home at […] (“[S Nursing Home]”). [S Nursing Home] is closer to my parents at […] and closer to where the majority of my friends live. Also [S Nursing Home] has better facilities than [Y Nursing Home].”
Ms W, a chartered accountant, gave evidence as to the most tax effective means by which the husband could satisfy the bond requirements of S Nursing Home. In summary, her opinion was that the most beneficial arrangement would be for the husband to pay a bond of $250,000 and higher daily fees.
Ms O gave evidence that the husband “is unable to manage his day to day care without a full time carer”. She was of the opinion that he could not “return to independent living outside of the nursing home without two full time nurses to care for him 24 hours a day”. Ms O said that his arrangement would exceed the cost of the husband’s care at S Nursing Home.
Section 75(2)(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 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;
As noted, the husband’s superannuation is presently valued at $586,887. The significant decrease from $1,009,696 to $586,887, between July 2008 and March 2009 does not auger well for capital growth in the immediate future. I am conscious, of course, that the husband withdrew $6,000 per month from the fund for most of 2007 and that his current pension payment is $9,000 per month.
The wife has a modest superannuation benefit worth $20,040. According to her Financial Statement sworn on 20 November 2007 she contributes $20 per week to her superannuation fund. It is open to her to increase her contributions and accrue a greater lump sum for her retirement, if she chooses to do so.
Section 75(2)(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;
The marriage was of 24 or 25 years duration, during which the wife largely devoted herself to the homemaker and parent role. She has no specialised employment qualifications and is now 50 years old.
Conclusion As To Section 75(2) Factors
Principally, the factors which favour the wife are her responsibility to care for C for the next two years and her limited capacity for gainful employment. Of course, she could increase her work hours and earn a larger income if she wished to do so. She has a modest superannuation benefit, to which she can contribute greater sums if she so wishes.
The husband is in a position of physical dependency and relies solely on the superannuation fund for his financial support. It seems to me that he is entitled to the best quality of life which nursing home care can provide to him, which means that he should stay at the extra care facility of S Nursing Home. I did not understand there to be any submission on behalf of the wife that he should accept the cheaper option of mainstream care. The husband is also entitled to enhance his quality of life as much as possible by having access to funds in excess of the cost of his nursing home care. Again, I did not understand there to be any submission to the contrary on behalf of the wife.
When these considerations are balanced against each other, it seems to me that there should be no adjustment in favour of either party on account of section 75(2) factors.
Conclusion
I thus find that the net property of the parties, including superannuation, should be divided equally between them. There was very little evidence in relation to the wife’s superannuation but I infer that the benefit accrued primarily during the parties’ cohabitation. It follows that the contribution-balancing exercise which I have undertaken flows through to the wife’s superannuation.
Result
The gross pool of property and superannuation is valued at $2,107,443. After deduction of the mortgage of $142,480 on the N property, the net pool amounts to $1,964,963. 50% of that figure equals $982,482.
The wife sought orders to the effect that she take the N and B properties on an unencumbered basis. I was not informed of the source of the money to be used to discharge the mortgage on the N property. The only possibility would be the husband’s superannuation fund but payment of $142,480 would reduce its value to $444,407. I do not know what tax consequences would flow from such a withdrawal.
If the wife takes these two properties, with the N home being unencumbered, she would hold or have had the benefit of the following property and superannuation:
1.
N property
$650,000
2.
B property
$350,000
3.
Honda Odyssey motor vehicle
$6,500
4.
Household contents
$7,000
5.
Bank savings
$197
6.
Money held in trust by her lawyers
$2,510
7.
Money withdrawn from joint accounts
$120,400
8.
Paid legal fees
$152,042
9.
Visa card credit balance
$1,409
10.
Superannuation
$20,040
$1,310,098
On this scenario, the husband would hold or have had the benefit of the following property and superannuation:
1.
AMP Ltd Term Life Whole of Life Plan
$19,782
2.
ANZ Bank shares
$5,670
3.
T Company shares
$65,379
4.
AMP Ltd Endowment Plan
$8,.200
5.
Scooter
$2,000
6.
Hospital type bed and hoist
$2,000
7.
Bank savings in his name
$6
8.
Joint bank savings
$846
9.
Money held in trust by lawyers
$1,710
10.
Paid legal fees
$84,039
11.
Proceeds of sale of T Company shares
$9,826
12.
Proceeds of sale of Burns Philp shares
$11,000
13.
Balance of superannuation fund after discharge of N property mortgage
$444,407
$654,860
This outcome would produce a differential between the parties of $655,238 in favour of the wife. I find it impossible to categorise such a result as just and equitable, having regard to the respective contributions and future needs of the parties. In fairness to the wife, this proposal was predicated on the husband’s superannuation having a value in excess of $1 million.
The husband was prepared to transfer the N and B properties to the wife on condition that she pays to him a sum of $300,000. There was no evidence that she presently holds or could raise this amount. This outcome would produce a differential of $229,722 between the parties, which would not be just and equitable according to the findings which I have made.
If the wife takes the encumbered N property and the B property, she would hold or have had the benefit of net assets and superannuation valued at $1,167,618, which would exceed her entitlement of $982,482 by $185,136. She would have to raise about $327,616 in order to refinance the mortgage and make payment to the husband. As noted already, nothing in the evidence suggested that she has any such capacity.
If the B property is transferred to the husband he would hold total net property valued at $1,147,345, which exceeds his entitlement by $164,863. The only way in which he could make such a payment to the wife would be to withdraw money from his superannuation fund. That option is most undesirable, given his need to pay a bond of at least $250,000 to S Nursing Home and the cost of his future care. It is unsurprising that the husband sought no orders that would require him to make a lump sum payment to the wife.
The best option, therefore, seems to be a sale of the B property. There was no evidence of likely selling costs or any capital gains tax. The best I can do is to order a distribution of the net proceeds of sale in percentage terms.
On this scenario, the wife would hold or have had the benefit of the following property and superannuation:
1.
N property
$650,000
2.
Honda Odyssey motor vehicle
$6,500
3.
Household contents
$7,000
4.
Bank savings
$197
5.
Money held in trust by lawyers
$2,510
6.
Money withdrawn from joint accounts
$120,400
7.
Paid legal fees
$152,042
8.
Visa card credit balance
$1,409
9.
Superannuation
$20,040
$960,098
She would assume liability for the mortgage on the N property, meaning that she would take property with a net value of $817,618. She would thus require $164,864 from the proceeds of sale of the B property to bring up her entitlement.
The husband would take the following property:
1.
AMP Ltd Term Life Whole of Life Plan
$19,782
2.
ANZ Bank shares
$5,670
3.
T Company shares
$65,379
4.
AMP Ltd Endowment Plan
$8,200
5.
Scooter
$2,000
6.
Hospital type bed and hoist
$2,000
7.
Bank savings in his name
$6
8.
Joint bank savings
$846
9.
Money held in trust by his lawyers
$1,710
10.
Paid legal fees
$84,039
11.
Proceeds of sale of T Company shares
$9,826
12.
Proceeds of sale of Burns Philp shares
$11,000
13.
Superannuation
$586,825
$797,283
He would thus require $185,137 from the proceeds of sale of the B property to bring up his entitlement.
I can do no more than make orders in terms of a percentage distribution of the proceeds of sale of the B property, after deduction of capital gains tax and selling expenses. The percentages will be 53% to the husband and 47% to the wife.
The result will be that the wife is in a position to discharge the mortgage on the N property if she wishes to do so. She will have an unencumbered motor vehicle, furniture and a small superannuation benefit.
The husband will retain his superannuation of $586,887. He will take or retain other property which, if liquidated, would realise a gross sum of around $99,000.
The husband has a greater need for liquid assets for his future support than does the wife. She has options, such as increasing her hours of employment and superannuation contributions, to consolidate her asset base. I appreciate that she is 50 years old and has no particular vocational skills. On the other hand, the husband’s position is static outside of the prospect of growth in his superannuation fund. I regard this outcome as just and equitable.
I certify that the preceding one hundred and sixty two (162) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson
Associate:
Date: 31 July 2009
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