Kornet & Struthers
[2024] FedCFamC1F 309
•10 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Kornet & Struthers [2024] FedCFamC1F 309
File number(s): MLC 13073 of 2021 Judgment of: MCNAB J Date of judgment: 10 May 2024 Catchwords: FAMILY LAW – PROPERTY - Division of property following a long marriage of around 20 years – Where parties pooled their financial resources – Where the Court finds that the $505,000 received by the applicant from the second and third respondents prior to the trial by way of a property settlement ought not to be treated as a discrete property pool and quarantined off as a contribution by the applicant – When the Court finds the contributions of the parties to the parties’ assets to be equal – Where the Court takes into account when determining the property pool that the husband is not in good health – Where the Court considered the expected inheritance of the wife under s 75(2)(o) in its final determination. Legislation: Family Law Act 1975 (Cth) ss 75, 79, 114Q(2)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), rr 10.13, 10.14
Cases cited: DeAngelis & De Angelis (2003) FLC 93-133
Dickons & Dickons [2012] FamCAFC 154
Dovgan & Dovgan [2021] FamCA 306
Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-14
Jabour & Jabour [2019] FamCAFC 78
Perrin & Perrin (No 2) [2018] FamCAFC 122
Stanford v Stanford (2012) 247 CLR 108
Division: Division 1 First Instance Number of paragraphs: 65 Date of last submission/s: 29 December 2023 Date of hearing: 9 – 12 October 2023 Place: Melbourne Counsel for the Applicant: Mr Salamanca Solicitor for the Applicant: Gold Stone Family Lawyers Counsel for the Respondent: Ms Goldthorp Solicitor for the Respondent: Kennedy Guy ORDERS
MLC 13073 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR KORNET
ApplicantAND: MS STRUTHERS
Respondent
ORDER MADE BY:
MCNAB J
DATE OF ORDER:
10 MAY 2024
THE COURT ORDERS THAT:
Payment and the Suburb B property
1.Within 90 days ("the date") the wife pay to the husband $209,120.79 ("the payment").
2.Contemporaneously with the payment:
(a)the husband remove any caveat he has registered against the property at C Street, Suburb B ("the Suburb B property");
(b)the wife retain to the exclusion of the husband the Suburb B property.
3.In the event that the wife fails to make the payment to the husband by the date, the parties forthwith do all such acts and things to place the Suburb B property on the market for sale ("the default sale").
4.For the purposes of the default sale (if applicable):
(a)the wife propose three real estate agents and conveyancers to the husband in writing within seven days of the date and the husband select one from the list to act as the real estate agent and conveyancer;
(b)the husband be permitted to obtain information from the real estate agent and conveyancer in relation to the sale, including but not limited to obtaining information about offers made by prospective purchasers;
(c)the reserve price, sale price and method of sale be agreed between the parties and failing agreement as recommended by the real estate agent.
5.On the completion of the default sale (if applicable), the proceeds of the sale be paid as follows:
(a)first, to pay the costs and expenses associated with the sale including real estate agent and conveyancing fees;
(b)second, to pay to the husband so much of the payment as is outstanding;
(a)third, to pay the balance to the wife.
6.Contemporaneously with the completion of the default sale of the Suburb B property (if applicable) the husband remove any caveat he has registered against the Suburb B property.
D Pty Ltd
7.Within 14 days of the date of these Orders, the wife sign all such documents required to transfer her shareholding in D Pty Ltd to the husband at the husband’s cost and on receipt of such signed documents the husband forthwith register the change of shareholding with ASIC.
Motor Vehicles
8.The wife retain to the exclusion of the husband her Motor Vehicle 1.
9.Within 14 days of the date of these Orders, the wife sign all such documents required to transfer Motor Vehicle 2 in the husband’s possession to the husband and on receipt of such signed documents the husband forthwith register the transfer with Vic Roads at his cost.
Money Held in Trust by the Husband’s Solicitors
10.The husband retain to the exclusion of the wife the money held in trust by his solicitors.
Commercial vehicle
11.The husband retain to the exclusion of the wife the commercial vehicle.
Debt
12.The wife be solely responsible for and indemnify the husband in relation to the debt related to her Motor Vehicle 1 and the debt owing to her mother.
13.The husband be solely liable for and indemnify the wife in relation to any tax debt in his name and any credit card debt in his name.
Other
14.Save for as otherwise provided for in these Orders:
(a)the parties each be entitled to the sole legal and beneficial ownership of all items of property (including choses in action) in the possession or control of each of them respectively;
(b)the parties be solely liable for and indemnify the other in relation to any debt in their respective names and any debt attached to any item of property to which they are entitled pursuant to these Orders;
(c)the husband and the wife each retain to the exclusion of the other any superannuation benefits belonging to or earned by them;
(d)any joint tenancy of the husband and the wife in any real or personal estate is hereby expressly severed.
NOTATION
A.The Court has been advised that on the making of Order 9 herein, the husband’s solicitor will pay $14,979.77 to the Child Support Agency from the money held on trust by their office.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Kornet & Struthers has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McNab J
INTRODUCTION
Parties in the matter are:
(1)Mr Kornet the applicant husband aged 58 years.
(2)Ms Struthers the respondent wife aged 61 years.
(3)Mr Beardsley the second respondent (son of Ms Struthers and stepson of Mr Kornet).
(4)Ms McGregor the third respondent (second respondent’s partner).
The applicant is 58 years of age and the respondent is 61 years of age. The applicant and respondent began living together in 1997, married in 2002, separated on 10 September 2020 and were divorced in 2022. There are two children of the relationship: the first child was born in 2000 and the second child was born in 2003, both children are now adults. The wife has a son from a former marriage – Mr Beardsley who was aged 9 years when the applicant moved in with the respondent. Mr Beardsley was the second respondent in the proceedings his wife the third respondent.
A dispute arose between the applicant and Mr Beardsley and his wife regarding the treatment of proceeds of a building development that they entered into in 2016. That dispute was resolved on 5 October 2023 with the applicant receiving $505,000 in that settlement shortly before the commencement of the trial.
The applicant moved into the respondent’s house in 1997. The respondent purchased the Suburb B property at C Street, Suburb B (the “Suburb B property”) in 1994 and became the sole registered owner in 1995 for the sum of $140,000 plus stamp duty of $4,600. This was the matrimonial home throughout the relationship. The applicant states at the beginning of the relationship he had an interest in two real properties in Suburb E and Suburb F along with some savings. He was a father to his two children as well as to his stepson Mr Beardsley.
At the commencement of the relationship the applicant was working full-time in sales, he then worked in another sales role and subsequently as a transport worker who owns his vehicle and operates his activities through the business D Pty Ltd, in which the respondent is a shareholder and the applicant a director and secretary. The applicant takes salary through the business.
The respondent initially worked for G Organisation, then as a mother and homemaker and she began in 2005 working part-time selling items online which she continues to do. She is also in receipt of the Jobkeeper subsidy.
The parties have always pooled their financial resources.
MATERIALS RELIED ON:
The applicant relied on:
(1)Minute of Proposed Final Orders on Behalf of the Respondent wife (with divergence in relation to Order 1) emailed to Chambers 29 December 2023.
(2)Joint Asset Pool emailed to Chambers on 22 December 2023.
(3)Joint Letter emailed to Chambers on 21 December 2023 outlining areas of agreement and disagreement in relation to the property pool.
(4)Affidavit of Mr H filed 9 October 2023.
(5)Outline of Case filed 6 October 2023.
(6)Affidavit in reply affidavit filed 3 October 2023.
(7)Financial Statement filed 18 September 2023.
(8)Affidavit Mr Kornet filed 18 September 2023.
(9)Amended Initiating Application filed 27 June 2023.
The respondent relied on:
(1)Joint Asset Pool emailed to Chambers on 22 December 2023.
(2)Minute of Proposed Final Orders on Behalf of the Respondent wife, emailed to Chambers on 22 December 2023.
(3)Joint Letter emailed to Chambers on 21 December 2023 outlining areas of agreement and disagreement in relation to the property pool.
(4)Outline of Case filed 6 October 2023.
(5)Financial Statement filed 25 September 2023.
(6)Trial Affidavit filed 25 September 2023.
(7)Affidavit of Single Expert Ms J filed 2 October 2023.
(8)Amended Response to Final Orders filed 28 June 2023.
LEGAL PRINCIPLES – PROPERTY
In respect to the parties’ dispute regarding the division of their property these proceedings, s 79 of the Act sets out the following:
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
…
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d)an order requiring:
(i) either or both of the parties to the marriage; or
…
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
In exercising that discretion, the court is required to take into account the matters set out in s 79(4) of the Act, as follows:
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), at [35] confirmed that before an order is made adjusting the parties’ property the Court is required to make a determination that it is just and equitable to do so. That determination is to be made, however, not as a discrete or preliminary issue but requires the Court to consider the matters set out in section 79(4) of the Act.
In Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143, the Full Court held at [39] that, in considering the matters set out in section 79(4) of the Act, the preferred approach was to adhere to the following four steps:
(a)identify and determine the value of the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);
(b)identify and assess each of the parties’ financial and other contributions up until the date of the hearing (this can include the financial contributions made before, during and after the marriage);
(c)assess how future and other events may have a financial impact on either of the parties, such as their age and state of health and their income and property or financial resources (known as the s 75(2) factors); and
(d)step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
The Full Court in Perrin & Perrin (No 2) [2018] FamCAFC 122 cited at [57] – [58] with approval, the decision in Babett & Falconer (2015) FLC 98-067 at [44]:
Within the family law context, those comments [in respect to the adequacy of reasons] should be seen as reinforced by the fact that the nature of the s 79 inquiry is, in essence, a broad discretionary assessment, which is neither an accounting nor mathematical exercise and which, effectively as a corollary, requires a ‘broad-brush approach’.
(Citations omitted)
THE ASSET POOL
A primary issue raised by counsel for the applicant was that the $505,000 that the applicant received from the second and third respondents prior to the trial by way of a property settlement ought to be treated as a discrete property pool and quarantined off as a contribution by the applicant on the premises that:
(a)the respondent had not visited the investment property, meaning she could not benefit from any net profit from the property, and
(b)the applicant had contributed the bulk of the financial investment which resulted in the net benefit of $505,000.
The parties were in a long relationship and marriage of over twenty years where they raised children together and pooled resources and where each assisted the other – the applicant was assisted by the respondent who organised him and the applicant cared for the respondent’s child as if he were his own. It was conceded by the respondent that there should be some recognition for this contribution. She agreed that the child’s father was very rarely in the picture and that he did not contribute much financially.
The final hearing of this proceeding ran from 9 – 12 October 2023. Final written submissions were received on about 29 December 2023. There was a delay in the receipt of final submissions as the parties required taxation advice regarding the treatment of $505,000 received by the husband, being proceeds of the sale of a building development entered into between the husband and his stepson Mr Beardsley and daughter-in-law Ms McGregor. That tax liability has been agreed at $79,480.87.
The husband’s Outline of Case filed 6 October 2023 submitted that the Court ought to make an overall division of the assets of the parties of 70/30 in his favour. The husband submitted that he had made the more significant contributions (65/35) and his future needs were greater than the wife’s (5% adjustment in his favour). By correspondence to the Court (copied to the wife’s solicitor) dated 29 December 2023 the husband sought a division of 57.5/42.5 in his favour.
The wife contends that the asset pool should be divided 53/47 in her favour pointing to what she contends are greater future needs.
The parties have agreed on the asset pool to be divided save as to a dispute that the wife had $6,000 in her savings account as at the date of separation. Counsel for the applicant asserted the wife had at least this amount in savings at the time of separation, and that this had been conceded by the wife in the witness box. There was no document referred to which proved the respondent had $6,000 in her bank account at the date of separation and it is not clear there was any concession related to money in the wife’s bank account at that time. I am not satisfied that she had that amount in her bank account at that time. I therefore exclude that amount from the asset pool.
The parties have agreed that the superannuation funds in each of their names (wife $44,715 and husband $26,322) should not be the subject of orders and that they should each retain the funds in their names.
The asset pool is as follows:
Non superannuation Assets/Liabilities Legal owner/interest holder Asset Value Liability Value Equity 1. C Street, Suburb B Wife $1,025,000 Nil $1,025,000 2. Share portfolio Wife $1,675 Nil $1,675 3. Motor Vehicle 1 Wife $80,000 ($40,914) $39,086 4. Loan from Ms K for the purchase and installation of amenity at C Street, Suburb B Wife Nil ($20,000) ($20,000) 5. D Pty Ltd Wife as owner of shares, Husband as director and secretary of the company Nominal Nil Nominal 6. Part property settlement of $250,000 received by the husband pursuant to orders made 15 November 2022 Husband $250,000 Nil $250,000 7. Interest in the remaining proceeds of the Suburb L properties, less $14,979.77 to be garnished by the child support agency from the husband’s solicitors trust account on final orders being made in these proceedings releasing money from trust to the Husband Husband, held on trust by the husband’s solicitor pursuant to orders made 5 October 2023 $505,000 ($14,979.77) $490,020.23 8. Motor Vehicle 2 Wife, in Husband’s possession $10,000 Nil $10,000 9. Commercial vehicle Husband $55,000 Nil $55,000 10. Pre-separation tax debt Husband Nil ($51,741) ($51,741) 11. Pre separation credit card Husband Nil ($12,130.35) ($12,130.35) 12. Husband’s tax debt arising from profit from the N Street and M Street properties not already included as “pre separation tax” in this pool Husband ($79,480.87) ($79,480.87) NET TOTAL $1,926,675 (219,245.99) $1,707,429
Superannuation Owner Value Superannuation Fund 1 Ms Struthers $44,715 The Trustee for Superannuation Fund 2 Mr Kornet $26,322
The total net assets of the parties is $1,707,429.
In an email to Chambers on 29 December 2023, the applicant attached a table outlining the distribution of assets he is seeking which included superannuation interests held by each party.
The applicant has erroneously included superannuation in the joint asset pool, whereas in his Amended Initiating Application filed on 27 June 2023 he sought at 5(c) that:
each of the Applicant and the First Respondent forego any claims they may have to any superannuation benefits belonging to or earned by the other;
thereby increasing the property pool by $71,037 with a larger amount of superannuation going to the respondent and resulting in an incorrect calculation of the property pool. The asset pool has been calculated on the basis that each party retains their respective superannuation funds.
Given that the vast majority of matters going to the determination of the quantum of the asset pool has been agreed, I will not traverse those areas that were previously the subject of dispute but which are now agreed. The parties have spent considerable time dealing with the outcome of a property development embarked on by the husband, the wife’s son Mr Beardsley and his wife Ms McGregor. The details of the controversy between these people as to how the proceeds of the development should be split is not material as it is now agreed that the husband received a part property settlement of $250,000 pursuant to orders made on 15 November 2022 and the payment of $505,000 as a result of an agreed settlement recorded in orders made on 5 October 2023. Similarly, controversy regarding the husband’s tax debt arising from the development was quelled by the parties agreeing that that debt is $79,480.87.
CONTRIBUTIONS
The Court is required to make an assessment of the nature and quality of the totality of the parties' contributions throughout the entirety of their relationship, together with their contributions in the period subsequent to their separation: Dickons & Dickons [2012] FamCAFC 154 at [14] (Bryant CJ, Faulks DCJ, Murphy J); Jabour & Jabour [2019] FamCAFC 78 at [61] (Alstergren CJ, Ryan and Aldridge JJ). See also Dovgan & Dovgan [2021] FamCA 306 at [347] (Harper J), which restates the need to holistically assess contributions following the case of Dickons, and that “all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder.”
The husband has worked in various roles during the relationship including running a business as a salesperson. In about 2006 he commenced a business renting out equipment. More recently the husband has been working as a transport worker and he owns his own vehicle. It is unclear the level of income that he achieved from that business and the level of financial contribution arising from it. His financial statement estimates a weekly income of $850 (before tax).
The husband states that he had an interest in two properties, one in Suburb E and the other in Suburb F.[1] He had acquired the interest in the property in Suburb E through the maternal grandparents. There is no evidence as to the value of the property as at the commencement of the relationship. In 1990 the husband had a one-third interest in the Suburb E property which he held with his mother and his maternal grandfather. [2]
[1]Applicant’s trial affidavit filed 18 September 2023 (“ATA”) at [13].
[2]ATA at [13] – [20].
In early 2007 the Suburb E property was transferred into joint names of the husband and his maternal grandfather, with the grandfather holding two of three equal parts and the husband holding the remaining part.
In late 2007 the husband’s mother and his grandfather passed away. In mid-2015, as a result of financial arrangements between the husband and other beneficiaries of the estate of his grandfather, the husband became the sole registered proprietor of the Suburb E Property. He sold the property in late 2015 for $1,200,000 and after the payment of the mortgage and the payment of costs and commission he received net proceeds of about $710,000. Those funds were then used for investment in the building development in M Street, Suburb L, that he entered into with Mr Beardsley and Ms McGregor in early 2016. The husband paid a deposit of $69,1000 in early 2016 to purchase the M Street property and contributed $530,000 the same month. He also paid $18,000 for building plans and other incidental expenses and calculated that his financial input into the M Street development was about $617,100.
In addition to the Suburb E property, the husband had a property in Suburb F which he became the sole registered proprietor of in 1997, having purchased his former partner’s interest in that property. He said at the time the property was worth about $130,000 and was the subject of a short-term solicitor’s mortgage of $70,000. In 1998 he refinanced the Suburb F mortgage and borrowed a further $38,000 which funds were directed to the benefit of the family.
The Suburb F property was sold in 1999 for around $150,000 and after the payment of costs, commission and discharge of the mortgage he received $40,000 which was used for the benefit of the family, including for the purposes of funding a holiday to Europe and to renovate the Suburb B property, although the value of that renovation and the cost of it is a matter of dispute which was not resolved by the evidence in the proceeding. There is no evidence proving the value of the renovations or the work performed by the husband but I accept that he did work and that was a contribution.
The husband also gave evidence that he purchased a property in Suburb O in 1999 for the sum of around $50,000 and he sold that property in 2000 realising a net profit of about $10,000.
In submissions the husband asserted that funds had been drawn down upon a loan facility against the Suburb E property between 2010 and 2015 however no evidence was before the Court as to when that occurred and how the monies were expended.
The husband gave evidence that he was involved in the care of Mr Beardsley. The child Mr Beardsley was almost 10 years old at the time of cohabitation and was not the subject of any unusual expenses. Mr Beardsley attended a local public school and the mother received modest child support from Mr Beardsley’s father.
As noted above in 1997 the husband moved into the wife’s home in Suburb B. That home had been purchased in 1994 and the wife became the registered owner in 1995 paying $140,000 plus stamp duty of $4,600. The home was purchased by her from savings of $100,000 and had a mortgage securing borrowed funds of $40,000.
There were various renovations and improvements, the quality which is the subject of some dispute. The level of the husband’s involvement in renovation works and the value of those works is a matter of dispute however the property has an agreed value of $1,025,000.
The wife was in paid employment from 1997 until 2000 when the parties’ son Mr P was born. From 2005 the wife conducted a business online selling items. She has earned a modest income from that enterprise; her financial statement indicates that it is an estimated $400 per week. The wife gave evidence that she and the husband were eligible for and received Family Tax benefits and applied her income to pay family living expenses and the mortgage on the Suburb B property. She was also responsible for home duties like cooking, cleaning, shopping and the care of the children.
The husband gave evidence that the wife also managed receipt of the rent for the Suburb E property and the payment of rates and said that the management of those matters was not one of his strengths. In giving evidence in relation to the proceeds of sale of the Suburb F property he stated that his memory was “not that good” and also that “I just don’t keep records, I just throw it out, it’s one of my downfalls in life.” It is apparent that the husband relied on the wife to undertake record keeping in relation to the Suburb E property and generally in relation to the management of the household finances.
FINDINGS IN RELATION TO CONTRIBUTIONS
This is a long marriage and as detailed the parties each came into the relationship with assets. It appears that the value of the wife’s assets at the commencement of the relationship were greater than the husband’s although the husband acquired assets through the course of the relationship through inheritance. It appears that the management of the family finances was directed largely by the wife and she was the primary carer for the children. The husband described the wife as “a good mum” in the course of his evidence.
I do not find that the sum of $505,000 should be quarantined off and treated as a discrete asset which the husband has made the vastly substantial contribution to. The acquisition of that asset is simply part of the contributions made by each party over the course of a long relationship. The husband’s evidence at trial was that the wife had encouraged him to enter into that project and it was not as contended in submissions of the husband an enterprise that had been entered into without the support of the wife and carried on independently. The money used to purchase the property that was developed was purchased with funds acquired through the course of the relationship. I do not find that the husband’s contribution to the assets is greater because he had to litigate and spend money on legal fees in order to achieve a resolution of dispute between him and his stepson and his stepson’s wife. A finding of that kind would require the Court to embark on an investigation of the course and reasonableness of that litigation and whether a resolution might have been achieved without spending the amount on legal fees that the husband did. The evidence is not before the Court to enable to the Court to engage in that exercise.
It is plain that both parties have worked through the course of the relationship and both parties supported their children. The father was also involved in the care of his stepson. Although the wife contends there were periods where the husband simply did not work for no good reason, at the same time he was making contributions through funds from renting properties that he held or property that he sold.
Considering the evidence as a whole, I find the contributions of the parties to the assets of the parties to be equal.
Relevant s 75(2) factors pursuant to s 79(4)(e)
Section 75(2)(a) the age and state of health of each of the parties
The husband is 58 years of age. Whilst no expert evidence was filed to verify that the husband's capacity for work is compromised as he suggests in his affidavit material, the evidence that is before the Court from Q Hospital dated early 2022 indicates that the husband is not in good health and he has chronic health conditions. The report from the treating physician confirms that he has relatively long-term health issues. It is noted that those conditions (which are not a complete list) is in the context of a past history which involves multiple health conditions and previous surgeries.
The wife is 61 years of age and suffers from a medical condition but is otherwise in good health.[3]
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;
[3]Respondent’s trial affidavit filed 25 September 2023.
The husband has an average weekly income of $850 with an annual wage of around $44,000 and weekly expenditure of $572. He has $30,000 in superannuation.
The husband gave evidence that he is working as a transport worker intermittently and he certainly gave every indication of not being a well person when giving evidence. In light of the evidence from Q Hospital I determined it was reasonable not to go to the expense to obtain expert medical evidence about ongoing capacity for paid employment given the clear evidence from his treating physician regarding his multitude of health issues. I accept that the husband has a limited capacity for ongoing work, notwithstanding the lack of expert evidence on that issue.
The wife has a slightly lower weekly income than the husband in the amount of $696 which equates to approximately $34,000 a year. Approximately $400 of this income is from the net proceeds of her business. The wife works part-time in her own business selling second hand items and she also receives a Jobseeker payment along with an energy supplement in the amount of $296 a week. Her expenditure weekly is $383. She has $44,715 in superannuation.
When pressed as to why she does not seek a significant increase in the work that she does, she gave evidence that a lot of time is spent looking for things to sell as part of her business and she simply does not have the capacity for further remunerative work.
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.
Neither party has the care or control of a child of the marriage who has not attained the age of 18 years.
Section 75(2)(d) and (e) – commitments of each of the parties that are necessary to enable the party to support himself or herself, and a child or another person that the party has a duty to maintain; and the responsibilities of either party to support any other person.
The wife cares for her elderly mother who is in residential care with moderate to severe dementia. The parties’ youngest son lives with the wife and she says she is responsible for his financial support. He is approximately 20 years of age.
Subsection (2)(f) – the eligibility of either party for a pension, allowance or benefit under (i) any law of the Commonwealth, of a State or Territory or of another country; or (ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party
The wife gave evidence she receives a receives a Jobseeker payment along with an energy supplement in the amount of $296.
Section 75(2)(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
In relation to ongoing financial matters the wife was cross-examined regarding the prospects of receiving an inheritance from her mother. The wife’s mother, Ms K, has recently moved into a care facility. There was limited evidence before the Court as to the cost of her care, the prognosis as to her life expectancy or evidence in relation to physical health.
Counsel for the husband submitted the expectation of the mother’s mother’s inheritance which the wife might receive could be in the order of $300,000 - $400,000, that this falls within the realm of s 75(2)(o) factors and that it would be a gross injustice to ignore this amount and that the mother’s mother significant age at 89 years made the possibility of an inheritance more likely and more imminent.
On cross-examination the wife gave evidence that she thought the mother’s mother’s (“Ms K’s”) property was currently worth around $1,000,000 but in closing submissions counsel for the wife stated that the wife is not a property valuer and her opinion as to the value of the property was of limited use. The wife agreed that she would be entitled to receive one‑third of that estate, approximately $350,000, if her mother was to pass away, however she stated that aside from dementia, her mother is in good health.[4] A Transfer Summary from R Hospital noted Ms K had been admitted in late 2022 and that one week later the only active problem listed was cognitive decline.[5] Counsel for the wife put in closing submissions that there was no evidence of life expectancy, only that admission to R Hospital which confirmed Ms K has dementia.
[4]Exhibit R 8 Assessment Summary from ‘My Aged Care’.
[5]Exhibit R7.
An Assessment Summary from My Aged Care (generated in early 2023) noted a high risk of falls in addition to dementia:
[Ms K] is described by her [R Hospital] medical team as experiencing moder to severe dementia, which, coupled with her poor mobility, and high fall risks, make it unsafe to return living at home.[6]
[6]Exhibit R8.
The recommendation was that Ms K transition to residential care.[7]
[7]Exhibit R8.
The wife was questioned in relation to Ms K’s Resident and Accommodation Agreement from S Centre where she is currently in residential care and she agreed that Ms K was paying around $3,000 a month for her accommodation[8]. The agreement notes Ms K pays $96 a day[9] but the wife states her mother’s property would need to be sold in 2024 to pay for Ms K’s care. The wife explained that currently her mother receives Centrelink payments but that after two years, in early 2025, those payments will cease and that she will then need to pay $350,000 up front. When asked how much Ms K has in her bank account currently the wife said that this amount was a little under $34,000.
[8]Exhibit A7.
[9]Exhibit A7.
In closing arguments counsel for the wife stated there is no medical evidence regarding Ms K’s physical health or life expectancy which indicate ill health likely to shorten her life [10] nor any expert evidence regarding the value of her assets.
[10]Exhibit R8.
The Full Court in DeAngelis & De Angelis (2003) FLC 93-133 (“De Angelis”) (comprising of Lindenmayer, Finn and Holden JJ), gave consideration to the prospect of in inheritances in property settlements where they concluded:
95.The discussion by the Full Court in White and Tulloch v. White (1995) 19 Fam LR 696 of this question of the treatment of anticipated inheritances in property settlement proceedings indicates that there is no absolute rule and that each case will depend on its own facts. However, we think it important to remember that the Court is required in exercising the jurisdiction under s.79 of the Family Law Act 1975 to accord justice and equity to both parties. The question therefore has to be asked whether, in the present case, it would be just and equitable to the husband for the Court to have ignored the probability that, in what could well be very short period of time (given the ages of her aunt and mother), the wife could well be the owner of two properties having a combined value of almost the same amount as the value of the parties' property currently available for distribution, and particularly in circumstances where the husband had been found to have done substantial improvement and maintenance work on both properties?
Documents compiled by My Aged Care strongly suggest the mother’s mother does not retain legal capacity.[11] The facts in this case are that there are ongoing costs associated with the care for the mother’s mother which could well diminish or completely deplete any inheritance. She is in permanent residential care and living with dementia. She is otherwise in good health. Although currently aged 89 years it is possible that she could live well into her 90s and require ongoing care, with associated expenses. The wife gave evidence that the mother seemed to be physically well notwithstanding that she has dementia. The cost of that care and the impact that may have on the quantum of any inheritance in unclear and the value of any inheritance is speculative, although at [98] of De Angelis, the Full Court observed that most of the s 75(2) matters are speculative.
[11] see Exhibit R8 Assessment by My Aged Care at page 2 where it notes Ms K has moderate to severe dementia.
In this matter the Court does not have evidence of the value of property owned by the mother‑in‑law, her prognosis in terms of length of life and the likely value of any inheritance. There is a possibility of some funds and I take that into account under s 75(2)(o) although I accord limited weight to that given the level of evidence on these matters.
Taking into account those matters, the husband’s future needs are slightly higher than those of the wife because his capacity for ongoing employment is limited and there is a prospect that the wife will receive a robust inheritance at some time in the future. Accordingly I make orders for the distribution of property on the basis that the husband receives 51% of the asset pool and the wife receives 49%.
When the Asset Pool as agreed by parties (see [22]) is divided as 51%/49% in favour of the husband:
The husband will have the following assets and liabilities:
Non superannuation Assets/Liabilities Legal owner/interest holder Asset Value Liability Value Equity 5. D Pty Ltd Wife as owner of shares, Husband as director and secretary of the company Nominal Nil Nominal 6. Part property settlement of $250,000 received by the husband pursuant to orders made 15 November 2022 Husband $250,000 Nil $250,000 7. Interest in the remaining proceeds of the Suburb L properties, less $14,979.77 to be garnished by the child support agency from the husband’s solicitors trust account on final orders being made in these proceedings releasing money from trust to the Husband Husband, held on trust by the husband’s solicitor pursuant to orders made 5 October 2023 $505,000 ($14,979.77) $490,020.23 8. Motor Vehicle 2 Wife, in Husband’s possession $10,000 Nil $10,000 9. Commercial vehicle Husband $55,000 Nil $55,000 10. Pre-separation tax debt Husband Nil ($51,741) ($51,741) 11. Pre-separation credit card Husband Nil ($12,130.35) ($12,130.35) 12. Husband’s tax debt arising from profit from the M Street and N Street properties not already included as “pre separation tax” in this pool Husband ($79,480.87) ($79,480.87) NET TOTAL $820,000 ($158,332) $661,668 The wife will have the following assets and liabilities:
Non superannuation Assets/Liabilities Legal owner/interest holder Asset Value Liability Value Equity 1. C Street, Suburb B Wife $1,025,000 Nil $1,025,000 2. Share portfolio Wife $1,675 Nil $1,675 3. Motor Vehicle 1 Wife $80,000 ($40,914) $39,086 4. Loan from Ms K for the purchase and installation of amenity at C Street, Suburb B Wife Nil ($20,000) ($20,000) 5. D Pty Ltd Wife as owner of shares, Husband as director and secretary of the company Nominal Nil Nominal NET TOTAL $1,106,675 ($60,914) $1,045,761
In order to achieve a distribution of the joint assets 51%/49% in the husband’s favour the wife will need to pay the husband $209,120.79
Husband’s net total $661,668
Wife’s net total $1,045,761
Total $1,707,429
Husband’s 51% $ 870,788.79
Wife’s 49% $ 836,640.21
Wife has $ 209,120.79 more than 49%.
Husband needs $ 209,120.79 more to equate to 51%.
I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McNab. Associate:
Dated: 10 May 2024
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