KURIAKIN & KURIAKIN
[2012] FMCAfam 382
•2 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KURIAKIN & KURIAKIN | [2012] FMCAfam 382 |
| FAMILY LAW – Property adjustment – exclusion of inherited assets from pool for division – availability of such assets to the parties – thereafter equal contributions – small s.75 (2) adjustment. |
| Family Law Act 1975, ss.75, 79 |
| Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355 In the marriage of Lee Steere (1985) FLC 91-626 In the marriage of Ferrarro (1993) FLC 92-335 In the marriage of Clauson (1995) FLC 92-595 Russell and Russell (1999) FLC 92-877 Teal & Teal [2010] FamCAFC 120 |
| Applicant: | MS KURIAKIN |
| Respondent: | MR KURIAKIN |
| File Number: | SYC 5463 of 2008 |
| Judgment of: | Foster FM |
| Hearing date: | 12 March 2012 |
| Date of Last Submission: | 22 March 2012 |
| Delivered at: | Sydney |
| Delivered on: | 2 May 2012 |
REPRESENTATION
| Counsel for the Applicant: |
| Solicitors for the Applicant: | Mr Reeve |
| Counsel for the Respondent: | Mr Heazlewood |
| Solicitors for the Respondent: |
ORDERS
That within 42 days of the date of the orders the respondent husband sign all documents and do all things necessary to transfer to the applicant wife all his right title and interest in the property situated at and known as [V] (hereinafter referred to as the [V] property) and that simultaneously with the transfer provided for in this order the applicant wife shall:
(a)discharge the present mortgage encumbering the [V] property and
(b)thereafter indemnify and keep indemnified the respondent husband in relation to the present mortgage encumbering the [V] property
That the husband and wife forthwith do all things necessary and sign all necessary documents to cause to be paid to the wife the whole of the nett proceeds of sale of the [I] property presently held on trust on behalf of the parties.
That the respondent husband pays to the applicant wife the sum of $252,882 within 42 days from the date of these orders and in default of such payment by the due date the wife have liberty to apply as to enforcement.
That the Court allocates, as required by section 90MT(4) of the Family Law Act 1975, a base amount of $106,285 to the applicant wife out of the respondent husband’s interest in the [I] Fund member number [omitted] (“the fund”) and in accordance with Section 90MT(1)(a) of the Family Law Act 1975 the court creates an entitlement on the part of the applicant wife to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and makes a corresponding reduction in the entitlement to the respondent husband or such other person to whom a splittable payment may be made would have had in the fund but for these orders and whenever the Trustee of the fund makes a splittable payment out of the respondent husband’s interest in the fund the Trustees shall do all acts and things and sign all such documents as may be necessary to pay the entitlement created by this order in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 and these orders have effect from the operative time and the operative time is four business days after the day on which the trustee is served with a signed and sealed copy of these orders.
The Court otherwise declares that the parties have divided between themselves in specie all their other property including real property, their furniture and furnishings, their jewellery and other personal effects, chattels, cash on hand and including their cash at bank and that they have no right title or interest in or to any such items presently in the possession of or under the control of the other and for the purposes of this declaration the contents of the home at [M] are deemed to be in the possession of the husband, the contents of the [V] property are deemed to be in the possession of the wife and the contents of the [S] property are deemed to be in the possession of the husband.
IT IS NOTED that publication of this judgment under the pseudonym Kuriakin & Kuriakin is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 5463 of 2008
| MS KURIAKIN |
Applicant
And
| MR KURIAKIN |
Respondent
REASONS FOR JUDGMENT
The Proceedings
These are proceedings for property settlement between the applicant wife and the respondent husband.
The applicant wife relied upon the following documents:
a)a amended initiating application filed on 6 March 2012,
b)updated financial statement filed on 23 January 2012,
c)affidavit of the applicant wife filed on 16 November 2011,
d)affidavit of the applicant wife filed on 7 October 2009.
The respondent husband relied upon the following documents:
a)response filed on 20 October 2009,
b)updated financial statement filed on 7 March 2012,
c)affidavit of the respondent husband filed on 20 October 2008,
d)affidavit of the respondent husband filed on 8 October 2009,
e)affidavit of the respondent husband filed on 12 December 2011.
The applicant wife sought orders in the amended application filed on 6 March 2012 as follows:
a)that all previous orders be discharged,
b)these orders are made by way of alterations of property interests pursuant to section 79 of the Family Law Act 1975,
c)that the respondent husband pay to the applicant wife by way of alterations of property interest the sum of $286,705.51 within 28 days from the date of these orders,
d)that within 28 days of the date of the orders the respondent husband sign all documents and do all things necessary to transferring to the applicant wife all he is right title and interest in the property situated at and known as [V] (hereinafter referred to as the [V] property),
e)that simultaneous to the above orders the applicant wife shall:
i)discharge the mortgage encumbering the [V] property and
ii)indemnify and keep indemnified the respondent husband in relation to the mortgage encumbering the [V] property.
f)the respondent being declared to have the sole right, title and interest in:
i)Property [M],
ii)Property [S],
iii)one third of the property located at [T],
iv)[I] shares currently held in the respondent husband’s sole name,
v)[E] shares currently in the respondent husband’s sole name,
vi)Commonwealth Bank account currently in the husband’s sole name account number [0],
vii)Colonial life policies,
viii)vintage Chevrolet motor vehicle registration number [omitted],
ix)1973 VW Fastback motor vehicle registration number [omitted].
g)that the respondent husband shall indemnify and keep indemnified the applicant wife in relation to all outgoings in respect of the properties and items referred to in the previous order including but not limited to the mortgages, liabilities, mortgage payments, statutory rates and charges, utilities, house and contents insurance and outgoings including water rates, council rates and the like in relation to repairs and improvements and any other sums due or accruing in respect of the said properties and items in the previous order,
h)that the applicant wife be declared to have the sole right, title and interest in
i)[Omitted] Credit Union online savings account number [1],
ii)[Omitted] Credit Union every day account number [2],
iii)[Omitted] Credit Union Advest account number [3],
iv)joint ANZ rent account number [4],
v)[Omitted] Credit Union–Money Max Gold account number [5],
vi)[Omitted] Credit Union–money management account number [6],
vii)[Omitted] Credit Union investment account number [7],
viii)Commonwealth Bank account number [8]
ix)[I] shares currently in the applicant wife’s sole name,
x)2003 model Holden Calais motor vehicle registration number [omitted],
xi)proceeds from the sale of Property [I].
i)that the applicant wife shall indemnify and keep indemnified the respondent husband in relation to all outgoings in respect of the properties referred to in the previous order including but not limited to the liabilities, fees and charges, and any other sums due or accruing in respect of the said items in the previous order.
j)that the Court allocates, as required by section 90MT(4) of the Family Law Act 1975, a base amount of $103,533 to the applicant wife out of the respondent husband’s interest in the [I] member number [omitted] and in accordance with section 90MT(1)(a) of the Family Law Act 1975 the Court creates an entitlement on the part of the applicant wife to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and makes a corresponding reduction in the entitlement to the respondent husband or such other person to whom a splittable payment may be made, would have had in the fund but for these orders and whenever the Trustee of the fund makes a splittable payment out of the respondent husband’s interest in the fund the Trustees shall do all acts and things and sign all such documents as may be necessary to pay the entitlement created by this order in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 and these orders have effect from the operative time and the operative time is four business days after the day on which the trustee is served with a signed and sealed copy of the final orders.
k)that as between the parties and subject to the above orders the applicant wife and the respondent husband shall each respectively retain all interest in and entitlement to all personal property now in his or her respective possession or control, all shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his or her sole name respectively and all interests in life policies and superannuation funds standing in his or her sole name is respectively,
l)both the husband and the wife hereby release the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other by reason of or in respect of any act, cause, matter or thing,
m)that the parties shall do all acts and things necessary and give all consents and execute all documents and writings to give effect to these orders in the time periods prescribed,
n)that in the event that either party refuses all neglects to execute any deed, document or instrument necessary to give effect to these orders, the registrar of the court be appointed and pursuant to section 106A of the Family Law Act 1975 to execute such a deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the registrar being provided with verification of such refusal or failure by way of affidavit.
The respondent husband at the commencement of the trial sought the following orders:
a)The husband shall cause as soon as practicable:
i)the nett proceeds of sale of [I] be paid to the wife after provision for payment of capital gains tax,
ii)transfer to the wife his interest in the property at [V],
iii)pay to the wife the sum of $30,000,
iv)require the Trustee of the [omitted] Fund Superannuation fund to make a splittable payment from the husband’s interest in that fund to a fund nominated by the wife in the sum of $68,950 (48% of total super as at October 2009 $234,918 minus wife’s super),
b)the wife shall, no later than simultaneously with the transfer of [V] to her arrange for the refinancing in her own name of the [V] property,
c)in the event the wife files or neglects to refinance the mortgage referred to in the previous order then the parties shall do all acts and things necessary to sell the [V] property and the wife shall secure the whole of the nett proceeds of sale,
d)the wife is declared the sole owner of:
i)Holden Commodore motor-vehicle,
ii)loan to wife’s brother,
iii)[omitted] Credit Union account,
iv)wife’s inheritance,
v)gift to wife’s brother amounting to $2000,
vi)loan to son [X] of $30,000.
e)the husband is declared the sole owner of:
i)[M],
ii)Property [S]
iii)his one third interest in [T],
iv)1973 Volkswagen motor vehicle
v)motorboat
vi)Vintage Chevrolet
vii)[I] shares
viii)[E] shares
ix)Husbands ANZ bank account
x)Joint ANZ bank account
xi)Colonial life policy number [1]
xii)Colonial life policy number [2]
xiii)Husbands CBA bank account.
Background
At the time of trial the applicant wife was 60 years of age and in employment as a casual [omitted] earning about $35,000 per annum. The respondent husband was 65 years of age and in employment as a [omitted] earning about $122,000 per annum plus 9% superannuation and a vehicle allowance.
The parties married [in] 1986 and separated on 26 January 2008, a cohabitation of just over 21 years.
There is one child of the marriage [X] born [in] 1987 who at the time of trial was 24 years of age.
At Cohabitation
At the commencement of cohabitation the parties had the following assets:
a)the wife:
i)a property at [G] having a value of approximately $72,000 and encumbered by mortgage in the sum of approximately $35,000. This property was sold in 1987 with the nett proceeds being in the sum of approximately $30,000,
ii)A Datsun motor vehicle,
iii)some savings.
b)the husband:
i)a property at [M] purchased by him in 1978 for the sum of $47,000 with a mortgage at that time of about $30,000,
ii)land at [S] purchased in 1985 for the sum of $16,000 with a mortgage of approximately $10,000,
iii)a boat and motor vehicle,
iv)savings of approximately $20,000.
In August 1985 the husband’s first wife passed away. He received the sum of $23,000 from her estate and with those funds applied in part towards the purchase of the [S] land referred to above with the remainder remaining at the time of marriage in his savings account.
Subsequent to marriage and in May 1987 the wife sold her [G] property and received the sum of about $30,000 net.
In the same year the husband was made redundant from his then employment, receiving a payment of approximately $12,500. The husband thereupon obtained employment with his present employer.
The husband’s employment thereafter necessitated him being absent from the home for various periods throughout the year. The wife asserts that on average the husband was absent from the home for a total of about three months in each year, leaving her to attend to the household duties and the care of their child.
The child of the marriage [X] was born in 1987.
The wife asserts that the nett proceeds of sale of the [G] property were applied to substantially fund renovations to the [M] property. The husband asserts that renovations were funded from the joint savings of the parties. Whatever the source of the renovation funds it is common ground between the parties that the nett proceeds of sale of the [G] property were introduced into the matrimonial finances.
In 1990 the parties refinanced the mortgage then secured over the [M] property to facilitate the construction of a cottage on the [S] land and to undertake further renovations to the [M] property.
In 1996 the husband inherited a one third interest in the property at [T] following the death of his father. The other two thirds are held by his mother and his sister who occupy and live in the property. The property comprises a cottage on approximately 10 acres of land, which is zoned rural. The property was the home of his father and mother since 1950 and by agreement with the husband his mother and his sister continue to occupy the property. The wife concedes that she is aware of the arrangement that will allow the husband’s mother to live there for life and that there is no intention to sell the property during the husband’s sister’s lifetime.
In 1998 the husband received an income bonus from his employer as a consequence of an extended period of employment in Taiwan. Part of those funds was applied to the purchase of motor vehicles and in 1999 and the parties purchased an investment property at [I] for the sum of $168,000 with a mortgage of $158,000. The property was purchased by the parties as tenants in common 90% as to the husband and 10% as to the wife to facilitate effective tax planning.
Subsequent to the purchase of the [I] property it was tenanted until its later sale.
In 2006 the parties purchased a second investment property at [V] in Queensland. The property was purchased for the sum of $325,000 and finance was secured over that properly with collateral security over the other assets of the parties.
In 2007 the wife’s mother passed away and subsequent to her mother’s death the wife lent to her brother the sum of $52,000, such some representing a portion of the wife’s entitlement in her mother’s estate.
On 26 January 2008 the parties separated and the wife moved to the [I] property and thereafter met the property outgoings without contribution from the husband. The husband remained in the [M] property that was at that time unencumbered.
In June 2008 the wife received a final distribution from her late mother’s estate in the sum of approximately $122,000.
In 2010 the wife received a partial repayment from her brother in the sum of $30,000 and the wife then advanced those funds to the parties’ child [X].
In May 2010 the investment property at [I] was sold in the sum of $317,500 and the nett proceeds of sale in the sum of $165,694 has been invested on behalf of the parties pending the outcome of these proceedings and is accruing interest.
Subsequent to separation the husband has met substantially the outgoings on the [V] investment property and the wife mortgage payments and outgoings in relation to the [I] property up to the date of sale.
The husband has 1334 shares in his employer [E]. As at October 2009 he held 898 shares with further shares being allocated under an employee share scheme since separation. A portion of the husband’s shares are embargoed from sale until he leaves the company’s employment.
At about the time of separation the husband held some $17,000 in an ANZ joint account. He has used those funds to meet property outgoings on the [V] property notwithstanding he had sufficient income to meet the expenses as they fell due without recourse to using capital.
The husband has not filed tax returns for the 2009, 2010 and 2011 tax years. His 2008 tax return (Exhibit D) shows nett property losses of about $16,000 ($14,513 referrable to [V]), with the husband receiving an income tax refund of $6,748 in that year. It is to be reasonably inferred that he has expectancy to not insignificant refunds in the 2009, 2010 and 2011 years.
The Law
The approach the Court is required to adopt in determining an application under section 79 of the Family Law Act 1975 for adjustment of property interests is well established by authority (Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355, In the marriage of Lee Steere (1985) FLC 91-626, In the marriage of Ferrarro (1993) FLC 92-335, In the marriage of Clauson (1995) FLC 92-595).
The process ordinarily involves a four-staged process. Firstly the court must identify the property, liabilities and financial resources of the parties at the time of the hearing. The Court then considers the contributions made by the parties as defined in section 79 (4) (a) to (c). Thirdly the Court must consider the future needs of the parties by having regard to the provisions of section 75(2) in so far as they are relevant. Finally in determining what order the Court should make the Court must be satisfied in all of the circumstances that it is just and equitable to make the order, section 79(2). It is the justice and equity of the actual orders that the court must consider. (Russell and Russell (1999) FLC 92-877, Teal & Teal [2010] FamCAFC 120).
The Asset Pool
At the commencement of trial the parties agreed that the pool of assets for consideration comprised the assets set out by the husband in his outline of case document that is Exhibit B in the proceedings subject, of course, to matters arising during the course of evidence.
The only updating evidence during the course of the trial was as to the present value of the parties’ respective superannuation entitlements. Accordingly the asset pool for the purposes of the Court’s consideration as to division is as follows:
Assets:
Husband Property [M] $540,000
Joint Proceeds of [I] sale $167,412
Husband [S] property $305,000
Joint [V] investment property $406,000
Husband One third share [T] property $190,000
Wife Holden Calais motor vehicle $ 13,000
Husband Chevrolet motor vehicle $ 8,000
Husband VW motor vehicle $ 3,000
Husband Boat $ 3,000
Wife [omitted] credit union accounts $ 13,276
Wife [omitted] Credit Union account $ 624
Husband Commonwealth bank accounts $ 16,938
Husband ANZ cheque account $ 34,366
Joint ANZ rent account $ 800
Wife [I] shares $ 3,995
Husband [I] shares $ 4,910
Husband [E] shares $ 5,162
Wife loan to [X] $ 30,000
Wife loan to Mr S $ 22,000
Husband Colonial life policies $ 26,330
Wife [omitted] Credit Union account $128,177
Total: $1,921,990
Liabilities:
Joint Property [V] mortgage $232,682
Wife CGT liability [I] $ 2,434
Husband CGT liability [I] $ 20,015
Total: $255,131
Superannuation:
Wife [F] Superannuation $ 63,552
Husband [I] $242,588
Husband [I] $ 15,880
Husband [I] $ 11,191
Husband [I] $ 6,463
Total: $339,674
The question remains as to what of the above asset pool is appropriately available for division. At the conclusion of the trial it was submitted on behalf of the wife that other than the assets that represent the husband’s inheritance and the wife’s inheritance that contributions should overall be regarded as equal. Subsequently it was contended on behalf of the husband that in the event that the [T] property interest representing the husband’s inheritance and those assets representing the wife’s inheritance were omitted from the pool for division then otherwise the Court should regard contributions as being equal.
On behalf of the husband it was argued that the husband’s savings account in the sum of just over $34,000 should be omitted from the pool for division as being a post separation acquired asset.
However post separation the husband utilised capital available in the parties joint rent account to meet [V] outgoings notwithstanding that he had significant income to meet those outgoings. The husband continued to occupy the unencumbered former matrimonial home to the exclusion of the wife who was following separation paying mortgage payments and outgoings for the [I] property occupied by her. The savings account will remain in the pool.
The husband at separation retained his significant income earning capacity that had been derived through long-term employment during the parties’ cohabitation. That capacity facilitated the husband continuing to accrue superannuation entitlements post separation that was otherwise unavailable at that level to the wife. There is no basis for adjusting superannuation notionally at the date of separation.
Having regard to the contributions of the parties identified above and the respective contributions post separation the Court considers it appropriate to deal with the assets of the parties on a one-pool approach.
The Court further considers it appropriate to isolate from the pool for division the husband’s interest in the [T] property and those assets (loans referred to above and her [omitted] Credit Union account) that represent the wife’s inheritance from her late mother’s estate. These assets will be considered in the context of section 75(2) considerations.
Accordingly the gross asset pool will now be in the sum of $1,551,813 and, after liabilities the nett sum of $1,296,682 together with superannuation in the sum of $339,674 making a total of $1,636,356.
Having regard to the contribution history set out above the Court considers that the contention of both parties and that there be a finding of the equality in the event that inherited assets are omitted is appropriate.
The Relevant Section 75(2) Considerations
The Court has had regard to the provisions of the section.
The wife is aged 60 years and does not assert any significant ill health. The husband is aged 65 years and likewise does not assert any significant ill health.
The income property and financial resources of the parties are identified above. The husband’s income from salary is significantly in excess of that of the wife, albeit with the prospect of a shorter working future. The husband will continue to accrue superannuation until retirement at a far greater rate than the wife.
The husband will retain outside the pool of assets for division his ongoing interest in the [T] property occupied by his elderly mother and sister. It is problematic as to when this asset may be realisable by the husband notwithstanding that he has the ability to realise the asset should he so wish subject, it was contended, to any adverse claim by his mother or sister.
The wife retains in the form of cash a significant sum representing part of her inheritance from her mother’s estate together with two sums owed to her by family. There is no evidence before the Court as to when those sums might be repaid.
Otherwise the husband has accumulated paid leave entitlements in the form of long service leave and accrued holiday pay totalling some 35 weeks as a consequence of his long-term continuous employment. This is a benefit not available to the wife.
The husband has been in long-term continuous employment. The wife’s primary contribution as homemaker and primary caregiver for the child of the marriage has facilitated the husband continuing in that employment and taking from the marriage an income earning capacity far in excess of that of the wife. Balancing this consideration is of course the age difference between the parties with the husband asserting his retirement in the foreseeable future.
Overall the Court is satisfied that an adjustment in favour of the wife of 2.5% for section 75(2) considerations is appropriate. This will create a disparity of 5% between the parties.
Just and Equitable
Accordingly the wife is entitled to 52.5% of the asset pool for division. That is in the sum of $859,086.90.
Both parties seek the transfer of the [V] investment property to the wife.
The wife will thus retain:
a)Property [V] equity $173,318
b)Holden Calais motor vehicle $ 13,000
c)[omitted] credit union accounts $ 13,276
d)[omitted] Credit Union account $ 624
e)Superannuation $ 63,552
f)[I] shares $ 3,995
$267,765
Less:
CGT liability Property[I] $ 2,434
$265,331
The wife to receive her entitlement requires a further adjustive order totalling $593,755.
Having regard to the parties’ ages and objectives of the superannuation splitting scheme it is appropriate that there be a splitting order effecting an equal division of superannuation. To this end there will be a splitting order in favour of the wife in the sum of $106,285 in respect to the husband’s [I] Fund ([omitted]).
This will leave the sum of $487,470 payable to the wife. She will receive the proceeds of sale of the [I] property ($167,412) and a cash adjustment from the husband of $320,058 in default of which the [M] property will be sold.
This will leave the husband with net assets including superannuation of $777,269 after his payment to the wife.
In all the circumstances the Court considers such proposed orders to be just and equitable.
The Court accordingly makes orders as set out at the commencement of these reasons for judgment.
_______________________________________________________________
I certify that the preceding fifty-eight paragraphs are a true copy of the reasons for judgment of Foster FM.
Date: 30 April 2012