L & L

[2003] FamCA 40

[2003] FamCA 40

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA

AT SYDNEY  No. SY3054 of 2001

BETWEEN:

L

Husband

- and -

L

Wife

REASONS FOR JUDGMENT

BEFORE:                 The Honourable Justice Moore
HEARD:                   13, 14, 15 & 16 January 2003
JUDGMENT:           31 January 2003

APPEARANCES:   Mr Lethbridge SC, instructed by Meyer Pigdon, appeared for the applicant/wife.

Mr Brereton SC, instructed by The Argyle Partnership, appeared for the respondent/husband. 

Proceedings

1. The parties have been able to agree on many matters related to the settlement of their property, but nonetheless what remains to be determined is the assessment of their respective overall contributions, the extent to which that apportionment ought be adjusted to account for s 75(2) factors and, significantly, whether Ms L’s ultimate entitlement is to be satisfied from the currently available property or whether the Superannuation Fund ought to be the subject of a splitting order.  Ms L’s claim for periodic spousal maintenance also remains to be determined.  Those applications will be addressed in that order. 

PROPERTY SETTLEMENT

1. Before coming to the steps involved in assessing what order would be just and equitable in all of the circumstances, I shall outline the more central features of the financial history of the parties’ relationship.  To that end, they have each presented evidence from a variety of sources, not all of which was tested by cross-examination in the end result.  As for the evidence of the parties, in closing addresses submissions were made about credit, though neither counsel contended that credit played any real part in the steps involved in determining their entitlements.  For my part, I accept that there were aspects of Ms L’s evidence that tended to indicate she had not been as careful or as vigilant as she might have been in presenting her evidence.  But at the same time, I do not think that was motivated by any intention to mislead or gain an unfair advantage and, in my assessment, there is little flow-on effect to the findings necessary here. 

Background

1. Mr L, aged 45 years, was born in 1958.  Ms L, aged 42 years, was born in 1960.  They began living together in 1980 and married in February 1982.  They have two children: A, presently aged 15 years, born in September 1987 and B, presently aged 12 years, born in July 1990.  They separated in September 2000 when Mr L withdrew from the family home at U, leaving Ms L and the children in occupation of it.  He has since lived in rented accommodation nearby. 

1. Ms L later formed a relationship with Mr W and he moved in to live at the U property in November 2001.  Their daughter, C, now aged about 13 months, was born on in December 2001.  He left the home in May 2002 and it is Ms L’s evidence that while there had been some prospect at an earlier time of reconciliation, she now considers the relationship has no future.  Mr W is a sports coach by occupation.  He was not called as a witness in Ms L’s case and therefore little is known about his financial circumstances.  Mr Brereton SC, who appeared for Mr L, tendered some documents produced on subpoena bearing upon his income though it was not suggested they were anything other than a mere indicator of earnings in the absence of any other information.  At any rate, he paid no child support until he commenced payments of $250 per month in early November last year.  The details of the arrangements about C’s care were not explored, but obviously Mr W has regular contact with her, he cares for her at times Ms L is not available and that appears to be an amicable arrangement, at least so far as those matters are concerned.

1. The parties have been able to agree about the arrangements for their children and orders were made by consent on 21 June 2002.  By those orders, Ms L has a residence order in her favour and Mr L has substantial contact with the children which includes contact for varying periods each week and during school holiday periods.  As Mr Brereton put it, the children spend about 40% of the nights with their father under these arrangements.  The proposition was put to Mr L in cross-examination by Mr Lethbridge SC that he had not taken all of the time available to him under the orders for one reason or another and a list of dates on which that occurred, covering a period from May to October 2001, was tendered (exhibit 20).  The probabilities suggest that was the case.  But by the same token, he had the children with him at times not contemplated by the orders (when Ms L gave birth to C).  In the result, the point made did not detract from the fact that, subject to flexibility offered by both parents, he has the children with him for the proportion of time submitted by Mr Brereton. 

1. The parties lived in Northern New South Wales when their relationship began and they moved soon after to Sydney. 

1. Mr L’s line of work is investment banking.  He started in his career with BANK 1, later taken over by BANK 2, when they moved to Sydney in 1981 and he remained with this employer until 1990.  In that time, between 1985 and 1987, he took up a position in London and the parties moved there for that purpose before returning to Australia.  In 1990 he changed jobs and started work with BANK 3, later taken over by his current employer, BANK 4.  That same year he began part time study towards a Masters in Business which he completed over three years.  Throughout his career he has progressed within his employer organisation and he presently holds the position of Director, Head of Financial Institutional Sales, and takes responsibility for teams in Sydney, Melbourne and London.

1. He has been – and remains – well remunerated.  In addition to his salary, he has received bonus payments, though during his years with BANK 1/BANK 2 bonuses were not received in all years.  The bonuses he has received have been relatively substantial, as is apparent from the detail he gave about them in his affidavit (see annexure DD for the years 1993 to 2001 inclusive) and are received early in the year following the close of the financial year to which they relate.  Those payments have ranged from $40,000 in respect of 1994 to $250,000 for each of 1996 and 1997.  The amounts received have continued to vary during more recent years; for example, in 1999 the bonus declared was $160,000 gross, in 2000 it was $185,000 gross, and in 2001 it was $198,868 gross (in two payments).  Indeed, the level of his total income between 1992 and 2002 inclusive is reflected in his income tax returns for those years (exhibit 7) and that is conveniently summarised in a schedule forming part of the exhibit.  It is apparent that over the past five years, say, his income has been increasing in increments with gross receipts from $292,685 in 1998 to $438,344 last financial year.  This resulted in net annual incomes for those years ranging from $160,130 to $238,241. 

1. With his current employer, the receipt of a bonus is discretionary and depends upon a mix of factors, including the performance of the executive employee.  Mr L maintained that his eligibility for a bonus include his creativity in the market place, the need to retain his services given the few people with his skills and expertise in a number of specialist markets, his reputation, experience and loyalty and exceeding the objectives he has been set.  The thrust of his evidence was supported by Mr K, head of Global Financial Markets at BANK 4, who is involved in the decision whether or not to grant a bonus to Mr L.  I accept, therefore, that eligibility derives from a mix of various considerations and quantum, if it is paid, varies from year to year. 

10.  Recently, in respect of the 2001 year, the level of his bonus was such that he fell within a scheme administered by his employer, referred to as BANK 4 Key Employee Equity Programme KEEP Awards 2001.  Of the $198,868 awarded for that year, he received 50% and the remaining $99,434 was the subject of this particular arrangement.  Of this sum, half is linked to the performance of BANK 4 Holding NV shares and half is linked to the performance of the BANK 4 global liquidity fund (a cash fund chosen by Mr L). 

11.  Introducing the scheme, the guidelines state that the ‘[W] Executive Committee reserves the right to change the provisions of the KEEP programme at any time’.  Vesting is subject to the conditions that the employee has not departed from the employer, his employment is not terminated for gross misconduct or there has been no ‘detrimental activity’ which is further defined in the document relating to the scheme.  Subject to those matters, Mr L is entitled to the benefits as to 50% on 6 March 2004 and as to the remainder on 6 March 2005.  The amount received will be taxable income in his hands at normal rates. 

12.  There is a dispute about the value of his deferred entitlement in the KEEP scheme and that was the subject of evidence by accountants, Mr McGrane (for Mr L) and Mr Spring (for Ms L).  There is also a disagreement, ventilated by counsel, as to whether it constitutes an asset or a resource for the purpose of these proceedings.  It will be convenient to deal with those two issues here. 

13.  As is apparent from the guidelines, the right to change the rules at any time is reserved to the trustee.  The employee has no interest in the underlying assets; the interest does not vest until a future date (in Mr L’s case in March 2004 and 2005); it may not vest at all (the employee may leave) though the probabilities strongly suggest it will in this particular case; and the employee is not able to alienate or mortgage the interest.  As Mr Brereton put it, it is a bare contractual right to be paid a sum of money in the future provided the fulfilling conditions are satisfied.  In that respect, he submitted, it is similar to an interest in a superannuation fund.  Moreover, there is no right to sue now to gain control of it though, as with a beneficiary of a discretionary trust, there may be a right to have the trustees act consistently with the employees interest.  In my opinion, all of this points in the direction of the interest constituting a resource rather than property as defined by the Act and that is the way in which it will be treated here. 

14.  The difference between the valuers in monetary terms was minimal: Mr McGrane put it at $41,000 and Mr Spring at 44,500.  They approached their task in different ways.  Mr McGrane took the value of the underlying assets currently (shares and cash) and applied to that figure a discount rate of 25% to account for risk factors.  Mr Spring took a more elaborate route.  He looked to the historical value and performance of the shares and then projected ahead to the time the fund would vest to arrive at a future value for the underlying assets to which he then applied a discount for risk factors, which included allowance for the probability that Mr L would leave and therefore not fulfil one of the conditions of entitlement. 

15.  In the end result, I was more persuaded by Mr McGrane’s approach.  Mr Spring’s approach entailed more judgments and I think it was demonstrated that in allowing for the prospect of Mr L’s departure in his discount rate, he confused the allowance he intended for that probability (1:10) within his ultimate chosen rate.  I find, therefore, the value of the resource to be $41,000 and that will be the figure brought to account in due course. 

16.  When they moved to Sydney in 1981 Ms L obtained employment with a commercial vehicle franchise as personal assistant to the finance manager.  She relinquished that employment to travel to London with Mr L when he took up his position there in 1985.  She obtained work as a personal assistant in London until 1987, just prior to A’s birth.  In this time Mr L’s income was by far the greater and they were able to accumulate savings while in London.  After the birth of their first child, Ms L’s capacity to undertake paid work changed.  Over the years that followed she completed a short course in interior decorating and obtained some part time work in a curtain shop and as a sales assistant.  She also qualified as a gym instructor and obtained part time work in the fitness industry until 1999.  She then commenced study for a Bachelor of Health Science at University which required attendance 12 hours per week and that entailed her completing a diploma course in … therapy.  She has now completed most of the studies required for her degree.  But she deferred further study in mid-2002 to seek work, a decision she regards as necessary to her financial survival at the time, and she was able to obtain some part time work earning $70 or $75 per week.  Otherwise she derives her income from a government benefit.  As a result, she now has another year of study to gain her degree which would qualify her as a health professional. 

17.  Obviously the income earned by Mr L throughout the course of their marriage, including his bonus payments, was wholly disproportionate to Ms L’s.  I accept they applied their income towards the support of the family and financial commitments they took on from time to time of one kind or another, as well as towards investment.

18.  When they began living together Mr L had savings between $10,000 and $15,000 and Ms L owned a second-hand motor vehicle. 

19.  Over the years they acquired three residential properties in succession, they later acquired an investment unit in Queensland, which has since been sold, and they have invested in superannuation and in a unit trust. 

20.  Their first property, a unit in U, was purchased in December 1983 for $79,000.  The money came from a loan advanced by the BANK 2 Bank of $55,000 at concessional rates of interest because of Mr L’s employment, savings of Mr L’s (which by that time had increased) of $14,000, and they borrowed $10,000 from Mr L’s father.  It became common ground that the loan has never been repaid to his father, but it is not being asserted by Mr L here that there is any obligation to repay it.  They lived in the property until they went to London, it was rented during their absence, and the income was applied towards the mortgage instalments and outgoings.  In mid-1988 the unit was sold for $134,000.

21.  Around that time they purchased their second home at G for $382,000.  The money came from the net proceeds of sale of the unit of $75,000, savings of $80,000 accumulated during the time they had been living in London, and they borrowed $230,000 from BANK 2, again at concessional rates of interest because of Mr L’s employment.  Some renovations were undertaken to the property and each party contributed in one way or another to that work.  Until 1993 Mr L deposited some funds from his bonuses in reduction of the mortgage to the extent that the liability stood at $190,000 by the time of the sale of the property for $445,000 in October of that year.

22.  They then purchased the home they still own at U for $582,000.  That was funded by net proceeds of the G property of $255,000, savings of $20,000 and borrowings from BZW of $342,000.  Further savings of $10,000 were used to buy furniture.  In February 1998 the mortgage was discharged with a lump sum payment of $103,000 from the bonus Mr L received at the time.  It is agreed that the property, now unencumbered, is currently worth $1.1 million. 

23. In May 1999 a unit in Queensland was purchased for $405,000. The necessary funds came as to $20,000 from savings and the balance of $400,000 was borrowed. The arrangements related to the loan were complicated and designed, on the advice of their accountant, to be to their financial advantage. Also on the advice of their accountant, three entities were established around this time : WRI Pty Limited (WRI), the L Unit Trust, and the L Superannuation Fund. WRI acts as trustee for the Unit Trust and the Superannuation Fund. It is common ground that Mr L controls WRI through his shareholdings and as a director of the company, though it appears Ms L also holds a number of shares. The Superannuation Fund is a small self-managed fund complying with the provisions of the Superannuation Industry (Supervision) Act 1993 and Mr L is its only member. Units are held by WRI and the Superannuation Fund in the Unit Trust. The purchase of the Queensland unit went like this: Mr L borrowed $400,000 from his employer; he invested this money in 400,000 redeemable shares in WRI; with the money, WRI acquired units in the Unit Trust; and the Unit Trust lent the money to Mr L. He then used it to acquire the Queensland unit, with repayment secured by mortgage over the U home.

24.  After settlement, the unit was renovated at a cost of $40,000 which was borrowed from the L Unit Trust.  By early 2001 the mortgage had been reduced to below $370,000, assisted by payments from Mr L’s bonuses. 

25.  After the establishment of these entities, Mr L made certain investment decisions in relation to them.  In 1999 WRI, as trustee for the Superannuation Fund, acquired units in a property syndicate which owned property on the Pacific Highway and in 2000 (shortly after separation) WRI, as trustee for the Unit Trust, acquired units in a property syndicate which owned property on the Nepean Highway, an investment that later underwent some restructuring.  At some point, he also made the decision to acquire some Optus shares in Ms L’s name. 

26.  Since their separation there have been a number of relevant developments.

27.  In December 2000 both parties and the children went to Canada for a holiday.  The circumstances in which that came about are immaterial, but to meet the cost Mr L borrowed $20,000 from the L Unit Trust. 

28.  Mr L has paid child support for the children, currently assessed at $430.50 per week.  He has also paid private school fees, supported the children during periods they have spent in his care and met related expenses, purchased some of their clothing, and maintained family health insurance.  In May 2002 he cancelled Ms L’s membership of the health fund after he learnt of a claim related to C’s birth and of that child being included as a member of it.  This issue attracted some attention at the hearing, but I think it very likely it all came about as a consequence of a misunderstanding or confusion somewhere along the line. 

29.  Following separation Mr L continued to deposit his income to the joint account but that came to an end when he discovered drawings and credit card debits by Ms L, detailed in his affidavit, between May and September 2001 which he regarded as excessive.  Until November 2001 he paid all of the outgoings related to the home including rates, electricity, telephone and the like. 

30.  Ms L’s drawings from the joint account may well have been in excess of his expectation but, by the same token, Mr L had considerable funds coming in to his hands over that time.  In addition to his salary, he received considerable sums of money by way of bonus payments, referable to the performance of the prior year, early in 2000 (prior to their separation) and during 2001 and 2002.  I referred earlier to the amounts involved.  He has applied those funds as detailed in his affidavit.  Suffice to say this here:

• With the money he received in April 2000, related to the 1999 year, he invested a proportion in the Superannuation Fund and the Unit Trust and deposited the balance initially into the joint account.  This partly met joint expenses and he later established two new account (total of $43,000) and he used those funds to establish himself in accommodation, take the children on holidays, generally meet living expenses, and he re-deposited $5,000 to the joint account to meet expenditure.  In May 2001 an AMP Savings Bond matured and $30,615 was paid into his bank account. 

• With the money he received in February and August 2001, related to the 2000 year, he left some funds in his account with his employer, deposited other funds into his own bank account, paid out the debt related to Ms L’s vehicle, and invested further monies in the Superannuation Fund.

• With the money he received in 2002, half was directed of necessity to the KEEP scheme and from the other half, along with the funds left in his account with his employer the previous year, he invested further monies in the Superannuation Fund, and deposited funds to his bank account from which he repaid the $20,000 borrowed from the Unit Trust for the Canada trip, together with interest.  He also paid school fees for A, which included a pre-payment of $8,280 for the 2003 year.  There is an argument about whether those pre-paid fees ought to be added back to the assets now available for division and I shall return later. 

31.  In these circumstances, I consider Ms L’s spending he highlighted to be immaterial to the assessments to be made now and I think it more appropriate to leave post-separation expenditure where it lies.  There was an argument about whether or not the AMP bond that matured in 2001 should be brought to account against Mr L by adding it back to the current available assets, but on reflection I think it ought not be.  He applied the money in the manner set out in exhibit 18.  This included a component for paid legal fees and I accept that it would be double counting to add back the paid legal fees (about which there is no dispute) and to add back the whole of this amount.  As for the balance, it has been spent on legitimate purposes.  It is true that he also had an income stream coming into his hands, but all of the funds he had available have been used either in investments, re-establishing himself away from the family home, in meeting a variety of expenditure, or are reflected in his current savings.  And it remains the fact that both parties had funds available to them to meet their needs, at least until Mr L withdrew part of his financial support in November 2001 when Mr W took up occupation in the U home. 

32.  In about April 2001, in disputed circumstances of no real relevance now, the unit in Queensland was sold for $410,000.  By agreement the net proceeds of sale of about $27,500 were deposited to a solicitor’s trust account to await the outcome of these proceedings.  In the meantime, there was further agreement that Ms L be paid $10,000 from those funds to assist her with paying disbursements related to this litigation, on the basis that the payment would be regarded as partial property settlement.  Consent orders were made to that effect in December 2001.  With it she has paid some fees or costs associated with this litigation.  A further $4,000 was paid to her in December 2002, that arrangement being the subject of further consent orders made on 11 December 2002 when her application for urgent spousal maintenance was dismissed.

33.  In early 2002 Ms L received cash and shares in Singtel following the takeover by Singtel of Optus.  There was an issue during the course of the hearing about these transactions, but in the end result it was conceded that Ms L had received cash of $2,250 which she applied for legitimate purposes and she holds 800 shares which have a current value of $1,008.  It is common ground that the $2,250 should not be brought to account as a pre-paid asset in her hands and that the shares should be included amongst their assets at the value agreed. 

Assets, liabilities and resources

34.  Against that background, I come to the current assets, liabilities and resources.  Certain disputes have been discussed and resolved earlier, but a number remain:

(a)       the value of the contents remaining in the U home;

(b)whether there should be added back to the asset list the school fees Mr L prepaid; and

(c)the value of the superannuation entitlement which, in turn, is effected by a dispute about the value of their interest in WRI.

35.(a)  On their separation Mr L took some of the contents of the U home.  Ms L estimates the value of what remained at $10,000 whereas Mr L estimates a value of $20,000.  Neither produced any independent evidence of value.  There were tendered, however, documents reflecting an insured value of $103,000.  That had been increased by Ms L since separation on the advice of the insurer without there being any additional items insured.  The submission of Mr Brereton was to the effect that the insured value, though conceded not to be the basis for determining value in these proceedings, nonetheless tended to indicate their value was the higher, rather than the lower, figure.  I think that a reasonable proposition in the absence of anything more concrete, or any alternative suggestion for resolving the issue, and therefore will include these chattels at $20,000. 

36.(b)  As for adding back the pre-paid fees of $8,280, it was submitted by Mr Brereton that this was an entirely legitimate use of funds which came, in any event, from Mr L’s post-separation income and it should not be added back as an asset.  I accept this.  Even so, it does mean that in looking at Mr L’s future support of the children as a s 75(2) factor, at least so far as 2003 is concerned, he will not have those fees to pay from his income. 

37.(c)  The value of Mr L’s entitlement to superannuation is effected by a dispute about the value of the interest in WRI.  That flows, in turn, from the arrangements to fund the purchase of the Noosa unit, referred to earlier.  Upon the sale of the unit Mr L repaid his loan from the Unit Trust of $400,000 (or thereabouts), WRI redeemed its units in the Unit Trust – at cost - for $400,000, and Mr L then redeemed his preference shares in WRI for $400,000 which he used to repay the loan from his employer.  Mr Spring pointed out that though the units held by WRI were redeemed at cost, the Trust Deed provides that capital units should be redeemed at a ‘fair value’.  As he saw it, a fair value for the units was $447,500 and so he notionally adjusted the value of WRI by $47,500.  When formation expenses are deducted, the realisable value of the assets of WRI are $45,342 and that is the amount Mr Lethbridge contends should be included as an asset here. 

But I think this produces an artificial result and I reject it.  The fact is, as Mr Brereton pointed out, the transaction did not proceed along these lines.  I would add that the profit on the sale of the unit is to be found in the money in the solicitors trust account and in Ms L’s paid costs, both of which will be included in the asset list, not elsewhere.  In any event, as Mr Brereton established during cross-examination of Mr Spring, capital gains tax – in the order of $14,250 – would have to be brought to account if this line of thinking is adopted. 

38.  As the gross value of the superannuation entitlement, I shall adopt $421,180.  Were Mr L to take this entitlement under the age of 55 years, there would be no tax-free threshold and the balance after tax at 21.5% would be $330,626.  On the other hand, if he takes it over the age of 55 years, he would have the advantage of a tax-free threshold of $105,843 and, with tax at the rate of 16.5%, he would be entitled to receive net $369,149.  At this stage, I shall include the value of the Fund at the gross figure. 

Assets – non-superannuation

House at U  1,100,000

The Argyle Partnership Trust Account   17,791
WRI Pty Ltd     NIL
Total:  1,117,191

Mr L’s other assets – non superannuation

St George Savings Account   5,237
St George Cheque Account   30,000
Shares  9,538
1998 BMW motor vehicle   19,000
Furniture and contents   10,000
Watch  150
Paid legal costs   80,428

Total:   154,353

Less liabilities

L Unit Trust  33,380
BMW Finance   10,000              43,380
Total net:   110,973

Ms L’s other assets – non superannuation

Bank accounts  400 E
NRMA shares  1,053
Shares in Singtel Ltd  1,008
1999 Honda motor vehicle   13,000
Furniture and contents – U home              20,000
Jewellery  3,000
Partial property settlement  4,000
Paid legal costs   10,156
Total:   52,617

Less liabilities

Loan from father  500
Total net:   52,117

Assets – superannuation fund

L Superannuation Fund   421,180

Resources

Mr L - BANK 4 KEEP scheme         41,000

Ms L    nil

Total net assets non-superannuation  1,280,281
Total current superannuation (gross)   421,180

1,701,461

Evaluation of contributions

39.  Submissions proceeded on the assumption that a global approach would be taken to assessing contributions and I think that appropriate to the case. 

40.  In the 22 years or thereabouts since their relationship began, each has made contributions, to one extent or another, that fall within s 79(4)(a) – (c). 

41.  Mr L maintained continuity of employment throughout that time in investment banking and gained, as a result, considerable expertise and competence in that field.  His earnings were high, augmented as they were by bonuses at the discretion of his employer.  Mr Brereton put the argument on his behalf that his substantial earnings arose in large part from the use of special skills and abilities to earn bonuses over and above his salaried remuneration.  But I do not assess this as a case coming within that concept as it was discussed in Ferraro and Ferraro (1993) FLC 92-235 and the well-known cases that followed. In other words, I do not see his competence as an employee involving special skills thereby attracting an added or extra weighting in an assessment of his contributions.  By the same token, I do think the high level of his earnings has to be recognised.  Plainly that income has been applied for the common benefit of the family, including the accumulation of superannuation and increasing the equity in their various homes; for example, the mortgage over the U home was able to be discharged within five years or thereabouts of purchase and was brought to a close by a relatively substantial lump sum bonus payment.  Also, the terms of his employment over the years enabled him to borrow money at concessional rates of interest and those loans were applied to the building up of their assets – ultimately, for the most part, finding their way into the interest they now have in the U home. 

42.  At the same time, Mr L’s employment meant he worked extended hours and it involved travel both interstate and overseas.  I have to say I was left with the impression that there may have been some exaggeration in Ms L’s account of his lateness arriving home in the evenings and the extent of his absences from home.  In saying this, I do not mean to be critical of her; very likely it reflects her genuinely held view that she was left largely unsupported to deal not only with the day to day management of the household but also with the responsibility for the children’s care, including the various crises that arise intermittently, while he attended to the demands of his work and related activities.  In any event, I think it plain enough he did participate in a meaningful way in the children’s upbringing, quite apart from providing financially for them.  For example, over the years he has involved himself in their various sporting commitments and he was also available to care for them when Ms L started her university studies – and I think his relationship with the children now is some indicator of his availability over the years.  So I do not think he falls into that group one sees the evidence establish from time to time of a mostly absent father/husband, driven by work, in thrall to workplace relationships, and giving his family the scraps of his time left over.  But, by the same token, he did not earn the level of income he did as an investment banker, nor gain the senior position he now holds, by working the regular wage earner’s week.  He clearly worked longer than normal hours and no doubt it did demand his commitment, attention and time when his wife would have preferred him to have been more available and attentive to issues on the home front. 

43.  Other contributions weighing in his favour include the work he did around the home such as mowing the lawn and assisting with garden maintenance.  He also continued his financial support for the family after separation at an appropriate level, ensuring they were accommodated in the family home and paying the outgoings related to that, at least for the first year or more. 

44.  On the other side of the scales, Ms L’s income over the years was far lesser, but it was she who withdrew from paid employment to take on the role of carer to their children and it was she who managed the practical aspects of their home, attending to all of the chores necessary to looking after a family, with some assistance from a cleaner after 1987, and made the day to day decisions entailed in raising two children.  In these matters she had some assistance from her husband, but hers was a very important role and she made a significant contribution by taking it on.  Her preparedness to do so meant that her husband was free to pursue his career uninterrupted by the need to see to the matters necessary to the organisation of their household and to see to a matter of substantial importance after they became parents - their children’s daily supervision and guidance.

45.  So in allowing that Mr L’s income was high, allowance must also be made for the significance of the complementary role Ms L adopted to meet their aspirations as a family.  I could not elevate one above the other. 

46.  Assessing their contributions, it is acknowledged that Mr L was in a stronger asset position initially and his father advanced money, not repaid, constituting a further 12.5% or thereabouts of the purchase price of their first home.  These considerations favour him, but when they are put on the scales and their contributions over the ensuing 20 years or so weighed in the balance overall, the tip is only a slight one and I would put it at 51:49 in his favour.  I apply this assessment also to the superannuation that was built up entirely in the time since their relationship began, including the period since their separation when the nature of contributions made earlier continued. 

47.  On a division of their non-superannuation assets in these proportions, Mr L would receive $652,943 and Ms L $627,338.  The splitting of the superannuation entitlement in those same proportions would mean Mr L would retain $214,802 and Ms L $206,378 as a provision for her own future.  Of course, rather than leave her entitlement in the Fund now managed by Mr L, she could make the arrangements necessary to establish her own Fund and have her entitlement rolled into it, though I could not say what cost, if any, she would incur in doing so. 

48.  But it remains to consider the s 75(2) factors and thereafter to consider whether the outcome is a just and equitable one.  It is only at that latter stage of reviewing their respective positions overall that there can be a resolution of the argument about whether the superannuation should be split to reflect their contributions (as these figures do) or Ms L’s entitlement satisfied out of currently available non-superannuation assets.

Section 75(2) factors

49.  Mr L has a substantial earning capacity, built up during the course of the marriage with the support of his wife.  He has, as he contends, considerable skills and acumen in the field in which he works and there is nothing to suggest that his ability to continue to work in investment banking is at any greater risk than is presented by the normal vicissitudes of life.  It was maintained that investment banking is a young persons industry and Mr L’s age is a disadvantage were he to be seeking work elsewhere.  Be that as it may, he has had stable employment - indeed, he has been with his current employer for over 12 years and appears to be a valued employee – and I think it fair to see him as continuing to earn his income into the foreseeable future from the work he currently undertakes.  While it is acknowledged receipt is discretionary and quantum uncertain, I also think it fair to see him as continuing to earn substantial bonus payments each year, though no doubt for variable amounts, because that has been the pattern for quite a number of years in the past.  His employment will also see him with the advantage of continuing employer contributions to his superannuation fund and, I infer, a capacity to borrow at concessional rates of interest. 

50.  Ms L, on the other hand, has some earning capacity.  She, too, has acquired some qualifications during the course of the marriage in different fields and, with the support of her husband at an earlier time, she has now completed the majority of her studies to qualify as a health professional.  But even given the time and support necessary to enable her to complete that qualification, there is likely to be some delay in her ability to position herself in that field so as to support herself adequately from earnings. 

51.  It is plain, therefore, that they have come out of this marriage with a marked gap in the extent to which they have behind them continuity of work experience and work-related skills built up and refined over time in their chosen fields, as well as vastly disparate earning capacities.  Ms L may well improve on her current situation once she has completed her degree studies and she obtains a position using those qualifications, but she is unlikely even then to earn anywhere near the income of Mr L as a highly paid investment banker.  These matters call for a meaningful adjustment in her favour to her contribution entitlement. 

52.  A further factor of relevance favouring Ms L is the resource available in the KEEP scheme which, the probabilities suggest, he will receive in March 2004 and 2005.  At a current value of $41,000 it does not loom all that large, but nonetheless it does call for an adjustment. 

53.  The remaining relevant factor is the future care of the children.  They are now aged 15 and 12 years and, as such, are reasonably independent.  Nonetheless, they do still require supervision in their day to day arrangements and, as they each participate in a number of extra-curricula activities, that still requires the involvement and support of their parents.  Mr L pays child support of some $430 per week against a claimed need of $460 per week, as well as their school fees.  He therefore makes a substantial contribution towards their financial support and that is likely to continue during their remaining dependent years (recognising he has paid from funds that would have otherwise been available, the 2003 school fees).  Moreover, under their agreed arrangements, the children will be with him for a good proportion of their time during which he will take responsibility for them, not only in providing for them financially but also by supervision and guidance.  This offsets to some extent the responsibility that would otherwise remain with their mother.  Nonetheless, their time with her will be greater overall and that is likely to be the case for a number of years to come.  Viewed overall, therefore, this is a factor that also favours her, though not to any great extent. 

54.  In my assessment, these factors call for an adjustment in her favour of a further 10% of the non-superannuation assets.  That would entitle her to payment of a further $128,028 over and above her contribution entitlement of $627,338. 

Effect of proposed orders

55.  On that assessment, Ms L would be entitled to receive:

Assets (i)        non-superannuation  $755,366

(ii)       superannuation split  $206,378
Total property, including superannuation                  $961,744

56.  Of (i), she already has net assets of $52,117 and would therefore need a further cash payment of $703,249 which would have to come from the sale proceeds of the U home, for the most part at least. 

57.  In that event, she would have a motor vehicle and household furniture sufficient to re-establish herself and the children elsewhere, some modest assets such as shares, bank accounts and jewellery and she will have paid some of her legal costs related to these proceedings.  Clearly there will be more to pay.  Otherwise she will be left with the $703,000 or thereabouts she will receive from the sale of the U property.  That will be the fund from which she will acquire a home for herself and the children and, subject to any provision for periodic spousal maintenance here and her re-entry to the paid workforce after she completes her studies, that will also be the fund from which she will support herself.  She will also have her own superannuation entitlement of $206,000 or thereabouts and that will constitute a provision for her future security, along with any further funds she might be able to invest in it prior to her retirement. 

58.  Mr L would be entitled to receive:

Assets (i)        non-superannuation  $524,915

(ii)       superannuation split  $214,802
Total property, including superannuation                  $739,717

59.  As to (i), he already has assets with a net value of $110,973 in his possession (savings, shares, motor vehicle, furniture and a fair amount of pre-paid legal costs), so he would be looking to receive a further $413,942 from the sale of the U home and the payment out of the remaining proceeds of sale of the Queensland unit.  He would also retain a superannuation entitlement of almost $215,000 and he would have his resource in the KEEP scheme to look forward to in 2004 and 2005.  With the cash component of his entitlement, he would have funds to put towards the purchase of a home for himself and the children while in his care.  Of course, he would also retain his substantial earning capacity and, I infer, a continuing capacity to borrow from his employer at concessional rates of interest. 

Whether just and equitable

60.  This leads to the question of whether matters should be left at this or whether Ms L’s entitlement should be satisfied entirely from currently available non-superannuation assets.  Or, as it was agreed was open, whether there be a lesser splitting order applied to the superannuation component, accompanied by an increase in the proportion of non-superannuation assets.  It is a question that has to be determined by reference to what is just and equitable in all of the circumstances. 

61.  Mr Lethbridge argued for leaving the superannuation with Mr L and providing her with currently available assets.  At the core of this is her need to rehouse after the U home is sold and to enable her to provide adequately for herself from investment funds. 

62.  Mr Brereton submitted, in effect, that both parties should have to wait for the entitlement to be paid and that outcome would be consistent with the underlying intent of the recent legislative changes.  He conceded that Ms L needs to re-house after the sale of the U home, but he maintained that Mr L needs to do so as well, particularly in light of the extent of his responsibility for the children and the time they spend in his care, and that ought to be given just as much priority.  I think that a reasonable proposition. 

63.  Mr Brereton tendered documents (exhibit 9) indicating the type and price of housing available for sale in the U area.  That information suggests there are available for purchase three bedroom homes at prices between $505,000 and $665,000 and four bedroom homes at prices between $545,000 and $689,000 ie. an average asking price of $575,000 for three bedrooms and $625,000 for four bedrooms.  This at least gives some idea of what each party would have to pay to set themselves up in a home in the same area at this juncture and therefore gives some picture of their post-settlement financial positions. 

64.  Of course with the home yet to be sold precise figures cannot be used in any calculations here.  But working on the agreed value and without taking any account of selling costs, I have already referred to the cash each might expect to receive from the settlement if structured on a splitting of the superannuation without any adjustment to other assets to account for it.

65.  From Ms L’s $703,000 she will be required to meet not just purchase price but also the costs associated with that and removal expenses.  The indicators are that she could acquire a three bedroom home in the same locale from those funds, meet the associated costs, and she may have some funds left over.  But, being compelled to look at the position generally, it seems to me on that scenario things could end up being a bit tight, leaving her with little left over as a buffer for contingencies and independent living.  This suggests her position of taking her superannuation entitlement by an adjustment to the other assets might be a better arrangement for her.  Of course that would result in her taking now all of her entitlement from the currently available assets and it would leave her with no provision for her future retirement, save to the extent that she build that up after she starts to earn income later.  As to the prospect of that, she will be 43 years of age in April and her chosen field is unlikely to produce a huge financial bonanza for her.  So the probabilities are that she would have little or no retirement funds in that event.  The tension between these two possible outcomes has led me to conclude that the better arrangement would be for her to take her entitlement partly by a splitting order and partly by an increase in entitlement to other assets.  As to the apportionment, if she were to retain 40% of her superannuation entitlement under a splitting order, that would leave her with $82,551 invested in a Fund for her later security.  The balance of 60% under a splitting order is $123,826.  But of course that does not mean she should receive now additional assets of that value there has to be allowance for the delay and tax that will be payable by Mr L in due course on what remains in the Fund. 

66.  Having said that, the outcome must be just and equitable overall, not just to her, and it is necessary to say something about Mr L’s position in either event.  Acknowledging, as I have, the reasonableness of his wish to buy a home and taking the asking price of properties in the area as a guide, if a splitting order were made to meet all of Ms L’s entitlement, he would still have insufficient capital to buy a property outright.  Even less so if her entitlement were met entirely from other available assets.  So I do not think the mid-course proposed disadvantages him in any real way.  Not to be forgotten is his substantial earning capacity and his ability in the past to borrow at favourable rates from his employer – the last occasion being as recently as 3-4 years ago for $400,000.

67.  Taking the view as I have that a compromise between the positions put by their counsel would produce a more just and equitable outcome for both of them and having taken the view that a splitting order as to 40% of her entitlement giving her a base figure of $82,551 for investment would be appropriate, the remainder of the exercise is a bit more involved.  In the end result, I have calculated that Ms L should receive a further $97,025 or 7.57% (say 7.5%) of the available assets in return for relinquishing the balance of her entitlement under a full splitting order. 

68.  That has been calculated as follows:

Ø  49             X        $421,180  =         $206,378

Ø  100

Ø  Splitting order of 40% of $206,378  =         $82,551

Ø  Balance remaining in fund for Mr L after splitting order:

$421,180  -          $82,551          =         $338,629 (gross)

Ø  Ms L’s ‘unallocated’ gross balance of $123,826 represents 36.5% (approx) of the gross value remaining.

Ø  But Mr L has to wait 10 years and then pay tax before he receives any of his remaining entitlement after the splitting order – just as she does on the split apportionment of $82,551.

Ø  If he were to take his gross entitlement now, he would receive:

Balance  338,629

Tax free threshold   nil

338,629

Tax @ 21.5%    72,805

Net  265,824

Ø  Therefore, instead of receiving her remaining $123,826 in full now, Ms L should receive:

36.5% of $265,824     =         $97,025

Ø  That represents a further 7.5% (approx) of the other available assets.

69.  Ms L’s entitlement, therefore, would be to receive a total of 66.5% of the available assets and have a splitting order in her favour for a base amount of $82,551.  Working on the agreed value of the U home without taking sale costs into account, that would give her an entitlement to $851,386.  Of that, she presently has net assets of $52,117, leaving her with cash in the order of $799,269 – or approximately $800,000.  Mr L, on the other hand, would end up with 33.5% of the assets, giving him a total of $428,860.  Of that he has net assets of $110,973 already and he would therefore receive a further $317,887 from the sale of the house and the funds in the solicitors’ Trust Account.  Of course he would also retain superannuation with a gross value of $338,629 for his future financial security and his interest in the KEEP scheme due to vest in 2004 and 2005. 

70.  When viewed in that light, I am satisfied this achieves a just and equitable outcome overall. 

71.  The form of orders to follow is drafted to reflect this outcome, but the parties and their legal representatives will have an opportunity to have some input before they issue.  I should say that the orders sought by Mr L contained a provision for some monies to be spent on improving the property in readiness for sale.  There was no mention of that in closing address and no response to that proposal from Ms L.  I have therefore taken it to be uncontentious and have included in the draft orders.  I should also say that I have made provision for an adjustment between the parties on settlement of the sale which will see Mr L pay to Ms L a further sum of $56,338.  That is to adjust for the assets they will each retain to reflect entitlements in the proportions of 66.5:33.5.  It has been calculated this way:

$110,973        +         $52,117          =         $163,090

33.5% of $163,090  =         $54,635
  $110,973        -          $54,635          =         $56,338

SPOUSAL MAINTENANCE

72.  I come now to Ms L’s maintenance claim.  Mr Brereton made several submissions directed to the dismissal of her application as unmeritorious or misplaced: 

• Her current inability to support herself arises as a result of the breakdown in her relationship with Mr W from whom she had not claimed maintenance though she is entitled to do so.  Documents tendered, produced on subpoena, implied that Mr W had an income from his business of some $71,000 during December 2001 to November 2002, exclusive of GST.  Consequently, there is no reason to think he does not have the capacity to pay maintenance for Ms L.  What she has done, he submitted, is to elect to tie her future fortunes to Mr L but her relationship with Mr W succeeded the marriage to Mr L and it should be to Mr W that she looks to cover the shortfall in her own support. 

• Furthermore, she had deferred her studies following the breakdown of her relationship with Mr W, that is when she brought her application for maintenance, and that is the reason for her current situation. 

• Her current circumstances result from that relationship and from the birth of their child, so Mr W should be seen as primarily responsible for her support to the extent to which she is unable to support herself.

73.  I think there is something in this line of argument, but only so far as it goes.  It tends to ignore the fact that Ms L also has responsibility for the parties’ two children, irrespective of developments in her life post separation, and in the years the parties were together they arranged their affairs so as to have their mother caring for them and working only part time.  Unless and until her financial position improves, that is as much a reality as her position vis-à-vis Mr W.  Therefore I do not think her application against Mr L should be dismissed. 

74.  The question is whether she can support herself adequately.  The answer to that must be in the negative at this stage.  That will remain the case until she receives her property settlement.  At that time, she will have sufficient funds to acquire an unencumbered home and it can be anticipated she will have a fund for investment thereafter from which she will derive an income stream sufficient to meet her own needs until she re-enters the paid workforce and later supplement her earnings. 

75.  However, it will be a while before the U home is sold and she is put in those funds.  In the meantime, I see it as appropriate that Mr L provide some periodic support for her.  She earns $75 per week.  She claims expenditure of $727, leaving a shortfall of about $650.  However, I see it as possible to prune that expenditure somewhat (eg cleaning house/pool of $100) and I therefore see her reasonable needs as amounting to $550 per week.  There is no question of Mr L’s capacity to pay.  In my opinion, a proper amount of support for a limited time would be $550 per week.  That should be paid until she receives the money to which she is entitled by way of property settlement. 

76.  For those reasons, subject to any submissions as to form, the Orders will be:

1. The parties forthwith do all acts and things and sign all documents necessary -

   (a)to sell the property at U and distribute the net proceeds after payment of all legal costs, agent’s commission, selling expenses and any of the usual adjustments:

   (i)to reimburse the husband for any amount advanced by him pursuant to order 4 below;

   (ii)thereafter between the parties in proportions 66.5% to the wife and 33.5% to the husband; and

   (b)to distribute the balance of funds that remain invested from the sale proceeds of the unit in Queensland between them in the proportions of 66.5% to the wife and 33.5% to the husband. 

2. From the amount received by the husband pursuant to Order 1 (a)(ii) hereof, he pay to the wife forthwith the sum of $56,338. 

3. For the purposes of the sale referred to in order 1, unless the parties otherwise agree in writing:

   (a)the sale be by public auction;

   (b)the reserve price be $1,100,000;

   (c)the property be submitted to auction within 90 days of these orders;

   (d)the parties appoint a solicitor to have the carriage of the sale;

4. The husband provide by way of advance up to $15,000 to complete repairs and renovations to the property in readiness for sale.

5. The husband within one month of the date of these orders transfer to the wife all his right title and interest in and to the Honda CRV motor vehicle, should that be necessary. 

6. The wife within one month of the date of these orders sign all documents submitted to her by or on behalf of the husband so as to :

   (a)transfer to the husband or his nominee all her shareholding in WRI Pty Limited;

   (b)resign as a director of WRI Pty Limited provided that if so requested by or on behalf of the husband she shall first attend at a meeting of directors and vote for such resolutions for the appointment of a replacement director as shall be proposed by the husband;

   (c)assign to the husband any credit loan account which she may have in WRI Pty Limited or in the L Unit Trust;

   (d)transfer and relinquish to the husband any beneficial interest, unit holding or other right or entitlement which she might have in the L Unit Trust;

   (e)release all actions suits claims demands proceedings debts and costs which she has or might have against WRI Pty Limited or the L Unit Trust as at the date of these orders.

7. The husband indemnify and keep indemnified the wife from and against all actions claims suits demands proceedings liabilities and costs which she might incur by reason of her having been a shareholder or director of WRI Pty Limited or a beneficiary of the L Unit Trust.

8. Pursuant to s.90MT(4) the base amount of $82,551 be allocated to the wife in respect of the husband’s superannuation interest in the L Superannuation Fund and that pursuant to s.90MT(1)(a) whenever a splittable payment becomes payable in respect of that interest the wife is entitled to be paid the amount calculated in accordance with the Family Law (Superannuation) Regulations in respect of that base amount and there is a corresponding reduction in the entitlement of the husband.

9. Each of the parties are otherwise entitled to the exclusion of the other to all items of real and personal property including moneys now in that party’s respective possession control or name, including in the case of the wife, the contents of the U property, and in the case of the husband, the contents of the W Road property.

10. The husband pay to the wife the sum of $550 per week by way of spousal maintenance until her receipt of the payment referred to in Order 1 here and otherwise her application for maintenance is dismissed.

11. The exhibits tendered in Court be returned at the expiration of one month from this day to the party tendering same on the condition they be returned to the Court if required.

12. In relation to documents produced to the Court on subpoena the solicitor for the party who caused the subpoena to issue uplift those documents no later than seven days from this day and forthwith take all steps necessary to return the documents to the person or corporation entitled to them. 

13. The matter be removed from the list of cases awaiting final hearing. 

I certify that the previous 76 paragraphs are a true copy of the judgment delivered by the Honourable Justice Moore. 

Associate: