Laporte and Penfold
[2008] FMCAfam 1093
•23 October 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LAPORTE & PENFOLD | [2008] FMCAfam 1093 |
| FAMILY LAW – Property – marriage of twenty-eight years in duration – treatment of husband’s defined benefit superannuation in payment phase – valuation of fund – superannuation acquired wholly during period of marriage – inappropriate to treat superannuation as either income or financial resource – assessment of contributions to superannuation – other assets – post separation contributions – treatment of parties’ debts – sale of assets – add backs – husband suffers from serious chronic illness – wife modest income earner – potential for wife to be poorer in retirement than husband – section 75(2) factors – split made in wife’s favour in superannuation pension – just and equitable. |
| Family Law Act 1975, ss.75(2), 79, 90MC, 90MS, 90MT |
| Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335; Clauson v Clauson (1995) FLC 92-595 Wardman & Hudson (1978) FLC 90-466; Biltoft & Biltoft (1995) FLC 92-614 NHC & RCH (2004) FLC 93-204 C & C (2005) FLC 93-220 Norbis v Norbis (1986) FLC 91-712 M & M (2006) FLC 93-281 Kessey & Kessey (1994) FLC 92-495 Pellegrino v Pellegrino (1997) FLC 92-789 Pierce & Pierce (1999) FLC 92-844 Russell v Russell (1999) FamCA 187 Waters & Jurek (1995) FLC 92-635 D & D [2003] FamCA 473 In the Marriage of Kowaliw (1981) FLC 91-092 In the Marriage of DJM and JLM (1998) 23 Fam LR 396 In the Marriage of Townsend (1994) 18 Fam LR 505 In the Marriage of Browne & Green (1999) 25 Fam LR 482 AJO v GRO (2005) 33 Fam LR 134 Ferraro & Ferraro (1992) 16 Fam LR 1 Treloar & Treloar (No2) [2007] FamCA 1127 T & T (2006) FLC 92-263 Jarman & Jarman (2006) FLC 93-289 |
| Applicant: | MR LAPORTE |
| Respondent: | MS PENFOLD (FORMERLY LAPORTE) |
| File Number: | ADC 1336 of 2007 |
| Judgment of: | Brown FM |
| Hearing dates: | 29, 30 & 31 July & 14 August 2008 |
| Date of Last Submission: | 14 August 2008 |
| Delivered at: | Adelaide |
| Delivered on: | 23 October 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Heinrich |
| Solicitors for the Applicant: | Howe Martin & Associates |
| Counsel for the Respondent: | Mr McGinn |
| Solicitors for the Respondent: | David Burrell & Co |
ORDERS
In full and final settlement of all claims for settlement of matrimonial property:
Within thirty (30) days of today’s date the parties do all things necessary and execute all documents to place the former matrimonial home known as and situate at Property D in the State of South Australia being the whole of the land comprised in Certificate of Title Register Book Volume [5] Folio [5] for sale by auction with a reserve price of FOUR HUNDRED AND SIXTY THOUSAND DOLLARS ($460,000.00) and otherwise upon such terms and conditions as the parties agree provided that each party is at liberty to bid at the auction.
The proceeds of sale to be paid as follows:
(a)Firstly to pay the costs, commissions and expenses related to the said sale;
(b)Secondly to pay the mortgage and overdraft secured against the aforesaid property;
(c)Thirdly to pay the balance as to fifty-two percent (52%) to the husband and forty-eight percent (48%) to the wife.
The husband cause to be paid to the wife the sum of $53,083.14 from the sum of money received by him in respect of the sale of the former matrimonial home pursuant to order 2(c) hereof concurrently with the distribution of the aforesaid funds to him.
Concurrently with the payment referred to in order (3) hereof the husband pay out the loan to the Australian Central Credit Union and keep the wife forever indemnified in respect of said loan.
The wife retain responsibility for all of the parties’ other joint matrimonial debts including her personal taxation liabilities and any capital gains tax arising from the sale of any items of matrimonial property either before or after the date of these orders and forever keep the husband indemnified in respect of such debts.
In respect to the husband’s superannuation interests with the Commonwealth Superannuation Scheme that:-
(a)in accordance with paragraph 90MT(1)(b) of the Family Law Act:-
(i)the wife is entitled to be paid the specified percentage, being twenty-five percent (25%) of the husband’s superannuation interest in the Commonwealth Superannuation Scheme and payable in accordance with that scheme; and
(b)the husband’s entitlement to payment from the Commonwealth Superannuation Scheme be correspondingly reduced;
(c)the Trustee shall do all such acts and things and have signed all such documents as may be necessary to:-
(i)calculate in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement created for the wife in this order; and
(ii)pay the entitlement whenever the Trustee makes the splittable payment out of the husband’s superannuation interest in the Commonwealth Superannuation Scheme;
(d)this clause shall have effect from the operative time and the operative time shall be seven (7) business days after service of the sealed final orders upon the Trustee.
That in the event that the Trustee does not pay the wife one quarter of the Commonwealth Superannuation payment then the husband shall pay to the wife one-quarter of the amount that he receives each fortnight from the Trustee until such time as the Trustee commences to make payment to the wife pursuant to these Orders.
That each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of making these orders and for that purpose accounts are deemed to be in the possession of the person whose name appears on the bank’s records thereof, insurance policies are deemed to be in the possession of the beneficiary thereof, any motor vehicles are deemed to be in possession of the registered owner thereof.
That in the event either party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to section 106A to execute such deed or instrument in the name of such party and to do all such acts and things necessary to give operation to the deed or instrument.
That the wife do serve upon the Trustee of the Commonwealth Superannuation Scheme a copy of these orders as soon as practicable.
Liberty to apply as to consequential orders to the Trustee and the husband and wife.
The application herein be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Laporte & Penfold is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 1336 of 2007
| MR LAPORTE |
Applicant
And
| MS PENFOLD (FORMERLY LAPORTE) |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the division of matrimonial property. The applicant in the proceedings is Mr Laporte “the husband”. The respondent is Ms Penfold (formerly Laporte) “the wife”.
The parties married in 1978 and separated on 30 November 2006, when the wife vacated the parties’ former family home, a 74 hectare farm at Property D “the Property D property”.
The marriage between the parties produced two children – [T] born in 1984 and [U] born in 1988. [T] is self supporting. [U] is a [omitted] student, who lives with the husband at the Property D property at present. He seems to be a resourceful young man and has regular part-time employment in a local [omitted].
Between the date of the parties’ marriage and some time in 1990 the husband was employed by [L] as a [tradesman]. As a result, on 23 November 1978, he joined the Commonwealth Superannuation Scheme “the CSS”.
The husband suffers from Crohn’s disease, a chronic inflammatory disorder of the gastrointestinal tract, which can lead to bowel obstruction and other serious complications. The husband was diagnosed with this condition in 1978.[1] He has had a number of bowel resection operations, the first of which was in 1981. He has also had operations to remove kidney stones.
[1] Dr H, the husband’s treating gastro-enterologist and consultant physician has reported that the husband’s condition was originally diagnosed in 1983. See Dr H’s report dated 31 March 2008, annexed to Mr Martin’s affidavit filed 15 April 2008. However, the parties both agree that the condition was diagnosed earlier.
In 1990, the husband was invalided out of his employment with [L], due to his illness. As a result, his interest in the CSS crystallised and he became entitled to receive an annual indexed pension for the remainder of his life. Currently, he receives around $16,878.94 per annum or just under $325.00 per week.[2]
[2] See exhibit W13
An actuary, Mr C has valued the husband’s interest in the CSS pursuant to the prescribed method provided under the Family Law (Superannuation) Methods and Factors for Valuing Particular Superannuation Interests) Amendment Approval Act 2003. Mr C values the husband’s interest at $285,582.38.[3]
[3] See exhibit W8
At present, the CSS pension is Mr Laporte’s only source of income. Although, with the assistance of his treating gastro-enterologist, Dr H, he has recently applied to Centrelink for a disability support pension.
In the past, with the approval of the CSS, the husband has been able to earn up to $18,000.00 per annum without any reduction of his pension. After his retirement from [L], the husband did some farming at the Property D property. More recently, in 2006, the husband started work [omitted] for a company known as [H] Horse Transport.
The husband stopped working for [H] on 25 April 2008.[4] It is his position that his condition has deteriorated markedly since and it is unlikely that he will ever return to any form of paid employment. It was after the husband left [H] that he investigated the possibility of a disability support pension. His application has not as yet been finalised.
[4] See exhibit W9
Mr Laporte had a personal relationship with the owners of [H], arising out of their mutual interest in the racing and breeding of harness horses. These people have recently sold their interest in the business to a larger company.
The husband contends that only a very kind and accommodating employer is likely to take him on as an employee in future, because of his health concerns. He deposes that the former owners of [H] were such employers. Amongst his many difficulties, arising from his illness, Mr Laporte suffers from frequent and loose bowel movements.
The wife shares the husband’s interest in harness horses. She has worked long and hard, in a variety of capacities, throughout the marriage. She has been both an employee and self employed during the lengthy twenty-eight year marriage between the parties.
In 1993, the wife commenced a cleaning business, [R] Cleaning. She transferred this business to her daughter [T] in 2007, because she found the work involved too arduous. The business has considerable tax debts, which remain outstanding.
The parties purchased their first home, at Property M, in 1980. This was followed by the purchase of land at Property G in 1982, on which they later built a house.
In 1993, the first section of the Property D property was purchased, followed by the purchase of a second portion of land in 1997. Property G was sold and a house, outbuildings and horse yards were built at the Property D property.
In 1994, the wife started a business called [B], which was involved in the breeding of harness horses, through artificial insemination, at the Property D property. It is the wife’s case that she is no longer able to operate the business, due to her leaving the Property D property and the poor nature of her relationship with the husband. In any event, both agree that the Property D property needs to be sold.
During the years of the parties’ occupation of the Property D property, the parties purchased a deal of equipment for farming and horse breeding, including tractors and front end loaders. Considerable controversy arises between the parties, as to how those materials have been disposed and whether for proper value, in the period following their separation.
Similar issues arise in respect of a number of motor vehicles, which the parties owned and a boat, which the husband sold after the parties attended a conciliation conference. The boat had been professionally valued but the husband concedes that he sold it for a lesser sum. He says as a result of its deterioration due to its exposure to the elements.
In November 2006, when the parties separated, they had a number of horses at the Property D property, which related to the operation of [B]. Afterwards, the wife agisted these horses elsewhere. On 18 February 2008, the parties agreed that six of the horses should be sold to [T] for $24,750.00, with the net proceeds to be used to reduce the wife’s taxation liability.
It is the wife’s position that, both before and after separation, she incurred considerable expense in respect of these horses and the operation of [B], which expenses should be taken into account now, in her favour, in these proceedings.
The husband suspects some financial sleight of hand in respect of these various transactions, many of which he disputes as being not relevant to either the horses or the business. He is also suspicious that, although the wife claims to have diverted assets towards the payment of her tax debts arising from income earned by her during the marriage, the tax debts in question do not seem to have significantly reduced.
The husband concedes that he left the keeping of the family’s financial records to the wife during the marriage. He now suspects that the wife has either negligently or disingenuously manipulated these records so that a considerable sum of money has gone missing from the parties’ joint matrimonial funds.
In particular, the husband is bemused that the Property D property is currently subject to a mortgage of $100,000.00. He believes that, given the sum that was achieved for the sale of the Property G property and other financial contributions made by his parents, the property should have been paid off long ago. He suggests that the wife has concealed a sum of around $100,000.00 from him and the court.[5]
[5] See husband’s affidavit filed 18 June 2008 at paragraph 8
Currently, the wife is employed, on a full-time basis, as a [occupation omitted] at [K]. She earns $575.00 per week. She has not accumulated any superannuation up to this point. Accordingly, she is not well prepared for retirement. It is uncertain, at this stage, how many years of working life the wife has before her.
On her retirement, the wife most likely will be in receipt of some form of Commonwealth benefit. Accordingly, as the husband’s entitlement to a CSS pension remains with him for the duration of his life, he will be in a much better position financially than the wife, when she reaches retirement. Although presently there is a discrepancy in the parties’ level of income, in the wife’s favour, this will not be the position when she has retired from the workforce.
The parties’ most substantial asset, in financial terms, is the Property D property. It has been valued at $460,000.00.[6] As previously indicated, both parties ostensibly agree that the property must be sold. Although, the wife asserts that the husband has been passively resistant to the sale because he has no obvious alternative means of accommodation. He has been paying the required recurrent mortgage payments on the property, in the period since separation, although the mortgage has fallen into arrears recently.
[6] See exhibit H4, the valuation report of Mr P, certified practising valuer
In the longer term, the wife would like to recoup sufficient capital from these proceedings to enable her to purchase some form of long-term accommodation for herself. The husband has a similar ambition. The proceeds of sale of the Property D property may not be sufficient to achieve such an outcome for both parties. The other of the parties’ assets are not significant and, if the wife’s position is accepted in respect of matrimonial liabilities, will be considerably eroded by debt.
The wife is a modest income earner and likely to remain so. In the short to medium term, she may be able to borrow against a potential mortgage. Given the husband’s position, his capacity to borrow is likely to be limited, if at all. These factors intensify the financial pressure on the parties, particularly in terms of their preparation for retirement and the provision of future accommodation for each of them.
The major legal issue arising in the case concerns the treatment of the husband’s CSS entitlements. After the Property D property, its capitalised value is the parties’ most significant asset. At a visceral level, the husband objects to it being included in the parties’ pool of assets.
From the husband’s point of view, the pension was awarded to him to compensate him for the high level of disability under which he currently suffers and for the restrictions on employment and quality of life, to which he will be subject for the remainder of his life.
In legal terms, he categorises his entitlements to the CSS pension as a form of income rather than an item of capital. Necessarily his categorisation of the pension in this way depends on the fact that it is now in its payment phase as opposed to the accumulation phase.
It is the wife’s position that the husband’s interest in the CSS pension was totally accumulated during the parties’ marriage. As such, she says her various contributions, during the marriage, have played a major role in the acquisition of the pension in the first place.
Accordingly, she contends that the capitalised value of the pension should be included in the pool of the parties’ assets and, if it is necessary to accord a proper division of the parties capital, in recognition of her and the husband’s various contributions, the capitalised value of the pension be divided between the parties, notwithstanding the fact that the pension is in its payment phase. Necessarily, the only way the pension could be divided is by some form of division of the income which it produces.
Overall, it is the wife’s position that her various contributions, during the marriage, are likely to have been greater than those of the husband. It is her case that she performed more of the parenting of [T] and [U] and more of the homemaking required to provide a comfortable family life, with little assistance from the husband.
In addition, the wife points to the fact that she was in almost continuous paid employment during the marriage, and also oversaw the various business ventures, in which the parties were involved from time to time.
It is her case that from 2000 onwards, the husband had no input into [B] and never had any involvement in her cleaning business. She categorises the farming venture as never having been really successful and is critical of the husband for making a number of poor decisions in regards to it, particularly his propensity to purchase unnecessary capital items and pay others to perform tasks, which he was capable of doing himself.
Notwithstanding these various factors, given the length of the marriage, the wife would accept an equal division of the parties’ property, as being an appropriate result in this case. Such an outcome would necessitate a split in the husband’s CSS pension and so some form of reduction in the weekly amount the husband receives. There are not sufficient capital resources, available to the parties, to effect an equal division of property, without the splitting of the pension.
From the husband’s perspective, he believes such an outcome would lead to his immediate impoverishment and be fundamentally unfair, particularly as the wife is currently in paid employment and receives more income than him, whereas he is in a very poor state of health, which is likely to deteriorate further.
In the longer term, particularly after she has permanently retired from the workforce, the wife argues that such a splitting order would be both fair and appropriate, as it will achieve some level of equalisation of the parties’ recurrent income, in the future, which is appropriate given the length of the marriage between them.
From the husband’s perspective, given his age (55 years) and poor state of health and the fact that, as the wife is 49 years of age and likely to have at least a decade of paid work before her, such an outcome would be fundamentally unfair to him, particularly in the short to medium term.
In addition, the husband disagrees about the level of his overall contributions during the marriage, assessing them as being greater than those of the wife by a figure of between five and ten percent.
In particular, he points to the fact that, as a result of his diagnosis with Crohn’s disease, his parents gifted him and the wife a sizeable amount of money in 1989, which was used to reduce the mortgage on the Property G property and buy a family motor vehicle.
The wife acknowledges some moneys were advanced but disputes the extent of the sums involved. In addition, she asserts that the moneys were paid back to the husband’s parents over time and in any event, the moneys were advanced too long ago to attract any special recognition or weight in these proceedings.
The parties also have significant disagreement regarding the implications of the husband’s Crohn’s disease in the ultimate disposition of this case. It is the wife’s position that the husband overstates the level of his disabilities and is likely to be able to do some paid work in future, as exemplified most recently by his employment with [H] in the earlier part of this year.[7]
[7] See wife’s affidavit filed 24 January 2008 at paragraph 65
The husband refutes any suggestion that he is anything other than totally incapacitated for permanent employment. It is his case that it was only his strong work ethic which enabled him to keep on at [H] and the unduly arduous extent of his work, in the first months of 2008, has resulted in the recent significant deterioration of his health. The husband’s position is supported by Dr H.
From the husband’s perspective, he sees the wife as having on-going secure employment, which he does not. He also believes that the wife will be able to return to her artificial insemination and harness horse breeding business, which in the past he asserts has been lucrative for her. As such, it is his position that the wife is likely to be far more financially secure than him, in future.
The wife deposes that she is currently suffering emotional stress as a result of the end of the parties’ marriage and the arduous litigation which has followed. Although she concedes that she enjoys overall good health, she does not believe that she can do the heavy physical work, which she previously performed. She has recently been diagnosed with diverticulitis. She would like to return to her harness horse business but does not believe this can be guaranteed.
These various disputes have lead to the parties having very different views regarding the percentage basis of any division of their property between them. It is the wife’s position that the parties’ total marital assets, including the CSS pension, should be divided equally between the parties. She also has very different views about the parties’ mutual level of indebtedness.
On the other hand, it is the husband’s position that he should retain in full the income stream, which is provided by the CSS pension and the other of the parties assets should be divided somewhere between sixty-five and seventy percent in his favour with the wife receiving between thirty and thirty-five percent of them.
At the very least, Mr Heinrich, counsel for Mr Laporte asserts that considerations of justice and equity should result in his client receiving at least sixty percent of the parties assets.[8] Mr Laporte also resists the notional adding back of items of property, which he says he was forced to sell to support himself. He also averts that many of the debts, which the wife wishes to be taken into account, should be held to be her sole responsibility.
[8] See paragraph 11.2 and 11.3 of Mr Heinrich’s written submissions
These proceedings are designed to resolve these various disputes between the parties and, as far as possible, finalise their financial relationship with one another.
Applications
The husband commenced these proceedings on 9 March 2007. The orders which he seeks in that application have been overtaken by events and are no longer relevant.
The wife responded to this application on 16 April 2007. The final orders which she seeks are set out in the case outline prepared by her counsel, Mr McGinn. It is annexure 1 to these reasons for judgment.
Documents relied upon
The husband relies on the following documents:
i)Two affidavits of himself filed on 21 January and 18 June 2008 respectively;
ii)A statement of his financial circumstances filed 21 January 2008;
iii)An affidavit of his solicitor, David Martin filed 15 April 2008.
The relevance of this last affidavit is that it contains a medical report of Dr H dated 31 March 2008.
The wife relied on the following documents:
i)An affidavit of the wife filed 24 January 2008;
ii)A statement of the her financial circumstances filed 24 January 2008;
iii)An affidavit of her solicitor David Burrell filed 26 March 2008.
This last affidavit is relevant because it annexes information obtained from the CSS regarding the husband’s pension entitlements and the consequences of splitting those entitlements.
The parties were each represented by skilled and well prepared counsel, who assisted me through the preparation of extensive written submissions. I am concerned however that the proceedings became an unnecessarily complex process of pseudo financial reconciliation.
The parties were the major witnesses in the case and each was extensively cross-examined by counsel for the other party. In addition, arrangements were made for Dr H to give evidence, before the court, via a telephone link from his rooms.
In addition, a large number of documents were tendered into evidence. These documents, the affidavits of the parties themselves and the additional oral depositions form the evidence on which the decision in this case is made.
The legal principles to be applied and the issues in the case
The process to be followed for the division of the parties’ property is well established by law.[9] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[9] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[10] This is a contentious area of dispute between the parties, particularly regarding what liabilities should be “added back” into the pool. The issues arising can be summarised as follows:
[10] See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614
·At separation, the parties owned a Haynes boat. On 6 July 2007, it was professionally valued at $22,000.00.[11] From the wife’s perspective, this is the appropriate value for the boat and it should be included in the parties’ pool of assets at this price.
[11] See exhibit W4 valuation of [H] Auctions
·The husband concedes he traded in the boat, at a value of $12,000.00, to purchase another boat in November of 2007, after he had retrieved it in August 2007 from the location where the wife had stored it.
·The husband asserts that the wife’s negligent storage of the boat had caused it to rot and depreciate in value. Accordingly, it is his position that the appropriate value for the boat is $12,000.00.
·There is no dispute regarding the sale of a jeep motor vehicle by the wife after separation. The trade-in value was $4,535.00, which the wife retained.[12]
[12] See exhibit W14
·At separation, the parties owned a John Deere tractor. The wife says she sold it for $10,000.00 in March 2007, to pay debts relating to horse feed.
·The husband asserts the wife misappropriated the vehicle and sold it without his consent. He asserts that the vehicle was worth somewhere in the vicinity of $20,000.00.
·There is no dispute between the parties that the sum of $24,750.00, the proceeds of sale of the six horses to [T], should be included in the parties’ pool of assets.
·There is significant dispute relating to what liabilities arise as a respect of that sale, particularly the prior costs relating to the upkeep of the animals and any capital gains relating to their sale.
·The husband asserts that the wife has not provided any legislative basis for the levying of a tax on the sale of the horses and has provided no notice of assessment. In such circumstances, he asserts it would be unfair to include any assessment of tax payable by the wife ($4,604.00) as a joint liability of the parties.
·A period of around six months separated the date of the parties’ separation from the sale of the horses concerned. During this period, the horses were agisted at a property at Property L. The wife said she incurred and paid debts of around $13,600.00 in respect of feed and vet’s bills for the horses.[13]
[13] This sum is calculated as follows: [D] (barley) $900.00; [G] (hay) $1,800.00; feed bill $9,408.00; [M] Vets $600.00; and [G] Vets $900.00.
·In addition, the wife claims that a sum of $19,987.00 should be included as a joint liability of the parties. This sum relates to miscellaneous debts, arising from the operation of [B] and other joint liabilities relating to the Property D property, which she says she paid in part from the proceeds of sale of the John Deere tractor.
·The husband characterises the documentary evidence tendered in respect of these alleged debts as a “shambles”. It is his position that the various invoices tendered by the wife,[14] are unclear and have been inadequately explained. As such, the court should be cautious about accepting them.
[14] See exhibit W14
·The wife has produced an invoice dated 19 July 2005 from Unimin for the sale of sand to the husband in an amount of $1,693.50. It is her case that this is a joint debt of the parties and remains outstanding.[15]
[15] See exhibit W14
·The wife also claims that she has paid a sum of $1,100.00 to [W] Transport in respect of an alleged jointly incurred matrimonial debt.
·In the absence of any invoice or other documentary evidence in respect of this debt, the husband asserts that the court should excise it from its calculation of the parties’ joint pool of assets and liabilities.
·The wife claims that her debt to WorkCover SA, relating to the operation of [R] Cleaning in the sum of $1,986.62 should be included as a joint matrimonial liability.
·The husband asserts that the related invoice[16] is unclear and may relate to a period after the parties separation.
[16] See exhibit W14
·The greatest dispute between the parties regards how the wife’s considerable taxation liabilities should be dealt with. As at 11 August 2008 the wife owed the Australian Taxation Office the sum of $39,467.42.[17]
[17] See exhibit W17
·In July of 2007, the tax debt was considerably greater, amounting to approximately $56,000.00. As such, it is the wife’s case that the debt was clearly incurred during the course of the parties’ marriage and as such should be regarded as a joint liability.
·It is the wife’s case that she negotiated with the Tax Office to reduce the debt by way of monthly instalments of $2,000.00 from August 2007 onwards.[18]
[18] See wife’s affidavit filed 24 January 2008 at paragraph 49
·The husband accepts that the wife had a significant taxation liability at separation. However, he is dubious as to how the debt was incurred.
·In particular, he is critical that the Taxation Office has imposed penalties and calculated interest on the tax outstanding, which he asserts is due to the wife’s financial incompetence, in the management of her business and, as such, it would be inequitable for him to be burdened responsibility for the debt.
·The wife asserts that the parties owe a sum of around $6,000.00 to the Australian Central Credit Union in respect of the purchase of a utility motor vehicle.[19]
[19] See wife’s financial statement at item 50
·The husband disputes this item in the written submission of his counsel.[20] However, in his statement of financial circumstances, the husband indicates a debt to the credit union of $5,793.00.[21]
[20] See Mr Heinrich’s written submissions at paragraph 8.1
[21] See husband’s statement of financial circumstances at item 50
·There is no dispute between the parties that currently a sum of $96,350.00 is owing to the Bendigo Bank in respect of a mortgage secured against the Property D property.[22]
[22] See exhibit H3
·The parties agree that the appropriate capitalised value of the husband’s superannuation pension is $285,582.32.[23]
[23] See exhibit W8
·The husband alleges that the wife disposed of a truck, prior to separation. He says he approved the sale only on condition that its proceeds were used to pay her taxation debts.[24]
[24] See husband’s affidavit of evidence filed 21 January 2008 at paragraph 19
·The husband is critical that the tax debt was not reduced. As such, he says the value of the truck ($20,000.00) should be added back into the parties’ pool of assets and credited against the wife’s entitlements.
·The wife agrees that the proper value of the truck was $20,000.00 and it was legitimately sold for this sum to a Mr C in July of 2006 with the proceeds used for legitimate household purposes and to discharge debt.[25]
[25] See exhibit W2
·The husband acknowledges that he sold a colt by [S] for $15,000.00, after the parties separated.[26]
[26] See annexure F to the wife’s affidavit filed 24 January 2008
·As such, the wife contends that this sum should be added back into the parties’ pool of assets and its value credited against the husband’s entitlements.
·The husband’s position is that he has been in straitened financial circumstances since the parties separated and financial necessity drove him to sell the colt to meet his day to day living expenses, which are neither extravagant nor unreasonable. As such, there is no call for this sum to be notionally added back.[27]
[27] See NHC & RCH (2004) FLC 93-204 at 79,314
·The parties operated three small businesses during their marriage: the farm; the cleaning business; and the horse breeding and insemination business. Necessarily, these businesses accumulated plant and equipment.
·In addition, the parties accumulated items of personalty and furniture during the nearly thirty years of their marriage.
·There exists considerable dispute about the inventory of this property; its overall value; and how it should be treated, particularly given as many of the items of property have been disposed of.
·The wife alleges that the husband has sold plant and equipment to the value of at least $25,700.00.[28]
[28] See Schedule 1 to the wife’s written submissions at items 8 & 10
·She says these items have been legitimately valued.[29] As such, the husband sold these items at his peril and they should be notionally added back into the parties’ pool of assets and credited against the husband’s entitlements.
·The husband does not accept these various valuations as being accurate. He acknowledges selling some items of plant but not for the sums which the wife asserts represents their proper value.
·Rather it is his position that he sold plant and equipment to the value of $9,000.00.[30] He has produced no receipts to justify this sum.
·In addition, it is his position that financial necessity drove him to sell the items in question, particularly the parties’ joint liability in respect of the mortgage on the Property D property. As such, he asserts that it would be fundamentally unfair to him to add back these items of property.
·Essentially, the husband says it would be unreasonable for both the court and the wife to expect him to live in a state of “suspended economic animation”, when he had pressing financial needs to satisfy.
·On the other hand, the wife requires a more rigorous financial accounting and asserts that it is open to the court to conclude that the husband has had the exclusive benefit of these items of property.
·The wife’s case is also predicated on the basis that she has sufficiently established a documentary basis for significant liabilities of the parties, which relate to the period of their marriage.
·These liabilities will remain her responsibility in future. Given this state of affairs, she asserts that both these debts and items of property disposed of between the date of separation and now need to be taken into account and notionally allocated between the parties.
·The exploration of the evidence relating to these complex issues took much time.
·A minor issue arises relating to a funeral plot valued at $770.00 and a Holden Commodore motor vehicle, which the wife asserts is properly the value of the parties’ daughter [T].
[29] See exhibit W14 valuation of [H] Auctions dated 4 July 2007
[30] See husband’s statement of financial circumstances filed 21 January 2008 at paragraph 59
Secondly, I must ascertain the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.”[31]
[31] See Family Law Act s79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
In assessing the parties’ contributions to the acquisition of the assets of their marriage, it is necessary to consider whether the court should adopt a global approach or an asset by asset approach. In the former, the court assesses the parties’ contributions to their assets in a total or comprehensive manner. In the latter, the court assesses the parties’ contributions to individual items of property.
The global approach is the method generally adopted because it is usually the more convenient, particularly when the court is assessing different types of contributions – home making and financial – towards the acquisition of the various assets concerned.[32]
[32] See Norbis v Norbis (1986) FLC 91-712 at 75,268
Pursuant to section 90MC of the Family Law Act 1975, superannuation interests are to be treated as property. Specifically, pursuant to section 90MS of the Act, superannuation interests may attract the operation of section 79 of the Act.
Necessarily, such an exercise requires the valuation of the superannuation interest in question. However, by its nature, superannuation is a different “species of asset” to other more easily disposed of assets, such as real and personal property, which are often described as being “conventional assets”.
For this reason, it has been held to be appropriate for superannuation assets to be placed in a separate pool of property to other items of property and the parties’ respective contributions towards their acquisition and preservation to be assessed separately. In addition, different considerations of justice and equity may apply to the division of superannuation interests because of the special nature of that property.[33]
[33] See C & C (2005) FLC 93-220 at 79,646
The second step occasions controversy between the parties in the following major areas:
·It is the wife’s position that the entire amount of the husband’s CSS pension entitlements were accumulated during the marriage, as such, the parties various contributions to the acquisition of this particular “species of asset” need to be assessed, regardless that the asset now produces an income stream.
·It is the wife’s position that her overall contributions, both as an income earner and home maker, have been superior to those of the husband. As such, the court must be careful not to undervalue her very significant non-financial contributions, particularly in the context of assessing contribution towards the CSS pension.
·The wife contends that it is largely immaterial, to the assessment of these contributions, that the husband attained the entitlement because of his ill-health and the loss of employment opportunities to him at [L].[34]
[34] See M & M (2006) FLC 93-281 at 80,813
·The wife assets that the court should only exercise its discretion not to split a superannuation asset, whether in its payment phase or otherwise, only if there are other assets available to divide between the parties concerned, which would accord overall justice and equity to them, on the basis of a proper assessment of their various contributions.[35]
[35] Ibid at page 80,814
·The husband asserts that his contributions to the CSS pension are markedly superior of the wife.
·In particular, he draws attention to the reason why the pension was allocated to him and the fact that it is analogous to a source of income, regardless of its capitalised value.
·The husband refutes any suggestion that his contributions have been inferior to those of the wife. Overall, it is his position that the parties’ respective financial and non-financial contributions should be regarded as equal, other than in respect of the contributions made by his parents.
·In the period post separation, the husband asserts his contributions have been markedly superior to those of the wife, as he has struggled to pay the mortgage payments required on the Property D property on a very limited income.
·The wife says she has attended to other of the parties’ debts, about which the husband has been in a state of denial.
·The husband asserts that his parents contributed a sum of around $50,000.00, which was put towards the purchase of the Property G home in 1989/1990 and the purchase of a motor vehicle.
·Given the nature of his relationship with his parents and the fact that these donations were made because of the husband’s Crohn’s disease, he contends that these are contributions to which he alone is entitled.[36]
·It is the husband’s position that this contribution is so disproportionate to other of the parties’ contributions that it now merits “special recognition”, in his favour.[37]
·The wife concedes that the husband’s parents did contribute some funds but asserts they were in the magnitude of $33,000.00.
·It is also the wife’s position that a significant portion of this sum has been repaid by way of regular instalments. Given this fact and the period which has elapsed since the contribution was made, the wife contends that the contribution concerned does not merit any special recognition.
·The husband concedes that some recurrent repayments were made to his parents at the rate of around $20.00 per week. Given the small amount of these payments, the husband contends that they amount no more than to a nominal amount of interest on the sums advanced and are of no account.
[36] See Kessey & Kessey (1994) FLC 92-495 and Pellegrino v Pellegrino (1997) FLC 92-789
[37] See Pierce & Pierce (1999) FLC 92-844 at 85,811
At the end of the second stage, it is the husband’s position that his contributions are significantly greater than those of the wife, particularly when the donations of his parents are taken into account. As previously indicated, he believes that a range of 10/15% weighting in his favour is justified in all the circumstances of this case.
On the other hand, although she asserts that her overall contributions have been greater, the wife accepts that an equal division of assets, including the husband’s CSS pension, is appropriate.
In respect of the CSS pension, it appears to be the husband’s case that the court should assess the parties’ respective contributions towards it separately, particularly given that it is in its payment phase and there is thus an air of artificiality in regarding it as a capital sum. On this basis, he seems to submit that it is appropriate that his contributions towards it be adjudged as being total.
On the other hand, given the paucity of the parties’ other “conventional” assets and the burden of debt under which she currently labours, it is the wife’s case that it would be fundamentally unfair to her if the pension was treated in this way.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2)(o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
In the main, section 75(2) deals with the prospective needs of the parties. This area too, occasions controversy between the parties in the following areas:
·The husband categorises the wife as a resourceful and enterprising person, who has engaged in a wide variety of employment. As such, he contends that her income earning capacity is much greater than his is.
·On the other hand, the husband categorises himself as having almost no income earning capacity due to his age and poor health.
·In contrast, the wife points to the fact that the husband was in paid employment as recently as April of 2008.[38] As such, she contends that the husband’s income earning capacity is not currently exhausted.
·In particular, the wife contends that the husband could engage in farming; livestock handling; or truck driving; as he has done in the past.
[38] See exhibit W9
At the end of the third stage, it is the husband’s position that he should be allowed another ten percent by virtue of relevant section 75(2) factors. On the other hand, it is the wife’s position that there should be no further adjustment, in favour of either of the parties, arising from the matters listed in section 75(2).
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[39]
[39] See Russell v Russell (1999) FamCA 187
Accordingly the fourth step is for the court to take a step back and examine whether the orders it proposes are just and equitable. In this regard, the husband asserts that it would be unfair if she receives anything less than sixty percent of the net matrimonial property, given his health and income earning position now and in future.
It is also the submission of the husband’s counsel that given
Mr Laporte’s pension only provides him with a modest level of income, it would be fundamentally unfair and unjust to reduce it any way.[40]
[40] See Mr Heinrich’s submissions at paragraph 11.2 – 11.4
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[41] or of equalisation of assets or financial resources.
[41] See Waters & Jurek (1995) FLC 92-635
At the outset, I am at pains to point out to the parties that the task I must undertake is not a simple accounting or arithmetical task. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretation.
Marriage is by and large a joint enterprise. How much buffer spouses must give one another, when financial set backs occur, must depend on the degree of consultation and acquiescence in their relationship.[42]
[42] See D & D [2003] FamCA 473 at paragraph 49
The task, set out for me in this case, requires me to balance and compare contributions which are by their nature different, within the framework of a marriage. Many contributions in a marriage, such as being a homemaker, do not result in the direct acquisition of assets. They are also difficult to value. The discretion I have is a wide one.
The evidence
The wife seemed to me to be an honest and credible witness. Certainly, she had a much more thorough knowledge of the family’s finances, particularly during the latter part of the parties’ marriage. She also seemed to me to be energetic and hard working.
The wife was obviously the financial brains behind the operation of both the cleaning business and [B]. As such, she attended to the payment of the necessary accounts and knew, in a general sense, how much money was coming in and, more importantly, going out.
However, my impression is that she did not conduct the accounts with a high degree of rigour. She is not one for elaborate ledgers, rather she belongs to the “shoe box” school of accounting, where records are held in the mind and invoices are piled up haphazardly in a manila folder or some other handy container.
Accordingly, it seems likely to me that the wife was somewhat lackadaisical about monitoring cashflow and make provision for the payment of bills. This is most evident in the parties’ current parlous position, so far as tax is concerned, which developed in the latter stages of the marriage.
However, if the wife’s accounting systems can be criticised for being primitive or lacking in method from time to time, her financial knowledge of the parties’ affairs is infinitely greater than that of the husband, who confessed that he left all such matters to the wife, whom he trusted implicitly. The husband is most certainly not a sophisticated person financially.
Like the wife, my impression of the husband is that he is an honest person, at times painfully so. The husband was ill-prepared emotionally for the parties’ separation, which the wife initiated, leaving the husband bitterly disposed towards her. He is still coming to terms with the separation, particularly its financial implications. My impression is that the parties’ separation has left the husband emotionally shell-shocked and financially paralysed.
Overall, he is in a state of denial or paralysis about the proceedings. Certainly he has not been able to engage, in a meaningful way, in the resolution of the issues arising between the parties or to work constructively with the wife to avoid the ever deepening financial disaster, which threatens to envelope them.
It is only after the parties’ separation and after the husband has become painfully aware of the importance of the wife’s financial input into the marriage that he has become suspicious about her previous financial management. His case against her, in this regard, is one of suspicion and innuendo and, to my mind, he was unable to provide any comprehensive evidence to suggest any financial misbehaviour on her part.
The only basis on which the husband asserts that the wife has secreted funds away from him is his conviction that, after so many years of mutual hard work, the parties ought to be better off financially now. The wife was able to comprehensively debunk any suggestion that the Property D property should be mortgage free by reason of her comprehensive account of the considerable moneys, which the parties expended on improving it.
The fact that the wife was able to provide this list of improvements and the expenses which related to them, of which the husband seemed to be largely ignorant, confirmed my view that the wife is likely to be a far more reliable financial historian than the husband is. Undoubtedly he left all financial matters to her.
The husband’s bitterness towards the wife have caused him to engage in a number of poorly conceived financial exercises, the most obvious of which involved the sale of the Haynes Hunter boat by him in November of 2007. He has also been unwilling to consult her about selling other items of property, which he says were above board and for proper value but driven by financial necessity. He provides no accounting in respect of these transactions leading to the wife’s deepening mistrust of him.
I have no reason to doubt the valuation of the boat, which the wife obtained in July of 2007 and which establish a value of $22,000.00.[43] After separation, the wife retained the vessel, no doubt hoping to secure some financial advantage for herself from it.
[43] See exhibit W4
It can be no coincidence that, without prior notice or consultation, the husband clandestinely recovered it, shortly after the parties’ abortive conciliation conference. He then traded the boat in, to purchase another one, in November of 2007, at a value of $12,000.00 against the new boat’s price of $39,500.00, most of which was borrowed.
Given the husband’s situation, at the time, this seems to be a gesture of financial lunacy, perhaps motivated by a desire to get back at the wife. He justifies the sale by the fact that the boat’s transom had rotted, supposedly as a result of the wife’s neglect, but provides no independent evidence in support of this assertion.
From the wife’s point of view, the transaction is evidence that the husband has wasted around $10,000.00 of the parties’ joint funds, after having acted high-handedly in respect of one of the parties’ assets. In such circumstances, it is little wonder that she is highly suspicious of the husband’s disposal of other items of plant and equipment, in the period after the parties have separated.
For his part, the husband is also suspicious of the wife in respect of how she has engaged in managing the parties’ finances. He too suspects the improper sale of items and the manipulation of accounts. It being implicit in his position that he believes the wife has stockpiled accounts to use against him, in these proceedings, whilst failing to account for income, which has flowed into her hands in the period since the parties’ separated.
The husband categorises the wife’s accounts as a “shambles”. I agree they are not the best kept accounts. However, the difference between the parties is that the wife has some records and some level of facility to provide an oral commentary on them, whereas the husband has neither such attributes.
Undoubtedly the parties’ separation inaugurated a period of intense financial austerity and uncertainty for them both. Two households cannot live as cheaply as one. The movement of the operation of [B] away from the Property D property also intensified these problems. The separation also deepened the crisis arising from the cleaning business and its tax problem.
I accept that after April of 2008, the husband has not worked and prior to that time his employment was intermittent, averaging at best around 17 hours per week.[44] In these circumstances, I accept that he has struggled to meet his necessary living expenses and particularly to pay the mortgage on the Property D property ($197.00 per week).[45]
[44] See exhibit W1 as summarised in Schedule 3 in the wife’s written submissions
[45] See item 21 on the husband’s financial statement filed 21 January 2008
It is in this context that the husband asserts that financial necessity has compelled him to sell assets, particularly so that the mortgage could be paid. The difficulty is that the husband has provided no documentary evidence of these sales other than the assertion that he has sold farming machinery to a value of $9,000.00.[46] Nor has he calculated with any rigour the moneys he says he has expended in satisfying joint matrimonial debts, in the period since separation.
[46] Ibid at item 59
On the other hand, the wife is able to provide valuation evidence in respect of items of property sold and retained by the husband. More importantly, she has documentary evidence that relates to expenses arising from those assets, particularly the horses. In addition, I found the wife’s evidence in respect of the calculation of these various debts to be credible. Whereas, on the other hand, I often found the husband’s financial narrative to be strained.
Although the process in which the court must engage is not a pure accounting exercise, there must obviously be some element of accounting within it. In this sense, the wife’s case is vastly more advanced than that of the husband, who, in the absence of records, must emphasise considerations of fairness.
The wife’s case is a simplified one of double entry bookkeeping. She points to the assets (with nominated values) which each of the parties have or have had in their respective possessions. She can also delineate the debts (almost exclusively remaining with her and the assets which she retains) which relate to those items.
The husband, without such records, can only assert that it would be unfair to him to proceed in this way, which he characterises as too rigid and prescriptive, so far as he has managed his financial affairs in the period since separation. Essentially, he alleges financial sleight of hand, on the wife’s part, in which he is incapable of similarly engaging.
Accordingly, the parties approach the task required in this case in fundamentally different ways. The husband impliedly relies on what was said by the Full Court in the case of NHC & RCH[47] where the court quoted from an earlier Full Court decision of Marker, where the following was said:
“There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.”
[47] NHC & RCH (2004) FLC 93-204
On the other hand, the wife points to what was said by the Full Court in Townsend.[48] She characterises the husband’s sale or disposal of various assets, after the marriage, as being a premature distribution of matrimonial assets, which should be notionally added back into the parties’ pool of assets and credited against the husband’s entitlements.
[48] In the Marriage of Townsend (1994) 18 Fam LR 505
Accordingly, the parties’ respective positions are coloured by their suspicion of and antipathy towards the other. This makes financial fact finding for the court difficult. Things are not assisted by the husband’s financial naivety and inability to keep even the most rudimentary of records.
Overall, I am of the view that the husband’s bitterness towards the wife, at the end of the parties’ long marriage, has significantly affected his objectivity. The wife is by far the better historian and has retained some semblance of financial records. The husband has not.
Accordingly, on balance, I find that the wife is likely to be the more reliable witness. However, considerations of justice and equity must still inform each step of the process. I must be careful not to inflict an injustice on the husband merely because he has behaved foolishly.
Whether an item of property is to be notionally added back into the pool of matrimonial assets, in circumstances where the value of that asset cannot be definitively established because it no longer exists or the situation that relates to an alleged wastage of an asset, must depend on the circumstances of the case concerned and an overall consideration of the justice and equity of the situation.[49]
[49] See In the Marriage of Browne & Green (1999) 25 Fam LR 482
In these reasons for judgment, findings of fact are made on the balance of probabilities. In what follows, statements of fact constitute findings of fact.
a) Chronology
The husband was born at [X] in South Australia in 1953. The wife was born at [Y] in South Australia in 1959. Neither party has had an extensive formal education.
The parties married in 1978, which was the date on which they began to live together and so mix their financial resources. [T] was born on in 1984 and [U] in 1988.
There is no dispute between the parties that their marriage irretrievably broke down on 30 November 2006, when the wife vacated the Property D property. The parties have lived separately and apart in the period since.
Accordingly, the marriage between the parties was one of twenty-eight and a half years duration. The period since separation is around twenty-two months, during which period the husband has remained in the Property D property and paid the mortgage on it.
The required mortgage payments have been in the vicinity of $197.00 per week. On my calculations, the husband has paid somewhere in excess of $15,000.00 towards the mortgage.
It is common ground between the parties that neither of them had assets of any significant value at the commencement of their relationship. At any event, given the length of the marriage between the parties, it would be inappropriate to give any great consideration to the parties’ respective asset position at this time.
b) The parties’ work histories
In the early years of the marriage, the husband worked as a [tradesman]. The wife was a process worker in a [omitted] factory. In 1980, the husband commenced working at [L] as a [tradesman]. By this time, the wife was doing some cleaning work and had also opened a fodder store in M.
The wife took a brief period of maternity leave around the time of [T]’s birth. By this time, she was working as a catering supervisor at [C] Hospital and was also doing some cleaning shifts. The husband continued at [L].
Again, when [U] was born, the wife took only a short period of three months maternity leave. She continued to work at [C] Hospital, as well as doing other cleaning jobs. I have no doubt that the wife worked very hard during the first fifteen years of the marriage, in a variety of paid employment.
The husband was diagnosed with Chrohns disease in the early years of the parties’ marriage. He had his first bowel resection in 1980. He was able to continue working at [L], as a [tradesman], until either 1989 or 1990, when ill health forced him to take early retirement. He had had a further bowel resection in 1988.
1993 was a year of major change for the parties. It was in this year that they purchased the first portion of land at Property D. In addition, the wife began her own cleaning business. The husband had not been formally employed since being invalided out of [L] a few years earlier. He did however receive his superannuation pension.
The husband’s family has had a long connection with harness horse racing. The impression I have is that, during the first decade or so of the parties’ marriage, they saved hard in order that they to might become involved in this industry.
The wife commenced [B] in 1994. She continued with her cleaning business and remained in this employment until after the parties’ separation. With the purchase by the parties of more land at Property D in 1997, the husband began to do more farming on the property. He planted a grain crop annually on the property.
From time to time, the husband augmented his farming activities by doing some casual driving for [H]. The parties cannot agree on the exact date when the husband started at [H]. The wife says it was in the later years of the parties’ marriage, the husband says it was far earlier.
It is impossible to assess what level of income the parties’ respective activities yielded. I accept that the wife worked very hard and utilised whatever income she had for joint family purposes. I also accept that she was closely involved in homemaking duties and parenting the children. She must have been very busy.
Similarly, the husband contributed whatever income he received – either from his superannuation pension or the sale of grain or other farming activities – to joint family purposes. In my view, it is largely immaterial now whether one made more income than the other. Both were doing the best they could and were engaged in common endeavours arising out of their marriage.
At this point, both parties have followed the common human tendency, in acrimonious proceedings such as these, to maximise their own contributions and minimise those of the other. In my assessment, the parties pooled their funds and each contributed, as best he or she could, to the greater financial success of the marriage, which was a common enterprise between them.
Although the wife characterises herself as the dynamo for the family’s activities and essential support, I do not think the husband can be regarded as an idle bystander. The parties were a family together. They brought up the children together and again each did the best he or she could do in this regard.
c) Acquisition of property
The parties’ first major purchase was a block of land at Property R in 1977 for a sum of around $6,000.00, $4,000.00 of which was borrowed with the remainder coming from savings. The Property R land was sold in 1980, with its proceeds being used to purchase the parties’ first home at Property M for $25,000.00, most of which was borrowed.
In 1981, the parties purchased another block of land at Property G for $10,000.00. The parties subsequently built a home on this land for a sum of around $26,500.00. Property M was sold to finance the construction costs, with the remaining sums required being borrowed.
In 1993, the parties purchased an interest in a block of land at Property D with friends, Mr and Mrs R, who shared their interest in harness horses. The parties’ contribution towards the purchase price was $27,500.00.
In 1994, the wife and Mrs R began breeding harness horses at the Property D property. Later again, in 1996, the wife and Mrs R became involved in artificial insemination. They sold some of the yearling horses, which they bred, at the property, for a profit.
In 1997, again with Mr and Mrs R, the parties purchased a second portion of land at Property D. The parties’ contribution towards this land was $45,000.00. Most of this sum was borrowed by way of a mortgage secured against the property.
It was with the purchase of this second block of land that the husband became more involved in farming activities at Property D. The parties began to purchase items of equipment, associated with both the farming and horse breeding businesses, from the time of the acquisition of the land at Property D. In 1998/1999 the parties and Mr and Mrs R first began to improve the land at Property D by building sheds and yards on it, associated with the horse breeding business. The parties continued to live at Property G.
The husband’s forced retirement from [L] constituted a considerable restriction on the family’s financial resources. In these circumstances, the husband’s parents wished to assist the parties, through a gift to them, to help them through this difficult period.
As previously indicated, there exists some dispute between the parties as to the extent of the gift. The husband asserts that it was around $50,000.00 and says it was utilised to discharge the mortgage on the Property G home and to purchase a motor vehicle for family use. The wife asserts that the gift was around $35,000.00, $22,000.00 of which was used to discharge the mortgage with the remainder being utilised to purchase a car.
Neither party is in a position now to produce any definitive financial records in respect of the gift, which occurred over eighteen years ago. At the time, it was an extremely generous gift. However, with the effluxion of time, its impact has inevitably diminished.
It is also likely that a small regular amount of around $20.00 per week was paid by the parties to the husband’s parents in consideration of the advance. Obviously this sum would never have amounted to any significant reimbursement of the sum and must be regarded as largely token.
The wife seemed to me to provide more detail in respect of the various transactions involved and her evidence, on balance, seems to me likely to be more reliable than that of the husband. However, in financial terms, the difference between the parties’ respective positions is not really all that great.
In 2001, the parties decided that they wanted to live at Property D. Accordingly, they arranged for the construction of a home at Property D, at a cost of $110,000.00, which was funded by a mortgage from the Bendigo Bank. Around this time, the parties purchased the interests of Mr and Mrs R in the Property D land, although they remained in business together.
The wife has produced evidence,[50] which indicates the parties drew down around $145,000.0 from their home loan around this time. The loan repayment required being $463.00 per fortnight.
[50] see Exhibit W15
The parties sold their home at Property G in 2003 for the sum of $185,000.00. The proceeds were utilised to pay off borrowings incurred in respect of the purchase of the home and land at Property D. On this basis, the husband is at a loss to understand why the Property D property continues to be encumbered with a mortgage in the sum of just under $100,000.00. As previously indicated, he suspects some malafides on the part of the wife.
I can find no evidence to support any suggestion that the wife has behaved inappropriately. Although both parties strike me as being frugal by nature, the purchase of the additional land at Property D and the construction of the home they both wanted there represented a considerable financial stretch for them.
The wife has provided evidence, which I accept, of the cost of constructing stables, yards, a work track, tack room and barn on the property. She estimates the cost at somewhere between $50,000.00 and $100,000.00. In addition, she deposed that the parties spent somewhere around $40,000.00, after the initial construction costs, in improving the house, which they had had built for them at Property D.
In all these circumstances, there is nothing extraordinary about the current extent of the parties’ indebtedness in respect of the Property D property. As I have previously indicated, the husband’s ignorance about the various transactions involved confirms my view that the wife was responsible for all the day to day management of the parties’ financial affairs and knew what was going on in them. However, in these various transactions, she was following a common purpose which she shared with the husband.
Over their lengthy marriage, the parties have purchased many individual items of property which relate to the operation of the farm at Property D; the breeding of horses at Property D; and various rural interests which the parties share. These items include tractors, trucks, boats, bailers and posthole diggers. As previously indicated, what has happened to these various items constitutes a major bone of contention between the parties.
In addition, throughout the latter stages of the parties’ marriage, the wife was involved in the breeding of harness horses through artificial insemination. The financial ramifications involved in the purchase of frozen thoroughbred horse semen seem to be complicated. I do not claim to fully understand these implications.
Again, as previously indicated, how the cost of providing for the needs of a number of horses, which were bred on the Property D property around about the time of separation, is another major bone of contention between the parties.
The wife’s cleaning business has associated with it a number of items of equipment, including vacuum cleaners; mop buckets; and a floor polisher. These items do not have any great value. Of far greater controversy is how the businesses taxation liabilities are to be dealt with. On the wife’s case, this liability is around $56,000.00.
d) The husband’s health
The husband has undoubtedly suffered from a serious and debilitating illness for many years. This has resulted in him having to undergo a number of bowel re-sectioning operations. His condition is not going to improve but can, at best, only be managed. Dr H’s view is that, in the husband’s case, the disease has taken a “fairly aggressive course”.
As a result of his surgery, the husband has a relatively short bowel. This affects the absorptive capacity of his bowel. In turn this has led to vitamin deficiencies and anaemia. In addition, the husband’s serum albumin level has been worrying low at times. In Dr H’s words, the husband “will struggle with micro nourishment” and will have to monitor his diet carefully.
Currently, the husband takes a number of dietary supplements. More importantly, he has to take a variety of medications to deal with the inflammation within his bowel. The concern is that this inflammation will lead to a fistula or obstruction of the bowel, which will necessitate further surgery. If this surgery occurs, it will intensify the various difficulties which the husband currently has because he will have even less bowel.
At present, one of the husband’s more serious symptoms is that he suffers from constant diarrhoea. The husband is likely to pass three to eight loose stools per day “with some urgency”. I accept Dr H’s assessment that the husband’s illness is to be regarded as chronic. These various difficulties, in Dr H’s opinion result in it being unlikely that the husband will ever be able to work again, certainly to do heavy manual work. In Dr H’s opinion, at best, the husband “may be able to do the odd day’s work”.
It is the wife’s position that the husband has played on his difficulties from time to time. This is not Dr H’s view. He has been treating the husband since 1995 and regards the husband as stoic in his response to the debilitating consequences of his illness. My assessment of the husband accords with Dr H’s. In my assessment, the husband is suffering from a chronic and debilitating illness. It is to his credit that he has been able to manage, as well as he has done, up to this stage.
In support of her case, the wife points to the fact that, until fairly recently, the husband was engaged in regular employment with [H]. This involved him driving to Melbourne regularly and handling thoroughbred horses. It is the wife’s case that it is self apparent that the husband was able to cope with this level of employment, which involved some physical activity as well as long periods of driving, notwithstanding his Crohns disease.
The husband’s log book indicates that his last interstate driving trip was on the 25th April 2008. Dr H saw the husband in May of 2008. At this time, it was Dr H’s view that the husband had profound anaemia and a dangerously low haemoglobin level. The husband described feeling fatigued and unwell at the time.
Around about this time, the husband was started on a new regime of anti-inflammatory medication. Dr H’s view was that the husband was “very ill”. He describes the husband as being compliant with his medication and other medical directions issued to him. It is the husband’s case that he became debilitated as a result of pushing himself too hard in the early part of 2008. I accept this is so.
Although it is difficult for Dr H to give an accurate prognosis, he believes that the husband’s life expectancy is likely to be slightly shortened. His current regime of drugs will affect this immune system and long term use of steroidal medication, used to combat inflammatory conditions, has implications for a patient’s bone density.
It was Dr H’s opinion that the husband was suffering some level of reactive depression. Anxiety and stress are not, for obvious reasons, regarded as good influences on inflammatory diseases. Dr H was hopeful that the husband’s condition would settle somewhat once the stress occasioned by these proceedings had diminished.
Dr H acknowledged that the husband was unlikely to have significant problems driving or that he had any other issues to do with his mobility. However, in Dr H’s view, on one of his “bad days”, the husband would struggle to complete a long trip. At this stage, given his age and illness, Dr H regarded heavy manual work involving livestock as being beyond the husband’s capacity. At best, he considered that the husband would be able to do casual, light work.
I have no reason to discount Dr H’s opinion. I accept his assessment that the husband has done well to obtain as much paid employment as he has during the first portion of 2008. It also seems to me that this employment has also come about because of the husband’s personal relationship with the previous owners of [H] and their sympathy for him. Given the change of ownership of the business, it is unlikely that this situation will prevail in future.
As a result of his view of Mr Laporte’s illness, Dr H has assisted the husband to apply for a disability support pension. I accept Dr H’s evidence that he does not assist his patients in this regard “lightly”. Rather, he is doing so because he realises the husband’s “limitations are real”.
Overall, it is Dr H’s view that the husband “will not return to robust good health”. As a result, Dr H does not believe the husband will ever be able to engage in conventional full-time employment at any stage in the future.
e) Events since separation
The parties’ separation was a financial disaster for both of them and seems to have accelerated the unravelling of their economic security. Prior to the separation, there were worrying indicators, particularly in terms of the taxation debt of the cleaning business, that all was not as it should be in the parties’ finances.
Unfortunately, due to the difficulties occasioned by their separation, the parties have been unable to agree on a common approach to dealing with these financial problems, particularly how debts should be managed and what items of property sold off to reduce their mutual indebtedness. In this regard, the parties have acted independently of one another and this has led to a growing sense of suspicion between them.
The husband is suspicious regarding the sale by the wife of a tray top truck for $20,000.00, shortly prior to separation. It is his case that he only authorised the sale of the truck in order to reduce the wife’s taxation liability.
I accept the wife’s evidence that the truck was properly sold to a Mr C, for $20,000.00, in July of 2006. The moneys were paid into the parties’ joint bank account and gradually whittled away in the payment of recurrent expenses. I do not think that there is anything sinister in this but it confirms my view that the parties were, to some extent, living beyond their means at the time.
On separation, the wife had to make arrangements to reaccommodate herself. Later, she had to deal with the expenses occasioned by these proceedings. She also had to make arrangements in respect of a number of horses which had been bred at the Property D property. These factors put considerable pressure on her finances. In such a situation, she was unable to make any contribution towards the mortgage on the Property D property.
In the period post-separation, both parties have struggled financially. The wife has been more adept at documenting her difficulties than the husband. However, I accept the husband has had to liquidate items of property, in order to pay matrimonial debts, particularly the mortgage on the Property D property.
In these circumstances, I propose allowing the husband a slight advantage, in respect of the assessment of post-separation contributions, made towards the parties’ non-superannuation assets to reflect these factors. This adjustment primarily reflects the husband’s contributions towards the mortgage.
However, such an adjustment will also reflect the fact that the husband did not necessarily sell the items of property for the sums estimated by Mr B which have been notionally added back into the parties’ pool of assets. In addition the adjustment reflects the fact that the husband has not been as proactive as the wife in recording his payment of marital debts.
In my view the modest adjustment is justifiable because, if not made, there is the potential for injustice to be accorded to the husband by treating the section 79 function as an accounting exercise in which he has not taken an active part. I propose dividing the parties’ net non-superannuation assets in the proportion 52/48 percent in the husband’s favour to reflect these factors.
The husband’s position is that the parties’ contributions towards the acquisition of his CSS pension should be assessed independently of their contributions to the other more conventional items of their property. It being his ultimate position that, given the pension results from his personal level of disability, his contributions towards that pension are intrinsically different to those made by the wife and should essentially be regarded as total.
In my view, for the court to adopt such an approach, would be potentially inequitable to the wife, given the value of the husband’s interest in the superannuation scheme, when compared with the value of the parties’ other assets. In addition, there can be no doubt that the husband’s interest in the CSS pension was acquired by him entirely within the period of the parties’ marriage. He made no contributions towards the superannuation scheme before 1978, when the parties married.
In essence, the husband’s entitlement to the CSS pension was derived entirely as a result of contributions made during the marriage. These contributions included direct financial ones made by the husband to his then employer, [L] and also indirect ones made by the wife, which enabled and facilitated the husband’s employment in the workforce. The husband’s disability triggered the payment of the pension but is not the sole factor which enables its receipt by the husband. In my view, the wife has clearly contributed to the pension’s acquisition, within the terms contemplated by section 79(4)(a).
Accordingly, it would be an error of principal to regard the husband’s CSS pension simply now as being an income stream alone, rather than an item of marital capital. That being so it must be valued as such according to the prescribed methodology. Next, the form of any splitting order must be considered, by the court, within the context of section 79(2) of the Family Law Act and as such, the court must determine, on the basis of considerations of equity and justice, how the pension is now to be split, if at all.[67]
[67] See Treloar & Treloar (No2) [2007] FamCA 1127 per Strickland J at paragraph 238
The husband’s case is that it is artificial (and so unfair to him) to regard the CSS pension as having a relatively large capital value (particularly when it is compared to the value of the parties’ other assets), when it produces a modest recurrent income stream for him, which barely provides enough support for him to live on.
The Family Court has pointed out that the valuation method prescribed by section 90MT(2) and the regulations under the Family Law Act is not to be regarded as providing an “artificial and arbitrary exercise”. Rather, it provides the best means of providing some “reality check” in respect of the division of a superannuation asset, which provide an income stream.[68]
[68] See T & T (2006) FLC 92-263 at 80,464 per Watts J at paragraph 117
Accordingly, the value of the husband’s CSS pension is not to be regarded as illusory or artificial. Rather, the valuation provides some approximation of what would be the necessary capital outlay to purchase such an open-ended income stream at some stage in the future.
Obviously the fact that the husband has an entitlement to receive a recurrent weekly pension, for the remainder of his life, represents a significant benefit for him. The wife’s contributions to it can only be assessed if it is given some form of capitalised value. This is so its worth can be compared to other more “conventional” assets.
The husband joined the relevant superannuation scheme in November of 1978, a few months after the parties married. He contributed to the scheme for around twelve years, during all of which period the wife was in substantial paid employment and was also making significant non-financial contributions towards the overall good of the family.
Since 1990, the husband has made no direct financial contributions towards the CSS pension. It has not provided a sufficient source of income to support the family. In these circumstances, the parties have had to look to other sources of income. The husband has had some farm income but, in the main, the necessary income support for the family has come from the wife.
I acknowledge that the pain and disability resulting from the contraction of Chrohn’s disease is the husband’s alone and the payment of the pension arises as a result of these factors, which preclude him from participation in the workforce.
However, it is difficult to see how this can be regarded as some sort of unique species of contribution, the assessment of which benefits the husband alone. In addition, it is impossible to correlate this type of “contribution” to those types of contributions which are defined in section 79(4)(a), (b) and (c) of the Act.
In my view, the fact that the payment of a superannuation benefit, in recurrent form, is triggered by the occurrence of a disability is no different from the situation arising if the payment is triggered by some other factor, such as retirement or the attainment of a particular age, so far as the question of contributions made towards that asset, pursuant to the provisions of section 79(2) & (4) is concerned.
Accordingly, in my view, the wife is entitled to receive the full benefit of the contributions she has made during the parties’ marriage towards the acquisition of the husband’s entitlement in the CSS pension. In addition, in my view, it is immaterial to the assessment of those contributions that, at present, the husband is not able to be part of the paid workforce and the wife, as a result of her employment, is able to earn a sum of money significantly greater than the husband’s recurrent pension.[69]
[69] See Jarman & Jarman (2006) FLC 93-289 at 80,950
In my view, the parties various contributions towards the acquisition of the husband’s CSS pension should be adjudged as being essentially even. It would be inappropriate to exclude the pension from the pool of assets merely because any division of it will result in difficult financial circumstances for the husband because of his level of disability.
Necessarily, the court is required to look at retrospective contributions at the second stage. It would be inequitable to discount its assessment of those retrospective contributions because of future difficulties which may result to one or other of the parties. These considerations belong to the third step and considerations of the overall justice and equity of the ultimate outcome.
Step three – section 75(2) factors – the prospective needs of the parties
Subsection (a) – The husband is fifty-five years of age. He is in poor health. The wife is forty-nine years of age. She has some health issues, exacerbated by stress. Otherwise, she seems to be a vital person, whom one would expect to have at least a decade of productive employment before her.
Subsection (b) – The wife has shown herself to be a resourceful person, during the parties’ long marriage. She has always been in paid work and has been able to operate a number of businesses in addition. However, apart from her knowledge of the cleaning industry and her experience in horse breeding, she has no specific or highly marketable skills to speak of.
As a result, at present, she has a secure but unskilled position at [K]. It provides her with a modest income. As a result, she cannot be regarded as financially secure. In particular, she has made no provision for her retirement.
The husband is to be regarded as a chronic invalid. He has a serious and debilitating illness, which is incurable and likely to deteriorate. He has no specific skills to speak of and, given his age, the prospects of him being retrained are negligible.
As a result of his age, the level of his skills and, above all, his state of health, the husband is not likely to return to any permanent or full-time employment in the future. As a result, his ongoing financial security must be regarded as doubtful and, as such, he is likely to be reliant on social security payments for the remainder of his life.
The husband does however have a significant advantage over many other recipients of the disability support pension. He has an entitlement to a recurrent and indexed superannuation pension for the remainder of his life.
As a result of my assessment of the wife’s contributions towards the acquisition of this pension, the husband’s entitlements will be significantly reduced from their present level.
However, whatever is the ultimate outcome of these proceedings, the husband will retain this form of financial “safety net”, which is a very significant resource indeed. Its receipt will ensure that the husband remains significantly better off than a person in receipt of a disability support pension alone and its receipt will mean that the husband’s old age has some semblance of financial security.
At this stage, the parties have differing prospective needs. The wife has a far greater need to maintain and accrue capital. On the other hand, the husband needs income. As a result of the decision I made, at the second stage of proceedings, the wife will have a significantly greater income than the husband. This situation will change when the wife retires from the workforce and, like the husband, is also in receipt of some form of government benefit as a major component of her financial support.
As I have previously indicated, it seems likely that the wife will remain a modest income earner for the next decade or so. During this period, the husband is unlikely to engage in anything other than sporadic and casual employment. Although I have grave reservations that even this level of employment is likely to occur.
Accordingly, for the next ten years or so, the husband will be required to derive his recurrent income from what I have characterised as an item of marital capital, the pension, as he will be unable to work. The wife, being able bodied, is able to derive her income by reason of her personal endeavours, at least for the medium term.
However, on the wife’s retirement from the workforce, likely to be at the earliest in 2019, when she will be sixty years of age, as matters currently stand, the incomes of the parties will equalise. It is also not beyond the bounds of possibility that the wife will work on into her sixty-fourth or sixty-fifth year or indeed beyond.
The difficulty, which this case throws up, is that the husband’s entitlements, in the CSS pension, can be only split once. The parties’ marital contributions towards the acquisition of that benefit having now crystallised. As such the asset will remain essentially as it is.
However, their prospective needs, over the next twenty years or so of their lives, are likely to change dramatically from each of their perspectives. Accordingly, the court needs to make some estimation of the level of all those needs, in order to do individual justice to the parties concerned, when the split is made now.
I think it is a factor, which militates in favour of an adjustment, towards the husband, so far as the CSS pension is concerned, that he has a greater need for a reliable stream of income than the wife, over the next decade or so.
The downside of such an adjustment is that it is potentially unfair to the wife that she is left with the prospect of living in penury, comparative to the husband, in her retirement and old age, when her major source of income will be social security, whereas the husband will have a greater superannuation pension as well as access to either the aged pension or disability support pension.
These are difficult issues with which to grapple. At present, the wife’s income is greater than that of the husband. With the equal split of the CSS pension, resulting from my assessment of the parties’ respective matrimonial contributions, the wife’s recurrent income will rise, whilst the husband’s will dramatically fall, putting aside his likely receipt of a disability support pension. In the short to medium term, this seems to be inequitable to the husband.
The answer to the conundrum would appear to be for the court to engineer any split in the CSS pension to enable the husband to have an appropriate income in the short to medium term and also enable the wife to have a sufficient level of income in that period to enable her to make sufficient provision to provide for her retirement, either through contribution to superannuation or in some other fashion, which she deems appropriate.
Subsection (c) – This is not a relevant consideration.
Subsection (d) – Both parties appear to live modestly. Currently, the wife is living in rented accommodation. In the longer term, she would like to purchase some form of accommodation for herself.
The parties agree that their former matrimonial home needs to be sold. Accordingly, the husband will also have to find alternative accommodation for himself. Accordingly, the matters which fall for consideration under this heading do not favour one party more than the other.
Subsection (e) – This is not a relevant consideration.
Subsection (f) – I have already considered the significance of the husband’s entitlements pursuant to the CSS pension scheme. These benefits include a revisionary aspect. In terms of the average length of human lifespans, the husband is to be regarded as being in middle age.
Although his illness may have consequences for his longevity, he is likely to have many years of life before him. As such, I must be careful not to undervalue the significance of a recurrent and indexed pension for life.
The wife has not made ample provision for her retirement. She is younger than the husband but has limited time in which to accrue superannuation. She will not be able to join a superannuation scheme, such as the CSS, which provides the significant defined benefits to its membership, which the husband has received.
Subsection (g) – One of the sad consequences of the end of the marriage between the parties is an inevitable reduction in the standard of living for them both. It is trite, but true nonetheless, that two households cannot live as cheaply as one. What is important, in respect of this subsection, is that any drop in standard of living should not be borne disproportionately by one party.
Again, considerations of this kind are germane to a consideration of the import of a superannuation split both now and when the wife retires from the paid workforce. Given the length of the marriage between the parties, it would be unfair, in my view, if one party had a more financially comfortable retirement than the other. Similarly, it is potentially unfair if, given his level of disability, Mr Laporte is left financially disadvantaged, whilst Ms Penfold is able to work.
Subsection (h), (ha), (j), (k), (l), (m) & (na) – I do not think that any of these subsections have any particular application in the present case.
Subsection (n) – As matters presently stand, I have decided to divide the parties’ non-superannuation assets approximately equally. After the payment of their mutual debts and the sale of the Property D property, such an outcome will leave each of the parties with a modest amount of capital, which is likely to be insufficient to purchase fully any form of alternative accommodation for each of them.
Accordingly, as a result of my assessment of their various contributions, neither party leaves the marriage in a significantly better capital position than the other. Given their respective circumstances now, I do not believe that it is appropriate to change this relative position in respect of either of the parties.
Subsection (o), (p) – Neither of these sections is relevant in the present case.
Conclusions – section 75(2)
Having considered all the applicable section 75(2) factors, I am not satisfied that any adjustment is merited in favour of one or other of the parties in respect of their non-superannuation assets. The issue so far as the CSS pension is more complicated.
In my view, at this juncture, it would be fundamentally inequitable to the husband if his recurrent income was dramatically reduced by half, given that he is so significantly incapacitated.
However, the wife cannot be regarded as a wealthy income earner. In my view, a person who earns a salary of around $30,000.00 per annum must be regarded as a low income earner. As such, she has limited scope in which to make provision for her retirement. However, in comparison to the husband, her income situation, although modest, is vastly superior.
This position will change on the wife’s retirement. It is difficult to know precisely when the wife will retire. Given the aging of the Australian population, there exist pressures and opportunities in the workforce, which encourage workers to work on past what was previously regarded as an acceptable age for retirement in the last century. As such, it is not beyond the bounds of possibility, that the wife will work into her late sixties.
As I have already indicated, I regard her as a vital and resourceful person. As such, I think it more likely than not that the stresses occasioned by the parties’ separation will resolve themselves rather than becoming entrenched and more debilitating, so far as the wife is concerned.
Accordingly, it is difficult, if not impossible, to ascertain precisely how long the wife has to prepare for her retirement and so for how long the inequality in the parties’ respective income positions will maintain. Bearing all these matters in mind, I have decided to apportion a further twenty-five percent split, in the husband’s favour, from the CSS pension.
Such a split, at present, will leave the husband with an income, from the pension, of around $12,700.00, which will remain indexed. The split will result in the wife receiving a recurrent income of around $4,200.00 per annum, which if she wishes, she will be able to divert into superannuation. Over a decade or so, this may provide her with a solid body of capital for retirement, depending on the circumstances of the market.
These are considerations which go to the maintenance of the parties, both in the short/medium and longer term. Pursuant to section 75(3), I am directed to disregard a person’s entitlement to a social security pension in assessing issues to do with maintenance.
However, the fact remains that the husband will be able to dovetail his CSS pension with his entitlements to a disability support pension so that he receives an adequate, if not ample level of recurrent income.
Conclusions – section 79(2) – is this a just and equitable outcome
The final step in determining property proceedings is to stand back and consider whether the proposed result represents a just and equitable outcome. Considerations of justice and equity must inform each step of the court’s process and the overall result.
It is all very well to talk in percentage terms, so far as orders are concerned, but at the end of the day what matters to the parties is what the orders mean in dollars and cents and what effect they have on their respective long term aspirations.
The hardest cases are those where the asset pools are modest but the needs of the parties concerned are great. This is one such case. The difficulties being compounded by the husband’s level of disability and the fact that neither party has the ability to earn anything other than a low income. As such, in order to accord justice and equity to each of the parties concerned, the court has little margin for error.
The end of the parties’ marriage was a financial disaster for each of them. My impression is that they were over committed financially and unable to make provision for the payment of debts, as they fell due. Regrettably, they have not had a united approach to the challenges created by this state of affairs but have managed their debts by the haphazard sale of assets.
I have endeavoured to deal with the difficulties created by this state of affairs, as best I can. The various debts will be liquidated and the parties each left with a modest amount of capital, which is not likely to reflect their significant and onerous contributions over the twenty-eight years or so of their marriage.
As I have endeavoured to point out, the exercise I must follow, pursuant to section 79, is not a mere accounting exercise. Necessarily, it must be more inexact than a straight reconciliation of figures alone as it represents the exercise of a discretion.
The parties’ net non-superannuation assets amount to a sum of $372,455.50. This is a somewhat misleading figure, as the parties agree that the Property D property needs to be sold. Accordingly, given the vagaries of the market and the fact that selling expenses will be incurred, this figure may be potentially greater or smaller, depending upon the sale.
Fifty-two percent of the parties’ net non-superannuation assets is represented by the sum of $193,676.86 and forty-eight percent by the sum of $178,778.64.
Putting aside the Property D property, the husband is to be credited with assets and liabilities having a net worth of $57,480.00. On the other hand, on the basis that the wife is liable to pay the vast majority of the parties’ debts ($98,974.50), when the assets she has nominally taken to have retained are taken into account, she is left in deficit in an amount of $49,024.50.
Accordingly, if the Property D property was to realise its exact valuation – an unlikely scenario – the wife would have to receive an additional sum of $53,083.14 in order to ensure that she would receive forty-eight percent of the parties’ net non-superannuation assets.
The result, which I have envisaged, in respect of the non-superannuation assets, sees each of the parties receiving a sum in excess of $170,000.00 from the realisation of their most significant asset, the Property D property. On a fifty-two percent/forty-eight percent split on a net amount of $364,000.00, the husband will receive $189,280.00 and the wife $174,720.00.
In my view, the attribution to each of them of the various other items which they are each taken to have retained is largely illusory. The debts however are very real. The wife will pay the vast majority of these. In such circumstances, she needs to receive a top up from the proceeds of sale of the Property D property.
In round terms, this will leave the husband with around $136,000.00, in cash, which is not likely to be sufficient to purchase a property for himself outright. On the other hand, after payment of all the various debts involved, the wife will have a similar, if slightly smaller sum, which again is likely to be insufficient to reaccommodate herself.
However, the significant advantage, which the wife will enjoy, is that she will have a superior recurrent income. Whether this will be sufficient to allow her to borrow by way of mortgage is unclear to me, in these uncertain financial times.
The next most significant, of the parties’ assets, is the CSS pension. I have determined that there should be a twenty-five percent split, from this pension, in the wife’s favour. This will enable the husband to have a reliable, if reduced level of income support, for the indefinite future.
It will also give the wife some latitude to save for her retirement, which is likely to be some way off. In this way, in their respective retirements, which may be a period longer than the wife will be able to remain in the paid workforce, there is some prospect of the parties having an approximately equal income in retirement.
I acknowledge that these calculations are necessarily somewhat inexact. However, bearing in mind the totality of the evidence and the various legislative provisions applicable, I am satisfied that such an outcome represents a just and equitable one.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding three hundred (300) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 23 October 2008
and Clauson v Clauson (1995) FLC 92-595
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