Lawless and Lawless and Ors

[2011] FamCA 34

FAMILY COURT OF AUSTRALIA

LAWLESS & LAWLESS AND ORS [2011] FamCA 34

FAMILY LAW – PROPERTY – Settlement in relation to marriage – Future needs

APPLICANT: Ms Lawless

RESPONDENT: Mr Lawless

SECOND RESPONDENT: Mr Lawless Senior

THIRD RESPONDENT: Mrs Lawless Senior

FOURTH RESPONDENT: M Pty Limited

FILE NUMBER: PAC 5379 of 2007

DATE DELIVERED: 1 February 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Cohen

HEARING DATES: 25-26 March, 19 April,
27 July 2010

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Champion Legal

COUNSEL FOR THE APPLICANT: Mr Sansom

SOLICITOR FOR THE RESPONDENT: Christopher M. Edwards

COUNSEL FOR THE RESPONDENT: Mr Givney (25-26 March)
Mr Hazelwood (19 April, 27 July)

SECOND AND THIRD RESPONDENTS: No appearance

SOLICITOR FOR THE FOURTH RESPONDENT: McCullough & Associates

Orders

It is ordered:

1. That the husband and wife as trustees of the Lawless Family Trust and the 2^nd,3^rd and 4^th respondents being Mr Lawless Senior, Mrs Lawless Senior and M Pty Limited are to do all things and execute all documents necessary to sell the real property situated at and known as S property within 2 months and after payment of all costs of and incidental to sale including advertising expenses, agent’s costs and commission and legal expenses shall divide the remaining proceeds of sale equally between  M Pty Limited  and the Lawless Family Trust and from the said Trust’s share of the proceed of sale, the husband and wife shall firstly discharge so far as those proceeds allow the debts to G Credit Union Ltd secured by mortgage over the said property and over the former matrimonial home at and known as W property and secondly so far as the proceeds allow discharge the debt of the husband and wife owing to P College and divide any residue by paying 76% of it to the wife and 24% to the husband.

2. The wife shall within one month of the exchange of contracts for sale of the real property at S or if exchange has already taken place within one month of this judgement elect by written notification to the husband’s solicitor whether or not she seeks transfer to her of the husband’s interest in the former matrimonial home situated at and known as W property.

3. In the event that the wife elects not to transfer the husband’s interest in the said home the husband and wife shall do all things and execute all documents necessary to sell and shall sell the said home within 2 months of the date the written notification is sent to the husband’s solicitor and after payment of all costs of and incidental to sale including advertising expenses, agent’s costs and commission and legal expenses shall:

   (a)cause to be discharged any remaining debt secured by mortgage to G Credit Union Ltd over the said property; then,

   (b)discharge any remaining debt of the husband and wife to P College; then,

   (c)pay $223,476.00 of the remainder  to the wife; then,

   (d)pay 76% of the balance to the wife and 24% of it to the husband.

4. In the event that the wife elects to obtain a transfer of the husband’s interest in the said former matrimonial home:

   (a)the wife shall within 21days of the date the written notification is sent to the husband’s solicitor:

   i.pay $57,965.00 to the husband; and,

   ii.pay 76% of any balances of the 3 joint debts of the parties to Y Credit Union Limited and P College; and,

   (b)the husband within 21 days of the date the written notification is sent to the husband’s solicitor shall:

   i.pay 24% of any balance of the 3 joint debts as they then stand to Y Credit Union Limited and P College; and,

   ii.forthwith on receipt of the $57,965 from the wife do all things and execute all documents necessary to transfer and transfer the whole of his legal and equitable estate in the said former matrimonial home to the wife

5. In the event that the wife elects to obtain a transfer of the former matrimonial home but fails to comply with her obligations under order (4)(a) herein the former matrimonial home is to be sold within 2 month of that failure and the proceeds of sale are to be dealt with in accordance with order (3) herein.

6. Liberty to apply in relation to the implementation of the orders for sale in orders (1), (3), (4) and (5) are reserved to each party affected by those orders.

7. Except as otherwise provided for in the above orders all property or other rights or interests held by or in the name of or for the husband and/or wife respectively are hereby declared to be the sole property, right or interest of the husband and/or wife respectively and hereafter the wife shall have no interest at law or in equity in property or other rights of or interests held by the husband and shall not be liable for any or any part of any debt of the husband and the husband shall have no interest at law or in equity in property or other rights of or interests held by the wife and shall not be liable for any or any part of any debt of the wife:

8. Costs are reserved

IT IS NOTED that publication of this judgment under the pseudonym Lawless & Lawless and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: PAC 5379 of 2007

MS LAWLESS

Applicant

And

MR LAWLESS

Respondent

And

MR LAWLESS SENIOR

Second Respondent

And

MRS LAWLESS SENIOR

Third Respondent

And

M PTY LIMITED

Respondent

REASONS FOR JUDGMENT

1. The wife is the applicant in these property proceedings. Her counsel, in his closing address, said that the net assets are in the range of $860,000 - $950,000 in value, including the husband’s rights under an insurance policy, that the contributions were about 50/50 at separation, whereas at trial, the point in time at which I shall ascertain contribution, the wife’s contribution slightly exceeds that of the husband but because of what he claims is a vast comparative discrepancy in the parties’ future needs, there should be a verdict settling between 80% and 90% of the net value of the parties’ assets on the wife with the balance to the husband.

2. The basis for the wife’s argument that the s75(2) factors in the Family Law Act so dramatically favour the wife in that the husband has only a short time to live, and of the parties’ four children, one was a little less that 9 years old and another a little less than 17 years old at the time the hearing concluded. The others were adults.  Originally the adjustment claimed was 30% but, when it became obvious that the parties’ net assets might be much less than the wife estimated, the percentage claimed was increased.

3. Counsel for the husband said that contributions to date ought to be regarded as 55% by the husband and 45% by the wife or up to about 50% each of the slightly less than $500,000 value he attributed to the parties’ net assets. He does not include the value of any insurance policy in the assets. He concedes that the wife should receive about 60% of the value of the net assets limited to assets he has included. He relies on the fact that the wife is in a permanent relationship with a person who has very significant assets and earning capacity.

4. The husbands’ father is a director of a company, M Pty Limited (M Company), in which he and his wife have a 50% interest. The company has a 50% interest in business premises at S (S property). The husband and wife, through their family trust (the Trust) hold the other 50% of this property. The husband’s father and mother and M Company are parties to these proceedings.

5. Originally the wife sought the sale of S property. She now asks that her share by virtue of her interest as beneficiary of the Trust be transferred to the husband. The wife asks to be paid $80,000 in cash. Subject to the execution of certain indemnities and releases from guarantees,  she agrees to be removed as a trustee and beneficiary of the Trust, being the Lawless Family Trust and to transfer her interest in and her liabilities related to the trust to the husband. She asks that the husband be required to transfer his interest in the former matrimonial home at W to her, that its contents be divided equally and that otherwise each party retain the personal property each holds in his and her name or in possession including the husband’s insurance policies, as well as their individual superannuation entitlements.

6. The husband is prepared to transfer his interest in the former matrimonial home to the wife provided she first discharges the mortgage debt secured by it. He will pay the outstanding council rates for it. 

7. The husband holds a right in a superannuation fund; Australian Super. It has been valued at about $30,300. The husband asks that a $24,000 part of it be split and allocated to the wife under s90MT of the Family Law Act and paid to her by the Trustee of the fund when the trustee makes any payment out of the husband’s splittable interest in the fund. If the wife does not discharge the mortgage on the former matrimonial home, he asks that it be sold and, after discharge of the mortgage debt and payment of the costs associated with sale, the balance be paid to the wife. Otherwise, he seeks that the parties each retain the property they hold or which is in their names and be responsible for their own individual debts. Many of the net property values are agreed in or so small they do not warrant disputing. These are:

   W property (joint)   $465,000

   NAB Savings (wife)   $ 457

   Subaru car (wife)  $ 3,000

   Personally funded paid legal costs (wife)              $13,595

   Superannuation (wife)   $5,900

   Bank of Queensland Savings (husband)                  $2,510

   37% of J Pty Ltd (husband)   NIL

   Personally funded paid legal costs (husband)        $15,000

   Australian Super (husband;

   death component only)   $30,320

   ___________

   $ 535,782

   The following liabilities are agreed upon:

   Safeway Credit Union Mortgage (joint)                $207,653

   Safeway Credit Union Mortgage (joint)                $27,405

   School fees $6,559

   ____________  $241,617

8. Significant disputes remain about the value of some property, debts and add backs. The dispute over the value of the Trust’s interest in S property is not based on any dispute between valuers. On 19 February 2010, Collier J made orders permitting each party to obtain individual valuations of this property. Only that obtained by the wife was filed.  The valuer was not required for cross-examination. The wife’s valuation at $515,000 for the whole property must be accepted.

9. The value of Trust’s interest in the property is said by the husband to be worth to the parties, not $257,500 as the wife contends, but between $230,000 and $200,000. The husband argues that the Trust’s share in the property was originally purchased for $200,000, so the profit would be $57,500. On sale, $23,000 in GST would be payable and $5,000 in capital gains tax would need to be paid, so it is really worth to the parties, on sale, about $230,000.

10. I accept his argument because I am satisfied that the husband will sell it. I find that the value of the property as held by the Trust to be $257,500. As the Trust has no assets and liabilities other than S property, its value is the same.  But, to the parties who have agreed with the husband’s father through M Company to sell it, it is really worth about $230,000 for their share after GST and CGT are paid.

11. An insurance policy and the like are the source of significant dispute between the parties. Exhibits “G” and “O” contain the insurance policy in question. There is an identical policy for each party. The husband’s policy was commenced on 1 August 1993. The premium is $28.69 per month. Both the premium and benefit have significantly increased over the years. At the time of hearing, it would have paid about $260,000 on the husband’s death and the same on the husband being diagnosed as having less than 12 months to live due to a “terminal medical condition”. This term is defined to mean one where 2 medical practitioners have certified that the insured suffers from an illness which is likely to result in death not more than 12 months after the date of certification, provided one of those certifying is a specialist practising in an area related to the illness.

12. The wife says that, as the husband will die soon and can claim on it before death, I can regard the policy as having its full value to the husband now and that as “property” in s79 is to be given a “wide” definition, the current value payable under it for a terminal medical condition should be regarded as part of the property available for distribution between the parties.  The husband submits that he has no interest of value in the policy because the conditions for vesting of an interest have not occurred. It has not been shown that two doctors; one a specialist, would, more probably than not, certify that he is unlikely to live for less than a year.

13. There are three medical opinions before the Court, all provided by the husband. Dr T is a consultant cardiologist. His report  of 24 July 2009 is to the effect that the husband suffers from cardiomyopathy with a “level of cardiac impairment” putting him at a “risk of cardiac morbility and mortality”, which is “significantly increased”. He estimated the risk of cardiac morbidity to be “relatively high with a five year survival rate of about 70%”; meaning he has about a 70% chance of living for another 5 years. Dr T was not cross-examined. His opinion would not qualify as one which could be used to vest the husband’s right to be paid out for a terminal medical condition.

14. Dr L is a Consultant respiratory physician. His report is dated 16 August 2009. He was not cross-examined. He saw the husband on referral from Dr T because of the husband’s restrictive lung disease. He said the “severe lung restriction” the husband suffers and his cardiac impairment lead to an ‘increased risk of cardio-respiratory morbility and mortality, which he would expect to give “a five year survival rate of the order of 70%”, precisely the same life span prediction as Dr T.

15. Dr C is the husband’s specialist physician and medical oncologist. She was cross-examined on behalf of the wife. Her report is dated 11 December 2009. In it she expressed her diagnosis of “metastatic carcinoma involving multiple bones and bone marrow without a known primary site”. “Metastatic carcinoma” is cancer which is spreading in this instance throughout his bones and bone marrow. Dr C said in her report that the husband’s condition is not curable and that no treatment was being offered or contemplated other than “palliative chemotherapy”; that is, treatment directed at easing the husband’s symptoms but not to curing his disease. She said in this report his likely prognosis was to live for “months to a year or two”. Of very great moment in the proceedings I must determine is the ultimate comment. It is:

    “I would concur that this patient is currently not likely to be able to coherently consider his medico-legal options and provide instructions. It is unclear at this time if his condition will significantly improve regarding this”.

16. What I regard Dr C as saying is that the husband was not able to be realistic about his future prospects. He gave evidence from which I conclude that he does not accept that he is as close to death as Dr C and his other doctors first thought.  There is reason to think that he is correct. He said after he heard Dr C’s oral evidence, something to the effect that he had beaten statistical predictions before. As a child he had cancer and lost part of his kidney at 3 years and part of his lung 2 years later. Dr C said the husband’s cardiac problems are stable and that it is especially difficult to predict how long the husband will survive because the primary site of his cancer is not known. He does not fall within average generalisations for assessing survival time from the time of diagnosis because he has already survived longer than originally predicted by that method. Dr C said during her oral examination that the husband has been completely stable recently and is in the best 20% of performance for cancer sufferers and that his prognosis is much better than her first estimate; that in her report, and nobody can tell what it is now. Nevertheless, she said he is still unlikely to survive for another 5 years, as he probably already has, but it is not unheard of and, having survived this long, he may go much longer.

17. Having heard this evidence and the opinion he then expressed in the light of Dr C’s assessment of the husband’s ability to be objective about his prospects, I find that the husband is highly likely to continue to believe he will survive his serious illness for much longer than anyone predicts and will not claim his life insurance on the terminal illness basis in the near future. If he does do so, I am quite lacking in satisfaction that two medical practitioners, one with expertise of relevance, would be prepared to say he will die within a year. It should not be overlooked that the onus of proving that two opinions to support a terminal illness claim are likely to be available is on the wife who could have called medical experts but did not do so. The inference is that had they been called their evidence would not have supported her case.

18. Section 47 of the Family Law Act has a definition of “property”. Section 79 requires the Court to make orders it considers appropriate in proceedings with respect to the property of the parties to a marriage or either of them altering interests in that property. Thus the Court can only deal with property in which the parties actually hold an interest. The s4 definition of property reinforces this concept because it defines “property” as “property to which a party to the marriage or both parties to it are entitled, whether in possession or reversion”. This cannot mean prospective rights under an insurance policy which have not vested, irrespective of how wide the definition of property within the meaning of that term might otherwise be. I find the future proceeds of the insurance policy the husband holds are not property available for division under s 79 and that, at present he has no property in that policy. It cannot be attributed a value to him. In any event, the wife has not proven or attempted to prove any present value of a future right once vested. The wife’s policy was not asserted to have any value.

19. The wife argues that the husband’s superannuation has a value of $195,000, approximately. The husband asserts it is worth about $30,320. The wife argues that it has a death component as well as one for total and permanent disability which will entitle the husband to a payment of about $195,000. The husband’s value is attributed in the usual way superannuation is calculated; that is, what he would be paid for contributions to date when it becomes payable, if all future accumulations and contributions cease. This is usually called the preserved benefit because it is not actually payable now. It is because of the Act, s 90MC(1), that the Court must treat a superannuation interest as property for the purposes of paragraph (ca) of the definition of “matrimonial cause” in s 4, although it is not property of a party to a marriage in most instances because the right which would make it property of that party has not vested. “Superannuation interest” is defined in s 90MD to mean “an interest that a person has as a member of an eligible superannuation plan, but does not include a reversionary interest”.  “Eligible superannuation plan” is defined in the same section. It is not disputed that the superannuation fund of which the husband is a member is within that definition.

20. By a letter dated 4 June 2010 which is in the bundle produced by Australian Super and marked Exhibit “N”, the preserved sum is $30,320 and the death or total and permanent disablement payout would be $190,800. The total on death which would be payable is $221,120. However, if the husband can obtain payment on becoming sufficiently disabled, he would not receive his superannuation, only his disability entitlement of $190,800. The $30,320 would be preserved because the husband has not retired and has not reached his preservation age; the age at which he can draw his superannuation if he retires.

1. He was born in 1968, and was 42 when the hearing concluded. The husband’s disability entitlement is not superannuation. It is not an interest the husband has as a member of a fund. It is simply disability insurance. Although the qualifications for vesting on death or permanent disability are wider than for the AMP policy already canvassed because permanent disability is not limited to instances of terminal illness, the only bases I can find on the evidence which would currently qualify the husband for payment are terminal illness and unemployment benefits. The husband is still working casual part time, earning $650.00 per week and, in my assessment will work for some time to come. I believe his stated intention to do so. He said he thought it is better to do something rather than sit in a corner and die. To my knowledge he has had no reason to alter his attitude. The conditions for payment for terminal illness are much the same as those in the AMP Policy. For the same reasons as I found for it, I find that the $190,800, approximately, which is currently the sum payable for terminal illness under the Australian Super policy is not property of the husband. I am not satisfied that he could, if he wishes, successfully establish that he is terminally ill pursuant to the terms and requirements of the policy, so only the $30,320 must be included in the calculation of the property of the husband available for division because it must be treated as property. I have already included this value in the calculation of net property because the way it is to be dealt with is not in dispute. However, the husband does have an unclaimed entitlement for about $12,000.00 in unemployment benefits which, as a chose in action, must be regarded as property.

2. The wife asserts that the husband has retained money and spent it on himself in a manner which warrants attributing a notional $20,000 to his assets. She says he should be regarded as having taken this sum for himself as a notional advance on his share of the parties’ property available for division. It is said by the wife that the husband did this in 3 ways.

3. One was by diverting funds of the parties to the husband’s father. This was done by way of a management fee which was claimed by the husband’s father and his company, M Pty Ltd. The first time it did this was after the parties separated. Separation occurred on 24 March 2007. The management fee was for the management of the tenancies and affairs of the industrial property half owned by the Trust and half owned by M Company from 1 July 2006 to the date of hearing. The property was purchased in 2003. Until 2007 an agent called R Agency handled its letting and rent collection. It took commission and paid half the balance of rent into an account with Y Credit Union in the parties’ joint names. An accountant dealt with GST and BAS returns. When R Agency ceased business in 2007, M Company took over managing the duties R Agency had performed and charged the Trust 5% of its gross rents.

4. The wife says this was a device used for no other purpose than to skim value from the parties’ net assets available for distribution with the purpose of benefitting the husband’s father and thereby the husband with the husband’s consent and connivance.

5. The husband says it was a legitimate business need and expense of the trust. He says whoever did the work was entitled to be paid. As the company; in fact the husband’s father himself, did the work and there is nothing exceptional about being paid for it. The husband said he discussed the issue with the wife and explained that it was appropriate because his father’s company was charging less than it would otherwise cost and inferred that his father would do the job better than others because of his personal interest in doing it.

6. In fact, all that the husband’s father was doing to manage the property was collect rent, pay GST, put in BAS statements and supposedly organise repairs to the property when needed. To calculate and pay GST and put in BAS returns would be exceptionally simple and involve little time. Another estate agent was engaged to collect the rent. There is no suggestion that the husband’s father might be professionally qualified or particularly skilled and experienced and thereby entitled to charge so highly at 5% of gross rentals received when the accounts are kept by a firm of accountants and the rents are collected and accounted for by an estate agent. Nor do I accept he was entitled to back date his charges to 1 July 2006 on 31 October 2009.

7. The next method the wife says was used to defraud her is a claim by the husband’s father and the husband for M Company to have been paid about $11,873 for  the Trust’s share of the costs of repairs which were said to have been done from about August 2008  to August 2009. I do not accept that the repairs which were claimed to have been done were in fact done. Invoices provided by M Company for work done are contained in Exhibit “H”. They seem to cover work done for repairs between 31 April 2007 and 2 August 2008. All the invoices for repair work and the like are dated early 2009. They amount to a total of $5,610.00.

8. Originally, the husband’s story was different from the final version. It was then changed more than once. The purpose was to explain the wife’s complaint to the effect that the Trust may not have received its proper share of the rent from S property.

9. In November 2008 the wife had sought copies of records and proper accounting. When these were not forthcoming her suspicious were aroused, causing her to make more enquires and investigations, especially after the wife’s solicitors were told, on 7 October 2009, by the husband’s solicitors that the husband had been “advised”, presumably by his father, that the tenants of the commercial property “are withholding payment of rent pending the necessary repairs being done”. The wife made enquires of the relevant tenant. It had complained about repairs being needed in 2007. These were not done, but the tenant did not at anytime withhold rent. The wife first enquired of the General Manager of the tenant company, Mr H, in September 2009.

10. Before October 2009 the story about the reason the Trust’s share of the rent had not been paid to was that the money had been used to reimburse M Company for the cost of the necessary repairs in addition to those which had been done at the cost to the Trust of $5,610. Then, in October 2009 after the wife had learnt the truth from Mr H, the husband and his father claimed that the estimates for additional work which had not been done were $21,175, making the Trust’s share $10,587.00 in addition to the $5,610. In his affidavit of 19 February 2010, the husband’s complaint was that the wife would not agree to this payment which seems to have been taken from the Trust in any event by the husband’s father on behalf of M Company.

11. No material was put before me by the husband to indicate the work had been done. The wife has attempted to gain the necessary information from the husband’s solicitors and M Company. In my opinion, the initial onus in such a situation is on the wife to prove what was paid to the Trust out of rents. I do not regard that onus as having been discharged as to the $10,587.00. I shall not make it a notional asset of the husband. I accept that the $5610.00 was for work done on the premises even though the invoices were not sent to the Trust for more than a year after the husband’s father deducted the money to meet them from the rent he had received on behalf of M Company. I accept that non-payment of recent rent to the Trust was occasioned by its share of a debt the S property partnership incurred to its accountants which is dealt with in Exhibit “K”. This is an example of the quality of the work done by the husband’s father in managing the property on behalf of M Company.

12. I do not accept that he and the husband should properly be regarded as having set a reasonable management fee based on the work to be done and the husband’s father’s skill. I think it was, at least in part, a skimming exercise by way of deliberate overcharging. I do accept that, despite his relationship with the parties, the husband’s father through his company was entitled to charge as much as he did for the work he did in management after 31 October 2008.  Two percent is more appropriate in my estimation in the absence of any evidence on which I might rely.

13. I know that between 1 July 2006 and 31 October 2008, through M Company, $4,482.85 in management fees was taken from the Trusts share of rent. Between 1 November 2008 and the time of leaving, the tenants of S property would have paid rent of about $44,000.00 based on my calculations from the information in paragraphs 18 and 19 of Mr. H’s affidavit, assuming the tenancy of Unit 2 continued to mid 2010, i.e. about the time of hearing and that the tenancy of Unit 1 would end at the end of March 2010. The 5% deducted from the Trust’s share of rent would be about $2,200 for this period. I accept the husband’s father’s company had a right to 2% rather than 5%, so a proper management fee from 1 November 2008 to the date of hearing would be two fifths of $2,200; that is, $880 rather than the $6,680.00, approximately, which was charged. The difference between what was taken in purported management fees and the $880 I regard as properly chargeable; $5,800.00, is notionally, part of the property of the parties available for division between them and advanced to the husband in anticipation of his entitlement. Justice Collier’s order about management fees made on 5 February 2010 is no more than an interim order made to protect the parties’ property. The 5% he allowed M Company to retain does not establish that its retention is reasonable and proper.

14. The third argument the wife advances to increase the notional advance on entitlement she says the husband has taken is that, at about the time of separation, the husband took $24,000 of the parties joint funds and used them exclusively for himself. In early 2006, about a year before final separation, the parties separated for a few months. At that time, according to the wife, the husband took $15,000 from their joint credit union account. Then, not long after final separation, she says the husband sold his car for $9,000, kept this amount for himself and leased a replacement vehicle.

15. The husband denies taking the $15,000. No convincing evidence that the husband took any fund and used it wastefully apart from the wife’s assertion has been put before the Court. In the face of the husband’s denial of taking this fund and using any fund wastefully and the lack of evidence from the wife that he did, I cannot be satisfied on balance that the husband took this or any amount he did not use properly for his ordinary living needs. I should and shall reject this claim, as I shall for the $9,000 attributed to the sale of the car. The husband simply says of the $9000, which was actually $9,900, that he used it to meet the business debts of the valueless company in which he held a 37% share with his parents through a 37% interest in a company, J Pty Limited. He gave his interest in JJ Pty Limited to his parents for nothing when his illness was diagnosed in order to put his affairs in order.  It is this business which he has at times during the hearing intimated is still his business. It employs him part time.  I am not satisfied that the husband has wasted or secreted this fund, so I shall not regard it as notionally still being held by him. I accept that the interest in J Pty Limited was worthless when he gave it away and that it is still worthless because its value depends on his personal efforts. The wife has made no attempt to call evidence that it has a greater value.

16. The husband disputed 3 debts owed by the wife on grounds that she incurred them after separation. They have a total value of $38,600.00. The wife said she used this money for ordinary living costs including $5,000 for a car for herself and $7,500 for motor cycles for the two youngest boys. I have little doubt that the wife used all those borrowings to meet her reasonable costs of living and that she has not wasted or secreted any of the money involved.

17. Thus to be added to the $535,782.00 worth of assets if the parties which is agreed on, are:

    Interest in Trust property at S (joint)  $230,000

    Unemployment benefit chose in action (husband)  $12,000

    Notional receipt of management fees for Trust property (husband)       $5,800

    _______

    $247,800

18. Thus the assets of the parties are $535,782 and $247,800 which amounts to $783,582. From this is to be deducted the agreed liabilities of $241,617 plus the additional debt of the wife of $38,600, a total deduction of $280,217 leaving $503,365.00 to be divided actually and notionally between the parties, the husband being notionally already holding $17,800.00 worth of assets as an advance on his entitlement on division. In fact, what will be divided is $503,365.00 less $230,000 plus the parties’ net receipt from the sale of the commercial property.

19. The husband is now approaching 43 years whereas the wife is close to 40 years. Their relationship commenced in 1988. The wife was 17 years old at the time. They married in 1988 after living together for a short time. As they separated on 24 March 2007, their relationship lasted about 19 years. They have 4 children, all boys, born in 1988, 1991, 1993 and 2001.

20. When their relationship commenced the partied lived with the husband’s parents. They continued to do so after their marriage until November 1991. They paid $100.00 per week for rent, although this probably also included board. The husband says, and I accept, that, whatever it was, they were paying less than a market rate because his parents wished to help the husband and wife, not only the husband, make a good start to their life together. The financial help given was a contribution made by the husband’s parents on behalf of both parties rather than the husband alone.

21. The husband was already qualified in a trade when the parties’ relationship commenced. He also owned property, both personal and real. He had purchased land in E some years earlier for $180,000 and had paid off the mortgage debt. He also had a car and an interest in a boat with a combined value of about $15,500, $40,000 in savings, some furniture and tools of trade and no debts.

22. His father had a business. The husband was, at the time, employed by his father. He continued working in that business until he resigned because of his ill health on 3 February 2010. However, he returned to work in late June 2010 after his prognosis improved. He works on a casual part time basis and earns, he says, $650 per week which must be assumed to be gross. 

23. On 19 February 2010, when he filed his financial statement, his only income was from 60% of the Trust’s share of net rent and a $30 per week personal benefit he got by the company which employed him paying instalments on the motor vehicle he uses.

24. One of the most characteristic aspects of these proceedings is the dearth of financial records which might permit me to have a reasonable understanding of both parties’ financial contributions. Because of the unusual circumstances, the availability of this information is not as critical as it otherwise might be. The particular circumstances are that the husband is unlikely to have prolonged future employment or to earn much from the employment he has, the wife has not been in much paid independent employment over the years, the current income from the parties’ commercial investment is approximately known, as is the income from it in the recent past. These will allow me to understand the relative level of income for it since it was obtained. It will be sold in the immediate future, if it has not already been sold. The wife’s current income is known.

25. When the parties first cohabited the wife was employed full-time as a check out operator in a department store. She had no significant assets and no debts. She continued working until she was about 7 months pregnant and returned to work when the first child was about 6 months old. The husband’s mother cared for the baby until the wife ceased working in early 1991 because she was pregnant with their next child. The care provided by the wife’s mother for the parties’ first child must be assumed to be, in the absence of any evidence to the contrary, a contribution she made to the wife’s ability to earn an income and by way of childcare on behalf of the husband

26. Until separation, the wife was, thereafter, engaged as a full-time homemaker and parent, although from time to time she did undertake a little casual paid employment. All her income was applied for the benefit of the family. As she said, she worked hard with 4 children, doing most of the housework and cooking, helping the children with their homework and managing their activities.

27. She emphasised the amount of work she did by arguing that it was required because the husband was away from home working for long hours. He used to leave to work at about 7am, often did not return until after 6pm and, in the warmer months, sometimes as late as 9pm. He often worked on weekends. As the husband said in his oral evidence, both parties worked very hard but applied themselves to differing roles. The husband says, however, that when the wife worked from time to time his mother cared for the children, thereby making a further contribution on his behalf to the husband.

28. The wife returned to paid employment after separation in late 2008. She was employed for 31½ hours per week with a net income of $500.00 per week. In March 2009 she increased her working hours to 40 hours per week for a short period but found this caused problems with the parties’ youngest son, so she reduced her working hours. She then worked as a receptionist from 9am to 5pm on 3 weekdays each week and from 9am to 1pm on the other two. Her financial statement indicates that she received $717.00 from this job. Because of the order which was made in February 2010, she would also have received 40% of the Trust’s share of the net income from the investment property, which would have been about $165.00 per week. However, because the receipt by both parties of distributions of the Trust income was arbitrary for practical reasons, their contributions of the combined monies being received have been in proportion to the respective contributions to the trust and its property.

29. The wife says that her efforts in parenting have been particularly onerous since separation. In March 2007 the oldest boy was an adult. The next son was about 16½ years old. He became an independent adult in October 2009 while he was in his final year at school. At first, he lived with the parties on a week about basis. This arrangement ended in August 2007. After that, he stayed with the wife most of the time, although he spent the 2008/09 Christmas period with the husband and worked for him for about 5 weeks. The husband did not see him from Easter 2009 to October 2009. Thus, the wife bore most of the burden of the care he needed, which was probably not much apart from cooking, doing his washing and tidying up after him.

30. The third child lived on a week about basis with the parties until September 2008. Since then, his predominant home has been with the wife. This child had always had problems at school with his behaviour and attitude. The mother has had to pay much attention to his school problems and discipline. On separation, his behaviour deteriorated a lot. The wife says, and I accept her estimate to be reasonably accurate, that she has attended 30 meetings with his teachers, whereas the husband has attended 2, and that she has been the only parent responsible for his discipline. He has had 3 schools since separation and left school after completing his school certificate. He had been asked to leave 2 schools since the parties separated and although he sat for his school certificate at one of his schools in 2009, he was asked not to attend lessons there. He did not return to school in 2010.

1. The youngest child was only 6 years old when the parties separated. Originally he lived with the husband on each weekend. From Easter 2007, this was changed to alternate weekends and half the school holidays.

2. On 1 October 2008, consent parenting orders were made which give the parents equal shared parental responsibility for the third child. He is to live with the wife and spend time with husband from Thursday afternoon to Monday morning in each alternate week, for half the school holidays and on special days with equal sharing of transport obligations.

3. The youngest child also causes difficulties for his parents. These mainly fall on the wife because they relate to his schooling. He is very resistant to attending school on most mornings. He is a very anxious child. He is now in year 3 at a new school where he seems happier. The wife takes him to and from school. This might involve considerable effort on her part because it is 25km from her home and return. He started there at the beginning of the 2010 school year, but for a reason I shall canvas later he usually travels from N rather than from W to school. That is about half the distance.

4. The land owned by the husband at the time they commenced cohabitation already had a concrete foundation slab. The parties commenced building on it when they married. The house was ready for occupation in November 1991, when the parties moved into it. Much of the work necessary for construction was done by the husband. When he was not at work on weekends he usually worked on the home. He worked as a labourer for the skilled tradesman who were engaged to do such things as electrical work, tiling, plumbing and plastering. The husband’s father, brother and friends helped from time to time. The wife helped too. She did most of the interior painting. The husband did some of it. He erected the roof frame, cut the materials for the veranda and tiled the roof. He installed pre-cut windows, cut the floors, architraves, door frames and skirting boards and installed these. He established the gardens and lawns.

5. I do not know how much the home cost to build. All I know is that $62,000 was borrowed by the husband and the home was sold for $187,000. The mortgage debt was $31,500.00 leaving the family about $155,000 net.

6. The home was always in the husband’s name, but it should not be thought, because of this and the fact that he had paid off much of the loan used to build it and provided the cost of erecting it which was not borrowed, that the wife’s contribution to it was only painting it. She cared for the children and did the other things she might be expected to do while the parties lived with the husband’s parents, thereby allowing the husband to earn an income and work on the construction. This was a considerable contribution by the wife, as was the home making and parenting she provided once the parties moved into this home.

7. On the sale of the E property the parties jointly purchased W property for $211,000. The $170,000 from the E property sale plus $83,000 was used to purchase W property and provide for the cost of planned renovations which were then carried out.

8. In 2003 the wife and husband formed the Trust. They then refinanced their home loan and, on the security of the home, borrowed $201,176.00 which they lent to the Trust which purchased the commercial investment property at S on 1 April 2003 with the husband’s parent’s family trust’s trustee company, which was then J Pty Limited. The cost of the Trust’s purchase was about the sum they borrowed on the security of their home.

9. In 2007, the husband’s parent’s trust’s trustee company was changed to M Company. At about the time of purchase of the commercial property, a business operated by the husband’s father started to go into decline so the original plan to shift the business to S was abandoned. There are two buildings on the S property. One, Unit 1, is an old house. It was tented to a firm from November 2003 to April 2008. The other building, a factory building called Unit 2, was first rented in October 2004 to a food company. It and a company which took it over continued in occupation until 1 April 2010. It then became vacant. Unit 1, was then rented to the parties’ eldest son and some friends for 3 months. The property was then rented from August 2008 to 1 April 2010 to the food company.

10. As the whole property was due to be sold, it had not been leased after 1 April 2010. The parties half share of the gross income from Unit 2 has been:

    9 September 2004 to 8 September 2005               $10,400.00

    9 September 2005 to 8 September 2006               $10,816.00
      1 February 2007 to 31 August 2007   $6562.00
      1 September 2007 to 31 August 2008                   $11,698.00
      1 September 2008 to 31 January 2009                  $5069.00
      1 February 2009 to 31 January 2010  $12,166.00

    1 February2010 to 31 March 2010  $2027.00

11. For Unit 1, the parties’ gross income has been approximately $190 per week from November 2003 to the end of March 2010. In the period when it was leased to a firm and to the parties’ son and his friends, I have not been told the actual rental incomes, but I have used the subsequent income from it as an approximation. Of course, repair costs actually spent and proper management costs would reduce the parties’ actual before tax income from both units.

12. The husband worked for his father during most of the marriage. His employer was really the owner of his father’s business, J Pty Limited. In mid 2006 the husband’s father retired. At some time before this, possibly as early as 2004, the husband’s father gave the husband 37.3% of the shares in this company and, thereby, the same proportionate share in the business. The husband’s father’s retirement was largely the result of a decline in the business which, by 2004, mainly relied on sales and service of sporting equipment. The brand the business sold ceased to be produced and the business could not obtain an agency for another brand. The use of the equipment was restricted not long after 2004, further undermining the business. Nevertheless, after mid 2006, it must have been enough to support the husband, although by 2005 all other employees has ceased to work in it. In early 2008, the husband engaged an apprentice and the husband, on the advice of Dr C, retired from it himself in February 2010. At the same time, he returned his shares in the business to his father at no cost. This was reasonable in the circumstances.

13. I accept he has no interest in the business now other than as a part-time casual employee. He still supervises the apprentice as best he can. I also accept that his father will not return the share the husband had in the business to the husband. He would have no reason to do so in view of the wife’s claim for property division. I also accept that the business would be worth little or nothing if it was owned by the husband; either wholly or partly, because it is most probably unable to generate a profit in addition to the husband’s wage. The husband’s father now works in the business. He does not draw a wage, but does earn consultation fees which would not add value to the business if its 37.3% was still held by the husband. 

14. On separation, the husband returned to live with his parents. He still lives with them. He pays board which he calls rent to his parents of $250 per week. In the circumstances, living with his parents has not been shown to involve any contribution to the parties’ assets by his parents.

15. Much time and detail has been devoted to each party’s efforts to show that he and she made mortgage and other payments from their individual incomes and therefore to argue these constituted increases in their individual contribution to their net assets. This time and detail had been wasted because all payments made were from income each party has obtained from the husband’s business interest, employment and the parties’ investment property. I shall include all these sources of funds as contributions. To count payments toward property made from them is to double count the payments as contributions overlaid on the contribution made by bringing in the funds paid.

16. With the investment income, it does not really matter who was receiving what or paying what from it. The result for the parties’ net assets would remain the same. Nevertheless, I do accept that for some of the time the wife suffered some hardship as a result of the payment by her of mortgage instalments from her income when she was having difficulty making ends meet from it.

17. I am of the view that he parties’ respective contributions to their current net assets are to the extent of 53% by the husband and 47% by the wife. The initial contribution by the husband accounts for more than the difference. The husband worked long hours but has not proved he earned an exceptional income from his employment and subsequent interest in the business. He also worked additional long hours when he was building the parties’ first home.  However, his long working hours placed a high proportion of the care of the household and four boys at the wife’s feet.  She too worked long hours. With four boys, this must have been unremitting until the youngest commenced school in about 2007. Within a short time, the parties had separated, leaving the greater obligation of child care on the wife. This is especially the case because the wife received only about $25 per month in child support for the two youngest boys; that is about $3.00 per week per child, much less than half the cost for providing for them during the time they have lived with her. This must have increased the burden and hardship she suffered as a result of having them mostly in her care.

18. There has been much argument about the manner in which I should deal with factors in addition to bare contributions which must be considered in order to reach a just and equitable final distribution of property. The first consideration I shall undertake relates to the effect of the proposed sale of S property. This will end the income source to each party from it. That income had the potential to be about $400 per week net before tax or slightly more in my estimate, but the sale will mean that the two mortgages will be able to be discharged or close to it. Nevertheless, the payments on the mortgages which are required are very low, being less than $200 per week and about $80 per week respectively.

19. Between 17 October 2009 to 3 July 2010 the husband was assessed to pay $43.31 to the wife for the support of the two youngest boys. He has been, by arrangement with the wife, paying less. Once these proceedings are determined, he will have to pay whatever is assessed. However, he may not work and earn for long. Once he ceases to do so, the cost of caring for both boys will in all likelihood, increasingly fall on the wife. Of course, the husband’s income is currently small. It is likely to remain much as it is for a few years because his father is likely to continue with the management of the business which employs the husband solely  so it can employ him for as long as possible.

20. However, the husband is not likely to live long. The evidence is that he has a 70% chance of living for 5 years. His needs are not great and are not likely to become greater. He has a home with his parents and is likely to remain there until near the end of his life. His outgoings are likely to be well covered by his income of $650 gross per week from his father’s business for a few years. The business supplies him with a car and is likely to continue to do so for as long as he can work in it. His board is $250 per week. Child support is likely to remain at less than $50 per week.

21. The wife says she needs a home and would like to purchase the former matrimonial home. I am far from convinced that she needs a home. She admits to having a boyfriend but says she does not live with him. Each says they have not decided to commit to one another. I do not believe them. The so called boyfriend, Mr B, is a thoroughly untruthful witness. On this aspect of the case, so is the wife. I am quite satisfied they are in a committed de facto marriage.

22. Mr B lives in a home on a large tract of land in N. He is 40 years old and has known the wife since they were school children. Exhibit “D” is a copy of a poignant email the wife sent him in mid 2007. It satisfies me that the wife has been in love with him since they met. It also proves a romantic and sexual association since before mid 2007 and that the wife has since then wanted to make the relationship permanent. I do not believe her evidence that she has never discussed living with Mr B.  I certainly do not accept that she started being his “girlfriend” in mid 2008, as she claimed in oral evidence, unless her idea of the definition of “girlfriend” is very different from mine.

23. Mr B has had a special interest in the wife for longer than that and the interest has been reciprocated. There is some truth in her claim that after the proceedings she and Mr B plan to reconsider the situation. But the truth is limited to a general acknowledgment of what I am quite convinced has been the position since the parties separated; they will make more open and settled living arrangements; that is, by living together in one house rather than alternating between the former matrimonial home and Mr B’s home in N for the purpose of improving the wife’s claim in these proceedings. It is not a coincidence that the youngest child was enrolled at a Public School near N in 2010 despite it being, according to the wife, 25km from the former matrimonial home. Although I accept the possibility that the wife took the child out of his former school because he was unhappy there, I cannot accept that she enrolled him at the N Public School for any reason other than that it fitted in with her future plans to move in with Mr B. There are at least three public schools much closer to the former matrimonial home according to the commonly available street directories. The wife admitted there are two; one being less than half a kilometre from the former matrimonial home. N Public School is the closest school to Mr B’s home.

24. Mr B lives on a property which he admitted is of more than 100 acres. He said it is worth $4.0m. The property is owned by his mother’s estate. He and his brother are equal beneficiaries under it. They are in dispute over their share of the estate. There are two houses on the property. They each live in one. Counsel for the husband put it to Mr B that Mr B’s mother’s estate is worth $5.3m but Mr B denied this. No probate documents were tendered and no valuation attempted. I accept that the estate is worth more than $4m, of which Mr B is likely to become entitled to about half. His affidavit proves the estate owns two cottages in a fashionable harbourside suburb of Sydney, in addition to the N property. I can take judicial notice of the fact that there might be a few cottages in Sydney’s harbourside which are worth as little as $700,000, but the majority of homes there are worth more than $1.0m and many are worth considerably more.

25. Mr B’s evidence about his financial situation was otherwise quite unsatisfactory. His income evidence seems to me to have been quite deliberately misleading or his affairs have been carefully and skilfully organised to avoid tax. He has his own business as a financial advisor. His taxable income for the financial year ended June 2009 was about $35,000, according to his affidavit sworn 7 February 2010. Either he is carrying on business in a manner which indicates his considerable skill in that field; being able to keep his taxable income so low, or he is so inept as a financial advisor that he should not be in business. He said he purchased the business for $400,000.00. He claimed, in oral evidence, to have earned $40,000 per annum before tax in all but the last two years since he obtained this business. When cross-examined in March 2010, Mr B claimed his interest on a $400,000 loan by way of vendors finance he took to purchase the business has been $56,000 per annum, at 14% per annum. When he gave evidence in mid April 2010, after an adjournment, he said the interest rate on the loan was approximately 10% and that he had paid $30,000 per annum in interest on it since the 2007/2008 financial year. He had paid out the original vendor’s loan with a $300,000 loan he had taken from AMP Finance. A further $100,000 came from the business and from savings. He admitted he has an income of $51,000 per annum, although his secretary also earned $51,000 per annum and he paid $36,000 toward superannuation for her. Thus, the business has the potential to provide him with much more than he is receiving from it if he has been even approximately accurate with his claims about it.

26. I am quite satisfied that Mr B will soon be in a position to discharge his debt to AMP if he chooses. He will have a significantly increased income if he takes this course. If he does not, it will be because he believes it is to his financial advantage to have a low income. The only advantage he could get would be capital gain. I find that, one way or another, the wife will gain very significant financial support into the foreseeable future from Mr B. She will be able to live with him and is likely to do so, therefore enabling whatever capital she gains from these proceedings to be invested for her benefit. I do not accept that she needs the former matrimonial home to live in because I think it is much more probable than not that she will live in a property owned by Mr B or his mother’s estate once there proceedings are completed. Eventually, Mr B will have his entitlement to the estate transferred to him. I accept Mr B’s evidence that he currently does not contribute to the wife’s household expenses “on a regular basis”. He does already contribute to them, but not regularly. There seems little reason to doubt that his contributions will become consistent after these proceedings end. I simply do not believe his claims that he and the wife have not made plans to spend their future together.

27. It may be that the husband will pay child support for the two youngest boys at much the same rate as he now does until the older boy becomes an adult. His contribution is likely to reduce thereafter. The major burden of the costs of their care as well as the physical burden of their care will fall on the wife. It is highly likely in 2 or 3 years that the husband will either cease to contribute to the youngest child’s care financially or physically or the contribution will be insignificant. The wife has about 9 years of child care or 12 child years ahead of her. These are likely to include some difficult times. The death of the boys’ father is likely to create problems as are their perceptions in the light of their father’s condition and the nature and permanency of the wife’s relationship with Mr B.

28. Section 79(4)(e) of the Family Law Act requires the Court to take into account, in determining what order for division of property to make, such matters as are referred to in s75(2) of the Act and are relevant. Here, paragraphs (e)(h)(ha)(n)(p) and (q) are not relevant. I have already referred to all the matters which are relevant under paragraphs (a)(c)(j)(m)(na) and shall take these matters into account in deciding what adjustment to make under s75(2). I shall deal with the remaining matters in the order that they are listed in s75(2).

    78(i)Section 75(2)(b), (d) and (f). – The wife currently earns $717 before tax from her part time job. That she cares for the two youngest boys is the reason she does not work fulltime. However, she currently expends considerably less than this income to support herself and the boys. Once these proceeding are over, she will be in a much better financial situation because she is likely to have no or very few necessary debts. Any she has will be by choice rather than necessity. She will have the benefit of financial support from Mr B who will be very well off. In any event, once the youngest boy reaches about 12 years of age, she is likely to be able to work full time and earn more that she currently does.

    78(ii)The husband’s income of $650 per week can meet all his needs and his need to pay child support and care for the children when he has them. It will not be long before the husband will be able to gain the disablement payment from both his superannuation and life insurance providers. He will then not have an income from employment but will have a considerable lump sum from these to meet his need for suitable care thereafter; a need which could be very costly for a relatively short period.

    
    

    The wife’s right to child support will not necessarily dissolve on the husband ceasing to be employed. It could well substantially increase because she will be able to seek a departure order from the assessment formula. In any event, she is likely to have no difficulty in supporting the youngest child because of Mr B’s relative wealth.

    78(iii)There is considerable difference between the parties over the effect of the husband’s relatively short life expectancy and the significantly different period over which the parties have to support themselves. Both referred to In The Marriage of Lawrie (1981) 7 Fam LR 560, a judgement which has, with one exception I know of, stood the test of time. It has been approved in S v P (unreported Full Court, 29 April 1997). The proposition which Lawrie stands for, one admittedly the result of a majority judgement where Asch’e JA. dissented, is:

    “It is appropriate and, in my view, necessary to consider the relative future needs of the parties in determining what is a just and equitable order under s79. Where there is significant disparity that would ordinarily be reflected in the orders. This is frequently a result in cases of a more usual type. Further, where in any case it is clearly established that the future financial needs of a party will terminate (or perhaps significantly diminish) upon the happening of a definite future event, it is proper to take that into account. A number of examples of that readily spring to mind. The weight to be give to that will obviously vary from case to case”. 

    78(iv)The exception referred to is the judgement of Young J in Leggero v Jagger (2008) 38 Fam LR 561. At pages 587 to 590 his Honour pointed out that s75(2)(d) had been amended in 1987, after Lawrie was decided. His view is that the amendment altered the emphasis of that paragraph away from “financial needs” and “financial obligations” toward commitments “to himself or herself” and “a child or another person who the party has a duty to”. His Honour felt the change may perhaps be more accommodating of a party’s right to direct his estate as he sees fit, meet commitments to beneficiaries under a will and recognise entitlements to benefit from his assets and financial resources acquired during a marriage.

    78(v)I appreciate that the amendment must have had a purpose, but I do not regard it as having been shown on its face to warrant any greater emphasis on the rights of a party who is unlikely to live long when compared to the life expectancy of the other party to be able to give away his estate or leave it by testamentary deposition to whomsoever he chooses. I cannot distinguish between “financial needs” and “financial obligations” on the one hand and “commitments… necessary… to support himself; and a child or another person [he] has a duty to maintain”. I cannot determine any difference between “obligations” and “commitments”.

    78(vi)In each case a testator’s liability is to make proper testamentary provision for an adult or child he has been supporting, or should have been supporting, if he fails to make appropriate inter vivos provision for that person, cannot be determined by some concept involving a notional alteration of what this Court has actually decided the potential deceased should retain. In any event, I am bound by the Full Court decision in Lawrie and shall apply it. I should comment that Young J, while emphasising the amendment, places much reliance on Asche J’s decision in Lawrie which was based on the version of paragraph 75(2)(d) which existed before it was amended in the way he suggests undermines the emphasis on needs and more widespread obligations.

    78(vii)I am conscious of a characteristic of s 75(2) factors which usually makes the adjustment made for them quite small. It is that they, to a very large extent, usually balance each other out because they are usually quite similar in weight. The ultimate adjustment is small because it represents the differences in them. Here, because the wife is likely to live more than 40 years more than the husband and probably more than 20 years more than the husband while in retirement, her future commitments to herself and the children, so long as they are children, are substantially greater than the husband’s to himself and the children, so long as they are children.

    78(viii)However, I must weigh this aspect of the wife’s situation against that which will probably arise from living with Mr B either in a de facto situation or as his legal wife in view of my assessment that Mr B has a potential to have and will have considerable assets and much higher earnings either by income or capital gain than he now claims to have.   

1. Section 75(2)(g) – I am quite satisfied that with their respective incomes and likely future circumstances both parties will be able to afford to live at a standard which is reasonable if an otherwise proper order for property division is made.

2. Section 75(2)(k) & (l) – There is no evidence which would satisfy me that the duration of the marriage in itself has adversely effected the caring capacity of either or that any adjustment in favour of the wife to what would otherwise be a fair division of their property is necessary to protect the wife so she can continue the parenting role she has been taking.

3. Section 75(2)(o) – A consideration I should refer to is the respective legal costs of the parties. Those of the wife will exceed $125,000. Those of the husband will exceed $110,000. I also bear in mind that s 117 of the Act does not permit costs of one party to be to any extent imposed on the other party without an order made after applying s 117 to it. An alteration of property interests based on liability for costs would indirectly impose a party’s costs in whole or in part on the other party without having applied s 117. Yet, the fact that the legal costs a party must pay or has paid will sometimes affect the justice of the division of their assets. Fortunately, the costs of both parties, while substantial, are sufficiently similar to create no need to alter the distribution of their property to obtain a just and equitable division of it. 

4. A consideration which must take a significant part in determining the adjustment for s 75(2) is the fact that the husband will, not long before his death, become entitled to or receive the benefit of his life insurance of $260,000 or more after having paid very little in future additional premiums and $190,800 or a few thousand dollars more for the disability insurance associated with superannuation, although nothing more has been contributed, a total of more than $451,000 to which the wife has probably contributed approximately 47%; that is, in the same proportion she has generally contributed to the parties’ net assets.

5. $451,000 is what the husband would be paid now if he were qualified. He will receive $451,000 plus interest on the principal as increased by future premiums, if any. Thus $451,000 is the present value of a sum to be paid in future; not the distant future but the relatively near and certainly foreseeable future. It does not matter for the purpose of valuing the wife’s contribution to this payment; one which is more than highly likely to be received by the husband although he has no vested right at present, whether the payment to the husband will be made in 3, 4, 5 or even a few more years. He is nearly certain to take the payment once he becomes entitled rather than leave it to his estate to collect and distribute. He will be able to distribute the funds during his lifetime according to his wishes without any interference with them by virtue of statute, so is not likely to allow either to become claimable on his death from his estate.

6. In my opinion justice demands that the wife be entitled to credit for her contribution to the $451,000.00 plus which the husband will receive. 47% of it is $211,970.00. I regard her contribution to this to be at 47% because even the husband’s income since separation, the income from which he paid premiums, was the result of the wife’s overall continuing contribution and to the investment by the Trust by parenting, freeing the husband to get into a situation where he continued to earn from employment with his father. Although I cannot include the $451,000 in the property to be divided under s79, I can take its future receipt into account on deciding what adjustment on contributions will provide a just division of the $503,365.00 which is the net available for division.

7. If I were to give the wife full credit for her 47% contribution to the $451,000 the husband will ultimately receive and make no other adjustment on contributions, she would receive 89% of the $503,365 being $448,551 and the husband would receive the balance of $54,814, but in the knowledge that he will receive whatever has a present value of $451,000.00 (($451,000 + $503,365) x .47 = $448,551, $503,365-$448,551 = $54,814, $448,551 x 100 ÷ $503,365 = 89%). I do not regard that as sufficient to meet the reasonable requirements the husband is likely to have to be able to lead a proper life in all the circumstances of his retirement. Only a small part of my reasoning is based on the fact that he will not ever be paid the $30,320 superannuation and notional assets of $32,800.00 included in the $54,814.00.

8. If he were to receive a little more than $120,000.00 of the $503,365, which is about 24% of it, this would give him about $60,000.00 to spend for living and the small luxuries I regard him as being entitled to before his illness prevents him from continuing to work and allows him to collect the $451,000 plus. His lack of other needs, including the need to purchase a home compared with the wife’s needs and situation which probably include the lack of need her relationship with Mr B will bring, makes such an allocation to the husband proper if I allow for a remote possibility that the wife’s relationship with Mr B might fail. I regard a 70% chance of living for 5 years as about equivalent to the probability that he will live for three or four years. He will probably become entitled to the $451,000 in about two and a half years.

9. After weighing all matters involved in determining the adjustment to be made, I conclude that 24% of the net value of the pool for division should be settled on the husband and 76% on the wife. This will give the husband the prospect of receiving 60% of the total of the net $503,365.00 plus the $451,000 plus interest he will receive in about three years i.e. (($120,000 + $451,000) x 100) ÷ ($503,365 + $451,000) = 59.9%) After weighing all the above matters, I regard such a result as just and equitable.

10. To achieve the necessary division one must take into account the wife’s wish to purchase the former matrimonial home. She should be given a proper opportunity to raise the funds necessary, otherwise the home will have to be sold. S property is to be sold if the sale has not already occurred. If it has not, as the agreement for its sale has been in existence for some time, it is likely to be sold before the former matrimonial home is sold. However, the scheme I have in mind will not depend on the sale of S property to take place before the former matrimonial home is sold if the wife does not purchase the husband’s share.

11. The wife solely owns:

    -    NAB account   $457

    -    Subaru Car   $3,000

    -    Superannuation   $5,900

    -    Paid legal costs (notional)        $13,595

    $22,952

    She has individual debts worth $38,600, thereby giving her a deficit of $15,648 for the assets and debts which she should retain.

    The husband solely owns:    

    - Savings$2,510

    - Superannuation  $30,320

    - Paid legal costs (notional)   $15,000

    - Notional fees taken by his father  $5,800

    - Chose in action for unemployment benefits       $12,000

    $65,630

12. The wife already has a deficit of $15,648.00 in excess of her assets and notional assets and the husband already holds assets and notional assets worth $65,630. To divide the assets and liabilities and the value of the former matrimonial home between the parties in the proportions of 76% to the wife and 24% to the husband requires the husband to hold $123,595.00  of the net $514,982.00 and the wife to hold the balance of $391,387.00. The husband already holds $65,630.00, so he would need to be paid $57,965.00 by the wife so she could hold the undivided title to the former matrimonial home which, with the all net assets except S property and with the three joint debts, if divided by giving 76% to the wife and 24% to the husband, would leave the wife with $391,387 ($465,000.00 - $15,648 - $57,965) and the husband with $123,595.00, the correct proportion. The three joint debts of $241,617 can be dealt with from the proceeds of sale of S property.  If they cannot be discharged from it, the shortfall will have to come from the parties’ share of the $514,982.00 in proportion to their entitlement to their respective shares i.e. 76% from the wife who will have to borrow it in addition to the $57,965 and 24% from the husband. If there is a balance left for the parties after the sale proceeds are used to meet the three joint debts, it should be divided between the parties in the proportion of 24% to the husband and 76% to the wife.

13. The wife should be given one month after S property is sold and, if already sold, one month from the date of this judgment, to elect whether to purchase the husband’s share of the former matrimonial home or sell the property. If she does not purchase it, it should be sold and the proceeds of its sale and the proceeds of sale of S property are to be used to discharge all the parties’ joint debts, whatever they might be at the relevant time, with the balance to be divided by paying the sum necessary to give her 76% if the husband’s holding of $65,630 is 24% plus $15,648, which is $223,476 in all ($65,630 x 76 ÷24 = $207,828 + $15,648 = $223,476) and dividing the balance by paying 76% of it to the wife and 24% to the husband. As the Trust will be worthless on sale of the property it owns and use of its funds, there is no need to make any further order for the disposition of interests in and entitlement under it.

14. I shall make orders which accord with the above because I regard such orders as providing the best balance to achieve justice between the parties. 

I certify that the preceding ninety-two (92) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen delivered on 1 February 2011.

Associate:     

Date:              1 February 2011