Layton and Layton

[2018] FCCA 1721

FEDERAL CIRCUIT COURT OF AUSTRALIA

LAYTON & LAYTON [2018] FCCA 1721

Catchwords:
FAMILY LAW – Property – alteration of property interests – where there is no jointly held property – where the parties’ finances are separated to a significant degree – where there are approximately equal contributions by the parties – where the parties have considerable earning capacity.

Legislation:

Family Law Act 1975, ss.75(2), 79(2), 79(4), 117(1)

Cases cited:

Stanford & Stanford (2012) 247 CLR 108

Bevan & Bevan (2014) FLC 93-572
Martin & Newton (2011) FLC 93-490

Applicant: MS LAYTON

Respondent: MR LAYTON

File Number: DNC 254 of 2016

Judgment of: Judge Young

Hearing date: 30 November 2017

Date of Last Submission: 30 November 2017

Delivered at: Darwin

Delivered on: 29 June 2018

REPRESENTATION

Counsel for the Applicant: Ms Farmer

Solicitors for the Applicant: Withnalls Lawyers

Respondent appearing in person

THE COURT ORDERS THAT:

1. Within 90 days from the date of these Orders, the husband will pay to the wife as she directs in writing the lump sum of $103,165.

2. The wife is permitted to roll over her superannuation interest from the Super Fund A (“the SMSF”) or otherwise transfer the interest to a superannuation fund of her choice. The superannuation interests of the parties will remain otherwise unaltered.

3. That otherwise, pursuant to section 78 of the Family Law Act, each of the husband and the wife shall be and hereby are declared to be the sole and absolute owners at law and in equity of:

   (a)all items of furniture, furnishings, personalty, chattels and jewellery;

   (b)all monies (whether held in cash or in deposit with any financial institution);

   (c)any motor vehicle;

   (d)all contributions to or benefits or entitlements arising from membership of any fund of insurance or superannuation whether such interest be present, contingent or expectant; in their possession.

4. The parties have liberty to apply.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

DNC 254 of 2016

MS LAYTON

Applicant

And

MR LAYTON

Respondent

REASONS FOR JUDGMENT

1. This is an application for alteration of property interests.

2. The applicant wife is 55 years old and the respondent husband is 63 years old.  The wife is employed as a (occupation omitted) with the (employer omitted).  The husband owns a Business Pty Ltd (“the company”).

3. The husband was a widower at the time he met the wife.  She was separated or divorced.  They met on the Internet.  They began to live together in 2007.  They married in 2011 and separated in November 2015.  The relationship lasted almost exactly 8 years.  At the time they began living together the wife had care of her two children, Mr J and [A], who were then about nine and five years old respectively.  They are now 19 and 15 years old.  The husband had care of his daughter, Ms S, who was 11, almost 12 years old.  She is now 22 years old.

4. It is clear from the evidence that the parties kept their finances separate to a significant degree.  Both parties own separate items of real estate and there is no joint property.  The wife has contributed to a self-managed superannuation fund, called the Business Superannuation Fund (“the SMSF”) set up by the husband but each of the parties have kept their contributions in separate accounts.

   Credibility   

5. The husband was initially represented but during the latter part of proceedings and during the trial he represented himself, including drafting his own trial affidavit which, nevertheless, was effectively drafted.  He was ignorant of the rules of evidence.  For example, he attempted to rely on a one line letter from his treating GP saying that he suffered from depression, anxiety and chronic lower back pain.  The doctor was not available for cross-examination and the letter was excluded from evidence. The husband struggled at times to identify relevant issues and to make appropriate submissions.  He was, furthermore, unable to effectively cross-examine the wife. To mitigate his disadvantage I permitted the husband to have the assistance of his daughter as a McKenzie friend and I advised the husband about issues that he needed to address. I am satisfied that the trial was fair to both parties.

6. The wife, on the other hand, was represented by an experienced solicitor advocate.  She was able to identify relevant issues and marshal appropriate evidence allowing the preparation of a reasonably accurate balance sheet.  The husband was subjected to effective cross-examination.

7. Unfortunately, I had the impression that there had been little real negotiation or cooperation between the parties, for example in relation to exchange of information, prior to trial.  The wife was critical of the husband’s failure to provide all of the disclosure required by her in correspondence.  She submitted that there had been deliberate nondisclosure by the husband and, on that basis, I should take a “broad brush” approach to disputed matters such as the respective contributions of the parties.  While I am satisfied that the husband has not provided all the disclosure sought by the wife (see the correspondence at exhibit A5), I am satisfied that there has been enough information provided to understand the past and current financial circumstances of the parties with a fair degree of accuracy.  I am not satisfied that the husband’s inadequate disclosure reflects an intention or is an attempt to mislead the wife or the court as to his circumstances, rather I find that the husband genuinely struggled to comply with the requirements of litigation.

8. Much of the contentious matter in the affidavits of the parties was directed towards an assertion by the wife that the husband did not contribute a fair share of the joint household and family expenses.  She alleged that the husband’s income for much of the relationship was minimal and that her income effectively supported the melded family.  Her affidavit contains general claims such as that she paid for “groceries, holidays, living expenses and this included the expenses for Mr Layton’s daughter Ms S”.  She said that she paid for the expenses associated with Ms S’s hobby of (hobbies omitted).  At paragraph 23 of the wife’s trial affidavit, she said that when she asked the husband to reimburse her he would tell her to “’fuck off’ and refused to reimburse [her] for any of the expenses”, including Ms S’s (hobbies).  Some paragraphs below the wife said that on 23 April 2008 she transferred $11,000 from her savings to the husband so that he could buy a horse float from the wife’s family.  She said that the husband reimbursed her for the $11,000.  This appears to me to be inconsistent with the previous claim.  The wife went on to say that she paid him a further $10,000 which was not reimbursed.  The date and circumstances of the further payment of the $10,000 was not further addressed in the affidavit nor was the husband cross-examined about the claim.

9. The wife also made forceful personal criticism of the husband, including his work ethic.  At paragraph 73 of her trial affidavit she said “Mr Layton has not worked consistently in the past five years and did not work for a period of 12 months from shortly after our marriage”.  This claim was heavily qualified elsewhere in the affidavit.  At paragraph 26 the wife said “There was a period of approximately one year when Mr Layton was not working consistent days”.  In cross-examination the wife said that there was a period, she was not sure of the exact dates, when the husband worked “only a couple of hours a day or worked from home”.  The reason for this was not explored in evidence but the wife said that around this time the husband was receiving treatment from a psychologist.  There was also reference in the evidence to the husband having back surgery and having 4 or 5 weeks off work although it was unclear when this occurred. The wife’s trial affidavit was unremittingly critical of the husband and the wife had nothing positive to say about him.  I am satisfied that some of the claims made in the wife’s trial affidavit were exaggerated, inconsistent or did not give a balanced picture.  However, given the husband’s ineffective cross-examination I have difficulty identifying the extent of this. I have approached the evidence in her trial affidavit with caution.

10. The husband’s trial affidavit was more balanced and he largely refrained from any personal criticism of the wife.  He denied the wife’s general claims that he did not contribute to the family expenses and rejected her claims in reasonable detail in his trial affidavit.  The husband said that until 2011 he paid the “lion’s share” of the family expenses. The wife denied this but both parties agreed that in 2011 they created a joint bank account into which they each paid $800 a fortnight, although each claimed it was his or her suggestion because the other was not contributing enough.  Contributions to the joint account apparently continued until the end of the relationship.  Both parties appear to agree that the joint account did not cover all family expenditure and that from time to time capital amounts were injected to pay for such things as holidays.  For example, in 2012 Ms S represented Australia in a two-day (hobby) event in (country omitted).  The wife said that she cashed leave entitlements and “mostly funded a trip to (country omitted) for Ms S…”.

11. The husband denied this claim.  He said that after he told the wife that he could not afford to pay for everyone to accompany Ms S the wife cashed leave entitlements in order to pay for herself and her two children to accompany Ms S and the husband.  The husband said that he also paid for expenses such as car hire and accommodation.  The husband was not cross-examined on this subject.  I generally prefer the husband’s account.  It appears to me indicative of the wife’s tendency to exaggerate or provide a partial picture of events in her trial affidavit.

12. The wife also said that the husband paid for the home loan and for telephone charges.  She said that about one or two years into the relationship she also began to pay half of electricity bills, family health insurance and rural rubbish bin hire.  In my view, this supports the husband’s claim that in the early stages of the relationship he made the bulk of the financial contributions but thereafter the parties agreed to make approximately equal contributions to family expenses, including through the use of a joint account to which each contributed equally.

13. Much of the evidence of the parties about the broad history of their relationship, including the financial history, was agreed.  There was, for example, little dispute about the assets owned by each party at the beginning of the relationship.  However, I find that the evidence of the wife in relation to her greater contribution to family expenses and the husband’s minimal contribution is exaggerated and misleading. 

14. I generally found the husband to be truthful although he was not always entirely reliable.  For example, I am satisfied that his evidence minimised the amount he spent on alcohol and gambling but in relation to other issues, his evidence contained concrete detail often lacking from the wife’s evidence and I find that he was generally a credible witness.

    The asset pool

15. The wife said she had $126,000 in cash at the beginning of the relationship from her property settlement with her former husband, a car and some household effects.  She held a superannuation interest in a Super Fund B worth $104,490. She also had an interest worth $40,000 in a superannuation fund from a previous employer. This was later rolled into her own account in the SMSF held by her and the husband.

16. The wife said that in 2009 she used $50,000 of her cash to pay a deposit on an investment unit at Property A, Queensland purchased for $385,000. She said the balance of the purchase price was borrowed. There was no documentary evidence about this transaction or mention of stamp duty or other ancillary expenses.

17. Of the remaining balance of wife’s cash, some $76,000 on her account, she said

    Other than those funds applied to purchase the Property A property, I otherwise expended my funds that I had at the commencement of the relationship of meeting the [husband’s], mine, my children’s and Ms S’s day-to-day living expenses, eating out, family outings, the purchasing of the majority of family birthday/Christmas gifts, including [the husband’s] extended family of which he currently has nine grandchildren and purchasing flights and accommodation for various holidays that we would take.

18. The wife provided no other evidence to support this claim.  Given my findings about the wife’s credibility I am not satisfied that her explanation of the expenditure of the $76,000 is accurate. 

19. The husband said of the $126,000 that, aside from the deposit paid on the Queensland unit, the wife also used $28,000 of her cash to pay out the loan on her car.  He said that after these payments she had $48,000 in cash left.  The husband said that the wife kept her financial affairs “concealed” and he was otherwise not aware of how she spent that money.  The husband was cross-examined about this claim and shown a bank statement of the wife’s which apparently showed that some eight months into the relationship she still retained $108,000 in the account.  It was suggested to the husband in cross-examination that his claim of her having withdrawn $28,000 pay out the car loan at the commencement of the relationship was, therefore, mistaken.  The husband conceded that it was possible he was mistaken but he restated his belief that this occurred.  The bank statement was not tendered in evidence by the wife but the fact that her cash had diminished by $18,000 some eight months into the relationship was unexplained.  She did not say what this money was spent on.  The cross-examination simply raised another question about the credibility of the wife’s claims.  It might be speculated that a possible explanation is that the repayment of the car loan was $18,000, not $28,000.  Regardless of the correct explanation, this was an issue that required an answer from the wife and it was not provided.

20. Elsewhere in the husband’s affidavit he mentions that various household items including two relatively cheap motorcycles he had purchased for Mr J and [A] were destroyed in floods. He said the wife replaced the motorcycles with expensive motorcycles and gear for the boys. The wife also purchased various white goods which she took with her at separation. This may be part of the explanation of the expenditure of the balance of the funds.  I consider it likely that the bulk of the expenditure of the balance was made for the benefit of the wife directly or her children.   

21. At the beginning of the relationship the husband owned the home at Property E, in which he had lived with his former wife and which passed to him by survivorship. He said in his trial affidavit that this was subject to a mortgage of $170,000 at the beginning of the relationship.

22. He also owned a half share in an industrial block at Property B. This was sold in 2009 and the husband’s share was $699,301. Precisely how the proceeds of sale of Property B were expended is unclear.  The husband did not provide documentary evidence about the expenditure of this money. He gave oral evidence that the mortgage on Property E was paid out from the proceeds.  The wife’s counsel questioned this in cross-examination because the mortgages to the Bank 1 registered in 2003 and 2004 showed no sign of discharge on a title search conducted in 2017.  The husband found some difficulty in providing a clear answer but said that he believed the mortgages remained to secure further borrowing.  It was not suggested that the husband continued to make mortgage payments in respect of the housing loan and I consider that the husband’s explanation is plausible.  He said that after he received the proceeds of sale of Property B he purchased an investment property at Property C, and paid a deposit of $50,000 and, presumably, borrowed the balance.  He also purchased an investment unit at Property D, through the SMSF for about $100,000.  With the mortgage payout figure of around $170,000 this would account for only about $320,000 of the proceeds.  In cross-examination it was put to the husband that there may have been capital gains tax on the sale and the husband agreed this may have been the case.  Overall, the husband’s oral evidence on this subject was vague and unsatisfactory but I am not satisfied that it was intended to be misleading.

23. The husband also purchased two marina berths at Suburb S in Queensland in 2009.  The wife said, on the basis of information from her solicitor (the source document was not tendered), that the marina berths were purchased in 2009.  In cross-examination the husband said he paid $320,000 or $330,000 for the berths.  This is some months before the sale of Property B so that would not appear to be the source of the funds used for the purchase and in cross-examination the husband suggested that the purchase of the marina berths had been an investment using borrowed money.  The husband still retains the marina berths.  They were not valued but the husband’s evidence that he had not been able to sell them at a listed price of $70,000 for the two years was not challenged. The wife was content to put these in the trial balance sheet at that value.

24. The husband owned the land on which the company operated at Property F (also known as Property F), free of encumbrance.  He retains this land. Its agreed value was $750,000.

25. The husband also owned land at Property G, Queensland.  The land was sold for $438,000 in 2017.  The net proceeds of sale of $84,549 were divided as to 1/3 to the wife, being $28,180, and 2/3, being $56,369, to the husband. 

26. Notwithstanding an order for joint valuations of any asset the value of which was not agreed neither party sought or obtained a valuation of the company. The husband asserted it should be valued at its balance sheet value at 30 June 2016 of negative $226,680. At trial the 2017 financial statements had not been prepared. He said debt had reduced so the overall book value would have increased by $20,000 to about negative $206,680. The wife was apparently content to accept that figure for the purpose of the trial balance sheet. Whether this is an accurate value might be doubted.  In 2016 the balance sheet valued goodwill at $10,000.  In 2016 the company had sales of about $680,000, in 2015 about $723,000 and in 2014 $669,000.  Salary and wages were around $300,000.  The husband gave evidence that he employed a manager in the business and he himself usually worked only about 30 hours a week due to restrictions caused by his health.  The salary of the manager was not stated but the husband was paid a salary of about $57,000 a year.  The company made a profit of $20,000 in the 2016 tax year. 

27. In addition the husband owned various vehicles, boats and equipment.

28. The husband’s financial statement filed before the trial recorded that he owned a life insurance policy.  The value ascribed to that policy in the financial statement is $139,907.  In submissions the husband said that he did not understand how that policy had been valued.  The financial statement was filed the same day that the husband’s former solicitor filed a notice of withdrawal and the financial statement showed some signs of professional preparation.  Notwithstanding the husband’s apparent ignorance about the basis of the valuation of the policy, I am satisfied that it should be given the value that appears in the financial statement.

29. It was agreed that the company was liable for $48,000 for unpaid superannuation contributions in respect of the husband.  Whether this is an asset of the SMSF as distinct from an unsatisfied statutory obligation of the company is questionable in my view. It might be doubted whether the SMSF would be able to sue for a debt. I have not included the amount in the balance sheet.

1. As to liabilities, there was no evidence about whether the husband’s personal liabilities had increased or decreased after separation.  He gave no evidence about it and he was not cross-examined on the topic.  The wife gave no evidence about the source of her credit card indebtedness of some $29,000 or when it was incurred.  Similarly, she gave no evidence about when her indebtedness for the motorcar lease was incurred.  It was unclear whether this indebtedness was incurred before or after separation.

2. The payments to each party of $5,000 described as “partial property settlement” were agreed deductions from the SMSF.  

3. The non-superannuation and superannuation pools at trial were as follows.

No.	Description	Wife	Husband	Total
Assets
1	Property A	$320,000
2	Property E	$650,000
3	Property C	$375,000
4	Property F	$750,000
5	Marina berths, Suburb S, Queensland	$70,000
6	Bank 1 Account	-$670
7	Bank 1 Account	-$31
8	Bank 4 Account	$382
9	Bank 4 Account	$4,224
10	Bank 1 Cheque Account	0	0
11	Life Insurance	$139,907
12	Business Pty Ltd	-$206,000
13	Motor Vehicle H	$22,000
14	Household Contents	$2,000
15	Household Contents	$5,000
16	Camper Trailer	$1,900
17	Shed Equipment	$1,000
18	Lawn Mower	$2,000
19	Boat	$6,000
20	Tractor	$3,000
21	Partial property settlement	$5,000
22	Partial property settlement	$5,000
23	Partial property settlement	$51,549
24	Partial property settlement	$28,180
Total assets	384,786	1,850,655	$2,240,289
Liabilities
25	Bank 4  Home Loan, Property A	$337,940
26	Bank 2 Loan Account	$4,330
27	Bank 4  MasterCard	$6,786
28	Visa Card A	$7,532
29	Visa Card B	$3,148
30	Bank 5 Account	$6,862
31	Finance company Account	$470
32	Hire Purchase Motor Vehicle H	$29,090
33	Bank 1 Loan Account Property C	$360,129
34	Bank 3 Loan Property F	$431,951
35	Bank 1 Loan Account Property E	$244,365
36	Frequent Flyer	$29,034
Total	$396,158	$1,065,479	$1,461,637
Net Total Assets	-$11,372	$789,996	$778,624
Superannuation
37	Super Fund B	$310,882
38	Self-Managed Superannuation Fund	$51,441	$264,283
Total	$362,323	$264,283	$626,606

Contributions

1. I generally reject the wife’s claims in her trial affidavit that she contributed the greater part of the expenditure necessary to support the melded family for the reasons set out under the subheading of “Credibility”.

2. The wife also submitted that there was evidence that the husband’s taxable income was so low that he was unable to make an equal contribution or, indeed, any significant contribution to family expenses.  The wife pointed out that in 2013, two years before separation, the husband’s wage income was $58,240 but the losses on his investment properties were $59,050 resulting in him paying no tax in that year.  In cross-examination the husband said that the shortfall between rental income and mortgage payments on the investment properties was made up by borrowings from the company.  Although the taxation records of the husband and the company are not complete there is evidence that this is likely to be true.  In 2013 the husband’s wage income was $58,240 and his investment losses $59,050.  In 2014 his wage income was $58,240 and his investment losses $23,630.  In 2015 his wage income was $58,240 and his investment losses $33,410.  In 2014 the company financial statements record “loans to shareholders” (the husband was the only shareholder) at $20,322.  In 2015 loans to shareholders stood at $73,096, that is, an increase of $52,744.  In 2016 loans to shareholders stood at $123,101, that is, an increase of $50,005.

3. It appears that the money available to the husband was sufficient, and more than sufficient, to cover his investment losses and provide an equal contribution, at least, to family expenses.  I also take into account some evidence that the husband made significant cash withdrawals in 2015 and 2017 (the bank records for 2016 are scant) at various pubs, taverns and sports clubs.  For one six-month period in 2015 the withdrawals were $4,920.  If extrapolated, this would indicate cash withdrawals in these establishments and possibly expenditure on drinking and gambling in the region of $10,000 a year.  In cross-examination the husband said that at the end of the marriage he was unhappy and reluctant to go home and fell into the habit of drinking and gambling at the end of the day.  I find that there was significant expenditure by the husband on drinking and gambling at the end of the marriage.  Nevertheless, given a wage income of almost $60,000 a year, augmented by borrowing from the company, it appears the husband had sufficient resources to contribute at least equally to family expenses.  I find this was likely to be the case.

4. At trial the wife’s salary income was $90,740 a year before tax.  She received rental income from the Property A property of $385 a week and had mortgage repayments on that property of $400 a week.  In her financial statement she said she paid income tax of $371 a week which would equate to after tax income of $71,573 a year.  In her trial affidavit the wife said that her taxable income for the 2008 year was $72,195, $66,870 for 2009, $54,247 for 2010, $53,769 for 2011, $51,304 for 2012, $73,012 for 2013 and $79,687 for 2014 (which appears to be mistakenly recorded as “2013” in the affidavit).  I understand the wife was in much the same employment throughout the relationship.  She did not explain the lower income in some years.  The husband asserted that the wife was using salary sacrifice to increase her superannuation contributions.  This was not denied by the wife.  There was no evidence from the wife about the extent of her salary sacrifice but I am satisfied that that the wife engaged in salary sacrifice and to some extent that explains the increase in the wife’s Super Fund B superannuation interest from about $104,000 at the beginning of the relationship to about $310,000 at trial.

5. To the extent that the wife was able to increase her superannuation contributions during the relationship this was a result, in part at least, of her residence, along with her children, in the home owned by the husband.  To that extent the husband may be said to have made a significant non-financial contribution generally and to the wife’s acquisition of her superannuation interest in particular.

6. The wife did not give evidence of receiving any child support for her two children.  In her financial statement for trial she deposed to receiving no child support notwithstanding that one of her children remained an infant.

7. The wife did not give any evidence that she made any direct or indirect financial contribution to real property owned by the husband, almost all of which was owned by him before the relationship commenced or was funded from the sale of property owned by him before the relationship commenced.  The wife gave evidence of some limited assistance to the husband in his business.  She said that during their honeymoon she assisted at the husband’s business “with administration” without being specific.  She said that during a “further four month period she assisted in the business on Saturdays and Sundays and took three weeks annual leave and worked during this three week period undertaking unpaid administration, bookwork, data entry on MYOB and preparing the business accounts for the accountant.”  The husband in his trial affidavit agreed that the wife assisted him at one point after his bookkeeper resigned although he said the hours were not full-time and that it occurred after the marriage rather than during a honeymoon.  There was no other evidence about the wife assisting the husband in his business.  I accept the husband’s evidence and I am satisfied that the wife’s assistance in the husband’s business was very limited. 

8. I find that both parties made approximately equal financial contributions to family expenses in the way previously described.  The parties did not make any direct financial contributions to the assets or superannuation of the other. 

9. The wife said that she made the greater non-financial contribution to the welfare of the family than the husband.  She said that she made a significant contribution to the care of Ms S.  Although Ms S was almost 12 at the beginning of the relationship and an adult at the end of the relationship, I accept that significant time and effort would still need to have been devoted to her care.  The husband rejected the wife’s assertion and said that, generally speaking, each parent was responsible for the care of their own child or children although there was some shared responsibility.  I accept the husband’s evidence.   

10. I am satisfied that the parties deliberately kept their financial affairs relatively separate and the only joint interest, a joint bank account, was intended to ensure equality of family expenditure.  There were, apparently, disagreements about the use of the joint account.  The wife gave evidence that the husband

    … would purchase approximately 2 to 3 cartons of beer and up to one bottle of ouzo per week.  I would drink approximately one bottle of ouzo per week and each of us smoked cigarettes, although I say Mr Layton consumed and expended far more for himself from joint funds on alcohol and double the expense I spent on cigarettes.  I told Mr Layton did not want to continue funding his smoking habit and because [of that] I suggested we pay for our cigarettes expenses separately. 

11. Without accepting the whole of the passage as accurate the wife’s evidence indicates that the parties generally expected that there would be an equal sharing of family expenses, an attitude also expressed by the husband in his evidence.  This arrangement is not surprising given that each party came to the relationship of the mature age with infant children to whom they were deeply, and perhaps primarily, committed.  It is clear from the evidence that much of the conflict between the parties arose out of perceptions that their respective children were not treated equally by the other party. 

12. Overall, I have found that neither party made any direct financial contribution to the acquisition, conservation or improvement of any property of the other.  Both parties have made some poor investments.  The value of the wife’s Property A property purchased for about $385,000 has decreased to about $320,000.  The wife implied that the husband was in some way responsible for this loss because he advised her to purchase the property in return for a “spotter’s fee”.  The husband denied this and there was no evidence to support the wife’s claim.  I accept the husband’s evidence.  The husband’s marina berths acquired for more than $300,000 now appear to be worth $70,000 or less. 

13. I consider it is likely that the husband has made some indirect contribution to the increase in the value of the wife’s superannuation interest over the duration of the relationship. He provided a home for the wife and her children to which she made no financial contribution thereby permitting her to increase her superannuation contributions by salary sacrifice.

14. I find that non-financial contributions, including contributions to the welfare of the family, were approximately equal.

15. The relationship lacked one of the usual characteristics of marriage, that is, it was not a joint financial project.  Almost the whole of the wife’s evidence was devoted to establishing that the husband did not keep up his side of implicit, and perhaps explicit, understanding that family and household expenses would be shared equally but otherwise each party’s finances were to be separate. 

16. It is to be noted that about 4% of the net assets have already been transferred to the wife by way of partial property settlement, largely as a result of the sale of the husband’s Property G property. I find that contributions to non-superannuation assets were 19% by the wife and 81% by the husband. A finding of 19% contribution by the wife will require, without taking into account section 75(2) matters, a further adjustment of 15%.

17. I find that the husband has made some indirect contribution to the increase in the wife’s superannuation with the result that contributions to superannuation were 54% by the wife and 46% by the husband.

    Section 75(2)

18. The wife is 55 years old.  She is in good health.  She has secure employment and earns about $90,000 a year.  One of her two children is an adult and the other will have a limited period of further dependency.  She has a net deficiency of assets compared to liabilities.  This reflects the poor investment in the Property A property and significant consumer or credit card debt incurred by her in unexplained circumstances.  The wife is presently living in rental accommodation.  There is no indication that she is unable to afford her rent or is otherwise in straitened circumstances. 

19. The wife has about $362,000 worth of superannuation.  As she may well have another 15 years of secure employment before her, it can be expected that this superannuation interest will increase accordingly. 

20. The husband is 63 years old.  I accept that there are question marks about his health.  He continues to be employed by a company of which he is the sole director and shareholder.  The husband said that the financial situation of the company had declined over the years.  I accept that the company has a high level of indebtedness but there is no evidence that the company is unable to service its debt.

21. The husband owns his own home but, overall, the husband’s equity in his various properties is principally made up of the equity in the Property F property from which the company operates.  This is an essential asset if the husband is to continue to earn a livelihood.

22. I consider that the wife’s long-term financial prospects are good.  I consider that, while the husband presently has significant net assets, the level of his indebtedness and the level of indebtedness of his company, along with the potential impact of an uncertain property market on his investments raises some doubts about the husband’s financial future. 

23. It is not apparent that the husband has the capacity to pay the wife sum she seeks which, according to her final submissions, is $324,584 (at proposed order 16) or $284,000 (proposed order 8).  She seeks the sale of all of the husband’s properties if necessary, including Property F, to satisfy such an order. She seeks to retain the entirety of her superannuation interests.

24. As noted, the relationship lacked one of the usual characteristics of marriage, that is, it was not a joint financial project.  I have considered, having regard to subsection 79(2), subsection 79(4) and subsection 75(2) of the Act, whether it is just and equitable to make any order for alteration of property interests.

25. Stanford & Stanford (2012) 247 CLR 108 makes clear that a decision about altering property interests requires consideration not only of the matters in section 79(4) but separate consideration of section 79(2). The question of what is “just and equitable” does not admit of exhaustive definition. See also Bevan & Bevan (2014) FLC 93-572.

26. As to when and how this question is to be considered the Full Court of the Family Court in Martin & Newton (2011) FLC 93-490 said at [305]:

    … it will be sufficient, in most cases, to have regard to the overall justice and equity of the orders after determination of the asset pool, consideration of contributions and assessment of the relevant s75(2) matters.

27. I have concluded that it is just and equitable to make an order having regard to these considerations, including subsection 75(2)(g) “where the parties have separated or divorced, a standard of living that in all the circumstances it is reasonable”.  Otherwise I consider that the subsection 75(2) matters are evenly balanced and I do not propose to make any further adjustment for those matters. 

28. The order I propose to make should see the wife able to liquidate or reduce her indebtedness and improve her standard of living.  The order should be capable of being complied with by the husband either by further modest borrowing or by sale of an asset.  I note that he has a life insurance policy valued at about $139,000 which I take to be a surrender value.

29. A 54%/46% split of superannuation interests would see a reduction in the wife’s interest by about $25,000 and a corresponding increase in the husband’s interest.  However, as the husband is in need of liquid assets rather than increased superannuation at this point, I propose to leave the superannuation interests of the parties unaltered and reduce the amount that the husband would otherwise be required to pay the wife by $25,000.

30. The wife will be permitted to roll over her superannuation interest from the SMSF or otherwise transfer her interest to a superannuation fund of her choice.

31. A payment to the wife equal to 15% of the value of the net assets would be $116,793. As noted, after taking into account the earlier partial property settlement, this equates to an effective payment to the wife of about 19% of the value of net assets.  To leave the wife with a further 15% of the net assets, taking into account her negative asset position, would require a total payment of $128,165.  If that amount is reduced by $25,000 that will require payment to the wife of $103,165.  I will order accordingly. Payment is to be made within 90 days.

32. The effect of the proposed orders is set out below. The percentage division of total assets and superannuation is 32.3% to the wife and 67.7% to the husband.

No.	Description	Wife	Husband	Total
Assets
1	Property A	$320,000
2	Property E	$650,000
3	Property C	$375,000
4	Property F	$750,000
5	Marina berths, Suburb S, Queensland	$70,000
6	Bank 1 Account	-$670
7	Bank 1 Account	-$31
8	Bank 4 Account	$382
9	Bank 4  Account	$4,224
10	Bank 1 Cheque Account	0	0
11	Life Insurance	$139,907
12	Business Pty Ltd	-$206,000
13	Motor Vehicle H	$22,000
14	Household Contents	$2,000
15	Household Contents	$5,000
16	Camper Trailer	$1,900
17	Shed Equipment	$1,000
18	Lawn Mower	$2,000
19	Boat	$6,000
20	Tractor	$3,000
21	Partial property settlement	$5,000
22	Partial property settlement	$5,000
23	Partial property settlement	$51,549
24	Partial property settlement	$28,180
Payment from the husband	$103,165
Total assets	$487,951	$1,850,655	$2,240,289
Liabilities
25	Bank 4  Home Loan Property A	$337,940
26	Bank 2 Loan Account	$4,330
27	Bank 4  MasterCard	$6,786
28	Visa Card A	$7,532
29	Visa Card B	$3,148
30	Bank 5 Account	$6,862
31	Finance company Account	$470
32	Hire Purchase Motor Vehicle H	$29,090
33	Bank 1 Loan Account Property C	$360,129
34	Bank 3 Loan Property F	$431,951
35	Bank 1 Loan Account Property E	$244,365
36	Frequent Flyer	$29,034
Payment to wife	$103,165
Total	$396,158	$1,168,644	$1,461,637
Net Total Assets	$91,793	$686,831	$778,624
Superannuation
37	Super Fund B	$310,882
38	Self-Managed Superannuation Fund	$51,441	$264,283
Total	$362,323	$264,283	$626,606
$454,116 32.3%	$951,114 67.7%	$1,405,230

1. The wife also sought a costs order against the husband because, she alleged, the husband’s failure to file a financial statement before a conciliation conference meant the conference was wasted. I note that the matter was mentioned about two months before the conference and after the time for the husband to file responding documents. The matter was not raised at that point. If it had been raised then it could have been addressed by the court. I am not satisfied there is any reason to depart from subsection 117(1) of the Act.

I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Judge Young

Date: 29 June 2018