Leclair and Abel
[2018] FCCA 2068
•3 August 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LECLAIR & ABEL | [2018] FCCA 2068 |
| Catchwords: FAMILY LAW – Property adjustment – very long relationship – questions of negligent non-disclosure by the Husband in compliance with Rules of Court that require full and frank [and ongoing] disclosure – Wife has significant health issues – Husband has re-partnered – use by parties of inheritance to their now adult children issue of who pays back this sum and how it should be done – Husband’s case to some degree focussed on how Wife’s orders sought if granted would result in her receiving less under her disability support pension – Husband has secured very well paid job – both parties submit “contributions” during the relationship should be considered to be “equal” – just and equitable considerations. |
| Legislation: Family Law Act 1975, ss.74, 75(2) Federal Circuit Court Rules 2001, rr.23.03, 23.04 |
| Cases cited: Chang v Su (2002) 170 FLR 244, (2002) 29 Fam LR 406 Dickons v Dickons (2014) 50 Fam LR 244 In the Marriage of Hickey (2003) 30 Fam LR 355 Marsh & Marsh (2014) FLC ¶93-576 In the Marriage of Tate (2000) 26 Fam LR 731 |
| Applicant: | MS LECLAIR |
| Respondent: | MR ABEL |
| File Number: | CAC 492 of 2016 |
| Judgment of: | Judge Neville |
| Hearing date: | 7 August 2017 |
| Date of Last Submission: | 19 December 2017 |
| Delivered at: | Canberra |
| Delivered on: | 3 August 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr G Stagg |
| Solicitors for the Applicant: | Watts McCray Lawyers (Canberra) |
| Solicitors for the Respondent: | Farrar Gesini Dunn (Canberra) |
ON A FINAL BASIS, THE COURT ORDERS THAT:
The Husband shall forthwith do all such things and sign .all such documents as are necessary to authorise Farrar Gesini Dunn to cause the sum of $125,984.28 held in their Trust Account to be paid to the solicitors for the Wife.
The Husband shall forthwith do all such things and sign all such documents as are necessary to authorise Eden Legal to cause the sum of $85,755.20 held in their Trust Account to be paid to the solicitors for the Husband.
Upon compliance with Orders 1 and 2 hereof, the Wife shall be solely responsible for, and indemnify the Husband with respect to, the repayment of the sum of $110,334.00 being the inheritance money owed to the children of the parties.
The Husband shall forthwith give all consents and sign all documents and do all things necessary to close his account held with Super Fund P and cause the whole proceeds (being $256,622.02 as at 24 July 2018) and any further interest held therein to be paid to the Wife AND pending such payment the Husband:
(a)shall hold the funds held in Super Fund P on trust for the Wife pending compliance with this Order,
(b)is restrained from withdrawing any funds from the Super Fund P account except for the purposes of compliance with this Order.
In accordance with section 90MT(l)(b) of the Family Law Act 1975:
(a)Whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of Mr Abel from his interest in the Super Fund Q ("The Super Fund Q"), Ms Leclair, the Wife, is entitled to be paid by the The Super Fund Q 64% of the splittable payment and there shall be a corresponding reduction in the amount Mr Abel would be entitled to receive but for these Orders; and,
(b)The operative time for Order 5(a) hereof is four business days after service of a certified copy of these orders on the Trustee.
Otherwise each party be declared as against the other the sole legal and beneficial owner of all other items of property held in their respective name, possession and/or control and each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which they are entitled pursuant to these Orders.
If either party fails or refuses to sign within 14 days of a written request to do so any document necessary to give effect to these Orders then the Registrar of the Federal Circuit Court in Canberra is hereby authorised pursuant to the provisions of section 106A of the Family Law Act 1975 to sign such document on behalf of the defaulting party.
IT IS NOTED that publication of this judgment under the pseudonym Leclair & Abel is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAC 492 of 2016
| MS LECLAIR |
Applicant
And
| MR ABEL |
Respondent
REASONS FOR JUDGMENT
Introduction
The final hearing of this property matter was held and concluded on 7th August 2017. On 12th September 2017, the Respondent Husband filed an Application in a Case seeking to re-open the matter on the basis that, on his account, new circumstances had arisen regarding his employment. This Application was heard on 16th November 2017; further written submissions were provided by both parties, which are set out below.
Leaving to one side for the moment the Husband’s Application to re-open, the basic, and as far as I understand uncontroversial, facts before the Court are:
(a)The parties are aged, as at the date of the hearing, the Wife – 56 years, and the Husband – 59 years;
(b)The duration of the relationship was 34 years;
(c)There are 4 adult children of the relationship;
(d)The principal non-superannuation asset was a property at Property A in New South Wales which has an agreed value of $740,000. There is a mortgage over this property of $548,530. Subsequent to the hearing of the Husband’s Application in a Case in November 2017, the Property A property was sold. The net proceeds of sale were $211,739.45. It is agreed that the nett proceeds of sale will be held in trust until the pronouncement of Orders by the Court in the current matter;
(e)The Property A property was purchased, by agreement between the parties, in the Husband’s sole name. Prior to purchasing that property, the parties owned a property at Property B. That property was sold for $600,000 in the latter part of 2017;
(f)For a period of time, the Husband was paying the mortgages on both properties, as well as rates and insurance. These payments totalled approximately $4500 per month until the sale of the Property B property;
(g)But for a very short period in December 2015 and early 2016, the Wife never lived at the Property A property. It was purchased by the parties in anticipation of it being their retirement residence;
(h)Certain renovations were conducted on the Property A property which were paid for by the Husband; he said he “thought” the cost of renovations were approximately $125,000. The funds for these renovations came from one or more of the Husband’s superannuation accounts. For a period of time, the Husband and his new partner, Ms H, had the benefit of living at the Property A property;
(i)At separation, each party had a motor vehicle: the Wife a Motor Vehicle 1 valued at approximately $3690, and the Husband a Motor Vehicle 2 valued at the time at $30,000;
(j)The Wife has no superannuation; the Husband has significant superannuation – Super Fund P, which totals $329,467, and Super Fund Q pension of $1,507,830;
(k)According to the Husband, the nett asset pool, including superannuation, totals $1,925,205; excluding superannuation, the nett asset pool is $153,654;
(l)There is agreement between the parties that there are outstanding funds owing to “the children” of the relationship, being funds owed to them from an inheritance. These funds were applied initially towards the mortgage and (as alleged by the Wife) used later by the Husband for the purchase/lease of a motor vehicle, and thus a liability, of $113,334. The issue here is not the amount owing to the children, or what the funds were used for, but rather who will pay it and how this sum is to be paid; and
(m)The Wife receives a means-tested disability support pension.
Other than the dispute over the Final Orders sought by each of the parties, the following issues were of some focus and attention during, and after the hearing:
(a)The nature and extent of the Husband’s financial disclosure. Indeed, on 28th August 2017, the Court was provided with a document entitled “Joint Document re Disclosure”, which outlined (with commentary by the solicitors of both parties) “partially disclosed funds” totalling $497,548.65, and an “allegedly non-disclosed amount” amount of $125,000.00. These latter amounts were “discovered from various documents produced under subpoena”;
(b)The Husband has re-partnered. Initially financial details concerning this relationship were not available to the Court but have since been remedied by the Husband’s new partner filing an Affidavit on 22nd November 2017;
(c)The Wife’s health issues are significant. She has carcinoma in her neck, and a condition known as osteoradionecrosis (otherwise known as “bone death”) of her jaw. She has depression and is under a mental health plan;
(d)On 30th November 2017, the Husband filed an Affidavit in which, among other things, he (a) corrected certain financial matters to which he had previously given evidence, and (b) informed the Court that his short period of unemployment had ceased and he was now employed as the (occupation omitted) at (employer omitted), with an income of approximately $252,000 per annum;
(e)There is a dispute also in relation to “add-backs”, specifically in relation to legal fees. Thus far, the Husband has paid fees of some $47,577.68. He says that because the Wife has not disclosed any legal fees, there should be no “add-back” of the Husband’s fees. In submissions, the Wife confirmed that her lawyers are working on the basis that her legal fees will be paid from what she receives from the property distribution. Accordingly, she says that she has no legal fees to “add-back” but that is no reason not to “add-back” the Husband’s legal fees. Respectfully, on this issue, I agree. The Husband’s legal fees will be added back into the asset pool;
(f)Finally, in the light of the very significant length of the relationship, among other things, both parties argue that contributions during the relationship should be assessed as equal. I agree.
There was also some extended and concerning discussion with the parties’ lawyers at the commencement of the trial about the unfortunately quite regular practice of (a) non-compliance with trial directions and (b) the consequential late-filing of material and seeking leave to rely upon it. By way of comment only: absent adverse costs Orders against parties and or their lawyers, as well as refusal of leave to rely upon late-filed material, it is almost impossible to ensure basic compliance with Court Orders, including filing directions.[1]
[1] See T 1 – 4.
Minute of Order Sought by the Applicant Wife
The solicitors for the Applicant Wife provided the Court with an updated Case Outline, containing Orders sought, on 25th July 2018 in the light of the sale of the Property A property, as follows:
PROPOSED ORDERS SOUGHT - UPDATED AS AT 25 JULY 2018
That by way of adjustment of interests with respect to the property of the parties, or either of them, pursuant to the provisions of section 79 of the Family Law Act 1975 the following orders be made:
1) That the husband shall forthwith do all such things and sign .all such documents as are necessary to authorise Farrar Gesini Dunn to cause the sum of $125,984.28 held in their Trust Account to be paid to the Solicitors for the Wife.
2) That the husband shall forthwith do all such things and sign all such documents as are necessary to authorise Eden Legal to cause the sum of $85,755.20 held in their Trust Account to be paid to the Solicitors for the Wife.
3) That upon compliance with Orders 1 and 2 hereof, the wife shall be solely responsible for and indemnify the husband with respect to the repayment of the sum of $110,334.00 being the inheritance moneys owed to the children of the parties.
4) That the husband shall forthwith give all consents and sign all documents and do all things necessary to close his account held with Super Fund P and cause the whole proceeds (being $256,622.02 as at 24 July 2018) and any further interest held therein to be paid to the wife AND pending such payment the husband:
a) shall hold the funds held in Super Fund P on trust for the wife pending compliance with this Order,
b) is restrained from withdrawing any funds from the Super Fund P account except for the purposes of compliance with this Order.
5) That in accordance with Section 90MT(l)(b) of the Family Law Act 1975 ("the Act"):
a) Whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of Mr Abel from his interest in the Super Fund Q ("The Super Fund Q"), Ms Leclair, the Wife, is entitled to be paid by the The Super Fund Q, 65% of the splittable payment and there shall be a corresponding reduction in the amount Mr Abel would be entitled to receive but for these orders, and
b) The operative time for Order 5(a) hereof is four business days after service of a certified copy of these orders on the Trustee.
6) That pending the making of the superannuation splitting order herein the payments to be made by the husband pursuant to the interim orders dated 17 May 2017 continue.
7) That the payments to the wife under the interim Orders of 17 May 2017 and under the superannuation splitting order herein be characterised as partial property settlement.
8) That otherwise each party be declare as against the other the sole legal and beneficial owner of all other items of property held in their respective name, possession and/or control and each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which they are entitled pursuant to these Orders.
9) That if either party fails or refuses to sign within 14 days of a written request to do so any document necessary to give effect to these Orders then the Registrar of the Federal Circuit Court in Canberra is hereby authorised pursuant to the provisions of Section 106A of the Family Law Act 1975 to sign such document on behalf of the defaulting party.
10) Liberty to apply for the purposes of enforcing or giving effect to these Orders.
Minute of Order Sought by Respondent Husband
The Respondent Husband’s solicitors provided the Court with an original Case Outline containing a Final Minute of Orders Sought on 2nd August 2017. In the light of developments that occurred subsequent to the hearing, the Court was then provided with an updated Minute of Orders Sought on 25th July 2018, as follows:
FINAL MINUTE OF ORDERS SOUGHT BY RESPONDENT HUSBAND
That pursuant to s79 of the Family Law Act, Orders 1 to 8 inclusive, be made:
1) That the Respondent Husband retain:
a) His Motor Vehicle 2;
b) Any money in any account in his name with any bank or other financial institution;
c) All goods, chattels and personal property in his possession.
2) That the Applicant Wife retain:
a) Her Motor Vehicle 3;
b) Any money in any account in her name with any bank or other financial institution;
c) All goods and chattels and personal property in her possession.
3) The parties cause the proceeds of the sale of the Property A property, which proceeds stand in the sum of $211,740, to be paid as follows:-
a) The sum of $122,975 to the Husband;
b) The sum of $88,765 to the Wife.
To give effect to this order the Husband will cause his solicitors to pay the amount due to the Wife under this order from funds held in their Trust Account. The Husband will be entitled to the balance of the funds held on behalf of the parties in that Trust Account, together with all of the monies held in the Trust Account of Eden Legal and Conveyancing.
4) Within seven days after the payments referred to in the previous order, the Husband pay to Mr J $20,556, Mr R $15,555.15 and Mr C $19,055.50.
5) Within seven days after the payments referred to in order 3, the Wife pay to Mr J $20,556, Mr R $15,555.15 and Mr C $19,055.50.
6) Within 14 days the Husband cause to be paid to the Wife an amount equal to the balance of the funds held in his Super Fund P superannuation account (account no.) being the sum of not less than $256,622.02.
7) That in accordance with Section 90MT(1)(b) of the Family Law Act 1975 (“the Act”):
a) whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of Mr Abel from his interest in the Super Fund Q (“The Super Fund Q”), Ms Leclair, the Wife, is entitled to be paid by the The Super Fund Q, 50% of the splittable payment and there shall be a corresponding reduction in the amount Mr Abel would be entitled to receive but for these orders.
b) The operative time for Order 4.a is four business days after service of these orders on the Trustee.
NOTATION
The parties note that this Order, and payments made as a result, will be affected by the Superannuation Legislation Amendment (Family Law) Act 2004 which came into effect on 18 May 2004 and by the Family Law (Superannuation) Regulations 2001 which together provide for a separate superannuation interest to be created for the non- member spouse and for consequential effects on payments.
8) That otherwise each party:
a) is declared, as against the other, to be the sole owner of all goods, chattels and personalty and of any other chose in action of whatsoever nature in their possession or ownership; and
b) is to indemnify the other against any debt secured against such property.
9) All prior orders in this matter are discharged.
The Wife’s Evidence
The Wife’s evidence at trial was very limited. I was impressed by her obvious candour and basic simplicity, her uncomplicated approach to her evidence, with no apparent malice or bitterness towards the Husband after such a very long marriage, and their now quite different, and her obviously difficult, circumstances.
The first part of the Wife’s cross-examination focussed extensively upon her receipt of a disability pension, and that such pension is affected by receipt of any other income. She confirmed that she was aware of this consequence. It was also put to her that the Orders proposed by the Husband would ensure that she continued to receive the maximum disability pension whereas, on the Orders that she sought, her pension would reduce. She said she was aware of this but also said that she was not aware of any adverse impact upon other benefits that would flow under the pension, such as medical and rental rebate assistance.[2]
[2] T11 – 14.
The next area of cross-examination related to the fact that, for a longer period of time than was desired, the Husband was paying the mortgage on both the Property B and Property A properties. The combined mortgage payments in August 2016 were $927 per week.[3] She agreed with the proposition that both parties originally hoped to sell the Property B property for over $800,000 but, ultimately, it sold 15 months later for $600,000.[4] The Wife also confirmed that the renovations on the Property A property were paid for by the Husband.
[3] T15 – 16.
[4] T16.
There followed a range of questions regarding various payments made by the Husband from, among other things, his termination pay from the (employer omitted). Such matters are set out in more detail later in these reasons, including in the submissions of the parties. The Wife, however, did note that, amongst other things, the Husband has a credit line, and that she was aware how much he had received from his termination pay or any other funds and what had been done with them. For example, there was the following exchange with her during cross-examination:
MR FARRAR: On the next page, on 5 August 2015, there’s a debit of $68,500. See that? Yes.
It says:
Transfer to other bank, to Abel.
That was the deposit on the Property A purchase, wasn’t it? If you don’t know, say ? Yes.
you don’t know, but – all right. Now, I’m going to give you the opportunity to acknowledge this, if you can: that the payments that I’ve just taken you to from that statement – that is, round figures, $100,000 paid off the overdraft, $30,600 paid off the credit card, $5100 paid off your car, $68,500 paid the deposit on Property A and $46,724 paid out the Motor Vehicle 2 lease – that’s a total of $311,162 that was paid out of that account predominantly from moneys that he received as termination pay. Do you agree with that? I’m not aware of how much he received from his termination pay or any other funds that he had available.
Right. Now, in his affidavit that he swore recently on 1 August – I don’t know if you recall that. It’s a two-page affidavit with some attachments in which he talks about what he did with moneys that he accessed from Super Fund P. Do you recall reading that affidavit? Not word for word, no.
Well, Mr Abel says that he spent about $25,000 out of his Super Fund P money for final payments associated with the kitchen renovation due to delays in completion to late January and associated costs associated with the need to add additional support for the ceiling following discovery of defects in the building’s original construction. Do you recall reading that? I have no knowledge of that. No.
He also says that there was – the 25,000 included a final payment for the timber floor and carpet, and painting the kitchen, lounge, dining, entry and study upstairs which was completed in late January/early February 2016, and the installation of an air-conditioner in February? I was aware of a delay in completing the work done at the house, but I was not aware of how much it cost or how much [was]. paid off in January.
All right. Well, no doubt he will he will be asked questions about his affidavit, but you say you were unaware that he took $25,000 out of Super Fund P ? That is correct.
There was also some relatively brief discussion about the payments which the Husband made to the Wife, post-separation, such as the bond on the property, which she rented in Suburb A, her health insurance and her mobile telephone account.[5]
[5] T26.
There was also a brief discussion about payments that the Husband had made to a son of the marriage, Mr R, when he was attending the (University), such as the purchase of a car and some rental accommodation in 2016. For part of his time at University, Mr R lived with his Mother.[6]
[6] T27 – 29.
The Husband’s Evidence
The first part of the Husband’s evidence sought to clarify (a) what monies he had received by way of redundancy from the (employer omitted), and (b) what he had done with it. For example, on 20th July 2016, there was a payment from the (employer omitted) of $214,823.20, which was his final redundancy payment, some of which he put into the parties’ overdraft account. Part of the monies received by the Husband were also used to pay off a credit card, as well as to pay out a loan in relation to a car owned by the Applicant Wife. A further payment was made to Motor Vehicle 2 Finance in relation to a lease for a vehicle. The Husband also confirmed that he received a cash payment for the trade in of one Motor Vehicle 2 prior to the lease of another.[7]
[7] T33 – 34.
The Husband confirmed that the inheritance money to the children of $130,000 was “at the time … used to reduce the mortgage.”[8]
[8] T35.
The Husband said that he thought that the total cost of renovations at Property A was approximately $125,000. The funds for the renovation came, he said, from his Super Fund P fund, or the lump sum superannuation payment.[9] He confirmed that the mortgage at the time of trial at the Property A property stood at $548,000.
[9] T36.
The Husband confirmed that his new partner, Ms H, is effectively a dependant of his and that she has no assets. He also confirmed that, as at the date of the trial, there was no evidence from Ms H.[10] There was not insignificant discussion with the Husband regarding the nature and extent of his relationship with Ms H, which I set out as briefly as possible below:[11]
[10] T39.
[11] T 41 – 42.
MR STAGG: You were just asked a question from his Honour asking you to confirm whether or not you are currently in a relationship, and I take it you that confirm that you were or you are currently in a relationship?‑‑‑Ms H lives at the same address, yes.
Well, you’re in a relationship, aren’t you, with her?‑‑‑Sorry?
You’re in a relationship with her, aren’t you?‑‑‑She lives at that address, yes.
You are in a relationship with her, aren’t you? She’s not a boarder. You’re in a relationship with her, aren’t you?‑‑‑I think we could classify – yes.
You have been on several holidays with her over the last two years, haven’t you?‑‑‑Yes.
You have been to (country omitted) ?‑‑‑Yes.
You have been to (country omitted)?‑‑‑She joined me in (country omitted) on a holiday that I had gone with my best friend.
Did you pay for her?‑‑‑I initially paid for her. She paid the cost of the tickets back.
Did you pay for her accommodation when in (country omitted)?‑‑‑Yes, yes.
(country omitted)?‑‑‑She paid for that.
For you as well?‑‑‑Yes.
(country omitted)?‑‑‑That was for the funeral of her ‑ ‑ ‑
Is it “yes” or “no”?‑‑‑ ‑ ‑ ‑ father and – yes.
And, in fact, you borrowed $4000 from my client for that, didn’t you?‑‑‑Yes.
And you have since repaid $1000?‑‑‑Yes.
(omitted) Queensland?‑‑‑No.
(country omitted) ‑ ‑ ‑?‑‑‑I have never been to (country omitted), no.
So you’re saying it was (country omitted). You have been to (country omitted) but you haven’t been to (country omitted)?‑‑‑When was that?
Well, you said to his Honour you have been to (country omitted)‑ ‑ ‑?‑‑‑Yes.
‑ ‑ ‑ with your partner. You haven’t also been to (country omitted)?‑‑‑No.
No. Now, you also said that you thought that you had paid the rates on the Property B property?‑‑‑Yes.
I will just show you a document. If you just look at the entry towards the bottom, you will see that there’s payment made to the local council of $4000. That would be for rates, wouldn’t it?‑‑‑That would be the – last year’s rates, yes.
Outstanding rates, yes. I tender that document.
HIS HONOUR: Have you seen this, Mr Farrar?
MR FARRAR: No – well, I might have. I don’t want to be alleging that it wasn’t in the disclosure, but I don’t – thank you.
HIS HONOUR: So the settlement adjustment sheet in relation to the Property B property will be marked exhibit B.
EXHIBIT #B SETTLEMENT ADJUSTMENT SHEET FOR PROPERTY B PROPERTY
MR STAGG: You completed a financial statement on 21 July, didn’t you, of this year?‑‑‑Of this year?
Yes?‑‑‑I think so, yes.
And you recall that, at part B, was a question to list the name, age and relationship to you and gross income of each other occupant of your household?‑‑‑Yes.
And you didn’t put Ms H in there, did you?‑‑‑No, I didn’t.
That was an oversight?‑‑‑It was an oversight.
HIS HONOUR: There was no particular reason?‑‑‑Well, I mean, it was – from my perspective, she’s not earning very much and I ‑ ‑ ‑
Sorry, you said earlier to me that she wasn’t earning anything, and now you say she’s not earning very much?‑‑‑Well, she’s on a Newstart allowance and that’s it.
A Newstart allowance?‑‑‑Yes.
And how long does that go for?‑‑‑Until she gets a job, I assume.
And is she qualified for anything in particular?‑‑‑She, I think, has a – she definitely has a (qualifications omitted).
In what?‑‑‑In, I think, (employment omitted).
MR STAGG: So you’re saying she’s mostly on a Newstart allowance?‑‑‑I believe so, yes.
So are you aware as to whether she has declared that she is in a relationship with you to Centrelink?‑‑‑I’m unaware.
You have never asked her that?‑‑‑No.
HIS HONOUR: Could I suggest that there are a number of things about Ms H that it’s, to put it as neutrally as possible, a little curious that the court doesn’t have anything about her?‑‑‑Yes.
And some of the answers that you have given, could I suggest – it’s just an observation – are less than detailed. It just seems a little curious that you’re in a relationship, and you have been in a relationship with her for approximately how long?‑‑‑She has been living in Property A since about 2016, I think.
But you accept that ‑ ‑ ‑?‑‑‑And she has been a friend of mine for years.
Right. But would you accept, though, that each time when you say that she has been living in Property A, say, since 2016, that someone like me might be entitled to assume that you have been in a relationship since 2016?‑‑‑We have been living together, yes.
Right. But there are a number of aspects that you mentioned that you don’t seem to have even much particular knowledge about, such as the details of her qualifications, details of her Newstart allowance, which again, for someone like me, strikes me as a little curious that someone that you’re living with, there are some basic details that you don’t seem to be aware of. Again, it’s a
matter for you as to how you conduct your relationship, but dealing with a financial matter before the court ‑ ‑ ‑?‑‑‑Well, I understand that she has been out of work for that entire period.
There are a number of observations that should be made here. First, it will be readily apparent how difficult it was, at times, to get the most basic information, or confirmation, from the Husband to very straight-forward and elementary questions, such as that he and Ms H were/are in a relationship.
Secondly, it is patent, even from this relatively brief exchange but many others like them, that there was a not insignificant number of other instances during the trial, how little information was forthcoming from the Husband. Moreover, it was more than just simply “curious” how or why the Husband did not list or record Ms H in his Financial Statement, for example under Parts E and H, given the circumstances of their relationship and her living in his residence. At least he acknowledged that this was “an oversight.” Many people, including me, could take it as perhaps something more.
Thirdly, either he was amazingly incurious about the financial and other matters relating to his partner and “friend” of many years, or showed a remarkable lack of insight and or perspicacity about his (and her) financial knowledge more generally. For someone who was then, and in more recent times, works specifically in the world of figures and financial matters, I was really quite concerned, intrigued, and much else besides, at his lack of attention to financial detail for the purposes of these proceedings.
In this same vein, there were other, less informative, aspects of the Husband’s evidence regarding what he did, and did not, know about Ms H with whom he is in a relationship, such as the level of her superannuation.[12]
[12] T43 – 45.
He confirmed that, as at the date of trial, he had prepared, but had not produced, a copy of his 2015-16 tax return. He said from memory his taxable income for that year was $180,000. He was asked to provide a copy of that tax return during the course of the trial.[13]
[13] T46.
He confirmed that he took part of his Super Fund Q upon retirement from the (employer omitted), as a lump sum, which amounted to slightly more than $400,000. There was further discussion about what he did with those funds that I need not recount here.[14] Later he confirmed that, at least in relation to one account, there was the sum of approximately $28,000 which remained unaccounted for.[15] Later still, when asked questions about borrowing an extra $50,000 (or thereabouts) from the Property A mortgage, he said he could not remember what that sum was for.[16] The Husband further conceded that, in relation to extending the mortgage over the Property A property in March 2017 by $60,000, (a) he did not ask the Applicant Wife about extending the mortgage, and (b) that that sum was spent on his own purposes.[17]
[14] T48 – 49.
[15] T51.
[16] T52.
[17] T53 – 54.
The Husband confirmed that in relation to a trip to (country omitted) with Ms H, he actually borrowed $4,000 from the Applicant Wife, of which he has only repaid $1,000.[18] It was never clear to me why he borrowed this sum from the Wife, and for that matter, why she lent him the money. Equally baffling is how or why he has not re-paid that sum in full. His rather casual approach to some financial matters was indeed troubling.
[18] T57.
In relation to his superannuation, he was unable to say whether, if he pre-deceased the Applicant Wife, his superannuation would go to her. He did say that it (was or) would be his intention that she would get it but he could not definitively say so.[19]
[19] T61.
Further questions were put to him regarding a deposit made on 11th September 2015 for an amount of $49,532.65. He said he assumed it was something to do with the process of the sale of the Property B property but he could not remember exactly what it related to.[20] Similarly, in relation to a range of other financial transactions put to him, he indicated that he could not be sure what each sum from each account was used for.[21] Again, for someone who works in the world of (employment omitted), the Husband showed an alarming lack of attention to detail.
[20] T 64.
[21] See for example T 64 – 66.
There followed a reasonably extensive discussion regarding the Husband lending money to Ms H and arrangements for monies from Ms H being passed through an account of the Husband’s.[22] Again, I do not need to go into detail about these matters other than, again, to note how quite opaque and generally unclear the Husband’s evidence was about such matters.
[22] See T 68 – 70.
More generally, the respective positions of the parties about funds received and used by the Husband was put by their lawyers at the end of the Husband’s evidence as follows (emphasis added):[23]
[23] T 74 – 76.
MR STAGG: Your ‑ ‑ ‑ HIS HONOUR: So are there any more documents that need to be tendered? Before the luncheon adjournment, Mr Stagg, you were saying that you were going to put into some table or some written form some figures that ‑ ‑ ‑
MR STAGG: Yes, your Honour. I’ve completed a table as to what we say is, to the best of our ability, the money which has been received by the husband since July 2015. Now, I’m not suggesting that all of that – this money was put to non-valid reasons, but what I’m suggesting is that is the money which we can ascertain has been received by him, either by way of direct payments or by drawing down on credit.
HIS HONOUR: And that these were sums that your client was not aware of until sometime recently.
MR STAGG: Some of them we were, but not – but certainly not all of them, your Honour.
HIS HONOUR: Are you able just to tell me even from the bar table which ones you say your client was not aware of?
MR STAGG: Your Honour, we were aware that the – the husband had received severance but we were unsure of the amount.
HIS HONOUR: Right.
MR STAGG: The – we are unaware of The Super Fund Q payment of August 2015. We were aware that some money had been provided by Super Fund R but were unaware it amounted to $135,000. He – in his evidence, he indicated $80,000 – in his affidavit material, I should say. Similarly for Super Fund P, what was indicated in his affidavit material was, I think, from memory, 45,000. That’s 95,000. The car became apparent in his affidavit material and the 50,000 from the Property A property at the time of the purchase of that property, and again, the extension in March 2017 was unknown. Specifically, the $60,000 extension in March 2017 could not have been known until last week. We did know about the sale of the Property B property, and that’s – the 9000 is the 5000 the husband received plus the loan of – which is unpaid. So while we knew that some of them had been received, we didn’t know amounts, and specifically for the more recent amounts, we weren’t aware of those at all.
HIS HONOUR: Right.
MR STAGG: Now, what is not included on there is money received from the – the partner, and what is not included is the money he has received from both his Super Fund Q pension and his current wage, which amounts to some 180,000 per year. So when all those are taken into account, it amounts to somewhere around $1 million.
MR FARRAR: Would your Honour hear me about this?
HIS HONOUR: Mr Farrar.
MR FARRAR: We don’t object to your Honour receiving this as an aide-memoire. We say it’s not evidence.
MR STAGG: No. No.
HIS HONOUR: No, no. I understand that.
MR STAGG: It’s not sought to be ‑ ‑ ‑
MR FARRAR: The first four entries were disclosed. They are in bank statements that they’ve had for over a year. The – the third-last entry that’s said to be 50,000 – it’s not 50,000 but it’s near enough – was also in the bank statement. To say that there’s some case built for non-disclosure about those items, I would dispute that. 95,000 is disputed as the Super Fund P withdrawals. The car could be 30,000. Well, that’s – that’s not evidence. And the sale of Property B, well, that’s information that was – I think my friend says has been in their knowledge since Property B was sold. The extension of mortgage, I would agree was not something that was disclosed, but – on the record, but I can say to your Honour it was disclosed, and in matters that have passed between the parties before today, and today again the husband says he takes that 60,000 as moneys that he has had for his own use. He said that in the witness box and that’s the case. So, your Honour, I say to you that the evidence does not amount to a non-disclosure of these matters.
HIS HONOUR: Well, again, they’re obviously ..... matters of submissions.
MR STAGG: Yes. And, indeed, to push that point, none of it’s mentioned in his affidavit material, and my instructing solicitor indicates that it wasn’t disclosed. If my friend had the letter indicating where it was disclosed, we obtained it through subpoenaed material.
The issue here is the failure by the Husband to comply with the ongoing requirement to make full, frank and complete disclosure in accordance with Rule 23.03 of the Federal Circuit Court Rules2001. Whether it be a case of wilful or deliberate action, or simply negligence on his part, or of those acting for him, he hindered significantly the Wife and the Court being fully apprised of his financial position. I cannot and do not make any finding of wilful obstruction. However, the Rules of Court are not dependent upon any specific intent or lack of it. The Rules are to be complied with. There was not proper compliance with them as outlined in the comments noted above by his experienced lawyer. And as Full Court decisions make plain, even in instances where there is no intent (as is the case here) to deceive or to mislead, the duty to make full and frank disclosure is an absolute and ongoing requirement.[24]
[24] See, for example, In the Marriage of Tate (2000) 26 Fam LR 731 at [50] – [52]; Chang v Su (2002) 170 FLR 244, (2002) 29 Fam LR 406 at [59] – [70]; In the Marriage of Hickey (2003) 30 Fam LR 355 at [40].
In this regard, it is apposite to set out here a document, not by way of evidence, but simply as a record, of what had and what had not been disclosed, what was described by both parties as a “Joint Document re Disclosure” dated 28th August 2017:[25]
[25] For a recent instance of where an “aide-memoir” was used at trial and which seems to have been endorsed by the Full Court, see the comments of Bryant CJ in Grier v Malphas (2017) 55 Fam LR 107 at [44] – [52].
JOINT DOCUMENT RE DISCLOSURE
Disclosed/ partially disclosed amounts
Applicant’s assertions Respondent’s reply
| Amount received (description) | Date received by husband | Disclosed | |
| $214, 823 (Redundancy payment) | 20/07/2015 | Yes – Disclosed in correspondence from Husband’s then solicitor dated 12/8/16 and Statement of Joint Account (Line of Credit( (Annex “A”) produced at that time. | Agreed – Statement number 241 page 4 of 6. Became exhibit A (note this statement was addressed to and sent to the wife by Bank 1 in August 2015) |
| $53,193 (Payment) | 25/08/2015 | Discoverable from Statement Account (Line of Credit) (Annex “C”) produced with correspondence from Husband’s then solicitor dated 12/8/16. | Agreed – Statement number 242 page 1 of 1. Became exhibit C. |
| $49, 532. 65 (additional borrowings from mortgage) | 11/09/15 | Discoverable from Statement Account (Husband’s Bank 1 Account) (Annex “F”) produced with correspondence from Husband’s then solicitor dated 12/8/16. | Agreed. Statement 50 page 1 of 4. Became exhibit F |
| $100,000 (Part of Lump Sum | 14/10/15 | Partially – Amount of $80,000 disclosed in correspondence from Husband’s then solicitor dated 12/8/16. Full amount discoverable from Statement Account (Husband’s Bank 1 Account) (Annex “F”) produced at that time. | Not partially, fully disclosed. Payment of $80,000 disclosed in statement 50 page 1 of 2 (became exhibit F) and $20,000 in exhibit I page 3 of 7. Narrative of these payments, and how they were disclosed and set out in letter from [A] to Watts McCray, 12.8.2016, (Page 4 item 7) (I had understood that letter became an Exhibit but it is not shown on the list of Exhibits) |
| $35,000 (Part of Lump Sum Superannuation – Super Fund R | 18/12/15 | Discoverable from Statement Account (Husband’s Bank 1 Account) (Annex “F”) produced with correspondence from Husband’s then solicitor dated 12/8/16. | Agreed. Payment disclosed in statement 80, page 3 pf 4 which became exhibit F. |
| $25,000 (Super Fund P) | 18/2/2016 | Yes – Disclosed in correspondence from Husband’s then solicitor dated 12/8/16 and Statement Account (Husband’s Bank 1 Account) (Annex “I”) produced at that time. | Agreed. Statement 51 page 2 of 7. Became exhibit I. Narrative of disbursement of that payment is on page 3 Item 7 of letter from [A] to Watts McCray 12.8.2016. |
| $20,000 (Super Fund P) | 16/3/2016 | Yes – Disclosed in correspondence from Husband’s then solicitor dated 12/8/16 and Statement Account (Husband’s Bank 1 Account) (Annex “I”) produced at that time. | Agreed. Statement 51 page 3 of 7. Became exhibit I. Narrative of that payment ditto as above. |
Allegedly Non-disclosed Amounts Respondent’s Reply
| Amount received (description) | Date received | Disclosed Otherwise | |
| $20,000 | 27/07/2016 | Not disclosed. Discovered from subpoenaed bank statement (Husband’s Bank 1 Account) (Annex “D”) | Agreed. See Husband’s Affidavit 1.8.2017. Explaining what he did with the withdrawal. |
| $10,000 (Super Fund P) | 16/8/2016 | Not disclosed. Discovered from subpoenaed bank statement (Husband’s Bank 1 Account) (Annex “D”) | See Husband’s Affidavit 1.8.2017. Explaining what he did with the withdrawal. |
| $5,000 (Super Fund P) | 28/9/2016 | Not disclosed. Discovered from subpoenaed bank statement (Husband’s Bank 1 Account) (Annex “D”) | See Husband’s Affidavit 1.8.2017. Explaining what he did with the withdrawal. |
| $15,000 (Sale of Motor Vehicle 2) | 25/10/2016 | Not disclosed. Discovered from subpoenaed bank statement (Husband’s Bank 1 Account) (Annex “J”) | Agreed. |
| $60,000 (Extension of Mortgage of Property A property) | 09/03/17 | Not disclosed. Discovered from subpoenaed bank statement– deposit of $59,523.03 (Husband’s Bank 1 Account) (Annex “G”) | Agreed. |
| $15,000 (Super Fund P) | 28/06/17 | Not disclosed. Discovered from subpoenaed bank statement (Husband’s Bank 1 Account) (Annex “D”) | Agreed. |
In general terms, in my view, the Husband’s evidence was less than impressive. For someone who is well versed in financial matters, in relation to his own financial affairs he was less than clear and often tended to both over-generalise and either hedge, dither, quibble or go close to evading answers. His recollections were often very hazy. His evidence at trial regarding his new partner (and long-time friend), Ms H, bordered on dissembling. The most straight-forward questions regarding that relationship took a needlessly long time to answer with any clarity. In the result, however, there was little overlap in the areas both parties were questioned about. Be that as it may, where-ever there is any relevant contest between the evidence of the parties, I very much prefer the uncomplicated and unadorned evidence of the Wife to that of the Husband.
Submissions on behalf of the Applicant Wife
The Wife’s Written Submissions, filed 5th September 2017, were as follows (footnotes omitted):
Disclosure/Evidence/Credibility
1) Between July 2015 and July 2017 the Husband received the sum of at least $631,016 not including wages and pension payments. This sum consists of redundancy payments, lump sum superannuation payments, selling Motor Vehicle 2 motor vehicle and increasing the mortgage on the Property A property above that necessary to fund purchase of the property.
2) Additionally the Husband received in excess of $150,000 in Super Fund Q pension payments and approximately $130,000 (employed since Jan/Feb 16) in wages over this period. He also currently salary sacrifices a leased motor vehicle thus reducing his taxable income from wages further.
3) On the Husband’s own evidence during this time the Wife received a total of approximately $35,000 from the Husband by way of fortnightly payments and $28,000 from the sale of the Property B property ($4,000 of which she then loaned back to the Husband and which remains largely unrepaid). The amount the wife has received from the Husband represents less than 8% of what he received and largely expended to his personal benefit during the relevant time.
4) The Joint Document Re Disclosure shows the husband failed to disclose to the wife a number of financial receipts and transactions to his advantage, and as recently as a month before the final hearing. Significantly, a number of the transactions reduced the existing pool available for distribution.
5) Additionally, Rule 24.03 of the Federal Circuit Court Rules requires disclosure to the Court by way of financial statement or affidavit of financial circumstances inter alia income for all sources, other financial resources, and any gifts or other property distribution made by a party since separation. The husband’s evidence, albeit disputed by the wife, was that separation occurred in January 2015. None of the “Amount’s Received” described in the Joint Document Re Disclosure are contained in any affidavit material from the Husband with the exception of the $33 000 received from the sale of the Property B property and some Super Fund P payments in his affidavit of 1 August 2017. It is submitted that the evidence of the husband filed in the proceedings created an inaccurate and misleading indication as to property received by and resources available to the husband from July 2015.
6) In evidence and under cross-examination the Husband ascribed applying monies from multiple sources to the same renovations of the Property A home, including but not limited to:
a) Monies drawn down from Super Fund R ($80,000 ascribed but actually total of $100,000 drawn down) – on 14 October 2015.
b) $35,000 additional drawn down from Super Fund R
c) Proportion of $45,000 drawn down from Super Fund P on 18 December 2015.
d) $50,000 additional funds borrowed at time of the Property A property purchase on 11 September 2015.
7) By affidavit dated 1 August 2017 Husband asserted that he accessed a total of $68,391 from Super Fund P with an asserted breakdown of how it was spent. Under cross-examination and through subpoenaed material he acknowledged withdrawing a total of $95,000 from Super Fund P of which only $45 000 had been previously disclosed.
8) It is submitted that where the husband’s evidence is in conflict with that of the wife, the court would prefer the evidence of the wife. For someone who was employed as a high level (occupation omitted), his professed lack of knowledge concerning financial matters was difficult to accept. It is submitted that the court would appropriately find that the Husband’s evidence as to disclosure and what happened to the monies he received post July 2015 was at best unconvincing and at worst deliberately evasive.
9) The Full Court has approved the principle (Chang v Su [2002] FamCA 156; (2002) FLC 93-117) that where there is deliberate non-disclosure, the only imperative that the Court can fall back upon is that the order must be just and equitable. In such circumstances the court should not be unduly cautious about making findings in favour of the innocent party. It may well be appropriate to err on the side of generosity. It is submitted the court would appropriately apply such principle in the circumstances of this matter.
The Husband’s Proposal
10) The husband’s proposes firstly that the wife receive the monies currently in Super Fund P which he asserts, without documentary support, is $263,721 as at July 2017. The amount in Super Fund P has already been reduced by some $95,000 (the majority of which was not disclosed) and applied solely to the Husband’s benefit, including as recently as 28 June 2017. The husband’s proposal sees him receive the entirety of Property A including the entirety of the funds he applied (whatever that amount may be), from the $631,013+ he received in lump sum payments since July 2015. This is manifestly inequitable.
11) The Husband proposes secondly that the wife receive no superannuation splitting but instead the husband will provide her with a proportion of what he receives from his Super Fund Q pension. He argues that this proposal will provide the wife with greater weekly payments than a superannuation splitting order. It however does not account for three important factors:
a) If the husband predeceases the wife the superannuation payments will not survive and will in all likelihood go to his current partner, thus depriving the wife of any periodic pension payments;
b) If the wife predeceases the husband he will take the full benefit of superannuation from that time, depriving the wife from any testamentary decisions for possible eligible children upon her death; and
c) Such an arrangement would be at odds with the Court’s duty under section 81 of the Act to end financial relations between the parties.
Contributions
12) It is accepted that the Husband made the greater financial contribution from income during the relationship. The wife made greater contributions as mother and homemaker. The Full Court has recently stated:
It is not a party’s “skill set” which must be considered, but their contributions. Contributions are the product of many things: talent, industry, selflessness and, indeed luck, to name a few. It is the contributions (in all senses in which that expression is used in s 79) that fall for consideration and assessment, not the combination of factors that has created the capacity for the making of those contributions.
It is submitted contributions during the relationship were equal.
13) The wife received the sum of $82,000 inheritance from her father’s estate which was applies to family expenses. A further $113,334 was inherited held on trust for the children. The husband suggests that this was applied to the mortgage. Even if this is unlimitedly repaid to the children, the benefit of monies has gone directly to husband by way of applying the majority of the Property B sale proceeds to the Property A property. The husband also borrowed $110,000 from the mortgage above that needed for purchase of the Property A property. It is submitted that an adjustment in favour of the wife for third party contributions is appropriate and that the Husband take full responsibility for repaying the children.
14) It is accepted that the husband made mortgage payments on both the Property B and Property A properties. During this period the wife was mostly renting and meeting rental payments herself. The husband’s claim to have assisted in rental payments was rejected by the wife. The husband’s claim to have made rates payments on the Property B property to benefit the wife was shown to be incorrect. He did provide some limited other support to the wife. The amount was minimal.
Section 75(2) Factors
Section 75(2)(a)&(b)
15) The parties agree that the wife has a significant disability . It was not disputed that she is unable to work and is unlikely to do so in the further. She is 56 years of age. The husband is 59 years of age and in good health. He has taken a redundancy but continues to be employed on a significant wage working 3 days a week. The court can appropriately find he has the capacity to earn a significant wage for the at least the next 5 to 10 years, also enabling him to rebuild his superannuation savings.
16) It is submitted that adjustment of 10 to 15% in favour of the wife is appropriate on section 75(2)(a) and (b) considerations.
Section 72(2)(o)
17) It is submitted that there would be a significant adjustment in favour of the wife to account for the husband receiving virtually the entirety of the benefit of the $631 000+ as contained in the Joint Document Re Disclosure. These funds were all derived from the time the parties were together and should have been available for the benefit of both parties.
18) In a number of regards this matter has parallels with the recent Full Court decision of Grier & Malphas where matters addressed in the joint judgement of their Honours Murphy and Kent JJ at paragraphs 128 to 131 are directly on point to this matter and in particular:
128. Each of the parties used funds available to them in the approximately four years between separation and trial. Included in purposes for which the sums were used were the reasonable living expenses of each. So-called “addbacks” are the “exception and not the rule”. Further, although always of course a matter of discretion it can be said that, in the usual course of events, amounts spent on reasonable living expenses would not often be added back.
129. …, However, when significant sums of money are said by one party or the other to have been “wasted” or to amount to a unilateral “premature distribution of property” and the evidence is suggestive of either or both, an analysis of the relevant sums and their use is needed.
…
131. … we agree with the Chief Justice that the evidence discloses a very significant disparity in the sums expended by the parties and that her Honour did not address that disparity or examine the purposes for which the money was used. We repeat that this is a matter of discretion and could have been done either by “adding back” or, as has been suggested as often preferable by decisions of the Full Court, by reference to s 75(2)(o).
19) It is submitted that it matters not whether the disbursement of the $631 000+ by the husband is considered an addback, contribution, waste or not just and equitable. The reality is that his use of the funds for his sole benefit deprived the wife of property to which she was entitled and this, to use the words of her Honour Bryant CJ “requires expression in some form, either as a matter to take into account under section 75(2)(o)”, or otherwise.
20) It is submitted that in considering all the circumstances of the case the court would find the appropriate orders are in those proposed in the Applicant Wife’s Amended Case Outline.
Submissions on behalf of the Respondent Husband
The Husband’s brief “primary submissions” were provided to the Court as part of his Case Outline, filed 2nd August 2017:
Submissions
Assessment based on Contributions:
Wife: 50%
Husband: 50%
Adjustment pursuant to Section 75(2)
Submissions:
1) The Husband is about to retire.
2) The Wife is unlikely to work in the future.
3) Wife’s Disability Pension will be reduced if pension splitting order is made.
4) In the event of her death there will be no residuary pension as there will be no eligible recipient.
5) If order for payment of half net pension as per interim orders then in the event of Wife predeceasing husband then:
a) In the event of Wife predeceasing husband full pension reverts to Husband;
b) In the event of Husband predeceasing Wife she would be entitled to a residuary pension as she will be wholly or substantially dependent on the deceased member.
Wife’s Disability Support Pension
1) Disability Support Pension “DSP” is income tested (see S4(1)FLA Reg 12 AFL Rules, S23(1) and S23A(1) Social Security Act (1991)).
2) Monies received after a pension splitting order would be income in her hands and would therefore reduce her Disability Support Pension.
3) Two things need to be noted:
a) 50/50 pension split would not give the Wife an equal amount to what she currently receives from husband’s pension:
i) This is because she is three years younger than him and as a female has a theoretically longer life expectancy.
ii) The Super Fund Q (as Trustee of The Super Fund Q) would calculate the 50/50 pension split with reference to those matters so as to arrive at a figure representing the Wife’s 50% share of the value of the Husband’s pension. That would then be translated to fortnightly payments.
iii) Given that her 50% would theoretically be payable over many more years, the pension will reduce.
b) The Disability Support Pension reduces by 50 cents in the Dollar, for each Dollar of income received over $168 per fortnight. (See note below*)
i) According to the Wife’s Financial Statement filed on 20 July 2017 the Wife’s Disability Support Pension is $510 per week or $1020 per fortnight.
ii) We do not know precisely how much each fortnight she would receive from Super Fund Q following a 50% pension split, but if we assume that it will be about $1300 per fortnight (at the moment it is $1340 per fortnight) then her income exceeds exempt figure by $1132 per fortnight.
iii) Accordingly, the Wife’s pension will be reduced by 50 cents in the Dollar of that figure – that is $566 per fortnight or $283 per week.
iv) Therefore her pension will drop from $510 per week to $283 per week, a reduction of $227 per week.
*Note re Centrelink Means Test – see “How income reduces payments” in the “Guide to Social Security Law” released 3 July 2017 on Centrelink website.
4) Section 75(2)(f) of the Family Law Act requires this court to “take into account” …
f) “Subject to sub-section (3, the eligibility of either party for a pension, allowance or benefit under:
i) Any law of the Commonwealth, of a State or Territory or of another country; or
ii) any superannuation fund or scheme … and the rate of any such pension, allowance or benefit being paid to either party …
5) Sub-section (3) requires the court to disregard any entitlement to a means tested pension, allowance or benefit when it is considering spousal maintenance proceedings.
a) It is submitted that the Court is not required to do that when it is considering property proceedings.
b) The court is required to “take into account” the Wife’s pension, but not to disregard it.
c) It is submitted that the fact that the legislation specifically guides the Court to disregard the pension in maintenance proceedings but not in property proceedings, it can be interpreted as entitling this Court to frame property orders which preserve those entitlements, in the course of meeting its obligations under section 79(1) and (2).
Following the trial, Orders were made on 9th and 18th August for a timetable for the filing of written submissions. A page limit of six pages was fixed, which applied to both parties.
In the light of the Husband’s Application in a Case, filed 6th November 2017, Orders were made which provided for a timetable for the filing of written submissions. There was no variation of the page limit of submissions pursuant to the August Orders. As transpired with the late filing of the Husband’s material at trial, so here there was a flagrant breach of the Orders regarding the page limit on submissions: the Husband’s submissions, including annexures, totalled 13 pages, more than twice the allocated limit prescribed by Court Order. Those unauthorised, elongated Submissions, filed 30th November 2017, were as follows:
Defining the Matrimonial Asset Pool
1) Following the hearing on 7 August 2017 it is submitted that the court will find that the relevant assets and liabilities are as per the spreadsheet which is annexed hereto. Addbacks include:
a) The sum of $60,000 drawn by the Husband from the mortgage.
b) Further drawdown from Husband’s Super Fund P in November 2017 so as to enable him to finance his move from Property A to Canberra.
It does not include addbacks for paid legal fees. More on that later.
2) The Matrimonial Asset Pool as proposed by the Husband excludes the household contents of each of the parties. Whilst they each give their own estimates of the value of those items, both are relatively low and neither has any expertise to value these items.
The Wife’s Position is Unreasonable
3) The orders contained in the Wife’s Amended Case Outline document for the first time set out the outcome that she seeks in the proceedings. From that document, we understand that she seeks virtually 100% of all the existing assets of the parties and 65% of the Husband’s superannuation pension. If we include the pension at its family law valuation the outcome is about 70/30 in the Wife’s favour. It is submitted that that is not a just and equitable outcome in the circumstances of this matter.
Add-Back or Other Consequences by reason of Premature Distribution of Assets or Non-Disclosure?
4) In September 2015, the parties decided to purchase the property at Property A. It cost $680,000. It was a joint decision though it was put in the Husband’s name by agreement.
5) They had attempted to sell the Property B property and had been given estimates as high as $900,000. Ultimately the property sold for $600,000 in December 2016.
6) In the meantime, the Husband met all instalments of mortgage on the bridging loan of over $1,000,000. He also met some of the rates on the Property B property (see Exhibit showing payment to Council), and insurances. According to his first Financial Statement filed 19 August 2016 those expenses cost $1,055 per week, or about $4,500 per month. Over a 15-month period until the Property B property sold, those outlays therefore totalled about $67,500.
7) There are a vast number of other expenditures which depleted the capital of the parties. The sources of funds to meet those payments were:
a) Termination pay received July 2015 (prior to separation) $214,523
b) Moneys drawn down from Super Fund P $80,000
c) Surplus borrowings for the purchase of Property A $49,532
d) Bank 2 State drawdown 14 October 2015 $100,000
e) Bank 2 State drawdown 18 December 2015 $35,000
f) Super Fund Q payment 25 August 2015
$53,193Total $529,248
8) The Husband’s wages were additional and paid into the joint account, mingling with the money referred to in para 6 above.
9) The evidence shows that the following outlays were made from those funds with the difference no doubt being made by the Husband’s wages.
a) Repayment of overdraft on 20 July 2015 $99,990
b) Payment of Husband’s credit card 21 July 2015 $30,661
c) Pay off debt on Wife’s Motor Vehicle 1 car 21 July 2015
(since sold for undisclosed amount) $5,145
d) Payout of Husband’s Motor Vehicle 2 lease 28 July 2015 $46,724.22
e) Deposit on Property A 5 August 2015 $68,500
f) 15 months of payments of mortgage and outgoings on both properties as above $67,500
g) Renovations of Property A $120,000
h) Payment of mortgage 28.10.15 $80,000
i) Payment of Wife’s removal costs (per oral evidence) $3,000
Total $520,869
10) In addition, those moneys paid for whitegoods for the Wife (refrigerator, washing machine and microwave), a holiday to the (omitted), the Wife’s health insurance and medicals, payments for the parties’ son, Mr R, including some university costs, car purchase and running expenses. No accurate particulars of these miscellaneous payments are possible but plainly they were substantial. In his affidavit filed 25 July 2017 the Husband set out payments that he made to the Wife from January 2015 to the present time. Paragraphs 22(a) to 22(d) set out the amounts of the direct payments. Annexed hereto is an Aide Memoire which totals those figures at $43,794.98 as at 25 July 2017. Those payments clearly came out of the moneys referred to in paragraph 8, as well as the Husband’s wages and pension. Therefore, the total of the amount referred to in paragraph 10 and the Aide Memoire amount is $564,663 – much more than the amounts he received as set out in paragraph 8.
11) The Husband made payments on his credit card for the expenses associated with the renovations on the Property A property which he then reimbursed from the joint account.
12) In Parshen & Parshen (1996) FLC 92-720 at page 83,665 the Full Court of the Family Court of Australia (constituted by Ellis, Finn and Purdy JJ) said this:
“…. In the absence of evidence to the contrary it should be inferred in proceedings pursuant to the provisions of s.79 that moneys howsoever received by a party during the course of a party’s cohabitation, are used by that party for the benefit of the family unit”.
13) In Boege [2001] FamCA 1167 (15 August 2001) a slightly differently constitued [sic] Full Court (Ellis, Finn and Warnick JJ) referred to Parshen and said:
“… In the instant case, it could be argued that there was evidence rebutting the presumption or inference referred to in Parshen. In our view, however, it is not sufficient to attract the consequences in the evaluation of contributions that followed in the instant case, that one party merely asserts that moneys have been retained by the other party for his/her ‘own purposes’”.
14) The above extract from Parshen has received approval from more recent Full Court decisions.
15) We say that there is clear evidence that the moneys received by the Husband were used in the manner described above and that those moneys are properly accounted for. It is also the case that all of the expenditure (save for the $67,500 at 8f above) occurred during cohabitation which ultimately was agreed to be January 2016. It may be that the Husband was in charge of the finances and the Wife did not know much about those expenditures. On the other hand there is no evidence that the Husband benefited personally (as opposed to the family benefiting) from those expenses. It is not alleged that he has hidden assets derived from the moneys that he received. All of those funds have been expended and should not be added back.
16) The $67,500 that he expended over the 15 months it took to sell Property B (see paragraph 6) was a liability the parties jointly incurred during their relationship. As he said in his evidence that with the benefit of hindsight they should not have bought Property A however as the Wife acknowledged, it was a joint decision as was the pledging of security over both properties for the necessary borrowings. They were led to believe that they would get a lot more for selling Property B than they ultimately did.
17) In relation to addbacks it would seem that the Applicant relies on the second limb of Omacini & Omacini (2005) FLC 93-218 (Motor Vehicle 3, Warnick, and Le Poer Trench JJ) at [30b] (p. 79,617) to “notionally addback” to the pool of assets moneys that no longer exist. That requires her to demonstrate that there has been “a premature distribution of matrimonial assets”. Clearly the Husband had not retained any assets for himself. In Layton & Layton [2014] FamCAFC 126 (17 July 2014) (Finn, Strickland and Ainslie-Wallace JJ) the Full Court reinforced that a Court should be cautious about adding back notional assets. The comments of the then Deputy Chief Justice in Mayne & Mayne (2011) FLC 93-479 at [72]-[74] invoke earlier Full Court decisions in Marker & Marker [1998] FamCA 42 and Chorn & Hopkins (2004) FLC 93-204 in support of the proposition that parties are not required to live in a vacuum post-separation and moneys expended to meet reasonable living expenses should not be added back or regarded as a pre-emptive unilateral division of property. Here the parties had made a decision to buy the Property A property and sell Property B. That decision, and the decision to renovate the Property A property, had financial consequences for the parties. If those financial consequences were positive, as opposed to negative, then neither party could argue against those consequences being brought to account in property settlement proceedings. The parties also had substantial prior indebtedness which was repaid from the capital inflows that the Husband received. This court should not addback moneys which had been expended in the ways described above for which the Husband gained no personal benefit.
18) Finally, in the matter of Bevan & Bevan (2013) FLC 93-545 Bryant CJ and Thackray JJ noted at [79]:
“We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage — and potentially an important part.
19) Their Honours went on to note that in an appropriate case s.75(2)(o) gives scope to ensure a just and equitable outcome. It is submitted there is no basis here to resort to section 75(2)(o) and no basis for adding back to the pool of assets moneys which were received and expended save for the addbacks referred to in paragraph 1 hereof.
20) Their Honours also identified s 79(4) of the Act as another means through which a Court can ensure a just and equitable property settlement outcome when faced with an “add back” argument. That comment needs to be read in light of the earlier decision of a differently constituted Full Court (Dickons & Dickons [2012] FamCAFC 154 (19 September 2012) at [25] per Bryant CJ, Faulks DCJ, and Murphy J) to the effect that “the demands of authority [require] that the ultimate assessment of contributions should be made without “...giving over-zealous attention to the ascertainment of the parties’ contributions...”and that “the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.”
21) The Applicant’s written submissions at [9] rally a number of authorities in support of this proposition: “In such circumstances [namely, “deliberate non-disclosure”] the Court should not be unduly cautious in finding in favour of the innocent party. It may well be appropriate to err on the side of generosity.” In all five cases cited, there was a finding to the effect that there existed assets that had not been brought to account in the pool of assets to be divided between the parties in the relevant property settlement proceedings by reason of non-disclosure on behalf of a party. Here, it is submitted that the Court won’t make such a finding of fact. There is a difference between, on the one hand, a situation in which one party has deliberately not disclosed assets such that the Court does not know the true extent of assets available to the non-disclosing party, and, on the other, a situation in which the value of the assets at all relevant times are known but a party simply seeks to quarrel with the other party’s explanation as to what has become of those assets. It is the former situation in which Black & Kellner and the other cases cited by the Applicant. It is the latter situation in which the Parshen inference above operates. This is a Parshen type of case, not a Black v Kellner type of case. As such no “generosity” in favour of the Wife is called for in respect of (1) the Court’s findings as to fact; (2) the Court’s evaluation as to the relevant s 79(4) and 75(2) factors; or (3) the overall result in respect of the orders made by the Court.
Add-Back For Paid Legal Fees?
22) The first limb in Omacini (Supra) at [30a] (p. 79,617) concerns paid legal fees. Here the Wife has not given any evidence either in her affidavits nor in her Case Outline document nor in any other material which the Court has before it as to the amount of her paid legal fees other than the statement in her Financial Statement filed 20/7/17 (item 29) that she was paying her lawyers $100 per week The Husband has given evidence as to his paid legal fees in his affidavit of 1 August 2017 and updated that in his most recent affidavit. Clearly the Wife also has legal costs.
23) In the absence of any information from her on that matter it is submitted that legal costs on both sides should be ignored and not added back. To add back the Husband’s paid legal fees and nothing for the Wife’s is clearly inequitable.
The Parties Contributed Equally
24) This is a long marriage. Neither party had any significant assets at the commencement. The Wife received an inheritance of $82,000 in 2011. In a period of cohabitation of 34 years (Wife’s affidavit of 20 July 2017 para 3) where both parties have contributed financially and non-financially, it is submitted that the Wife’s inheritance should not affect the overall finding as to the overall contributions of the parties.
The Section 75(2) Factors and the Division of the Husband’s Super Q Pension
25) Section 75(2)(a) requires the court to take into account the age and state of health of each of the parties. The Wife is ill but that is not per se grounds for her to receive a bigger property settlement. Her health affects her earning capacity and that is a factor to be taken into account as set out above. There is no evidence that her ill-health causes her to be in greater financial need than a healthy person.
26) The husband’s income and earning capacity is superior to the Wife’s. He was unemployed from August to December 2017 but has recently obtained full-time employment. His Super Fund Q pension will be dealt with by the property settlement orders.
27) Any other components of the Husband’s 2016 income tax return were one-off payments related to his termination and will not be repeated.
28) The Husband is 59 years of age. He will continue to work but given his age his working life is relatively finite. The Wife has no earning capacity. She gets a Disability Pension.
29) Under s 75(2)(f) the court shall take into account the Wife’s eligibility for a pension allowance or benefit and the amount of that benefit. Her current Disability Support Pension (DSP) is such a payment. Section 74(3) requires the court to disregard such entitlements in maintenance proceedings but not in property proceedings. It is submitted that the court shall take her Disability Support Pension into account. The Husband sought orders that the payment to the Wife from his pension be an amount equal to half of the net pension, and that payment be characterised as property. That would maximise the Wife’s DSP. Receipt of a superannuation splitting order will reduce the Wife’s DSP. The Wife gave some vague evidence about what she understood her pension to be. It is submitted that it was incumbent upon the Wife to inform the court as to what her future income will be if a pension split is ordered and she has not fulfilled that obligation. She acknowledged that whatever percentage pension split is made will not result in her receiving that percentage of the Husband’s current pension, because of her gender and age.
30) In general terms a pension split will require the Super Q Superannuation Corporation to undertake the process prescribed in s 146MA of the Superannuation Act 1976, which has the effect of requiring the calculation of the associate pension which will be created by a splitting order. Regulation 2.05 of the Superannuation (Family Law – Superannuation 1976) Orders 2004 set out the steps that must be taken to calculate the amount of that pension. Steps 3 to 5 refer to the age and gender of the associate member. The Court received as an exhibit an explanation of these sections.
31) The result is that the Wife is going to receive substantially less than the Husband is offering her. Her income will fall and, depending on the percentage split, her pension will be less than the current amount being paid under the interim orders. The pension split will also be taxable in her hands and no evidence has been adduced as to what the impact of the income tax on the super pension will be. It is likely that the aggregation of the two payments will be the Wife’s taxable income further reducing her net receipts.
32) Having said that, it is acknowledged that by reason of s 8B of the Superannuation Act 1976 and because the Wife sought a divorce, in the event that no pension split order is made, if the Husband predeceases the Wife she will cease to receive any benefits. Given the health circumstances of the parties unfortunately it is more likely that the Husband will survive the Wife in which case the pension split that she receives will cease in the absence of any reversionary beneficiary.
33) Overall it is submitted that the Husband’s proposal on the evidence is a preferable way to deal with the pension. It is further submitted that there is no justification for a 65/35 pension split. It is submitted that if there is to be a pension split then it should be 50/50. The parties are of similar ages and the Husband is nearing the end of his working life. To reduce his pension in the way the Wife proposes ignores the fact that within a few short years he will be in receipt of the pension as his sole source of income.
34) Section 75(2)(m) requires the court to have regard to the financial circumstances relating to cohabitation with any another person. The Husband’s companion, Ms H, is now on affidavit. She is in receipt of a New Start Allowance. She has no assets but owes significant money for legal fees in family law proceedings to which she is a party. It is the financial circumstances relating to the cohabitation that is relevant, not the financial circumstances of the person with whom the party is cohabiting in a general sense (P & W [2005] FamCA 1303 (29 November 2005) per Warnick J). The Husband does not assert her as a dependent or ask that she be taken into account as such. In those circumstances that is the extent of her relevance.
35) The Husband’s proposal, if implemented, will see the Wife receive 55% of the overall net asset pool inclusive of superannuation which the Husband submits is a just and equitable outcome in light of the above matters with respect to the s 75(2) factors.
Formally, I make no ruling on these matters, especially given that there is no costs Application before the Court. I simply suggest, nothing more, that the matters just listed would, or should, rightly be considered [only] in the context of a costs Application.
In my view, the Orders proposed by the Wife, with two adjustments, are just and equitable in all the circumstances. Those adjustments are: (a) the amounts currently held in trust shall be divided as follows: the Wife shall receive the amount of $125,984.28 from the trust account of Farrar Gesini Dunn, and the Husband shall receive the amount of $85,755.20, which is currently in the trust account of Eden Legal; (b) the superannuation splitting Order should be in an amount of 64% in the Wife’s favour. Otherwise the Orders the Wife proposed should be made, which relevantly include re-payment of the inheritance to the “children” of the marriage.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Neville
Date: 3 August 2018
7
3