Lopez & Hagarty

[2007] FMCAfam 908

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LOPEZ & HAGARTY [2007] FMCAfam 908

FAMILY LAW – Property settlement – husband with significant superannuation – modest pool of assets and non-superannuation resources – wife declining to seek superannuation splitting order – pool of property and resources limiting extent to which wife’s claims on husband’s superannuation able to be satisfied.

Family Law Act 1975, ss.79, 75(2)
Family Law (Superannuation) Regulations 2001

Hickey & Hickey; A-G for Commonwealth (Intervener), [2003] FamCA 395, (2003) FLC 93-143, (2003) 30 Fam LR 355
Coghlan & Coghlan, [2005] FamCA 429, (2005) 33 Fam LR 414, (2005) FLC 93-220
Whitehead & Whitehead, (1979) 5 Fam LR 308, (1979) FLC 90-673
Omacini and Omacini, [2005] FamCA 195, (2005) 33 Fam LR 134, (2005) FLC 93-218
DJM and JLM (1998) 23 Fam LR 396, (1998) FLC 92-816
Chorn & Hopkins, [2004] FamCA 663, (2004) FLC 93-204, sub nom NHC v RCH, (2004) 32 Fam LR 518
Townsend and Townsend (1994) 18 Fam LR 505, (1995) FLC 92-569
Kowaliw and Kowaliw (1981) FLC 91-092
Marker [1998] FamCA 42, unreported, 1 May 1998
Cerini [1998] FamCA 143, unreported, 8 October 1998

Applicant: rosa adelina lopez

Respondent: nicholas john hagarty

File number: SYM 2105 of 2005

Judgment of: Halligan FM

Hearing date: 18 & 19 July 2007

Date of last submission: 17 October 2007

Delivered at: Parramatta

Delivered on: 6 November 2007

REPRESENTATION

Counsel for the Applicant: MR HENNESS

Solicitors for the Applicant: RJ RUSSELL SOLICITORS

Counsel for the Respondent: MR LIVINGSTON

Solicitors for the Respondent: BEILBY POULDON COSTELLO

ORDERS

1. The husband shall pay to the wife the sum of $65,000 within 60 days.

2. On payment of the sum referred to in Order 1, the wife shall transfer to or at the direction of the husband all shares she owns in Hagarty Lopez Pty Limited and any other interest she may have in the company and in the Hagarty Lopez Family Trust, and shall resign as a director of the company.

3. If the husband fails to pay the sum in accordance with Order 1, then both parties shall do all things and sign all documents necessary to cause Hagarty Lopez Pty Limited as trustee of the Hagarty Lopez Family Trust to sell the property at 3 Jull Place St Helens Park, New South Wales, being the property in folio identifier 1034/809725, and to cause  the company, as trustee of the family trust , to pay 78% of the net proceeds of sale, after payment of agents commission and other costs of sale, and after repayment of debts secured on the property, to the wife in accordance with the terms of the trust deed establishing the Hagarty Lopez Family Trust.

4. Pending payment of the sum in accordance with Order 1, or in default, payment to the wife in accordance with Order 3, the husband shall pay or cause to be paid, as and when they fall due, all mortgage instalments, council and water rates, land tax, insurance premiums and other outgoings in relation to the St Helens Park property.

5. The husband shall indemnify the wife in relation to all liabilities in relation to Hagarty Lopez Pty Limited and the Hagarty Lopez Family Trust.

6. Otherwise, each party is entitled, to the exclusion of the other, to all property in his or her respective possession or control.

7. Pursuant to section 106A, Family Law Act 1975, should a party fail or refuse to sign a document necessary to give effect to these orders, a Registrar of the Court may sign the document on behalf of the party.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

SYM 2105 of 2005

ROSA ADELINA LOPEZ

Applicant

And

NICHOLAS JOHN HAGARTY

Respondent

REASONS FOR JUDGMENT\

Introduction

1. These are property settlement proceedings under s.79, Family Law Act 1975. The wife ultimately sought orders to the effect that the husband pay her $155,000 and she retain her motor vehicle and superannuation, the parties equally divide the contents of the former matrimonial home, and that she transfer to the husband her interest in Hagarty Lopez Pty Limited and the Hagarty Lopez Family Trust. The husband sought orders to similar effect, except he proposed paying the wife $60,000.

Background

1. The husband was born on 22 November 1950, and will shortly turn 57. The wife was born on 11 November 1965, and will shortly turn 42. The parties commenced cohabitation in June 1997, married on

   
   25 September 1999

   , and finally separated in October 2003, when the wife left the parties’ matrimonial home. They separated for about

   
   

   3 months before marriage. They thus cohabited for a little over 6 years. There are no children of the marriage. The parties are now divorced.

2. The wife has three children of her first marriage, Melissa presently aged 19, Alarna aged 15 and Mark aged 14. They were members of the parties’ household throughout their cohabitation.

3. The husband has three children of his first marriage. They were all over 18 at the commencement of the parties’ cohabitation. They were not members of the parties’ household, but visited from time to time for a holiday, and one of them stayed with the parties for a few months after they moved into their second home.

4. The husband was in a de facto relationship for a time after his first marriage broke down and before commencing cohabitation with the wife. The husband remarried in July 2005.

Credit of witnesses

1. The only witnesses other than the parties were the husband’s present wife and a forensic accountant, both called in the husband’s case. The accountant was not required for cross-examination, and there was no challenge to the credit of the husband’s present wife. It was submitted on behalf of the husband that the wife’s credit had been successfully challenged, and the husband’s evidence should be preferred to hers.

2. The wife was vigorously cross-examined about a statement in her financial statement sworn on 28 May 2007, that her children were aged 17, 13 and 12, in an effort to impugn her credit. Her affidavit sworn on 28 July 2006, gave the same ages for the children. In cross-examination she said the children’s ages at May 2007 were 19, 15 and 14.

3. While it is clear the children’s ages as stated in the wife’s financial statement are wrong, this is no basis for any serious challenge to the wife’s credit. It could not mislead the husband. It is clear there was no intention to mislead the Court. In fact, the husband's affidavit sworn on 19 February 2007, gives the children’s ages as 17, 12 and 11. These children were members of the parties’ household for the duration of their cohabitation, and the husband relies on various non-financial contributions to these children. He knew their ages, and made the same mistake that the wife made – neither checked an affidavit carefully enough before swearing it. In fact, the husband misstates his own age in his affidavit, saying he was 55 on 19 February 2007. He turned 56 some three months before swearing his affidavit. I am not satisfied the credit of either party is seriously called into question by these careless mistakes both have made, and consider the inordinate time spent in cross-examination of the wife on this point, despite my drawing counsels’ attention to the similar error by the husband, as entirely disproportionate to the significance of the issue.

4. The wife listed in her financial statement as members of her household as at May 2007 all three of her children. In fact, her eldest child Melissa does not live with her, and her second child Mark lives with his father but spends each weekend or each alternate weekend or a week at a time with the wife. She contended that Mark remained a member of her household for this reason.

5. I note that the husband’s financial statement sworn 14 June 2007 also misstated the members of his household, omitting the 15 year old daughter of his present wife, who has lived with him and his present wife since March 2007. There is no basis in my view to prefer the husband’s evidence to the wife’s on these matters.

6. There were other aspects of the wife’s evidence which, it was submitted, demonstrated her unreliability. However, as in so many property cases, there are aspects of both parties’ evidence that can be shown to be incorrect. Considering both parties’ evidence overall, I am not satisfied that either party intended to deliberately mislead the Court. I am not satisfied that the general credit of either party is called into question.

The evidence

Before cohabitation commenced

1. The husband’s unchallenged evidence, which I accept, is that in mid 1996, after the wife separated from her husband, he gave her $1400 to rent premises for herself and her children, and paid the weekly rent of $180 on the premises she rented at Eagle Vale in about July or August 1996. For about 4 or 5 months, the husband’s then 18 year old son also stayed with the wife in those premises. He did not pay the wife any board.

2. The husband says that in 1996, he bought a Honda motor vehicle for $4,500 for the wife's use. In cross-examination the wife agreed that the husband bought her a Honda motor vehicle, but said this was shortly after cohabitation. I cannot determine on the evidence whether the motor vehicle was bought by the husband before or after cohabitation. To the extent the husband seeks to establish a matter in his favour, he bears the onus of proof, and as I am not satisfied it was bought before cohabitation, I am not satisfied it represented a contribution by the husband in addition to what he otherwise had at cohabitation.

Assets at cohabitation (June 1997)

1. At the commencement of cohabitation, the husband owned a Porsche motor vehicle subject to a debt of $21,000, a 280TE Mercedes motor vehicle subject to a debt, items used in the conduct of his sky diving business including certain tandem parachute rigs, furniture and electrical items, and superannuation then worth about $80,000. The husband could not recall how much he owed on the Mercedes, and his evidence of what he thought the motor vehicles to then be worth is not probative of the fact, he not being qualified to express such opinions. The wife owned furniture and electrical items, the value of which she is unqualified to give evidence about. She also had a property settlement claim in relation to her prior marriage that was subsequently realised.

2. In addition, the husband had savings, in the sum of $1,000 according to the wife, or the sum of at least $12,000 according to the husband. The husband said he kept these savings in cash in his brief case. He said he did the same with some $42,000 he later received on the sale of the parachutes from the sky diving business, a sum it is agreed was realised on the sale of these items. There is nothing to corroborate the husband’s asserted savings at cohabitation.

3. The husband said he met the cost of the parties’ marriage, which he put at $20,000. The wife said she paid $8,900 towards the $12,000 cost of the wedding, an unspecified part of which she said came from her property settlement with her former husband. She said she gave the husband a cheque on the evening of the wedding at the wedding reception, and did not know whether and if so how much the husband may have contributed to the cost. She said her contribution to the cost of the wedding reception was $6,500, being a $500 deposit and $6,000 paid at the end of the reception. This suggests that the cheque she said she gave the husband at the wedding reception was $6,000. She suggested this was her property settlement cheque. In fact, Exhibit K shows that the wife's property settlement cheque from her solicitors was for $2,902, being a cheque drawn by her solicitor in favour of the husband on her instructions on 27 September 1999, that is, two days after the wedding.

4. The recollections of both parties of the detail of events occurring several years ago are, understandably, less than perfect. As the wife would seem to have a less than clear recollection of the true cost of the wedding or precisely how it was met, I tend to prefer the husband's evidence as to the level of his savings at cohabitation, and find that he did have $12,000 in cash at cohabitation.

5. At the commencement of cohabitation, the wife was working permanent part time with Mayne Health and the husband was a full time school teacher and operated his skydiving business.

Parties’ employment

1. The wife, I am satisfied, was in part time employment throughout the parties’ cohabitation. To the extent the husband seemed to contest this fact, I prefer the wife's evidence due, inter alia, to some ambiguity in the husband's evidence in cross-examination as to what he meant when he said the wife worked half the time. In 1999/2000, her assessed taxable income was $22,447, in 2000/2001 her declared taxable income was $17,514, and in 2002/2003 her assessed taxable income was $26,150. She says her earnings in 2001/2002 were about $20,000.

2. The husband worked as a school teacher throughout the parties’ marriage earning between $58,000 and $66,000 per annum., and for a time from about 2002 to 2004 he also worked a second job with a security firm working an additional 40 hours per week. This was at the time he was paying off his former de facto partner’s costs of their property settlement proceedings.

3. It is common ground that throughout the parties’ cohabitation, the husband's income far exceeded the wife's, although that difference was markedly greater when the husband worked the second job with the security firm. In 2003 and 2004 his total income was about $105,000 per annum.

4. I am satisfied both parties contributed their income to the household or to assets of the parties.

5. In addition, the husband conducted his sky diving business until a serious accident in April 2000 (not 1999 as the husband said) resulted in the husband losing his chief instructor rating without which the business could not operate. This business was conducted on weekends, although telephone enquiries and bookings came at any time.

6. There is an issue as to the extent to which the wife worked in the sky diving business. The wife said she worked in the skydiving business from 1997 to 2000, apart from the 3 months separation before the parties married, without pay. She said she took phone bookings and enquiries on a mobile phone she carried, and on the parties’ home phone. She answered enquiries about times, costs, and advised people about the requirements of sky diving. She kept notes of enquiries and called back to confirm with clients. She took deposits and payments for jumps at the business office at Camden Airport. She said she worked all but about 4 weekends per year, both Saturday and Sunday. While at the office, she gave direction to customers, performed bookwork, prepared reports for the Australian Parachute Association, filled out logbooks and manifests and recorded details of all jumps. She said she attended to the banking, to the folding and packing of parachutes, and was the target control officer, which required her to drive to the field, spot the plane, operate the radio and direct skydivers as to where to land. Once they landed, she would collect the clients and return them to the airfield.

7. In cross-examination, when challenged about her evidence that the husband was secretive about the parties’ finances but she attended to the banking for the business, the wife said she only did the banking when the husband did not do it himself. She denied she only worked as target control officer up to a maximum of 20 times a year, and that her evidence of filling out log books was false, saying she filled them out and the husband signed them. She maintained she did bookwork “on many occasions”, and agreed she did skydiving herself.

8. The husband denied that the wife worked in the skydiving business except for occasionally driving the pick up vehicle to the drop zone to pick up customers and drive them back to the airport. He said she did this no more than twice a month on average from 1997 to 1999. He fixed 1999 as the limit of the wife's work based on his incorrect assertion that the business closed in 1999. He said that while she did not receive any payment for doing this work, she received individual skydiving training to the value of $3,000 approximately without charge to become a qualified parachutist, and received approximately

   
   

   90 jumps and the use of equipment, to the cost of $35 per jump, free of charge. He said the wife “occasionally” answered the mobile telephone, but said there were no more than 3 or 4 tandem jumps booked in a week on average. He said she had full use of the mobile telephone at the expense of the skydiving business.

9. In cross-examination, the husband said that the wife had a Saturday job, and so could not have worked in the skydiving business every weekend on both Saturday and Sunday. This was not put to the wife in cross-examination. He said she came on some Sundays, but not most of the time. He said that they both answered the phone. He said that the mobile number for the business was for a mobile phone the wife carried. He said she answered calls, took callers details, and then he would ring them back. He said the wife occasionally acted as target assistant, and was not sure when she started doing this.

10. There are some inconsistencies or qualifications in both parties’ evidence. The wife's evidence in chief that she did the banking became in cross-examination that she did the banking when the husband did not do it, entirely begging the question whether she did this task regularly or only very rarely. The husband's evidence that the wife’s only work in the business was to occasionally drive the pick-up vehicle to retrieve jumpers on landing became that the wife also had the exclusive use of the business mobile phone and would take calls from customers or potential customers. The husband's attempt to minimise the significance of this by saying there were only a few tandem jumps each weekend cannot reduce the significance to the business of this work.

11. While it is not possible to make precise findings as to the exact work the wife performed in the business, I am satisfied it is more likely than not that the wife performed considerably more work than the husband initially conceded, and accept that the wife made a considerable contribution to the business for which she was not paid by the husband. As to the free tuition and jumps the husband said the wife received, it seems this was an interest both parties shared and enjoyed together, the husband obviously enjoying many jumps too for which he would not have paid himself. I do not consider this can detract from the wife's contribution through her work in the business.

Husband’s property settlement (after cohabitation)

1. The husband entered into a property settlement with his former de facto partner, under which she retained a jointly owned home and the husband retained the sky diving business and his motor vehicles. The husband was ordered to pay $18,000 costs of his former partner. These costs were not paid until about 2002 to 2003.

2. The wife says that the husband paid off the costs by an initial payment of $5,000 from joint funds. This evidence was not challenged and I accept it. It seems to be common ground that the husband had a second job with a security company at the time the costs were repaid, and the balance was paid off by instalments from the husband's income.

Disposal of Honda motor vehicle (1998)

1. In about 1998, the husband exchanged the Honda motor vehicle he bought for the wife for his son’s parachute, which he then sold for $4,000. He applied the proceeds of sale of the parachute to “joint expenses”.

Purchase of first home (June 1999)

1. The parties purchased a home at Terrigal Place Woodbine in about June 1999 for about $192,000. The parties paid $20,000 and borrowed the balance from the Teachers Credit Union.

2. The wife said the $20,000 came from “joint funds”. The husband said it came from the sky diving business. It is not clear what the wife means by “joint funds”, and the husband's assertion that the money came from the business simply means it came from his income from the business. I accept the deposit came from money sourced from the husband's income, to which the wife was making a contribution by working in the sky diving business without pay.

Improvements to first home

1. Improvements and renovations were effected to the Woodbine property. There is an issue whether and to what extent the wife was involved in this work. The wife said this was a joint enterprise of the parties, in which her children assisted. The husband said he arranged and performed all the work himself, except the stripping and painting of the interior of the home, which he said he and the wife did together.

2. However, in cross-examination the husband admitted that the wife assisted him in the work on the first home, but denied that the wife’s children helped.

3. Based on the husband's admission, I find that both parties were involved in the work not done by tradesmen on the renovations and improvements to the first home.

Wife’s property settlement (about September 1999)

1. Exhibit K satisfies me that in late 1999, the wife received a total of $5,197.18 in relation to her previous marriage, being $2,902 after solicitor’s costs by way of property settlement, and $4,118.58 by way of arrears of child support recovered by the Child Support Agency from her former husband's share of the property settlement. As previously mentioned, the solicitor’s cheque for the $2,902 was made payable to the husband on the wife's instructions. I am satisfied that the wife's recollection that she received approximately $7,000 by way of property settlement is wrong.

Contributions to costs of wedding (25 September 1999)

1. As mentioned, there is conflicting evidence about who contributed what to the cost of the wedding, and what that cost was. I am satisfied that the cost was more likely than not in the order of $20,000 overall, and that both parties contributed to the cost. Whether the husband contributed his $12,000 pre-cohabitation savings or not, and whether the wife contributed her property settlement moneys or not, is largely irrelevant, as I am satisfied that both parties contributed the moneys they derived from these sources, be it to the wedding costs or otherwise.

Creation of the Hagarty Lopez Family Trust (March 2001)

1. The parties established the Hagarty Lopez Family Trust, of which Hagarty Lopez Pty Limited is trustee, in about March 2001. The parties are the only shareholders and directors of the trustee.

2. By deed of assignment dated 20 April 2001, amended on 1 January 2002, the parties assigned to the company a large number of items of personal property, including home electrical items, furniture, garden equipment, power tools, four motor vehicles, a boat, motor and trailer, and various parachutes and related equipment. The evidence does not directly establish whether the parachutes and related equipment assigned to the company are the same items that the husband sold in 2001 for $42,000, but the clear inference is that they are.

Sale of skydiving equipment and purchase of boat

1. The husband sold the parachute rigs used in his business for $42,000. The husband said he used those funds as to $19,500 for the purchase of a boat in 2001, and the balance was used for “joint living expenses”. Later in his evidence in chief, he asserted that he used part of the proceeds of sale to purchase a Mercedes 420SEL motor vehicle for $15,000. This was at a time when he or Hagarty Lopez Pty Limited already owned at least three motor vehicles.

Purchase and sale of plane

1. In 1997 or 1998, that is after the commencement of cohabitation, a plane was acquired for use in the husband's sky diving business at a cost of $70,000 with a bank loan. The husband sold the plane for $90,000 in about 2001. The purchase price was paid to the husband by instalments of $20,000 cash, none of which the husband banked. Apart from one instalment of $20,000, which was used for the purchase of the parties’ second matrimonial home at St Helens Park, the husband said he applied the proceeds of sale to “joint expenses or debts such as purchasing furniture, and meeting the cost of any improvements” to the St Helens Park property. I accept this evidence.

Sale of first home and purchase of second home (October 2001)

1. In about October 2001, the parties sold the Woodbine property and purchased another home at St Helens Park in the name of Hagarty Lopez Pty Limited.

2. The Woodbine property was sold for $264,500 netting the parties $86,914.82, which was applied to the purchase of the St Helens Park Property. The total cost of the latter property, including stamp duty and other costs of purchase, was $398,801.94.

3. The parties paid a deposit of $19,000 on the purchase, which the wife says came from “joint savings” and the husband said came from an instalment of the price of the plane. I prefer the husband's evidence to the wife's. The parties borrowed $300,000 from St George bank secured by mortgage on the purchased property. After applying the proceeds of sale of the Woodbine property to make up the balance of the cost of purchasing the St Helens Park property, the parties received $19,706.88 from the solicitor acting on the sale and purchase, which was spent on repairs and renovations to the property.

4. The husband said that when the parties moved into the St Helens Park property, they purchased new furniture and electrical items to a total cost of in excess of $16,500. He does not say how these purchases were funded.

Improvements to second first home

1. As with the first home, there were renovations and improvements carried out to the St Helens Park home, and as with the first home, there is an issue as to whether the wife assisted in this work.

2. The wife said that she and the husband carried out repairs and renovations to the St Helens Park property, assisted by her children. She says they cleaned out the front and back yards, retiled and resealed the tiles, returfed the yards, cleaned the tennis court and swimming pool, and she barrowed bricks and soil around the property to assist the husband in landscaping the grounds.

3. The husband said that he alone did the work on the St Helens Park property. He said he cleaned the yard, taking a few truckloads to the dump, landscaped the front yard by building a brick retaining wall, removing rocks and weeds and debris, felling a gum tree, returfing and planting hedges at a cost of $2,000. He said he built and installed a

   
   

   3-tier fountain and installed a new pool pump, replaced the built-in vacuum cleaner system, built two steel gates at the side of the property, installed garden beds at the side of the house, resurfaced the tennis courts, installed garden beds in the back yard, organised and paid for a tiler to install tiling at the back of the house, returfed the back yard, and installed a lighting system on the tennis court.

4. The husband said in cross-examination that he, the wife and his son did the work on the St Helens Park property. His son lived with them free of charge for some months after they moved into the property.  He said the surface of the tennis court was cleaned with a gurney, not resurfaced as he said in his affidavit.

5. In light of the husband's admission in cross-examination, I find that the wife assisted the husband in carrying out the improvements to the

   
   St Helens Park

   property as a joint enterprise of both of them.

Purchase and sale of motor vehicles (2000 - 2003)

1. In 2000, the husband bought a Nissan Patrol motor vehicle for $40,000 using funds he then had and a loan from GE Finance. The husband gave no evidence as to how much he borrowed.

2. In 2001 the husband bought a Mercedes 420SEL motor vehicle for $15,000, using some of the proceeds of sale of the parachutes. Also in 2001, he sold the 280TE Mercedes motor vehicle he owned at the commencement of cohabitation for $8,000 and applied the proceeds of sale to “joint living expenses and/or paying joint debts”. He still retained the Porsche motor vehicle he owned at the commencement of cohabitation, and the wife had a motor vehicle for her use.

3. In 2002, the husband bought a Toyota Land Cruiser motor vehicle in the company’s name. He traded in the Nissan Patrol and the Mercedes 420SEL motor vehicles, and received a net allowance after the debts on them of $4,099. The balance of the purchase price was $41,798.46, which he borrowed through Toyota Finance. In about October 2002, this loan was refinanced by increasing the loan secured on the

   
   St Helens Park

   property.

4. In June 2003, the husband bought in the company’s name a Toyota Camry for $6,000 for the wife's use. This was financed on credit cards in the husband's name.

5. All the motor vehicles at this time were owned by the company as trustee for the family trust. In about 2004, the Toyota Land Cruiser was transferred into the husband's name and the Toyota Camry was transferred into the wife’s name.

Other non-financial contributions

1. I find on the evidence that the husband was generally responsible for outside chores such as landscaping, gardening and minor repairs, with which the wife assisted him. I find that while the wife was generally responsible for the majority of internal chores such as cooking, cleaning, washing, ironing, vacuuming, tidying, dusting, mopping the floors and making beds, the husband did assist, particularly on days the wife was at work, and even more particularly when the wife was at work during school vacations, during which time the husband also cared for the wife's children. The husband took the wife's children to and from school on occasions until they moved to St Helens Park, when the children were able to walk the relatively short distance between home and school. The husband's availability to assist with child care and household tasks reduced during the time he had the second job with the security firm late in the parties’ marriage.

2. The wife readily acknowledged that the husband supported her children in every way, financially, emotionally and otherwise. Her concession went well beyond what was called for by the question she was asked. During the first three years of cohabitation, her children’s father barely paid any child support for them. After the parties’ marriage, the wife received $63 per week in support for her children, although the evidence is unclear as to how long this continued, and with what regularity the payments were made.

Separation (October 2003)

1. At separation, the wife and her children left the St Helens Park property and moved to rented accommodation. The husband has remained in occupation of the former matrimonial home ever since. To the extent payments have been made since separation in relation to council rates, land tax and other outgoings on the matrimonial home and in relation to Hagarty Lopez Pty Limited, the husband alone has made them without any contribution by the wife, although there are currently arrears in council rates, land tax, water rates and ASIC fees.

2. The wife says that at separation she left the matrimonial home only with her own clothing, the children’s furniture and “a few items of contents”, unspecified.

3. The husband says that at the time of separation, the wife removed a significant quantity of furniture and furnishings from the matrimonial home. He lists the items he says the wife removed in paragraph 59 of his affidavit. In cross-examination, the husband said that the wife took many items at separation, then returned about 12 months later and took further items, including items identified in his affidavit as having been taken by the wife “when (she) left the former matrimonial home”. There is thus an inconsistency in the husband's evidence as to whether some of the items he says the wife took were taken when she left the matrimonial home or 12 months later.

4. I am unable to resolve this issue, as I am not satisfied there is sufficient basis to prefer one party’s evidence over the other’s on this matter.

5. At separation, there were two credit card accounts in the husband's name, for which the wife had supplementary cards. At separation, the National MasterCard had a debit balance of $1,130 and the St George MasterCard had a debit balance of $12,462. The husband also had a debt at separation to the Australian Parachute Federation relating to the excess payable in relation to an insurance claim for the sky diving accident in 2000. A statement of claim was issued for this debt in April 2006 claiming $6705.05. There is no evidence what has happened in these proceedings, although the husband has since reduced the debt.

Financial dealings since separation (after October 2003)

1. After separation, the husband obtained a line of credit facility from

   
   

   St George Bank with a credit limit of $30,000. That facility is now fully drawn. The husband used the funds to pay $12,000 for repairs to the Porsche, $5,000 for repairs to the boat, $1,000 to have the Porsche repainted, $4,000 for tuition fees for a migration agent’s course that he did not complete, $800 for a Toyota Corolla so he did not have to drive the Toyota Land Cruiser to work, $480 for a pump motor for the pool at the former matrimonial home, about $570 for a green slip for an unspecified motor vehicle, $450 for a replacement motor for the built-in vacuum system at the former matrimonial home, and for general living expenses. There is no explanation why the husband needed to buy another motor vehicle when he already had two at his disposal, the Porsche and the Toyota Land Cruiser. The husband conceded that the moneys expended on the Porsche were not recouped on its sale.

2. These figures suggest the husband spent $5,700 drawn on the line of credit facility for his own general living expenses. They also suggest that he spent only $1,050 in repairs on the former matrimonial home. He spent $18,000 on the Porsche and the boat, but there is no evidence to show what these moneys were spent on or to show that the work performed was necessary. He said in cross-examination that he paid $11,500 to have the motor in the Porsche rebuilt in 2003 and repainted the vehicle. It is unclear whether this is the same work that the husband said cost a total of $13,000 and was paid from his line of credit after separation. However, there is a strong correlation in the sums said to have been expended, and I infer it is the same work.

3. In relation to the $4,000 on the migration agent’s course, the husband said he did the course, failed to take the exam, then did a refresher course and again failed to take the exam. He said he does not intend further attempting to complete the course. He said he did not do the exam as his memory was no good

4. The husband said that in August 2005, the wife transferred $2,900 from the joint line of credit account into an account in her sole name. In cross-examination, the husband was adamant that his assertion the wife transferred $2,900 from this account was true, emphatically saying it occurred on 10 October 2005. When further questioned, he became less certain, and said it might have been August, but specifically remembered it was on the 10^th of the month. These matters were not put to the wife, nor were the relevant bank statements put into evidence. The matter was not addressed in submissions. The evidence does not satisfy me any adjustment need be made for the suggested transaction.

5. In about July 2006 the husband sold the Porsche and Toyota Land Cruiser for $33,000. He said he applied these funds as follows:

   ·$7,500 to purchase a 1993 Toyota Surf motor vehicle;

   ·$5,000 paid off the St George MasterCard;

   ·$62 towards a phone bill;

   ·$188 towards a water bill;

   ·$96.60 to the Waterways Authority;

   ·$500 for council rates;

   ·$433.61 for an electricity account;

   ·$6,144 towards the home loan;

   ·the balance (that is, $13,075.79) towards food and living expenses.

6. In cross-examination, the husband said he deposited the proceeds of sale of the two motor vehicles into his bank account. He said his

   
   

   St George MasterCard debt at the time was about $15,000. He said in evidence in chief that this credit card debit balance at separation was $12,462, and that he had been meeting repayments on it since separation. He said the payment towards the home loan would have been to bring payments up to date. His evidence in chief was that he had been paying this loan too. Since this payment, the loan has increased by about $11,000, further calling into question the husband’s contentions of servicing this loan since separation. He denied he spent about $13,000 of the sale proceeds on his food and living expenses, even though that is the effect of his evidence in chief. When pressed, he said he was not sure what he did with the rest of the money, but that it had all been used.

7. The husband said in cross-examination that there was a garnishee on his wages for a personal loan he had with St George, leaving him with insufficient to meet the mortgage repayments, repayments that he incorrectly listed in his financial statement as being made.

8. The husband says he has attempted to sell the boat since separation without success. He initially listed it for sale at $15,000. He progressively reduced the price of the boat, to $8,000 at the time of the hearing, without achieving a sale.

9. The husband says that since separation he has painted the inside of the former matrimonial home and has attended to its maintenance and upkeep.

The husband’s superannuation

1. The husband has interests in three superannuation funds – the State Authorities Superannuation Scheme, First State Super, and Optimum Superannuation Master Plan.

2. No superannuation splitting orders are sought in this matter, and so the valuation of the superannuation interests does not have to be in accordance with the Family Law (Superannuation) Regulations (s.90MT), although it can be.

3. Evidence of the value of the husband’s superannuation interests in accordance with the Family Law (Superannuation) Regulations was not challenged. However, it was based on the husband not having a superannuation surcharge debt in relation to any of those interests, and his evidence is that for the 2003/2004 tax year, he was assessed for a surcharge debt of $856.70 for the Optimum Superannuation Master Plan interest, and $1,305.80 for the State Authorities Superannuation Scheme interest. There is no evidence otherwise about any surcharge debts of the husband. To correctly value these two interests in accordance with the Family Law (Superannuation) Regulations at any date after 30 June 2004, these sums must be deducted from the gross value of the relevant interest (Reg.28).

4. The value of the husband's superannuation interests in accordance with the Family Law (Superannuation) Regulations at specified dates is as follows.

State Authorities Superannuation Scheme

1. There are two components of this interest, arising under separate NSW Acts – the State Authorities Superannuation Act 1987 (SASS) and the State Authorities Non-Contributory Superannuation Act 1987 (SANCS). Scheme specific factors have been determined under Regulation 38 of the Family Law (Superannuation) Regulations for determining the gross value of interests under these Acts for the purpose of s.90MT, and the trustee of the scheme has made calculations in accordance with those factors of the gross values.

2. The husband’s period of eligible service for the SASS and SANCS commenced on 10 September 1990. The husband first became a member of the SANCS on 10 September 1990 and of the SASS on

   
   1 January 1991

   . Both components are defined benefit interests in the growth phase.

3. The evidence of the surcharge debt in relation to this interest does not indicate how it is to be attributed to the separate components of this interest. Hence, the amount of the debt is deducted from the sum of the gross values of the two components on this interest as at 1 May 2007.

4. The value of the interests at the indicated dates is:

Date	SASS	SANCS	Total
25 September 1999	$105,662.23	$8,454.90	$114,117.13
1 October 2003	$145,544.38	$15,564.57	$161,108.95
1 May 2007	$234,873.98	$25,987.69	$259,555.87

First State Super

1. The husband’s interest in First State Super is an accumulation interest in the growth phase. He joined the fund on 10 December 2001. His eligible service period commenced on 1 July 1989. The value of the husband’s interest in accordance with the Family Law (Superannuation) Regulations at the indicated dates is:

Date	First State Super
10 December 2001	$1,146.80
1 October 2003	$12,701.53
27 February 2007	$20,034.71

Optimum Superannuation Master Plan

1. The husband’s interest in the Optimum Superannuation Master Plan is an accumulation interest in the growth phase. The husband’s eligible service for this interest commenced on 31 March 2003, and he joined the fund on 25 June 2003. The gross value of this interest fell between 30 June 2005 and 21 February 2006 by $281.

2. Allowing for the surcharge debt, the value of the interest in accordance with the Family Law (Superannuation) Regulations at

   
   21 February 2006

   , is $6,897.98.

Parties’ current situation

The wife

1. The wife lives in rented accommodation. Her youngest child lives with her. Her middle child spent some time living with his father and seeing the wife on weekends, but since May 2007, has resumed living full time with the wife. The wife’s eldest child has lived with her de facto partner for most of the time since the parties separated and is self-supporting.

2. The wife works as a travel consultant. She is an Enrolled Nurse and as such, her hourly rate of pay would be over $2 higher than as a travel consultant. However, she prefers the travel consultancy work as she enjoys it more. Her current income is $634 per week, of which $200 per week is salary or wages and the balance Government benefits. She has the capacity to earn $700 per week, as she did in 2006.

The husband

1. The husband presently earns $73,000 per annum as a school teacher. He also commenced doing security work in July 2007, working 12 hours per week at $21 per hour, or $252 per week. His total annual income is therefore approximately $86,000.

2. The husband said he had a major sky diving accident in 1979 and has partial paralysis in his right side that prevents him running and doing any heavy lifting. Elsewhere in his affidavit the husband said the parachute accident resulted in a broken pelvis causing nerve damage and a “dropped foot”, and that he cannot stand on his feet for over an hour. He nonetheless said that during cohabitation he performed heavy work doing landscaping on the parties’ homes, including moving many tonnes of soil.

3. The husband said he has arthritis that prevents him writing for extended periods of time, severe neck pain that gives him headaches, and suffers from stress and anxiety. Elsewhere in his affidavit he said he has arthritis in both wrists and both knees and suggested he may need knee surgery, and said he is suffering from depression for which he is being treated with Zoloft prescribed by his general practitioner.

4. The husband said he had surgery on his hands in August and November 2006. There is no evidence as to the purpose or reason for this surgery, but he contended he does not have 100% strength in his hands although he said that after the surgery “the condition has been corrected”.

5. The husband called no medical witness to verify his contentions about his health. He said he intends to stop working next year because of his health. But in the absence of any medical evidence to suggest he cannot or should not continue working due to the state of his health, this must be treated as a discretionary decision of the husband rather than one arising from medical necessity or prudence.

6. As mentioned, the husband remarried in July 2005. His new wife was limited to 20 hours work per week by her visa conditions. She was earning between $100 and $150 per week. When she was working

   
   

   20 hours a week, the husband said he was supporting his new wife. Hence, his expenditure on living expenses since July 2005, has included the support of his second wife. It was represented by the husband in the proof of evidence given to the wife’s legal representative at the commencement of the hearing, Exhibit L, that his new wife’s hours of work and income increased this year. Exhibit L suggests she now supports herself, although the husband said in cross-examination that he does not know how much she earns. Her 15 or 16 year old daughter, who is fully dependent, lives with them.

7. The husband’s new wife was a witness in his case as to her financial circumstances. In oral evidence in chief, she asserted that her income remained at about $100 to $150 per week, creating a discrepancy between that evidence and the husband’s document Exhibit L.

8. In cross-examination, the husband’s new wife said she was enrolled in an advanced diploma in tourism management course involving

   
   

   20 hours per week of college attendance. She said she works 20 hours a week or less as a consultant. She said the 20 hours per week work restriction under her visa only applied during course times, and did not apply during college vacations. She said she has prepared her permanent residence application and is waiting until these proceedings finish before submitting it. No reason was given for delaying her application.

The applicable law

1. In Hickey & Hickey; A-G for Commonwealth (Intervener), [2003] FamCA 395; (2003) FLC 93-143; (2003) 30 Fam LR 355, the Full Court (Nicholson CJ, Ellis & O’Ryan JJ) explained the preferred approach in determining property settlement proceedings under s 79, as follows (FamCA at [39]; FLC at 78,386; Fam LR at 370):

   “39   The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79.  That approach involves four inter-related steps.  Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing.  Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties.  Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two.  Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEJ and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.”

2. Where superannuation interests are involved, the majority of the Full Court said in Coghlan & Coghlan, [2005] FamCA 429, (2005) 33 Fam LR 414, (2005) FLC 93-220:

   “61   Nothing we have said in this judgment would prevent a Court in the exercise of its discretion from including a superannuation interest as an item of property in the list of property which is drawn as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings.  This approach could be adopted where the parties agree that it should be adopted, or where the Court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the Court to conclude that this would be an appropriate approach. 

   62.    The parties’ contributions to all items on that list (including the superannuation interest) would then be assessed on either a global or an asset by asset basis.  It might then be necessary in the s 75(2) context to have regard to the parties’ future superannuation entitlements (having regard of course to any division proposed on the basis of their contributions), with consideration then being given to the overall justice and equity of any proposed award or order (including any proposed splitting order).  Indeed, this is the approach which the Full court has used on its re-exercise of the trial Judge’s discretion in Ilett and Ilett (which will be delivered contemporaneously with the decision in this case). 

   63.    However, given the conclusions we have reached above, we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise).  This of course is the approach which the trial Judge adopted in this case.

   64.    Then for the reasons we earlier gave, whether or not a splitting order is sought on either party’s application, the parties’ contributions to both the property (as defined in s 4(1)) and also to the superannuation interests should be assessed.  The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered.  Specifically in the context of s 79(4)(e), that is the s 75(2) factors, any division of the property (as defined in s 4(1)) and any “division” of any superannuation interest (in the sense of an allocation of the base amount) based respectively on the assessments of the parties’ contributions to the property and to any superannuation interest, would then be considered.  Similarly, the parties’ future superannuation prospects (be they in capital or income form) would also need to be considered.  The overall justice and equity of the ultimate award (including any proposed splitting order or the need for such an order) would then be considered.

   65.    In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case.  If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:

   (a)    value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);

   (b)    consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;

   (c)     consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and

   (d)    ensure that pursuant to s 79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.

   66.    In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of the cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse’s present and/or future entitlements under the fund.

   67.    If this approach is adopted, whereby superannuation interests are dealt with separately from property as defined in s 4(1), but are subject to the considerations in s 79(4), then not only will any contributions, both direct and indirect, by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account, both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable. 

   68.    When we refer to “the real nature” of the relevant superannuation interest, we are referring to the fact that notwithstanding that its value according to the Regulations may well be calculated to be a very significant amount, that superannuation interest may be no more than a present or future periodic sum, or perhaps a future lump sum, the value of which at date of receipt is unknown.”

The property of the parties

1. Most of the property acquired by the parties, both personalty and realty, is not owned by them. It is owned by Hagarty Lopez Pty Limited as trustee of the Hagarty Lopez Family Trust. However, the parties have absolute control over the property of the trust, as they are the sole shareholders and directors of the trustee, they are also appointors of the trust (Clause 1(i) and the Schedule to trust deed, Exhibit C), and they are the primary beneficiaries of the trust (Clause 1(b) and the Schedule, Exhibit C). As such, they have the necessary powers to deal with the property of the trust as they choose, and to have it transferred to them if they wish, for example by causing the trustee to appoint the vesting date (Clause 1(h), Exhibit C), and to cause the trustee to distribute the property of the trust to them in such shares as they determine (Clause 7(a), Exhibit C). In fact, the only distributions from the trust have been made to the parties.

2. In these circumstances, the property held by the company as trustee for the family trust is a financial resource of the parties (Whitehead & Whitehead, (1979) 5 Fam LR 308, (1979) FLC 90-673). It was agreed by the parties that the property of the trustee company should be included in the list of non-superannuation assets and liabilities of the parties, such is the degree of control of the parties over the trust property. This in my view is an appropriate approach to adopt. The real significance of the ownership structure the parties have put in place is in the framing of orders to achieve a property settlement.

3. Ultimately, there was little controversy over the assets and financial resources, including superannuation, of the parties and their value. There are issues about the inclusion of some of them in the pool of divisible assets. The controversial matters are as follows.

Boat

1. On behalf of the wife, it was submitted that the boat should be valued at $12,000, the value ascribed to it by the husband in his financial statement. On behalf of the husband, it was submitted that because of the lack of success in attempting to sell the boat, it should be valued at $8,000.

2. The husband’s evidence in chief was that he had reduced the asking price of the boat as at February 2007 to $15,000 without achieving a sale. His financial statement sworn in mid June 2007, put the value of the boat at $12,000. His oral evidence at trial was that he had reduced the asking price to $8,000 and was yet to achieve a sale.

3. The husband was not challenged in cross-examination to suggest he was not genuinely attempting to sell the boat. In those circumstances, I find the boat is worth $8,000.

Husband’s Toyota Hilux Surf

1. It was submitted on behalf of the wife that this vehicle is worth $7,500. The husband’s unchallenged evidence in his financial statement is that it is worth $6,000. The husband’s evidence amounts to an admission it is worth no less than $6,000. The figure advanced in the wife’s case is the cost of the vehicle when the husband bought it about a year ago. There is no admissible evidence of its current value. It is more likely than not that the vehicle would have decreased in value over the past year. There is no evidence to suggest the husband paid other than market value for the vehicle. I therefore ascribe a value of $6,000 to it.

Husband’s Toyota Corolla

1. The husband’s evidence is that he used $800 from the personal loan he took out just after separation to buy a Toyota Corolla. He did not disclose this vehicle in his financial statement. It was the wife’s case that it should be included at its purchase price. It was also submitted on behalf of the wife that the husband’s post-separation debts should be omitted from the pool of divisible assets. If that were to occur, then it would not be appropriate to include in the pool of divisible assets an item to which an omitted debt relates. If the debt is included in full, or not discounted for the price of the Corolla, then the vehicle should be included at the only value available, namely its purchase price. Otherwise, it should be omitted.

Mortgage

1. It was submitted on behalf of the wife that there should be a notional add-back into the pool of divisible assets of the sum of $10,000, it being put that the mortgage balance at separation was $366,619. At trial, in July 2007, the balance outstanding under the mortgage was $376,720.

2. The increase in the secured debt calls into question the husband’s evidence that since separation he had “continued to pay for all expenses related to the former matrimonial home”. Either he failed to meet necessary repayments on the loan, or he redrew funds under the credit facility secured by the mortgage. Certainly his assertion that he paid council rates, land tax and water rates since separation is not entirely correct, as there are arrears on all three of these commitments.

3. However, I am not satisfied it is appropriate to either add-back into the pool of divisible assets a notional sum in the husband’s hands of the amount of the increase in the mortgage debt. Rather, the preferable course in my view is to take this fact into account when assessing the parties’ contributions. That is, that through the increase in the mortgage balance since separation, the husband having exclusive occupation of the matrimonial home and being in full time employment, in fact earning over $100,000 per annum for part of that period, the wife has made a capital contribution to the husband’s living expenses and standard of living.

Husband’s post-separation debts and proceeds of sale of cars

1. The wife’s case was that all the husband’s post separation debts should be omitted from the pool of divisible assets. While submissions in the wife’s case referred to the $4,000 spent by the husband from the personal loan funds on a migration agent’s course he did not finish, and also to the arrears of council rates, water rates and land tax, there was otherwise no reference to the balance of the husband’s post-separation personal loan. The personal loan debt was categorised as a post separation debt in the written outline of the wife’s case submitted at the commencement of the hearing.

2. I note that the husband’s evidence as to his expenditure of the personal loan funds shows that he spent $5,700 on his own general living expenses. He spent $930 on repairs in relation to the former matrimonial home. He spent $18,000 on repairs to the Porsche and the boat, $4,000 for tuition fees already referred to, $800 to buy the Toyota Corolla, and $570 for a green slip for an unspecified motor vehicle.

3. It was also put on behalf of the wife that $14,356 from the proceeds of sale of the Porsche and Toyota Land Cruiser motor vehicles, received by the husband after separation, had been spent by the husband on his own living expenses, and it was submitted that while it could not be said that this expenditure was reckless or involved waste, the amount should be written back as a notional asset of the husband. The sum of $14,356 does not include the sums totalling $19,644 from the proceeds of sale of the two motor vehicles used to buy the Toyota Hilux, reduce the St George Mastercard debt, and in repayments of the mortgage loan.

4. I propose to include the arrears of council rates and land tax, as they are capital costs in relation to the former matrimonial home. To the extent the husband has or has not met these obligations, and has or has not serviced the mortgage on the home, since separation, these are matters to be taken into account in assessing the parties’ contributions.

1. However, the husband’s post separation personal loan and his post separation use of the proceeds of sale of the two motor vehicles are of a different character.

2. In Omacini and Omacini, [2005] FamCA 195 at [30], (2005) 33 Fam LR 134, (2005) FLC 93-218, the Full Court identified three categories of cases where it may be appropriate to add back notional sums into the pool of assets. They are:

   ·Where the parties have expended money on legal fees (DJM and JLM (1998) 23 Fam LR 396, (1998) FLC 92-816, Chorn & Hopkins, [2004] FamCA 663, (2004) FLC 93-204, sub nom NHC v RCH, (2004) 32 Fam LR 518);

   ·Where there has been a premature distribution of matrimonial assets (Townsend and Townsend (1994) 18 Fam LR 505, (1995) FLC 92-569); and

   ·Where one of the parties has embarked upon a course of conduct designed to reduce the worth of the matrimonial assets, or where one of the parties acted "recklessly, negligently or wantonly" in a way that the value of the matrimonial assets are reduced (As outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644).

3. The Full Court’s decision in Townsend & Townsend (above) is authority for the proposition that funds or property in which one party has a legitimate interest, which are expended or disposed of by the other party after separation, may be brought to account as part of the pool of divisible assets. However, subsequent Full Courts have emphasised that parties are entitled to meet their own reasonable needs from moneys and property available to them, and that writing back assets dissipated since separation should be the exception rather than the rule (Marker [1998] FamCA 42, unreported, 1 May 1998; Cerini [1998] FamCA 143, unreported, 8 October 1998).

4. Turning first to the husband’s personal loan, while it was argued on the wife’s behalf that the husband’s expenditure on the motor vehicles was excessive, and the husband conceded he did not recoup that expenditure on the sale of the Porsche, in my view it would not be appropriate to on the one hand write back against the husband’s interest the money spent from the personal loan on the repairs to the Porsche, and on the other write back against the husband’s interest the proceeds of sale of the Porsche spent by the husband.

5. However, since the husband was then earning over $100,000 per annum, it is difficult to see how the husband’s expenditure from the personal loan funds on his own personal living expenses in a way that now reduces the net property available for division between the parties is reasonable in terms of the authorities. The husband spent $4,000 on a course he did not complete. That money in the result has been lost for no benefit to either party. If he had completed the course and it had increased his earning capacity, the expenditure would have been taken into account as a contribution by the wife towards the improvement in the husband’s earning capacity into the future. In the circumstances, the amount of the husband’s personal loan included in the pool of divisible assets should be reduced by this expenditure.

6. Similarly with the $5,700 the husband spent from the borrowed funds on his own living expenses. While a party after separation is entitled to meet his or her own reasonable living expenses from available resources, it is not at all apparent that the husband lacked the capacity to meet his expenses from his income. His evidence was that the wife’s income was spent on herself and her children during cohabitation, and that he met the outgoings on the home. After separation he failed to meet all the outgoings on the home, as evidenced by the arrears of council rates and land tax, and the mortgage balance increased significantly. In those circumstances, it would seem that to the extent that the husband spent these borrowed funds on his living expenses, they more likely than not financed a standard of living that was not reasonable in all the circumstances, and hence the expenditure was not reasonable. I am satisfied the amount of the personal loan included in the pool of divisible assets should also be reduced for this amount.

7. Thus, the husband’s personal loan of $21,000 should be reduced in the pool of divisible assets by $9,700, to $11,300.

8. In relation to the proceeds of sale of the Porsche and Land Cruiser, $13,759 of the $33,000 proceeds was spent on the husband’s personal needs. It was put on behalf of the wife that this sum was $14,356, but this includes $500 spent on council rates and $96.60 to the Waterways Authority. These are reasonable expenditures by the husband in my view. The nature of the payment to the Waterways Authority is unclear, but as a boat is included in the pool of divisible assets, and as the wife bears the onus of proving why these sums should be written back, I am not satisfied this was not in relation to the boat, and as such is reasonable expenditure. Similarly the payment of rates on the matrimonial home is not unreasonable in my view. However, when assessing the parties’ contributions, these payments towards assets are relevant to the extent the wife has an interest in the funds used for the payments.

9. The sum of $13,759 was expended on the husband’s phone bill, water bill, electricity account, and general food and living expenses. These are part of the husband’s day-to-day living expenses. For reasons already given, I am not satisfied this type of expenditure from funds in which the wife had an interest was reasonable, and the sum should be written back as a notional asset of the husband in the pool of divisible assets.

10. In relation to the remaining post-separation debts in contention, for council rates, water rates and land tax, the water rates, including a usage charge, should be excluded as being part of the husband’s normal living expenses. As to the council rates and land tax, they are capital in nature, relating to the primary asset, and should be included in the pool of divisible assets, but are relevant to the assessment of post-separation contributions.

11. The husband’s credit card debts were not addressed in oral submissions on behalf of the wife. The written outline of the wife’s case described the husband’s St George Mastercard debt in the sum of $10,000 as a post-separation debt, but not his NAB Mastercard debt in the sum of $2,717. It made no further reference to these debts.

12. The sums currently outstanding on these credit cards are agreed at $10,500 and $3,500 respectively, a total of $14,000. The husband had both credit card accounts at separation, when the debit balances were $12,462 and $1,130 respectively, a total of $13,592. Thus, these are not entirely post-separation debts. The current credit balance remains higher than the balance owing at separation even after the husband applied $5,000 from the proceeds of sale of the motor vehicles to the

    
    

    St George Mastercard account. In the absence of any submission in the wife’s case suggesting how this should be treated to the extent it is or includes a post-separation debt of the husband, it again is a matter to be taken into account when assessing contributions.

Capital gains tax

1. It is possible the former matrimonial home may have to be sold. If so, it being owned by the trustee company, not the parties, a capital gains tax liability may arise. While it would be the company’s liability, consistently with treating the home as if it were the parties’, so any CGT debt from its sale ought to be similarly treated.

2. Although this and other consequences of the ownership of the home were clearly raised at the outset of the hearing, ultimately no evidence was put to the court in relation to the likely CGT liability if the home was sold, nor did either party propose any form of order to make provision for the payment of CGT on a sale of the home, for example by reserving a sum from the sale proceeds from which a CGT liability could be paid, despite being invited to do so. The court is therefore unable to make any provision for CGT, either in the pool of divisible assets or in the form of order to be made.

Findings as to assets, liabilities and resources

1. Accordingly, I find that the pool of divisible non-superannuation assets, resources and liabilities is:

2. I find that the superannuation interests of the parties and their values at the most recent dates for which there is evidence are:

Assessment of contributions

1. It was submitted on behalf of the wife that contributions to non-superannuation property and resources should be assessed at 60/40 favouring the husband. It was submitted on behalf of the husband that that assessment should be 70/30 in his favour.

2. At the commencement of cohabitation, the husband owned significant assets in the form of the parachutes and other equipment of the sky diving business, which were realised later in the marriage for $42,000. The husband also had about $12,000 in savings. Set off against this must be the fact that as a result of his property settlement with his former de facto partner, he had a debt of $18,000, which was repaid during cohabitation. While the husband also owned two motor vehicles, the evidence does not establish the value of his equity in them. The wife owned modest personalty. She subsequently received a total of $5,197.18 by way of property settlement and child support arrears in relation to her first marriage. I infer that at least some of the child support arrears related to the period from the commencement of cohabitation in June 1997 to when the arrears were recovered in about September 1999.

3. It was put on behalf of the husband that the significance of the wife’s financial contributions was reduced, and inferentially that of the husband’s enhanced, because it was put that the wife’s money was not contributed to the acquisition of assets. There is no merit in this submission. The husband gave no evidence as to what became of the $12,000 he had at the commencement of cohabitation, although I infer some of it was used to buy the Honda motor vehicle for the wife at a cost of $4,500. When that vehicle was realised, the $4,000 received was used for “joint expenses”. And the $42,000 proceeds of sale of the business parachutes was used as to $19,500 for a boat that the husband now cannot sell for $8,000 after paying $5,000 for repairs, and the balance was spent on “joint living expenses”.

4. If greater significance is to be given to financial contributions to the acquisition of assets, the most significant assets the parties acquired were the two homes. The first was paid for with $20,000 “from the sky diving business” according to the husband, and a joint loan. There is no evidence there was cash in the business at cohabitation over and above the husband’s $12,000 cash, so the $20,000 must have been income from the business, to which the wife contributed by working in the business to a significantly greater extent, I am satisfied, than the husband conceded. Being co-borrowers, the parties’ financial contributions to the acquisition of the first home from loan funds was equal. In relation to the second home, the parties contributed the net proceeds of sale of the jointly owned first home, $19,000 from the sale of a plane bought during cohabitation with jointly borrowed funds, and borrowed funds that the parties jointly guaranteed.

5. But I do not accept that a financial contribution to the acquisition of an asset ought normally be treated as more significant than a financial contribution to the day-to-day living expenses of the parties. To the extent a party makes such a contribution, they can be said to make an indirect financial contribution to the money applied to the acquisition of the asset.

6. Both parties worked during their cohabitation. The husband worked full time as a teacher and from the commencement of cohabitation to 2000 in his sky diving business and from about 2002 until separation with a security firm. The wife worked part time during the marriage, and also assisted the husband in the sky diving business from cohabitation to 2000. I am satisfied both parties contributed their income in a relevant sense.

7. The husband's income was at all times considerably greater than the wife's. That fact alone does not mean it is to be regarded as a greater contribution. I take into account the duration of the parties’ cohabitation, about 6 years, the extent of the disparity in incomes, and the fact that the disparity was in part due to the husband working a second job in 2002 and 2003. I also take into account the fact that the income from the skydiving business, while contributed to by both parties working in the business, was the result of the husband having a particular qualification recognised by the Australian Parachute Federation, which he had before cohabitation, and that the business was established and operating before cohabitation commenced.

8. Of relevance in the husband’s favour is that the wife’s three children were members of the parties’ household during their cohabitation, that child support from the children’s father was not paid regularly, and that the husband made a direct financial contribution to the support of the wife’s children.

9. It was submitted on behalf of the wife that the husband’s expenditure on motor vehicles during cohabitation was so excessive as to amount to a wasting of assets by the husband. It was submitted on behalf of the wife that this should be taken into account in assessing the parties’ contributions. On behalf of the husband it was put that the evidence did not establish any waste by the husband. As already mentioned, wasteful or wanton dissipation of assets by one party to the detriment of the other’s property settlement claims may be taken into account in arriving at a result that is just and equitable in all the circumstances.

10. In this case, the husband appears to have had a penchant for acquiring motor vehicles, owning directly or through Hagarty Lopez Pty Limited at least 2 motor vehicles for his own use at all times during the marriage. However, the husband owned two vehicles at the commencement of cohabitation. There were times during the marriage when he owned more than two vehicles, and there appears no explanation for the husband having multiple vehicles at his disposal other than an affinity for them. It is noteworthy that the cost of the various vehicles he bought during cohabitation for his use was considerably more than the two vehicles he bought for the wife’s use.

11. Against this is the fact that the wife was a co-borrower of the funds secured by mortgage on the St Helen’s Park property with which the loan for the Toyota Land Cruiser was repaid in 2002. There is no explanation why, if she objected to the husband’s expenditure on motor vehicles, she facilitated the conversion of a significant liability for one of them into a liability secured over the matrimonial home.

12. On balance, I am not satisfied that the evidence is sufficient to support a finding of waste in the relevant sense by the husband.

13. Both parties made non-financial contributions during cohabitation, both to the improvements to both houses, and as parents and homemakers. The husband’s homemaker and parent contribution has included a contribution by the husband to the wife’s children, a contribution that the wife readily acknowledged as quite significant.

14. Since separation, the husband has retained the exclusive use of the home, the bulk of its contents, the boat, and two of the parties’ three motor vehicles. While he has met some of the expenses in relation to the home, he has not met them all, and some of them have been met with funds from the sale of the motor vehicles. To the extent outgoings in relation to the home have not been paid and now reduce the pool of divisible assets, the wife in effect has contributed to the husband’s exclusive use of the home, which is the parties’ joint resource, while having to pay rent for her own accommodation. She has thus contributed since separation to the husband’s living expenses.

15. Taking all these matters into account, I assess the parties’ contributions overall to the non-superannuation assets and resources as 60/40 favouring the husband. That is, the parties’ contribution-based entitlement to the net non-superannuation assets and resources is $55,365 to the husband and $36,910 to the wife, of which the wife retains non-superannuation property worth $10,400.

16. In relation to the superannuation interests, it was submitted on behalf of the wife that the parties’ contributions should be assessed in the proportions 70/30 favouring the husband, while it was submitted on behalf of the husband that they should be assessed at about 72/28 favouring the husband.

17. There is no evidence the wife held any superannuation at the commencement of cohabitation. There is no evidence of the amount of her superannuation at separation. The husband had about $80,000 in superannuation at the commencement of cohabitation. It seems unlikely that that figure was calculated under the Family Law (Superannuation) Regulations, as the values at later dates have been. At separation, the husband’s superannuation interests, valued in accordance with the Regulations, were worth $161,109, and at the most recent dates for which there is evidence, were worth $286,489.

18. The husband thus introduced at the commencement of cohabitation one of his three superannuation interests with a value of about $80,000. During cohabitation, that interest has grown, and both parties’ other interests have commenced and grown, as a result of the parties’ employment. Each can point to non-financial contributions to the other’s ability to work, through their respective contributions as parents and homemakers. The other various contributions previously mentioned are also relevant. And the contributions the wife has made since separation to the husband’s living expenses previously referred to is equally relevant in assessing contributions to the superannuation interests.

19. The assessment of the parties’ contributions to their respective superannuation interests is not an exercise in mathematics. While the period of cohabitation in relation to the overall period of contributory membership of the various superannuation schemes is a relevant consideration, it is not the case that the value of the superannuation interest that may on a pro rata basis be said to have accumulated outside the period of cohabitation is excised and quarantined. In fact, the differing methods of valuation for the husband’s SASS superannuation interest at cohabitation and at later dates makes such an apportionment impossible.

20. The husband’s eligible service for his First State Super interest commenced on 1 July 1989, and he joined the fund on

    
    10 December 2001

    , both dates during cohabitation. His eligible service for the Optimum Superannuation master Plan commenced on 31 March 2003, and he joined the fund on 25 June 2003, both dates within about 7 and 4 months respectively before separation. In contrast to the evidence about the husband’s other superannuation interests, he has put no evidence before the court as to the value of this interest at separation. The logical inference is that such evidence would not have assisted his case, and I note the unexplained reduction in the value of this interest between 30 June 2005 and 21 February 2006.

21. Considering the parties’ contributions in relation to their superannuation interests overall, and having regard to the duration of the parties’ cohabitation, I assess those contributions in the proportions 67/33 favouring the husband. That would result in the wife having a contribution based entitlement to superannuation on current values of $100,137. Her superannuation interests are worth $16,957, requiring an adjustment to the wife of $83,180 in relation to the superannuation interests to achieve her contribution based entitlement.

The assessment of other factors

1. The wife’s case is that she is entitled to an adjustment in her favour for other factors, including those under s.75(2), of 10% on both the non-superannuation assets and resources and on the superannuation interests. On behalf of the husband it was submitted that there should be no adjustment to the parties’ contribution based entitlements, or a small unspecified adjustment in the husband’s favour.

1. The wife is aged 41, the husband 57. The husband is in secure full time employment as a teacher earning $1,400 per week, and has recently commenced a second job earning $252 per week, a total of $1,652 per week. He has remarried, his wife is presently limited in the hours she can work, and has a 15 year old daughter with her. Once she secures permanent residence, she can work longer hours. She has prepared the application for permanent residence but is withholding the application until these proceedings are over. She is thus voluntarily restricting her income earning capacity, and in those circumstances I do not accept the submission on behalf of the husband that there is any necessary moral obligation to support her and her child.

2. The wife’s earning capacity is at least $700 per week. She has the care of two of her children. However, they are not the husband’s children, and the wife discloses no child support received from the children’s father.

3. Otherwise, based on the findings as to the parties’ respective contributions, the husband has greater capital assets than the wife, although the net pool of non-superannuation assets and resources is very modest at only $92,275 in total. The husband also has a far greater superannuation resource than the wife.

4. It was put on the husband’s behalf that he suffered various maladies that restricted his future working life. Reference was made to the wife’s evidence in which she acknowledged the husband had certain physical limitations. However, her evidence was that “even thought (sic) the husband suffered from a bad back and leg which stopped him from performing heavy duties or indeed from even (sic) light duties over an extended period”, he nonetheless did much of the external work on the renovations and improvements to the Woodbine property. The husband himself said he moved many tonnes of soil around the yard. That is simply not consistent with an inability to perform heavy physical labour, not that there is any evidence that either of his current jobs entail heavy physical labour.

5. Further, the fact the husband has so recently secured a second job casts doubt on his suggested inability to work into the future. While his primary employment is as a teacher, working in effect primarily school hours, his second job entails security work involving two 6 hour shifts per week.

6. In the absence of medical evidence to support a suggestion the husband has a restricted ability to work now or in the future, I reject the submission that this is a relevant consideration in his favour.

7. In my view, the most significant considerations are the husband’s greater earning capacity and greater share of the property and superannuation, which favours the wife, and the significant difference in the parties’ future working lives, which favours the husband. When these matters are considered with the relatively modest duration of the parties’ cohabitation, in my view, in relation to both the non-superannuation assets and resources and the superannuation interests, no adjustment is warranted to the parties’ contribution based entitlements.

Orders that are just and equitable

1. It was submitted on behalf of the wife that her entitlements to the non-superannuation items and to the superannuation interests should be aggregated and the husband should pay her the figure arrived at, which was suggested to be $155,000. Based on my findings, adopting this aggregation approach, the payment would be $109,690. On behalf of the husband, it was put that while he proposed he be ordered to pay the wife $60,000, the wife was not entitled to this much. No submission was put on behalf of the husband as to how much the wife was entitled to. In neither party’s case was any attention given to the appropriate way to convert a share in the husband’s superannuation interests, payable in the future, into a payment now from present assets and resources.

2. The wife expressly eschewed the option of a superannuation splitting order, even when I questioned what should be done if a just and equitable order could not be made from the presently realisable property, and the husband did not seek one either. The wife’s position must entail a concession that whatever order can be made justly and equitably from the present property is the order that should be made.  Ultimately, the pool of presently realisable property, and the need not to denude the husband totally of present property to make the superannuation adjustment to the wife, limit the extent of the adjustment to the wife for her superannuation interest.

3. The wife is to receive $26,510 on account of her share of the non-superannuation property and resources. The balance of her superannuation entitlement is $83,180. A payment in the sum proposed by the husband of $60,000 would represent the wife’s share of present property and resources and $33,490 paid now on account of her entitlement to a superannuation adjustment of $83,180 that would not vest for up to 8 years. Thus, the husband’s proposal involves a discount of 60% on the value of the wife’s entitlement to a superannuation adjustment in return for a payment now rather than in a maximum of 8 years. A payment of $60,000 would represent 76.3% of present property and resources. It would leave the husband with $21,875 of the present assets and resources.

4. A payment to the wife of $70,000 would provide an adjustment to the wife that includes $43,490 for her superannuation adjustment, a discount of 48%, and represent 87.1% of present property and resources, leaving the husband with present property of only $11,875.

5. Based on the husband’s case that the wife is entitled to 30% of the property and resources and about 28% of the superannuation, a payment to the wife of $60,000, as the husband proposes, would involve a discount on the wife’s share of the superannuation interests of 37% in return for a payment for her share of the superannuation now in lieu of a payment within a maximum of 8 years. If that discount were applied to the wife’s share based on my findings that she is entitled to 40% of the property and resources and 33% of the superannuation, the wife would be entitled to a present payment of $78,913, leaving the husband with only $2,962 from the property and resources.

6. Where the pool of presently realisable assets is very modest in relation to the superannuation interests, it is very difficult to achieve a just and equitable result where a party with little superannuation has a significant claim on the aggregate superannuation without splitting the superannuation interests. Either one party, to receive proper recompense for their claims to the superannuation, must receive almost all the present property, impoverishing the other party until their superannuation vests, or the party with the preponderance of the superannuation also receives a reasonable share of present property and the other party’s proper claims on the superannuation are effectively lost. This is precisely why the Family Law Act was amended to permit orders to be made splitting superannuation interests.

7. Where, as here, the party in the inferior position in relation to significant superannuation interests disavows any claim to a superannuation splitting order, then in my view it would be unjust and inequitable to impoverish the other party to seek to secure a payment to the first party that fully or more fully recognises that party’s claims on the superannuation.

8. Ultimately, I am of the view that considering the matters referred to above, the order that is just and equitable in the circumstances of this case is to require the husband to pay to the wife the sum of $65,000 within 60 days, in default of which the parties are to do all things necessary to cause the trustee company to sell the home and to distribute the proceeds of sale to the parties in the proportions of 78% to the wife and the balance to the husband. This would give the wife total current net assets of $75,400 and superannuation of $16,957 due to vest in no more than 23years, and would leave the husband with current net property and resources of $16,875 and superannuation of $286,498, due to vest in no more than 8 years.

I certify that the preceding one hundred and sixty-four (164) paragraphs are a true copy of the reasons for judgment of Halligan FM

Associate:  Deanne Bush

Date:  6 November 2007