LUCAS & HART

[2020] FCCA 1348

FEDERAL CIRCUIT COURT OF AUSTRALIA

LUCAS & HART [2020] FCCA 1348

Catchwords:
FAMILY LAW – Property settlement proceedings – final hearing – case determined “on the papers” by agreement of the parties – add back arguments – contributions arguments – section 75(2) arguments – just and equitable outcome.   

Legislation:

Family Law Act 1975 (Cth), Pt VIII

Cases cited:

Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Stanford & Stanford (2012) FLC 93-518.

Robb & Robb (1995) FLC 92-555

Kowaliw & Kowaliw (1981) FLC 91-092
Rosati & Rosati (1998) FLC 92-804

Applicant: MR LUCAS

Respondent: MS HART

File Number: NCC 2774 of 2016

Judgment of: Judge Betts

Hearing dates:

28 March 2019, 10 July 2019,

2 April 2020 and 14 April 2020

Date of Last Submission: 14 April 2020

Delivered at: Newcastle

Delivered on: 28 May 2020

REPRESENTATION

Counsel for the Applicant: Mr Graham

Solicitors for the Applicant: Tony Cox Lawyers & Conveyancers

Counsel for the Respondent: N/A

Solicitors for the Respondent: Byrnes Lawyers

ORDERS

1. That within twenty-eight (28) days, the Husband do all acts and sign all documents as are necessary to transfer to the Wife  (at her expense) all of the Husband’s interest in and to the real property situated at and known as B Street, Town C.

2. Contemporaneously with order (1) herein, the Wife (at her expense) do all acts and sign all documents as are necessary to refinance the existing joint mortgage encumbering the B Street, Town C property so that the Husband is discharged as a mortgagor.

3. That within twenty-eight (28) days, the Wife do all acts and sign all documents as are necessary to transfer to the Husband (at his expense) all of the Wife’s interest in and to the real property situated and known as D Street, Town C.

4. Contemporaneously with order (3) herein, the Husband (at his expense) do all acts and sign all documents as are necessary to refinance the existing joint mortgage encumbering the D Street, Town C property so that the Wife is discharged as a mortgagor.

5. That within seven (7) days of the making of these orders:

   (a)the Wife (at her expense) is to do all acts and sign all documents necessary to register a withdrawal of her Caveat registered over the title to the real property situated at E Street, Town C;

   (b)the parties are to do all acts and things to authorise the moneys presently held in the trust account of Tony Cox Lawyers and Conveyancers to be paid to the Husband, or as he directs.

6. That the parties forthwith do all things and sign all documents necessary to cause the property situated at and known as E Street, Town C, NSW to be sold by private treaty at the earliest possible date at a price to be agreed upon between the parties and failing such agreement at a price to be determined by the President of the Real Estate Institute of New South Wales (or any successor of it) or his/her nominee and to disburse the proceeds of the said sale in the following manner and priority:

   (a)Payment of the agent’s commission and advertising expenses and legal expenses of the sale;

   (b)Discharge of the Mortgage to the ANZ Bank;

   (c)Payment of costs incurred, if any, in relation to determination of value or selling price by the President of the Real Estate Institute of New South Wales or his/her nominee;

   (d)The balance to be held in the trust account of the Husband’s solicitors, and if agreed then to be invested in the joint names of the parties pending disbursement as provided for in order (9).

7. That in the event the property situated at and known as E Street, Town C, NSW, is not sold by private treaty within a period of four (4) months of the date of these Orders, then the parties forthwith do all acts and things necessary including executing all documents necessary to cause the property to be sold by public auction at the earliest possible date at a reserve price to be determined by the President of the Real Estate Institute of New South Wales (or any successor of it) or his/her nominee and to disburse the proceeds of the said sale in accordance with order (6).

8. That as soon as it is practicable for him to do so, the Husband is to lodge his income tax return for the financial year in which the sale of the E Street, Town C property takes place, and he is to contemporaneously provide a copy of that return to the Wife.  The husband is to provide the Wife with a copy of the relevant Notice of Assessment from the ATO within seven (7) days of it being issued, together with a written advice from his accountant as to the amount of CGT which is included in the Notice of Assessment (if same is not apparent from the Notice itself).

9. Within seven (7) days of the Husband complying with order (8), the trust moneys held pursuant to order (6)(d) herein are to be applied as follows:

   (a)The Wife is to receive a cash payment so that she receives 48% of the total net combined assets;

   (b)The Husband is to receive a cash payment so that he receives 52% of the total net combined assets;

   (c)Where the “total net combined assets” are calculated as $1,482,891 plus the net sale proceeds of the E Street, Town C property after deducting the mortgage, the costs of sale referred to in orders (6) and (7) and the Husband’s CGT liability. 

   IT IS NOTED THAT of the $1,482,891 referred to in order (9)(c), the Husband holds assets pursuant to these orders valued at  $785,019 and the Wife hold assets pursuant to these orders valued at $697,872.

10. That the Wife indemnify the Husband in respect of all mortgage repayments and all other property outgoings in respect of the real property at B Street, Town C.

11. That the Husband indemnify the Wife in respect of all mortgage repayments and all other property outgoings in respect of the real properties at D Street, Town C and E Street, Town C.

12. The Husband is to otherwise retain, to the exclusion of the Wife:

    (a)any bank accounts or insurance policies in the Husband’s name;

    (b)the Husband’s shares;

    (c)the trailer and motorbikes in his possession;

    (d)the Motor Vehicle 1;

    (e)the bikes and paddleboard in his possession;

    (f)paintings in his possession;

    (g)the ANZ mortgage re-draw;

    (h)the e-trade moneys;

    (i)his superannuation entitlements.

13. The Wife is to otherwise retain, to the exclusion of the Husband:

    (a)any bank accounts or insurance policies in the Wife’s name;

    (b)her motor vehicle;

    (c)her superannuation entitlements.

14. Except as otherwise expressly provided for herein:

    (a)each party be solely entitled, to the exclusion of the other, to all other property and chattels of whatsoever nature and kind in the first party’s possession at the date of these orders;

    (b)each party be solely liable for, and indemnify the other against, any liability encumbering any item of property to which the first party is entitled pursuant to these orders.

15. In the event that either party refuses or neglects to execute any document necessary to give effect to all or any of the orders herein within seven (7) days of a written request to do so, then the Registrar of the Federal Circuit Court of Australia at Newcastle be appointed pursuant to s 106A of the Family Law Act 1975 to execute any such document in the name of the defaulting party and do all acts and things necessary to give validity and operation to the said document or documents without further notice.  The Registrar’s jurisdiction pursuant to this order shall be enlivened by the filing of an affidavit by the solicitor for the party seeking relief.

16. The court will hear the parties on the question of costs or as to any incidental or machinery provisions necessary to give effect to these orders.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 2774 of 2016

MR LUCAS

Applicant

And

MS HART

Respondent

REASONS FOR JUDGMENT

Introduction:

1. Following the breakdown of their marriage, Mr Lucas (“the Husband”) and Ms Hart (“the Wife”) have found themselves unable to agree upon a property division.

2. Their trial was listed to proceed on 28 March 2019 in the court’s sittings at Wauchope.  However, on that day there proved to be insufficient hearing time available.[1] 

   [1] The court’s notoriously heavy listings at Wauchope meant that the hearing day was over-listed.

3. The parties did not however want the trial to be adjourned to another date.  Instead, both parties assured me that the factual and legal issues in dispute were quite narrow and both wanted me to simply determine the matter “on the papers” on the basis of written submissions and without cross-examination. Notably, the parties’ trial affidavits had been exchanged contemporaneously; they were not necessarily responsive to each other in relation to various factual issues.

4. I agreed to proceed “on the papers”; consent orders were made to that effect.  The orders included a timetable for the exchange of written submissions, with liberty to re-list if necessary.

5. Unfortunately, the written submissions gave rise to some unexpected difficulties.  For a start, they were surprisingly lengthy.  The Husband’s submissions also contained numerous factual assertions which were not otherwise deposed to in his trial affidavit.  His submissions also annexed various documents which he sought to tender as exhibits.    

6. The Wife’s submissions in response, also voluminous, objected to the Husband’s introduction of new evidence by way of submissions.  The wife also objected to various documents annexed to the Husband’s submissions. 

7. Given the lengthy submissions and the degree of controversy which had emerged, on 19 November 2019 the parties jointly provided me with a very helpful document setting out the agreed facts, the factual issues in dispute, the issues for determination and a Balance Sheet.  This document was essentially a joint “roadmap” for the determination of the matter.

8. I reviewed the file earlier this year with a view to preparing reasons for judgment.  In so doing, I noted the extent of the written submissions and objections and out of an abundance of caution I decided to re-list the matter.  Firstly this was to ensure that I had an accurate list of the documents relied upon by each party and that all such documents were with the file.  Secondly, I wanted to make clear to the parties that any decision by me would have to be based on the evidence they had produced - submissions not being evidence. 

9. The parties agreed that the Wife’s solicitors’ letter dated 1 April 2020 accurately set out the relevant list of documents.  For convenience I marked that letter as exhibit 4.  Helpfully, exhibit 4 also included a list of the documentary objections.  Neither party sought to formally re-open the evidence. ^[2]

   [2] Court events of 02/04/20 and 14/04/20.

10. In the somewhat unusual circumstances of this case I have done the best I can to arrive at what I consider to be a just and equitable outcome.

Material before the court:

1. I have had regard to the material identified in exhibit 4:

   Husband’s documents filed prior to hearing:

   (a)Amended Initiating Application filed 26 November 2018;

   (b)Trial affidavit of the Husband filed 7 March 2019;

   (c)Financial Statement of the Husband filed 7 March 2019;

   (d)Husband’s List of Objections dated 28 March 2019;

   (e)Husband’s Case Outline dated 28 March 2019.

   Wife’s documents filed prior to hearing:

   (a)Response filed 3 July 2017;

   (b)Trial affidavit of the Wife filed 20 February 2019;

   (c)Financial Statements of the Wife filed 3 July 2017 and 6 March 2019;

   (d)Wife’s List of Objections dated 26 March 2019.

   Exhibits tendered at the hearing:

   1.ANZ Bank statements from 2 July 2015 to 26 October 2017 (E Street, Town C property);

   2.Husband’s FY 2012, 2013 & 2014 Income Tax Returns;

   3.Wife’s FY 2012, 2013 & 2014 Income Tax Returns.

   Written submissions filed subsequent to the hearing:

   (a)Husband’s submissions filed 12 April 2019;

   (b)Wife’s amended submissions in reply filed 1 May 2019;

   (c)Husband’s written submissions in response filed 20 May 2019;

   (d)Wife’s further submissions in response filed 10 July 2019;

   (e)Joint document setting out “agreed facts, factual issues in dispute, issues for determination and Balance Sheet” dated 19 November 2019.

2. The documents annexed to the written submissions, and my rulings as to objections, will be referred to as relevant.

The law to be applied:

1. Matrimonial property settlement proceedings are governed by the provisions of Part VIII of the Family Law Act.

2. I will adopt the following approach:

   (a)Firstly, I will identify and value the property, liabilities and financial resources of the parties;

   (b)Secondly, I will consider whether it is “just and equitable” to make a property settlement order;

   (c)Thirdly, I will identify and assess the respective contributions made by each of the parties towards the net assets pursuant to s 79 of the Act;

   (d)Fourthly, I will identify and assess the relevant “future factors” prescribed in s 75(2) of the Act.  I will also consider any relevant matters pursuant to s 79(4)(d), s 79(4)(f) and s 79(4)(g).  Having done so, I will then determine what (if any) adjustment ought to be made to each party’s respective contributions-based entitlement.  I will be mindful of not only percentages (often a convenient tool for the court) but also of the underlying dollar figures the percentages represent (which are the practical consequences to the parties);

   (e)Lastly, I will consider the effect of my findings and proposed orders to satisfy myself that any proposed property settlement order I am contemplating is “just and equitable”.[3]

   [3] This approach is derived from Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143, adapted by me to take into account the High Court’s decision in Stanford & Stanford (2012) FLC 93-518.

Step 1 – Identifying & valuing the assets, liabilities and financial resources of the parties:

1. The parties are largely agreed on a Balance Sheet.  The items in dispute are quite narrow and the evidence on point relevantly “thin”. 

2. I set out below the Balance Sheet as I have determined it (ignoring cents).  The asterisked items represent disputed values for which my reasoning will follow.

   ‘Tangible’ Assets:

Owned by	Item	Husband’s figure	Wife’s figure	My figure
Joint	B Street, Town C	$   675,000	$   675,000	$   675,000
Joint	D Street, Town C	$   550,000	$   550,000	$   550,000
Husb	E Street, Town C	$   350,000	$   350,000	$   350,000
Joint	Monies in trust	$   190,035	$   190,035	$   190,035
Husb	Shares	$      2,174	$      2,174	$      2,174
Wife	Motor Vehicle	$     10,000	$     10,000	$     10,000
Husb	Trailer	$         500	$         500	$         500
Husb	Motorbike	$      9,000	$      9,000	$      9,000
Husb	motorbike	$     13,000	$     13,000	$     13,000
Husb	motorbikes	$      3,600	$      3,600	$      3,600
Husb	Bikes	$      1,000	$      1,000	$      1,000
Husb	Motor Vehicle 1	$      9,000	$      9,000	$      9,000
Husb	Paddleboard	$         400	$         400	$         400
Husb	Paintings	$         800	$         800	$         800
Husb	Mtge Redraw*	$      6,490	$      9,743	$      9,743
Husb	E-trade monies*	$     14,045	$Nil	$     14,045
Wife	F’s monies*	$     25,473	$Nil	$Nil
Sub-total tangible assets:	$1,838,297

Liabilities:

Owed by	Item	Husband’s figure	Wife’s figure	My figure
Joint	B Street, Town C Mortgage	$     235,692	$  235,692	$  235,692
Joint	D Street, Town C Mortgage	$     414,692	$   414,692	$   414,692
Husb	E Street, Town C  mortgage	$     186,815	$   186,815	$   186,815
Husb	E Street, Town C CGT*	$     48,886	$Nil (s 75(2) factor)	$Unknown
Husb	D Street, Town C CGT*	$     37,000 (estimated)	$Nil	$Nil
Sub-total:	$   837,199 (+ E Street, Town C CGT)
Net tangible assets:	$1,001,098 (Less E Street, Town C  CGT)

Superannuation Assets:

Owned by	Fund	Husband’s figure:	Wife’s figure:	My figure:
Husband	Super Fund G	$    396,414	$     396,414	$     396,414
Wife	Super Fund G	$    248,564	$    248,564	$     248,564
Total super:	$     644,978

Husband’s mortgage redraw:

1. On 26 April 2017, the Husband drew down $9,743 from the mortgage over the E Street, Town C property.  He concedes that the sum of $6,490 should be notionally added back to the Balance Sheet whereas the Wife seeks that the whole amount be added back.

2. There is no evidence in the Husband’s trial affidavit as to how he applied those funds. In his written submissions of 12 April 2019 he initially contended that he had applied $3,500 towards an ATO debt, $5,000 towards legal costs and the balance towards accountancy fees.  In his later written submissions filed 20 May 2019, he disclosed as annexure “H14” a statement from the ATO dated 12 April 2017, disclosing an overdue tax debt at that time of $3,244.15. 

3. The Wife objects to the court receiving that statement.  She contends that the document only becomes relevant if the court accepts the Husband’s submission that he applied the redraw moneys to pay it.   But as his affidavit is silent on this issue, the Wife complains that it is merely “evidence from the bar table”.  She further submits that the ATO statement was “not disclosed prior to the hearing and the Wife has had no opportunity of meeting it”. 

4. I uphold the Wife’s objections.  There is no “evidence” whatsoever that the Husband paid the debt referred to in that ATO statement.  On the balance of probabilities, I am unable to infer that he did so from the redraw moneys. 

5. Accordingly I will notionally add back the full amount of the redraw.[4]

E-trade account:

[4] Neither party contended that the redraw be instead taken into consideration in the context of post-separation contributions.

1. The Wife seeks to notionally add back to the Balance Sheet the sum of $14,045, being the amount held in the e-trade account at separation which was retained solely by the Husband.  The Husband opposes this.

2. The Husband’s trial affidavit is silent as to receipt, or expenditure of, these moneys.  The only direct evidence on point comes from the Wife, whose trial affidavit asserts that the e-trade account balance at separation was $14,045.  Her affidavit annexes relevant documents from ‘E-trade Australia’ which reveal that on 3 March 2015 they paid the Husband the sum of $14,000 – essentially clearing out the account.

3. The Husband has attempted to cure this evidential defect in his written submissions.  In his first written submissions he submitted that he had applied $8,500 of that money towards Visa Card debt, the balance of $5,500 being applied towards living expenses.  In his second written submissions he then asserted that he had applied $13,746 towards Visa Card debt.  Various credit card statements, with handwritten annotations, were annexed to support that version of events.  Notably, the husband’s trial affidavit had not deposed to the quantum of the Visa card debt at separation nor had his Financial Statement disclosed that the Husband had ever “cashed in”, or disposed of, the e-trade account.[5]

   [5] See Part M thereof

4. The Husband’s case is that the version of events set out in his written submissions (and annexures) “is credible, logical, and open for the Court to find.”  The Wife disagrees.  She formally objects that the Husband’s written submissions (and annexed documents) are not evidence per se, but rather “evidence from the bar table”.

1. I uphold the Wife’s objections. 

2. In the circumstances, while the e-trade monies were received by the Husband some five (5) years ago, I will notionally add those moneys back into the Balance Sheet.[6]

Moneys held by the Wife for her daughter F:

[6] See footnote 4

1. At separation, the Wife was holding $25,743 in an account for her daughter F, the Mother’s child to a previous relationship.  Those moneys represented child support paid by F’s biological father during the marriage.  The Wife always kept those moneys in a separate account for F in the names of herself and F’s father as trustees; the Husband did not have access to that account. 

2. The Husband contends that such moneys should be notionally added back as an asset in the Balance Sheet. The Husband’s trial affidavit deposed that “to the best of my knowledge” the account had never in fact been utilised for F’s benefit during the parties’ relationship.  Inferentially, his case is that the Husband and Wife supported F throughout.[7] 

   [7] Husband’s trial affidavit, para 33.

3. The Wife’s trial affidavit admits that the account has been depleted since separation, with the moneys being used to meet F’s school fees and to buy her a motor vehicle.  It is silent as to whether or not the account had been accessed during the marriage.

4. If as the Husband asserts the account had never been accessed for F’s benefit during the marriage, then his argument for an add-back would arguably be stronger.  But the Husband’s evidence in this respect is couched in general terms only and, frankly, I find it inherently implausible.  Both F’s father, and the Wife, were specifically keeping the account to meet F’s expenses. It is illogical that the account would have been left untouched during the marriage.  Further, given the period of the marriage the amount of $25,000 would appear unusually modest if that represented the full amount deposited over the years (presumably with accumulated interest).

5. I consider it more likely than not that the account was in fact accessed during the relationship for F’s benefit.  The moneys were earmarked for F’s benefit.

6. In my view, though the account was no doubt “property”, it is not appropriate to notionally add those moneys back to the Balance Sheet given the purpose for which they were held – and in fact applied.  However, the Husband’s support of F during the marriage is relevant in the context of s 75(2)(o): Robb & Robb (1995) FLC 92-555.

E Street, Town C CGT:

1. The E Street, Town C property is an investment property which the Husband brought into the relationship.  The Husband seeks orders that it be sold and the parties are in dispute as to whether any associated CGT should be included as a liability in the Balance Sheet.

2. Annexure “D” to the Husband’s trial affidavit is a letter under the hand of Ms H JP from “J Accountants” dated 6 October 2017.  It estimates a CGT liability on sale of $48,886 based on the Husband’s FY 2016 taxable income.  The Wife contends that the letter is inadmissible as to form.  Her objection must be upheld as the letter is not sworn; it does not disclose the expert qualifications of the author; there are no calculations provided to substantiate the CGT calculation.

3. But the Wife goes on to submit that CGT should be entirely disregarded as a Balance Sheet issue, and instead that it should be treated as a section 75(2) factor only.  The Wife’s reasoning is that the Husband is only seeking to sell the property now so that the Wife has to share in the CGT liability.  She deposes that he previously threatened to sell the property purely so as to make her share in the CGT.

4. The Husband disputes that his sale is motivated by malice. 

5. In the end, I consider the Husband’s personal motivations for sale to be irrelevant.  He is proposing that the property be sold and this is perfectly reasonable.  The Wife is not seeking to retain the property herself.  She can hardly resist him selling it if he wants to.

6. Even if the Husband was acting in a deliberate way as to crystallise the otherwise latent CGT liability, I would not consider this to be “wasteful” in a Kowaliw sense.[8]  His actions are not wanton, reckless or negligent.  An owner of property is entitled to sell it.  Indeed, but for the Wife’s caveat lodged over the property post-separation, it may have already been sold by now.

   [8] Kowaliw & Kowaliw (1981) FLC 91-092, a decision of Baker J which has since been applied in a subsequent line of authorities

7. The orders I make will expressly provide for the timely sale of the E Street, Town C property; the sale proceeds can be set aside and then applied towards the CGT debt. The parties can thus share in that liability.  In my view such a result is the very manifestation of “justice and equity”.

8. I will therefore include CGT as a liability in the Balance Sheet, but in an amount unknown.  Further, as my orders will provide for a sale of the property, there will also be some sale costs that will have to be deducted.  Those amounts are also unknown but should be reasonably modest.

CGT Liability for D Street, Town C:

1. This was an investment property purchased by the parties in September 2010 and it was rented out until April 2018 at which point the Husband moved into the property himself.  He plans to stay living there into the foreseeable future and both parties’ proposed orders provide that he retain that property.

2. Based on the same inadmissible letter from his accountants referred to earlier, the Husband seeks to include the estimated CGT liability on sale of $37,000.[9]  

   [9] Annexure “D” to Husband’s trial affidavit.

3. I consider it inappropriate for me to include this as a liability in the Balance Sheet given the uncertainty as to when the home will ever be sold: Rosati & Rosati (1998) FLC 92-804. Any potential CGT liability (in an unknown amount) will instead be taken into consideration pursuant to s 75(2).

Plumbing repairs for D Street, Town C property:

1. The Husband’s trial affidavit deposes that the D Street, Town C property requires $4,268 worth of drainage repairs.  He annexes a quotation from “K Plumbing” in that amount dated 18 January 2015, seemingly generated just after separation. 

2. The quotation itself is not sworn evidence.  The Husband has never had the work carried out.  The single expert valuer did not take such repair costs into account, apparently because the Wife objected to him doing so.

3. I will not allow for such repair costs in the Balance Sheet.  I take this view because:

   (a)The cost of the repairs is inadmissible as to form and is significantly out of date;

   (b)The Husband is retaining the property anyway.  The repairs have not been a priority for him to date and thus the timing of any such repairs is entirely unknown;

   (c)Carrying out the repairs may potentially increase the value or saleability of the home; it may potentially be a relevant expense for CGT purposes later on when the home is sold.  In short, there is potential for the Husband to derive a financial advantage from carrying out the repair work if he ever does so.     

Step 2 – Is it “just and equitable to make a property settlement order?

1. The parties agreed that it would be “just and equitable” to make a property settlement order in this case, as specifically noted in the orders of 28 March 2019.

2. The “just and equitable” requirement is readily satisfied here.

Step 3 – Identifying and assessing each party’s respective contributions:

1. The parties agree that their respective contributions during the relationship were equal.  But there remains a dispute between them concerning what weight (if  any) should be applied in respect of:

   (a)the Husband’s greater initial financial contribution;

   (b)the Husband’s inheritance received during the relationship; and

   (c)the respective post-separation contributions of the parties.

2. I will assess contributions in a broad-brush way by reference to the parties’ combined assets - including their superannuation interests.[10]  I consider this appropriate because, although there was a disparity in the respective initial superannuation balances at commencement of the relationship, the relevant superannuation balances at the time were both relatively modest. 

Initial Contributions:

[10] See Norbis & Norbis (1986) FLC 91-712

1. At commencement of cohabitation in mid-2002, each party introduced assets.

2. Initial contributions favour the Husband.  The parties agree that the Husband’s assets amounted to $182,547 and the Wife’s assets amounted to $154,000. 

3. The Husband’s assets were made up of $143,644 in non-superannuation property, comprised of equity in the E Street, Town C property and in an investment property at Town L.  He also had motor vehicles, cash, and other items.  His superannuation amounted to $38,903.[11]

   [11] The super balance comes from the Husband’s trial affidavit, para 10(h)

4. The Wife’s assets were made up of equity in a real property, some moneys she was to receive by way of property settlement, a motor vehicle, furniture and personalty totalling $121,394.  She had superannuation of $22,250.[12]

Contributions during the relationship:

[12] The super balance comes from the Wife’s trial affidavit, para 29

1. Both parties worked as health care workers for the Employer M throughout. 

2. During the relationship, the parties bought and sold various real properties.  As a general statement, they made equal contributions towards any joint loans, but otherwise left their bank accounts largely, if not entirely, separate.  The Husband retained the income, and paid the expenses for, his own investment properties which were negatively geared throughout. 

3. Each party made significant parenting and homemaking contributions as the parties structured their work arrangements around the care of the children – being the Wife’s daughter F and the parties’ son X born in 2005.  The Wife took twelve (12) months’ maternity leave after X was born and thereafter the parties worked “opposite rosters” so as to manage their child-care and home responsibilities.

4. The Husband made salary sacrifices into his superannuation throughout the relationship, causing his superannuation to grow much more significantly than the Wife’s. 

5. In 2004, the Husband did receive a modest inheritance of around $17,000.[13]

Post-Separation Contributions:

[13] This was the year in which the Wife received $24,500 by way of property settlement from her previous partner (F’s father).  The parties treated that particular sum as being part of the Wife’s “initial” contribution and so I have adopted the same approach

1. At separation, the parties had the following mortgage balances:

   (a)Husband’s investment property at Town L - $244,386;

   (b)Husband’s investment property at E Street, Town C - $185,658;

   (c)Joint investment property at D Street, Town C - $428,788; and

   (d)Former matrimonial home at B Street, Town C - $257,943.

2. The Wife remained living at B Street, Town C.  The Wife’s mortgage repayments were $335 per week, which she could comfortably afford. 

3. The Husband initially lived in rented accommodation.  

4. He did make some financial contributions towards B Street, Town C, paying the Council Rates for that property in the second half of 2015.  The Husband also continued to meet the outstanding loan repayments for the installation of solar panels at B Street, Town C, in the amount of $7,060.  Regrettably the Husband’s trial affidavit had inaccurately deposed that he paid to install solar panels at a cost of $7,060 but this is inaccurate and I am satisfied from annexure “H16” to the Husband’s submissions of 20 May 2020 that he repaid loan repayments in that amount.  Although the Wife objects to annexure “H16” I propose to admit it into evidence and act upon it - noting that the Husband’s trial affidavit had deposed to the $7,060 figure (albeit inaccurately).

5. The Husband continued to pay the Town L and E Street, Town C  mortgage repayments.  The investment properties were negatively geared; the Husband gained various tax advantages from this arrangement. 

6. The D Street, Town C property became problematic.  The Husband’s position was that each party should continue to share equally in the income and in the mortgage repayments and other expenses.  On that basis he continued to pay his half.

7. In respect of the D Street, Town C property, the mortgage interest alone equated to the total rental income without any allowance for the various other holding costs.[14]  That said, negative gearing conferred various tax benefits upon both parties.

   [14] See exhibit 3 and annexure “H10” to the Husband’s submissions filed 20/05/19

8. In July 2017 the Wife stopped paying her half of the mortgage for D Street, Town C.  Arrears began to accrue.  The Husband ended up taking occupation of the property himself in April 2018, paying out the Wife’s arrears of $6,616 and negotiating with the mortgagee in circumstances where the parties were under some pressure from the bank.  He thereafter made all mortgage repayments, as well as paying the other costs for the property including Rates, insurances etc.  The Husband’s mortgage repayments were $568 per week to the Wife’s $335 at B Street, Town C.[15]

   [15] Item 21 of the Financial Statements filed 06/03/19 and 07/03/19 respectively

9. In his trial affidavit the Husband deposed that, upon moving into D Street, Town C, he also had to pay $13,925 to repair damaged caused by the previous tenant, including replacing various items.  He corroborated this with documents annexed to his submissions of 20 April 2020, but the Wife objected to such documents being tendered on the basis they had not been previously disclosed.  I overrule that objection.  The Husband took possession; he has personal knowledge of what he spent on the property and the documents speak for themselves.  They do no more than corroborate what the Husband’s trial affidavit deposes to.

10. I am not sure why the Wife stopped paying her half share of the mortgage for D Street, Town C.  On the face of her Financial Statement, she had the capacity to keep paying it.  By returning to occupation of the property and taking over the mortgage himself, the Husband preserved the value of the asset. 

11. The mortgage repayments he has had to make are significantly higher than the mortgage repayments that the Wife has had to make.  That said, I am conscious that the Husband has had sole use of the property since he moved back in.

12. On the Wife’s application, I notionally added back to the Balance Sheet the full amount of the Husband’s E Street, Town C mortgage re-draw and the Husband’s unexplained expenditure of the e-trade moneys.   Having done so, in my view the Husband should be given an appropriate contributions credit for taking over the D Street, Town C mortgage repayments, particularly for meeting the Wife’s outstanding arrears.  He deserves appropriate credit for having to negotiate with the mortgagee and for moving into the property and taking over the much greater expenses involved.  He deserves credit for the significant repair costs he incurred and for continuing to pay off the solar panel loan for B Street, Town C.

13. By agreement between the parties, the property at Town L was sold and the proceeds invested in trust. There was initially a debate between the parties about whether the Husband’s CGT liability to the ATO should be paid out of the sale proceeds but that issue was sensibly resolved by way of consent orders providing for such payment. 

14. In relation to the E Street, Town C property, it became untenanted for a period and the Husband has been able to source a tenant for the property on a month-to-month basis.  It will be sold pursuant to the orders I am making.

15. The Husband has continued to salary sacrifice into his superannuation and the greater balance he now holds is available for division between both parties.

16. In relation to parenting, the parties shared equally in the care of X after separation until around December 2018 at which time X decided to stay with his Mother.  He has hardly spent any time with the Husband since then.  The Wife has thus made the much greater parenting contributions in more recent times.

17. The Husband has been paying significant child support to the Wife.

Overall assessment of contributions:

1. The Husband’s overall financial contributions are superior.  These include his salary sacrifices into superannuation throughout.  He also provided support for the child F: Robb & Robb (supra). 

2. Post-separation the Husband has made the more significant financial contributions.   I have already added back into the Balance Sheet various moneys that the Husband has had the sole benefit of since separation.  I must not double-count those moneys.

3. Post December 2018 the Wife has made much more significant parenting contributions. 

4. The Wife’s financial contributions have also been significant throughout.

5. Weighing up all of these matters, I consider that the Husband’s contributions-based entitlement is 54% to the Wife’s 46%.

Step 4 – Identifying and assessing the relevant “future” factors pursuant to s 75(2), s 79(4)(d), s 79(4)(f) and s 79(4)(g):

1. The parties are of similar ages and undertake similar work roles.  Historically their incomes have been broadly similar.

2. The Wife was receiving worker’s compensation payments at the time of trial, said to be a result of exposure to various traumatic events at work.  Inferentially these occurred post-separation.  In her work role the Wife would no doubt face some confronting scenes at times, as would the Husband.   At the hearing date the Wife deposed that she was intending to return to work on a part-time basis only.  However, I have no medical evidence before me as to any disability from which she suffers, nor do I have evidence as to any associated level of work-related impairment.  In my view it would not be appropriate for me to give any significant weight to this matter absent medical evidence, particularly where the Wife has such a consistent work history. 

3. The parties are in the fortunate position of being able to divide fairly substantial property.  In my view, each of them will be able to maintain a reasonable standard of living into the future. 

4. The Wife has the ongoing primary care of X.  There is potential for that to change however at this stage it seems unlikely.  But I am mindful that X is not a young boy anymore; he is 15 years old.

5. Each party can property support himself or herself, and each party is properly providing for X’s upkeep.

6. The duration of the relationship has not in any serious way affected the earning capacity of either party.  Apart from having one year off around the time of X’s birth, the Wife’s career was unimpeded by the marriage. 

7. The Court is mindful of the need to protect both parties in their ongoing parenting roles, particularly the Wife.

8. Each of the parties has re-partnered.  The Husband’s partner is a widow apparently with a young child although they do not live together.  The Husband provides his partner with some financial assistance from time to time.

9. In the Wife’s case, her new partner is a medically retired public servant and she does not live with him.

10. Neither party contends that the other party’s new partner has any particular relevance in the s 75(2) context.

11. The Husband will be paying significant ongoing child support to the Wife and I note that his child support liability has recently increased as a result of the recent Capital Gain from the sale of Town L property being included in his taxable income.   This will be a temporary “spike”.

12. The parties have historically shared in X’s costs equally. The Wife however expresses concern that she will have to pay X’s private school fees on her own going forward ($7,000 per annum). The Wife’s trial affidavit in this respect is not responded to in the Husband’s submissions.  The Husband merely observes that he is paying ample financial support for X and that X’s living arrangements are likely to be “fluid”.  I can only infer from his submissions that he is conceding that the Wife will be paying the school fees.

1. The Wife has the benefit of living in a CGT-free home at B Street, Town C, which she is retaining as part of the property division.  The Husband will assume a latent potential CGT in relation to D Street, Town C.

2. When considering any adjustments for future factors, I need to be mindful of each party’s contributions-based entitlement as a starting point.  As the E Street, Town C property is being sold, I will put that property to one side including the mortgage, and the associated sale costs and CGT.  Though the parties agree that its value is $350,000 the fact is that the market will determine its ultimate value and it will be necessary for my orders to adopt a formulaic approach.  

3. Putting E Street, Town C to one side, the balance of the combined net assets come to $1,482,891.  The Husband’s 54% contributions-based entitlement equates to $800,761 while the Wife’s 44% equates to $682,130.

4. The Wife would be retaining B Street, Town C (net value $439,308); her motor vehicle ($10,000) and her superannuation ($248,564) which have a combined value of $697,872. 

5. The Husband would be retaining D Street, Town C (net value $135,308); the trust moneys ($190,035); shares ($2,174); trailer and motorbikes ($26,100); Motor Vehicle 1 ($9,000); bikes and paddleboard ($1,400); paintings ($800); Mortgage re-draw ($9,743); E-Trade moneys (14,045) and superannuation ($396,414).  These have a combined value of $785,019.

6. Thus, pending the sale of E Street, Town C, the wife’s asset holdings exceed her contributions-based entitlement by $15,000 in round terms. But when E Street, Town C is sold she would then be entitled to offset that amount against her share of the net sale proceeds of that property.  My best estimate is that upon sale of E Street, Town C, the Husband will likely have to make a modest cash payment to the Wife.

7. Overall, I consider that a further adjustment to the Wife of 2% of the net value of the combined assets would be appropriate on account of future factors.  This equates to a figure upwards of $30,000, which more than covers X’s remaining three (3) years of school fees as well as incorporating a modest capital sum on account of her ongoing primary care of him – care which has not of itself historically impacted her earning capacity.  Moreover, the effect of my orders is that the Wife’s 2% will be received by her as “cash” which is of more immediate benefit to her than taking it in the form of superannuation.[16]

   [16] I am also mindful that the Husband is carrying forward any latent CGT liability for D Street, Town C.

Step 5 – Considering whether my proposed order is “just and equitable”:

1. It follows from the above analysis that, in my view, a just and equitable outcome would see the Husband retaining 52 % of the combined assets and the Wife retaining 48%.

2. Neither party seeks a super splitting order.  The Husband clearly has a long term interest in building up his superannuation as much as possible. 

3. The practical consequence is that the Wife will retain more of the non-superannuation assets than the Husband will.  The E Street, Town C proceeds will be divided in the same percentage so that the parties will share equitably in the fruits of that property.  In my view the Husband should maintain that property and meet the associated expenses pending its sale.  The property has always been in his name and he will gain whatever tax advantages accrue to him on account of such payments.

4. I consider this to be a just and equitable outcome.

Conclusion & Orders:

1. For these reasons, the court makes the orders which are set out at the commencement of the judgment.  The orders provide for a formulaic division and for payment out of the CGT in due course.  They otherwise reflect the agreed asset holdings going forward.

I certify that the preceding one hundred and six (106) paragraphs are a true copy of the reasons for judgment of Judge Betts

Associate: 

Date: 28 May 2020