Mantel and Mantel
[2020] FamCA 157
•31 March 2020
FAMILY COURT OF AUSTRALIA
| MANTEL & MANTEL | [2020] FamCA 157 |
| FAMILY LAW – PROPERTY SETTLEMENT – Where parties agreed it would be just and equitable for their property interests to be adjusted – Where husband received significant inheritance from his father immediately after separation – Whether different assets should be treated as forming part of separate pools – Whether assets in a discretionary family trust and a discretionary testamentary trust comprised of assets accumulated by the husband’s father are to be regarded as property of the marriage – Where husband had fiduciary obligations as trustee to administer both trusts in accordance with his father’s wishes – Whether a capitalised value should be applied to husband’s defined benefit disability pension payable through superannuation – Whether defined benefit disability pension should be considered separately from other assets in the matrimonial pool – Contributions in a long marriage treated as equal – husband to retain inheritance received from his father – wife to receive significant adjustment to reflect husband’s inheritance and financial resource to husband represented by defined benefit disability pension |
| Family Law Act 1975 (Cth), ss 75, 79, Part VIIIB Family Law (Superannuation) Regulations 2001 (Cth) r 42 |
| Alekovski & Alekovski (1996) 135 FLR 131; (1996) FLC 92-705 Coghlan & Coghlan (2005) 193 FLR 9; (2005) 33 Fam LR 414; (2005) FLC 93-220; [2005] FamCA 429 Davey v Lee (1990) 13 Fam LR 688 Windmann & Windmann [2017] FamCA 602 |
| APPLICANT: | Mr Mantel |
| RESPONDENT: | Ms Mantel |
| FILE NUMBER: | MLC | 4485 | of | 2018 |
| DATE DELIVERED: | 31 March 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | McEvoy J |
| HEARING DATE: | 5 June 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Wraith |
| SOLICITOR FOR THE APPLICANT: | Peter Szabo Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr Guzzo |
| SOLICITOR FOR THE RESPONDENT: | James Partners Lawyers Pty Ltd |
Orders
The husband transfer his interest in the real property situate at and known as B Street, Suburb C in the State of Victoria (“former matrimonial home”) to the wife, at her expense and free of all encumbrances.
Within 30 days of the date of these orders the husband cause to be paid to the wife the sum of $220,000.
Within 90 days of the date of these orders the husband cause to be paid to the wife the sum of $300,000.
The wife make available for collection by the husband at a mutually convenient time within 30 days of the date of these orders (if not collected earlier) the following items:
(a)antique corkscrew owned by husband’s great grandfather (last located in the lounge room dresser);
(b)painting of woodland scene (last located on the lounge room wall);
(c)two ivory handled bread and butter knives owned by husband’s grandmother (kitchen cutlery drawer) if able to be located;
(d)plough seat owned by husband’s grandfather (last located garage or deck);
(e)green and yellow trike (husband’s childhood toy) (last located under house);
(f)blue scooter (husband’s childhood toy) (last located under house);
(g)husband’s photo albums (two albums);
(h)any framed photo of the husband’s grandparents or father;
(i)the entire contents of the garage including the train room, workshop wall panels and lighting fixtures with the exception of Christmas decorations and outdoor furniture;
(j)all tools (not including Mr Mantel’s planer);
(k)all hardware items (not including Mr Mantel’s timber);
(l)all model train items;
(m)atom motorised edger;
(n)husband's personal items from study such as photos, certificates and career keepsakes;
(o)copy hard drive for husband’s home office computer;
(p)DVDs – certain titles and any other work related DVDs.
The wife retain for her sole benefit:
(a)$180,000 paid to her by the husband by way of partial property settlement pursuant to the orders of this Honourable Court made 19 December 2018;
(b)all monies contained in bank or like accounts in her sole name;
(c)her motor vehicle;
(d)the contents of the former matrimonial home save for the items to be collected by the husband pursuant to paragraph 4 herein;
(e)her superannuation entitlements; and
(f)the sum of $520,000 to be paid to her pursuant to orders 2 and 3.
Save for his obligation to pay the wife the sum of $520,000 as per orders 2 and 3, the husband retain for his sole benefit:
(a)the real property situate at and known as D Street, E Town in the State of Victoria;
(b)all monies contained in bank or like accounts in his sole name;
(c)his shares;
(d)his F Investment investment;
(e)his motor vehicle, caravan and boat;
(f)all monies owed to him by his sons, Mr X Mantel and Mr Y Mantel;
(g)the items to be collected by him from the former matrimonial home pursuant to order 4;
(h)his superannuation entitlements; and
(i)his entitlements arising from the death of his father, Mr G Mantel.
Each party otherwise retain to the exclusion of the other all property in the possession of such party and be solely liable for and indemnify the other against any liability encumbering any such item of property.
IT IS NOTED:
A.It is the parties’ intention that pursuant to s 81 of the Family Law Act these orders will finally determine the financial relationships between the parties to avoid further proceedings between the parties.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mantel & Mantel has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 4485 of 2018
| Mr Mantel |
Applicant
And
| Ms Mantel |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to this proceeding were married for some 34 years. They separated on or about 11 March 2017. In issue in the proceeding is how various assets and interests of the parties, deriving from various sources, ought to be considered for the purposes of matrimonial property division under s 79 of the Family Law Act 1975 (Cth) (“the Act”).
The relevant assets and interests of the parties can usefully be grouped into four categories. First, there are those assets which are unequivocally property of the parties to the marriage or either of them which were accumulated by the parties during the course of the marriage. Secondly, there are those assets, again unequivocally accepted to be property of the parties to the marriage or either of them, inherited by the husband absolutely following the death of his father shortly after separation. Thirdly, there is the issue of the treatment to be given to a family trust and a testamentary trust deriving from the husband’s father when considering the appropriate division of matrimonial property. These two trusts raise the question of whether the relevant trust assets are properly characterised as property divisible between the parties for the purposes of s 79 of the Act and, if not, the extent to which they are relevant to the just and equitable division of the property of the parties. The final category of interest is the husband’s disability pension entitlements under the Super Fund 1 Scheme.
For the reasons which follow there will be orders broadly in the terms sought by the husband, save that rather than a further payment to the wife of $220,000, as the husband has proposed, there will be a further payment to the wife in the sum of $520,000. The additional $300,000 payment to the wife over and above what the husband has proposed is to reflect the very substantial benefit to the husband represented by his disability pension entitlement and the financial resources available to him through the family trust and the testamentary trust. The family trust and the testamentary trust are not properly to be characterised as property divisible between the parties for the purposes of s 79 of the Act, but they are relevant to the just and equitable division of the property of the parties insofar as they represent financial resources available to the husband.
Background
The parties married in 1983. There are two adult children of the marriage who are themselves both married with children.
The husband is now aged 58 years. He is retired, having joined a public service in January 1978 at the age of 16. The husband suffers from anxiety, depression, and post-traumatic stress disorder for reasons relating to his service. He retired in September 2017 due to ill health. He has not worked since, and is unlikely to be able to undertake gainful paid employment again. Since September 2017 the husband has been on a lifetime permanent disability pension.
The wife is now aged 59 years and works four days per week as an administrative assistant. She says she is in reasonable to good health, and spends one day per week caring for grandchildren.
In 1982, prior to their marriage, the parties purchased a property in H Town for something in the region of $32,000 from their joint savings.
In 1984 the parties’ first son was born, and at about that time the H Town property was sold for approximately $40,000.
In 1986 the parties had a second son, and a property in Suburb C was purchased for $160,000 (“the former matrimonial home”). The former matrimonial home is now valued at $1,415,000.
On 20 September 2002 the husband’s father, Mr G Mantel, created the Mr G Mantel Family Trust. This is the family trust which has already been mentioned. It will be necessary to return to the terms of this trust and the value of the assets held by the trust.
On 28 April 2006 the husband’s father made his last Will. It will also be necessary to return to the subject of this Will, and in particular to the terms of the Mr Mantel Testamentary Trust which the Will created upon the husband’s father’s death, and the value of the assets held by this trust. This is the testamentary trust which has already been mentioned.
In 2015 the wife reduced her working week, apparently with the husband’s agreement, to a four day week in order to look after the parties’ grandchildren.
On or about 12 March 2017 the parties separated and the husband left the former matrimonial home. The wife has remained living in the former matrimonial home since that date.
On 13 March 2017, the day after the husband left the former matrimonial home, the husband’s father passed away. Upon the death of the husband’s father, and leaving to one side for the moment the husband’s entitlements under the testamentary trust, the husband inherited absolutely a substantial F Investment bond and the modest proceeds of a bank account, together with a substantial parcel of shares purchased by the husband’s father during his life and registered either jointly with the husband or in the husband’s sole name.
In May 2018 the husband commenced to live with a new partner at her home in J Town. In the period since the parties separated until May 2018 he had lived at various locations throughout the State in his caravan.
In September 2018 the husband purchased a property in country Victoria (“the country property”) for $1,250,000 plus stamp duty and other expenses. The husband and his new partner commenced living at that property in November 2018 and apparently continue to do so.
History of proceedings
On 26 April 2018 the husband commenced proceedings in this Court seeking orders for a final property settlement.
On 27 July 2018 the wife filed a Response to Initiating Application seeking that there be a property settlement pursuant to s 79 of the Act, spousal maintenance and ancillary orders.
On 12 October 2018 the wife filed an Application in a Case, together with a supporting affidavit, seeking that the husband be restrained by injunction from disposing of or dealing with any property in which the parties had an interest, the husband pay monies by way of interim property settlement, and ancillary orders.
On 19 December 2018 orders were made by consent that the husband pay $180,000 by way of interim property settlement, and that the wife’s Application in a Case filed 15 October 2018 be otherwise dismissed.
On 15 April 2019 the husband filed an Amended Initiating Application for Final Orders, together with a supporting affidavit and Financial Statement. The Amended Initiating Application sought orders that he transfer his interest in the former matrimonial home to the wife, that the wife retain for her sole benefit the $180,000 partial property settlement payment, all monies in bank accounts in her sole name, her motor vehicle, the contents of the former matrimonial home save for certain specified items requested to be retained by the husband, and her superannuation entitlements. The husband sought that he retain for his sole benefit the country property, all monies in bank accounts in his sole name, his shares, an investment bond, his motor vehicle, caravan and boat, all monies owed to him by his sons, his superannuation entitlements, and his entitlements arising from the death of his father. It may be observed that this proposal of the husband’s has an air of unreality about it. It would have left him in a substantially better position than the wife after a 34 year marriage and two children. At the conclusion of the trial the husband moderated his position, proposing that he pay the wife an additional $220,000.
On 17 May 2019 the wife filed an Amended Response to Final Orders, supporting affidavit and Financial Statement. She sought orders that the husband transfer his interest in the former matrimonial home to her, that she retain for her sole benefit the $180,000 partial property settlement payment, all monies in bank or like accounts in her sole name, her motor vehicle and the contents of the former matrimonial home. The wife also sought a further sum or assets from the total net asset pool so that in total she receive approximately 35-40 per cent of the total net asset pool (including the husband’s inheritances, by which she also means the assets of the family trust and the testamentary trust) and 50 per cent of the combined superannuation entitlements.
It will be apparent therefore that the parties are in dispute as to what share the wife should receive of the balance of the net asset pool, including the husband’s inheritances, as well as his superannuation entitlements. They are also in dispute about whether the assets of the family trust and the testamentary trust are properly to be regarded as property of the husband such that they can also be the subject of an order under s 79 of the Act.
Material relied upon
The husband relied upon the following documents:
a)Amended Initiating Application filed 15 April 2019;
b)Affidavit of Mr Mantel filed 15 April 2019;
c)Financial Statement of Mr Mantel filed 15 April 2019;
d)Affidavit in reply of Mr Mantel filed 24 May 2019;
e)a binder of original documents containing the financial records of Mr G Mantel which was tendered for identification purposes, together with a 2018 PAYG statement from ESSSuper;
f)an outline of case filed 29 May 2019; and
g)written closing submissions filed 4 June 2019, together with a summary of the authorities relied upon.
The wife relied upon the following documents:
a)Affidavit of Ms Mantel filed 17 May 2019;
b)Amended Response of Ms Mantel filed 17 May 2019;
c)Amended Financial Statement of Ms Mantel filed 17 May 2019;
d)an Australian Super superannuation balance dated 3 June 2019;
e)an outline of case dated 31 May 2019;
f)written closing submissions dated 4 June 2019, together with a supplement entitled “Legal Submission”.
The statutory regime and general legal principles
Orders under s 79 of the Act altering the property interests of parties may only be made if the Court is first satisfied, pursuant to s 79(2), that it is just and equitable to make such orders. The Act then identifies in s 79(4) the matters the Court must take into account in considering what order, if any, should be made (see Stanford v Stanford (2012) 247 CLR 108 at [22], [35]). While those two inquiries are not to be conflated (see Stanford & Stanford at [35], [40], [51]), it is permissible for the s 79(4) factors to inform the inquiry under s 79(2) (see Bevan & Bevan (2013) 279 FLR 1 at [83]-[89], [163], [169], [171]-[172]).
It is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying the existing legal and equitable property interests of the parties. It must not be assumed that the parties’ rights to or interests in marital property should be different from those that then exist or that a party has the right to have the parties’ property divided by reference to considerations set out in s 79(4) of the Act (see Stanford & Stanford at [37]-[40], [50]). Commonly, however, it will be just and equitable for the parties’ property rights to be altered because the breakdown in their relationship will end their fiscal unity and deprive them of the common use of their property (see Stanford & Stanford at [42]; Bevan & Bevan at [68]-[70], [82], [164]-[165]).
If and once determined that it is just and equitable for the property interests of the parties to be altered, the process of evaluating the proper orders to make is dictated by the factors enumerated within s 79(4) of the Act. The Court must necessarily identify and assess the parties’ contributions within the meaning of ss 79(4)(a)-(c) and then take account of the relevant matters referred to in
ss 79(4)(d)-(g) of the Act, which include the matters referred to in s 75(2) of the Act, so far as they are relevant. The process of property adjustment calls for a discretionary and holistic value judgment (see Quinn v Quinn (1979) FLC 90-677 at 78,615; Garrett v Garrett (1984) FLC 91,539 at 79,359, 79,372; Davey v Lee (1990) 13 Fam LR 688 at 689).
The evidence
Save for certain discrete matters, much of the evidence is relatively uncontroversial.
The relevant assets and interests
The husband deposes to the value of the assets of the marriage, as well as his superannuation interests, the value of his inheritance from his father and the value of the assets in the family trust and the testamentary trust in his trial affidavit, in his reply affidavit, and in his financial statement. However in his outline of case dated 29 May 2019 the husband provides, in the form of Annexure A, a more complete statement of these assets and their then current market value. The husband conducted his case at trial on the basis of the assets and valuations in Annexure A.
At the commencement of the trial the wife had a substantially similar, but not identical, summary of the relevant assets and liabilities at Schedule A of her outline of case. By the end of the trial, however, most of the differences between the parties in relation to the relevant assets and liabilities had converged, and it is now simplest to proceed on the basis of the assets and liabilities listed in Annexure A of the husband’s outline of case. The limited areas where there are differences between Annexure A and the wife’s summary of the relevant assets and liabilities will be explained as necessary. It is to be noted that counsel for the wife did not address, in terms, the minor areas of difference in the wife’s written or oral final submissions.
Annexure A, with certain redactions, is reproduced below.
ANNEXURE A
Marriage Assets Item Value$ Comment Date Title/Owner Property Joint Suburb C 1,415,000.00 5/12/2018 Banking H T Bank ••••••15 1,851.62 25/05/2019 H T Bank ••••••09 9.70 25/05/2019 H T Bank ••••••71 20,023.85 25/05/2019 H T Bank ••••••49 85,461.82 25/05/2019 H CBA CDIA •••••58 1,000.39 25/05/2019 H CBA CDIA •••••44 6,156.72 25/05/2019 H V Bank ••••19 41.00 25/05/2019 W T Bank •••••57 2,547.88 N/K 30/06/2018 W T Bank •••••s1 1,053.01 N/K 30/06/2018 W V Bank •••••45 Everyday 16.65 N/K 6/06/2018 W V Bank •••••89 Savings Maximiser 66,211.94 N/K 30/06/ 2018 W Interim Property Settlement payment 180,000.00 25/01/2019 Shares H ANZ (1195) 33,268.80 24/05/2019 H ARG (1316) 14,597.00 24/05/2019 H BHP (250) 9,362.50 24/05/2019 H CBA (300) 23,454.00 24/05/2019 H IFL (324) 1,717.20 24/05/2019 H RIO (152) 15,390.00 24/05/2019 H SUN (2201) 30,593.90 24/05/2019 H TLS (600) 2,172.00 24/05/2019 H WBC (328) 9,223.36 24/05/2019 H WES (155) 5,832.65 24/05/2019 H WOW(300) 9,810.00 24/05/2019 H COL (155) 1,926.65 24/05/2019 Managed Funds H F Investment Investor Account ••••55 40,971.92 24/05/2019 H S Bank **••••••30 36,660.91 23/05/2019 Outstanding loans H Son 1 45,200.00 25/05/2019 H Son 2 169,400.00 25/05/2019 Vehicles H Motor vehicle 1 •••••• 37,000.00 25/05/2019 H Boat ••••• 35,000.00 25/05/2019 H Boat Trailer•••••• 1,500.00 25/05/2019 H Caravan 55,000.00 25/05/2019 W Motor vehicle 2 7,000.00 25/05/2019 Sundry Joint Suburb C furnishings/appliances H Tools/Models TOTAL ASSETS 2,364,455.47 LESS Liabilities H Capital Gain Tax Debt on share holdings 12,281.25 24/05/2019 TOTAL NET ASSETS 2,352,174.22 Superannuation H Super Fund 1 Accumulation Plan Member No. ***13 500.96 25/05/2019 W Super Fund 2 or/and Super Fund 3 237,274.05 N/K 30/06/2017 Husband's inheritance from his father
Item Value$ Sub Totals/Totals Date F Investment Insurance bond 1,309,803.58 26/09/2018 Note: Proceeds of F Investment Insurance bond utilised in full to purchase E Town property (Property) (E Town) 1,250,000.00 12/ 11/ 2018 Property sub-total 1,250,000.00 Shares CSR (612) 2,533.68 24/05/2019 HIL (17193) 2,750.88 24/05/2019 SCP (389) 1,019.18 24/05/2019 SCG (2252) 8,805.32 24/05/2019 TAH (1429) 6,573.40 24/05/2019 wow (1945) 63,601.50 24/05/2019 ARG (3850) 30,646.00 24/05/2019 CBA (376) 29,395.68 24/05/2019 OMN (28) 22.12 24/05/2019 SUN (575) 7,992.50 24/05/2019 TWE (449) 6,775.41 24/05/2019 URW 2,212.00 24/05/2019 HIL(1369) 219.04 24/05/2019 Shares sub total 162,546.71 Banking T Bank ******34 1,457.29 25/05/2019 Banking sub total 1,457.29 Total Assets 1,414,004.00 Liabilities Capital Gain Tax Debt on share holdings 18,724.67
24/05/2019
Total Assets less
Liabilities
1,395,279.33
The Mr G Mantel Family Trust
Item Value$ Sub Totals/Totals Date Shares AGL (1000) 21,730.00 24/05/2019 ARG (5306) 42,235.76 24/05/2019 BLD (2950) 15,428 .50 24/05/2019 CTX (2000) 52,940.00 24/05/2019 CBA (394) 30,802.92 24/05/2019 CGF (1034) 8,334.04 24/05/2019 CWN (380) 5,027.40 24/05/2019 GUD (2000) 22,880.00 24/05/2019 HVN (3254) 17,929.54 24/05/2019 ORG (2730) 20,502.30 24/05/2019 SUN (1490) 20,711.00 24/05/2019 TLS (1903) 6,736.62 24/05/2019 QAN (1855) 10,221.05 24/05/2019 Shares sub total 275,479.13 Banking T Bank ******04 1,566.26 25/05/2019 T Bank ******44 488,421.71 25/05/2019 Banking sub total 489,987.97 Managed Funds F Investment *****79 74,654.13 30/06/2018 Managed Funds
sub total
74,654.13
Loans Son 1 256,000.00 25/05/2019 Son 2 107,300.00 25/05/2019 H' s sister 2,000.00 25/05/2019 Loans sub total 365,300.00 Total Assets 1,205,421.23 Liabilities Capital Gain Tax Debt on share holdings 24,917.41
24/05/2019
Total Assets less
liabilities
1,180,503.82
The Mr Mantel Testamentary Trust
Item Value Sub Totals/Totals Date Shares AMP (1000) 2,170.00 24/05/2019 ANZ (12433) 346,134.72 24/05/2019 ANZ Equity (8722) 242,820.48 24/05/2019 BHP (1000) 37,450.00 24/05/2019 B5L (275) 3,225.75 24/05/2019 CBA (258) 20,170.44 24/05/2019 CSR Equity (784) 3,245.76 24/05/2019 CYB (1800) 6,192.00 24/05/2019 CYB Equity (642) 2,208.48 24/05/2019 Hil Equity (445) 71.20 24/05/2019 HVN (1046) 5,763.46 24/05/2019 IFL (5038) 26,701.40 24/05/2019 JHX (600) 10,986 .00 24/05/2019 NAB (8906) 229,863.86 24/05/2019 NAB Equity (3177) 81,998.37 24/05/2019 ORG (3041) 22,837.91 24/05/2019 ORG Equity (1641) 12,323.91 24/05/2019 SUN (6746) 94,019.60 24/05/2019 SUN Equity (1448) 20,127.20 24/05/2019 S32 (1000) 3,440.00 24/05/2019 TAH (1836) 8,445.60 24/05/2019 Shares sub total 1,180,196.14 Banking T Bank ****S7 12,022.18 25/05/2019 ANZ Equity Manager ******32 45,264.69 20/03/2019 ANZ Frequent Flyer 1,052.16 20/05/2018 Banking sub total 58,339.03 Investments ANZ Onepath Funds Man. ****96 82,254.97 31/12/2018 BT Imputation Fund C*****57 13,455.34 1/01/2019 S Bank *********65 241,869.23 23/05/2019 One Path Investment ****10 7,834.61 25/05/2019 One Path Investment ****06 16,068.13 25/05/2019 One Path Investment ****87 18,793.98 25/05/2019 Investments sub total 380,276.26 Total Assets 1,618,811.43 Liabilities Capital Gain Tax Debt on share holdings 69,637.05
Total Assets less
liabilities
1,549,174.38
24/05/2019
As can be seen, in Annexure A the husband has set out inventories of the following assets:
a)those which are unequivocally property of the parties to the marriage or either of them accumulated by the parties during the marriage, including the wife’s superannuation and the husband’s interest in the growth phase of his Super Fund 1 (first part of Annexure A);
b)those which comprise the assets of the husband gifted by or inherited from his father which the husband concedes in his closing submissions are unequivocally property of the parties to the marriage or either of them (second part of Annexure A);
c)those contained in the Mr G Mantel Family Trust (third part of Annexure A); and
d)those contained in the Mr Mantel Testamentary Trust (fourth part of Annexure A).
It is convenient to deal with the relevant assets on this basis, making reference also to the husband’s disability pension entitlement under the Super Fund 1 as, in effect, a separate interest of the husband. This disability pension entitlement is the principal part of the husband’s superannuation.
Assets of the marriage accumulated by the parties
At the time the parties separated they had assets accumulated during the marriage with a net value at the time of trial of approximately $2,352,174.22 (leaving to one side the husband’s disability pension entitlements and other superannuation interests, and the wife’s superannuation). In summary, this figure of $2,352,174.22 comprises the following assets:
Former matrimonial home $1,415,000.00
Wife’s bank accounts $69,829.48
Wife’s car $7,000.00
Interim payment made to wife $180,000.00
Husband’s share portfolio $157,348.06
CGT debt on share holdings ($12,281.25)
Husband’s managed funds $77,632.83
Husband’s bank accounts $114,545.10
Loans to the parties’ children $214,600.00
Husband’s vehicles, boat, caravan etc. $128,500.00
$2,352,174.22In addition to this, as well as his disability pension entitlements, the husband has an interest in the growth phase of his Super Fund 1 of $500.96. The wife accepted in a cross-examination that she had superannuation in the amount of $294,152 (not the lesser amount of $237,274 recorded by the husband in Annexure A).
The wife sought to include in the asset pool a valuation figure for “workshop tools models etc” attributed to the husband. The difficulty with this, as the husband points out, is that the wife led no evidence from which a value of these items can be ascertained, and in any event the wife does not attribute any value to the entire contents of the former matrimonial home which it is accepted will be retained by her (other than certain chattels which she has agreed to permit the husband to collect). In all the circumstances there is no basis for attributing value to any of the chattels which the husband will retain, and I accept the husband’s submission that it would not be just and equitable to do so. The same applies in relation to the balance of the contents of the former matrimonial home.
I accept also the husband’s submission that it is appropriate to take into account the CGT liability which would be payable on the sale of what has been described as the husband’s share portfolio (the amount of $12,281). The husband’s evidence that these shares would need to be sold for a further payment to be made to the wife was not challenged, and it is reasonably apparent that they would need to be.[1]
[1] Rosati & Rosati (1998) FLC 92-804, 6.36 (Ellis, Lindenmayer and Kay JJ).
The total net assets of the marriage, excluding the parties’ superannuation and excluding also, for present purposes, the assets gifted to the husband by his father or inherited from him and the assets in the family trust and the testamentary trust, are therefore valued at $2,352,174.22. The wife’s superannuation is valued at $294,152, and the husband’s interest in the growth phase of his Super Fund 1 is valued at $500.96. The husband’s defined benefit pension, which provides him with an ongoing income stream, represents the vast majority of his superannuation interest, and is separately considered.
Assets of the marriage gifted or inherited from the husband’s father
Upon the death of his father the husband became entitled to and in fact received the sum of $1,309,803.58 from an F Investment insurance bond which the husband’s father had taken out when the husband was a teenage boy. It is said by the husband that those funds in their entirety were used to purchase the country property in which the husband now lives with his new partner. The husband contends that it is the value of that property, which was purchased for $1,250,000 in November 2018, and not the amount of $1,309,803.58 which he received from the F Investment bond, which is relevant. The husband submits that the stamp duty and other costs of the acquisition of the country property were reasonably and properly incurred by him, and that the amount expended by the husband does not represent a wastage of assets which should be added back into the pool.
The wife’s position, set out in paragraph 27 of her closing submissions, is that it is the full amount of the F Investment bond surrender value of $1,309,903.58 that is the amount properly amenable to orders pursuant to s 79(1) of the Act. She does not address in terms, in her oral or written final submissions, the husband’s argument that it is the country property in specie that is now the relevant asset.
The husband was not challenged in cross examination on his position that it is the property itself which is the relevant asset, nor on his evidence that the stamp duty and other purchase costs were paid from the money left to him by his father. In these circumstances I consider that it is appropriate and reasonable to proceed on the basis that it is the country property which is the relevant asset in considering any alteration of property interests pursuant to s 79(1) of the Act, and not the amount of $1,309,803.58 received from the surrender of the F Investment bond.
The husband also received, on the death of his father, shares in listed companies to the value of $162,546.71. The particulars of these shares are set out in the second part of Annexure A. In addition, Annexure A discloses a further amount of $1,457.29 which the husband says he has inherited from his father. This sum is apparently in a T Bank Account numbered ***134.
In paragraph 27 of her closing submissions the wife refers to an amount of $158,995 as reflecting the value of the shares inherited by the husband from his father. This no doubt reflects an earlier valuation of those shares, but the difference between her figure and the husband’s figure is not addressed by the wife in oral or written closing submissions. I proceed on the basis that it is the husband’s higher figure that is the relevant figure. The wife does not appear to claim, in addition, that the T Bank account amount of $1,457.29 identified by the husband should be included in the sum inherited absolutely by the husband from his father, but I proceed on the basis that this amount also is part of the husband’s inheritance from his father, to which the wife makes a claim.
The husband notes that there is a CGT liability on the shares he inherited from his father in the amount of $18,724.67. His position is that this liability should be reflected in the sum taken to represent his inheritance from his father. Neither the wife’s oral or written submissions address this point.
I consider that for the purposes of ascertaining the value of the assets of the parties to the marriage the amount of $18,724.61 should be deducted from the amount of the husband’s inheritance. Although it is less clear that these inherited shares will need to be sold to make a further payment to the wife, given my ultimate conclusions in relation to the further sum to be paid to the wife I consider that there is a prospect that at least some of these shares may need to be sold for this purpose. In any event, having regard to all the circumstances of this case, and the fact that the relevant shares were acquired as an investment, the principles essayed in Rosati & Rosati seem to me to make it appropriate that the liability for capital gains tax on these shares should be reflected in the sum taken to represent the husband’s inheritance.
Accordingly I proceed on the basis that the husband’s inheritance from his father has a value of $1,395,279.33, inclusive of the value of the shares, the sum in the bank account, and the asset in specie of the country property which was purchased by the husband for $1,250,000, plus stamp duty and other costs.
The Mr G Mantel Family Trust
This trust, which has been referred to in these reasons as the family trust, was created by the husband’s father in September 2002. Under the Will of the husband’s father the husband became the appointor of the family trust. At the time of the husband’s father’s death the husband and one of his sisters were (and remain) joint trustees of the family trust.
In the third part of Annexure A the total assets of the family trust are stated to be $1,205,421.23, less a CGT liability on share holdings of $24,917.41, giving a value of $1,180,503.82. Although in the final result it will not much matter, I am prepared to proceed on the basis that this CGT liability should be reflected in the value of the family trust. The assets of the family trust comprise shares, amounts in bank accounts and managed funds, and loans to the children of the husband and the wife, and the husband’s sister. The wife’s position, as reflected in paragraph 27 of her closing submissions, is that the assets of the family trust are valued at $1,196,707. This minor disparity in value no doubt reflects, in part, this same figure in the husband’s financial statement which was overtaken by the case put by the husband at trial, but the wife makes no submission about this difference in her oral or written final submissions. In the end the difference is not material. I am satisfied on the basis of the husband’s evidence that the total assets less liabilities position of the family trust is $1,180,503.82.
The wife’s position in relation to the family trust is that 60 per cent of its value is property to which the husband is entitled and this amount is hence amenable to an order pursuant to s 79(1) of the Act. The wife adopts this position because she says that the husband has a fixed 60 per cent interest in the family trust. It is necessary therefore to understand the terms of the family trust and certain background circumstances.
The family trust was created by Phyllis Isobel McIntosh as the settlor on 20 September 2002. Pursuant to the deed of settlement the husband and his father were the joint trustees of the trust. The primary beneficiaries were the husband and his siblings. The general beneficiaries included the spouses, de facto spouses, children and grandchildren of the primary beneficiaries. During his lifetime the husband’s father was the appointor of the trust, and upon his death the husband became the appointor. Provision is made for one of the the husband’s sisters to become the appointor on the death of the husband. The husband is presently the sole guardian and appointor. The vesting date of the family trust is 30 June 2083.
Clause 4.1 of the trust deed originally provided that on vesting the entitlements of each of the children of the husband’s father were to be as follows:
a)the husband – 50 per cent;
b)Ms K – 25 per cent;
c)Ms M – 15 per cent;
d)Ms N – 10 per cent.
Each of children of the husband’s father were originally primary beneficiaries of the family trust. However by a Deed of Variation of Trust dated 15 June 2006 two of them, Ms K and Ms N, were excluded as primary beneficiaries and as guardians and appointors of the family trust. The Deed of Variation also provided that from the vesting date the husband and his sister Ms M would stand possessed of the trust fund and income thereof as tenants in common as to:
a)the husband – 60 per cent; and
b)Ms M – 40 per cent.
By a resolution dated 14 June 2016 the husband’s sister Ms M was appointed a trustee of the trust along with the husband, albeit that in the event that the husband and Ms M are not able to agree on any particular matter, the resolution provided that the husband, as the senior trustee, will have the casting vote.
By a further Deed of Variation of Trust dated 5 March 2018, the family trust was further amended to the effect that the wife and others spouses and de facto spouses were made excluded beneficiaries.
In relation to the family trust therefore the husband is, with his sister, a joint trustee of the trust (and the husband has a casting vote as the senior trustee), the husband is the sole guardian, and the husband is the sole appointor. On this basis the wife submits that, in effect, the husband is the absolute controller of the family trust with powers to remove his sister Ms M and vest the trust at any time prior to the current vesting date of 30 June 2083, should he choose to do so. It is on this basis that the wife says, following the death of his father in March 2017, the husband inherited or became entitled to 60 per cent of the value of the family trust.
There was significant evidence given by the husband concerning the history of his family, and in particular his father, helping future generations to make a start in life. During the course of the marriage the husband’s father provided material financial assistance to the parties, including an interest free loan to secure the purchase of the former matrimonial home. It was in this context that the husband said that his father created the discretionary trust which is the family trust and the Will which upon his death created the testamentary trust.
The husband says that in addition to conversations he had with his father during his lifetime about how his father’s legacy was to be administered, and the expectations his father had of him that he would administer his father’s legacy in accordance with his wishes, his father prepared a typed document entitled “[Mr G] Mantel Family Trusts”. This document sets out, amongst other things, the background and purpose of the trusts that his father had created and would create upon his death. It contained strict instructions for the administration of these trusts, including the qualifications required of beneficiaries before they could benefit from them. The explicit purpose of the trusts, the husband says, was to provide low interest loans for family housing, education and health purposes, and to make income distributions as the trustees deemed fit. The husband says that his father first showed him this document over the Christmas holidays in 2003/2004, and that he referred to its contents many times during his life in conversations between the two of them. It is useful to set out the terms of this document in its entirety:
[Mr G] Mantel Family Trusts
There will eventually be two Trusts:
1.The “[Mr G] Mantel Discretionary Trust” which currently exists and contains some of my Assets.
2.The “[Mr G] Mantel Testamentary Trust” which will come into existence on my death and contain the remainder of my Assets.
Purpose of the Trusts
The Trusts will have a duration of up to 80 years at the discretion of the trustee/trustees who will have the right to terminate the Trusts and distribute the remaining assets according to a laid down formula among the then existing beneficiaries who meet the Trust’s qualifications. The purpose of the Trusts is to provide low interest loans, for family housing, education and health purposes to those beneficiaries who qualify. Also following my death, to make such income distributions as they think fit to beneficiaries who qualify
The Trustees
The current trustees are myself and Mr Mantel. Following my death Mr Mantel in his discretion may appoint or not appoint additional trustees.
The Beneficiaries
The beneficiaries are the natural born children, and their descendants, of [Ms G] Mantel (nee …) and [Mr G] Mantel.
Qualifications required of beneficiaries before they can benefit from the Trusts
Let me say at the outset that I respect the right of the beneficiaries to live their lives as they see fit and I hope that they will respect my right to determine who will benefit from my assets. You may think some of the requirements are hard but I want you to appreciate that the accumulation of my assets took careful planning and much hard work. Along the way I have made some good and some bad financial decisions but nothing occurred because of good luck or good fortune.
I was a child of the Depression Era. Money was always in short supply and my parents had to budget very carefully. From an early age the necessity to save for what I wanted was impressed on me and I was always told that the only reason you borrowed money was to purchase a home. Anything else you went without until you had saved the necessary money. My first pocket money was one penny a week and if I saved a halfpenny I was given another halfpenny which was then banked in my school State Savings Bank passbook each Tuesday.
To earn my pocket money I had various chores to carry out and as I got older the nature of the chores and the number increased accordingly and of course so did my pocket money although I can’t remember ever getting more than sixpence. Also as I got older I was able to use my initiative to gain employment outside the family. To this end I trapped rabbits and sold them for their skins and carcasses (two shillings a pair top price), caught frogs and leeches (by dangling my legs in the creek at the back of our home) and sold them to the University. Caddied at the golf course (two shillings a round). Assisted in the cartage of hay and when I was fourteen I had saved enough money to buy my first bike (and the only one I ever owned now I think about it) and then got a job with the butcher delivering meat around O Town each morning 6am-8am for two shillings a week. I can still clearly remember the first money I ever earned. I was eleven and coming home through the O Town Gardens when the greenkeeper as the bowing [sic] green sang out “Hey lad, do you want to earn two shillings? Just run around the green and keep the grasshoppers off it until the bowlers arrive”. There was a grasshopper plague at the time and I thought I was made. An extra two shillings went into the bank that week.
My first job after leaving school was in a factory and I was paid 30 shillings a week and out of that I had to pay my parents ten shillings a week board.
I joined the [Armed Forces] shortly after my 18th birthday and received six shillings a day plus free board, lodgings, clothing, medical and dental expenses. I thought Xmas had come early! During my time in the [Armed Forces] I managed to save two hundred pounds.
I joined the [public service] in 1948 and after [Ms G] and I married in 1955 we moved into our own home at P Street, Suburb Q, built with a carpentry book in one hand and 2000 pound loan in the other. All furniture, with the exception of the kitchen setting was built-in and we had bare boards on the floor and an Austin tourer car. We saved to buy anything else we needed (not wanted).
As well as establishing my career in the [public service] I worked a number of second jobs in my spare time. Truck driver, roofing tile carrier, plumber’s labourer, concreter’s labourer and panel beater’s labourer.
My big break came around 1959/60 when a television production company who produced a TV Soap couldn’t get actors. I became a character in the show and portrayed that role until the show came to an end. As well as acting in the series I progressed to writing scripts and providing technical advice to the show. When my acting career finished I continued to write scripts and provide technical advice for the series. I eventually wrote a pilot episode for a new series and continued writing scripts and providing technical advice for the series. My participation eventually came to an end when the Writers’ union threatened a strike unless I joined their Union which of course I couldn’t do. My sojourn into Television did however give me a sizeable financial benefit which has been saved and multiplied.
By 1967 we had paid off our housing loan from the R Bank and purchased the block at Suburb C. We then embarked on the next project of erecting a house. I took two months long service leave and with the help of good friends, the money from the sale of P Street and a $7,000 War Service Housing Loan completed the project and we moved to Suburb C in 1968.
So that is why the Trustees of my two trusts will never provide monies from the trust to beneficiaries who:-(a)Buy what they want rather than what they need.
(b)Indulge in excessive (in the opinion of the trustee/trustees) consumption of alcohol or gambling.
(c)Use illicit drugs other than those provided under a doctor’s prescription.
(d)Cannot establish a good savings record.
(e)Cannot establish that he/she is a responsible person.
Future Trustees
Future trustees will be appointed from time to time by the then serving trustees but no person should be appointed as a trustee unless he/she is prepared to administer the trusts according to the guidelines I have outlined above.
(As per original)
The husband says in paragraph 59 of his trial affidavit that with the exception of his father’s assets which passed to him outside his father’s Will, all of his father’s wealth acquired throughout his lifetime is held in the family trust or the testamentary trust. The husband says that he intends to adhere to his father’s wishes to maintain the tradition of each generation of the Mantel family supporting the next generation, and that he will apply the funds of both trusts solely for those purposes and in accordance with his father’s explicit instructions. The husband notes, as is apparently correct, that since the death of his father, none of the income or capital of the two trusts has been dispersed.
The husband was cross-examined on the question of who had effective control of the family trust. He was asked whether he exercised effective control, and his response was that, along with his sister Ms M who is also a trustee, the two of them are in effective control. The husband accepted that he managed and controlled the trust, albeit that if decisions had to be made then he would make them with his sister Ms M. Importantly, the husband was not challenged in cross examination by counsel for the wife on his assertion in his trial affidavit that it is his intention to adhere to his father’s wishes to maintain the tradition of each generation supporting the next and applying the funds of both trusts solely for that purpose in accordance with his father’s explicit instructions.
The husband gave evidence during cross examination about how the family trust is presently working. He mentioned his discussions recently with his sister Ms M about her desire to construct a new garage at her property. He said that the two of them had discussed the family trust making a loan to her to cover the cost of this exercise, and that this loan would have to be repaid to the trust. This is apparently how matters have been recorded in the accounts of the family trust. The husband’s evidence in this respect is consistent with him complying with the directions that his father has given him: that is, that the family trust was to be preserved, so that Mr G Mantel’s wealth could be used to benefit future generations. The husband does not consider that the family trust comprises a fund to which he can have recourse for his own advancement or enjoyment.
Although the wife accepted during cross examination that the statement of wishes or intentions of the husband’s father accurately reflected her understanding of her father-in-law’s wishes and instructions with respect to the administration of the assets he had accumulated during his lifetime, she submitted that his December 2003 statement is not a legal document and has no legal effect. She says that at most it places a moral obligation on the trustee of the family trust. The wife points out that the trustees have a very wide discretion as to how they administer the trust, only limited by the terms of the trust deed.
In cross examination the wife was asked whether she expected that the husband would give effect to his father’s wishes in the administration of the trusts. She was not able to say that he would not give effect to his father’s wishes – her position was that “maybe” he would do so. It is fair to say that the impression conveyed by this answer was that she was sceptical that the husband would comply with his father’s wishes in the administration of the trusts.
Despite the wife’s scepticism, I accept the husband’s evidence that he will comply with his father’s wishes as communicated during his lifetime, and in his December 2003 document. Not only was the husband not challenged in cross examination on his intentions in this regard, I believe the husband’s statement of position that he will administer the family trust (and the testamentary trust) as his father intended. As was submitted on his behalf, he impressed as a frank, forthright and sincere individual, who was determined to honour the undertakings he had made to his father. There is simply no basis for his evidence that it is his intention to comply with his father’s wishes and give effect to his fiduciary obligations as trustee of the family trust and testamentary trust to be impugned.
The Mr Mantel Testamentary Trust
This trust, which has been referred to in these reasons as the testamentary trust, was created by the husband’s father’s Will upon his death. The husband was the sole executor and trustee of his father’s Will and under the Will the husband became the trustee of the testamentary trust. The beneficiaries of the testamentary trust include the husband as the “principal beneficiary”, the wife as spouse, and their children, grandchildren, great grandchildren and their spouses. The Will provided that after the payment of the funeral and testamentary expenses the residuary estate was to be applied to the testamentary trust. The father, as the sole trustee and principal beneficiary, has a sole discretion to apply the income and capital of the testamentary trust to any of the beneficiaries, including himself. None of the husband’s surviving siblings have any entitlements under their father’s Will or the testamentary trust. As the trustee of the testamentary trust the husband would be within his powers to vest the trust within 80 years of his father’s death.
The wife’s position in relation to the testamentary trust is that 100 per cent of its value is property to which the husband is entitled and it is hence amenable to an order pursuant to s 79(1) of the Act. The wife adopts this position because she says that the husband, having been appointed the sole executor and trustee of his father’s Will and the sole trustee of the testamentary trust, is able to vest the testamentary trust within 80 years of his father’s death. The wife says that the husband, as sole trustee and principal beneficiary, can at his sole discretion apply the income and capital of the testamentary trust to any of the beneficiaries, including himself.
In the fourth part of Annexure A of the husband’s outline of case the total assets of the testamentary trust are stated to be $1,618,811.43, less a CGT liability on share holdings of $69,637.05, giving a value of $1,549,174.38. Counsel for the wife accepted in oral closing submissions that this figure (and not the amount of $1,900,089 referenced in paragraph 27 of the wife’s written closing submissions) should be taken as correct. I am satisfied on the basis of the husband’s evidence and the wife’s concession that the total assets less liabilities position of the testamentary trust is $1,549,174.38.
Despite the wife’s argument that the structure of the testamentary trust would allow the husband to vest that trust and apply the income and capital to himself as sole trustee and principal beneficiary, ignoring his father’s wishes, I do not accept that he will do this. As I have explained in relation to the family trust, I accept the husband’s evidence that he will adhere to his father’s wishes that his assets should be applied to maintaining the family tradition of each generation supporting the next and that he will discharge his fiduciary obligations as trustee of the testamentary trust in accordance with his father’s explicit instructions. As I have said, there would be no basis to do otherwise. It is the husband’s evidence that this is what he will do, he was not challenged on it in cross examination by counsel for the wife, and it was not put to the husband that he would exercise his power to vest the testamentary trust at any time.
The husband’s disability pension entitlements
As has been mentioned, by reason of the husband’s psychiatric illness he retired from the public service in September 2017 and is unlikely to work again. The husband’s evidence is that prior to his resignation from the public service due to ill-health he had been deemed unfit for work following various psychiatric examinations and assessments. He says that at this time he was continuing to take prescribed anti-depressants and had been seeing a psychologist as well as his general medical practitioner for treatment. The husband says that he was diagnosed with a major depressive disorder and alcohol use disorder and was deemed unfit for work and unlikely to substantially recover. In support of his evidence in this respect he exhibited to his trial affidavit two medical reports prepared by consultant psychiatrists at the request of his superannuation fund. Both are to the effect that he is permanently disabled. The husband’s evidence in relation to these matters is not disputed by the wife.
By virtue of his diagnosis and his years of service in the public service (5 years prior to the marriage and 34 years during the marriage), since September 2017 the husband has received a lifetime disability defined benefit pension under the Super Fund 1. He currently receives a gross amount of approximately $103,324 per annum, a sum on which he is taxed. This fortnightly lifetime pension payment apparently replaces the lump sum payment to which he would ordinarily have been entitled as a member of that superannuation scheme.
Although the husband conceded that he has the option of taking a lump sum when he turns 60 (in almost two years’ time), and again when he turns 65, his evidence, which was not challenged by the wife at trial, is that he does not intend to commute the income stream to a lump sum. He says, and I accept, that he will continue to receive his pension in the form of an income stream.
The husband’s superannuation interests for the purposes of Part VIIIB of the Act were jointly valued (in accordance with Regulation 42(2)(b) of the Family Law (Superannuation) Regulations 2001) (“the Regulations”) at $1,555,135 as at 3 October 2018. This is the amount of which the wife seeks a 50 per cent share in her outline of case and her written closing submissions, despite the fact that she refers also to an email to the husband from the Super Fund 1 dated 16 April 2018 which appears to value the income stream represented by his pension at $1,631,349.76. The valuation report, which is exhibited to the wife’s affidavit, notes that as the husband’s pension “is a ‘Permanent Disability Pension’ ESSSuper 1 may not pay any split to the non-member as a ‘clean break’ split”.
Summary of categories of assets and relevant interests
By way of summary, the values of the various categories of assets and interests which need to be considered are as follows:
a)assets of the marriage accumulated by the parties during the marriage:
$2,352,174.22
with the addition of the wife’s superannuation and the nominal figure representing the non-pension superannuation entitlements of the husband:
$294,152 + $500.96
b)assets of the marriage gifted or inherited from the husband’s father, inclusive of the country property in which the husband now lives valued at the purchase price of $1,250,000:
$1,395,279.33
c)The Mr G Mantel Family Trust:
$1,180,503.82
d)The Mr Mantel Testamentary Trust:
$1,549,174.38
e)the husband’s disability pension entitlements:
an income stream of approximately $103,324 per annum, capitalised, if relevant, at $1,555,135.
Contributions made by the parties and other relevant matters
Insofar as the property in H Town which the parties purchased for something in the order of $32,000 in 1982 before they were married is concerned, the wife accepts that the husband contributed a greater amount than she did to the purchase price, although she cannot recall the amount of her contribution. The husband maintains that he contributed approximately $18,000 to the purchase price and that the wife contributed $2,000.
At the time of the marriage in February 1983, neither of the parties had assets of significance aside from the recently purchased H Town property. The wife says that when she married she was earning approximately $75 per week and had savings of about $3,000 and a motor vehicle valued at about the same amount. The husband was a public servant contributing to his superannuation to the maximum amount allowable. He says he owned a utility vehicle valued at approximately $5,200, a motorcycle and various other possessions, and had savings of approximately $4,000.
The former matrimonial home, which was purchased in 1986 for $160,000 from the husband’s father, was financed partly from the sale of the H Town property, and partly from an interest free loan from the husband’s father of $130,000, which has been repaid in full.
During the marriage the husband also received an inheritance from his grandmother, which is invested with S Bank and has a value attributed to it in the first part of Annexure A of $36,660.91.
Throughout the marriage, although the wife was usually in paid employment, she assumed the role of primary home maker and carer for the children. Outside her working hours the wife performed home duties which included the majority of the household unpaid work and chores including the cooking, shopping and cleaning. Outside of his working hours, the husband made contributions to assist the wife in the capacity of home maker and parent. The husband was responsible for performing significant work on the former matrimonial home, including renovations, home maintenance and garden landscaping. The wife accepts that the husband was a good father to the children during the marriage.
During the marriage both the husband and the wife applied all their income from their respective labours for the use, benefit and welfare of their family. Although throughout the marriage the husband’s income was higher than the wife’s, the husband accepts that for the most part the financial and non-financial contributions of the parties during cohabitation were comparable.
Insofar as her relationship with the husband’s father is concerned, the wife says that after the husband’s father moved into his retirement unit he would usually spend the weekend with the husband and the wife. The wife says that she had a good relationship with the husband’s father, and that he often referred to her as his favourite daughter-in-law. (The wife was in fact her father-in-law’s only daughter-in-law.) There is no suggestion or claim in any of the wife’s evidence that she made any particular contribution which is relevant in the context of the husband’s inheritance and the trusts.
The husband has alleged that during the marriage the wife diminished the assets of the parties by virtue of gambling losses of not less than $60,000 – $80,000, and says that as a result of her gambling the parties effectively conducted their financial affairs separately from about 1997. The wife disputes that she lost in the region of $60,000 – $80,000, but in final submissions the husband did not seek that the wife’s losses, whatever they were, be held against her. It is therefore unnecessary to have further regard to these matters.
Insofar as the husband’s inheritance from his father is concerned, the husband’s evidence is that in the 1990’s his father started purchasing shares in either his own name, or in his and the husband’s names. The husband says that his father did this to minimise his tax and as part of his estate planning. The husband says that when his father purchased shares in this manner, it would be a loan of the purchase price from him to the husband. At least some of those purchases are documented in a series of 19 receipts, written by the husband’s father and signed by the husband, dated from 3 February 1996 to 30 January 1999. The husband says he trusted his father completely and that his father likewise trusted him. The husband says that he kept no records and that his father would simply produce the receipts for the husband to sign. The husband says he took no other role in these investments other than agreeing with the overall arrangement and signing when requested. The husband says the shares were his father’s assets, completely controlled and owned by him, even though the husband’s name appeared on the documents.
The husband also says that all dividends payable from these shares were paid directly from the company to his father. He says that every financial year his father would provide him with the information he required to complete his tax return and he would make good any adjustments required by reimbursing him for the tax payable to ensure that the husband was not disadvantaged by any of these transactions. The husband says that the only exception to this was a holding of a certain number of Commonwealth Bank shares which, for reasons unknown to either him or his father, produced dividends which were and continue to be paid into an account of the husband’s. The husband says that up until the time of his father’s death he would transfer any dividend repayments from this holding back to his father.
It seems that for the most part these shares comprise the shares which the husband inherited from his father and which are identified in the second part of Annexure A.
Insofar as the F Investment bond that the husband inherited from his father is concerned, this was apparently a bond the husband’s father commenced contributing to well before the parties married. The husband was the sole nominated beneficiary and so he became entitled to the funds invested on the death of his father.
Post separation the wife has lived in the former matrimonial home, and until sometime in 2018 the husband continued to pay the rates, property and contents insurance. Until May 2018, while the husband was living in his caravan, he paid site fees at various locations. In addition, and as the wife submits, since separation the husband has enjoyed benefits, at least in the form of interest earned on money invested in bank accounts in his name, and on other investments. There is no evidence about the extent of these benefits, other than to the extent that they are reflected in Annexure A. In any event, the wife’s claim as it was put in closing submissions is essentially to the assets particularised in Annexure A (with some minor variations), together with the husband’s superannuation.
As has been mentioned, the husband has not worked since September 2017 due to ill-health, and is not expected to be able to undertake gainful paid employment again. He does, however, have the benefit of the lifetime disability defined benefit pension which pays him approximately $103,324 per annum. The wife, who is in reasonable to good health, works four days per week as a legal assistant and earns $943 gross per week. This equates to approximately $49,000 per annum. Both parties are in their late 50s.
The husband’s new partner, who now lives with him at the country property, works casual jobs and is paid the minimum hourly wage. She owns her own home in a separate part of Victoria, which is mortgaged and rented. She has no dependent children, and the husband says that the two of them keep their finances separate and propose to do so in the future. There is no evidence about whether she pays board to the husband, and this subject was not explored in cross examination.
The income, property and financial resources of the parties aside from the husband’s pension income stream are, in the form they were at trial, reflected in Annexure A. Although it is apparent that the husband’s capacity for appropriate gainful employment is extremely limited, there is no suggestion that the wife will not continue to be gainfully employed, at least in the medium term. The wife adduced no evidence about her intentions in this regard, save that she wishes to continue to work part time so as to be able to look after her grandchildren one day per week.
Neither of the parties has the care or control of a child of the marriage who is under 18 years of age, and neither party has commitments beyond those that are usual to support themselves. It will be apparent that the parties have no debt, and that the homes in which they are both presently living are unencumbered.
It is clear that the husband’s superannuation arrangements, in the form of his defined benefit disability pension entitlement, will provide him with a substantially greater income for the rest of his life than the wife could hope to earn in her present employment, or by accessing her present superannuation entitlements. The husband’s disability pension provides him with an annual income stream which is slightly more than double what the wife is able to earn as a legal assistant working four days per week. It is apparent that during their married life the parties lived in relative comfort, both of them holding good jobs and also relatively free from debt due to the beneficence of the husband’s father.
Matters for determination
The asset pool to be the subject of an order under s 79(1)
Assets of the marriage accumulated by the parties
It is uncontroversial that the non-superannuation assets accumulated during the marriage by the joint endeavours of the parties or the efforts of either of them, valued at approximately $2,352,174.22 at the time of the trial, are part of the asset pool which will need to be the subject of an order pursuant to s 79(1) of the Act.
The wife’s superannuation, valued at $294,152, and the husband’s interest in the growth phase of his superannuation valued at $500.96, are also part of the asset pool for the purposes of the exercise to be undertaken, although it will be unnecessary to make any orders altering these interests.
Assets of the marriage gifted or inherited from the husband’s father
Also part of the asset pool available for division between the parties, albeit in one sense forming a separate category to the assets of the marriage accumulated by the parties themselves, are the assets of the marriage gifted or inherited from the husband’s father. The husband accepts that these assets are also property of the parties to the marriage or either of them. They were valued at approximately $1,395,279.33 at the time of the trial.
In relation to this “category” of the asset pool available for distribution between the parties, I accept the submissions of the husband that as there are substantial other matrimonial assets which are the product of the parties’ marriage, to which recourse can be had to satisfy the wife’s entitlements and ensure a just result, it is permissible, and not inappropriate in this case, to adopt an approach which would allow the husband to retain his inheritance subject to any adjustment required to ensure that the wife receives an amount which is just and equitable: Bonnici & Bonnici (1991) 105 FLR 102; Bishop & Bishop [2013] FamCAFC 138, [27]-[29] (Finn, May and Strickland JJ), Bevis & Bevis [2014] FamCAFC 147, [83] (Thackray, Strickland and Ryan JJ) and Calvin & McTier (2017) 57 Fam LR 1, [51]. I proceed for present purposes on this basis.
The family trust and the testamentary trust
Insofar as the assets in the family trust and the testamentary trust are concerned, in the particular circumstances of this case I am unable to accept the wife’s submission that 60 per cent of the assets in the family trust and 100 per cent of the assets in the testamentary trust comprise property to which the husband is entitled and is hence amenable to an order pursuant to s 79(1) of the Act.
As I have indicated, the husband is a joint trustee with his sister of the family trust, and the trustee of the testamentary trust. Both of these trusts have objects, and beneficiaries other than the husband. The husband has said, and I accept, that he will comply with his fiduciary obligations to administer these trusts in accordance with his father’s wishes. Even if these obligations are not legally enforceable, or are only enforceable in limited circumstances, I do not consider that they can be disregarded if the husband’s intention to honour them is accepted.
In these circumstances it would not be correct, as the wife contends, to treat the husband as being the beneficial owner of 60 per cent of the assets in the family trust and 100 per cent of the assets in the testamentary trust. Administering these trusts in accordance with his father’s wishes means that the husband will be unlikely to receive significant benefit from these trusts. Indeed, as the husband submits, the effect of treating the assets of these trusts as the husband’s would put him in a position of having to have recourse to them for his own support, and thereby unjustly depriving future generations of his father’s descendants of the benefits which the husband’s father intended to confer upon them. The approach contended for by the wife in relation to the family trust and the testamentary trust would not be just and equitable. As the husband puts matters in his final submissions, it would be to treat as being beneficially the husband’s that which evidently is not.
I accept, in this regard, the husband’s submissions distinguishing Kennon v Spry (2008) 238 CLR 366, and in relation to Ingles & Ingles [2019] FamCA 33 and Martin & Newton (2011) FLC 93-490. The trusts in the present context were not created as a vehicle for the tax effective management and accumulation of the assets of the parties. Still less can they be regarded as a sham, created by the husband to keep the assets out of the reach of the wife. The assets in the family trust and the testamentary trust are not referrable to the labours of either the husband or the wife, and the wife does not contend that either she or the husband contributed in any material way to the accumulation of the assets represented in the corpus of the two trusts.
However the husband concedes, and I accept, that the existence of the trusts as a financial resource of his is a matter which the Court can have regard to under s 75(2)(o) of the Act. In other words, after the contribution based findings are applied to the matrimonial assets the existence of the trusts should, to an extent, support the making of an adjustment (which the husband says should be modest) in favour of the wife. Section 75(2)(b) of the Act is also relevant in this respect.
The husband’s disability pension entitlements
Insofar as the husband’s superannuation is concerned, the critical question is whether it is appropriate to apply a capitalised value to the income stream. It will be recalled that the husband receives approximately $103,324 per annum as a defined benefit pension, and that he pays tax on this amount. The evidence is that, at age 60 or 65, he could elect to take this income stream as a capital sum, however he has clearly stated that he will not do this, and I accept his evidence in this regard.
The husband submits that on the question of whether it is appropriate to apply a capitalised value to the income stream, the cases support the following propositions. First, that while a superannuation income stream or pension can be attributed a capital value, its nature as income and not a capital lump sum ought not be ignored. Secondly, inequality can arise if the formula under the Family Law (Superannuation) Regulations 2001 (“the Regulations”) to capitalise the value of the income stream is applied to a pension which is subject to tax. Thirdly, courts must be careful not to “double count” superannuation as both an asset in the pool to be divided and a future income stream, and if there is to be a division there must be circumstances justifying that course: Semperton & Semperton (2012) 47 Fam LR 626, [47], [88]-[89] (May J), [143]-[146], [154], [159]-[160], [183] (Thackray and Ryan JJ); Surridge & Surridge (2017) Fam LR 267, [30]-[34], [104] (Murphy, Aldridge and Kent JJ).
The husband’s position is that whilst his superannuation interest in the form of his defined benefit pension is capable of having a present capital value attributed to it in accordance with the Regulations, it would be an error for the Court to treat this value as, in effect, cash in the hands of the husband. This, it is said, would be artificial.
The husband submits that the correct approach to his pension entitlement is to treat the capital sum arrived at by application of the Regulations as Coleman J did in Cahill & Cahill (2006) FLC 93-253, [75]-[79], [81]-[82], namely as a “notional asset” which is not included along with the other assets in the matrimonial pool but to make it relevant as an income stream (not its notional capital value) when considering the respective needs of the parties under s 75(2) of the Act.[2]
[2] His Honour was there dealing with a Defence Force Retirement and Death Benefits (“DFRDB”) Scheme pension. See also Semperton, [81] (May J) (referring to Coghlan & Coghlan (2005) 193 FLR 9, [65] (Bryant CJ, Finn and Coleman JJ)).
Thus, the husband submits, his pension should be considered separately from the other assets of the parties and, in circumstances where the wife does not seek a splitting order, whilst a capital value may be attributed to the pension, it must be recognised that this is not in the nature of cash in the hands of the husband but is rather a guaranteed and significant lifetime income stream for him.
The husband concedes, correctly, that the vast majority of his entitlement to the pension accrued during the course of the marriage and that it should therefore be viewed as something to which the wife had made indirect contributions. The husband also submits, however, that to the extent that he receives his pension due to his disability, it arises from the injuries he suffered in his work in the public service, and therefore should be viewed as a contribution made by him: Alekovski & Alekovski (1996) 135 FLR 131 at 139. It is not at all clear, however, what proportion of the husband’s entitlements is referrable to his disability and the husband has neither led any evidence nor made any submissions about this. In all the circumstances I proceed on the basis that the wife has in fact made indirect contributions to the husband’s pension. I do not consider that it would be just and equitable to do otherwise.
The husband notes also that it is not possible to determine accurately what portion of the capital sum is referrable to the period prior to him attaining retirement age, and nor is it clear exactly how much tax he pays on the income he receives (although a document he produced indicates how much tax is automatically withheld by the fund, it does not reveal how much tax is ultimately paid). The husband says that given these factors, the application of the formula under the Regulations to his current income inevitably leads to a distorted and exaggerated capital value, and one which does not distinguish between the component that is referrable to his injury, and what might be referred to as the “retirement component”.
The wife, by contrast, contends simply that the husband’s superannuation entitlements, capitalised at $1,555,135, should be included in the asset pool. She says that his superannuation entitlements constitute property to which he is entitled, and hence that they are amenable to orders pursuant to s 79(1) of the Act. The wife says that she should have 50 per cent of the parties’ combined superannuation. She does not engage substantively in her written or oral submissions with the arguments advanced by the husband on the question of whether it is appropriate to apply a capitalised value to the income stream which the husband’s pension represents, or what should be done in the alternative.
As May J observed in Semperton & Semperton, at [75], a case where the Court was required to consider DFRDB entitlements, the approach to be taken is not demonstratively clear from the provisions in the Act and the Regulations. Nor did it appear especially clear in Surridge & Surridge, where the Court considered the approach to be adopted in relation to a police “hurt on duty” pension payable under the Police Regulation (Superannuation) Act 1906 (NSW): see especially at [30]-[34]. The approach to be taken in the circumstances of this case is not altogether clear either. It is perhaps made more complicated by the fact that, unlike the position in relation to the DFRDB pension in Cahill & Cahill and Semperton & Semperton, and the police “hurt on duty” pension in Surridge & Surridge, the husband’s pension here is in fact able to be commuted to a capital sum in a little under two years, albeit that the husband says, with obvious justification given his age and physical health, that he will not do this.
Nonetheless, recognising that how to treat the husband’s pension is a matter for the exercise of my discretion,[3] I accept the husband’s submission that, in accordance with the authorities to which he makes reference, an approach to his pension entitlement which is open is to treat the capital sum arrived at by application of the Regulations as a notional asset which is not included with any of the other assets in the matrimonial pool. Instead it can be brought to account in the adjustment exercise as an income stream of the husband’s when considering the respective needs of the parties under s 75(2) of the Act. Accordingly I proceed on this basis in relation to the husband’s disability pension entitlements.
[3] Surridge & Surridge, [31]; Semperton & Semperton, [76], [191], [192].
Conclusions as to the asset pool available for division
Having regard to my findings in relation to the relevant groups of assets, the asset pool for division between the parties comprises two separate groups of assets: the assets accumulated by the parties during the marriage valued at $2,352,174.22, together with the wife’s superannuation valued at $294,152 and the husband’s interest in the growth phase of his superannuation valued at $500.96; as well as the assets of the marriage gifted or inherited from the husband’s father valued at approximately $1,395,279.33 at the time of the trial.
The asset pool available for division, exclusive of the wife’s superannuation and the husband’s interest in the growth phase of his superannuation, thus has a valuation at the time of the trial of $3,747,453.55. Once the superannuation amounts are added in as well, the total figure is $4,042,106.51.
Would it be just and equitable to make an order under s 79(1)?
The parties have both contended that orders should be made under Part VIII of the Act adjusting their proprietary interests. They each submit that an adjustment of their interests would be just and equitable. Having regard to the relatively superior financial position of the husband in the context of the asset pool available for division (leaving to one side, for the moment, the existence of the family trust and the testamentary trust), the fact of the parties’ 34 year marriage, the fact that the parties used funds accumulated by them jointly for the payment of living expenses and that all property (aside from the inheritance) was acquired by the parties during the marriage, it is plain that it would be just and equitable for orders adjusting the proprietary interests of the parties in favour of the wife to be made.
Global approach or assessment of classes of assets separately?
The husband concedes that in most cases it is appropriate to adopt a global approach to the ascertainment of the asset pool. That is to say, that the usual course is to include all of the property of the parties to the marriage in a single pool, to which considerations of contribution and need can then be applied. However in the particular circumstances of this case the husband says that there are compelling reasons to view different assets in separate “pools”, particularly having regard to the husband’s pension, and the fact that a substantial portion of the asset pool was inherited from the husband’s father following separation.
While the husband concedes that all property owned by him is relevant and significant in terms of the overall exercise of discretion when determining how the matrimonial assets and interests ought to be divided, he says that simply to conflate all the assets and then weigh contributions having regard to the nature and origins of the assets may tend to obscure, rather than to illuminate, the demands of justice and equity in the particular circumstances of this case. The husband refers, in this regard, to the decision of the Full Court in Calvin & McTier (2017) 57 Fam LR 1, [51] (Bryant CJ, Ryan & Aldridge JJ) where it was emphasised that the Court, in a particular case, retains a discretion as to how to approach the treatment of after-acquired property. In this case an inheritance was in issue, and the Full Court considered that it was open to the trial judge to include the inheritance among the property to be divided, or deal with it separately – there was not an obligation to follow one course or the other.
The wife’s position is that in considering the division of matrimonial property there are two acceptable approaches: either a global approach (which she submits involves adding up all of the assets and deducting all of the liabilities, thereby deriving a net pool) or an asset by asset approach (which she contends involves looking at each individual asset and considering the parties’ contribution to each individual asset). The wife submits that in this case it would be more convenient and preferable in weighing contributions that the global approach be adopted. The wife refers, in this regard, to G & G (1984) FLC 91-582; Norbis & Norbis (1986) 161 CLR 513; Aleksovski & Aleksovski (1996) FLC 92-705; Singerson & Jones [2014] FamCAFC 238; Windmann & Windmann [2017] FamCA 602; Holland & Holland (2017) 57 Fam LR 84; Calvin & McTier (2017) 57 Fam LR 1 and Hurst & Hurst [2018] FamCAFC 146.
In the particular circumstances of this case, and having regard to my findings as to the asset pool available for distribution, I am not convinced that anything much turns on which approach should be adopted. If it be relevant, I accept the husband’s submission, at least for the purposes of categorisation, that there are compelling reasons to view different assets and interests as more properly forming part of separate pools. It is clear that the various assets and interests which have been in contention in this case can conveniently be grouped in the manner identified in paragraphs 33 and 34 – that is, as:
·those assets accumulated by the parties during the marriage, including their respective superannuation balances in the growth phase;
·those assets of the husband gifted to the husband by his father or inherited by the husband from his father;
·those assets contained in the family trust;
·those assets contained in the testamentary trust; and
·the husband’s disability pension entitlements.
It is convenient to group the relevant assets and interests in this way not only because, as the husband submits, some of them are “hard” assets, accumulated during the marriage, a substantial portion of them was inherited by the husband very shortly after separation, and having regard to the fact that the husband’s pension is a capitalised income stream, but also because, for reasons I have explained, those assets in the family trust and the testamentary trust are not properly to be regarded as property of the parties to the marriage or either of them. In these circumstances the assets of the family trust and the testamentary trust are not directly relevant to the alteration of property interests to be undertaken pursuant to s 79 of the Act.
The assessment of contribution: s 79(4) and s 75(2) factors
This exercise, often a difficult one, is simplified somewhat in this case by certain concessions made by the parties. The husband accepts, sensibly, that in a relationship spanning 34 years and which produced two children that the assessment of the direct, indirect, financial and non-financial contributions by the parties in their respective spheres should be assessed as equal with respect to the assets accumulated by the parties during the relationship.
The wife also adopts this position, noting that notwithstanding the husband’s initially greater contributions, the length of the marriage should be regarded as having extinguished or significantly reduced the effect of those initial contributions.
The relevant assets in this respect are those described in the first part of Annexure A, leaving to one side for the moment the wife’s superannuation and the husband’s modest interest in the growth phase of his superannuation fund. These assets, valued at $2,352,174.22, if divided equally, would represent a sum of $1,176,087.11 for each party. On this approach the non-superannuation assets acquired by the parties during the marriage would be viewed as having been the subject of equal contributions. I accept that this is the appropriate approach in relation to the non-inherited assets accumulated during the marriage.
Nonetheless, in practical terms, and on the basis that the husband’s inheritance is also part of the pool available for distribution, the husband proposes that the wife retain the former matrimonial home unencumbered, her car, the funds in her bank accounts, the entirety of her superannuation, the partial property distribution in January 2019 of $180,000, and that she be paid a further sum of $220,000 which is broadly reflective of the after tax proceeds of the sale of the shares accumulated during the relationship and the husband’s interests in the managed funds which he has said he will need to sell to make this payment to the wife.
On this basis the wife would receive assets valued as follows:
·the former matrimonial home $1,415,000
·the money in her bank accounts $69,829
·her car $7,000
·the interim property distribution $180,000
·the additional payment $220,000
Total (non-super) $1,892,200
Plus her superannuation $294,152
Total $2,186,352
The husband’s proposal would have him take as part of his share of the assets accumulated during the marriage the unsecured loans owing by the parties’ sons which attract no interest payments and which (should) only see capital repaid over time ($214,600), the funds in his bank accounts (amounting to close to $115,000), and his vehicles (amounting to close to $130,000). His share of the assets of the marriage would be worth approximately $460,000, inclusive of his de minimis interest in the growth phase of his superannuation fund.
On the husband’s proposal the funds received beneficially by him following his father’s death would be viewed as assets to which the wife has made no direct or indirect contribution but which are relevant on the assessment of the adjustment to be made in her favour against the matrimonial assets. The husband proposes that he would keep these assets, which would give him a home (valued at slightly less than the former matrimonial home) and shares and liquid funds to the value of (approximately, and at the time of trial) $145,279.
On the husband’s proposal his pension income, although capable of having a capital value attributable to it, would be approached having regard to what it actually is, that is, a guaranteed income stream for him.
The effect of the husband’s proposal is that the wife would receive an adjustment of approximately 30 per cent of the pool of non-superannuation assets accumulated by the parties during the marriage (the wife retaining slightly more than 80 per cent, or $1,892,200 of the $2,352,174, and the husband, after paying $220,000 to the wife, approximately $460,000). The husband notes that this creates a disparity of entitlement to the assets acquired by the parties themselves during the marriage of about $1,430,000. This is true, although it ignores the significant value of the husband’s pension.
The husband submits that in both real-dollar and percentage terms, an adjustment of this order of magnitude represents a substantial acknowledgement of the wife’s significant financial and non-financial contributions throughout the duration of the marriage, and pays proper regard to the fact that he will continue to enjoy the benefits of his pension for life, the assets he inherited from his father, and, to the extent that they are relevant, the existence of the family trust and the testamentary trust. The husband submits that the financial resource the trusts represent to him is modest, and ought not to weigh heavily on the exercise of the Court’s discretion if his evidence is accepted that he intends to administer the trusts in accordance with his father’s stated wishes. The husband says that his proposal would see the wife retain the vast majority of the assets which were accumulated by the parties themselves during the marriage. The husband’s superannuation, on his case, is not an asset as such, but a notional asset in the form of an income stream to be considered in the context of s 75(2) of the Act.
On the subject of his pension, the husband says that the Court must pay proper regard to the fact that the notional capitalised value of the future income stream is not a capital sum in his hands; rather it is the present value of his future income stream which ought to be viewed as a contribution by him. He says that given that it is taxed, it would be appropriate to apply some form of discount to reflect that, although the evidence does not allow any findings as to how any discount should be calculated, or its size.
The wife, by contrast, has proposed in paragraph 52 of her closing submissions that she should have 30-35 per cent of the assets of the marriage, the husband’s inheritance from his father, what she regards as the husband’s 60 per cent interest in the family trust and his 100 per cent interest in the testamentary trust, and 50 per cent of the capitalised value of the husband’s pension.
Insofar as the s 75(2) factors are concerned, the wife notes:
a)age and health of the parties
· the parties’ age in their late 50s and that they are in reasonably good health (although this materially overstates matters with respect to the husband);
· the fact that their children are adults;
b)income, property and financial resources and capacity for gainful employment
· the fact that she is employed only four days per week and earns $943 gross per week (approximately $49,000 per annum);
· the fact that the husband has a lifetime pension of $103,324 net per annum and, were he to retain all his inheritance shareholdings and assets could earn in excess of a further $100,000 per annum (although there is no evidence about any of this, and in the present economic circumstances the proposition may be doubtful);
· the fact that the husband has always had and will continue to have for some years a very good income earning capacity and greater potential than the wife (although this submission sits uncomfortably with the evidence);
c)the standard of living that in all the circumstances is reasonable
· her entitlement to a financial settlement that will enable her to be housed and to have a reasonable income without having to rely on the aged pension;
· the fact that if she were to lose her present employment her future prospects would be uncertain;
d)if either party is cohabiting with another person, the financial circumstances relating to that cohabitation
· the fact that the husband has re-partnered but that she has not;
e)the duration of the marriage
· the 34 years of marriage;
f)any fact or circumstance which the justice of the case requires to be taken into account
· the fact that the asset pool, including the husband’s inheritance, is very substantial and that the husband has a life time income.
In addition, the wife submits in paragraphs 65 and 66 of her closing submissions that in all the circumstances she should have an additional allowance of 5-10 per cent in property over and above the 30-35 per cent that represents her primary claim having regard to the s 75(2) considerations and in light of all her s 79(4)(a)-(c) contributions. This, she says, would mean that she would receive an approximately 35-40 per cent overall adjustment in her favour for non-superannuation assets and 50 per cent of the parties’ combined superannuation.
As I have indicated, I accept that insofar as the assets accumulated by the parties themselves during the marriage (excluding the husband’s inheritance) are concerned, it is appropriate to proceed on the basis that the parties have made equal contributions. Insofar as the husband’s inheritance from his father is concerned, I accept that it is appropriate to view these assets as not having been the subject of any contribution by the wife, but that it is appropriate to regard them as highly relevant on the assessment of the adjustment to be made in the wife’s favour against the assets accumulated by the parties during the marriage.
In all the circumstances I consider that, save in relation to his superannuation entitlements, the proposal advanced by the husband in relation to the assets of the marriage, including his inheritance, represents a more just and equitable basis for orders altering the property interests of the parties than the proposal advanced by the wife. Although the exercise is not straightforward, the husband’s proposal strikes an appropriate balance. Leaving to one side the difficult issue of the husband’s superannuation, it ensures that both parties have a fully unencumbered home in which to live, and that they both have access to not insubstantial liquid funds. Further, the husband does not need to have conceded the wife any share of the assets of the trusts, for the reasons that I have given.
However, I also consider that, in as much as the trusts represent something of a financial resource available to the husband (consistently with the terms of the trusts), and the fact that the future income stream represented by the husband’s defined benefit pension is of such considerable value,[4] a further adjustment ought be made in favour of the wife having regard to certain of the matters required to be taken into account by s 75(2) of the Act.
[4] See, in this respect, Semperton & Semperton, [170]-[173] and the authorities to which reference is there made.
The wife has submitted that, on the basis of s 75(2)(g), it is appropriate that in all the circumstances she have a financial settlement that will enable her not only to be housed, but which will give her a reasonable income without having to rely on a government pension. She says that although she is presently employed, enjoys reasonably good health, and continues to work, her future is uncertain as compared to her husband who will have the protection of his defined benefit pension for life. The wife refers also, in the context of s 75(2)(o) of the Act, to the substantial nature of the husband’s inheritance from his father, and the value to him of his guaranteed lifetime income.
It is unquestionable that the husband’s pension represents a considerable benefit to him. The income stream that it provides can only be regarded as an extremely valuable financial resource to him (see also s 75(2)(b) of the Act). Although it may be accepted that he receives this benefit at least in part, if not substantially, by reason of his assessed permanent disability, it remains the case that the superannuation interest accrued during the course of the marriage and was, therefore, something to which the wife made indirect contributions. It may readily be inferred that the nature of the husband’s post-traumatic stress injuries imposed a burden that the wife was compelled to share with the husband for a considerable period of time during the marriage.
Although the husband’s proposal that the wife have a settlement of $2,186,352 would leave her with the entirety of her superannuation, which is in the order of $294,152, and provide her with a further sum of $220,000, in addition to her partial property settlement of $180,000, the former matrimonial home and other assets, there is considerable force in the wife’s submission that her post-retirement position will be significantly more tenuous than the husband’s.
Bearing all of this in mind I consider that, having regard in particular to the matters in s 75(2)(b), (g), (k) and (o) of the Act, and making a holistic value judgment, it would be appropriate for the wife to receive an additional amount from the asset pool available for division of $300,000, giving her a total distribution of $2,486,352.
I consider that a further adjustment of this quantum is, in all the circumstances, necessary to produce an outcome which is just and equitable and, accordingly, consistent with the requirements of s 79 of the Act. In coming to the view that a payment of $220,000 is insufficient, I note that a further amount of $300,000 is well within the husband’s means having regard to the asset pool available for division. In this regard the husband conceded in cross examination that if he were to be ordered to pay an additional amount to the wife, he could do so, but he would need to consider selling some of his vehicles and the shares his father left him. He also volunteered that, if necessary, he could borrow money from the trusts for this purpose, although it would have to be repaid. On the basis of the amounts disclosed in Annexure A, it would also appear to be the case that the husband could have recourse to money in his bank accounts which he is retaining to fund a further payment to the wife.
With a total pool of assets available for distribution of $4,042,106.51, inclusive of the wife’s superannuation and the husband’s interest in the growth phase of his superannuation, the payment of a further $300,000 to the wife would mean that she would receive approximately 61.5% of the total asset pool. Expressed as a proportion of that part of the pool comprising only the assets accumulated by the parties themselves during the marriage, the wife would receive approximately 94%, almost 14% more than the husband’s proposal at the conclusion of the trial would have given her.
The husband will be left with assets valued at approximately $1,556,211, inclusive of the country property in which he now lives. This represents 38.5% of the assets available for division, including his inheritance from his father. Importantly however, he will retain his pension income stream of $103,324 per annum for life, something the wife will have to fund herself, and he will have available to him the financial resource represented by the trusts (consistently with their terms and the commitment he has made to honour his father’s wishes in their administration). The family trust, it will be recalled, had an asset position at the time of the trial of $1,180,503.82, and the testamentary trust had an asset position at the time of trial of $1,549,174.38.
Conclusion
There will accordingly be orders broadly in the terms sought by the husband, save that the husband will be ordered to pay the sum of $520,000 to the wife rather than the sum of $220,000. Accepting that the husband may require some time to organise the payment of this further amount, the orders will not require the husband to pay the additional $300,000 to the wife for a period of 90 days.
Insofar as the chattels remaining in the former matrimonial home are concerned, at the conclusion of the trial the Court was provided by counsel for the husband with a form of order which purported to list the chattels to be surrendered to the husband by the wife, consistently with the evidence given in relation to those matters. There was no contrary submission made by the wife, and so the orders to be made in relation to the chattels will reflect those sought by the husband in his minute.
I certify that the preceding one hundred and forty-four (144) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McEvoy delivered on 31 March 2020.
Associate:
Date: 31 March 2020
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