MELVILLE & MELVILLE

[2011] FamCA 410

FAMILY COURT OF AUSTRALIA

MELVILLE & MELVILLE [2011] FamCA 410

FAMILY LAW - PROPERTY SETTLEMENT – Assets and Liabilities; Contributions; Adjustments; Just and equitable – Superannuation

Family Law Act 1975 (Cth) Sections 75 & 79

In the Marriage of Hickey (2003) 30 Fam LR 355; In the Marriage of Omacini (2005) 33 Fam LR 134; Jones v Dunkel (1959) 101 CLR 298; Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Shewring (1987) l2 Fam LR 139; In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797; In the Marriage of Coghlan (2004) 33 Fam LR 414; In the Marriage of Clauson (1995) 18 Fam LR 693 at 711; [1995] FLC 92-595; Best v Best (1993) FLC 92-418; 16 Fam LR 937; Commissioner of Taxation & Worsnop and Anor [2009] FamCAFC 4; (2009) FLC 93-392; 40 Fam LR 552.

APPLICANT: Mr Melville

RESPONDENT: Ms Melville

FILE NUMBER: SYC 666 Of 2009

DATE DELIVERED: 8 June 2011

PLACE DELIVERED: Sydney

JUDGMENT OF: Loughnan J

PLACE HEARD:  Sydney

HEARING DATE: 1 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT WIFE:

Ms S. Christie

SOLICITOR FOR THE APPLICANT:

MCW Lawyers

COUNSEL FOR THE RESPONDENT 

HUSBAND:

Ms Kennedy

SOLICITOR FOR THE RESPONDENT

Cameron Gillingham Boyd

Orders

1. The husband and wife forthwith do all acts and give all directions necessary so that the St. George Bank term deposit in their joint names be closed and the closing balance be distributed :

   1.1.as to $144,423, to the wife ; and

   1.2.as to the balance, to the husband.

2. By consent, within seven (7) days from the date of this order the husband, in his capacity as director of B Pty Ltd  ACN …, shall do all acts and things necessary to cause the … motor vehicle registration number … to be transferred to the sole name of the wife.

3. By consent, the parties shall do all acts and things necessary to transfer the wife's shares in B Pty Ltd  to the husband or his nominee and in implementation of this order:

   3.1.The husband shall provide a share transfer form to the wife's solicitors within seven (7) days of this order.

   3.2.The wife shall return the signed transfer form to the husband's solicitors within fourteen (14) days of this order.

   3.3.The husband shall attend to the recording of the share transfer in the books of B Pty Ltd  and the lodgement of all necessary ASIC notices within twenty-eight (28) days from the date of these orders.

4. By consent, from the date of these orders the husband shall indemnify the wife in relation to any liability of B Pty Ltd .

5. That:

   5.1.In accordance with Section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable to Mr Melville from his interest in MLC Superannuation account number … Ms Melville is entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using base amount of $69,377 and there is a corresponding reduction in the entitlement Mr Melville would have had but for these orders.

   5.2.Having been accorded procedural fairness in relation to the making of these orders, these orders bind the trustee of MLC Superannuation.

   5.3.These orders have effect from the operative time and the operative time is five working days from the date of service of these orders upon the trustee.

6. By consent, as between the husband and wife, and except as provided for in the orders herein, the parties shall retain all interest and entitlement to:

   6.1.All personal property now in their respective possession or control.

   6.2.Credit funds standing in bank accounts, building society or credit union accounts in their sole names respectively.

   6.3.Their superannuation entitlements, subject to order 5 above.

7. The husband and wife do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders in the time periods prescribed.

8. In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

   IT IS NOTED that publication of this judgment under the pseudonym Melville & Melville has approved been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 666 of 2009

Mr Melville

Applicant

And

Ms Melville

Respondent

REASONS FOR JUDGMENT

1. Mr and Ms Melville were married in 1979 and lived together for about 28 years. They cannot agree on a settlement of their property. For convenience I will refer to them as the wife and husband.

Applications

1. The husband seeks orders in terms incorporated in the Case Summary document provided in his case as follows:

   1.That the husband and the wife shall do all acts and things and sign all documents necessary to direct St George Bank to distribute the proceeds of Account Number …, being the proceeds of sale of the property at [C Street, Suburb D], as follows:

   1.1as to $130,000.00 to [Ms Melville];

   1.2as to repayment of the Citi Gold credit card (account number …);

   1.3as to repayment of the Citi Ready Credit credit card (account number …);

   1.4as to repayment of the ANZ Visa Card (account number …);

   1.5as to the balance:

   1.5.150 per cent to the wife ; and

   1.5.250 per cent to the husband.

   2That:

   2.1the Court allocates, as required by Section 90MT(4) of the Family Law Act, a base amount of $55,859.00 to the wife out of the husband's interest in MLC Superannuation (account number …) ("the Fund").

   2.2in accordance with Section 90MT(1)(a) of the Family Law Act, the Court:

   2.2.1creates an entitlement on the part of the wife to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

   2.2.2makes a corresponding reduction in the entitlement to the husband, or such other person to whom a splittable payment may be made, would have had in the Fund, but for this Order.

   2.3whenever the Trustee of the Fund makes a splittable payment out of the husband's interest in the Fund, the Trustee shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in paragraph 2.1 of this Order in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001.

   2.4this Order has effect from the operative time and the operative time is four (4) business days after the sealed Order is served on the Trustee.

   3That except as otherwise provided in these Orders, the husband and the wife are entitled to be the sole legal and beneficial owners of all items of property including money, insurances, equities, business interests, superannuation interests and entitlements, shares and personal effects currently in the possession or control of each of them respectively.

   4That in default of either or both of the husband and the wife doing all such things and executing all such documents as is necessary to comply with these Orders, a Registrar of the Sydney Registry of the Family Court of Australia, or such other person appointed by the Court, be authorized to do all such acts things and execute all such documents on behalf of either or both of the husband and the wife and order that in the event that either party procures compliance with the Orders set out hereunder by obtaining execution of documents pursuant to this Order, then the party procuring such execution of documents shall be indemnified by the other party for his or her costs and expenses incurred in obtaining such compliance.

2. According to the wife’s Case Outline Document, as amended orally in the course of final submissions, the wife seeks orders as follows:

   1.   That the husband and wife forthwith do all acts and give all directions necessary so that the St. George Bank term deposit in their joint names be closed and the closing balance be distributed:

   1.1.As to 72 per cent to the wife (a percentage of the invested funds that will result in an overall division wife 60 per cent: husband 45 per cent

   1.2.      28 per cent to the husband.

   2.That within seven (7) days from the date of this order the husband, in his capacity as director of [B Pty] Ltd ACN 099 463 393 shall do all acts and things necessary to cause the … motor vehicle registration number … to be transferred to the sole name of the wife. 

   3.That the parties shall do all acts and things necessary to transfer the wife's shares in [B Pty Ltd] to the husband or his nominee and in implementation of this order:

   3.1.The husband shall provide a share transfer form to the wife's solicitors within seven (7) days of this order.

   3.2.The wife shall return the signed transfer form to the husband's solicitors within fourteen (14) days of this order.

   3.3.The husband shall attend to the recording of the share transfer in the books of [B Pty Ltd] and the lodgement of all necessary ASIC notices within twenty-eight (28) days from the date of these orders.

   4.From the date of these orders the husband indemnify the wife in relation to any liability of [B Pty Ltd].

   5.That:

   5.1.In accordance with Section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable to [Mr Melville] from his interest in MLC Superannuation account number … [Ms Melville] is entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using base amount of $69,538.60 and there is a corresponding reduction in the entitlement [Mr Melville] would have had but for these orders.

   5.2.Having been accorded procedural fairness in relation to the making of these orders, these orders bind the trustee of MLC Superannuation.

   5.3.These orders have effect from the operative time and the operative time is five working days from the date of service of these orders upon the trustee.

   6.That as between the husband and wife, and except as provided for in the orders herein, the parties shall retain all interest and entitlement to:

   6.1.      All personal property now in their respective possession or control.

   6.2.Credit funds standing in bank accounts, building society or credit union accounts in their sole names respectively.

   6.3.Their superannuation entitlements, subject to order 5 above.

   7.The husband and wife do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders in the time periods prescribed.

8.That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

Documents read

1. The husband relied on the following documents:

Sworn / Affirmed	Filed
Affidavit of husband	21 April 2011	21 April 2011
Husband’s Financial Statement	9 February 2009	9 February 2009
Husband’s Financial Statement	21 April 2011	21 April 2011

1. The wife relied on the following documents:

Sworn / Affirmed	Filed
Affidavit of Wife	6 May 2011	6 May 2011
Wife’s Financial Statement	6 May 2011	6 May 2011

Short history

1. The husband was born in 1961 and, as at the date of hearing, he was 50 years of age.  The wife was born in September 1962 and as at the date of hearing, she was 48 years of age.  The parties commenced cohabitating and married in 1979.  They separated in February 2007. 

Children

1. There are six children of the marriage:

   Ms E Melville  was born in 1979 and is currently 31 years of age;

   Ms F Melville   was born in 1981 and is currently 29 years of age;

   Mr G Melville   was born in 1986 and is currently 25 years of age;

   Mr H Melville   was born in 1989 and is currently 22 years of age;

   Mr J Melville   was born in 1991 and is currently 19 years of age; and

   K Melville was born in 1995 and is currently 15 years of age.

The hearing

1. When the matter was called on the parties asked for time to explore settlement. That could not be achieved and at 11.15 am the oral trial commenced. Such was the limited area of relevant dispute that the wife’s case closed before lunch and after submissions were made, judgment was reserved at 3.08 pm.

Disputed facts

1. In the outline filed in the wife’s case, the following issues were identified:

   1.   Composition of the asset pool:

   a.   How should the monies advanced by the husband’s mother be treated?

   b.   How should credit card debt be treated?

   2.   Treatment of contributions in a long marriage.

   3.   Wife’s knowledge of indebtedness of parties/company.

   4.   Status of monies owed to parties by B Pty Ltd .

   5.   Extent of adjustment having regard to disparity in earning capacity and parenting arrangements.

Background facts

10.The parties started living together and were married in 1979.

11.At the date of marriage, the husband owned a motor vehicle and minimal savings.  He was employed by the II Bank and earned approximately $3,500 per annum.  The wife worked as a shop assistant, earning approximately $2,500 per annum.  Her assets consisted of personal effects.

12.The parties lived at the wife’s parents’ home at L Town for the first two weeks of their marriage.  They then moved into a rented home at M Town, where they lived for approximately two years.

13.The wife ceased paid employment prior to the birth of the parties’ first child, Ms E Melville.

14.Ms E Melville was born in 1979. 

15.From 1980 to 1981, the husband worked as a consultant with N Pty Ltd on a full time basis.

16.In around 1980, the husband received an inheritance of approximately $10,000 from his grandfather’s estate. 

17.In 1980, the parties purchased a home at O Street, Suburb P (“the Suburb P property”) for approximately $64,500.  The husband applied his inheritance toward the purchase price.  The balance was made up by borrowings secured by a mortgage.

18.Ms F Melville was born in 1981.

19.From 1981 until 1984, the husband worked with Q Pty Ltd on a full-time basis.

20.Mr G Melville was born in 1986.

21.From 1984 until 1990, the husband was employed at as a Manager for R Pty Ltd on a full-time basis.  

22.Sadly, the wife gave birth to a child who died after a few hours. Some time later she gave birth to a still born child.

23.Mr H Melville was born in 1989.

24.In around 1990, the parties sold the Suburb P property for approximately $89,000 and received net proceeds of approximately $26,000.

25.In around 1990, the parties purchased a property at S Street, Suburb T (“the Suburb T property”) for approximately $125,000.  The parties applied the sale proceeds from the Suburb P property toward the purchase.  The balance was made up by way of mortgage in the amount of approximately $105,000.

26.From 1990 until 1991, the husband was employed as a Manager at U Pty Ltd.

27.Mr J Melville was born in 1991.

28.From 1991 until 1993, the husband was employed as a Manager at V Pty Ltd.

29.From 1993 until 2001, the husband was employed as a Manager for W Pty Ltd on a full-time basis.

30.In 1995, the parties sold the Suburb T property for approximately $286,000 and received net proceeds of approximately $140,000.

31.In 1995, the parties purchased a block of land at C Street, Suburb D for $140,000.  The parties constructed a home on the land at a cost of $450,000.  The parties applied the sale proceeds from the Suburb T property toward the purchase and took out a mortgage in the amount of $380,000 from Bankwest.

32.K Melville was born in 1995.

33.While the home at Suburb D was being built, the parties lived at the husband’s parents’ holiday home at X Town.

34.Between 1999 and 2000, the wife completed a TAFE course to allow her to gain entry into university. 

35.In March 2001, the husband incorporated the company Y Pty Ltd.  He and the wife were the directors of this company and held equal shares in the company.

36.In early 2001, Y Pty Ltd purchased the business known as Y Products from a company known as Z Pty Ltd for approximately $385,000, funded by a loan provided by the National Australia Bank.

37.In 2001, the wife commenced studying a Bachelor of Science.

38.In April 2001, the parties also purchased a factory at AA Street, Suburb BB from Z Pty Ltd for approximately $1,765,000, which was used to conduct the business of Y Pty Ltd.  The loan for this purchase was also provided by the National Australia Bank.

39.In February 2002, the husband incorporated the company B Pty Ltd  (“B”), which operated an acoustic insulation manufacturing business known as “CC”.  The husband was the sole director of B Pty Ltd  and the parties held equal shares in the company.

40.In April 2002, the husband and wife sold the Suburb BB property for approximately $2,255,000.  The sale proceeds were used to settle loans with the National Australia Bank, other business debts, sale costs, agent’s commission and the legal costs of the sale.

41.After this sale, the business was conducted out of rented premises at Suburb DD.

42.In around July 2002, $660,000 was borrowed for B Pty Ltd . That was used to purchase manufacturing equipment, to rent office and factory space, to set up a production line and for staff wages.

43.In 2002, Y Pty Ltd was placed into voluntary administration and ceased trading.  The liquidation process was completed in around late 2003. After Y Pty Ltd was liquidated, a debt of approximately $50,000 remained unpaid. 

44.In 2002, the husband’s father died and the husband received $100,000 from his estate.  The husband paid $50,000 toward the debts of Y Pty Ltd and the balance was paid toward the mortgage secured against the Suburb D property. 

45.In January 2003 the husband’s mother advanced $100,000 to the husband. The husband contends that the advance was by way of loan. The husband paid those moneys into B Pty Ltd .

46.In September 2004, the National Australia Bank provided a Business Mortgage overdraft facility to B Pty Ltd  in the sum of $60,000.  The wife says she had no knowledge of this facility.

47.In January 2006, B Pty Ltd  opened a National Business Plus account with the National Australia Bank.  The wife says she was unaware of this account.

48.In May 2006, the wife graduated from university and started work on a part-time basis. 

49.In October 2006 the husband’s mother advanced $30,000 to the husband. The husband contends that the advance was by way of loan. The husband paid those moneys into B Pty Ltd. The husband paid those moneys into B Pty Ltd  

50.In December 2006, Ms F Melville and her then partner, Mr EE, purchased a property at FF Street, Suburb GG for approximately $280,000. The parties guaranteed the loan Ms F Melville and Mr EE obtained from the National Australia Bank and the guarantee was secured against the Suburb D property.

51.In February 2007, the parties separated under one roof.

52.From the commencement of the National Australia Bank loan, until around November 2007, the husband says he contributed approximately half of the repayments and that Ms F Melville and Mr EE contributed the other half.  Over the course of the loan, the husband says he contributed $39,000 toward the mortgage repayments and that the wife contributed approximately $4,000.

53.The husband says that from November 2007, his mother did not require him to make any payments in respect of the $130,000 loan, due to the financial difficulties resulting from the Suburb GG property.

54.In around July 2007, Ms F Melville and Mr EE separated.

55.From November 2007, the husband says he started paying the entire amount of the repayments for the National Australia Bank loan.

56.In around October 2008, the parties sold the Suburb D property for $720,000.  The parties were able to discharge their joint mortgage and three loan accounts in the name of B Pty Ltd from the sale proceeds.  The surplus funds in the amount of $294,668 were held in a term deposit account with the National Australia Bank. 

57.In late 2008, the Suburb GG property was sold for approximately $260,000.  The sale price was not sufficient to discharge the loan secured against the property, which had a balance of $310,000.

58.Upon completion of the sale of the Suburb GG property, the amount of $252,462.23 was paid to NAB from the sale proceeds. A further $79,906 was paid to National Australia Bank from the funds held in the National Australia Bank term deposit to meet the shortfall. 

59.In December 2008, the wife borrowed money from her sister to establish herself in a rented two bedroom apartment.

60.In 2009, the wife commenced work as a lecturer at HH University on a part time basis.

61.In early 2009, the parties each received $15,000 from their National Australia Bank term deposit. 

62.On 9 February 2009, these proceedings were commenced when the husband filed an Application for Final Orders seeking property orders.

63.In March 2009, the husband says he recommenced making loan repayments to his mother.

64.On 6 May 2009, the wife filed a Response to Initiating Application seeking property and parenting orders.

65.In August 2009, K Melville was diagnosed with Type 1 Diabetes.  He is required to administer insulin injections on a daily basis and eat a specialised diet.

66.In around July 2010, the parties transferred the funds held in the National Australia Bank term deposit into a St George Bank term deposit.  At this time, the parties also gave $5,000 to their son, Mr G Melville, for his wedding expenses.

67.In around mid 2010, the wife obtained employment with the public service in Tasmania.  On 8 August 2010, she moved to Tasmania.

68.From around December 2008 to around February 2011, K, Mr H and Mr J Melville lived with the husband.

69.On 31 August 2010, I made parenting orders in terms agreed between the parties. Those orders are as follows:

By consent orders are made in terms of the document titled “Consent Orders” marked Exhibit 1 as set out hereunder:

“1.That the parents have equal shared parental responsibility for the child, [K Melville] (“[K]”) born … 1995.

2.That [K] live with the father and spend time with his mother at times as agreed between the parents and [K].

3.That in relation to [K’s] diabetes, during the time [K] is with either the husband or the wife, that each party use their best endeavours to ensure that:

3.1His medical condition is regularly reviewed.

3.2That [K] complies with recommendations of his treating doctors concerning medication, diet and exercise.”

2.That these proceedings be listed before Justice Loughnan for hearing in relation to property settlement, estimated hearing time one (1) day on a date to be settled by arrangement with Justice Loughnan’s associate and the solicitors for the parties.

3.That unless the parties agree to the contrary in writing, not later than one calendar month prior to the hearing date the parties are to file and serve affidavits of evidence-in-chief and updated Financial Statements.

4.That not later than three (3) working days prior to the hearing the solicitors provide in Microsoft Word format by email to Justice Loughnan’s associate and to each other Case Outline documents setting out the terms of any orders sought which are different to the orders sought in their Application, Response and Reply, that they identify the documents relied on by each of the parties and set out briefly the arguments to be made in relation to any disputed issue on the agreed balance sheet and brief arguments to be made in relation to contributions and the other matters referred to in s79(4).

5.At that same time the parties are to settle and provide in Microsoft Word format to Justice Loughnan’s associate an agreed chronology noting in the document where the evidence will be found in relation to any disputed issue of fact and an agreed balance sheet, again noting on the document where the evidence will be found in relation to the identification of any asset or liability or the value of any asset or liability.

6.That if not already done, by the hearing date the parties are to also provide a copy of advice from the trustee of any superannuation fund, an interest in which either party seeks be the subject of a splitting order.

7.Not later than 10:00 am on the day of the hearing the parties are to have settled or joined issue on objections to evidence.

8.That in the event that either party becomes aware of any matter which would prevent the hearing commencing or continuing to conclusion on the date fixed for hearing, that party is to forthwith restore the matter to the list by arrangement with Justice Loughnan’s associate on giving 7 days notice to the Court and to the other party.

9.Pursuant to s.65DA(2) and s.62B, the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.

70.In December 2010, the wife returned to Sydney from Tasmania.  She lived with Mr G Melville and the parties’ daughter-in-law for a period of two months.  I take it that she then moved to rented premises. K moved in with his mother in February 2011 and spent only one night with the husband since that time.

71.In January 2011, the parties agreed to share the cost of K’s school fees.

Credit and Submissions

The evidence of the witnesses

72.The only witnesses called for cross-examination were the parties. There are no issues that fall to be determined solely by reference to the testimony of the parties. To that extent credit is not an issue.

Submissions

73.The written submissions on behalf of the husband are:

CONTRIBUTION BASED ENTITLEMENTS

1.The wife made the substantial homemaker and parent contribution.

2.The husband assisted with homemaker and parent contributions when he was not working.

3.The husband was the primary income earner for the family.

4.The husband received an inheritance of $100,000.00 on the death of his father in 2002.

5.The family received the benefit of two loan from his mother in February 2003 of $130,000.00 which kept the family afloat.  The husband made continuous repayments of this money save for a period where he was experiencing financial hardship and the repayments ceased for a period.

10. Contribution based entitlements are assessed at 50/50

SECTION 75(2) FACTORS

11. The husband is 50 years of age. He is winding down the [B Pty Ltd] business and will shortly commence to look for employment.

12. The wife is a qualified speech pathologist and at present earns slightly less than the husband.  She seems to choose not to work to her full capacity.  She has superior qualifications to the husband.

13. [K] aged 15 presently lives with his mother but has also lived with his father for a substantial period of the separation.

14. The father houses both Mr H and Mr J Melville when they are not studying or working
15. There should be no adjustment for section 75 (2) factors

74.The oral submissions on behalf of the husband are in summary:

·    This is a long marriage and no Kowaliw argument applies;

·    The debt of $130,000 to the husband’s mother should be taken into account. The reasons include that:

ØThere is evidence that the advances were made;

ØRepayments have been made;

ØNotwithstanding that there is no evidence of the term of the loan or that the loan has been called in – it is a joint debt;

ØAlthough paid to the company, moneys thereafter came out of the company and into the joint mortgage;

ØThe husband was not asked in cross-examination if he has asked his mother to give evidence and therefore the Jones and Dunkel inference from the absence of evidence from her, does not arise.

·    The contributions are equal (although if the loan is to be ignored then that may not be the case);

·    There should be no adjustment to the wife.

75.The submissions on behalf of the wife are in summary:

·    The small areas of dispute in the balance sheet should be dealt with on the basis of admissions against interest;

·    The debt of $130,000 to the husband’s mother should not be taken into account. The reasons include that:

ØIt is a debt of [B Pty Ltd] and not of the parties;

ØGiven that the parties are owed a significantly greater amount by [B Pty Ltd] because of loans they have made to the company there is no way of tracing the application of the $130,000 to any family purpose;

ØIn the absence of evidence from the husband’s mother to the contrary, not repayable;

ØThe loan is statute barred; and

ØThe husband’s financial conduct has been reckless.

·    The contributions are equal;

·    There should be a 10 per cent adjustment to the wife because:

Øher income is less than the husbands and less certain;

Øshe will always be a PAYE wage earner whereas the husband has the advantages of working through a company.

Ø[K] lives with her and has spent little time with the husband;

The approach in proceedings under section 79

76.The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79, involving four inter-related steps. First, I make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determinations and identify orders that are just and equitable in all the circumstances of the case.[1]

[1] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370.

77.There is no mention of steps in s 79 but it is convenient to approach the exercise of discretion in a structured way. The Full Court has supported such an approach.[2]

[2] In the Marriage of Hickey above.

The property of the parties at the date of the hearing

78.The Court is required to make a finding as to the property of the parties. That involves identifying assets, liabilities and financial resources and their values.

79.There are circumstances whereby assets can be included in the list for division although they no longer exist. The same logic would apply to the exclusion from the relevant list of liabilities, debts that do exist at the date of the hearing. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:

[30]     To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:

(a)Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:

[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.

(b)Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:

In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.

(c)In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:

As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:

(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or

(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.

Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.

80.The parties settled an agreed balance sheet and there are some items about which there is no dispute as to inclusion or the value of the asset or liability. Some of the disputed items were agreed after the joint balance sheet was prepared. I have worked off the agreed balance sheet for ease of reference. As to the disputed issues:

Item 2 – husband’s St George Bank Direct Saver account No. …

81.The wife puts that figure at $658. The husband says it is $682. It is submitted for the wife that the wife’s figure is to be preferred as it comes from paragraph 84 of the husband’s affidavit. Unusually, the wife’s figure is in effect a concession by both parties, against interest. I will adopt that figure.

Item 3 – husband’s St George Bank Freedom Business account No. …

82.The wife puts that figure at $6,804. The husband says it is $6,039. It is submitted for the wife that the wife’s figure is to be preferred as it comes from paragraph 84 of the husband’s affidavit. No submission was advanced on behalf of the husband against that argument. I will adopt the figure advanced on behalf of the wife.

Item 4 – husband’s St George Bank Freedom account No. …

83.The wife puts that figure at $3,974. The husband says it is $2,544. It is submitted for the wife that the wife’s figure is to be preferred as it comes from paragraph 84 of the husband’s affidavit. No submission was advanced on behalf of the husband against that argument. I will adopt the figure advanced on behalf of the wife.

Item 7 – Motor Vehicle 1

84.It is agreed that the car belongs to the husband and not the company.

Item 8 – Motor Vehicle 2

85.It is agreed that the car is worth $4,200.

Item 11 – Husband’s boat

86.The wife puts that figure at $5,000. The husband says it is $4,500. It is submitted for the wife that the wife’s figure is to be preferred as it comes from paragraph 43 of the husband’s Financial Statement. No submission was advanced on behalf of the husband against that argument. I will adopt the figure advanced on behalf of the wife.

Item 23 – Husband’s Australian Super

87.The wife puts that figure at $6,527. The husband says it is $6,080. No submissions were made in relation to this issue. At paragraph 45 of the husband’s Financial Statement he puts the value at $6,527. I will adopt the figure advanced on behalf of the wife.

Item 24 – Husband’s MLC Superannuation

88.The wife puts that figure at $115,894. The husband says it is $111,718. No submissions were made in relation to this issue. At paragraph 45 of the husband’s Financial Statement he puts the value at $115,894. I will adopt the figure advanced on behalf of the wife.

Item 26 – Wife’s Unisuper

89.The wife puts that figure at $9,785. The husband says it is $882. No submissions were made in relation to this issue. I will adopt the figure advanced on behalf of the wife as an admission against interest.

90.I find that the assets are:

ASSETS	VALUE
1.	Joint St George Bank Term Deposit a/c	$213,285
2	Husband’s St George Bank Direct Saver account	$658
3.	Husband’s St George Bank Freedom Business account	$6,804
4.	Husband’s St George Bank Freedom account	$3,974
5.	Wife’s St George Bank account	$904
6.	Shares in B Pty Ltd  - Husband	Not Known
7.	Husband’s motor vehicle 2	$11,000
8.	B Pty Ltd motor vehicle 2	$4,200
9.	Husband’s furniture	$2,500
10.	Wife’s furniture	$2,000
11.	Husband’s boat	$5,000
12.	Moneys owed to husband and wife by B Pty Ltd	Not Known
13.	Husband’s paid legal fees and moneys in trust	$20,195
14.	Wife’s paid legal fees	$155
Total Gross Assets	$270,675.00

ADDBACKS	VALUE
15.	Moneys released to husband from term deposit	$15,000
16.	Moneys released to wife from term deposit	$15,000
Total Gross Assets	$30,000.00

SUPERANNUATION ASSETS	VALUE
23.	Husband’s Australian Super	$6,257
24.	Husband’s MLC Superannuation	$115,894
25.	Wife’s Australian Super - nominal	$0
26.	Wife’s Unisuper	$9,785
Total Gross Assets	$131,936.00

Liabilities:

91.As to the disputed issues:

Husband’s debt to his mother

92.This is the most contentious issue in the case. The husband deposed to the fact that in February 2003 his mother lent him $130,000 on an interest only basis.

93.The wife concedes that in January 2003 the husband’s mother advanced $100,000 to the husband and that in October 2006 she advanced $30,000 to the husband. I understand that the husband concedes that the wife’s version is correct.

94.Lending support to the wife’s version is Annexure C to the husband’s affidavit which includes is a handwritten note which reads:

Loan to [Mr Melville]

Principal$100,000

Interest$417.oo monthly paid @ 5 per cent

Commenced6/2/2003

95.Also attached to the affidavit is a copy of a number of handwritten receipts from 2003 and 2009/2010. The wife said that does not know if the handwriting on those documents is that of the husband’s mother. Nevertheless the advances are conceded.

96.It is an agreed fact that the wife knew nothing of the advances made by the husband’s mother.

97.The husband paid the moneys advanced by his mother, into B Pty Ltd.

98.It is argued for the wife that the loans will not be enforced and in any event that they are the loans of the company, not of the husband. It is the husband’s case that the moneys were applied to matrimonial purposes and in particular, mortgage payments were made by the company from those moneys.

99.It falls to the husband to establish that the debt is payable and in any event, that it should be taken into account in identifying the net pool of assets. He is not able to discharge that onus.

1. The husband conceded in cross-examination that he knew that the wife challenged the inclusion of the debt in the calculations for the net pool of assets. He has not called any evidence from his mother about the advances and has not said why he did not call her. An inference arises in those circumstances that the evidence of his mother would not assist his case.[3]

   [3] Jones v Dunkel (1959) 101 CLR 298.

2. There is evidence that some payments have been made to the husband’s mother. At various times amounts of $417 a month were paid. That would accord with the contention that the initial advance was made on the condition of interest only repayments at 5 per cent per annum. That is where the evidence of commerciality ends. As I have noted, there is no evidence of the loan being for a particular term or that the loan is at call, or that there has been a call for repayment. Further, the payments made to the husband’s mother have been patchy. There were payments made from 2003 to 2007 and in later years but there were significant periods when no payments were made. In those circumstances it is difficult to understand why the debt would stand at $130,000 and not a greater figure reflecting unpaid interest.

3. At various times the husband has had the capacity to make additional payments to his mother. For example, he has travelled overseas in each of the last three years. He pays a high rate of rent. As an aside, at $620 per week, his rent makes no sense of the evidence about his after tax income.

4. The facts suggest that the loan could be owed by the Company. In each case the moneys advanced were paid into B Pty Ltd. They were then used by B Pty Ltd to meet its obligations. For example the husband says that the moneys were used to pay his wages. It was B Pty Ltd, not the husband, that made the payments to the husband’s mother which are acknowledged in the handwritten receipts at Annexure C to the husband’s affidavit.

5. It is difficult to distinguish that company’s debts from personal debts. For example, in 2002, $660,000 was borrowed for B Pty Ltd. That sum was made up of $280,000 borrowed by B Pty Ltd in the form of a bank loan and $100,000 on overdraft and $280,000 borrowed by the parties by way of a flexi plan mortgage on their Suburb D property.

6. No company records have been produced showing the state of the loan accounts of the parties. It was submitted for the wife that the amount shown in the 2009 tax return of B Pty Ltd as owing to the parties of the order of $61,000 makes no sense of the earlier injections of funds by them of $175,000 in instalments from March 2003 and of $351,353 from the proceeds of sale of the Suburb D property in November 2008. It may be that I misheard the submission. The 2009 tax return for B Pty Ltd has the figure for shareholders funds at $51,059. Nevertheless, the point is well made.

7. If the husband seeks to make an argument that the advances from his mother can be traced, for example, through B Pty Ltd to payments on the joint mortgage, then he needs to demonstrate that fact. Even then, as I have mentioned above, the parties have raised funds on the security of their assets, solely for the benefit of B Pty Ltd.

8. Even if I am wrong and there is a loan, owed by the husband or the company there remains the issue of whether that loan should be included in the liabilities going to make up the relevant pool of assets.

9. In Commissioner of Taxation & Worsnop and Anor [2009] FamCAFC 4; (2009) FLC 93-392; 40 Fam LR 552 the Full Court was dealing with an appeal against property settlement orders where, for the purposes of identifying the net pool of assets, the trial judge had excluded the husband’s debt to the Commissioner of Taxation. There was no issue there about the existence of the debt.

10. The Full Court said:

    54.      Next, Mr Lethbridge submitted that the “exclusion” by Rose J from the asset table of the tax debt was not within recognised exceptions to the general approach described in the cases just referred to.  Mr Lethbridge referred to Biltoft and Biltoft (1995) FLC 92-614 at 82,125, where the Full Court acknowledged that the general practice might be departed from, where:

    …because of the circumstances surrounding the incurring of the liability it ought in justice and equity be wholly or partly disregarded in determining the appropriate order under section 79 as between the parties to the marriage.  Such a result could be reached where a spouse has incurred a liability in deliberate or reckless disregard of the other party’s potential entitlement under section 79…

    55.      Rose J discussed Biltoft (supra) at some length.  Among other passages from it, he quoted from 82,128:

    There is no requirement that the rights of an unsecured creditor or a claim by a third party must be considered and dealt with prior to the court making an order under s79, nor is there a rule of priority as between a creditor claimant and a spouse.  Those rights, however, cannot be ignored.  They must be recognised, taken into account and balanced against the rights of a spouse. (emphasis added)

11. And later:

    78.      While it is well-established that under s 79 the Court may make orders within a s 79 order, for payment by a spouse, or by both spouses, of a debt to a third party, whether that third party has intervened or not, in our view the s 79(2) requirement that an order under the section not be made unless it is just and equitable to do so, relates to the order made pursuant to s 79(1).  Altering the interests of the parties to the marriage in the property does not mean that an intervening third party creditor acquires by intervention some rights based on s 79(2) for a just and equitable remedy, that are additional to the creditor’s other rights at law.

    79.      Mr Lethbridge also referred to the terms of s 90AE(3)(d) of the Act, which is one of the conditions which must be met if an order is made changing a third party’s rights under the preceding subsections.  Sub-paragraph (d) requires that the Court be satisfied that in all the circumstances, it is just and equitable to make the order.  However, this requirement is in respect of the Court’s direct interference with a third party’s rights, for example, in respect of a creditor, rights relating to the person from whom recovery may be sought.  In contrast, the aspect of a creditor’s position to which the Court must have regard under s 75(2)(ha) are not rights to recovery but the practical prospects of recovery from a debtor spouse’s property.

    80.      For example, one might imagine a circumstance where one spouse’s initial contributions and the shortness of the marriage might mean that the great bulk of property existing at the time of a property settlement trial had belonged to, and does belong to, that spouse and that position ought not be altered under s 79.  In the meantime, a creditor might have lent, perhaps unwisely, to the other spouse, who lost the borrowed money and could not repay from his or her own assets.  As we have said, we do not think that in such circumstances, either s 79(2) or s 75(2)(ha) has the result that the creditor has some opportunity, on the basis of justice and equity, of improving the position that the creditor would have been in had he pursued the debtor spouse alone.  In other words, the creditor who becomes a party does not step up in status to become entitled to greater “justice and equity” than the non-party creditor.

    81.      This does not mean that the principles of fairness, justice and equity to a creditor ought not be addressed, where there is in prospect a reduction in the property of the debtor spouse, for the purpose of satisfying the s 79 claim of the other spouse, which reduction might adversely effect the prospects of recovery of the creditor, but this position does not arise because of the application of s 79(2).

    82.      In our view Rose J did not err in principle in the manner in which he applied s 75(2)(ha) of the Act.

12. Unlike the situation in Worsnop, if the debt to the husband’s mother is included in fixing the net pool of assets, the pool will not be entirely consumed by that debt.

13. Just because there is a debt due to the husband’s mother does not mean I am obliged to order that debt to be repaid or that it be taken into account, prior to making a distribution to the parties to the marriage from their property. My obligation is to make a just and equitable order for settlement of property.

14. It is not necessary that I find that the conduct of the creditor is such that the loan in question should have no priority over other claims. In Worsnop no such criticism could be made of the conduct of the Commissioner yet the Trial Judge’s decision to exclude the husband’s tax debt from the net property pool was found to be within his discretion. As in Worsnop there is no evidence here that the wife knew of the debt.

15. Here, if a debt exists I would exclude it from the calculation of the net assets of the parties. At no time was the wife involved in the establishment of the debt. The husband has not acted consistently with the existence of a debt. The financial disclosure of the husband has not been sufficient to evidence the debt. The lender has not given evidence about the status of the debt, nor has she or the husband explained the claimed balance of the debt. The financial affairs of B Pty Ltd and in particular the amounts owed to the shareholders and the financial dealings between the husband and B Pty Ltd are not revealed in the evidence. For those reasons the advance of $130,000 made by the husband’s mother is not relevant to the calculation of the net assets of the parties.

18 & 19 Husband’s Credit Card debts

1. The husband seeks that his ANZ Visa and Citibank credit card debts be included at $23,526 and $27,386, respectively. It is submitted for the wife that the husband’s credit card debts should not be included as relevant debts because of the confusion about what debts are those of the parties or the husband and what is owed by B Pty Ltd. If the debt is to be included, it is submitted that it should be limited to a combined total of $28,872 which is agreed to be the combined balance of the cards at separation.

2. No submissions were made against this submission. The natural approach to the pool of assets is to take figures as they stand at the time of the hearing. In Omacini (above), the Full Court discussed exceptions to that approach. Here the financial arrangements for B Pty Ltd and the interrelationship between the husband and B Pty Ltd are unclear. Despite a turnover of $105,000, B Pty Ltd was able to use tax losses to declare no taxable income in 2009. The tax calculation[4] made for the husband for that year was based on a taxable income for the year of $1,979. The husband conceded in cross-examination that in that year, the company charged out his services at $8,000 plus GST, a month.

   [4] Exhibit 5.

3. Meanwhile, the wife has worked as a PAYE wage earner. She has met her own expenses and has no opportunity to have preferential taxation treatment of her income.

4. The proper course is to take the credit card debts as at the date of separation.

20 Husband’s Income tax debts

1. The husband claims that he has an income tax debt of $7,179. The husband was to receive a tax refund of $188 for the 2009 year.[5] It is his evidence that he has not submitted a tax return for 2010. The debt[6] in question is addressed to CC Products and seems to be a debt of B Pty Ltd.

   [5] Exhibit 5.

   [6] Exhibit 3.

2. I will not include the debt in the list of relevant liabilities.

21 Joint school fees

1. The parties reached an agreement to share the cost of school fees. The submission on behalf of the wife is that the claimed debt of $1,681 should not be included in the list of relevant liabilities. There is no evidence before me as to how the debt arises and whether it represents what the wife has to pay, what the husband has to pay or a joint debt, in terms of the parties agreement. No harm is done in ignoring the debt. The agreement for the parties to share school fees will deal with this issue.

22. Husband’s legal fees

1. I take it that this item was included for completeness only. The husband and wife need not contribute to legal fees owing by the other party unless that is done in the context of costs orders. Presumably that is why the parties agreed to add back paid legal fees at items 13 and 14 above.

2. I will not include the debt in the list of relevant liabilities.

22A. Wife’s HECS debt

1. The wife owes a HECS debt of $9,000. The debt was accidentally omitted from the joint balance sheet. But for the course giving rise to that debt, it is likely that she would not be in a position to earn what she does. The debt is properly included in the list of relevant liabilities.

1. The relevant liabilities are:

DEBTS	VALUE
17.	Loan to Husband’s mother	$0
18.	Husband’s ANZ Bank Visa and Citibank accounts	$28,872
19.
20.	Husband’s Income Tax Assessment	$0
21.	Joint school fees	$0
22.	Husband’s outstanding legal fees	$0
22A	Wife’s HECS debt	$9,000
Total Gross Assets	$37,872.00

Net assets

1. The net assets have a value of $394,739 ($432,611 - $37,872). Of that, $131,936 is in the form of superannuation and $262,803 is in the form of non-superannuation assets.

Financial Resources

1. There is no evidence about financial resources.

Contributions

1. The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets.[7] There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[8].

   [7] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1.

   [8] In the Marriage of Shewring (1987) l2 Fam LR 139.

2. As to whether the Court should apply the considerations in section 79(4) to the assets globally or asset by asset, the authorities have it the former approach is preferred, in appropriate circumstances either approach is permissible and sometimes, an asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.

3. In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that:

   … approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.

4. Here the parties did not isolate superannuation interests for the purposes of applying section 79(4) to the assets. If I understand the counsel of the Full Court correctly, I am permitted to take the same approach.

Contributions

Section 79(4)(a) Contributions

1. Financial contributions, both direct and indirect were made by each of the parties.

2. Neither of the parties had assets of significant value at the date of marriage. At that time the husband worked at II Bank. He was in paid employment in various enterprises, as an employee until 2001. In March 2001, the husband incorporated the company Y Pty Ltd. In February 2002, the husband incorporated the company B Pty Ltd, which operated a manufacturing business known as “CC”. The husband worked in those enterprises since that time.

3. The wife worked as a Shop Assistant when the parties married. She then left the workforce. From the start of the marriage until 2007 the wife engaged in some part-time employment. She worked in a nursing home 3 hours a day for about 12 months; worked as a Cleaner in a factory for about 4 hours a week; and for 2 years she worked 4 – 6 hours a week holding parties to sell children’s clothing. In early 2007 the wife started working as a Nanny on 2 days a week for 8 hours each day on a casual basis. That continued into 2008 for one day a week. In addition, the wife obtained casual work as a Research Assistant for 4 days a week. She also undertook ironing work. In 2009, the wife commenced work as a Lecturer at the HH University for 40 hours and worked as a Research Assistant throughout the year and to the middle of 2010. From July/August to December 2010, the wife worked as a public servant in Tasmania. She had lecturing work during Summer School at the HH University in February 2011 and started a contract as a Lecturer and Research Assistant in March 2011.

4. In about 1980 the husband inherited approximately $10,000 from his grandfather’s estate. In 2002 the husband received $100,000 from his mother. He applied $50,000 to the debts of Y Pty Ltd and the balance to the mortgage secured on the Suburb D property. On one view, $50,000 was applied to paying off the Suburb D property. However, in the same year $660,000 was borrowed for B Pty Ltd. B Pty Ltd borrowed $280,000 in the form of a bank loan and $100,000 on overdraft. The parties borrowed $280,000 by way of a flexi plan mortgage on their Suburb D property. Thus, the mortgage was part of the B Pty Ltd debt.

5. In payments made in 2003 and 2006, the husband’s mother advanced $130,000 which was put into B Pty Ltd.

6. The husband made the greater financial contribution.

Section 79(4)(b) contributions

1. This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions.

1. The parties lived rent free with the wife’s parents for a few weeks at the start of the marriage. The parties lived in the husband’s parents’ holiday home while the Suburb D home was built. The husband says that the parties paid a reduced rent of $50 per week.

2. Otherwise there is no evidence about contributions that would fall under this provision.

Section 79(4)(c) contributions

1. This provision deals with contributions to the family including contributions in the form of homemaker contributions and contributions to children of the marriage.

2. It is agreed that the wife was the primary carer for the children and the primary homemaker throughout the marriage. She gave birth to eight children. Sadly, two premature babies died prior to or shortly after birth. It is her unchallenged evidence that from about 1990 the husband generally worked long hours, leaving home at 7.00 am and returning at about 6.30 pm. She deposes to:

   ·    breast feeding each of the children for about 12 months;

   ·    attending to the majority of the bathing and nappy changing and for the older children, was solely responsible for laundering cloth nappies;

   ·    preparing the babies’ food. Save for tinned apple she prepared all of their food from natural ingredients;

   ·    attending to all of the needs of the children during the day, in the evenings and when they woke during the night;

   ·    arranging and attending play groups and providing all of the normal pre-school experiences for Ms E and Ms F, who did not attend a formal pre-school For example, the wife had taught Ms E to read by the time she started school;

   ·    delivering and collecting Mr G, Mr J and Mr H to and from pre-school and participating in pre-school activities for 2 days a week in the 2 years before they started school;

   ·    delivering and collecting K to and from pre-school and participating in pre-school activities for 3 days a week in year before he started school and one day a week in the year before that;

   ·    preparing the children for pre-school and food and suitable clothing each day;

   ·    until they each respectively completed Year 12, preparing breakfast for the children, ensuring that uniforms were ready, that school notes or messages were dealt with and  making school lunches;

   ·    driving the children about 20 minutes to school and back each day from 1990 to 1995. This took about one and one half hours each weekday;

   ·    delivering and collecting the children from a wide range of activities they were involved in. On weekends, she and the husband shared attendance at the children’s sport; and

   ·    each afternoon supervising the children’s homework and organising non-curricular activities.

1. The husband was in full-time paid employment throughout the marriage. He deposes to assisting the wife with the children. In particular, when he was home from work, he says he:

   ·    fed the children when they were young;

   ·    changed nappies;

   ·    bathed the children when they were young;

   ·    helped the children with their homework;

   ·    took the children to sporting matches and training;

   ·    dropped the children at school and picked them up;

   ·    supervised the children; managed the boys soccer teams;

   ·    prepared school lunches almost every day;

   ·    vacuumed and mopped floors;

   ·    washed and dried dishes;

   ·    hung out washing and brought it in;

   ·    cooked dinner for the family approximately 5 times a week;

   ·    mowed the lawns;

   ·    watered the garden;

   ·    pruned plants;

   ·    built retaining walls;

   ·    established gardens; and

   ·    painted the home.

2. There seems to be some conflict in the evidence. For example, the evidence about cooking meals and delivering children to and from school is inconsistent. Neither of the parties was asked about those matters in cross-examination.

3. The agreed fact remains that the wife made the overwhelming contribution by way of parent and homemaker.

Conclusion on Contribution

1. This was a marriage involving cohabitation spanning 28 years and contributions have been made for more than 30 years. The parties had a number of financial reversals and their efforts have left them with a modest pool of assets. This is a marriage where the most valuable ‘assets’ are the earning capacities of the parties.[9] In this case, the greater earning capacity is that of the husband. Although I was initially told that the parties both argued for a finding of equality of contributions – I can understand why the husband would seek to resile from that given a finding that the $130,000 advance from his mother will not be taken into account in identifying the pool of assets.

   [9] See the Full Court decision in Best v Best (1993) FLC 92-418; 16 Fam LR 937.

2. Much of the wife’s complaint is that she was not told about the level of indebtedness of the parties at various times and simply went along with the husband and supported his plans, including his business plans. Sadly the parties’ investments (for example, the Suburb GG purchase, the incorporation of Y Pty Ltd and B Pty Ltd ) have not as yet lead to the generation of significant visible assets. The task of applying s 79 to the circumstances of the parties cannot normally involve revisiting each financial decision made during the marriage and apportioning responsibility for the extent to which those decisions contributed to the family. The Act does not provide for it and it would be difficult to made findings about how decisions were made over the duration of the marriage. The task is to make a just and equitable settlement of property taking into account the requirements of s 79(4).

3. In the circumstances, the proper finding is that the parties contributed equally, albeit in different ways.

The other matters in Section 79

1. Once contributions have been assessed, the other factors in s 79(4) need to be considered. They are:

Section 79(4) (d)

1. Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. This was not a matter addressed in submissions or evidence. The distribution of the funds held in the joint term deposit and the likely application of those funds to various expenses will probably mean that the parties will not directly benefit from investment income from those funds. However, to the extent that those funds might be applied to defray their accommodation costs, for example as a deposit on real estate, there will be a compensating benefit. The latter benefit is likely to be more tax effective than paying after tax income to rent.

Section 79(4)(e) - Section 75(2) Factors

1. The relevant matters in s 75(2) would seem to be paragraphs (a), (b), (c), (d), (f), (j) and (k).

(a)      the age and state of health of each of the parties;

1. First, as to the age and state of health of each of the parties. The husband and wife are 50 and 48 years of age, respectively.

2. There is no evidence about their health.

(b)      the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;

1. The husband says he earns $1,090 per week, made up of $1,000 in drawings from B Pty Ltd which provides Industrial Marketing services and $90 in interest on the St George Bank account. He conceded in cross-examination that some of his expenses (including telephone and motor vehicle expenses) are met directly by B Pty Ltd. In real terms, the husband’s income from paid employment is substantially greater than $1,000 per week. Omitted from the husband’s Financial Statement is reference to the fact that, for a significant period, the husband has received and he continues to receive Family Tax Benefits A and B. He lives with the parties’ sons, Mr H and Mr J who earn $300 per week and $60 per week respectively. Mr H pays him $50 per week. That fact was also omitted from the husband’s Financial Statement. That payment will cease later in the year as Mr H is to be married.

2. The husband deposes to the following expenses:

Expense	Amount
Income tax	$200.00
Rent –	$620.00
Life Insurance - MLC	$15.00
Boat insurance	$7.00
Loan repayments to Ms Melville Snr	$150.00
Visa card repayments – ANZ Min payment $486	$130.00
Citibank repayments – min payment $504	$122.00
Total	$1244.00

1. The husband has weekly deficit of $150. It is not suggested that the husband is not exercising his earning capacity.

2. The wife’s income is $1,028 per week made up of her salary as a Speech Pathologist of $925 and $101 in interest on the St George Bank account. It is not clear why the wife receives more interest on the account than the husband. Her employer pays $80 per week in superannuation contributions on her behalf.

3. The wife lives with the parties’ son, K, who has no income. The wife’s expenses, inclusive of all living expenses are:

Expense	Amount
Income tax	$200.00
Rent	$475.00
Third party personal injury  insurance	$13.00
Motor vehicle registration –	$7.00
Total	$695.00

1. On the face of her Financial Statement, the wife has a weekly surplus of about $330.00 but I note that, apart from rent, she discloses no expenditure on living expenses. The wife does not put a figure on it but deposes to providing support for K by way of rent, food, groceries and clothing. She received no financial support from the husband.

2. The evidence about the wife’s assets and liabilities is set out earlier in these reasons.

3. The wife started contract at HH University as a Lecturer and Research Assistant in March 2011. She does not have a tenured position. She says that she has not been offered a contract for the upcoming semester. In re-examination she said that it is unusual that she would not have an offer by this stage. If she is not offered work at the University she will apply for other jobs. In cross-examination she was asked about moving to private practice. She said she could be paid $30 - $40 per hour for face–to-face work but that she may need to build a client base before having a full load of about 5 hours face to face a day. I gather 5 hours face–to-face, with the associated preparation and follow up work, is a full work load.

(c)      whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;

1. K is 15 years of age and lives with the wife. Each of the parties asserts that he will live with them in the future. It is not possible to make a finding about his living arrangements in the future, save to note that he currently lives with the wife and has done so since February 2011. Because he spends little time with the husband, the wife bears the responsibility to accommodate K and the main parenting load. True it is that K is at an age where he does not require close supervision but neither is he an adult. He has compromised health due to his Diabetes, the management of which requires daily insulin injections and a controlled diet.

(d)      commitments of each of the parties that are necessary to enable the party to support:

1. himself or herself; and

2. a child or another person that the party has a duty to maintain;

(e)       the responsibilities of either party to support any other person;

1. I have set out the evidence in relation to the parties’ expenses.

(f)       subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:

1. any law of the Commonwealth, of a State or Territory or of another country; or

2. any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
   and the rate of any such pension, allowance or benefit being paid to either party;

1. The husband has a superannuation interest. The wife has a nominal amount in superannuation. Perhaps because his taxable income has been artificially low and because he did not trouble officialdom with the fact that K no longer lives with him, the husband has received and continues to receive, Family Tax Benefits A and B.

(g)      where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;

1. There is no evidence about the standard of living enjoyed by the parties during the marriage. The bare facts suggest that the parties struggled at times. There is no obligation established by the legislation for the Court to seek to preserve the standard of living enjoyed during the marriage, for either party. Nor is that standard necessarily something beyond which the parties should not aspire.

2. No doubt in happier times the parties would have each wished that the other was able to live comfortably.

(h)      the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;

1. There is no evidence that either party intends further study or to establish a new business.

(ha)  the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; 

1. I am not satisfied that there is a debt to the husband’s mother. If there is, the financial affairs of B Pty Ltd and those of the husband are so opaque that it is difficult to say what would have an impact on repayment. Since separation, the husband has had money for travel and rent that could have been paid to his mother and he has not done so.

(j)       the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;

1. It is likely that the wife’s efforts as parent and homemaker made it easier for the husband to maintain full-time employment.

2. Late in the marriage and only after the family was established, the wife completed a TAFE course to allow her to gain entry into university. She then completed studies at HH University and graduated. The university studies were undertaken between 2001 and 2006 on a part-time basis.

(k)      the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;

1. The marriage may have affected the wife’s earning capacity. She was 16, in Year 11 and pregnant when the parties married. As a result there was no opportunity for her to make a start on a career. She was out of the paid workforce for about 27 years. She is now in paid employment as a lecturer but it is likely that she has lost the opportunities that come with unbroken employment – security of employment, promotion, leave entitlements and the opportunity to build towards a self funded retirement.

2. The marriage had no identified adverse impact on the husband’s earning capacity.

(l)       the need to protect a party who wishes to continue that party's role as a parent;

1. This provision has no relevance to these proceedings.

(m)      if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;

1. I have referred to the evidence about those matters.

(n)      the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;

(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and

1. There is no evidence about a current assessment. The Child Support Agency has not caught up with the new living arrangements for K. It may be that a new assessment will soon issue. The child support position is confused because K moved houses in February 2011. As at 31 May 2011 the records[10] of the Child Support Registrar had the wife owing $3,499.14. I do not know what the net position should be.

   [10] Exhibit 4.

(o)      any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;

1. Nothing comes to attention here.

(p)      the terms of any financial agreement that is binding on the parties.

1. There was no binding agreement made between the parties.

Section 79(4)(f)

1. I have referred to the orders made under the Family Law Act 1975. They do not reflect K’s currently living arrangements.

Section 79(4)(g)

1. I refer to the comments above about child support.

Conclusion

1. The wife seeks an adjustment of 10 per cent under section 75(2). The husband argues that there should be no adjustment.

2. The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:

ØThe husband has a substantially greater income, better income security and income earning capacity than the wife;

ØOf the parties, only husband has made any significant provision for a self funded retirement;

ØBecause her income is largely from work as a PAYE wage earner, the wife does not have the opportunities that are available to the husband to obtain preferential tax treatment for his income;

ØFor a relatively short period, the wife is likely to have continuing responsibility for housing and day to day support for K;

1. These matters all support an adjustment in favour of the wife.

2. It is not the role of the non-contribution elements of paragraph s 79(4) to equalise or balance the parties’ financial circumstances.  For example, it has been said in relation to s 79(4)(e) that the provision does not invite a process of social engineering;[11] and In Mallett, above, at Fam LR 472, Wilson J said that:

   [11] In the Marriage of Clauson (1995) 18 Fam LR 693 at 711; [1995] FLC 92-595 at 81,912.

   The objective of the section is not to equalise the financial strengths of the parties. It is to empower the court, following a dissolution of a marriage, to effect a redistribution of the property of the parties if it be just and equitable to do so…

1. It is appropriate to look at the dollar effect of an adjustment, not just the percentages. In my view an adjustment is warranted and a proper adjustment would be 10 per cent. While a 10 per cent adjustment in this context (two parties with substantial earning capacities and one 15 year old child) might seem high, in the context of this case 10 per cent represents only $39,474. I acknowledge that the adjustment will cause a difference between the parties of twice that amount but husband will probably make up that difference in a few short years. The dollars are important but in these circumstances, they are perhaps more important for the wife.

Just and Equitable

1. The net assets have a value of $394,739. Of that, $131,936 is in the form of superannuation and $262,803 is in the form of non superannuation assets. A division in the proportions 60 per cent to the wife and 40 per cent to the husband would leave them with about $236,843 and $157,896 respectively. On that basis, the wife would receive about $157,682 in non superannuation assets and about $79,162 in superannuation interests. The husband would receive about $105,121 in non superannuation assets and about $52,774 in superannuation interests.

2. As to the form of the orders, the husband does not oppose the form of orders 2 – 6 inclusive sought by the wife. I do not understand that agreement to extend to the base amount sought by the wife to reflect a 60 per cent division to her. The form of orders sought by the wife has also been provided to the trustee of the larger of the husband’s funds and subject to some information being provided, the trustee will be able to give effect to an order in those terms.[12] The agreed orders include the transfer of the motor vehicle 1 to the wife.

   [12] Exhibit 12.

3. The wife has or has had the benefit of, the following non-superannuation assets:

ASSETS	VALUE
Wife’s St George Bank account	$904
Wife’s furniture	$2,000
B Pty motor vehicle 1	$4,200
Wife’s paid legal fees	$155
Moneys released to wife from term deposit	$15,000
Wife’s HECS debt	-$9,000
Total Gross Assets	$13,259.00

1. If she is to receive 60 per cent of the non superannuation assets, the wife should receive another $144,423 from the funds held in the St George Bank.

1. The wife has the following superannuation interests:

SUPERANNUATION ASSETS	VALUE
Wife’s Australian Super - nominal	$0
Wife’s Unisuper	$9,785
Total Gross Assets	$9,785.00

1. If she is to receive 60 per cent of the superannuation interests, the wife should receive another $69,377 in the form of superannuation. I will record that as the base amount for a splitting order.

1. That would leave the husband with the following non superannuation interests:

ASSETS	VALUE
Husband’s St George Bank Direct Saver account	$658
Husband’s St George Bank Freedom Business account	$6,804
Husband’s St George Bank Freedom account	$3,974
Husband’s motor vehicle 2	$11,000
Husband’s furniture	$2,500
Husband’s boat	$5,000
Husband’s paid legal fees and moneys in trust	$20,195
Moneys released to husband from term deposit	$15,000
Husband’s ANZ Bank Visa and Citibank accounts	-$28,872
		Balance of the St George term deposit	$68,862
Total Gross Assets	$105,121.00

1. On that same basis his superannuation interests would be:

SUPERANNUATION ASSETS	VALUE
Husband’s Australian Super	$6,257
Husband’s MLC Super: but subject to a splitting order with a base amount of:	$115,894
	-$69,377
Net superannuation interest	$52,774.00

Conclusion under Section 79

1. Significant contributions were made by each of the parties. They acquired assets and supported each other. In the course of about 28 years of cohabitation and since, the parties shared the work of the marriage in different ways. Nevertheless their contributions were equal. An adjustment in warranted in the wife’s favour to account for various matters but in particular a difference in the parties’ earning capacities and the living arrangements for their youngest son. The orders I propose will effect a just and equitable settlement of their property.

I certify that the preceding one hundred and ninety three (193) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan.

Associate: 

Date:              8 June 2011