MIDDLEMISS & MIDDLEMISS

[2021] FCCA 262

FEDERAL CIRCUIT COURT OF AUSTRALIA

MIDDLEMISS & MIDDLEMISS [2021] FCCA 262

Catchwords:
FAMILY LAW – Property – lengthy marriage – post-separation contributions.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79(4)

Cases cited:

Stanford & Stanford (2012) 247 CLR 108

AJO & GRO (2005) FLC 93-218

Clauson & Clauson (1995) FLC 92-595

Applicant: MS MIDDLEMISS

Respondent: MR MIDDLEMISS

File Number: LNC 378 of 2020

Judgment of: Judge McGuire

Hearing date: 21 January 2021

Date of Last Submission: 21 January 2021

Delivered at: Launceston

Delivered on: 17 February 2021

REPRESENTATION

Counsel for the Applicant: Ms K Mooney

Solicitors for the Applicant: McVeity Dean Lawyers

Counsel for the Respondent: Mr G Tucker

Solicitors for the Respondent: Grant Tucker

ORDERS

(A)That within sixty (60) days of the date of these orders the husband shall:

(1)Make a lump sum payment to the wife of $220,200;

(2)Transfer and/or vest to the wife all his right, title and interest in the following absolutely:

(i)All personalty and chattels in the possession of or under the control of the wife as at the date of these orders;

(ii)The balances of any bank accounts or like investments in the name of or to the benefit of the wife as at the date of these orders;

(iii)Any motor vehicle in the possession of or under the control of the wife as at the date of these orders;

(iv)The wife’s superannuation policy and entitlement with Super Fund B superannuation.

(3)Refinance or otherwise discharge the mortgage registered against the property at C Street, Town D in Tasmania and provide a release to the wife accordingly of her liability under the existing mortgage;

(4)Be solely responsible for and indemnify the wife in respect of any of the assets retained by the husband pursuant to these orders; and

(5)Be solely responsible for and indemnify the wife in respect of any and all liabilities incurred by the husband since separation in either joint names or in his name alone.

(B)Contemporaneously with the payment in (A)(1) hereof, the wife shall:

(1)Transfer and/or vest all her right, title and interest in the following to the husband absolutely:

(i)The property situate at C Street, Town D in Tasmania;

(ii)All personalty and chattels in the possession of or under the control of the husband as at the date of these orders;

(iii)The balances of any bank accounts or like investments in the name of or to the benefit of the husband as at the date of these orders;

(iv)Any motor vehicle, motorcycle or farm plant and equipment in the possession of or under the control of the husband as at the date of these orders;

(v)Any livestock in the possession of or under the control of the husband as at the date of these orders;

(vi)The husband’s superannuation policy and entitlement with Super Fund E but subject to these orders.

(2)That the wife be solely responsible for and indemnify the husband in respect of the following:

(i)Any and all liabilities attaching to any of the assets retained by the wife pursuant to these orders; and

(ii)Any and all liabilities incurred by the wife since separation in either joint names or in her name alone.

(C)That paragraphs (C) to (I) (inclusive) of this Order are binding on the Trustee of Super Fund E superannuation, member No. ... (“the Fund”) and it is declared that this order is made in accordance with Section 90XT(1)(a) of the Family Law Act 1975.

(D)That pursuant to Section 90XT(4) of the Family Law Act 1975 the base amount allocated to MS MIDDLEMISS out of the interest of the Applicant in the Fund is $177,755 (“the base amount”).

(E)That in accordance with Section 90XT(1)(a) of the Family Law Act 1975 whenever the Trustee of the Fund makes a splittable payment from the interest of the Applicant in the Fund Ms Middlemiss shall be entitled to be paid an amount calculated in accordance with part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using the base amount and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this Order.

(F)That this Order have effect from the operative time and the operative time is the fourth business day after the day on which the final sealed Orders are served upon the Trustee;

(G)That until the Trustees of the Fund have effected the splittable payment in favour of Ms Middlemiss pursuant to Order (D) herein the Trustee of the said Fund, the Applicant, personal representatives and any other person or persons acting on her or their behalf be and are hereby restrained from disposing of all or any amount payable to the Applicant and/or her personal representatives received by or held in trust for the benefit of her or them;

(H)That a sealed copy of these Orders be served by the solicitors for the Applicant upon the Trustees of the fund within fourteen (14) days of the date of this Order;

1. That there be liberty to apply to each party and the Trustee of the Fund in relation to the implementation of this Order affecting the Applicant’s superannuation interest.

(J)That pursuant to Section 81 of the Family Law Act 1975 the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT LAUNCESTON

LNC 378 of 2020

MS MIDDLEMISS

Applicant

And

MR MIDDLEMISS

Respondent

REASONS FOR JUDGMENT

Applications

1. These are proceedings for property settlement. The wife is the applicant. Her Counsel argued in opening for a settlement of 60% of the net tangible assets in her favour on the basis of equal contributions with a 10% adjustment for relevant s.75(2) factors. She seeks orders to equalise the parties’ superannuation entitlements.

2. The husband specifically proposes orders that he retain the former matrimonial home and make a lump sum payment to the wife of $185,000. In final submissions and given essential agreement as to the asset pool, the husband's Counsel says that such orders would give the husband a 20% loading on account of superior contributions with 12% adjustment to the wife on account of s.75(2) factors thereby giving the wife a net of 42% of the tangible assets. The husband proposes a superannuation split to the wife from his entitlement of $77,000 which, on my calculations, would give the wife 16.15% of the parties current joint superannuation entitlements but where the wife concedes that she has withdrawn approximately $20,000 from her entitlement although she says this was due to hardship issues and consequently that amount should not be 'added back' to the pool.

Background

1. The husband is 56 years of age and the wife 53 years.

2. The parties commenced cohabitation in 1985. They married in 1989. The parties agree that they separated in 2007 although they have cohabited under the one roof at various times since that separation.

3. The parties have one child namely X born in 2004.  There are no Court orders in respect of X and she appears to have lived variously between the parties for convenience.

4. There seems to have been a relatively amicable relationship between the parties for approximately 10 years after separation but such relationship deteriorated in about 2017.

5. The wife works casually at Employer F as a retail assistant. The husband is employed as a professional with an income of approximately $100,000 per annum.

6. Since about August 2018 the husband has voluntarily been making payments of around $450 per fortnight on average to the wife.  Those payments have never been categorised by a Court.

7. The evidence suggests that the wife has obtained various child support assessments in respect of X but has not enforced payment in circumstances where the husband has made payments for X’s private school fees at the G School and/or made the abovementioned voluntary payments to her.

8. In June 2020 the wife withdrew $20,000 from her superannuation entitlement.  She says that $2,700 was paid towards her legal costs in respect of these proceedings and the balance spent on payment of loans and for support of X.

9. The parties are not yet divorced.

10. There is no evidence that either party has re-partnered in the sense of support or dependency.

The Issues

1. The major dispute between the parties is in respect of the treating of post-separation contributions and in particular:

   a)The status of the husband's payments averaging $450 to the wife since 2018;

   b)The husband's post-separation payment of private school fees for X;

   c)Which of the parties, if either, primarily cared for and financially supported X after separation;

   d)The husband's post-separation contributions to the farm/former matrimonial property at C Street, Town D;

   e)The treatment of the wife's withdrawal of $20,000 from her superannuation;

   f)The treatment of the husband's drawdown on the mortgage loan in a sum of $9,470 and a post-separation loan of approximately $34,000 received by the husband in October 2010; and

   g)The number of head of cattle on the farm at separation.

The Evidence

1. Both parties provided affidavits and financial statements.  They gave evidence and were each cross-examined.  Each of the wife and the husband gave evidence in accordance with their own recollections of the history of the relationship and from my observations they were both essentially honest witnesses.

2. The wife adduced evidence from Mr H and his son Mr J.  Both provided affidavits affirmed 14 January 2021.  Their evidence was directed at the number of cattle on the property during the course of the parties’ relationship.  Both witnesses deposed that there was consistently an average of 50 or so head of cattle on the property from their own experiences as kangaroo and rabbit shooters on the property.  Neither witness was particularly impressive in cross-examination and each became somewhat confused as to their recollections between 2007 and 2017. The context of the evidence of both witnesses must stand against the husband's evidence of his tax returns for 2007 which show 12 head of cattle plus 6 calves on the property where he says he has now developed the herd to about 50 head.

3. The wife also adduced evidence in an affidavit from her general practitioner, Dr K.  His affidavit is affirmed 14 January 2021 and annexes a medical report dated 12 January 2021.  The doctor confirms the wife's diagnosis of ‘cervical (neck) radiculopathy with symptoms including bilateral neck pain and left shoulder/arm pain.  The doctor opines that the symptoms are severe, constant, and impact on the wife's activities of daily living and also on her ability to function as a retail assistant. The doctor suggests that the degenerative process is likely to progress and that advices of replacement and fusion of the cervical vertebrae.

4. The doctor was not required for cross-examination.

Relevant Law

1. Matters of property settlement are provided for in s.79 of the Family Law Act 1975 (‘the Act’).

2. As emphasised in the well-known decision of the High Court in Stanford & Stanford[1], the Court should not make any order altering the parties’ interests in property unless, in all of the circumstances, it is just and equitable to do so. In the matter now before me the parties endured a lengthy relationship which brought one child into this world. They have both made significant but varied contributions to the property pool and the major asset being the former matrimonial home/farm currently sits in the possession of the husband. Whilst caution is urged against simply conflating the contribution considerations in s.79(4), I am easily satisfied in this matter that justice and equity dictates a consideration of alteration of those interests.

   [1] (2012) 247 CLR 108

3. The starting point for the Court is to identify the legal and equitable interests of the parties, or either of them, in property. That notion of 'property' includes assets, liabilities and financial resources.  Superannuation is to be 'treated as property' although not often capable of readily being crystallised in the form of an asset. In this sense, both parties argue their cases on a 'two-pool' basis which is a course open to the Court.

4. It is generally accepted that valuations in respect of the items in the pool and hence the pool itself should be established as at the date of the trial.

5. Once the property pool is established then the Court moves to consider the contributions to the acquisition, maintenance and improvement of the property pool.  Contributions may be of a direct or indirect financial type or, alternatively, of a non-financial type including as homemaker and parent.

6. Having considered any alteration of the property pool on the basis of contributions, the Court then determines whether there should be any further adjustment to either of the parties on account of the matters set out in s.79(4)(d) – (g) including any of the relevant factors under s.75(2) of the Act.

7. It is generally accepted that the above process is not strictly ‘staged’ but a fluid one permeated by considerations of justice and equity.  In this sense there is a 'fourth step' where the Court should 'stand back' and consider whether the proposed orders themselves give justice and equity to the parties rather than the simple percentage mathematical distribution of the pool.

Property Pool

1. The parties agree the property pool as it currently stands and as follows:

ASSETS
C Street, Town D	$550,000
Home Contents (divided as agreed)	Divided As agreed
motorcycle; 2 tractors, slasher and implements (H)	$  10,000
Wife’s motor vehicle	nominal
Husband’s motor vehicle	nominal
Cattle	$ 58,400
Total	$618,400
LIABILITIES
Mortgage	$178,000
Net Property Pool	$440,400
SUPERANNUATION
Wife’s Super Fund B	$       959.27
Husband’s Super Fund E	$ 475,612.51
TOTAL SUPERANNUATION	$ 476,571.78

1. The wife currently has four loan liabilities totalling $24,500.  Her unchallenged evidence is that these monies have been used for paid legal costs in respect of these proceedings.  Consequently, neither her paid legal costs nor her post-separation liabilities will be included in the pool.

Contributions

1. Neither party had any assets or liabilities of any significant value as at the commencement of their cohabitation.

2. The parties’ relationship continued from 1985 until 2007. They together contributed and built the wealth evidenced in their assets above.  Both parties worked, including work on the farm.  The wife assumed a greater role as homemaker and parent.  I am easily satisfied that their contributions until the 2007 were equal.

3. The husband says that he has made superior contributions post-separation.  Specifically, he says that the value of the herd of cattle on the farm has increased since 2007 commensurate with an increase in the number of head.  He says that there were 18 head of cattle including calves in 2007 and as evidenced by his tax returns.  The wife's recollection and that of her witnesses, Mr H and Mr J, is that the herd has consistently been around 50 or 60 head.  The husband's evidence is based on his representation to the tax office in 2007. The wife and her witnesses rely on their recollections.  The evidence of Mr H and Mr J was not impressive as to their recollection when tested in cross-examination.  I prefer the evidence of the husband. However, in circumstances where he has had continuing use and benefit of the farming property, although he has worked the property, I do not see this as being a contribution which should result in any additional loading to the husband.  I note also in this respect that the wife herself has also lived substantially in the former matrimonial home on the farming property since the parties’ agreed separation in 2007 and hence I accept that she has made both direct and indirect contributions accordingly.

4. Secondly, the parties dispute the post-separation contributions of each made to the care and financial support of the parties’ daughter X.  The dispute seems to rest around the actual living arrangements for X. There were periods after separation when the wife lived on the farming property and she also lived away from the farming property after 2007. Whilst the parties themselves dispute who was the primary parent for X, the evidence before me suggests that they both contributed to X's care and general support with X living primarily with each at various times but with both parents contributing actually and financially consistently.

5. Further, the parties agreed during their relationship that X would attend the G School.  The annual fees are substantial.  The husband has continued to meet those fees since separation.  Nevertheless, this must be seen within the context of the parties’ pre-separation agreement as to X's education; the relative financial circumstances of the parties post-separation where the husband continued in full time remunerative employment and the wife, at best, has engaged in casual or part-time employment; and the husband's continued use and benefit of the major asset being farming property as evidenced by his own claims of increasing the herd.  Further, the husband obtained a personal loan of approximately $30,000 and a further drawdown on the mortgage of $9,470 both of which he says were utilised, at least in large part, on the payment of X’s school fees and support which is an argument that I accept as ‘reasonable expenditure’.

6. The husband also claims a post-separation contribution (or some form of partial property settlement in favour of the wife) by way of his regular instalment payments of $450 to her.  There has been no prior categorisation of these payments. The wife says that they should be taken as a form of informal spousal maintenance.  I prefer the position taken by the wife.  Frankly, given the financial positions of the parties post their agreed separation in 2007, it is highly likely that the wife could have mounted a successful interim spousal maintenance case if one had been brought where, of course, she did not have the initiative to bring such an application given the voluntary payments by the husband.  In any event, the best evidence is that the wife obtained but did not enforce assessments of child support in respect of X.  Such an argument is also made in respect of the husband's payment of school fees for X.

7. The husband also says that he has made all of the mortgage payments and outgoings in respect of the matrimonial home/farm since separation including extra repayments such as X’s dental costs of $10,000.

8. Taking all of these matters into account but within context, I am satisfied that the husband has made a superior financial contribution to the family since separation.  There have been times that the wife has had use and benefit of the home since separation whilst the husband maintained the payments.  His payments towards X's school fees post-separation must be taken within the context of relief of child support but are still substantial on top of his other financial support of X.  He has met X's extra and specific costs such as dental costs.  He has increased the value of the cattle herd although again to be taken within the more holistic context.  Nevertheless, in respect of post-separation contributions, but also taking into account all of various contributions by both parties during this twenty-two year relationship, I am of the view that the net tangible property pool should be divided as to 52.5% to the husband and 47.5% the wife. 

S.75(2) Factors

1. The husband through his Counsel in his final address conceded that there should be an adjustment to the wife by reason of the relevant matters under s.75(2) with primary focus being on the discrepancy of current and potential earnings for the parties noting their ages and, in particular, the wife's health issues. Counsel for the husband conceded as much as 12% adjustment. Counsel for the wife in her final submissions agreed that 12% adjustment would be reasonable. I agree. The husband's current and likely continuing earnings are in the realm of $100,000 per annum. He wishes to retain the farming property and hence its benefit including the usual available tax benefits available to him. Conversely, the wife's position is not so positive. She has limited work capacity and hence income. That capacity will be impacted further by her health conditions. The parties, on the evidence before me, are likely to share in the responsibility for the actual care of X who is now 16 years of age. The husband will continue to meet X’s school fees albeit only for the next two years. Taking all of these matters into account, I am of the view that the husband's proposal of a 12% adjustment to the wife on account of s.75(2) factors is appropriate, just and equitable. The value of the property pool here is only $440,400 in respect of tangible assets. The Full Court have said that any s.75(2) adjustment should be realistic and not just a percentage[2].  Consequently, the net tangible pool will be divided as to 40% to the husband and 60% the wife.

   [2] Clauson & Clauson (1995) FLC 92-595

Superannuation

1. The husband's superannuation entitlement sits at $475,612.51. The wife's entitlement is just $959.27.  The wife has drawn down $20,000 from her superannuation.  She says that these monies were spent on the reasonable expenses for herself and X except $2,700 for legal fees. She was not substantially or successfully challenged in this respect.  Consequently, I am not satisfied, therefore, that this drawdown should be 'added back' to the pool[3] but will take into account the $2,700 paid on legal fees. 

   [3] AJO & GRO (2005) FLC 93-218

2. The husband proposes a split of $77,000 to the wife from his superannuation entitlement. The wife argues that there should be a split of $227,806 to the wife which would, on my calculations, constitute 48% of the current total superannuation entitlements of the parties.  The husband's proposal would leave the wife with 16.36 percent of the total joint current entitlements or even if including the wife's 'received' amount of $20,000 then she would, on the husband's proposal, be receiving just 20.55% of total entitlements.

3. The general contribution factors have been set out above in respect of the tangible assets and also apply to consideration of the parties’ superannuation.  This was a relationship of her some duration extending from 1985.  Many of the contributions have continued after separation although I accept that the husband has continued to contribute to his superannuation during those thirteen or so years since separation and that he should be given credit accordingly for this substantial contribution to the post-separation increase in the current value of his entitlement. The husband continues in his long-standing employment and potentially has some 12 years left in the workforce and hence can contribute further to his superannuation.  His income is far superior to that of the wife where the best evidence is that her continuing employment is, in any event, tenuous and hence her ability to superannuate is limited.  In all of those circumstances I am of the view that the parties’ total current superannuation entitlement be divided as to 37.5% to the wife and 62.5% to the husband.  I calculate a base amount to the wife of $177,755 accordingly. 

Conclusion 

1. On the basis of the husband wishing to retain the former matrimonial home/farm together with the other tangible assets set out above, I calculate that a 60% adjustment to the wife would entitle her to a cash adjustment from the husband in a quantum of $220,200.

2. Given the circumstances of this long relationship together with the current circumstances of the parties where the husband remains in remunerative employment and will retain the home and the benefits of the attached farm, I am of the view that orders in the above terms providing for a cash adjustment to the wife just and equitable.  I will order accordingly.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Associate:

Date: 17 February 2021