Moffatt and Dobbs
[2016] FCCA 3152
•6 December 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MOFFATT & DOBBS | [2016] FCCA 3152 |
| Catchwords: FAMILY LAW – Property – large pre-cohabitation contributions by each party – inheritance and damages award – asset by asset approach – whether lawyer’s “work in progress” is “property” – neither party seeks superannuation split – adjustment from non-superannuation assets. |
| Legislation: Family Law Act 1975, s.75 |
| Cases cited: Mullane v Mullane (1983) 158 CLR 436 at 445 W & W (1980) FLC 90-872 |
| Applicant: | MS MOFFATT |
| Respondent: | MR DOBBS |
| File Number: | DNC 367 of 2015 |
| Judgment of: | Judge Young |
| Hearing dates: | 18 & 19 May 2016 |
| Date of Last Submission: | 19 May 2016 |
| Delivered at: | Darwin |
| Delivered on: | 6 December 2016 |
REPRESENTATION
| Solicitors for the Applicant: | Ms V Farmer of Withnalls Lawyers |
| Solicitors for the Respondent: | Mr K Norrington of DS Family Law |
ORDERS
That within 56 days of the date of these orders, the parties do all necessary things and sign all necessary documents to transfer to the husband, at the husbands expense, all of the wife’s right, title and interest in (omitted) from plan(s) (omitted) also known as Property G in the Northern Territory (“the matrimonial home”).
That simultaneously with the transfer pursuant to order 1, the husband shall, at his expenses, discharge the mortgage over the matrimonial home, owing to (omitted) Bank.
That simultaneously with the transfer pursuant to order 1, the husband shall pay to the wife the sum of $382,254.
That in the event that the husband fails to comply with orders 1, 2 and 3, the parties shall within 21 days, do all acts and sign all documents necessary to list for sale the former matrimonial home and execute all documents and instruments necessary to sell the home in the following terms:
(a)That the former matrimonial home be listed for sale at a listing price of $850,000 by private treaty for a period of not less than 90 days with an agent of the husband’s choice and the parties shall accept all offers at $850,000 or above;
(b)In the event that the former matrimonial home has not been sold by private treaty within the 90 days referred to at Order 4(a) herein, the former matrimonial home be listed for public auction within 30 days of the 90 days of Order 4(a) expiring or otherwise recommended by the selling agent;
(c)In the event the parties are unable to agree on a reserve price at auction, they shall accept the recommendations of the auctioneer pursuant to Order 4(a) herein for the sale of the former matrimonial home;
(d)If the bidding does not reach the reserve price, the parties may negotiate with the highest bidder or any other interested person and effect a sale of the former matrimonial home at a price which is not more than 20% below the reserve price and the parties shall each pay and be responsible for the payment of one half of the auction expenses payable before the home is auctioned;
(e)Upon completion of sale, the proceeds of sale should be applied as follows:
(i)First, to pay all costs, commissions and expenses incurred in respect of the sale;
(ii)Secondly, to pay all outstanding municipal rates and other levy’s due in respect of the home;
(iii)To pay the amount required to discharge any mortgage registered over the home; and
(iv)Payment to each party of the sum of necessary to give effect to a distribution of non-superannuation assets for the wife to receive an overall non-superannuation distribution of 46% and for the husband to receive an overall non-superannuation distribution of 54%.
(v)In addition to the sum in (iv) the husband shall pay the wife the sum of $59,000.
That the wife retain all of sole right, title and interest in the following:
(a)Lot (omitted) otherwise known as Property Y;
(b)The net proceeds of sale of Lot (omitted), otherwise known as Property B received by the wife to date pursuant to the Order 4(b) of the Orders 25 August 2015 and 1(a) of the Orders 03 September 2015.
(c)The wife’s business ‘(business omitted)’;
(d)All member entitlements standing to the wife’s credit with (omitted) Super;
(e)All member entitlements standing to the wife’s credit with (omitted) Super;
(f)All funds standing to the wife’s credit in the following bank accounts:
(i)(omitted) Bank Account (omitted);
(ii)(omitted) Bank Account (omitted);
(iii)(omitted) Bank Account (omitted);
(iv)(omitted) Bank Account (omitted);
(v)(omitted) Bank Account (omitted);
(vi)(omitted) Bank Account (omitted);
(vii)(omitted) Bank Account (omitted);
(viii)(omitted) Bank Account (omitted).
(g)Toyota (omitted) motor vehicle Northern Territory Registration ‘(omitted)’.
That the wife indemnify the husband with respect to the following liabilities:
(a)All funds due and owing by the wife for credit cards in her name;
(b)All monies due and owing by the wife to the (omitted) Bank for the Toyota (omitted) motor vehicle Northern Territory Registration ‘(omitted)’;
(c)All monies due and owing in respect of the loan and mortgage for the Property Y loan no. (omitted);
(d)Any monies due and payable to the Australian Taxation Office arising from the wife’s personal taxation liability including but not limited to capital gains tax associated with the sale of Property B.
That the Husband retain for his sole use and benefit:
(a)All monies standing to the husband’s credit in any bank accounts;
(b)Any member entitlements standing to the husband’s credit in any superannuation funds;
(c)The husband’s (‘business omitted’);
(d)The net proceeds of sale of Lot (omitted), otherwise known as Property B received by the Husband to date pursuant to the Order 4(a) of the Orders 25 August 2015 and l(b) of the Orders 03 September 2015 .
That the husband indemnify the wife with respect to the following liabilities:
(a)All monies owing on the mortgage over Property K, South Australia;
(b)All monies owing to the (omitted) Bank Visa Card held in the husband’s name;
(c)All personal taxation liabilities the husband has with the Australian Taxation Office; and
(d)All rates, duties, taxes and any liabilities with respect to Lot (omitted) also known as Property G in the Northern Territory.
That unless otherwise specified in this order and except for the purpose of enforcing the payment of money due under this order or any subsequent order:
(a)Each party shall be entitled to the exclusion of the other to all other property and chattels of whatsoever kind or nature in the possession of such party as at the date hereof and for this purpose, bank accounts are deemed to be in the possession of the person whose name appears on the bank records thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements;
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this order.
IT IS NOTED that publication of this judgment under the pseudonym Moffatt & Dobbs is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT DARWIN |
DNC 367 of 2015
| MS MOFFATT |
Applicant
And
| MR DOBBS |
Respondent
REASONS FOR JUDGMENT
This is an application for orders for alteration of property interests. The applicant wife is 44 years old and the respondent husband is 51 years old. The wife is a (occupation omitted) and the husband is a (occupation omitted). They have three children aged nine, seven and four years. The matter was originally listed for trial of parenting issues as well but the parties told me that an in principle agreement had been reached which provided for the children, who presently reside primarily with the mother, to transition to an equal shared care arrangement over about 18 months. Orders were subsequently made by consent reflecting this agreement.
The parties reached agreement about a number of important matters. They agreed that non-financial contributions were equal. They agreed on the value of almost all assets and liabilities and provided a joint balance sheet. They also agreed or, perhaps more accurately, asserted that they had intentionally kept their finances separate throughout the relationship but something more needs to be said about that assertion.
It is apparent that the parties went to some trouble to keep many of their financial affairs separate. The reason, at least in part, for this stemmed from the fact that both parties owned investment properties before commencing cohabitation which they continued to manage during the relationship. However, the parties also went to some trouble to ensure equality of financial contributions. There was evidence that at one point the husband was paying the mortgage on the matrimonial home and the wife was paying for food and other household expenses. The parties prepared a spreadsheet to compare their expenditure and it was revealed that their expenditures were almost equal. So, notwithstanding that some property, particularly the investment properties, was treated as the property of one or other of the parties they still mixed their finances significantly, especially household expenses and contributions to the former matrimonial home. Given that the parties lived together for 10 years and had three children I am satisfied that there has been substantial mixing of the parties’ finances and that it would not be appropriate to treat each and every item of property as the property of one or of the other.
The parties agreed that there should not be a superannuation split.
Their counsel told me at the beginning of the trial that all that was required was an assessment of various specific contributions relating to property owned by both parties before the relationship, inheritances, the proceeds of a damages claim, the proper treatment of the husband’s “work in progress” as a solicitor and his tax debt. I understood this to mean that both parties agreed that any investment property owned by one of the parties prior to the relationship and any proceeds of sale from such a property channelled into joint property such as the matrimonial home should be seen as the contribution of that party alone. The parties ran their respective cases on this basis and neither party asserted that they had made any contribution to the properties owned by the other before the commencement of cohabitation. There was one exception to this approach because the husband and wife resided for a period in the husband’s property at Property C, Darwin. The wife asserted that she helped with renovations to this property. That property was sold during the marriage and the proceeds were spent by the husband. This matter is considered in more detail below. The parties also jointly purchased a home at Property G, Darwin and each made financial and non-financial contributions towards that property. Those contributions are also considered in detail below.
During his opening counsel for the husband told me that it would be necessary to resolve a dispute about the children’s day care and school fees. By the time of final submissions both parties told me they would endeavour to resolve this issue themselves.
The parties agreed that they began to cohabit in about (omitted) 2004 and married in (omitted) 2006. They disagreed about when they separated. The husband asserted that the parties separated under one roof in 2012 and, apart from a short period, they slept in separate bedrooms until April 2015 when they decided that situation was no longer tenable. The husband moved downstairs initially and then the wife and children moved out of the home in June 2015. The wife says that the parties separated in April 2015. Although there was no detailed evidence about the issue I had the impression that the parties continued to operate as a family unit until April 2015 and did not begin fully separate lives until after that time. Accordingly I find that separation occurred in April 2015.
While it is true that to a considerable degree the parties kept their finances separate, even to the extent of not having a joint bank account apart from the joint mortgage account for the former matrimonial home, their finances were mixed to a significant degree, particularly in relation to the contributions to the acquisition and improvement of the former matrimonial home. Much of the dispute centred around this issue.
It is useful to set out a chronology:
1999
Husband purchases unit at Property K, South Australia.
Husband purchases unit at Property S, South Australia.
2000
Wife purchases an investment property at Property W, Victoria, paying a $20,000 deposit and borrowing the balance.
2002
Wife purchases an investment unit at Property B, Queensland.
2003
Husband purchases unit at Property C, Northern Territory.
2004
Wife purchases investment unit at Property Y, Queensland.
5.2004
Parties begin to cohabit at Property C property.
2004/2005
Husband inherits $20,000 from his grandmother. The husband says this was spent on renovations on the Property C property.
8.2005
Parties purchase residential unit at Property G, Darwin.
7.10.2005
Husband settles sale of Property S property, realising a net figure of $175,199, and pays this into his (omitted) Bank account.
10.10.2005
Husband withdraws by bank cheque the sum of $27,200 from his (omitted) Bank account.
11.10.2005
Husband withdraws by bank cheque the sum of $91,445 described as “settlement drawing” from (omitted) Bank account.
Settlement of purchase of Property G unit for $551,291.
Purchase monies made up of deposit of $20,000, husband’s contribution of $91,445 and joint borrowings from (omitted) Bank of $440,000 (before allowance for adjustments).
2.2006
Wife sells Property W, property for $179,000 realising a net sum of $48,000.
3.4.2006
Wife pays $48,000 into Property G mortgage account.
3.2009 to 3.2010
Wife pays $41,327 towards renovations of Property G property.
c.2.5.2007
Property C property sold for $368,000 realising a net sum of $133,171 placed into husband’s (omitted) Bank account. Interest on this sum used to offset interest on Property G mortgage.
10.2008
Husband becomes involuntarily redundant.
5.11.2008
Husband receives a redundancy payment from his former employer of $48,624.
1.2009
Husband resumes employment.
2011
Husband receives an inheritance from his father of $60,000.
2013
Husband receives a payment from his former employer of $42,500 as damages for breach of contract in his redundancy.
8.4.2015
Parties separate.
26. 8.2015
Wife sells Property B property realising a net sum of $132,824.
Wife claims she is liable for capital gains tax on the Property B property of c. $36,000.
25.8.2015 and 3.9.2015
Parties agree on consent orders to equally divide proceeds of sale of Property B as partial property settlement, that is, $66,412 each.
23.2.2016
Husband assessed for $34,261 tax for 13/14 tax year.
Husband assessed for $25,091 tax for 14/15 tax year.
17.5.2016
Husband assessed for $77,281 for unpaid GST and PAYG tax for period 5.2015 to 5.2016
Husband’s total tax liability is $136,633.
The property pool at trial
The parties prepared a balance sheet with dollar values which, with some small changes, I have adopted:
Description
Husband
Wife
Total Pool
Assets
1
Property G
425,000
425,000
850,000
2
Proceeds of sale of Property B, distributed equally between the parties as partial property settlement.
66,412
66,412
132,824[1]
3
Property Y
240,000
240,000
4
Property K
245,000
245,000
5
Bank (omitted) Account (omitted)
198
198
6
Bank (omitted) Account (omitted)
451
451
7
Bank (omitted) Account (omitted)
1,628
1,628
8
(omitted) Bank Account (omitted)
2,423
2,423
9
(omitted) Bank Account (omitted)
1000
1000
10
(omitted) Account (omitted)
9,462
9,462
11
(omitted) Account (business omitted)
16
16
12
(omitted) Account (omitted)
200
200
13
Bank (omitted) Account (omitted)
70,792
70,792
14
Bank Account (omitted)
46,174
46,174
15
(omitted) Bank Account (omitted)
8,810
8,810
16
(omitted) Shares
2,000
2,000
17
(omitted) Shares
20,215
20,215
18
(omitted) Shares
4,187
4,187
19
(omitted) Shares
508
508
20
Toyota (omitted)
15,000
15,000
21
Ford Falcon
2,000
2,000
22
Volkswagen (omitted)
2,000
2,000
23
(omitted) Sailing Boat
500
500
24
Firearms
500
500
25
Household Contents
5,000
5,000
10,000
883,866
782,022
1,665,888
Liabilities
26
Mortgage – Property G
(136,746)
(136,746)
(273,492)
27
Mortgage – Property Y
(181,308)
(181,308)
28
Mortgage – Property K
(64,597)
(64,597)
29
Capital Gains Tax - Property B
(36,000)
(36,000)
30
Toyota (omitted) Finance
(25,578)
(25,578)
31
(omitted) Overdraft Account (omitted)
(1,204)
(1,204)
32
AMEX Card
(1,808)
(1,808)
33
Husband’s tax debt
- Pre-separation $59,352
- Post-separation $77,281
(136,633)
(136,633)
(337,976)
(382,644)
(720,620)
Total net
545,890
399,378
945,268
Superannuation
34
(omitted) Super
1,559
1,559
35
(omitted) Super
133,379
133,379
36
(omitted) Super
44,280
44,280
37
(omitted) Super
2,856
2,856
38
(omitted) Super
1,512
1,512
39
(omitted) Super
2,584
2,584
40
(omitted) Super
6
6
41
(omitted) Super
112,194
112,194
163,432
134,938
298,370
[1] These amounts were substantially dissipated at trial but as I propose to give full credit for this distribution it seems convenient to include the amounts in the pool.
The wife asserted that the husband’s (omitted) Credit Union account balance should be recorded as $9,462, the sum reported in his financial statement of 10 February 2016, rather than the amount set out in his trial balance sheet of $421. There was no explanation of this discrepancy and I have adopted the figure in the financial statement.
The husband asserted the value of the wife’s Toyota (omitted) was $22,000 but called no evidence other than attempting to rely on hearsay in the form of a Red Book entry. I accept the wife’s valuation as an admission adverse to her interest.
The wife asserted that the husband’s work in progress at the date of trial, which he calculated as having a nominal value of $152,675, should be included in the balance sheet. The husband rejected this and relied on a passage from the High Court decision of Mullane v Mullane[2] that “… s 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them”. He also relied on an earlier case, W & W[3]. There Nygh J held that work in progress of a legal partnership was not “property” for the purposes of the Family Law Act. He said that word indicated “… some present right of value which the law will enforce and that an expectation, however real or imminent, of future income or gain is not ‘property’”. He relied on remarks of Barwick CJ in Henderson v Commissioner of Taxation (1970) 119 CLR 612 to the effect that only when a legal fee is due under an agreement or, in default thereof, the general law, is that a fee earned and recoverable as a debt.
[2] (1983) 158 CLR 436 at 445.
[3] (1980) FLC 90-872 at 75,523.
The wife relied on an unreported decision of Monteith J in Grey v Stone[4] in support of her submission that work in progress was to be considered as “property”. However, that case does not support the submission. In that case an accountant valuing a business took into account the value of work in progress and stock in trade at the beginning and end of a financial year but the purpose was to identify any anomaly affecting profitability. There was no finding, express or implied, that work in progress was “property”. It is not challenged that the husband’s (business omitted) is basically a (business omitted) so the “value” of that work is even more difficult to assess. I am satisfied that work in progress is not “property” for the purpose of the Act although it may be a financial resource indicating likely future income.
[4] [2008] FamCA 238.
The husband asserted that a personal costs order against him should be included as a liability. The costs order was made following an unnecessary adjournment of a workers’ compensation trial in the Local Court. The costs have not been assessed. Correspondence was tendered showing an itemised claim for costs by the other party of about $45,000. The claim was plainly excessive in my view and included items which were not costs thrown away. I considered a more realistic claim was probably about $20,000. In any event, until taxation or agreement about the sum of costs the claim is entirely contingent. As it is clearly part of the husband’s (business omitted) and, no doubt, only one of a number of business liabilities: actual, contingent or future, I do not consider it appropriate to include in the balance sheet for reasons similar to those applicable to work in progress.
The husband also submitted that his taxation liability should be included in the balance sheet representing the property pool. The wife submitted, initially, that it should be excluded but ultimately submitted that the amounts relating to the 2013/2014 and 2014/2015 tax years, the years before separation, should be included and the amounts relating to the 2015/2016 tax year, after separation, should be excluded. The wife also submitted that if the earlier amounts were included it should be considered as a negative contribution against the husband because he ought to have paid the debt as it arose. The wife submitted that such an approach was merited, in addition, because the parties, in substance, kept their finances separate. For the reasons set out in paragraph [3] I do not accept entirely accept that submission.
The husband gave no satisfactory explanation for his failure to pay his tax as it accrued and for allowing the liability to build up over a number of years. He gave no explanation for his failure to lodge his tax returns or BAS when due. He had cash resources: the amounts from his inheritance and damages awards, which would have enabled him to pay the tax as it accrued. He gave no explanation as to how his “extra” untaxed income was expended. There is no evidence it was spent on the family. Of course, had the tax been paid when it accrued the actual income available to the husband would have been reduced. It may also be that other assets would have been reduced in value. Given the extent to which the parties separated their financial affairs I consider the most likely scenario is that the husband, if unable or unwilling to pay the tax from income, would have drawn on his own personal cash resources to meet any liability rather than, say, increasing the mortgage on the matrimonial home. There is no evidence that the wife benefited in any particular way from the husband’s failure to pay his tax as it accrued or would have suffered any loss had the tax been paid or that she was complicit in or approved of his laxity in relation to his taxation affairs.
Notwithstanding this I feel constrained by authority of Trustee of the Property G Lemnos, a Bankrupt & Lemnos & Anor[5] to include the husband’s tax debt as a liability of the parties, at least that part of it that accrued before the parties’ separation. This amounts to $34,261 for the 13/14 tax year and $25,091 for the 14/15 tax year, a total of $59,352. The parties separated in April 2015 and the tax liability in respect of the period May 2015 to May 2016, $77,281, should be borne by the husband alone. While I have left this latter amount in the pool, I have taken this amount into account in reaching my assessment of overall contributions.
[5] [2009] FamCAFC 20 at [242] – [245].
Contributions – non-superannuation assets
The parties presented their cases on the basis that an asset by asset approach was appropriate given that some assets of significant value were owned by one or other of the parties before the relationship and that some part of the assets were the result of inheritance and of a damages award that were the husband’s contribution alone. The non-financial contributions were agreed to be equal. An asset by asset approach is merited for some assets but a global assessment is also required to ensure that a just and equitable result is obtained overall.
As noted, the parties kept their finances separate to a significant degree, particularly in relation to the properties owned by each before the commencement of the relationship. Neither party claimed to have made any contribution to the pre-relationship property of the other. Those properties should be seen as being the result of the sole contribution of the respective party.
The husband owned the properties at Property K, Property S and Property C prior to the relationship. The first two properties were tenanted it appears. The husband asserted, and this was not challenged, that the wife did not contribute to any mortgage payments on those properties. She says she did some renovation work on the Property C property. As noted above that property has been sold and the net proceeds dissipated during the marriage.
The husband continues to own the Property K property and I find that this should be seen as his contribution alone.
The Property Y property was the wife’s before the relationship and she alone should be seen as having contributed to that property.
The wife’s property at Property B was also the wife’s before the relationship. It was sold before trial. The proceeds of sale of $132,924 were divided equally with $66,412 to each party as a part property settlement. This should be seen as the contribution of the wife. She remains solely responsible for capital gains tax which she, based on advice from her accountant, estimated at $36,000. She set out the details of the tax calculation. Some criticism of this estimate was made by the husband. While the capital gains tax had not been assessed I see no reason to doubt the wife’s estimate of the liability. Given that the property was the sole contribution of the wife an adjustment in her favour needs to be given to account for the amount paid to the husband.
One significant asset to which the parties each made a contribution is the purchase of the former matrimonial home at Property G in 2005. The husband contributed an amount for stamp duty of $27,200. The purchase price was $551,291. The husband paid a deposit of $20,000 and an initial contribution of $91,445. Those funds were derived from the sale of the husband’s property at Property S. The balance of the purchase price was paid by a joint borrowing of $440,000 (more accurately, $439,846 after adjustments at settlement). Thus the percentage contribution of the husband to the purchase price plus stamp duty at settlement was $358,568 ($138,645 + $219,923) of a total of $578,491 or 62%.
The husband also claimed in his trial affidavit that in 2007 he contributed $133,171 from the net proceeds of sale of his Property C to the reduction of the mortgage debt. This was challenged by the wife who pointed out that the husband’s bank transactions did not support the claim. The husband subsequently withdrew that claim. He asserted that he had, in fact, placed the sum into a bank account and the interest on the sum was used to offset interest on the Property G mortgage but this contribution was not quantified. I accept that the use of his funds in an offset account contributed to the reduction of mortgage interest but I am unable to quantify that amount.
The mistaken claim by the husband that he used the proceeds of sale of the Property C property to reduce the Property G mortgage left unanswered the question of what ultimately happened to that money. There was no further evidence about it. The husband’s counsel said in submissions that it was simply absorbed in the general expenditure of the marriage. He said I should infer that it was used to make mortgage payments but pointed to no evidence on which such an inference could be based. The husband himself did not give that evidence. The proceeds of the Property C property, if they could be identified or were reflected in some current asset, would substantially be the contribution of the husband. It appears more likely than not that some part of it, at least, was absorbed in the general expenditure of the marriage but given the paucity of evidence I do not propose to do more than keep it in mind when assessing the parties’ respective contributions.
By virtue of being a joint borrower on the mortgage the wife contributed, at least in equitable terms, $219,923[6] or 38% to the purchase price.
[6] Half the borrowed amount after adjustments at settlement.
In addition the wife paid $48,000 to reduce the Property G mortgage debt in April 2006. This sum represented the net proceeds of sale from her Property W property. This contribution was made slightly less than 6 months after the purchase of the Property G property and, while not strictly a contribution to the purchase price, was a significant contribution to reduction of the mortgage indebtedness soon after purchase. One way of looking at this, although not strictly in accord with an equitable approach but as a rule of thumb, is to see this as part of the wife’s contribution to the purchase price. If so her contribution would be $267,923 ($219,923 + $48,000) or 46.3%. If a corresponding adjustment was made to the calculation of the husband’s contribution it would be $310,568 ($358,568 - $48,000) or 53.7%.
The wife also gave evidence that from 2009 to 2010 she contributed $41,327 towards the cost of renovations of the Property G property. She produced a detailed calculation to support this claim, which I accept. However, the wife did not give evidence about the provenance of this sum. She deposed to having had savings at the commencement of the relationship but not how much. She gave evidence that she paid for a substantial part of the wedding expenses from savings but did not say what, if anything, was left. Given the paucity of evidence I cannot conclude that this money was from her pre-relationship savings. It might be argued, although I do not find, that given the degree of separation of the parties’ finances, this should be seen as a contribution by her. If so this would take her cash contributions to the acquisition and improvement of the Property G property to about $309,250, very close to the husband’s identified cash contributions of about $310,568.
Of course the identification of the financial contributions of parties to the acquisition, conservation or improvement of property is not to be equated to the taking of accounts. However, it is consistent with the manner in which these parties conducted their financial relationship that the financial contributions to the acquisition, conservation and improvement of the Property G were almost equal. Although I find that the husband’s financial contributions to the acquisition were slightly greater it is agreed that the non-financial contributions of the parties were equal. Accordingly, I find that the overall contributions to the Property G property were slightly in the husband’s favour to with a contribution of 51.5% to the husband and 48.5% to the wife.
The redundancy payment received by the husband in 2008 has been expended, substantially during his subsequent period of unemployment. I do not propose to make any separate allowance for that.
The amount of $46,174 in a second Bank (omitted) account represents the damages award received by the husband in 2013 as a result of his successful damages claim against his former employer. This claim was settled and no breakdown of the amount was made but it appears that it represents damages for breach of contract of employment, more specifically damages for an inadequate period of notice of termination of employment or perhaps breach of a process of termination of employment. I am satisfied on the basis of Aleksovski v Aleksovski[7] this should be seen as a contribution of the husband.
[7] (1996) FLC 92-705
The sum of $70,792 in the husband’s Bank (omitted) account represents the inheritance received by the husband from his father plus, it would appear, accrued interest. It was not suggested by the wife that she had made any contribution to this sum.
The wife asserts that she owned shares in (omitted) Shares (previously (omitted) shares) and (omitted) before the relationship and these shares continued to be owned by her at trial. This was not challenged by the husband and I shall treat these as being her contribution alone.
The husband owned the (vehicle omitted) before the commencement of the relationship. He inherited the firearms and the sailing boat was a gift. I am satisfied these should be seen as his contribution alone.
The other assets should be seen as the result of an equal contribution by each party. The liabilities, other than those attached to the pre-cohabitation owned properties described above, should also be borne equally.
The husband also claimed that the wife received various amounts after separation which he said should have been shared with him. These were:
a)a refund of $3,590.40 for an overpaid insurance premium;
b)approximately $1,600 taken from the children’s savings accounts;
c)$9,807.46 from the Department of Children and Families;
d)Centrelink rebates, in an unspecified amount, for child care paid by the husband; and
e)Family Tax benefits and rebates in an unspecified amount.
No time was spent by the parties in cross-examination about these matters. It might be argued that the insurance refund, if the premium had been paid by both, should be shared but in the absence of evidence about who paid the insurance, and when, I feel unable to reach a conclusion about it. The money taken from the children’s accounts was, I infer, used by the wife to meet extraordinary expenses at the time she left the matrimonial home with the children. I do not think this merits any particular adjustment. There was no evidence from the husband about the reason the money from the Department of Children and Families was paid or the entitlement or otherwise of a particular party to it and I am unable to reach any conclusion about it. The Centrelink rebates for child care were an aspect of the day care fees dispute which the parties ultimately told me that they did not require me to resolve. In the absence of figures it is not possible to address the matter of Family Tax benefits and rebates.
In any event, the wife was the primary carer for the children after separation and will be for some further period. Her post-separation contributions in that capacity would substantially offset the husband’s claims.
I find that the overall contribution to non-superannuation assets, taking into account the husband’s slightly greater contribution to the Property G property and the other matters mentioned, was 54% by the husband and 46% by the wife.
Contributions - superannuation
Each party submitted that there should not be a superannuation split. However, neither party said superannuation should be ignored. In each case the superannuation interests are accumulation accounts in the growth phase.
The wife gave unchallenged evidence that she had superannuation before the commencement of the relationship and did not make contributions to her superannuation after she moved to Darwin (more or less contemporaneous with the commencement of the relationship). She said her present superannuation interests represent that pre-relationship interest and accretions only. In those circumstances the husband’s non-financial contribution (there being no financial contribution) to the wife’s superannuation was modest at best.
The husband says that he had “some superannuation” before the relationship but he does not say how much. I infer from his silence on this point that any evidence would not assist. I conclude that his pre-cohabitation superannuation interest was not large. His interest was, it follows, primarily built up during the marriage. In my view the wife’s non-financial contribution to the husband’s superannuation was substantial. Each party contributed to the welfare of the family as homemaker and parent, permitting the other party to pursue their respective careers and, in the husband’s case, contribute to superannuation.
The parties’ balance sheets at trial each included superannuation. Their proposed adjustments, in effect, took it into account as part of one pool, that is, any adjustment necessary because of superannuation interests was to take effect through an adjustment of non-superannuation assets. I propose to follow that course[8].
[8] I acknowledge the question raised by the majority in C & C (2005) FLC 93-220 about whether there is a legislative gap when there are relevant superannuation interests requiring adjustment but no split is sought by the parties. The answer in this case is that the parties have, in effect, agreed to treat the superannuation interests as “property”. See discussion at [54] - [61].
I find that the contribution to the total superannuation pool by the husband was 35% and by the wife 65%. As the husband holds 55% of the total superannuation pool and the wife 45% of the pool this necessitates an adjustment in the wife’s favour of an amount equal to 20% of the superannuation pool or about $59,400. I will round this figure to $59,000. As the parties agree there is to be no superannuation split this must be made up from the other assets.
I have considered whether there ought to be some discount of the amount paid to the wife to take account of the fact that she is receiving an amount before reaching her preservation age. I can see no actuarial reason for doing so. It is not, for example, present receipt of future income or other future entitlement but rather receipt of the equivalent of a sum that is otherwise subject to certain legislation and rules, principally regarding taxation. In circumstances where the parties have agreed that they will not seek a superannuation split I see no reason to make such a discount.
Section 75(2) factors
The husband said there should be no adjustment for section 75(2) factors. He said both parties are professionally qualified with a history of continued employment which is likely to continue. I accept that submission. The husband also asserted that the income of the parties was approximately equal. Whether this is so is less clear. The husband did not give detailed evidence of his own income but at one point suggested his present income was about $130,000 a year. The wife gave evidence of receiving a salary varying between $106,652 and $54,261, but predominately around $90,000, in the years from 2006 to 2012. Her income appeared to drop thereafter with her salary and business income stated to be $72,670 in 2015. It transpired in cross-examination that her business expenses included substantial expenditure that I would ordinarily consider to be private expenditure so I am not satisfied this latter figure is an accurate statement of her actual income.
The husband said that although the wife will care for the children more than him until the transition to equal time he is seven years older than the wife, impliedly with fewer years of employment ahead, and each factor balances the other.
The wife did not submit that there should be any adjustment for section 75(2) factors.
In the circumstances I do not make any adjustment for section 75(2) factors.
Conclusion
The wife presently holds 42.25% of the net non-superannuation assets, including her present equal interest in the equity in the former matrimonial home at Property G. As her contribution to those assets was 46% this necessitates an adjustment in her favour equivalent to 3.75% of the net non-superannuation asset value. This is, after rounding, equivalent to $35,000. In addition, I have found that an adjustment is necessary for the wife’s greater contribution to superannuation interests of $59,000 in her favour, a total of $94,000. The result is that the wife will receive an amount equivalent to 50.5% of the total net assets and superannuation and the husband 49.5%. Overall, I am satisfied that this is just and equitable.
If the husband wishes to acquire the wife’s interest in the former matrimonial home he will need to pay a sum equivalent to her half interest in the property or $288,254. The total of this and the $94,000 described in the preceding paragraph is $382,254.
If the husband does not wish to acquire her interest the parties are agreed that the property should be sold. In that event the proceeds of sale are to be divided proportionally so that total net figure for non-superannuation assets in the balance sheet set out above is 54% to the husband and 46% to the wife. In addition the husband must pay the wife $59,000 to as an adjustment in respect of contributions to superannuation.
I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of Judge Young
Date: 6 December 2016
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