Monfort and Bade (No.2)
[2017] FCCA 1673
•13 October 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MONFORT & BADE (No.2) | [2017] FCCA 1673 |
| Catchwords: FAMILY LAW – Contested property proceedings – parties have significant reliance on credit cards and borrowings during the relationship to acquire assets – each worked to the best of their ability – weight given to s.75(2) factors – wife ten years older and has significant psychiatric diagnosis resulting in unlikelihood of participating in the workforce in the future – cancer diagnosis arose after the trial concluded – trial re-opened – property and superannuation – splitting order for pension in payment phase – wife seeks time to refinance mortgage to enable her to retain home – treatment of wife’s share of a post separation inheritance – husband’s income earning capacity diminished post separation – husband has primarily paid post separation mortgage repayments and debts – whether husband had capacity to continue to pay interim spousal maintenance – property division 75/25 in favour of the wife – spousal maintenance application dismissed. |
| Legislation: Family Law Act 1975, ss.74, 75(2), 77A, 79(4) |
| Cases cited: In the Marriage of Hickey (2003) FLC 93-143 |
| Applicant: | MS MONFORT |
| Respondent: | MR BADE |
| File Number: | BRC 4638 of 2014 |
| Judgment of: | Judge Willis |
| Hearing date: | 27 October 2016 |
| Date of Last Submission: | 26 September 2017 |
| Delivered at: | Cairns |
| Delivered on: | 13 October 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Baston (direct brief) |
| Solicitors for the Respondent: | Porter Galea Lawyers |
ORDERS
That the overall property division is to be divided 75% to the wife and 25% to the husband.
To achieve the division the following orders will apply.
The parties (and the Trustees referred to in the Orders) are granted liberty to apply in relation the mechanical provisions of these Orders.
Sale of Property A
The parties are to do all acts and things to forthwith effect a sale of the property situated at Property A in the State of Queensland more properly described as Lot (omitted), (omitted) County, Parish of (omitted) Title Reference (omitted), (the Property A property) pursuant to Order 5 herein.
Trustee for Sale
To effect the sale of the Property A, the parties are to do all acts and things to forthwith appoint Miller Harris Lawyers as Trustee for sale (“the Trustee”). The husband and wife are to do all acts and things necessary and sign all such documents as may be required to register the Trustee on the title to the Property A property.
The Trustee is authorised by these Orders to have the sole conduct of the sale in all respects on behalf of the parties in relation to the Property A property. This will include doing all things necessary to list the Property A property for sale by private treaty and after a period determined solely by the Trustee for sale by auction. For the purposes of sale the following shall apply:
(a)The Property A property is only to be listed with such real estate agent/s and auctioneer as determined solely by the Trustee.
(b)The listing price for sale by private treaty and reserve price for an auction shall be such the amount as determined solely by the Trustee in consultation with the real estate agent/s and any other enquiries the Trustee wishes to make.
(c)The husband and wife are to co-operate in every way with the Trustee appointed real estate agent/s in relation to the marketing of the property for sale including making the key readily available, allowing inspection of the property at all reasonably requested times by the agent/s and ensuring the property is in clean, neat and good order at the time, vacating the property prior to any inspections as directed by the Trustee to enable any prospective buyers to have access to and properly inspect the Property A property in the absence of the husband or wife.
(d)Follow any other directions of the Trustee in relation to the sale of the Property A property and/ or inspections or viewing of the property and do all acts and things as requested by and in co-operation with the Trustee as and when requested to do so.
The husband and wife are restrained from taking any action which causes interference with any prospective purchaser or sale or with the responsibilities and obligations of the Trustee in relation to the Property A property.
The husband and wife are restrained from communicating with any agent/s, auctioneer appointed by the Trustee (other than to follow the directions of the Trustee) or any prospective purchaser without first obtaining the prior written consent of the Trustee.
Neither party may confer on any agent without the prior written consent of the Trustee, any permission to sell or any sole or exclusive agency in respect of the Property A property.
The costs of and incidental to such appointment of the Trustee is to be borne equally by the parties.
That pending the sale of the Property A property, the husband shall have the sole right to use and occupy this property to the exclusion of the wife.
Division of Proceeds of Property A property
Upon completion of sale of the Property A, the proceeds shall be applied and paid in the following order:
(a)To pay all costs, commissions and expenses of the sale and to pay any rates, land taxes and utility charges in respect of the property;
(b)To discharge the mortgage on the Property A property;
(c)To pay the amount of $92,000.00 towards to the husband’s credit card debt (unless already paid pursuant to the default provisions of Order 29 herein);
(d)To pay the amount of $7,000.00 towards the wife’s credit card debt (unless already paid pursuant to the default provisions of Order 29 herein);
(e)To pay or quarantine the sum of $24,663.00 being the capital gains tax liability arising from the sale of the Property C property (unless already paid or quarantined pursuant to the default provisions of Order 29 herein;
(f)The balance is to be paid to the husband, and taken into account as part of his 25% as referred to in these Orders.
Wife to pay Husband cash adjustment
That within 120 days of the date of these Orders (or other such date as agreed to between the parties in writing and if there is no agreement to vary this date, then within 120 days) the wife is to:
(a)Pay to the husband the cash adjustment necessary to effect a 25% division to the husband pursuant to these Orders. Such sum will be arrived at after taking into account the following calculation:
(i)Starting with $484,265.00 (being the equity retained by the wife in Property B (after deduction of the mortgage); plus
(ii)the balance of the sale proceeds of the Property A property (after the deduction of the debts as referred to in Order 12 herein); plus
(iii)the sum of $75,000.00 (being the value of the (omitted) Superannuation Fund) plus $3,800.00 (being the value of the husband’s car). The total of these sums will be referred to as A.
(iv)A is then to be multiplied by 25% representing the husband’s overall entitlement (excluding the (employer omitted) pension).
(v)From the figure arrived at in Order 13(a)(iv) above, the sum of $78,800.00 is to be deducted being the value of the assets to be retained by the husband (the (omitted) Superannuation and the husband’s car).
(vi)The figure arrived at will be the referred to as the cash adjustment payable by the wife to the husband.
The wife is to pay the husband funds totalling the sum of the cash adjustment as provided for in Order 13 herein and contemporaneously with such payment, the wife is to refinance the mortgage on Property B pursuant to Order 15 herein so as to remove the husband from all financial responsibility to Property B.
Wife to re-finance
The wife and husband is to do all things and sign all documents necessary to refinance the mortgage on Property B and secure the release of the husband from his personal covenants in respect of the current mortgage to the bank over Property B and or any guarantee by the husband in relation to that mortgage. From that time the wife shall release and indemnify the husband in relation to all liabilities arising pursuant to the mortgage or liabilities of any other kind whatsoever arising from Property B.
Transfer of Property B
Contemporaneously with the wife’s compliance with Orders 13, 14 and 15 herein, the husband and wife do all such acts and things and sign all documents that may be required to transfer to the wife at the expense of the wife all of the husband’s right, title and interest in and to the property situated at Property B in the State of Queensland, more particularly described at Property B on Crown Plan (omitted) of (omitted) Title Reference (omitted) (Property B).
(employer omitted) Pension
Subject to procedural fairness being accorded to the Trustee of the (employer omitted) Superannuation , that in accordance with section 90MT(1)(b) of the Family Law Act 1975, (the Act), whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of Mr Bade from his interest in the (employer omitted) Superannuation ((omitted)), his former spouse Ms Monfort (formerly Ms Monfort) who is a person specified in section 90ME of the Act is entitled to be paid (by the Trustee of (employer omitted) Superannuation) 75% of the splittable payment and there shall be a corresponding reduction in the amount Mr Bade would be entitled to receive but for these Orders.
The operative time for Order 17 is four business days after the service of the final orders on the Trustee.
(omitted) Superannuation
The husband is to retain to the exclusion of the wife, 100% of the (omitted) Super Fund standing in his name.
Husband’s vehicle
The husband is to retain his vehicle.
Default Provision
In the event of default by the wife of any of the obligations under Orders 13, 14, 15 and 16 herein the parties are to forthwith do all acts and things to effect a sale of the property situated at Property B in the State of Queensland, more particularly described at Property B on Crown Plan (omitted) of (omitted) Parish, Title Reference (omitted) (Property B) pursuant to the terms of Order 22 herein.
To effect the sale of the Property B, the parties are to forthwith do all acts and things to appoint Miller Harris Lawyers as Trustee for sale (“the Trustee) of Property B. The husband and wife are to do all acts and things necessary and sign all such documents as may be required to register the Trustee on the title to Property B.
The Trustee is authorised by these Orders to have the sole conduct of the sale in all respects on behalf of the parties in relation Property B. This will include doing all things necessary to list Property B for sale by private treaty and after a period determined solely by the Trustee, for sale by auction. For the purposes of sale the following shall apply:
(a)Property B is only to be listed for sale with such real estate agent/s and auctioneer as determined solely by the Trustee;
(b)The listing and reserve price for an auction shall be such amount as determined by the Trustee in consultation with the real estate agent/s and by any other enquiries the Trustee wishes to make;
(c)The husband and wife are to co-operate in every way with the directions of the Trustee appointed real estate agent/s in relation to the marketing of the property for sale including making the key readily available, allowing inspection of the property at all reasonably requested times by the agent/s and ensuring the property is in clean, neat and good order at the time, vacating the property prior to any inspections as directed by the Trustee to enable any prospective buyers to have access to and properly inspect Property B in the absence of the husband or wife.
(d)Follow any other directions of the Trustee in relation to the sale of the property and/ or inspections or viewing of the property and do all acts and things as requested by and in co-operation with all requests of the Trustee as and when requested to do so.
The husband and wife are restrained from taking any action which causes interference with any prospective sale or with the responsibilities and obligations of the Trustee for Sale in relation to the Property B.
The husband and wife are restrained from communicating with any agent/s, auctioneer appointed by the Trustee (other than to follow the directions of the Trustee) or any prospective purchaser without the prior written consent of the Trustee.
The costs of and incidental of the Trustee is to be borne equally by the parties.
Neither party may confer on any agent without the prior written consent of the Trustee, any permission to sell or any sole or exclusive agency in respect of the Property B.
That pending the sale of the property, the wife shall have the sole right to use and occupy Property B to the exclusion of the husband.
The proceeds of sale are to be divided as follows:
(a)To pay all costs, commissions and expenses of the sale and to pay any rates, land taxes and utility charges in respect of the property;
(b)To discharge the mortgage on the Property B;
(c)In the event that the Property A property remains unsold, at the time of the sale of Property B the credit card debts referred to at Orders 12(c) and (d) are to be paid and the CGT if not already paid referred to at 12(e) herein is to be paid or quarantined.
(d)The balance is to be distributed so as to achieve an overall division of assets of 75% to the wife and 25% to the husband (after taking into account the assets retained by the husband and wife (excluding the (employer omitted) Pension).
Other Orders
Unless specifically provided for in these orders, the parties are solely entitled to the exclusion of the other to all other property and chattels in the possession of each of the parties as at the date of the making of these orders.
That unless otherwise provided for in these Orders, the husband and wife each remain solely liable for an indemnify the other for any and all credit card debt or liability held in their own respective names.
That each of the parties shall do all acts and sign all necessary documentation to give effect to the terms of these Orders. In the event that either party refuses or neglects to sign (within seven 7 days of a written request to do so) any document necessary to effect the terms of these orders, the Registrar of the Federal Circuit Court of Australia is hereby appointed pursuant to section 106A of the Family Law Act 1975 to execute such documents on behalf of such party.
Spousal Maintenance
The wife’s application for spousal maintenance is dismissed.
The wife’s applications for contraventions of any interim and or previous spousal maintenance orders, enforcement for arrears and warrants for seizure of property arising from any previous spousal maintenance orders are dismissed.
Outstanding Applications
The Application in a Case filed on 16 May 2016 and 4 August 2016 are dismissed.
All outstanding applications are dismissed are removed from the pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Monfort & Bade (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CAIRNS |
BRC 4638 of 2014
| MS MONFORT |
Applicant
And
| MR BADE |
Respondent
REASONS FOR JUDGMENT
This is an application for a property settlement made by the applicant wife, Ms Monfort (the wife). The respondent husband is Mr Bade (the husband).
The history of this matter is that it was originally filed in Brisbane in May 2014. On 28 July 2014 Judge Jarrett made standard orders for single expert valuations, a financial conference, dismissed the wife’s application for weekly interim spousal of $1,294.75 and reserved the costs. On 12 August 2014 orders were made by consent by His Honour including that another application for weekly interim spousal filed on 4 August 2014 (days after the previous order) be dismissed and transferring the matter for further hearing to the Cairns Registry.
The matter first came before me on 3 February 2015. Further Orders were made by consent including for the sale of the Property A property. By that stage the parties had engaged in mediation.
The file will show that a feature of this litigation has been the number of interim applications filed and subsequently ultimately dismissed by consent. So too were appeals filed by the wife in relation to interim Consent Orders in 2016. Those matters were dealt with by the Full Court and ultimately dismissed.
Each of the parties has been represented at the trial in this matter. Mr Baston of Counsel has appeared for the applicant wife[1] and Mr Galea, a solicitor advocate, has appeared for the respondent husband.
[1] Mr Baston appears pro bono for the wife through a direct brief through the Bar Association pro bono program. He is the second barrister to offer his pro bono assistance through the Bar Association.
The parties have agreed that this matter should proceed on the papers as the issue in dispute between the parties is limited to the weight to be given to various factors, and in particular the section 75(2) factors, rather than disagreement about a range of factual matters. The matter has been re-opened twice given post trial change of circumstances involving the wife’s inheritance, the husband’s re-employment and the wife’s cancer diagnosis. Further submissions were filed on each occasion.
Each party read their material relied upon as set out in their respective case outlines. Mr Baston filed a case summary and accompanying written submissions on 26 October 2016. Mr Galea solicitor for the respondent filed his amended case summary on 28 September 2016 and accompanying written submissions on 27 October 2016. At each stage of re-opening, any further affidavit or submissions to be relied upon have been read and agreed that it is to be added to the original list of documents for each party.
The wife attended the hearing by phone (for her own convenience) in company with Mr Baston of Counsel in Brisbane who also appeared by phone. Mr Galea and his client appeared at the hearing in person in Cairns.
At the conclusion of the hearing, the matter was adjourned part heard as the submissions on behalf of the husband were not completed. Mr Baston was then to provide a minute of Orders sought to meet the primary proposal of the wife and a spread sheet. Time was granted for that to occur and to also allow the legal advocates to have discussion about a possible third option as to the division of assets which had crystallised during the hearing. The proposal was then to resume the matter for further submissions.
On 23 November 2016 a further affidavit was filed by the wife and relied upon in relation to an issue which was flagged at the hearing, namely an inheritance received by the wife.
Supplementary submissions were filed on behalf of the wife by Mr Baston on 29 November 2016. Supplementary submissions were filed on behalf of the husband by Mr Galea on 15 February 2017.
In the meantime the wife, self-acting, filed a number of further applications including enforcement warrants and applications in a case. The wife has been represented by a variety of privately funded solicitors, then self-acting but given assistance by pro bono barristers at hearing dates. Mr Baston has been appearing for a considerable period on behalf of the wife, as part of the Barristers Association pro bono scheme. There were others before him. The wife appealed following an appearance by another pro bono barrister who appeared in person in Cairns with the wife on the phone. The wife claimed that the barrister did not follow her instructions and did not consult with her whilst she was appearing by phone.
Mr Baston took over on a pro bono basis also as part of the Queensland Barristers Association pro bono scheme. Mr Baston has undertaken significant work on a continuous basis to assist the wife. The Court records its thanks to Mr Baston for his significant pro bono work including advocacy and comprehensive written material over many months. It is clear that hours and hours have been given by Mr Baston to assist the wife. The Court also acknowledges and thanks the Barristers Association for continuing to supply this very worthy scheme to litigants.
As a result of the interim applications and enforcement warrants issued by the wife, the matter was further mentioned on 11 July 2017. On that date the enforcement warrant issued by the Registrar was set aside and all of the other interim applications filed by the wife were dismissed with no order as to costs.
On that date, Mr Baston and Mr Galea were invited to file an agreed document dealing with several issues which had arisen since the written submissions had been received. At the time of the trial the husband was unemployed and that had changed, and the wife’s receipt of her inheritance had been finalised. The legal advocates were to file a document setting out the agreed facts of the post hearing events.
Given the wife’s post trial cancer diagnosis, the matter was re-opened again and each party filed additional submissions and the wife an affidavit.
Further evidence and submissions have been received in relation to the wife’s cancer diagnosis.[2] I have had regard to all of the oral and written submissions (including the supplementary and further supplementary submissions) of both Mr Baston and Mr Galea.
[2] Wife’s affidavit filed 24 July 2017. Submissions from both Mr Baston and Mr Galea.
I thank each advocate for their assistance in attempting to have this matter dealt with as expediently as possible. This has not been without its difficulties. In my view, there is nothing further that either Mr Baston of Counsel or Mr Galea solicitor advocate, could have done to further the interests of their respective clients.
Orders sought by the parties
The wife is seeking an 80/20 split of the property pool. The main issue in dispute is the uplift for her section 75(2) factors and the style of Orders made. The parties agree that the matter should be approached on a one pool basis.
In seeking an 80/20 split the wife sought that such split should include her retention of the Property B and the mortgage. Property B is the single biggest liquid asset of the parties and contains significant equity. Its value is $840,000.00 and the mortgage as of November was $356,186.00. As can be seen, the approximate equity to be retained by the wife in seeking to keep Property B is around $483,000.00.
At the hearing, the wife produced evidence of loan pre-approval confirming she is able to borrow a maximum amount of $370,000.00 from (omitted).[3] Given her limited income, to be in a position to do this the wife seeks a splitting order of 100% of the husband’s (employer omitted) pension, which is in the payment phase paying $458.00 per week. It is submitted on behalf of the wife that this payment (or the amount paid to her above 50% at least) would be categorised as a spousal maintenance pursuant to s 77 of the Family Law Act so that the wife’s receipt of a disability support pension is not affected.
[3] Exhibit 3.
It is agreed that the whole of the (employer omitted) pension entitlement accrued during the course of the marriage.
Mr Baston of Counsel for the wife urges the Court to make orders for the appointment of a statutory trustee for sale of the Property A property without delay and submits that the husband has not been proactive in effecting a sale of the Property A property contrary to Consent Orders made for the sale of this property back in 2015.[4] The Orders of 12 May 2015 were Orders by consent for the sale of the Property A property, made at a time when each of the parties were legally represented.
[4] Orders of 12 May 2015 and 15 September 2015.
The subsequent Orders of 15 September 2015 state, “By consent, Orders 1-5 of the Orders of this Court dated 12 May 2015 in respect of the property at Property A (“the Property A property) commence from the date of these Orders NOTING THAT the wife has not co-operated in all respects with the provisions providing for sale of that property.” Another order was included providing for the Registrar to sign all documents necessary to effect the sale if either party refuses to sign such documents.
The husband’s application at the commencement of the trial was that the remaining two properties (Property B and Property A) should be sold and the joint debts paid out (credit card, mortgages and funds set aside for the Capital Gains Tax payable attributable to the Property C property sale ) and then the balance divided on a 70/30% basis.
During the trial the husband indicated that he would wish to retain the Property A property in which he lives and the further supplementary submissions confirm that the husband’s position that each of the remaining two properties (Property A and Property B) be sold and the debts paid. In the event that the Court chooses to order the sale of the Property A property only, the husband submits that his credit card debt should be paid from the net sale proceeds before the balance of funds are distributed between the parties. In the re-opening of the trial the husband’s re-entry into the work force was confirmed as was his current salary, which is about half what he earned during the marriage and most of the post separation period.
Whilst in principle the husband is supportive of the wife retaining Property B, the husband submits that their financial situation likely precludes this possibility. Mr Galea on behalf of the husband submits that even after the sale of the Property A property, there are insufficient funds to pay out completely the existing mortgage on Property B, their credit cards debts and the capital gains tax.
On the morning of the commencement of the trial, Mr Baston tendered evidence from a financier the wife had pre-approval for a mortgage. This was the first time that there was evidence that the wife could obtain a mortgage to retain Property B. The pre-approval from (omitted) Bank is for approval to the maximum amount of $370,000. The approval for the finance is subject to conditions including that the valuation of the new property is approved (Property B) and (omitted) Bank receive a copy of a “fully signed and dated Separation Agreement, confirming ongoing (employer omitted) Super to be paid to you for life.” This is a reference to the (employer omitted) pension entitlement in the payment phase standing in the name of the husband.
Mr Galea submitted that if the wife wished to and could re-finance the existing mortgage on Property B and any other joint debts, she is to retain as part of the property division that the husband does not wish to remain in any way liable for the mortgage on Property B or remain as a co-mortgagor nor become a guarantor. The husband is doubtful that the property division can accommodate the wife retaining Property B as the wife’s proposal does not take account of the credit card debts which he submits are a joint debt. The wife contests the full extent of the joint credit card debt and maintains that the joint credit card debt should be fixed at $66,733.50 (being $59,733.50 standing in the husband’s name and $$7,000.00 in the wife’s name[5]). The husband contends that the correct figure is $92,000.00.
[5] All submissions including further supplementary submissions on behalf of the wife, page 4 “Balance
The husband does not wish to retain debt into the future arising from this marriage and he wishes to reach a financial property division resulting in a final settlement and separation so that he can move on with his life too. In particular he submits that if he is to retain the credit card debt (whether at the wife’s amount or the husband’s) this will reduce his percentage entitlement by the extent of the debt. Similarly he points to the joint debt of the Capital Gains Tax which has to be paid. Again, if he is to pay this joint debt, the husband says that this will also diminish the amount of his percentage. As I have said elsewhere, whilst not wishing to deprive the wife of the opportunity to retain Property B, the husband does not understand how it can occur in a practical sense and noting the nature of the asset pool and the liabilities.
The husband submits it would be just and equitable for the Court to determine that the parties contributions to the tangible assets and the pension to be equal. Mr Galea for the husband contends that all of the present debts of the parties, the mortgages and the Capital Gains Tax liabilities which either have or will accrue from the disposal of the three properties (Property B, Property A and Property C) should be funded from the net assets in the pool equally before the percentage division.
Mr Galea for the husband concedes a 20% uplift for the section s.75(2) matters accepting also that the range is 70 to 75% overall. The husband therefore seeks an order that the property be divided on the basis of 70% to the wife and 30% to himself, after all the remaining the properties have been sold, mortgages paid, credit cards debts paid and Capital Gains Tax provision made. In the supplementary submissions, Mr Galea for the husband submitted that if the Court is minded to make orders that the wife retain the Property B, that it should only be on the basis that the wife is able to refinance the existing mortgage and the other liabilities are also dealt with so as enable his client to receive his proper entitlement of the property division. Further, it is submitted that any orders made for the wife to try and retain Property B should make a provision that Property B be sold if the wife is unable to refinance the existing mortgage within a reasonable time, say 60 days.
Proposed draft orders of the husband provide that the Property A property at Property A (“the Property A property) be sold and the Property B property (“Property B”) be sold (Property C, their 3rd property, has been sold prior to the trial). Provision is sought to set aside an amount for Capital Gains Tax liability that results from the sale of any of the three properties as set out at proposed Order 1(c). In the supplementary submissions, Mr Galea submitted that given the history of the difficulties in having the wife comply with Orders for sale, that the Court consider appointing a trustee for sale of the properties if they are not sold within a reasonable time.
Mr Galea supports his contention that a trustee should be appointed to conduct any sales, given the wife’s history of acting contrary to Consent Orders and her past changing of her position in relation to issues, such as is seen in the Applications in a Case filed by the wife and then discontinued. Moreover, he points to the Consent Orders for the sale of the Property C property and the evidence of her being obstructive in the sale process. The wife’s refusal to comply with Consent Orders regarding the sale of the Property C property resulted in an urgent interim hearing by this Court on 21 December 2015, a couple of hours prior to the settlement date.[6] The wife’s application to prevent the sale was dismissed. Given the evidence, the Court also made an Order that the wife be restrained from taking any action of any kind whatsoever to hinder, impede or prevent the settlement of the contract of sale for the Property C property.
[6] The 6th application in a case filed by the wife at that point. More have been filed and dismissed since that date.
The husband’s Orders also seek to have a splitting order issued in relation to the (employer omitted) superfund of the husband, splitting 70% to the wife and to retain 30% for himself. It is submitted that this pension in the payment phase has a different character from the other capital assets of the marriage. It is agreed that it cannot be converted into a lump sum and that it derived from a commutation of the husband’s defined benefit superannuation interest when he left his career in the (employer omitted). The husband wishes to retain some of the (employer omitted) superannuation as it will eventually assist him in his own retirement and would form part of his retirement income. Whilst it is conceded that the Court may decide to give the wife 100% of this asset, the husband wishes to retain as much as he can.
Overall, the husband through his solicitor advocate Mr Galea, concedes that the range available to the wife, given her s.75(2) factors, is 70 to 75%. This includes after consideration of the wife’s late cancer diagnosis.
As to any claim for spousal maintenance, the husband rejects that he is liable for payment of any spousal to his wife in the future, primarily on the basis that he does not have the capacity to pay spousal maintenance even if the wife can establish a need. The issue of the wife’s cancer diagnosis and its affect in the long term is referred to, noting that there is no evidence either way as to the wife having an altered life expectancy or any additional needs.
As to the request of the wife to have included in any final orders that the amount paid to her in excess of 50% of the (employer omitted) pension be identified in the final orders as being “pursuant to 77A (1)(a) of the Family Law Act specifying that of the property alteration orders that distribution in excess of 50% be said to be an order for the provision of maintenance of the Wife”, Mr Galea submits that it is against public policy to classify some of the property claim as representing a percentage of spousal maintenance to serve the wife’s purpose to retain her full disability pension.
As to the alleged spousal maintenance outstanding pursuant to an existing Order for interim spousal maintenance, the husband says that he became unemployed on 29 July 2016. Thereafter he was unemployed for a significant period. It is submitted that the husband has been sole income earner post separation and clearly his lack of income had a significant affect and caused financial grief. The husband contends that he was close to bankruptcy in this period. Further, Mr Galea for the husband points to the evidence that the husband was still responsible for the mortgages and significant credit card repayments and that he had to use the credit cards to keep the parties afloat financially in this period. He did not therefore have the capacity to pay spousal maintenance. Because of his lack of capacity to pay, it is submitted that the husband is not liable for the arrears that the wife seeks (at least $13,000.00 as at August 2016 according to the wife). The wife asks the Court to deduct the alleged arrears from any amount she is ordered to pay the husband in exchange for Property B being transferred to her sole name.
As to the wife’s entitlement to a share in the inheritance of her father, Mr Galea submits that the wife knew of the inheritance before the date of the hearing on 27 October, 2016 but did not disclose it to the husband or the Court. The wife’s own affidavit filed on 23 November 2016 confirms that she was contacted by solicitors for her father’s estate on 3 August 2016.
It is agreed that the wife received the sum of $82,500 after payment of the legal fees associated with that dispute. It is submitted that after the wife has paid her own credit card and other debts, that she will have no more than about $32,000 to contribute to a mortgage. Mr Baston of Counsel submits that the inheritance has no connection to the assets of the marriage or to the husband and that the inheritance will be received more than 5 years after marital separation and almost 3 years after the divorce is final. For these reasons it is contended on the wife’s behalf that the inheritance ought not be included in the asset pool.
Mr Galea for the husband submits that it is conceded by the husband that the husband did not contribute to the wife’s inheritance from her father and contends that the amount retained by the wife should be regarded as a financial resource in her hands. Further it should be considered when having regard to any claim for spousal maintenance into the future.
Background
Turning to the background in this matter, the parties in this marriage commenced initial cohabitation in (omitted) 1991 and married on (omitted) 1992. They separated finally in July 2012 according to the wife and then lived together separated under the one roof until April 2014.
The husband denies that the parties separated finally in 2012. The husband admits there was a temporary separation but says it was of short duration and then the parties resumed cohabitation. The husband says he first heard of the final separation around 1 April 2014, when the wife sent him an email informing him that their relationship was over and telling him he was not welcome back to the jointly owned property and then matrimonial home at Property B (Property B). He says that they had relocated from the Property A property in March 2014 at the wife’s request as she said she wanted to move to Brisbane to be closer to her family who live in Brisbane. The husband says they both moved all their furniture and possessions to Property B where the husband lived for a short time before doing shift work to and from (omitted). Having made this move, the husband says he got the email on 1 April 2014 saying the relationship was over. He accepts that their relationship was rocky prior to this but says he had no knowledge of the marriage being over prior to that and therefore did not consider that they were living separately under one roof.
The husband accepts though that there was an issue in July 2012 when the wife sent a text message saying do not come home to their then Property A property. The wife believed the husband was having an affair. He says he was on his way home from (omitted) in Western Australia where he was working with (employer omitted) and therefore booked into a motel for 7 days. The husband says as part of the wife’s psychiatric illness, she would have “episodes” “from time to time where she would become extremely stressed and paranoid. I thought this was one of those episodes and decided to give her some time to settle down. After a few a days the applicant telephoned me and told me that she thought I had cheated on her. She said she had made a mistake and asked me to come home.”
I do not consider that there needs to be a definitive finding on the separation date. The only issue which appears to have any resonance with a specific separation date as far as the wife’s position stands is in relation to credit card debt. As explained elsewhere in these reasons, I have determined the figures for the credit card debt based on the evidence. The husband continued to be the primary income earner after 2012 and satisfy all of their debts in any event, apart from minimal contribution to joint debts by the wife. A rate payment relating to Property B is one of those payments. Overwhelmingly the husband’s income has kept the parties afloat financially since 2012. Each of the parties received rent from Property C and Property A whilst it was tenanted. The husband has now moved into the Property A property as he has to have somewhere to live, just like the wife who has occupied Property B from around May 2013.
During the marriage, the wife has shown considerable flair and initiative in setting up various businesses during the marriage including a (omitted) business, a (business omitted) and (business omitted). She set up (business omitted) in (omitted) 1991, about 14 months before the parties commenced living together.
The husband was a (occupation omitted) at (employer omitted), and then worked in a (employer omitted). In (omitted) 1995 he commenced work at the (employer omitted) as a (occupation omitted). The husband has worked hard to improve his earning capacity and qualifications. In (omitted) 1997 the husband was promoted with (employer omitted) in Brisbane. He moved to Brisbane and the wife stayed at their home at Property E, having bought that land in April 1993 and built a house on it later in 1993. In April 1997, the wife sold the business (business omitted) and moved to Brisbane to join the husband. In November 2008 the wife moved from Brisbane back to (omitted) again due to the husband’s work. The wife has worked at various other occupations such as an (occupation omitted) with (employer omitted); she has studied (studies omitted) and worked in an array of (employment omitted) positions.
In May 2000 the wife became involved in litigation in the Supreme Court in relation to the winding up of the Property B Trust. The wife was granted leave by Justice Atkinson for liberty to apply for the property Property B. The parties eventually purchased this property. In May 2001 the wife worked and researched and lodged an application under the 2000/01 Community Heritage Projects program to do works to Property B.
The wife says in July August 2000 she suffered a back injury in a café whilst she was out to lunch in (omitted). There are various other injuries suffered by the wife over the years through car accidents or slips and falls or work related accidents as set out in the material. The most recent seems to be 2015 when the wife was injured in a car accident and suffered whiplash and injury to her cervical spine.
In September 2007 the wife suffered a psychiatric episode in the work force. The wife has been diagnosed with work related stress disorder by Dr C in December 2010 when she resigned from her employment. There have been other psychiatric breakdowns since that time. In 2012 the wife suffered a psychiatric breakdown while working in a casual role. Dr B issued a report in September 2013 stating that it seems clear that the wife will not return to paid work in the foreseeable future. In May 2014 the wife suffered a severe psychiatric episode. In 2014 the wife was diagnosed with post-traumatic stress disorder. In December 2015 the wife qualified for a Centrelink disability support pension.
It is agreed between the parties that the wife will not return to the workforce given her psychiatric conditions. The wife qualified for a disability support pension in December 2015, backdated to July 2015.
I am aware of the evidence of the wife’s diagnosis of a high grade ductal carcinoma in situation with invasive carcinoma right breast which has required immediate surgery and post-operative treatment.
The husband’s career has progressed through (employer omitted). He has worked with (employer omitted) earning over $200,000.00 as a (occupation omitted) at (omitted), flying in and out from (omitted) for some years. However, the husband’s contract was not renewed 2016 and he was made redundant on 29 July 2016.
The husband and wife have together purchased various properties during the marriage. There are no children of the marriage. Their finances have been intermingled.
The wife lives alone at Property B and strongly seeks to retain this property as part of her property settlement.
Various interim Orders have been made about the sale of other properties. The parties have significant credit card debt.
The husband has worked throughout the marriage, though at the time of trial he had been made redundant in July 2016. He was actively seeking further employment. It was submitted that he would likely obtain further contract employment. This has occurred after the hearing in October 2016, as per the supplementary submissions filed on 15 February 2017. The husband was however unemployed and on social security until he obtained his next position.
The husband’s case is that he has struggled financially to keep up with the mortgage repayments on Property B, the Property C and the Property A property and the expenses relating to these properties along with payment of their credit cards, his own cost of living and trying to pay spousal maintenance and other outgoings. He says he thought he would go bankrupt. I accept that this was so.
The husband says (and it is not contested) that the wife received half of the rental from the Property C property and the Property A property causing significant financial burden upon his salary and income.
The husband’s evidence sets out a long history of buying and selling homes, using equity to do renovations, strong reliance on credit cards, being heavily geared to the point of having at one stage 4 mortgages. At times the parties accessed equity on properties with increasing values to pay down credit card debt. Several refinances were organised. The wife co-ordinated renovations of their property at Property A. That property was re-financed several times to fund the renovations and pay down credit card debt and make mortgage repayments. The husband says, and the credit card records show that their expenditure on credit cards was substantial as their overheads on mortgages and other costs was generally higher than their incomes. In 2007 and 2008 around $140,000.00 was spent on the Property A renovations financed by some cash from refinancing loans and credit cards.
The global financial crisis (GFC) eventually put an end to borrowing against equity. In 2008 and 2009 the parties struggled to manage their debt. The husband arranged to temporarily relocate through his (employer omitted) employment to (omitted) which provided a non-ongoing position for the wife as part of the deal. Even so, their costs of living with four mortgages were greater than their income. As a consequence the Property D property was sold.
As can be seen from the style of Orders issued right from the first Court date, the plan has been to sell the assets to reduce debt. The wife has agreed to selling properties and then, as the record will show, has refused to sign documents for the sale resulting in an urgent hearing to enable a sale to proceed. After the wife had various solicitors act for her, she sought advice from (employer omitted) in relation to the accounting issues associated with the property division. Consequently, the wife changed her approach and focus. This resulted in her disagreeing with her previous existing consent to sell properties. This resulted in an urgent hearing to enable the sale of Property C to proceed as ordered.
The wife seeks to structure the property settlement such that she maintains her much loved Property B. This is a home that the wife has found offers her security and stability. This is supported by the evidence of her mental health expert.[7] The wife has put her energy and litigation into securing Property B through the Supreme Court action. It seems that she has also managed to then obtain through her energy and skills a $5,000.00 grant from the Queensland Government for urgent stabilisation works to Property B. In April to August 2002, the wife received $60,000.00 from the (employer omitted) for conservation works to the Property B. The wife was nominated as the project officer. She administered the project with a registered builder who was the project manager.
[7] See expert reports in the Notice to Admit Facts/documents.
The wife is described by Mr Baston of Counsel as an intelligent, hardworking, well presented woman who through her myriad of presentations that form a number of diagnoses within the DSM-IV and DSM-V the effect of which is that, while she might be able to secure a job, she could never keep it. Unfortunately her past and likely future psychotic events arising from her psychiatric illness are a barrier to her obtaining employment. I accept this and so does this husband.
The wife’s father passed away on (omitted) 2016, some months before the final hearing 27 October 2016. The wife is the eldest of 3 siblings. The wife has set out the percentages of the estate of her father left to herself and her siblings in her affidavit. The grant of Probate was sent to the wife by O’Neill’s Solicitors on or about 23 September 2016. The wife expects the amount of her share from this estate which primarily consisted of a home unit, to be modest. Apart from a $20,000.00 bequest to a friend, the 3 siblings are to receive percentages of the balance of the estate namely 50% of the residue to her brother, and 25% of the residue to each of her sibling and herself. The wife advised the Court that she intended on making a Family Provision Claim. The wife’s affidavit of 23 November 2016 estimated that her father’s estate was worth around $460,000.00 to $420,000.00. Evidence subsequently received fixes the amount of the post separation inheritance received by the wife at $82,500.00 after deduction of the legal fees incurred by the wife in relation to this issue. It is submitted on behalf of the wife that after payment of her credit cards and other debts incurred that she will have no more than about $32,000.00 left.
The husband has been under significant financial pressure to keep up with the considerable mortgage repayments and joint debts post separation. It involved much juggling and reliance on credit cards. He has worked long and hard in remote work to earn the significant income he had at (employer omitted), with much travel to and fro. His ability to fund their ongoing commitments has been pivotal in still having the Property B available for distribution. When the husband lost his lucrative contract of employment in July 2016 he was without an income derived from his occupation. The husband has been on the brink of bankruptcy.
The lump sum payments received by the wife post separation have not been directed into joint debt reduction. Instead, the wife has spent significant sums on her own family law legal fees and used the balance each time for her own personal expenses. Whilst he was working, the husband continued to make the mortgage repayments on Property B where the wife lived and to pay spousal maintenance amongst other outgoings. The significant and continuing credit card debt has existed through the marriage. Like many people, these parties had expenses greater than their income and relied on their credit cards to fund many expenses and projects. From 2012 onwards the husband’s income was the primary source of funding their joint debt.
The husband has secured further employment as predicted, though he is not earning the high salary that was earned when the husband worked as a (occupation omitted) at (employer omitted) which came to an end in July 2016. After this occurred the husband wrote to the wife and set out the financial difficulties this meant for their joint debt situation and the financial stress that was being suffered.
The husband’s salary now is in accordance with a fixed contract for the next three years of $120,000.00 per annum.[8]
[8] Supplementary submissions of the husband, paragraph 10.
As referred to elsewhere in these reasons, the wife has had a diagnosis of cancer after the initial hearing and has been hospitalised in August 2017 for surgery and then post-operative treatment.
The Law
In this matter I am required to follow the approach to property division set out in various authorities and described as a four step process in cases such as C & C (2005) 33 Fam LR 414; In the Marriage of Hickey (2003) FLC 93-143 and Ferraro and Ferraro (1993) FLC 92-335. The four step approach is to first determine the pool of assets and liabilities, then evaluate each of the parties’ financial and non-financial contributions during the marriage and post separation, determine if that contribution figure requires adjustment in light of the relevant section 75(2) factors and finally to consider whether the proposed result is just and equitable in all of the circumstances having regard to the actual result in real terms.
As the Full Court (Bryant, CJ, Finn & Thackray JJ) noted in Bevan & Bevan [2013] FamCAFC 116 at [65] although the High Court in Stanford & Stanford (2012) FLC 93-495 did “not disapprove the four step process, we accept it was not approved either”. However it is clear that after an identification of the existing property interests (as determined by common law and equity), the Court is required to consider under s79(2) whether it is just and equitable to make an order at all.
As the High Court said in Stanford at [42]:-
“In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationships. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also bought to an end. Hence it will be just and equitable that the court make a property settlement order….”
As to the four step approach, Justice Murphy has suggested in Watson & Ling[9] that as a consequence of what was said in Stanford by the High Court, that:
“As a result of those matters, the Court’s approach to s 79/ s 90Sm may be less compartmentalised than what a strict or unthinking adherence to four (or three) “steps” might otherwise reveal. The task is essentially holistic: Is it just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and if so, its terms must similarly meet that criteria. Of course, holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Courts reasons make that clear.”
[9] (2013) FLC 93-527.
I have also had regard to the decision of Judge Howard in Semperton [2013] FCCA 1562 October 2013 and in particular to the reference by His Honour to various passages in Stanford v Stanford [2012] HCA 52 which Mr Baston has drawn the Court’s attention to.
Mr Baston has also helpfully referred me to the decision of the Full Court in Calvin & McTier [2017] FamCAFC 125 (12 July 2017) who in turn made reference to which refers to James and James [1978] FamCA10 (1978) FLC 90-487 The Full court stated that property does not fall into a protected category merely because it is an inheritance, however, if there are ample funds from which a just and equitable property settlement can be arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question. They also stated that “the other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Accordingly, we think that in the present case the moneys received by the husband…from his uncle’s estate should not be brought into account. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property.”
Step 1 Asset pool – determining the assets and liabilities
In the first step of the four steps referred to in Hickey and Hickey when determining a property division. There was largely agreement as to the value of assets including the property and the superannuation. There is disagreement by the wife as to the extent of the husband’s credit card expenses to be included in the pool.
The pool has been adjusted since the trial first occurred to allow for slight variations in the figure for the liabilities or an increase in the superannuation balances.
It is agreed that the husband’s (omitted) Super can be rolled over to the wife (all but $5,000.00 of its $75,000.00 value) and then cashed by the wife given her age. I have therefore constructed the asset pool in 2 ways.
In relation to the liabilities, it is agreed between the parties that there is a capital gains debt which is payable as a result of the previous sale of the Property C property. That figure is agreed at $24,663.00. The parties agree that this amount of money needs to be quarantined ready for payment. In my view, this should be included in the liabilities.
Credit Card debt
There is a dispute regarding the balance of the credit card standing in the name of the husband. I have regard to the submissions made on behalf of the wife that the sum of $59,733.00 ought to be adopted as the husband’s credit card figures and not $92,000.00. I am not satisfied that there is any evidence of waste or reckless spending on behalf of the husband on his credit card. I do not accept that the husband has failed to pay joint debts or that he has spent funds on unnecessary or extravagant personal expenses. The husband has had to live day to day and incur expenses as has the wife. The husband’s work entailed much travel on his part from Western Australia to Queensland in his fly in fly out position, for years.
I am not satisfied that there is any evidence to support the wife’s submission that, effectively, the husband should be solely responsible for the balance on the credit card debt for the difference between $59,733.00 and $92,000.00 (which is the husband’s position).
I accept the submissions of Mr Galea for the husband in this regard. Mr Galea for the husband was able to identify through the wife’s own sworn evidence[10] in her affidavit of 17 August 2016 at paragraph 87 [11] her analysis of the credit card statement.
[10] Wife’s affidavit filed 17 August 2016 paragraph 87.
[11] (and elsewhere in that affidavit – Mr Baston was not aware of this affidavit).
The wife says in that affidavit[12] that as at 2 July 2012 (the earlier date of separation) that there was $59,733.00 of credit card debt. The husband has set out his credit card expenditure between 2011 and 2016.[13] Having regard to all of the evidence, including the report of (employer omitted), and noting the close scrutiny of their spending contained in that affidavit, it is clear that there was a credit card debt in 2014.
[12] Paragraph 87.
[13] Paragraph 152 noting the bottom table for the financial year 2013-2014 under the “total interest” has a 1 missing and should read $17,699.48.
Mr Galea submitted that in the forensic report of (employer omitted),[14] the available cash after net property income and taxation reported in that year (30/6/14) was $64,395.00. The total payments of the credit card in that year were $51,822.92.[15] By subtracting one from the other the difference represented the money that the husband had left over to spend on himself or for whatever else throughout the year, was $12,573.00. I accept that this figure of $12,573.00 does not represent any wanton or reckless spending on his part, nor does it illustrate that he has been secreting money away. The husband’s position is that he used these funds for paying expenses incurred in his day to day existence including feeding himself and ordinary expenses after payment of their joint debts. The same exercise can be applied to the next year, being 2015. The figure of $75,512.00, taking away the total credit card payments for that year of $45,028.00, leaves a discretionary amount of $30,484.00 over the year. Again this is not an amount which suggests reckless spending or wastage.
[14] Schedule marked M 1, (wife’s affidavit filed 1 July 2016).
[15] Which comes from the husband’s summary at bottom of “total payments” for the financial year 2013-14, paragraph 152 his affidavit filed 23 September 2016).
I accept also that the wife has paid significant fees of her own from the funds received by her in two lump sum payouts. Essentially the wife has retained for her sole use, all of the proceeds of her payouts. What is left over from legal fees, she has retained for her personal use. The husband has also had to fund his own legal fees. As I understand the breakup of the credit cards is that the husband’s is $92,000.00 and the wife has $32,000.00 comprising $7,000.00 personal expenses and $25,000.00 paid to her lawyers MacDonnells for legal fees.
I am satisfied that the husband’s figure of $92,000.00 for his credit card is to be accepted as a joint debt, along with the wife’s credit card at around $7,000.00, a total of $99,000.00.
The husband has directed his income to debt reduction and as well as that he has his own expenses associated with his cost of living. As seen in the (employer omitted) figures, his cost of living as explained by Mr Galea is well within conservative expenditure.[16] Funds used to pay back the credit cards in part derived from the husband’s receipt of a portion of (employer omitted) pension (a portion of $458.00 with the wife receiving similar), as submitted by Mr Baston. The husband’s salary however was approximately $240,000.00. The husband has earned significantly more from his personal exertion. I do not consider therefore that the husband’s legal fees of $25,000.00 over 5 years ought to be added back into the pool. The wife has also retained half of the rent, and significant payouts. None of those amounts were directed to debt reduction. The husband has paid down the credit cards and maintained all of their significant joint debt for years.
[16] Page 44 of the transcript referring to Exhibit M1 – discretionary expenditure by the husband end of June 2015 $12,573 and end of 2015 financial year, $29,484. The husband had the expense in travel, feeding himself and ordinary expenses.
I am aware that the figures as explained by Mr Galea show that the husband has spent about $25,000.00 on legal fees, with a total owing of around $42,000.00. The wife has spent $98,000.00 to $100,000.00 in the same time on her legal fees.[17]
[17] Page 45 transcript 27/10/16 – line 5 onwards.
The husband is not seeking to include the wife’s payouts in the property pool. He accepts that the wife has spent considerable money on legal fees. Even when the husband was unemployed and facing possible bankruptcy, apart from the wife paying one mortgage repayment on Property B, the husband has managed to juggle finances to keep up with payments on Property A and the significant credit card debts. There was a moratorium on the Property B mortgage repayments for a period of six months organised by the wife, Overall, given the husband’s financial contributions, which have continued well beyond separation whether it is 2012 and 2014,[18] and the husband continues to pay joint debts as at the date of the final submissions I do not consider that there is scope to sustain an argument that the husband’s legal fees ought to be added back.
[18] Both separation dates.
(employer omitted) superannuation fund
One of the significant assets in the property pool is the Family Law Valuation attributed to the Husband's (employer omitted) Pension which is in the payment phase. That value is $469,000.00 which is illusory in some respects as this figure represents the capitalised value of the weekly annuity, currently $468.00 per week or around $24,000.00 per annum. In 2012 prior to separation (early 2012) a decision was made to exercise an option to commute the husband’s defined benefit superannuation scheme when he left the (employer omitted). The benefit is now the annuity payments that are currently paid. There is therefore no lump sum available for distribution.
The husband concedes that the wife’s contribution entitlement to his (employer omitted) pension is also equal as the superannuation interest from which it derived (defined benefit scheme) accrued wholly during the relationship.
I accept the submission of the husband that the nature of this asset sets it apart from the other capital assets of the marriage. Mr Galea submits that it is a very useful asset and that the husband would wish to retain some percentage of it, as with all of the other assets. It is submitted that upon the husband’s retirement, this annuity or a portion of it, will form part of the husband’s retirement.
Mr Baston on behalf of the wife submits that the wife ought to receive all of the available assets including all of the husband’s superannuation ((omitted) Super) and all of a percentage of the existing (employer omitted) superannuation payments. Mr Baston submits that to do otherwise would increase the prospects of further litigation and constant review of periodic spousal maintenance. The wife seeks an Order pursuant to s. 77A (1)(a) of the Family Law Act 1975 specifying that of the property alteration orders that distribution in excess of 50% be said to be an order for the provision of maintenance.
I accept that the husband has spent $5,000.00 that was previously in his bank account on joint debts.
Wife’s inheritance from her father’s estate
Having regard to the submissions of Mr Baston regarding the wife’s post separation and post-divorce inheritance and noting that the concession by Mr Galea on behalf of the husband that the husband does not suggest he made any contribution to this inheritance, I am satisfied that it is appropriate in these particular circumstances, not to include the amount in the property pool. The wife says she expects to receive $82,500.00 after payment of the legal fees associated with this dispute. The wife says also that she has other credit cards and debts that she will put these funds towards and she expects to have about $32,000.00 to contribute to the mortgage she is wishing to take out to be able to secure Property B.
The capital amount retained by the wife is a fund available to the wife as a future financial resource.
The property pool at trial has been adjusted to allow the full amount for the credit cards as per my findings herein. I have also deleted the wife’s car as it is now defunct. I have also adjusted the (omitted) Super to accord with the husband’s financial statement of 21 June 2017 ($75,000.00). There have also been adjustments to the current mortgage liabilities in line with the further supplementary submissions on behalf of the wife. The reduction in the Property A mortgage shows the results of the ongoing payments by the husband.
The (omitted) Super (save $5,000.00) if necessary can be transferred to the wife and then cashed by her (given her age) or conversely retained solely by the husband for his future security. I am indicating its full value of $75,000.00 in the asset pool.[19]
[19] Further supplementary submissions filed 21/08/17 on behalf of the wife, balance sheet indicates a figure under assets, should be $75,000.00 (total) instead of $75,000.00 under assets and also under superannuation at $5,830.00.
The parties are seeking a split of the (employer omitted) superannuation and each understands that this asset has a unique character being a weekly annuity. It will be shown under a separate heading. Effectively this represents the adoption of a two pool process.
Description Value Property B $840,000.00 Property A $590,000.00 Husband’s car $3,800.00 Sub total $1,433,800.00 (omitted) Super $75,000.00 Total Assets $1,508,800.00 Liabilities Property B mortgage $355,735.00 Property A mortgage $396,753.00 Husband’s credit card $92,000.00 Wife’s credit card $7,000.00 Sub total $851,488.00 Capital Gains Tax – Property C property $24,663.00 Total Liabilities $876,151.00 Total of net assets (excluding (employer omitted) pension) being total assets of $1,508,800.00 minus total liabilities including the CGT, $876,151.00 $632,649.00 (employer omitted) Pension Wife- value (employer omitted) Pension in Payment Phase ($24,000.00 p.a.
$458.00 per week)
$469,000.00
Step 2 - Contributions – financial and non-financial –Section 79(4)
At the commencement of the marriage each party had modest assets. The wife had set up a business and had some cash. The husband had a half interest in a unit. There were debts to be paid when the wife’s business was sold. Overall, their initial contributions are no longer a factor which would attract any further weighting.
Having had regard to the evidence, I am satisfied that each party has worked to the best of their ability to achieve financial security in their joint endeavours throughout the marriage. Each of the husband and wife has worked throughout the marriage. When the wife was well enough to work, she was very creative starting up various businesses and operating them for some years. The wife has worked in a myriad of settings including private and government work. From March 2012 to June 2012 the wife worked casually. In July 2015 the wife applied for a disability support pension and this was granted 21 December 2015.
Similarly, the husband has continued to build on his career during the marriage, which has resulted in him having to move to Brisbane from time to time to take up promotion. The wife has fully supported the husband’s career progression. The wife has always managed to find employment despite moves from (omitted) to Brisbane and back and she has worked in an array of responsible positions. The husband has not had the same health issues as the wife nor has he suffered as many physical injuries as the wife. The wife has made capital from time to time from selling businesses established by her. The wife has worked to keep the rental properties properly tenanted and assisted in dealing with the many issues which arise from owning a rental property.
It seems that the wife performed a large part of the domestic chores within the home and the husband played a supportive role in this activity.
The husband has maintained employment and made financial and non-financial contributions to the acquisition of assets for their joint benefit, as has the wife. It seems the high point of his income earning was the period he worked with (employer omitted) on a contract at (omitted) when the husband earned around $240,000.00 per annum until he was retrenched in July 2016. The parties have been very ambitious in their purchasing of properties, such that they have been heavily geared and have had to be creative about ways of generating equity or borrowing funds or using credit cards to keep them afloat.
Post separation has been a particularly difficult period financially for these parties. This is not unexpected in some ways as it has been necessary to maintain two homes and the separate cost of living for both parties, together with meeting all of their recurring expenses and servicing debts.
It is clear therefore that the husband has directed most of his income to maintain their levels of borrowing and credit cards until assets could be sold and the final property division can occur, including in a practical sense. It is clear that the husband is being asked to continue to maintain the debts (apart from the Property B mortgage which the wife seeks 90 days to try and refinance. If and when that occurs, the wife will take on that debt along with the title to the property. Up to that point, the husband remains responsible for payment of their joint debts.
The husband has been working and maintaining the mortgage repayments on Property B which the wife has occupied. The wife seeks to retain this asset for her future home. The parties have been under considerable financial pressure to maintain Property B where the wife lives, and to also maintain the other mortgages and pay shortfalls in expenses.
The husband has been responsible for paying the mortgage repayments on their other two properties post separation. There has been significant combined credit card debt which the husband has continued to pay post separation. From time to time the wife has made modest financial contributions post separation towards an expenditure relating to Property B such as a rate payment of some hundreds of dollars.
The wife has on her own case, been in need of spousal maintenance post separation. Her initial application for interim spousal maintenance however was dismissed by Judge Jarrett on 28 July 2014. Another application for interim spousal maintenance was filed by the wife days later on 4 August 2014. That was dismissed by consent on 12 August 2014, with no orders as to costs in relation to that particular application.
The Property A property has been on the market for some time as seen in Consent Orders of the Court. The husband is living there in the meantime. Another rental property at Property C was sold prior to the trial, the proceeds of which were directed to reduce debt.
Given the wife’s agitation of her difficult financial position, an urgent spousal order for $250.00 per week was made on 15 September 2015, when the wife informed the Court at a mention that she was in a dire financial position without funds. Other orders were made on that date for the sale of properties. The husband agreed on that date to pay the wife, by way of urgent interim Order, $250.00 per week which was to last until the next mention date or until the matter came back before the Court. That urgent interim Order was replaced by a later Order for interim spousal on 9 November 2015 again for the amount of $250.00 per week.
The husband has fallen behind on those repayments from the time that he lost his own employment in July 2016 when his contract with (employer omitted) was not renewed, when the project he was working on came to an end.
The husband sought an Order on 8 September 2016 by way of Response to an application in a case[20]that the interim spousal maintenance payment be suspended given his change of circumstances in being made redundant.
[20] Cross application to an application in a case filed on 4 August 2016 by the wife.
On 14 September 2016, I made an Order that the wife’s application in a case filed on 4 August 2016 and the husband’s response seeking to suspend the spousal maintenance made on 9 November 2015 be consolidated and heard at the final hearing of the matter which was then listed for 27 October 2016.
Whilst the matter has been adjourned part heard, despite the previous Order, the wife herself filed various applications including enforcement warrants in relation to the non-payment by the husband of spousal maintenance order which was no longer current, seeking to sell property belonging to the husband (despite the property matters being part heard). Based on sworn information provided by the wife, the Registrar issued an enforcement warrant, however, that was subsequently set aside as the information provided to the Registrar was inaccurate. The Order referred to for spousal maintenance was no longer current and moreover, the Court was seized of the issue of the outstanding spousal maintenance payments in the part heard hearing.
I heard submissions by Mr Baston at the final hearing that the husband would likely find further employment given his qualifications. That was conceded by the husband, though the husband was not confident of finding employment with the same high salary. I am advised that the husband has now, since the conclusion of the hearing, secured further work as was predicted at the hearing. As I have said, his income is $120,000.00 on a 3 year contract.
After separation, in September 2014, the wife received a total and permanent disability insurance payout for her psychiatric condition in the sum of $52,201.69. Some of that was spent on living expenses, $10,000.00 on the lawyers involved in the TPD claim, $12,000.00 on legal fees for the family law dispute and another $23,000.00 on a different family lawyer and other costs as set out in the wife’s affidavit.[21] Apart from the lawyers handling the payout, other legal fees on family law matters of around $35,000.00 were spent by the wife on what amounts to her own legal expenses. All of the funds were spent by May 2016.
[21] Paragraph 17.
In May 2016, the wife received another payout being an insurance payout from the (employer omitted) Superannuation for total and permanent disability for her psychiatric condition. In total that was $111,247.82. $40,000.00 was paid to the lawyers acting for the wife in her TPD claim. The wife has then however paid around another $45,232.50 on further family law legal advice from various law firms, which included repaying a third party $22,000.00 plus interest of $1,760.00[22] for a loan given to the wife to obtain family law advice. The balance of the funds were spent on the cost of living for the wife including $443.00 on a rates payment on Property B. All of those funds were expended at the date of trial.
[22] 8% interest for 12 months.
It is submitted on behalf of the wife that post separation she has lived frugally, that her standard of living has fallen such that she shops for clothing, shoes, homewares, manchester and other necessary items solely from charities and opportunity shops. The husband suggests that the wife has always enjoyed pottering around in opportunity and antique shops. The wife retained one half of the rental on the Property C property prior to its sale, (around $202 per week) and also $248.00 per week from the Property A property, prior to the husband moving into the property himself.
The wife’s position is that she has not had the income to pay for replacements as appliances have broken down and that it has been unavoidable to incur expenditure on her credit cards. The wife has received rental income from a rental property but maintains that this was also not sufficient for her to be able to live to a reasonable standard.[23] There is no doubt that the financial pressure for both these parties has been considerable. It is the wife’s case that her cost of living well exceeded the amount being paid to her by the husband. That may be so, however, the significant payouts she received were retained by the wife and it was at her discretion that she spent a significant portion on her own legal expenses.
[23] Para 19 of her trial affidavit filed 17 August 2016.
I am satisfied on the evidence before me that the husband has done all he could to keep juggling the income he had to attempt to meet their joint commitments. The husband has a (employer omitted) Superannuation fortnightly pension, which is in the payment phase, amounting to $458.00 gross per week.
Having had regard to all of the evidence, and the psychiatric illnesses suffered by the wife, I am satisfied that the financial and non-financial contributions to the preservation and acquisition of the assets of the marriage ought to be considered as equal notwithstanding that the husband has been the primary income earner and thus responsible for paying the bulk of their debts post separation.
Each of the party submits that the contributions based entitlement ought to be equal. I assess their contributions as 50% to the wife and 50% to the husband.
Step 3 - Section 75(2) factors
In turning to the relevant section 75(2) factors, I note that the wife is aged 59 and the husband is ten years younger being 49.
At trial, neither of the parties were in the workforce and both were receiving Centrelink payments as their income. The wife was receiving her disability pension and the husband receiving unemployment benefits. When determining a property distribution, for the purposes of considering the wife’s income, the wife’s disability pension is to be acknowledged as income that is $433.50 per week. This is $22,542.00 per annum.
Subsequent written submissions from the husband provide that as of 5 December 2016, the husband commenced work as a (occupation omitted) for a fixed 3 year contract on a combined salary of $120,000.00 per annum. This is less than he has earned in earlier years with (employer omitted) (around $240,000.00) however, prior to the husband working with (employer omitted), he earned around $140,000.00.
In terms of the wife’s income earning capacity, I am satisfied that with the evidence of her significant psychiatric diagnosis and the many manifestations of that illness, that the wife’s income earning capacity is minimal to nothing. Mr Baston submitted that the situation for the wife is tragic. Mr Baston has strongly submitted that the long term outlook for the wife is grim and has made reference to the Mental Health and Homelessness Final Report authored by Dr Lauren Costello, Dr Melanie Thomson and Dr Katie Jones for the Mental Health Commission of New South Wales. Mr Baston of Counsel has also made reference to the plight of those with a mental health illness as referred to in the Australian Council of Social Service report Poverty in Australia 2014. This reference is to illustrate the difficulties and long term consequences of having a mental health condition and securing housing, in particular, that poor mental health is a risk factor for homelessness because people with poor mental health often lack secure and stable housing. Mr Baston submits that the wife is emotionally attached to Property B and that retaining this property represents her optimum opportunity to secure long term housing and stability. The multiple challenges in accessing housing facing those with mental health is discussed, including economic disadvantage and discrimination in the private rental market.
The documents admitted into evidence include a Notice to Admit Facts (and authenticity of documents) filed on 5 July 2016 on behalf of the wife. Expert reports are annexed to those documents. I rely upon but do not repeat the contents of the expert evidence which forms part of the wife’s evidence regarding the wife’s psychiatric condition. The wife has a range of debilitating psychiatric conditions and more recently diagnosed with breast cancer.
It can be seen that the wife’s psychiatric condition includes her having episodes which result in psychotic type behaviour. This includes risk taking behaviour, becoming socially disinhibited and engaging in excessive spending when her bi-polar type symptoms are present during a manic phase. At the end of that phase the wife will return to her major depressive conditions. This behaviour is symptomatic of her diagnosed conditions.
When the trial was re-opened, the Court was advised of the wife’s breast cancer diagnosis. I have had regard to the evidence of this development. I do not have evidence as to the long term effect of this diagnosis. As I have said elsewhere, it is already accepted that the wife will not return to work.
The wife seeks to retain Property B in order to provide for her future housing security. The wife is 58 turning 59 and 10 years older than the husband. It is highly likely that she will not work again in the paid workforce, as evidenced by her insurance payouts for permanent and total disability.
The husband has the opportunity to continue to work in well paid employment for a long period before he reaches retirement. He has more years available to him to accrue superannuation and to provide for his financial security. He does not have the quite serious psychiatric condition that unfortunately the wife will endure for the remainder of her life.
As to section 75(2) (o) I have also considered the non-payment by the husband of the Order for $250.00 per week to the wife by way of spousal maintenance The wife asks that outstanding amount ($5,000.00 as at December 2016 and which continues to accumulate and estimated as $13,000.00 in August 2017) be deducted from the cash adjustment to be paid by the wife to the husband, as part of her proposal.
Given all of the evidence however, I am satisfied that the husband did not have the financial capacity to continue to comply with that Order. The husband was himself unemployed from July 2016. The husband quite properly filed an Application in case on 4 August 2016 to suspend the interim spousal payments to the wife. On the first return date of the husband’s application, on 14 September 2016, I made orders that his application and the respondent’s response filed on 8 September 2016 be consolidated with and heard and determined with the parties’ competing applications for property alteration orders. Orders were also made for a final hearing to be listed on 27 October 2016, which occurred. Since that time there have been two re-openings of this matter.
I am satisfied that the husband has been under continuing and significant financial pressure to keep up with all of the mortgage repayments on all their three properties. The husband himself was on social security after he lost his employment. The husband has been the main breadwinner for the 5 years post separation. He only received half the rent and the wife retained the other half. The wife has received lump sums post separation and those lump sums have not been directed to debt reduction. They have been retained by her for her sole use. I am satisfied that the husband did not have the capacity to be able to pay spousal maintenance in addition to all of the other joint debts, credit card debts and pay for his own living expenses. I do not accept that the wife is owed the ongoing amount of $250 per week since the husband ceased paying in July 2016.
Overall Mr Galea, solicitor advocate for the husband, has conceded the wife has significant factors to justify a section 75(2) adjustment of around 20%.
In my view, in consideration of the relevant the section 75(2) adjustments, an up-lift of 25% is warranted in favour of the wife.
Adding that uplift to the initial finding of 50% on contributions based entitlements, results in a final overall property division of 75% to the wife and 25% to the husband.
(employer omitted) Pension
As to the (employer omitted) fund, that (employer omitted) pension is in the payment phase. The wife has been advised by the Trustee that the (employer omitted) fund have no difficulties with a splitting order expressed as a percentage. It is accepted by both parties as submitted by Mr Baston of Counsel, that the (employer omitted) annuity cannot be converted into a lump-sum payment by the respondent husband or in the hands of the wife, subsequent to any splitting Orders. This means that the amount represents an income stream. I accept the wife’s evidence that if she has that income, she may be able to obtain a mortgage to refinance the Property B.
For the reasons outlined in this judgment, I intend to Order that this fund be split between the parties also in the percentage of 75% to the wife and 25% to the husband. In making my determination, I have had regard to the type of asset involved in this split, which includes both real property and superannuation interests of differing characteristics.
I am not prepared to make a declaration that this payment is made pursuant to s.77 of the Act, meaning it is paid as spousal maintenance. It is not spousal maintenance, it is a splitting order of a superannuation fund in its payment phase. To classify it as “spousal maintenance” would offend public policy noting that this request arises from the wife so that she can continue to receive a full disability pension.
(omitted) Superannuation
The husband has an accumulation fund with (omitted) Super of $75,000.00. It is possible for this fund to be the subject of a splitting order with a lump sum being split to the wife. Given her age, the wife would be able to access those funds. It would also be possible, if it were necessary to do so to effect the division to split the funds to the wife for the sole purpose of her cashing the fund in, and paying the cashed in sum to the husband. If this was necessary I would appoint a trustee to oversee this transaction given the evidence of the wife’s psychiatric condition. On my calculations however, that fund can be retained solely by the husband as part of his 25%.
Overall, I have had regard to the contributions of each of the parties, and their respective s.75(2) factors in arriving at the distribution of 75:25%.
Discussion
Having regard to all of the evidence, I accept and the parties concede that there ought to be a division of their property in order to end the financial arrangements arising from their marriage.
I propose to make Orders for the division of the value of the property including the Superannuation and (employer omitted) pension, on the basis on 75% to the wife and 25% to the husband.
I propose to allow the wife to have the opportunity to retain Property B for the reasons outlined. I will allow the wife 120 days to refinance the mortgage into her sole name or re-finance with another financier and to gather the funds necessary to pay out the husband the cash adjustment necessary for him to receive 25% of the asset pool. If the wife retains Property B she retains the bulk of the equity in the real property as set out in the asset pool.
After the period of 120 days has expired (or later date only if agreed between the parties), Property B will be sold forthwith. I accept the submissions as to the appointment of a Trustee for sale.
I accept the submissions that the parties have had difficulties in the past in the wife attempting to prevent the sale of the Property C property at a time when there were Consent Orders in place for that sale. This resulted in an urgent application to this Court on the afternoon of the settlement of the sale. As I have said elsewhere, the wife has been very litigious in this matter as demonstrated by the number of interim applications, many of which were subsequently withdrawn. I accept also that the wife’s psychiatric condition may compel her to act contrary to an Order for sale if she was wholly opposed to it (which she is). I consider that a trustee for sale will prevent further unnecessary litigation regarding issues to do with the sale of Property A or Property B and thus avoid further unnecessary expense for the parties. There is agreement as to the identity of the trustee for sale, namely Miller Harris Lawyers.
I intend to include that the trustee for sale also be appointed for the sale of the Property A property. This has been for sale for some time pursuant to interim Orders. The husband is content for this property to be sold, though his position at trial seemed to waiver. This property has to be sold without delay to enable payment of the parties’ debts. I consider that appointing a trustee for sale on the Property A property will prevent further litigation given that the wife and husband have each changed their minds about wanting to sell or keep properties. I am also aware of the wife’s psychiatric condition as I have said. Most recently the wife has a cancer diagnosis to deal with. It will also prevent accusations and needless money spent on lawyers on urgent applications regarding the sale of the Property A property or suggestions that the husband is not actively selling the property.
What does the percentage mean in real terms?
On the figures as they appear in the asset pool a 75:25 division would result in the following:
Total assets: $1,508,800.00 (not including (employer omitted) Pension but including $75,000.00 of (omitted) Superannuation)
Total debts: $876,151.00
Balance: $632,649.00
$632,649.00 x 75% = $474,486.75
$632,649.00 x 25% = $158,162.25
If the wife retains Property B she retains its value of $840,000.00 – less $355,735.00 being the mortgage = $484,265.00.
For the husband to retain $158,162.25, he could retain his (omitted) Super fund of $75,000.00, his car and the balance of the sale proceeds from the Property A property together with a further cash adjustment paid to him by the wife to achieve 25%.
Adopting the current value of the Property A property of $590,000.00 – the mortgage of $396,753.00 = $193,247.00. The costs of sale need to be deducted from the remaining proceeds as well as the $99,000.00 for their respective credit cards as referred to in this judgment and $24,663.00 for the CGT on Property C. The total of the known debts is $123,663.00. Deducting that figure from $193,247.00 would leave a balance of $69,584.00.00. As I have said, this does not allow for the costs of sale nor the cost for the trustee for sale.
However, for the sake of the exercise in following that calculation through, if the husband retained the car at $3,800.00 and the (omitted) Superannuation at $75,000.00 = the husband retains a total of $78,800.00. A further sum therefore of $79,362.00 is owed to the husband. Some of the $79,362.00 is to materialise from the remaining sale proceeds of the Property A property. For instance if there was $40,000.00 remaining the wife would need to pay an additional $39,362.00.
On the other hand if the wife is not able to secure funding to retain Property B by re-financing the current mortgage into her own name and paying the husband the cash adjustment within 120 days, I am satisfied that to bring the parties to financial finality, that Property B will have to be sold. The overall division will then be applied to the net sale proceeds of Property B to achieve the 75/25% division.
I have had regard to the proposed split of the (employer omitted) pension. In reality that represents an income stream to each party, splitting the total of $458.00 per week. This figure multiplied by 75% of its value is $353.40 per week to the wife and $114.50 to the husband. [24]
[24] Expressed as a percentage of its family law valuation (but noting it is in its payment phase the wife receives $351,750.00 and the husband retains 25% being $117,250.00.
To enable the division, I intend to order that the husband retain the (omitted) Super Fund of $75,000.00 standing in his name as this gives the husband a base amount for his future financial security, noting his age. He will not have a home as the Property A property is to be sold. The husband will also retain his car at $3,800.00, a total in all of $78,800.00. As I have said this is in addition to him retaining 25% of the (employer omitted) pension.
Given however, that the Property A property is to be sold, it is not possible at this time to know with precision what the sale amount will actually be. Neither is it possible to know what the balance will be after payment of the costs, commissions, and payment of credit card debts of $99,000.00 and payment of the CGT. The precise amount of net funds will not crystalize until this sale is complete.
Just and Equitable Orders – Step 4
I am satisfied that the Orders which provide justice and equity for both parties in this matter, are Orders which provide for the wife’s long term personal living stability and if possible she could have a chance to retain Property B. It is also essential to sever the joint financial commitments of the parties to enable the husband also to move on with his life, free of debt arising from this marriage.
To do that I have structured the Orders to enable the wife to have the opportunity to retain Property B. The wife says she can organise finance to enable her to do this in her own standing without the husband being included financially. I accept the submission that orders to sell Property B and the wife receiving a considerable amount of cash to buy another property in my view introduces a possibility of the wife’s psychiatric condition (deteriorating as it does from time to time) making her vulnerable to symptoms of her diagnosis which include the risk of excessive or impulsive spending. If this occurred, the wife could lose the security of her desired future home. The husband is generally supportive of this provided the wife can afford to borrow funds to do this as well as paying him his cash adjustment.
The husband asks for a time limit to operate after which Property B must be sold if the wife cannot secure the necessary finance to facilitate a settlement involving her keeping Property B pursuant to the orders. Given the wife’s current age, psychiatric condition and the years of hard work by both of these parties who have worked for their future long term financial security during their marriage, it seems just to me that this opportunity should be afforded. Until the settlement or sale of Property B and Property A, the husband appears to be the only party able to continue to make contributions to the respective mortgages and existing debt. I consider that to do justice and equity to both parties, the husband must be able to sever all of his financial obligations to the wife and time limits must operate. Allowing for the wife’s current treatment, I consider that 120 days is appropriate. The husband ought to be relieved of the ongoing financial burden as soon as possible.
I accept the submission that the husband has his own future to provide for and that the final property Orders ought to enable each party to be financially independent of the other. If ultimately it is not possible for the wife to re-finance the existing mortgage into her sole name, or re-finance in to her sole name, then Property B will have to be sold. The husband does not wish to retain it.
The wife’s car no longer has any value as submitted by Counsel. The husband retains his car at $3,800.00.
The parties agree that CGT liability of $24,663.00 payable in relation to the Property C property needs to be quarantined from joint funds. The credit card debts stand at $7,000.00 for the wife and $92,000.00 for the husband. The property division must factor in that these debts have to be paid or allocated. The credit card debts attributable to the marriage as determined in these reasons. The CGT and mortgage debt on Property A all need to be paid from the sale proceeds of the Property A property. Alternatively, however, if the first property to be sold is Property B, the joint debts will need to be deducted from the net sale proceeds of that property. It is imperative the husband be relieved of the crushing credit card debt as soon as possible.
Overall, having regard to all of the evidence and the current position of the parties, having regard to the final percentage division and what that means in real terms, in all of the circumstances I am satisfied that the end result of this division represents a just and equitable outcome.
Given all of the circumstances, I am also satisfied that it is just and equitable that orders be made to finalise the financial arrangement between these two parties.
Spousal Maintenance
The Law – Spousal Maintenance
The wife must demonstrate that she has a need for spousal maintenance and that the husband has a capacity to pay.
The jurisdictional basis of the Court making an order for spousal maintenance arises under s.72 of the Family Law Act which sets out the rights of a spouse to the marriage to obtain an order for spousal maintenance. If, and only if, the other party is unable to support him or herself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason having regard to the relevant matter referred to in subsection 75(2).
The power of the Court to order spousal maintenance is found in section 74, namely:
Section 74
In proceedings with respect to the maintenance of a party to a marriage, the Court may make such order as it considers proper for the provision of maintenance in accordance with this part.
In exercising jurisdiction under section 74 the Court must also take into account only the matters referred to in section 75(2) which are:
(a)The age and state of health of each of the parties;
(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;
(c)whether either party has the care or control of a child of a marriage who has not attained the age of 18 years;
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
(f) subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under the law:
(i) any law of the Commonwealth of a state or territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established or operates within or without Australia
and the rate of any such pension, allowance or benefit being paid to that party.
Subsection (3), of course, states that the Court must also disregard any entitlement to an income tested pension, allowance or benefit (see section 75(3)). Section 75(3) says:
In exercising its jurisdiction under section 74, a Court shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit.
The intention being that it is not up to the public to support a spouse when the other spouse has the capacity to do so. Continuing with s.75(2)(g):
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
(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.
(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;
(k) the duration of the marriage and the extent to which it has effected the earning capacity of the party whose maintenance is under consideration;
(l) the need to protect a party who wishes to continue that party’s role as a parent;
(m) if either party is cohabitating with another person the financial circumstances relating to the cohabitation;
(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 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
(o) any fact or circumstance which in the opinion of the Court justice of the case requires to be taken into account.
In essence then the Court’s power for making an order for spousal maintenance requires:
(a) a threshold finding of the right of a spouse to maintenance under section 75(2);
(b) consideration of the relevant factors in section 74 and 75(2);
(c) no fettering principle that pre‑separation standard of living must automatically be awarded where the respondent’s means permit it; and
(d) discretion exercised in accordance with the provisions of section 74 with reasonableness in the circumstances as the guiding principle.
Wife’s need for spousal maintenance – threshold finding
The wife has the onus of establishing a need for spousal maintenance. This is to be considered in the context of her having received 75% of the property available for distribution pursuant to the Orders made.
As can be seen by the wife’s own evidence, she has received and used significant lump sums for her own living expenses post separation and also spent considerable sums on paying her own legal fees to a variety of legal advisors. Had those funds used differently, the wife would have had considerably more funds still available for her own support. She has received 75% of the property available for distribution pursuant to the Orders I have made.
Her financial situation is in a position of flux. The wife may or may not be successful in achieving a loan to finance the Property B mortgage and other liabilities which must be extinguished if the husband is to receive his 25%. The wife has a current diagnosis to deal with however the long term consequences are unknown. The wife is seeking to take on debt to secure the home she particularly wishes to secure albeit it alone is worth more than her percentage entitlement. The wife is choosing to place herself in debt to do so. The wife also received and retains after payment of the legal fees associated with her contesting the will, $82,500.00. This was received post separation. The wife submits that she will have no more than about $32,000 remaining after paying other debts.
In the property settlement, the wife has received the bulk of the assets at 75%. The wife has opted to take on more debt to secure Property B and is proposing securing finance to do so. She is aware that a cash adjustment must also be paid to the husband. It means however the husband will be left paying the joint debts for a further period of at least 120 days whilst the wife seeks finance approval and that he is left paying the credit card monthly accounts and whatever he can towards the mortgages until settlement of Property B either way and whilst the Property A property is also sold. After 120 days, if the wife cannot secure finance, Property B will be sold. The mortgage will still have to be paid and the husband has still to secure and pay his own accommodation. The credit card debt alone standing in the husband’s name is for a significant sum of $92,000.00. On the evidence before me, I am not satisfied that the wife has satisfied the initial threshold of demonstrating a need for spousal maintenance.
Husband’s capacity to pay
Moreover, on the evidence before me, I am not satisfied that the husband has had the capacity to pay the existing spousal maintenance Order. I do not consider he had the financial capacity at the trial nor will he have financial capacity to satisfy such an Order whilst this property division remains incomplete. The wife has been very much focused on her own financial position however their joint financial position has been extremely fragile.
The husband’s income is now one half of his previous earnings of $240,000.00 per annum at the time he agreed to pay $250.00 per week. He is to receive 25% of the property pool. I am satisfied that he could not afford the $250.00 sought by the wife at the time of trial. I am satisfied that the husband did not have the capacity to pay once he lost his contract in July 2016. There is still much water to go under the bridge before either of the wife’s or the husband’s long term financial position settles. The husband may remarry and have more financial obligations on trying to secure his own financial stability and future. The wife’s current diagnosis may affect her future needs. These things are all unknown at this point.
The husband is younger, and in the work force, however, he has received a minor share of the property, he has to rehouse himself and have funds for his own living costs. He will not have a property. I have had regard to the financial obligations the husband has had post separation and his extremely tight financial position in the context of the husband paying significant funds to keep their property portfolio afloat in the years post separation and which continues whilst properties are waiting to be sold. This is particularly so in relation to Property B which the wife asks for an opportunity to retain as part of the final property division. I am satisfied that the husband will likely be under extreme financial pressure for some time ahead. Overall, even if the wife had demonstrated a need for spousal maintenance (which she has not) not, I am not satisfied that the husband has the capacity to pay spousal maintenance on the evidence before me.
I will dismiss the existing spousal maintenance Order. I accept that there is a reasonable excuse for the non-payment of the periodic amount by the husband given his loss of employment and the financial pressure he has been under and which he still labours under. He did not have the capacity to pay. The records show that the wife sought to enforce the alleged arrears by an enforcement summons, after the conclusion of the final submissions (on the first occasion) whilst the decision was reserved.[25] The decision was reserved in relation to both property and spousal maintenance. In the reserve decision, the Court and parties were aware that the husband had filed an application in a case for the husband to have the spousal maintenance order suspended given he had lost his employment. Despite all these matters being reserved, the wife sought a warrant of possession[26] and sought to have the husband’s car seized (part of the assets under consideration by the Court) to enforce her alleged outstanding arrears of spousal maintenance.
[25] (and before it was re-opened).
[26] (and other enforcement procedures).
So that there is no misunderstanding and to avoid any future applications on this issue, I will dismiss any application by the wife in relation to the alleged arrears owed by the husband in relation to any spousal maintenance Order. I have dealt with that issue in these reasons and found that the alleged arrears are not owing.
Similarly, I dismiss any and all enforcement procedures or contraventions or enforcement warrants of possession still outstanding in relation to spousal maintenance. As to the current application by the wife to be paid spousal maintenance, I also dismiss that application for the reasons outlined in this judgment.
Given the Orders made have some complexity to them, I intend to provide liberty to apply in relation to the mechanical provisions only.
I certify that the preceding one hundred and eighty-six (186) paragraphs are a true copy of the reasons for judgment of Judge Willis
Date: 13 October 2017
Sheet.”
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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Procedural Fairness
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Jurisdiction
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Res Judicata
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Injunction
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