Morbey and Morbey

[2010] FamCA 278

FAMILY COURT OF AUSTRALIA

MORBEY & MORBEY [2010] FamCA 278

FAMILY LAW – PROPERTY – Settlement in relation to marriage

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

Lee Steere and Lee Steere (1985) FLC 91-626
Ferraro and Ferraro (1993) FLC 92-335
Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355
Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414
Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693

APPLICANT: Mr Morbey

RESPONDENT: Ms Morbey

FILE NUMBER: WOC 1320 of 2007

DATE DELIVERED: 31 March 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston JR

HEARING DATE: 5 November 2009

REPRESENTATION

FOR THE APPLICANT: Mr Morbey in person

SOLICITOR FOR THE RESPONDENT: Ms Luke, Lukes Law

Orders

1. That the husband and wife forthwith instruct S Conveyancing to pay the monies in their Trust account representing the net proceeds of sale of the parties’ former matrimonial home at C, New South Wales as follows:

   1.1      61.677 percent to the wife; and

   1.2      38.323 percent to the husband.

2. That the husband is declared the sole owner of his property known as L property.

3. That a base amount of $452 742 is allocated, as required by s 90MT(4) of the Family Law Act 1975 to the wife out of the husband’s interest in the Emergency Services Superannuation Scheme.

4. That in accordance with paragraph 90MT(1)(a) of the Family Law Act 1975:

   4.1The wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

   4.2The husband’s entitlement, and the entitlement of such other person to whom a splittable payment may be made to payments out of the husband’s interest in the Emergency Services Superannuation Scheme, is correspondingly reduced;

   4.3That the Trustee, Emergency Services Trustee Corporation, of the Emergency Services Superannuation Scheme (“the Trustee”) shall do all such acts and things and shall sign all such documents as may be necessary to:

   4.3.1Calculate in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement created by clause 4.1 above of this order; and

   4.3.2Pay the entitlement whenever the Trustee makes a splittable payment out of the husband’s interest in the Emergency Services Superannuation Scheme;

   4.4That this order have effect from the operative time and the operative time is four (4) days after the service of this order on the Trustee of the Emergency Services Superannuation Scheme;

   4.5That the non-member requests the Trustee of the Emergency Services Superannuation scheme to create a new interest out of the member’s superannuation interest in accordance with the requirements of the Trust Deed or Superannuation Act 1916;

   4.6That the Court notes pursuant to r 14G of the Family Law (Superannuation) Regulations 2001, any payments from the husband’s superannuation interest made after the Trustee has created a new interest in the wife’s name in the Emergency Services Superannuation Scheme are not splittable payments.

5. That otherwise the husband and wife are the sole owners of all other property and superannuation in their possession and / or control respectively.

6. That in the event of either party neglecting or refusing to sign all or any necessary documents to give effect to these orders the registrars of this Court are appointed to sign any such documents in the name of the person to whom the direction was given and to do all acts and things necessary to give validity and operation to the said deed or instrument.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: WOC 1320 of 2007

MR MORBEY

Applicant

And

MS MORBEY

Respondent

REASONS FOR JUDGMENT

Introduction and applications

1. These are property proceedings.  The parties in the proceedings are Mr Morbey and Ms Morbey.  For convenience I shall refer to them as “the husband” and “the wife” respectively.

2. The wife seeks orders to the following effect:

   ·That the monies being held in the S Conveyancing Trust Account being net proceeds of sale of the former matrimonial home be paid to the wife in their entirety;

   ·That the husband be declared the sole owner of his property at L, New South Wales;

   ·That the parties otherwise be declared the sole owner respectively of all other property in their possession and/or control; and

   ·That there be a superannuation splitting order in respect of the husband’s interest in the Emergency Services Superannuation Scheme with a base amount allocated to the wife of $417 130.35.

3. On the other hand the husband seeks orders the broad effect of which would be to allocate 50 percent of the parties’ property to each of them with the exception of the husband’s interest in the Emergency Services Superannuation Scheme, the husband opposing a splitting order other than to split 45% of his interest in the Scheme to the wife.

Background

1. The husband was born in 1963.  The wife was born in 1963.

2. The parties met at school.  They commenced their relationship at the end of 1980.  They started to cohabit at the beginning of 1983.

3. The wife became pregnant in late 1984.  The parties separated prior to the birth of their elder child H in 1985.  They subsequently reconciled although they did not resume cohabitation.  But after approximately a year they separated again.  This was in approximately July 1986.

4. At approximately the end of 1986 the wife formed a relationship with Mr U.  They married in November 1987.

5. In approximately 1988 the husband married Ms V.  But both the husband and the wife separated from their respective spouses in 1989 and reconciled with one another.  Once again they commenced cohabiting.

6. At this time they were both working in the New South Wales Emergency Services.  They both transferred to the G District.  At this time the wife’s property consisted of savings of $3000, a 1979 Toyota Corona motor vehicle and some furniture and personal possessions.  The husband had some modest savings.

7. Subsequently the wife received approximately $5000 as her property settlement from her former husband.  The wife contributed this to the purchase of a block of land at G.

8. The parties did not settle into life at G and in March 1991, the husband obtained a transfer to the central coast.  They moved back to reside in O.

9. The wife was unable to secure a transfer so she resigned from the Emergency Service.  She received $3730 in lieu of long service leave and recreation leave.  The wife also received a payout from State Super in the amount of $12 649.

10. In 1992 the parties purchased the former matrimonial home at C for $134 000.  The monies received by the wife upon her resignation from the Emergency Services were paid towards funding the purchase of their home.  They also borrowed funds on mortgage.  The parties subsequently spent approximately $50 000 on installation of a swimming pool and renovation of the backyard.

11. The parties’ second child M was born in August 1992.

12. In 1992 or 1993 the husband was assaulted during the course of his duties. Subsequently he received approximately $1000 from a victim’s compensation award.

13. The wife returned to the paid workforce in August 1994, working on a temporary basis as a clerk.

14. The parties married in 1995.

15. In April 1995 the wife commenced employment as a co-ordinator at P Organisation.  The wife became the manager there in 1998.

16. In January 2003 the parties purchased a block of land at N for $197 000.

17. On 1 April 2004 the parties separated.  The husband moved from the former matrimonial home.  From this time they kept their finances separately.  They continued to have a sexual relationship.

18. In May 2004 the wife sold IAG shares for $5233.  She had to pay some capital gains tax in relation to this.  The wife used these funds to purchase a motor vehicle for H.  The wife also borrowed $2500 from her sister to fund the purchase of this vehicle.

19. In March 2005 the parties sold their land at N for $317 000.  The wife has an outstanding $21 000 capital gains tax liability in respect of this sale.  The husband also has a capital gains tax liability arising from this sale.  The sale proceeds have been applied to reducing the mortgage.

20. In April 2005 the husband drew down $4500 on the mortgage with the wife’s agreement to fund the purchase of a laptop computer and equipment for the purposes of a home consultancy business he was establishing.  The husband also traded in the parties’ 1996 Mitsubishi Lancer motor vehicle for a 2003 Toyota Camry motor vehicle which he arranged for his business to lease.  The husband subsequently worked in this business.

21. Also in April 2005 H left the wife’s home and went to live with the husband for approximately 15 months.

22. In November 2005 the husband was discharged from the Emergency Services on medical grounds.  He received a payment of approximately $83 000.

23. In early December 2005 the husband commenced to receive a pension paid from the Emergency Services Superannuation Scheme.

24. In January 2006 the husband deposited $59 563 into the mortgage account but a few weeks later the wife arranged for this to be transferred back to the husband’s account.

25. In March 2006 the wife received a payment of $13 676 for long service leave and recreation leave.  The wife applied a large part of this to funding renovations to the backyard and painting the home.  She also gave H $1000 as a 21^st birthday gift.

26. In July 2006 H returned to live with the wife for 12 months.

27. In late 2006 the husband purchased a townhouse at L for $350 000.

28. From the end of January 2007 M lived with the husband 4 nights per week and with the wife 3 nights per week.  Prior to this M had always lived with the wife.

29. In June 2008 the wife moved to live in Sydney.  From this time M lived with her father.

30. In October 2008, with the wife’s agreement, the husband drew down $11 000 on the St George home loan and used this to pay some of his debts.  The wife subsequently agreed to the husband drawing down an additional $30 000 on the home loan which he used to pay his credit card debt.  The wife said that the parties agreed to these drawdowns on the basis that the wife’s share of this money would be repaid to her as part of her property settlement.

31. In late 2009 the former matrimonial home was sold and the net proceeds of sale held in the trust account of S Conveyancing are $265 229.

The Applicable Law

1. Sub-section 79(1) of the Act provides that in property settlement proceedings, the Court may make such order as it considers appropriate.

2. Sub-section 79(2) provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

3. There is a long-standing preferred approach to the determination of an application brought pursuant to the provisions of s 79.  This involves four inter-related steps.  Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing.  Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties.  Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two.  Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. 

4. This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.

Property available for division

1. The parties have agreed about a number of matters in relation to their property and superannuation available for division between them. 

2. Firstly, they have agreed that the Court would leave out of the pool of available property their current motor vehicles.

3. They have also agreed that $41 000 would be added back to the pool.  This is to take account of the fact that after separation the husband initially drew down $11 000 on the mortgage and then a further $30 000 as indicated above.

4. Also agreed is repayment to the wife of the following:

$
-          School fees	3654
-          Half marketing costs	173
-          Half contract costs	75
-          Loan application fee	500
-          Interest on redraw	1900
______
$6302

1. I shall take account of this by regarding these repayments as liabilities of the wife which will in effect be paid to her from the net proceeds of sale of the former matrimonial home.

2. In addition, the wife submits that there should be an add back of $5000 for the parties’ Mitsubishi Lancer motor vehicle used by the husband as a trade in for the lease of his Toyota Camry vehicle.  She says that she agreed that the husband could dispose of the Lancer in this way on the basis that this would be taken into account as an asset in the husband’s favour at property settlement.  I accept this submission by the wife.

3. It is also submitted on behalf of the wife that there should be an add back of $4500 for the April 2005 drawdown on the mortgage by the husband to fund the purchase of a laptop and other equipment for his business.  The husband opposes such a course.  But I accept this submission by the wife and have included this with the other draw downs.  On this basis the mortgage drawdowns come to a total of $45 500 ($30 000 + $11 000 + $4500).

4. The parties each have personal liabilities.  Apart from their respective capital gains tax liabilities I propose to leave out their personal liabilities on the basis that these were incurred after separation.

5. Accordingly, the property available for division between the parties consists of the following:-

Assets	$
1.         Net proceeds of sale of former matrimonial home in S Conveyancing Trust Account	265,230
2.         Husband’s L home unit	360,000
3.         Wife’s savings	1,622
4.         Wife’s household contents	2,000
5.         Husband’s household contents	5,000
6.         Husband’s mortgage drawdowns (add back)	45,500
7.         Mitsubishi Lancer motor vehicle (add back)	5,000
_____________
$684,352
Liabilities
1.         Mortgage on husband’s L property	305,000
2.         Wife’s capital gains tax liability	11,000
3.         Husband’s capital gains tax liability	11,000
4.         Moneys owing to wife (referred to above) to be repaid from moneys in trust	6,302
__________
$333,302
Surplus	$351,050
Superannuation
1.        Wife’s AMP superannuation	51,236
2.        Husband’s Emergency services Superannuation Scheme	1,006,094
____________
$1,057,330
Total	$1,408,380

Contributions

1. There is no issue between the parties concerning the Court’s assessment of their contributions.  They agree that the Court should assess their contributions overall as having been equal.  I accept this.

s 75(2) matters

1. The wife is 46 years of age and there are some difficulties in terms of her health.  The wife suffers from Type 2 diabetes which she is controlling by diet.

2. The wife is working full time as a project manager for a foundation by whom she has been employed since May 2008.  Her income is $87 000 per annum gross.  Of this, the wife is required to salary sacrifice $15 000 per annum for a car lease, use of a car being a requirement of her employment which involves considerable travel including interstate travel. The wife’s employment involves managing a government / industry funded project which ceases on 30 June 2010.  The wife is uncertain about her employment prospects after this date.

3. On the other hand the husband is also 46 years of age.  He is unemployed.  His income is $1000 per week which he receives from his Emergency Services pension.  Since going on stress leave in 2004 or 2005 the husband has worked as a labourer and as a consultant, the latter being in his own business which he established in April 2005.  But it appears that this business venture was unsuccessful.

4. M lives with the husband although she has been seeing the wife once each week.  The wife pays the husband a very modest $450 per month child support by agreement with him.  On all present indications this situation is likely to continue.  On the other hand the wife contributes $60 per week to the parties’ daughter H to assist her with her expenses of attending university.

5. The husband submitted that the Court should apply an appropriate set-off of superannuation in his favour to take account of the relevant s 75(2) matters.  He submitted that such matters include the fact that he is in a weaker income-earning position than is the wife and he will continue to have the major responsibility for the care of M including the major financial responsibility for her.

6. I accept this submission.  Both parties accept that it will be necessary for the Court to make an order splitting the husband’s superannuation interest.  This will have the effect of reducing his pension in proportion with the split.  The wife suggests that the husband will be able to obtain employment.  That might be so.  But there is no evidence to indicate that he will be able to obtain employment which would attract a salary as valuable as that which the wife enjoys.

7. The other relevant matters which support a set-off in favour of the husband are the fact that he has the major responsibility for M’s care and the fact that the husband has a higher level of personal liabilities than the wife.

8. The husband submitted that the appropriate set-off is 5 percent of his superannuation.  This would be a 10 percent differential between the parties in terms of the husband’s superannuation interest.  This would equate with $100 609 (10 percent of $1 006 094 = $100 609).

9. In my view this is appropriate in all the circumstances and would result in a just and equitable order as required by s 79(2) of the Act.

Conclusion

1. The wife is to have 50 percent of the available property and her superannuation and 45 percent of the husband’s superannuation.  This is property and superannuation with a value of $653 885 calculated as follows:

$
1.         Net proceeds of sale of former matrimonial home	265,230
2.         Husband’s L home unit	360,000
3.         Wife’s savings	1,622
4.         Wife’s household contents	2,000
5.         Husband’s household contents	5,000
6.         Husband’s mortgage drawdowns (add back)	45,500
7.         Mitsubishi Lancer motor vehicle (add back)	5,000
8.         Wife’s AMP superannuation	51,236
_____________
$735,588

1. But the liabilities of $333 302 must be subtracted from this which leaves $402 286 ($735 588 - $333 302 = $402 286).  Fifty percent of $402 286 = $201 143.  And the wife is to have 45 percent of the husband’s superannuation.  This is $452 742 (45 percent of $1 006 094 = $452 742).  So the wife is to have total property and superannuation with a value of $653 885 ($201 143 + $452 742 = $653 885). 

2. The wife has the following property:

$
1.         Her savings	1,622
2.         Her household contents	2,000
3.         Her superannuation	51,236
_____________
$54,858

1. But the wife also has the following liabilities:-

$
1.         Wife’s capital gains tax liability	11,000
2.         Moneys owing to wife to be repaid from moneys in trust	6,302
__________
$17,302

1. Accordingly, the wife has a surplus of property and superannuation compared with liabilities of $37 556 ($54 858 - $17 302 = $37 556).  She will also have 45 percent of the husband’s superannuation which is $452 742.  This would provide her with $490 298 ($37 556 + $452 742 = $490 298).  To achieve property and superannuation with a value of $653 885 the wife requires additional property worth $163 587 ($653 885 - $490 298 = $163 587).  This will be paid to the wife from the monies in the S Conveyancing trust account.  It represents 61.677 percent of such monies.

2. On the other hand the husband is to have 50 percent of the available property and 55 percent of his superannuation.  These assets would have a value of $754 495 ($201 143 + $553 352 = $754 495). 

3. The husband has the following property:-

$
1.         His L home unit	360,000
2.         His household contents	5,000
3.         His mortgage drawdowns (add back)	45,500
4.         Mitsubishi Lancer (add back)	5,000
_____________
$415,500

1. But he also has the following liabilities:

$
1.         Mortgage on husband’s L property	305,000
2.         Capital gains tax liability	11,000
__________
$316,000

1. Accordingly, the husband has a surplus of property compared with liabilities of $99 500 ($415 500 - $316 00 = $99 500).  He will also have his 55 percent interest in his superannuation which is $553 352.  This is property and superannuation with a total value of $652 852 ($99 500 + $553 352 = $652 852).

2. For the husband to achieve property and superannuation with a value of $754 495 he will require a further $101 643 of property ($754 495 - $652 852 = $101 643).  This will be paid to him from the S Conveyancing trust money.  It represents 38.323 percent of that money.

fourth step

1. The orders I propose will not affect the income-earning capacity of either party.

2. The wife will have her modest personal property and her superannuation.  She will also have 45 percent of the husband’s superannuation which is $452 742.  She will receive $163 587 from the trust money.  She will need to pay her capital gains tax and presumably some legal fees.  But the wife ought to have sufficient funds to be able to pay a deposit on a home or use the money towards accommodating herself.

3. On the other hand the husband will have his home unit and 55 percent of his superannuation which is $553 352.  But the husband receives this in the form of a pension and splitting 45 percent of his superannuation to the wife will result in a commensurate reduction in his pension.  Presumably the husband will have to endeavour to obtain some employment.

4. In addition the husband will receive $101 643 from the trust money.  But he has some personal liabilities and his capital gains tax liability.  He will probably be able to reduce his mortgage by a modest amount.

5. The form of the proposed superannuation orders was served on the Trustee of the Emergency Services Superannuation Scheme by the wife’s solicitor and the Trustee advised the solicitor that it did not have any objection to the proposed orders and did not wish to be heard in the proceedings.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the Reasons for Judgment of Judicial Registrar W P Johnston.

Associate:     

Date:              31 March 2010