MOSS & MOSS
[2012] FamCA 538
FAMILY COURT OF AUSTRALIA
| MOSS & MOSS | [2012] FamCA 538 |
| FAMILY LAW – PROPERTY – Orders - adjustment and contribution – just and equitable division of asset pool - substantial pool of assets - where both parties made substantial contributions – where allegations of extravagant spending and waste of the matrimonial property by the husband were unfounded – where no splitting order in relation to the husband’s superannuation entitlements was justified due to the size of the asset pool - where it was just and equitable that an order for equal distribution of the pool of assets be made – where it was just and equitable for the wife to have sole proprietorship of the former matrimonial home. FAMILY LAW – PROPERTY - value of property – inadmissibility of single expert evidence - where it was just and equitable that the item of property be sold. FAMILY LAW – EVIDENCE - admissibility of opinion evidence – evidence of single expert rejected - where the reasons underlying the expert’s report were not exposed and the facts and assumptions upon which the opinion was based were not proven. FAMILY LAW – EVIDENCE - admissibility of opinion evidence – where an application for adversarial expert evidence as to the value of the former matrimonial home was rejected - a difference in ultimate opinion as to the value of a matrimonial asset is not generally of itself a special reason to admit adversarial expert evidence. |
| Evidence Act 1995 (Cth) s 79 Family Law Act 1975 (Cth) ss 75, 79 and 90MZD Family Law Rules 2004 (Cth) rr 14.06,15.42, 15.49, 15.64B and 15.64 |
| Chorn & Hopkins (2004) FLC 93-204 Coghlan & Coghlan (2005) FLC 93-220 Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 Doctors van Leeuwen & Doctors van Leeuwen (1990) FLC 92-148 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Jarrott & Jarrott [2012] FamCAFC 29 Kasiopoulos & Garapiperis [2012] FamCAFC 85 Marriage of Bell & Bell (1993) FLC 92-347 Marriage of Nolan & Ingram (1984) FLC 91-585 Marriage of Waters & Waters (1981) FLC 91-019 Omacini v Omacini (2005) FLC 93-218 ON v ON [2005] FamCA 1110 Smith & Smith (1991) FLC 92-261 Tomasetti & Tomasetti (2000) FLC 93-023 |
| APPLICANT: | Mr Moss |
| RESPONDENT: | Ms Moss |
| FILE NUMBER: | SYC | 161 | of | 2011 |
| DATE DELIVERED: | 16 July 2012 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Justice Austin |
| HEARING DATE: | 16, 17, 18 May 2012 & 22 June 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr J. Miller |
| SOLICITOR FOR THE APPLICANT: | Karras Partners Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr A. Givney |
| SOLICITOR FOR THE RESPONDENT: | Broun Abrahams Burreket |
Orders
The wife is declared the sole legal and beneficial owner (as between the parties) of the real property and improvements comprising Folio Identifier …, being the property more commonly known as X property (“the property”), and the husband shall forthwith do all such things and sign all such documents as may be necessary to transfer all his right, title and interest in the property to the wife.
Subject to compliance with Order 1 hereof, and in consideration of that transfer, the wife shall indemnify and keep indemnified the husband against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the property.
Pending compliance with Order 1 hereof, the wife shall have sole and exclusive possession of the property, subject to the following conditions:
(a)Within 14 days of these orders the husband is permitted, on 48 hours written notice to the wife, to attend and enter upon the property to recover possession of the urns containing the ashes of his deceased parents and the headstones in the memorial garden established upon the property; and
(b)Within 14 days of these orders the husband is permitted to attend and enter the property to comply with Orders 12(b) and 13(b) hereof.
The parties shall forthwith do all such acts and things and sign all such documents as may be necessary to close the banking account held by them with the St George Bank and to disburse the funds held in that account in the following manner:
(a)Firstly, to pay to the husband the sum of $488,094; and
(b)Secondly, to pay the balance then remaining to the parties in equal shares.
The parties shall forthwith do all such acts and things and sign all such documents as may be necessary to close the banking account number #03 held by them with the ANZ Bank and to disburse the funds held in that account to the husband.
The parties shall forthwith do all such acts and things and sign all such documents as may be necessary to authorise and direct Broun Abrahams Burreket Solicitors to disburse the monies held on trust by those solicitors for the wife to the wife.
The husband is declared the sole legal and beneficial owner (as between the parties) of, and the wife shall forthwith execute all such documents as may be necessary to transfer to the husband all legal and equitable title in, the following items of property:
(a)The X communications account and associated chattels;
(b)Banking account number #59 held by the husband with the ANZ Bank;
The wife is declared the sole legal and beneficial owner (as between the parties) of, and the husband shall forthwith execute all such documents as may be necessary to transfer to the wife all legal and equitable title in, the following items of property:
(a) The hospitality business account and associated chattels;
(b) The Mitsubishi … motor vehicle;
(c) The Ford … motor vehicle;
(d) Banking account number #21 held by the wife with the ANZ Bank;
The husband shall be solely liable for and shall indemnify and keep indemnified the wife in respect of the visa credit card liability with the ANZ Bank.
The husband shall be solely liable for and shall indemnify and keep indemnified the wife in respect of any liability allegedly owed by the wife, solely or jointly, to any sibling or other relative of the husband.
The wife shall be solely liable for and shall indemnify and keep indemnified the husband in respect of the HECS debt.
The parties shall do all acts and things necessary to divide between them the chattels contained within the storage containers located at the property in the following manner:
(a)Within 7 days of the date of these orders the wife shall divide the chattels into two piles;
(b)Within 14 days of the date of these orders, and upon 48 hours written notice to the wife, the husband shall attend the property, choose one pile and forthwith remove those chattels from the property.
The parties shall do all acts and things necessary to divide between them the chattels described by them as “sundry boat/farm equipment” in the following manner:
(a)Within 7 days of the date of these orders the wife shall cause all such equipment to be delivered to the property and shall divide the equipment into two piles;
(b)Within 14 days of the date of these orders, and upon 48 hours written notice to the wife, the husband shall attend the property, choose one pile and forthwith remove that equipment from the property.
The wife is appointed trustee for sale of the marine vessel named “K” (“the vessel”) and for that purpose:
(a)The husband shall forthwith deliver up to the wife the keys to the vessel and all registration and title documents relating to the vessel;
(b)Without the consent of the other, the parties are restrained from using the vessel other than for a purpose connected with the demonstration or sale of the vessel;
(c)The sale of the vessel shall be conducted by the wife on the following terms and conditions:
(i)The wife shall, within 14 days hereof, appoint a marine broker to act on the sale and notify the husband of the identity of that broker;
(ii)The vessel shall be listed for auction sale, which sale shall occur no later than 7 months from the date of these orders;
(iii)The parties may each bid as purchasers at the auction;
(iv)The reserve price shall be the price nominated by the marine broker, which price shall be revealed to both parties;
(v)In the event the vessel is not sold by auction, or private negotiation within a further 7 days, then the vessel shall be submitted to successive auctions within further 6 weeks periods until sold, otherwise on the same terms and conditions as applied to the first auction.
(vi)The parties shall bear in equal shares, and promptly pay upon demand, any expenses incurred in the maintenance, insurance, berthing, mooring and sale of the vessel.
Upon completion of the sale of the vessel the wife, as trustee, shall disburse the proceeds of sale as follows:
(a)Firstly, to pay all costs, commissions, and expenses of the sale not paid in advance of the sale;
(b)Secondly, to pay the balance then remaining to the parties in equal shares.
Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose superannuation entitlements are deemed in the possession of the superannuant; and
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession and any debts in their respective sole names.
In the event of either party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s.106A of the Family Law Act.
Costs are reserved for 28 days.
Any and all outstanding applications are dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Moss & Moss has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 161 of 2011
| Mr Moss |
Applicant
And
| Ms Moss |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties commendably achieved compromise over the parenting orders to be made in respect of their two children in March 2012 after more than a year of litigation, but they were unable to reach agreement over the adjustment of their property interests.
These reasons explain the property adjustment orders made between the parties, over which there was protracted debate.
Brief background
The parties married and began their cohabitation in 1990.
Their two children were born in 1995 and 1996.
The parties separated on 8 August 2010 whilst the family was living at a rural property at X in the southern highlands of NSW. The parties then lived separately under the same roof until the husband voluntarily vacated the property in April 2011.
These proceedings were commenced by the husband in January 2011. The proceedings initially pertained only to property adjustment orders, but were later widened to encompass parenting orders.
Interim financial orders were made with the parties’ consent on 21 September 2011, which made provision for the parties’ extension of their loan from the ANZ Bank by $200,000 and the distribution of those funds between them and in payment of accrued interest (Orders 1.1, 1.4 and 1.8), distribution between the parties of the damages recovered in other litigation against a third party (Order 1.2), and expenditure by the parties of agreed amounts upon the repair and sale of their real property at B in the southern suburbs of Sydney (Orders 1.3, 1.5 and 1.6).
The interim orders were consummated over following months.
In October 2011 the monies recovered by the husband from a debtor were disbursed in the manner ordered.[1] The sum of $60,000 was allocated to expenses related to the Sydney property, the sum of $24,000 was paid to the husband, and the sum of $100,000 was paid to the wife.[2]
[1] Wife’s affidavit, pars 173-176
[2] Husband’s affidavit, par 58; Wife’s affidavit, pars 161-163, 173-174, 176
The ANZ Bank loan was extended by $200,000 in April 2012 and the funds equally divided between the parties.[3]
[3] Wife’s affidavit, pars 163.3, 170, 184
Also in April 2012 the parties exchanged contracts to sell the Sydney property,[4] with the sale completed during the short period between the close of evidence on 18 May 2012 and final submissions being made on 22 June 2012.
[4] Husband’s affidavit, par 45; Wife’s affidavit, par 177
On 21 March 2012 parenting orders were made by the Court with the parties’ consent providing for the parties to have equal shared parental responsibility for the children and for the children to live and spend time with each of the parties in accordance with their wishes.
The husband now lives in rented accommodation at W, a town in the Southern Highlands, with the eldest child, while the wife and youngest child remain resident at X.
Proposal and primary evidence of the husband
The husband abandoned the property adjustment orders successively proposed by him in his Application filed in January 2011, his Amended Application filed in March 2011, and his Case Outline document dated 9 May 2012 upon which he relied when the trial began.
Instead, the husband filed a Minute of Order on 24 May 2012 after the evidence closed, but before final submissions were made, in which he proposed orders to the following effect:
a)The parties sell the Sydney property pursuant to interim orders made in September 2011, and then distribute the sale proceeds in payment of various debts, some of which were controversial, establishment of a fund to meet the costs of the children’s future education, and finally payment of the net residue in 55/45 proportions favouring the husband (Order 1);
b)Within seven days of the distribution of those sale proceeds in that manner the husband pay to the wife the sum of $292,500, in consideration for which the wife transfer to the husband her interest in X property, of which the husband would then be sole proprietor, together with all farm equipment and livestock (Orders 2 and 3)
c)The wife sell, as trustee for the parties, the marine vessel named “[K]” (“the vessel”) for $599,000, subject to certain conditions entitling the husband to purchase the vessel (Orders 4-6), with the husband to meet outgoings in respect of the vessel pending its sale or transfer (Order 7), which order superseded a minute of order pertaining to the vessel tendered during the trial;[5]
d)The parties equally divide between them the contents of two storage containers situated at X property (Order 8);
e)The wife transfer to the husband any interest she has in two businesses established by the parties (Order 9);
f)One of the husband’s superannuation interests be split between the parties (Order 10); and
g)The wife pay to the husband $5,516.75 in part reimbursement of fees incurred with the single expert Mr L (Order 11).
[5] Exhibit H1
The orders proposed by the husband were, at least in part, overtaken by completion of the sale of the Sydney property and distribution of a proportion of the sale proceeds.
In support of such orders the husband relied upon:
a)His affidavit filed on 4 May 2012;
b)His financial statement filed on 4 May 2012;
c)The affidavit of his sister, Ms C, filed on 4 May 2012; and
d)The affidavit of his sister, Ms M, filed on 4 May 2012
Proposal and primary evidence of the wife
The wife abandoned the orders set out within her Amended Response filed on 7 May 2012 and the Minute of Orders she proposed at the commencement of the trial.[6] Instead, she proposed the orders set out in a Minute of Orders tendered at the commencement of final submissions.[7]
[6] Exhibit W1
[7] Exhibit W11
The wife’s proposal entailed:
a)Disbursement of the net proceeds of sale of the Sydney property in certain alternate ways, depending upon whether she retained X property (Order 1.1);
b)The husband’s transfer of his interest in X property to the wife so that she would then be sole proprietor of the property (Order 1.2), with her retaining exclusive possession of the property until then (Order 1.3);
c)The husband transferring to the wife one-half of his shares in Company S (Order 1.4);
d)The parties equally dividing between them the contents of two storage containers situated at X property and other chattels (Orders 1.5 and 1.6);
e)Equal division between the parties of a joint banking account (Order 1.7);
f)The husband bearing sole liability for, and indemnifying the wife against, debts he incurred with his two sisters (Order 1.9); and
g)Sale of the vessel by the wife as trustee on certain terms and conditions, which included the restraint of the husband’s purchase of it, and distribution of the sale proceeds between the parties, with the proportional division dependent upon whether or not the wife retains X property (Orders 1.1.1, 1.10, 1.11, 1.12, 1.13 and 1.14)
The new orders proposed by the wife, in part, represented a belated reversion to her long-held former proposal for her trustee sale of the vessel and distribution of the net sale proceeds between the parties.[8]
[8] Amended Response filed 7 May 2012, Orders 1.1 and 1.2
In support of her proposal the wife relied upon her affidavit and financial statement, both of which were filed on 4 May 2012.
Single expert evidence
The parties remained at odds in respect of the valuation of certain assets and so an order was made for the appointment of several single expert witnesses to value those assets.[9] The valuation evidence which remained controversial was confined to that relating to X property and the vessel.
[9] Orders 15-22 made on 21 March 2012
The vessel
The single expert providing valuation evidence in relation to the vessel, Mr R, gave his opinion by way of affidavit filed on 14 May 2012. He opined the current value of the vessel was $650,000.
The husband challenged the admissibility of Mr R’s evidence on the basis that his valuation report failed to meet the criteria for admissibility under s 79 of the Evidence Act 1995 (Cth), as explained by the High Court in Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588.
Despite the wife’s submissions about the admissibility of the evidence, the husband successfully sustained his challenge to the evidence of Mr R and his evidence was rejected as inadmissible. The reasons for that decision may be shortly stated.
The following facts were evident from the face of the report produced by the single expert:
a)The methodology of the valuation was to compare the subject vessel with other vessels possessing similar qualities;
b)It was “not possible” for the single expert to conduct a “same vessel” comparison between the subject vessel and other vessels;
c)There was only one other vessel which was a “very close comparison”;
d)The single expert apparently compared only six other vessels, but only then on the basis of their “asking prices” rather than their “selling price[s]”;
e)The asking prices of the allegedly comparable vessels covered an enormous range, from $579,000 to $1,295,000;
f)There was no explanation as to how the single expert reached his conclusion the vessel “could be worth approximately $700,000” if it was “fully restored and in immaculate condition”;
g)There was no explanation as to how the single expert estimated the costs of repairs to the vessel at “anywhere between $30,000 to $50,000”;
h)The single expert revealed he had determined his market valuation “in consultation with knowledgeable boat brokers”, but the identities of the brokers were not disclosed and the nature of the information they afforded him was not disclosed; and
i)The single expert revealed he also relied upon “current internet listings” in reaching his opinion, but it remained quite unclear as to whether those “listings” were the same as, or in addition to, the six comparable vessels previously identified.
In such circumstances it was impossible to know whether the opinion expressed by the single expert was based wholly or substantially upon his own specialised knowledge (see Dasreef at [32]-[37], [42], [98]-[99]). Furthermore, the facts and assumptions upon which the opinion was based were not proven and the single expert’s reasoning was not exposed (see Dasreef at [91]-[101], [120]-[124], [128]-[130]). Those matters affect the admissibility of the evidence, not the weight attributed to it (see Dasreef at [42], [94], [98], [129]).
It was not a satisfactory solution for the husband to tease those issues out in cross-examination (see Dasreef at [91], [93], [98], [101], [123]). Had the expert evidence been furnished to the parties in timely advance of the trial the husband could have, pursuant to the Family Law Rules 2004 (Cth), convened a conference with the expert or posed questions to him to explore such shortcomings, but that was not feasible when the trial was under way and neither party sought an adjournment of the trial when that option was squarely raised with them both.
Sale of the vessel would undoubtedly crystallise its true market value and that, ultimately, was the mutual proposal of the parties.
X property
The single expert providing valuation evidence in relation to X property, Mr L, gave evidence by way of two affidavits filed on 16 August 2011 and 14 May 2012. He opined the current value of X property was $650,000.
No challenge was made to the admissibility of Mr L’s evidence. Rather, at the commencement of the trial the wife sought leave to adduce conflicting evidence from an adversarial expert. Such leave was refused, at least pending the wife’s resort to the Family Law Rules (Rules 15.64B and 15.65) and her cross-examination of the single expert.
The wife did then resort to use of those Rules and cross-examined the single expert on the third day of trial. At the conclusion of the cross-examination the wife renewed her application to adduce evidence from her adversarial expert.
The wife tendered the report of her adversarial expert on the voir dire conducted to determine her application.[10] The contents of that report were clearly the foundation for much of the single expert’s cross-examination. Relevantly, the adversarial expert valued X property at $100,000 more than the single expert and the wife contended the disparity in opinion warranted admission of the adversarial expert’s evidence in the interests of justice.
[10] Exhibit W7 (admitted only on the voir dire)
The wife’s application was refused, largely in accordance with the husband’s submissions. Among other considerations, the Court is enjoined to ensure that, if practicable and without compromising the interests of justice, expert evidence is given by a single expert witness (Rule 15.42(c)). Admission of adversarial expert evidence in conflict with single expert evidence should be the exception rather than the rule. The Court’s permission for a party to adduce adversarial expert evidence in the face of existing single expert evidence is guided by considerations stipulated by the Rules (Rule 15.49), but none of those considerations were satisfactorily addressed by the wife’s submissions.
The wife’s adversarial expert did not offer his contradictory opinion about valuation from the basis of some different methodology (Rule 15.49(2)(a)). The single and adversarial experts each used the “direct comparison” method of valuation, the result of which they each checked by advertence to the “summation” method. The fact that the adversarial expert made express reference in his report to his use of the summation method as a check and the single expert did not had no bearing upon the veracity of their identical approach.
The wife’s adversarial expert was not possessed of knowledge unknown to the single expert, which tended to invest his opinion with greater weight (Rule 15.49(2)(b)). The experts were each familiar with X property and the other properties in relative proximity to it, which each relied upon as both comparable and distinguishable. Each expert agreed there was no closely comparable property, but there was general disagreement as to why. They had different perceptions about the movement in the market over recent years and the significance of X property’s proximity to other townships.
There was no special reason why the adversarial expert’s evidence ought have been received (Rule 15.49(2)(c)). It could not be persuasively contended that a different ultimate conclusion – in this case as to value – of itself is necessarily a special reason why an adversarial expert’s evidence should be permitted, for otherwise whenever a party disagrees with the ultimate opinion of the single expert there would be grounds to seek permission to rely upon an adversarial expert.
In rejecting the wife’s application to adduce evidence from her adversarial expert I also accepted the husband’s submission that the adversarial expert’s report was likely inadmissible in any event by reference to Dasreef principles.
The adversarial expert’s opinion as to value was prefaced by nothing more than the statement:[11]
Following an analysis of recent sales of comparable properties, and considerations of the foregoing factors, I consider that the market value…
[11] Exhibit W7, Annexure A, page 3
In his following discussion of five other properties the adversarial expert briefly described their features, but did not explain how he reasoned his valuation of X property from its comparison with them. As for the “foregoing factors”, they were only a composite description of X property by reference to the land and improvements upon it.
The single expert in the parenting proceedings
The husband sought to rely upon the evidence of Dr T contained within his report dated 10 March 2012. Dr T was appointed as a single expert witness in relation to the parties’ former applications for parenting orders, which applications merged in the consent orders made on 21 March 2012.
The asserted purpose of the husband’s reliance upon the report was to support his intended submission to the effect the Court should make a finding of fact that both children would probably soon choose to live with him – a finding which would be relevant at the third stage of the property adjustment process.
The wife objected to the husband’s reliance upon the single expert report and her objection was well founded. The identified material portions of the report were opinions expressed by the single expert which relied upon statements made to the single expert by the children. Leaving to one side any debate about the equivocation evident in such statements, the representations of the children to the single expert were hearsay because the husband relied upon them to prove the truth of the asserted facts. The Evidence Act (Cth) applies in property adjustment proceedings. The evidence infringed the hearsay rule and was inadmissible. The husband conceded that no recognised exception to the hearsay rule permitted reception of the evidence.
Process of property adjustment
In determining the property adjustment orders that should be made between spouses the Court follows a recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39]).
Firstly, the Court should identify and value the matrimonial pool of property, comprised of assets, liabilities and financial resources 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) of the Act, and determine the contribution-based entitlements of each party as a percentage of the matrimonial pool of assets.
Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), and s 75(2), and determine the adjustment, if any, that should be made to the contribution based entitlements of the parties.
Finally, the Court should consider the effect of those findings and resolve what order is just and equitable in all the circumstances of the case.
The matrimonial pool
I find that the pool of matrimonial property and resources is comprised as follows (to the nearest dollar):
| No | Assets | Party | Value | Total |
| 1 | X property | Joint | 650,000 | |
| 2 | X Communications Acc | H | 60,873 | |
| 3 | Hospitality business | Joint | 3,000 | |
| 4 | Mitsubishi vehicle | W | 1,000 | |
| 5 | Ford vehicle | W | 3,965 | |
| 6 | [omitted by agreement] | |||
| 7 | Marine vessel | H | NK | |
| 8 | St George acc (Sydney property sale proceeds) | Joint | 3,124,446 | |
| 9 | ANZ acc #03 | Joint | 41 | |
| 10 | ANZ acc #59 | H | 8 | |
| 11 | ANZ acc #21 | W | 34,086 | |
| 12 | [omitted by agreement] | |||
| 13 | Contents in X property containers | Joint | 200,000 | |
| 14 | Sundry boat/farm equipment | Joint | 30,000 | |
| 15 | Company S stock | H | nil | |
| 16 | Funds held on trust by wife’s solicitors | W | 20,333 | |
| Sub-total | 4,127,752+ | 4,127,752+ | ||
| Add-backs | ||||
| 17 | Mercedes-Benz sale proceeds | W | nil | |
| 18 | Post-separation withdrawals | W | nil | |
| 19 | [omitted by agreement] | |||
| 20 | Paid legal costs | W | 157,158 | |
| 21 | Paid legal costs | H | 115,687 | |
| 22 | [omitted by agreement] | |||
| 23 | Interim distribution of funds | H | 20,000 | |
| 24 | Interim distribution of ANZ loan funds | W | 25,000 | |
| 25 | Interim distribution of ANZ loan funds | H | 100,000 | |
| 26 | Loan from Ms C - repaid | H | nil | |
| 27 | Loan from Ms M - repaid | H | nil | |
| Sub-total | 417,845 | 4,545,597+ | ||
| Liabilities | ||||
| 28 | ANZ Visa | Joint | 23,665 | |
| 29 | HECS debt | W | 1,710 | |
| 30 | [omitted by agreement] | |||
| Sub-total | 25,375 | 4,520,222+ | ||
| Superannuation | ||||
| 31 | BT Super | H | 19,147 | |
| 32 | Colonial Super | H | 8,541 | |
| 33 | One Path Super | H | 104,106 | |
| Sub-total | 131,794 | 4,652,016+ | ||
| Net assets | 4,652,016+ |
The parties tendered jointly prepared balance sheets explaining aspects of their agreement and disagreement over the constitution and valuation of the matrimonial pool of property at both the commencement[12] and conclusion[13] of the trial.
[12] Exhibit A
[13] Exhibit B
Although the scope of their dispute was narrowed by the close of the evidence, some of the items comprising the pool of property and resources still require explanation because of the extent of the controversy between the parties.
Item 7
There is no doubt the vessel is an important component of the matrimonial pool of property. However, it must be treated separately because there was no admissible evidence adduced as to its value. Both parties proposed sale of the vessel, albeit on different terms and conditions, and so its true value will be realised in that way.
Item 15
During his employment with Company S the husband acquired stock and stock options in that corporation.[14] The wife maintained a fervent belief that the husband still retained a quantity of that stock.
[14] Husband’s affidavit, par 39
The wife’s belief emanated from a number of documents she read, some of which were apparently contradictory.[15] The wife refused to concede the proposition the husband had long ago in 2008 disposed of all Company S stock and deposited the sale proceeds into the parties’ ANZ bank account, which was a reasonably strong inference from the available documents.[16]
[15] Wife’s affidavit, pars 205-208
[16] Exhibit H4; Husband’s affidavit, par 103; Wife’s affidavit, tab 53
In light of her belief as to the existence of the stock the wife was then asked if she would like to have it all, to which she perplexingly replied “they don’t have much value”.
I am satisfied, on the balance of probabilities, the husband disposed of all stock held by him in Company S. I accept the husband’s submission it would be an error to make an order compelling the husband to transfer some or all of any such stock to the wife when there is insufficient evidence of its existence, for otherwise the wife may then commence enforcement proceedings entailing fresh debate about whether in fact the asset still exists.
Item 17
The wife sold the Mercedes-Benz vehicle for $12,500 following separation.[17]
[17] Wife’s affidavit, par 180
The mother also purchased the Ford vehicle for $5,000 after separation.[18]
[18] Wife’s affidavit, par 197
There is no evidence the wife used the proceeds realised on the sale of the Mercedes-Benz to buy the Ford, although the husband presumed that to be the case to submit the unused balance of the proceeds of sale should be regarded as a premature distribution of matrimonial funds to the wife and therefore added-back to the matrimonial pool. Although the differential was $7,500 no clear explanation was offered by the husband as to why he quantified the add-back at $7,000.
I am not satisfied there should be any add-back. I accept the wife’s submission that the vehicle she retained on separation was not in good condition and was sold for a fair price and she used the sale proceeds unremarkably. Parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives (see Chorn & Hopkins (2004) FLC 93-204 at [24]).
Item 18
The husband asserted the wife should have added-back against her interest the money she spent post-separation, excepting that spent on legal fees which was already accounted for (item 20).
The notional add-back to the balance sheet of post-separation expenditure is more comprehensively discussed as an issue in relation to items 26 and 27 below, where an explanation is afforded as to why there should be no add-back against the husband. Similarly, there should be no add-back against the wife.
Item 24
Pursuant to the interim orders made in September 2011 the parties each received $100,000 from an extension of their loan liability to the ANZ Bank.
The comparable $100,000 received by the husband is added-back to the balance sheet (item 25) but there was disagreement about the extent of any similar add-back against the wife.
Although no adverse inference is drawn about the parties’ post-separation expenditure, their respective receipt of $100,000 under the interim orders was a premature distribution of matrimonial funds. If the wife expects the distribution to the husband to be taken into account then consistency requires the distribution to her to also be taken into account.
The husband, however, in reliance upon the wife’s evidence,[19] acknowledged that of the $100,000 received by the wife, the sum of $75,000 was allocated by her to the payment of legal fees (item 20), in which case he asserted an add-back against the wife of only $25,000. I accept the validity of that submission and reject the wife’s submission that there should be no add-back at all.
[19] Wife’s affidavit, pars 175, 184
Item 25
Despite the disagreement apparent from the tendered balance sheet, the parties ultimately agreed item 25 should reflect an add-back against the husband of $100,000. The husband always admitted it and the wife conceded it in the event the Court did not accept her arguments about the proposed add-backs of items 26 and 27.
Items 26 and 27
The principal theme of the father’s cross-examination was his alleged profligate expenditure.
Apparently in expectation of such criticism the husband prepared a host of schedules calculating income and expenditure. Some schedules were tendered during his examination-in-chief[20] and others during his cross-examination.[21] Other documents were also tendered during the husband’s cross-examination, including his taxation returns for the financial years ended 30 June 2004 to 2011 inclusive[22] and his financial statement filed in these proceedings in January 2011.[23]
[20] Exhibits H5, H6
[21] Exhibit H7
[22] Exhibits W2, W4
[23] Exhibit H9
At the commencement of her examination-in-chief the wife tendered her own schedule of income and expenditure covering the period elapsed since separation[24] and later tendered her own computations about the husband’s expenditure arising from the schedules prepared by him.[25]
[24] Exhibit W6
[25] Exhibit W8
Despite the asserted importance of the issue, during cross-examination the wife made numerous concessions which rendered the allegation of the husband’s profligacy curiously irrelevant. In the face of such concessions the parties’ intricate tabulations and inquiries concerning the movements of funds into and out of their respective households since their matrimonial separation, as if they were conducting an audit or taking accounts consequent upon the termination of a commercial partnership, were pointless.
In relation to her own financial circumstances the wife conceded:
a)She had declared her weekly expenditure to far exceed her weekly income in the financial statement she filed in these proceedings in March 2011, the difference being some $1,000 per week;
b)She had declared her weekly expenditure to far exceed her weekly income in the financial statement she filed in these proceedings in May 2012, the difference being some $1,660 per week;
c)She withdrew and spent capital from the parties’ bank accounts to meet expenses, including from the joint account in relation to which she criticised the husband for making withdrawals[26] and the Visa card account,[27] such expenditure totalling approximately $97,000;[28]
d)She spent the money she received pursuant to the interim orders made in September 2011, which amounted to some $200,000;[29]
[26] Husband’s affidavit, par 104; Wife’s affidavit, par 182
[27] Husband’s affidavit, par 104
[28] Exhibit W6, pars 2.1, 2.2
[29] Exhibit W6, pars 2.5, 2.6
Even more importantly, when asked about the husband’s expenditure, although the wife said she had “questions” about the husband’s expenditure and his apparently affluent lifestyle, she could not identify one single item or type of expenditure by the husband that merited condemnation or even disquiet.
The evidence permits, and perhaps even demands, the conclusion each party continued their lifestyle of choice after separation. Even though the husband’s high income ceased years before the parties’ separation they continued to spend capital amounts to sustain their affluent lifestyle and maintain their expensive assets. Little changed after their separation. For his part, the husband admitted spending in excess of $600,000 following separation. The wife’s expenditure was not as extravagant, but she admitted her own expenditure of some $347,000.[30]
[30] Exhibit W6, par 3
Against that background, the husband borrowed money from his two sisters over a period of time to help meet his expenditure on school fees, land tax, insurances, vessel expenses, family living expenses, and legal fees.[31]
[31] Husband’s affidavit, pars 94-98
The wife did not dispute the existence or quantum of the loans. Rather, she asserted the loans, which were discharged with the funds realised on the sale of Sydney property, should be the sole responsibility of the husband and notionally added back to the balance sheet as monies enjoyed by him. I do not accept that submission for several reasons.
Firstly, some of the borrowed money was expended on legal fees, which is already added back to the balance sheet against the husband’s interest (item 21), consistently with authority (see Chorn v Hopkins at [55]-[60]).
Secondly, it is clear that a reasonable proportion of the borrowed funds were advanced whilst the parties were still cohabiting, or at least living under the same roof. I accept the husband’s submission it is likely those particular funds were expended within the “family economy”, as he described it.
Thirdly, the wife approved of the husband borrowing funds from his sisters. The husband deposed to the wife commenting favourably during their cohabitation how generous it was of the husband’s sisters to loan the money.[32] In cross-examination the wife admitted she had done so.
[32] Husband’s affidavit, par 99
Fourthly, expenditure of those funds borrowed by the husband following his departure from the X property was consistent with perpetuation of the privileged lifestyle the parties enjoyed.
I am not satisfied the loans, repaid as they were from the Sydney property sale proceeds, were an effective premature distribution to the husband or waste by the husband of matrimonial assets, in which case there is no proper basis for their notional add-back to the matrimonial pool of property (see Omacini v Omacini (2005) FLC 93-218 at [28]-[39]).
The alternate argument of the wife was that the loans made to the husband and his expenditure of the funds, requiring repayment of his sisters from the parties’ funds realised on sale of the Sydney property, should reflect in a 1.5 per cent adjustment in her favour pursuant to s 75(2)(o) of the Act at the third stage of the adjustment process. That argument will be discussed later in these reasons.
Item 28
It was common ground the parties have a Visa credit card liability to the ANZ Bank. There was no dispute the current quantum of the liability is $23,665.
The wife’s argument for the liability to be ignored was premised upon an assertion that the current liability was created by the husband and should therefore be born solely by him. That however is an argument about the parties’ contributions rather than an argument about the constitution of the pool of matrimonial assets and liabilities. But the submission is erroneous in any event.
The liability existed at the time the parties separated, when the debit balance approximated $22,000.[33] The husband has since serviced the liability, but only so as to keep the debt at approximately the same balance as existed at separation. Since the debt actually exists it should be incorporated within the matrimonial pool.
[33] Wife’s affidavit, par 179; Exhibit W6, par 2.2
Items 31-33
The Court is generally exhorted to treat the parties’ superannuation entitlements separately from assets, but that need not necessarily be the case (see Marriage of Coghlan (2005) FLC 93-220 at [61]-[68]). Neither the husband nor the wife directly addressed the issue in submissions, but it is appropriate in the circumstances of this case to treat the superannuation interests of the husband as property because they are only a modest amount, they represent only a small proportion of the pool, and the parties will share in other cash and assets which will afford them plenty of liquidity.
Items 34 and 35
These items are two small bank accounts, worth only $154 in aggregate, regarded by the wife as financial resources of the husband. The accounts are described as being bank accounts of the two children and the balances of the accounts were conceded by the husband.
There was no evidence adduced about the accounts. Nor was a single submission made about them. In the context of the property already included within the pool I intend to ignore the two accounts as de minimis.
Item 36
The wife, who notionally contended for inclusion of huge “capital losses” as a financial resource available to the husband, abandoned the contention in final submissions. The item is therefore excluded.
Assessment of contributions
The parties’ respective contributions of assets upon the commencement of their cohabitation were disparate.
The husband brought to the relationship savings of approximately $5,000[34] and his one-half interest in a parcel of real property at N.[35] The value of his interest in the N property at that time is not quantified in the evidence, but the husband realised net proceeds from the sale of it some five years later in 1995 of not less than approximately $50,000 and not more than $74,147.67.[36]
[34] Husband’s affidavit, par 25
[35] Husband’s affidavit, par 21-24; Wife’s affidavit, pars 15, 17
[36] Husband’s affidavit, par 36; Wife’s affidavit, par 34
By comparison, the wife had no assets of any material value at the time cohabitation was commenced.[37]
[37] Husband’s affidavit, par 26; Wife’s affidavit, par 14
The wife assisted the husband physically and financially, even if only indirectly, to maintain and improve the N property during the tenure of the husband’s ownership.[38]
[38] Wife’s affidavit, pars 19-21, 34
The wife’s father also provided the husband with the sum of $40,000 which was used to diminish the encumbrance over the N property in 1992.[39] However, in late 1995 and early 1996 the parties repaid to the wife’s father the total sum of $53,000,[40] with which the husband agreed in examination-in-chief.
[39] Wife’s affidavit, par 25
[40] Wife’s affidavit, par 36
In 1993 the parties purchased the X property in conjunction with the husband’s parents. The parties acquired a three-quarters share in the property and the husband’s parents a one-quarter share.[41] At the time of acquisition, the X property was unimproved rural land, so a kit home was purchased and erected upon the property. The husband conceded in cross-examination he was in error to assert in his affidavit there was “an old and dilapidated residence” on the property.[42]
[41] Husband’s affidavit, par 27; Wife’s affidavit, par 26
[42] Husband’s affidavit, par 28
The purchases of X property and the kit home were funded by two loans acquired by the parties and the husband’s parents from the St George Bank – one for $200,000 and the other for $60,000. All four persons were debtors to the bank in respect of both loans, which were secured by mortgages registered over both X property and the home of the husband’s parents in Sydney.[43]
[43] Husband’s affidavit, par 28; Wife’s affidavit, pars 26-27
The parties and members of their families’ laboured to improve the X property following its purchase.[44]
[44] Wife’s affidavit, pars 28 (part), 29, 30 (part), 31
In 1994 the parties and their children moved overseas where the husband pursued remunerative employment.[45] Prior to departure from Australia the wife closed her bookkeeping business and contributed to the family accounts the sum of $4,500, representing the residual value of that business.[46] The parties did not return to Australia to live until 2000.[47]
[45] Husband’s affidavit, pars 32, 39; Wife’s affidavit, par 32
[46] Wife’s affidavit, par 32
[47] Husband’s affidavit, par 60
Considerable maintenance and improvements were carried out at the X property by the husband’s parents.[48] Much of the cost of that work was funded by money sent back to Australia by the husband from his earnings overseas.[49] The husband’s mother managed and expended the monies sent back to the parties’ Australian bank account.[50]
[48] Husband’s affidavit, pars 29-31; Wife’s affidavit, par 38
[49] Husband’s affidavit, pars 33-34; Wife’s affidavit, par 39
[50] Husband’s affidavit, par 34; Wife’s affidavit, par 40
In 1999 the parties purchased the Sydney property. The whole of the purchase price of $1,630,000 was funded by income and capital acquired by the husband through his employment overseas.[51] After its acquisition the parties spent approximately another $4,000,000 renovating the property. The renovations were funded by a combination of the income and capital sums derived from the husband’s employment and a loan of $1,304,000 from the ANZ Bank, which was secured by mortgage registered over the property.[52] The wife contended the loan was used to acquire the property rather than renovate it,[53] but the difference is immaterial. She did not attempt to quantify the total cost of the renovations and did not challenge the husband about his estimate of that cost at approximately $4,000,000.
[51] Husband’s affidavit, par 38
[52] Husband’s affidavit, par 40
[53] Wife’s affidavit, par 52
Both parties spent considerable time supervising the renovation work up until they were able to occupy the property in December 2002.[54] The husband was still in full-time employment until 2004 and the wife was at the site each day throughout 2002, justifying an inference the wife was primarily responsible for supervision of the works.
[54] Husband’s affidavit, par 40; Wife’s affidavit, pars 55-61
In 2001 the parties purchased the marine vessel.[55] Although used privately, the vessel was also chartered to generate income to cover the expenses of its maintenance. Both parties provided their labour during charters to ensure their success.[56]
[55] Husband’s affidavit, par 41; Wife’s affidavit, par 100
[56] Wife’s affidavit, pars 101-103
The parties continued to maintain and improve the X property upon their return to Australia in 2000,[57] and were assisted in that endeavour by paid managers between 2006 and 2008.[58]
[57] Wife’s affidavit, par 48
[58] Wife’s affidavit, pars 49-50
The husband’s father died in 2002 and his mother fell into ill health resulting in her death in April 2008.[59] Upon her death the husband inherited the one-quarter interest in X property that comprised part of her deceased estate.[60]
[59] Husband’s affidavit, pars 44
[60] Husband’s affidavit, par 57; Affidavit of Ms C, par 19
The parties moved from Sydney to the X property in January 2008, some months before the husband’s mother’s death.[61] Each of the parties worked hard at X property after moving to live there. The husband laboured to improve the farm,[62] and the wife took primary responsibility for household chores and the care of the children, which had been her role throughout the marriage.[63]
[61] Husband’s affidavit, par 44
[62] Husband’s affidavit, pars 61-62, 70-72
[63] Husband’s affidavit, pars 68-69, 73-74; Wife’s affidavit, pars 109-135
The husband’s employment with Company S had ceased some years before. He deposed to that occurring in 2003,[64] but corrected himself in examination-in-chief saying it was 2004. After that time he was free to devote all of his energy to the farm and other interests.
[64] Husband’s affidavit, par 60; Wife’s affidavit, par 62
The parties were involved to varying extents in the establishment and pursuit of some businesses conducted at or from X property, which included a produce business,[65] a hospitality business,[66] a communications business,[67] and an IT business.[68] None of those businesses was particularly profitable,[69] and while one party may have exerted more effort than the other in the pursuit of one business over another, each party expended their available time to ensure the financial interests and physical needs of the family were advanced.
[65] Husband’s affidavit, pars 46, 60; Wife’s affidavit, pars 85-87
[66] Husband’s affidavit, pars 46, 66; Wife’s affidavit, pars 88-93
[67] Husband’s affidavit, par 60; Wife’s affidavit, pars 94-98
[68] Husband’s affidavit, pars 46, 60; Wife’s affidavit, par 99
[69] Husband’s affidavit, pars 46, 54, 102; Wife’s affidavit, par 146
The husband also undertook some part-time paid consultancy work during 2005. His taxation returns for the financial years ended 30 June 2005 and 2006 show his taxable income from such consultancy to have been $38,680 and $23,958 respectively.[70]
[70] Exhibits W2, W4
The wife was able to arrange a short-term but lucrative lease of the Sydney property to a television company. The rental income covered the mortgage payments on the property for a year.[71] The Sydney property was vacated in April 2008 and not rented again until October 2009. Whilst it was vacant the wife maintained the property.[72] Tenants occupied the property continuously from October 2009,[73] with the rental income defraying the mortgage liability. The wife continued to bear principal responsibility for management of the Sydney property until completion of its sale.[74]
[71] Wife’s affidavit, pars 71-73
[72] Wife’s affidavit, pars 78-82
[73] Wife’s affidavit, pars 83, 151
[74] Wife’s affidavit, pars 152 (part), 153, 154, 158, 164-168
The parties separated in August 2010 but both remained living at the X property, although the husband spent considerable time away before he finally vacated the property in April 2011.[75]
[75] Wife’s affidavit, pars 136-137
The parties blame each other for the X property falling into some degree of disrepair after separation,[76] but the dispute was arid. There was no evidence that the value of the property was diminished by any asserted failure to properly maintain it and each party desperately wanted to retain the property despite their individual opinions as to its condition.
[76] Exhibit H8; Husband’s affidavit, pars 50-56; Wife’s affidavit, pars 138, 140-145, 150
In June 2011 the husband secured well-paid employment, the income from which he used to meet some matrimonial expenses, but more particularly the living expenses incurred by him and expenses related to the children,[77] one of whom lives with him.
[77] Husband’s affidavit, par 89
The wife contended the parties’ “complicated set of contributions” should sound in equal contribution-based entitlements, whereas the husband submitted his contributions were superior and should be measured at 55 per cent for him and 45 per cent for the wife.
I accept the submission that the husband’s overall contributions were slightly superior, but not so superior as to reflect a 10 per cent differential. The disparity is more properly measured at 5 per cent, in which case the husband’s share is 52.5 per cent and the wife’s share is 47.5 per cent.
The factors which predominantly account for the husband’s marginally greater entitlement are his greater contribution of assets at the commencement of cohabitation, the assistance given to the parties by the husband’s parents in the acquisition and improvement of the X property, and the husband’s inheritance of a one-quarter share of the X property from his deceased mother’s estate.
Adjustment
The wife contended that an adjustment in her favour was warranted, but only because of the parties’ disparate income-earning potential. She acknowledged the parties are of similar age, both are in good health, and each has a child of similar age living with them.
In June 2011 the husband secured employment in a managerial capacity earning an annual salary of $160,000, together with a car allowance of $18,000 and an annual superannuation guarantee contribution of $14,000.[78] There is no evidence the husband’s employment is under any threat, other than by his stated preference to resume occupation of the X property and instead work and generate income as a farmer.
[78] Husband’s affidavit, pars 49, 63
By comparison, the wife last held independent paid work prior to the family’s departure overseas in 1994. She was unable to work overseas because of visa restrictions.[79] Upon the family’s return to Australia in 2000 the wife continued to fulfil the role of primary homemaker while the husband pursued his highly remunerative employment with Company S. When that employment ceased in 2004 the parties decided to adopt a more leisurely lifestyle and enjoy the assets they had accumulated, for which neither was critical of the other.
[79] Husband’s affidavit, par 66
The wife’s forays into income-producing activity did not resume until 2008 when the family moved to live at the X property and the parties jointly tried to conceive several different businesses with limited success.
The wife submitted that, assuming her retention of the X property, the disparate income-earning potential of the parties warranted an adjustment of 2.5 per cent in her favour.
Conversely, the husband submitted no adjustment either way was justified. The husband contended that the disparate income-earning potential was of no moment because he gave uncontradicted evidence of his intention to resign his employment and derive his future income as a farmer on the X property. In such circumstances his actual income would likely be much less than it is currently and he would then be in a similar financial position to the wife.
I reject the husband’s submission, which suffers from numerous flaws.
For reasons explained below, an order is made vesting in the wife rather than the husband sole proprietorship of the X property. Even if the husband was to retain the X property, he conceded he may well not generate the farming income he hoped for and then need to retain paid employment elsewhere. If his need for paid employment was to eventuate it is likely he would look for employment, such as his current position, for which he is skilled and well remunerated.
Applicable provisions of the Act enjoin the Court to look beyond merely the actuality of the husband’s intended income. Section 79(4)(d) requires the Court to direct its attention to the effect of orders upon the earning “capacity” of each party. Section 75(2)(b) requires the Court to consider the parties’ physical and mental “capacity” for “appropriate gainful employment”. Sections 75(2)(j) and 75(2)(k) both refer to the relevance of the earning “capacity” of each party. Finally, section 75(2)(o) obliges the Court to take into account any fact or circumstance that justice requires.
By any one or more of those statutory considerations it is proper for the Court to have regard for the proven capacity of the husband to earn a handsome income far in excess of any income that could conceivably be generated by the wife.
The wife submitted that the third-stage adjustment in her favour should be even more pronounced if she was deprived of sole proprietorship of the X property. In such circumstances she submitted for an extra adjustment of 1 per cent. That result has not eventuated, but in any event, I accept the husband’s submission that any third-stage adjustment should be determined globally after considering all relevant factors rather than by aggregating incremental adjustments in respect of each relevant factor (see Tomasetti & Tomasetti (2000) FLC 93-023 at [26], [107]-[114])
Earlier in these reasons reference was made to the wife’s submission that the loans by the husband’s sisters, if not notionally added back to the matrimonial pool, should be taken into account pursuant to s 75(2)(o) of the Act, with the effect of enlarging the third-stage adjustment made in her favour. She contended for an additional 1.5 per cent adjustment because the matrimonial pool would have been larger but for the husband’s expenditure of the loaned monies. In support of that submission the wife cited a recent decision of the Full Court (see Kasiopoulos & Garapiperis [2012] FamCAFC 85 at [71]).
The decision cited by the wife is not authority for the submission she made. The portion of the decision to which she expressly referred recorded only that the trial judge had acknowledged a collection of factors that uncontroversially warranted a third-stage adjustment in favour of the wife in that case, which relevantly included:
The husband enjoyed a different lifestyle after separation, compared to the parties’ lifestyle during the marriage. It is an agreed fact that the husband insisted that the wife exercise financial restraint during her stewardship of the family finances and more so, after he took over those responsibilities. His lifestyle expenditure after separation is in stark contrast to those restrictions.
That factor bears little resemblance to the found facts of this case, in which both parties continued to enjoy a lifestyle after separation much as they did before. There was no agreement, nor finding, in this case that the husband demanded financial restraint by the wife in the face of his own profligacy.
It would be a curious outcome indeed for the Court to reject the mother’s argument for notional add-back of the sister’s loans to the matrimonial pool and then achieve a similar outcome by inflating the wife’s third-stage adjustment pursuant to section 75(2)(o) in reliance upon the same underlying factual premise.
I reject the wife’s argument for additional adjustment under section 75(2)(o), quite apart from the inherent vice of impermissible aggregation of factors as already discussed.
The husband is the only one with superannuation interests. He proposed a superannuation splitting order in respect of his largest superannuation interest in order to achieve an outcome in which the parties had equivalent superannuation interests.
Pursuant to leave granted with the wife’s consent, the husband subsequently transmitted documents to the Court after the close of submissions proving his superannuation trustee had been afforded procedural fairness and approved of the proposed splitting orders, as required by the Act (s 90MZD) and Rules (Rule 14.06). Such documents were formally marked as an exhibit.[80]
[80] Exhibit H10
Nevertheless, for reasons discussed below, I am not persuaded to make the superannuation splitting orders. That will mean the husband will retain the totality of his superannuation interests, worth $131,794, and the wife will have none. I am not, however, persuaded such an outcome is a factor which justifies any third-stage adjustment in favour of either party. The matrimonial pool is sufficiently large, and the husband’s superannuation interests a sufficiently small part of it, so as not to be an influential factor. The assets both parties receive will leave them each in a comfortable financial position with ample liquidity to accommodate themselves and live without financial pressure.
Overall, I am satisfied that a third-stage adjustment is warranted in favour of the wife because of the significant disparity in the parties’ income-earning capacities and I am satisfied that adjustment should be measured at 2.5 per cent of the matrimonial pool.
Just and equitable orders
The result of the foregoing conclusions is that the wife and husband should have equal entitlements to the matrimonial pool, despite the husband asserting his entitlement to 55 per cent and the wife asserting her entitlement to not less than 52.5 per cent.
Their overall entitlements are valued at $2,326,008 plus their one-half shares in the unquantified value of the vessel.
Both parties wanted orders investing them with sole proprietorship of the X property.
The wife has lived continuously at the X property since the family moved there in January 2008. From the time she filed her Response in the proceedings her primary application has always been for her retention of the property, although she has posited alternate outcomes. As a consequence of her continuous residence at the X property the mother has established a network of friends in the area and become enmeshed in the local community. She believes it would be beyond her financial capacity to acquire a similar property in the same locale,[81] which evidence she confirmed during cross-examination, saying she had researched the option of buying another property in the area and found nothing suitable. She was not seriously challenged about that proposition.
[81] Wife’s affidavit, pars 145, 200, 204
The wife has been out of paid employment since departing for overseas in 1994. Her only realistic sources of future income are the hospitality business she continues to conduct upon the X property and utilisation of her past bookkeeping skills, which she is currently trying to improve by updating her qualifications.[82] It is her asserted intention to maximise the modest income earning potential of the farm[83] and otherwise rely upon procurement of bookkeeping work. The wife asserted, without contradiction, she had earned approximately $7,000 net income in the current financial year from the hospitality business.
[82] Wife’s affidavit, pars 193-195
[83] Wife’s affidavit, pars 201-203
When the husband commenced these proceedings in January 2011 he did not seek any specific order about the X property. Rather, he simply sought property adjustment orders that would leave him with 55 per cent of the matrimonial pool of property. It was not until the father filed his trial affidavit in May 2012 that it was apparent he desired sole ownership of the X property.
The husband asserted he only reluctantly departed the X property following separation.[84] Significantly for him, the urns containing the ashes of his deceased parents are kept in a memorial garden upon the property, making it a place of sentimental value.[85] There is no evidence the ashes are interred and no evidence the memorial headstones are immovably fixed.
[84] Husband’s affidavit, par 47
[85] Husband’s affidavit, pars 55-56, 91, 93
Although it is the husband’s asserted intention to return to work on the X property as a farmer,[86] it is difficult on the evidence to see how he could make the property particularly profitable as a commercial farming enterprise, given the relatively poor financial performance of the agricultural businesses conducted on the farm by the parties over the past four years. The property has never carried more than a couple of dozen animals[87] and, although the property has olive trees planted on it,[88] the husband admitted in cross-examination he had only ever sold 10-20 bottles of olive oil to guests.
[86] Husband’s affidavit, pars 65, 80
[87] Wife’s affidavit, par 146
[88] Husband’s affidavit, par 61
The husband adduced no evidence of any formulated plan about how he could rationally transform the X property from a hobby farm, as it was regarded by the parties, into a genuinely commercial enterprise. The chances of the husband deriving income from the farm that would even remotely compare to his current income are inestimably small.
The husband conceded in cross-examination the past income generated by the farm would not cover his current living expenses and that he may well need to obtain paid employment elsewhere. He frankly conceded he was unsure whether his plans to farm X property would actually be successful, whereas he acknowledged the wife intended using the property to continue the hospitality business as a source of her income. The wife, he admitted, had always worked hard around the house, in the garden around the “house block”, and in the conduct of the hospitality business.
Although both parties propounded persuasive arguments to retain the X property, on balance, I am satisfied the wife’s sole ownership of X property is a more just and equitable result. The continuity of her occupation, her greater need for the property as a source of income, and the transportability of the husband’s mementos sway the decision. The orders make provision for the wife’s retention of the X property and permit the husband a short period within which to attend the property to recover the ashes of his deceased parents and any other sentimental accoutrement from the memorial garden.
The husband proposed orders to split his superannuation interest in ING Masterfund.[89] I impute that to be one and the same as his superannuation interest in One Path Super, as the fund is described in both the tendered balance sheet[90] and the documents tendered to prove provision of procedural fairness to the fund trustee.[91]
[89] Minute of Order filed 24 May 2012, Order 10
[90] Exhibit B, item 33
[91] Exhibit H10
No application for a superannuation splitting order was made in the husband’s Application filed in January 2011 or in his Amended Application filed in March 2011. The superannuation splitting order was proposed for the first time in the minute of orders contained within the husband’s Case Outline document filed just in advance of the trial. The proposed order was repeated in the husband’s Minute of Order filed on 24 May 2012. None of the orders proposed by the wife ever indicated her consent to the split of the husband’s superannuation interest and her receipt of the split superannuation interest.
Even though the superannuation splitting order was raised at a late stage of the litigation, neither party was confronted with the order in cross-examination and in final submissions the order was only mentioned in passing as an outcome the husband desired. In effect, the husband wanted the splitting order, the wife did not, and neither explained why or why not. In such circumstances I am not prepared to make the order. As already mentioned, it is not necessary to split the husband’s superannuation interest to ensure economic equality or stability. The split of the husband’s superannuation interest is not an outcome that justice and equity demands.
Given those findings, the wife will retain assets (items 1, 3, 4, 5, 11, 16), add-backs (items 20, 24) and liabilities (item 29) with a net value of $892,832.
For his part, the husband will retain assets (items 2, 9, 10), add-backs (items 21, 23, 25), liabilities (item 28) and superannuation interests (items 31, 32, 33) with a net value of $404,738.
It is common ground the parties have joint interests in chattels stored within shipping containers at the X property. They propose the division of those chattels between them in an equivalent way, which proposal is adopted in the orders.
It is also common ground the parties have joint interests in “sundry boat/farm equipment” valued at $30,000. Such is the only inference that arises from the incorporation of that agreed item on the balance sheet (item 14).
One might reasonably impute the boat equipment is stored on the vessel, but there was no evidence or submission about the nature of the equipment, nor whether the equipment was to be sold with the vessel or retained by the parties.
Similarly, one might reasonably impute the farm equipment is stored at the farm. The husband proposed an order suggesting he retain that equipment upon his resumption of occupation of X property,[92] but given the wife will retain X property that order is inapposite. The wife also proposed an order relating to those chattels,[93] but the order she proposed clearly embraced more than simply “sundry farm equipment”.
[92] Minute of Order filed 24 May 2012, Order 3
[93] Exhibit W11, Orders 1.5, 1.6
Since the issue was not explored in the evidence and was not the subject of any submission, an order is simply made that the boat and farm equipment be divided between the parties in the same manner as the chattels contained within the shipping containers.
The retention by each party of a one-half interest in the contents of the shipping containers (item 13) and the sundry boat/farm equipment (item 14) will mean they each receive further chattels worth $115,000, taking their respective shares to $519,738 for the husband and $1,007,832 for the wife.
The order making provision for unequal distribution to the parties of the net proceeds realised on the sale of the Sydney property is calculated to ensure that each party receives cash and assets amounting to one-half of the matrimonial pool. The initial payment to the husband of $488,094 represents the differential between the two figures in the preceding paragraph.
The one-half share of the matrimonial pool taken by the husband will incorporate a cash component of $1,843,527. That sum is computed by addition of the banking accounts retained by the husband (items 2, 9, 10) and his share of the Sydney property proceeds of sale (item 8), less the liability he will bear (item 28). Of course, the husband will also have his superannuation interests (items 31, 32, 33), his equal share of chattels (items 13, 14) and his equal share in the vessel (item 7).
The order dealing with sale of the vessel ensures the parties’ equal entitlement to the net sale proceeds, so as to preserve overall equality. It is orthodox for the Court to order the sale of an asset to realise its true value and apportion the parties’ entitlements to the sale proceeds in percentage terms so as not to alter the overall percentage entitlements of the parties in the event of the asset being realised for significantly more or less than the parties anticipated (see Marriage of Waters & Waters (1981) FLC 91-019 at 76,207-76,209; Marriage of Nolan & Ingram (1984) FLC 91-585 at 79,724; Docters van Leeuwen & Docters van Leeuwen (1990) FLC 92-148 at 78,024; Smith & Smith (1991) FLC 92-261 at 78,759; Marriage of Bell & Bell (1993) FLC 92-347 at 79,683; ON v ON [2005] FamCA 1110 at [48]; Jarrott & Jarrott [2012] FamCAFC 29 at [21]).
The sale of the vessel still presented a conundrum, even though the parties ultimately agreed it should be sold and that the sale should be unilaterally controlled by the wife as trustee. Controversy remained about the true value of the vessel and whether the husband ought be permitted to try and acquire it.
Both parties proposed an extended period of months within which to achieve the sale because sufficient time must be allowed to market the vessel and stimulate interest amongst prospective purchasers. I accept that reasonable time must be allowed for the marketing exercise. The orders allow seven months, covering the Spring and the height of Summer, which are likely to be the most favourable seasons for attracting a purchaser.
Each party proposed an initial period or periods during which the vessel would be offered for sale by private treaty, but the disparate conditions they each proposed make that process unwieldy and ultimately untenable. The wife refused to accept the floor price stipulated by the husband because she believes the vessel has a higher value. The husband proposed a complicated mechanism by which he could retain the vessel and pay a certain sum to the mother in recompense, which aggravated the mother’s fear he would try to retard the sale price.
The most attractive way in which to realise the vessel’s true value is to submit the vessel to auction sale following a reasonable marketing campaign. The wife criticised the idea of an auction sale as a “fire sale”, but an auction sale was her ultimate fall-back position. There should be no fire sale with a reasonably lengthy period over favourable seasons within which to properly advertise the sale.
The orders therefore make provision for an auction sale, and furthermore, permit each party to bid as purchasers. The mother could not articulate any rational argument about why the husband should be excluded as a prospective purchaser from any auction sale. If the wife fears the husband will be the successful bidder at too low a price she will be at liberty to outbid him and then do as she wishes with the vessel, which would then be her property. The parties both currently have an interest in the vessel so each should be permitted to know the reserve price at the auction, even though the wife is acting as trustee on the sale. It would not be just for only her, and not the husband, to know the reserve price.
The vessel is expensive to maintain,[94] insure and berth. That is a consideration when the auction sale will not take place for several months and may not even sell at the first auction. The orders require the parties to contribute promptly and equally to such costs. The orders also preclude the parties’ private use of the vessel, without the consent of the other, so as not to depreciate its value by wear and tear.
[94] Exhibit H3
The husband proposed use of the net sale proceeds of the Sydney property to constitute an education fund for the parties’ children.[95] I decline to make such an order, which was not consensual. No evidence was addressed to the issue, neither party was cross-examined about it, and no submission was made about it.
[95] Minute of Order filed 24 May 2012, Order 1.9
The husband proposed his recompense for certain fees of the single expert witnesses and the trial fee,[96] while the wife proposed the husband pay her legal costs.[97] I decline to make either order, particularly in the absence of any submission by the parties about those proposed orders. The expenses sought by the husband are disbursements that form part of the legal costs incurred by him in the conduct of the proceedings. Costs are reserved for 28 days. If either party seeks a costs order against the other it will be necessary for an application to be made within the period prescribed by the Rules and the parties’ costs and disbursements will be considered in light of the orders then sought.
[96] Minute of Order filed 24 May 2012, Order 11
[97] Exhibit W11, Order 4
I am satisfied the orders set out at the commencement of these reasons represent a just and equitable division of matrimonial property.
I certify that the preceding one hundred and sixty nine (169) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 16 July 2012.
Associate:
Date: 16 July 2012
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