Murdock and Tucker
[2015] FamCA 23
•28 January 2015
FAMILY COURT OF AUSTRALIA
| MURDOCK & TUCKER | [2015] FamCA 23 |
| FAMILY LAW – PROPERTY SETTLEMENT – only unusual contributions were a late inheritance by the wife and large bonus received by husband from his employment along with redundancy – Husband’s income greater than that of wife – Should there be a significant adjustment where husband and wife both in their 50s and “pool” is just over $2 million plus superannuation – Modest adjustment made. |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) |
| Aleksovski v Aleksovski (1996) FLC 92-705 Clauson & Clauson (1995) FLC 92-595 Coghlan and Coghlan (2005) FLC 93-220 Dickons & Dickons [2012] FamCAFC 154 In the Marriage of Kowaliw (1981) FLC 91-092 Mallet v Mallet (1984) 156 CLR 605 Norbis v Norbis (1986) 161 CLR 513 Sinclair & Sinclair [2012] FamCA 388 Stanford v Stanford 247 CLR 108 Steinbrenner v Steinbrenner [2008] FamCAFC 193 |
| APPLICANT: | Mr Murdock |
| RESPONDENT: | Ms Tucker |
| FILE NUMBER: | MLC | 1719 | of | 2013 |
| DATE DELIVERED: | 28 January 2015 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 19 October 2014; 18 December 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Wilson |
| SOLICITOR FOR THE APPLICANT: | Westminster Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Puckey |
| SOLICITOR FOR THE RESPONDENT: | Burke Family Law |
Orders
That the husband and the wife forthwith do all things necessary to place the property at M Street, Suburb B on the market for sale on such terms and conditions as the parties agree and failing agreement on terms and conditions as determined by the Court and upon the settlement of the sale, the proceeds be distributed as follows:
(a) First to pay all costs, commissions and expenses of the sale;
(b)Secondly to discharge the various loans up to $250,000 referred to in paragraph 54 of the reasons for judgment this day; and
(c)Thirdly, to add the net proceeds thereafter to the other assets referred to in paragraph 50 of the said reasons for judgment which shall then be divided as to 57.5 per cent to the wife and 42.5 per cent to the husband taking into account the assets described in paragraph 50 of the said judgment as retained by each party.
That the wife forthwith make available for collection by the husband and at a time to be nominated by him:
·The silver coasters and bottle stand which were a 21st birthday present to the husband;
·The husband’s personal photographs;
·The digital copies of joint photographs;
·The husband’s books;
·The husband’s papers and personal belongings stored in the attic; and
·The husband’s record albums.
That pursuant to s 90MT(4) of the Family Law Act 1975 (Cth) (“the Act”) a base amount of $374,500 of the husband’s interest in the Australian Superannuation Fund (Employer No: …, Policy Number: …) be allocated to the wife.
Pursuant to s 90MT(1)(a) of the Act, whenever the trustee of the Australian Superannuation Fund makes a splittable payment out of the husband’s interest in the said fund (Member No …), the trustee shall pay to the wife her entitlement pursuant to these orders and make a corresponding reduction in the entitlement that the husband would have had but for this order.
The foregoing splitting order has effect from the operative time which is four days after the service of this order upon the trustee.
That the wife exercise a request for the creation of a new interest in her name in the Australian Superannuation Fund with the value of the transferable interest calculated in accordance with Regulation 7A.11 of the Superannuation Industry (Supervision) Regulations 1994 (Cth).
Pursuant to Regulation 14F of the Family Law (Superannuation) Regulations 2001 (Cth), any payments from the husband’s superannuation interest made after the trustee has created a new interest in the wife’s name in the said fund, are not splittable payments.
That each party otherwise retain to the exclusion of the other, all such assets and interests therein in the possession of such party as at the date of this order.
That each party be solely liable for and indemnify the other and pay any liability encumbering any item of property to which that party is entitled pursuant to these orders.
Any joint tenancy in any property referred to in these orders is expressly severed by these orders.
Save as to issues of costs, all extant applications are otherwise dismissed.
That should any party seek costs arising out of these orders, such application be made by written submission and filed and served by no later than 16 February 2015 with such submission being endorsed with the fact that it has been so served on the other party and any recipient of such submission have until 2 March 2015 to file and serve any response and such response be endorsed with the fact that it has been so served on the other party and upon receipt of any such application for costs, it or they be determined in chambers.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage counsel to attend.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Murdock & Tucker 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 MELBOURNE |
FILE NUMBER: MLC 1719 of 2013
| Mr Murdock |
Applicant
And
| Ms Tucker |
Respondent
REASONS FOR JUDGMENT
This dispute between Mr Murdock (“the husband”) and Ms Tucker (“the wife”) concerns how to divide their modest assets. The assets were largely agreed and there was no significant dispute about valuation. The wife wants to keep their former matrimonial home but through her counsel, conceded that if she had to take on more debt than the existing mortgage, a transfer of the husband’s interest in the property was unrealistic and a sale should follow. In my view, it would not be just and equitable for the wife to be able to retain the home if the husband only received what she envisaged. Accordingly, the house will need to be sold.
The parties have interests in superannuation valued at approximately $890,000 and non-superannuation assets of about $2.1 million. The details are set out below. The wife’s case revolved around the husband keeping the bulk of the superannuation and the disposal of his liquid assets which would have enabled her to retain the home. In my view that would not be just and equitable for the reasons that follow.
The disputed facts between the parties were also modest. Each of those is dealt with below. None of those matters has a significant impact on the outcome of these proceedings.
In addition to a property settlement, the wife also brought a spousal maintenance claim. Leaving aside the question of the impact of the retention of assets she will have from these proceedings and whether on the basis of that she could adequately support herself, there was little evidence that would justify a conclusion that the wife could not adequately support herself without maintenance. Indeed, when challenged about whether or not she could keep the home, the wife said that to service a mortgage, she would get employment. The maintenance application must fail on the basis that a liquidation of the major asset would enable the wife to still buy a property and have money to adequately support herself. In addition, she acknowledged a capacity to at least seek employment on the basis that she would then support herself.
Initially, the wife also sought child support departure orders but sensibly, they were not pressed. The children only one of whom is under 18 years of age are shared between the parents and the husband supports them.
In these proceedings, each of the parties was represented by counsel and each relied upon their respective trial affidavit and financial statement. Each party was cross-examined sensibly. No rulings were required in relation to objections to the evidence that the parties presented. In respect of the determinations set out below, I have applied the standard of proof set out in s 140(2) of the Evidence Act 1995 (Cth). That standard is the balance of probabilities.
Section 79(2) of the Family Law Act 1975 (Cth) (“the Act”) makes clear that the Court must not make an order altering the orders of parties in property unless it is just and equitable for it to do so. Each counsel conceded that an order was necessary in this case and each asked the Court to make it.
Background
The husband is a 52 year old company executive, a role he commenced in July 2014. He earns about $300,000 plus superannuation and expects to receive bonus incentives. He has a history of that sort of employment. Be that as it may, he did face redundancy in 2014 but has proved adept at overcoming that despite his age and is back in the workforce. He has no health problems. He has begun a new relationship with a woman in Sydney who has two children. He and his new partner do not live together although she rents the apartment that he has acquired. The equity in that apartment is included in the assets set out below. Notwithstanding protestations of the wife, I am satisfied that the arrangement between the husband and his new partner is a commercial one. Whilst the husband stays there from time to time, he has his major employment situation in Melbourne and desires to obtain a property here.
The wife is 53 years of age. She has a science degree and until 2006, worked as a consultant through her own corporate entity. The wife left that role to commence her current volunteer position as president of a national organisation. She has travelled overseas in that role as a representative of the Australian organisation and fulfilled international obligations. It is an unpaid position but her expenses have been reimbursed. The significance of that evidence is her capacity to undertake the role. That is important because the wife has had significant health problems but as recently as November 2014, was given a clearance certificate. She is otherwise on Newstart allowance through Centrelink. Whilst I have already referred to her confidence about obtaining employment if she had to service a mortgage, the evidence about just what employment is available to her is not clear. When she was working, she was earning $60 per hour but I am unsure just what income she would now earn. She was vague about employment opportunities and certainly no evidence was called in respect of that. She said she had sought positions unsuccessfully but just exactly what they were was unclear.
The parties commenced living together in 1987 and married in 1991. Their final separation was in December 2011. The two children of the marriage are respectively 20 years of age and the youngest will turn 16 in mid-2015.
The positions that the parties began with in the proceedings.
The husband was the applicant in the proceedings, filing his application on 8 March 2013. In that, he simply sought that there be an alteration of property interests which the Court might consider just and equitable. There was no real justification for the uncertainty having regard to discovery. There was little here that was not known to both parties.
On 15 May 2013, the wife filed a response to the husband’s application and she also failed to plead what orders she wanted with particularity.
In his amended initiating application in October 2014, the husband sought orders that the home be sold and that after payment of various bank liabilities and sale costs, the proceeds be divided as to 55 per cent to the wife and 45 per cent to himself. He also sought orders that the joint bank account be divided equally and otherwise that the parties more or less kept what they had in their respective possessions. The husband then sought an order that there be a superannuation splitting order with a base amount of $369,470 allocated from his entitlements to that of the wife.
The wife filed an amended response on 22 October 2014 and she sought orders that the husband transfer to her the home and that he discharge the various liabilities encumbering that property. She also sought that if the husband did not pay out the mortgage on the home, his property in Sydney Suburb R in New South Wales be sold to achieve that end. She then sought an order equalising the superannuation entitlements, a weekly spousal maintenance sum of $1312.96 and that the administrative assessment of child support be departed from and for the husband to pay private school fees. As indicated, the child support issues were not pursued.
The case was opened by the husband on the basis that there was equity of approximately $2.15 million and that that should be divided 55 per cent to the wife and that there otherwise be an equalisation of the superannuation.
The wife responded to the husband’s opening position indicating that there should be a global approach such that superannuation and non-superannuation assets be added together and divided. She sought that she be given 65 per cent of the global total but otherwise 70 per cent of the non-superannuation assets and an equalized division of the superannuation. Even in respect of the superannuation division however, there was some equivocation.
The outline of argument for the husband indicated that the issues in dispute included the weight to be attributed to the inheritance received by the wife, the weight to be attributed to the husband’s redundancy received after separation and, the question of the wife’s spousal maintenance claim. It is important to observe that there had not been any orders in relation to maintenance between separation and trial but the husband had been paying a variety of accounts as well as supporting the children and in particular, paying the private school fees. I return to that issue below.
The husband also sought an order that the wife’s “supplementary” store credit card be closed and cancelled. There is no evidence about that but more importantly, any outcome of the nature he proposed could be arranged through commercial means. There is no basis for the Court to make orders.
The husband also sought orders about the wife’s occupation of the home until its sale along with the payment of the mortgage and other commitments. These did not seem to be the subject of dispute or submission so I do not consider it appropriate to make adjustments or orders. The wife wanted orders that the husband discharge the mortgage so that she could then have an unencumbered home and for the husband to pay the mortgage until the transfer. As that will not happen now because, for the reasons that follow, I have found that the wife cannot retain the home and that her position was unrealistic, the order is not appropriate. The husband indicated a willingness to pay those commitments until the sale and that has always been what he has done without any orders. Thus, there is no basis for me to make orders here.
The evidence
The husband said at the commencement of cohabitation, he did not own any assets of significance but acknowledged that the wife owned a property in Suburb E, which was sold two years after cohabitation began, where she received approximately $6000. The wife did not seem to agree with the husband’s position about the fact that he owned nothing of substance because she conceded the husband had a house in Suburb H in which there was an equity of about $24,000. She then went on to say however that she put $10,000 into the Suburb H property which came from the sale of the Suburb E property that she owned and to which the husband had referred. It seems therefore that to the extent this was an issue at all, it was so long ago that it has been forgotten and in any event, the parties otherwise contributed more or less equally.
The husband then said that both parties initially worked in the same field and were earning much the same amounts but their respective salaries were applied to their joint benefits. The wife’s role was changed to that of homemaker and parent after the birth of their first child but she returned to work in 1997 and continued working through to 2008 at various times. The husband said that in 2008, the wife left her paid employment which, presumably for tax minimization purposes, was conducted through her own company and took up her present voluntary position with the international organisation. That issue was barely mentioned by the wife and was the subject of considerable cross-examination by counsel for the husband. Over the period of 2012 to 2014, the wife agreed that she had attended approximately 23 “events” and that there was somewhere between eight and ten per year. She had been an international judge in the activity but disputed that she spent a lot of time on it. She conceded that she took the opportunity to travel whenever she could and there were not many official duties involved. She said that judging was her passion. There was considerable dispute between the parties as to whether or not there was income involved in this role or whether monies that exchanged hands between the organisation and the wife were simply a reimbursement. I am satisfied that it has been just a reimbursement. When the wife was asked whether she had travelled overseas for personal reasons, she denied it. However, it seems she has been able to travel personally at times associated with the organisational duties. She went to Thailand in 2012, Europe in 2014, Hong Kong in 2014, and has been judging in New York. While she admitted that the travelling was physically difficult because of her health reasons, she was a seasoned traveller. I find therefore that despite her health difficulties which have now abated, she has had the capacity to fulfil her passion and arduous things such as international travel would not have precluded her from at least pursuing employment. The wife has used her credit card extensively and although she described herself as a Centrelink recipient, it would seem that the lifestyle she enjoyed during the relationship has not changed significantly. She is currently living in the former matrimonial home. The parties had a dispute as to whether it was a four bedroom or five bedroom home but in any event, there are at least four bedrooms and a study. It has a swimming pool albeit that the wife described that as “small”. Having regard to the ages of the children, I find that it is currently not necessary for the wife to retain a house that big. She conceded that whilst it was the children’s home and she did not want to disturb that, if she had to take on the existing mortgage commitment, she could do so for a while but otherwise the house would have to be sold. In my view, the wife was being unrealistic about all of that. It would be in everyone’s interest if the house was sold quickly and each got on with their lives. The sale of the house is therefore inevitable.
The inheritance dispute
The wife’s evidence was that she received a total of $554,928 from her father’s estate. That came between May 2010 and July 2011. She placed those funds in the National Australia Bank portfolio facility and then subsequently removed $250,000 into an account in her name. She applied $50,000 to the purchase of her car after separation. The evidence was otherwise scant in relation to what happened to that money. In his final address, counsel for the wife indicated that $190,000 went into the mortgage and $50,000 went (as the wife indicated) into the purchase of her motor vehicle. He said that there was $100,000 remaining in cash and that seems consistent with the assets that the parties agree they still have. He observed that $200,000 which was the otherwise missing sum of money went on living expenses subsequent to separation having regard to the fact that no maintenance was paid by the husband. That explanation is consistent with the wife living a life unlike other people in receipt of unemployment benefits. Absent some clear evidence which I do not accept is present, I find the wife’s expenditure not reasonable. I find that having regard to the support that the husband was providing.
What was also disputed by the husband was the receipt of money provided by the wife’s father’s estate policy with MLC. In his evidence, the husband had indicated that he did not accept the statements of the wife about the MLC funds. Despite the fact that this case was issued in 2013, it was not until immediately prior to the trial commencing in October 2014 that any formal request seems to have been made for details about large sums of money moving through the wife’s accounts. In her evidence on 18 December 2014, the wife said that she had collated the various documents and given a written explanation to show where the monies went. The wife said that whoever was reading the letter she had written would have to guess what it all meant. She indicated that the husband simply had to trust her word for it. Unfortunately he did not. She acknowledged that there were no records in relation to the MLC money held by her brother and when asked why she did not get those details from her brother, she said she did not think it was necessary. In relation to some of these monies that were placed in her daughter’s account, she indicated that she had not provided any other statements that would have enabled the husband to get a very clear picture of what monies were transferred around between what accounts. That approach to discovery was not satisfactory.
It seems that the wife’s father had made provision for his grandchildren. There are a number of grandchildren two of whom are the children of these parties. As the wife conceded, it would be difficult for the husband to glean just exactly what was happening from the papers that had been provided. The husband said that he did not accept the wife’s explanation and accordingly, maintained that there was about $65,000 for which no source or records were provided. Whilst there was some suggestion that an argument might arise about an “add-back”, in final address neither counsel approached the case that way. It is disconcerting that the wife did not comprehensively indicate what had happened to those records not only in respect of the MLC investment but also those of her daughter. Having regard to the amount of money involved in the overall “pool” of assets that the husband and wife have, the $65,000 is a very small amount. There seemed little dispute from the husband that the amount of money one way or another might have been attributable to the estate. On that basis, I shall take it into account as part of the inheritance that the wife has contributed but I do not propose to give her the credit for the entire amount she claimed she received.
Another issue rising out of the inheritance concerned $190,000 which was said to have been paid into the mortgage. There is no evidence that that occurred. I have no idea how much money was paid into the mortgage and counsel for the husband produced no records (nor was it his client’s responsibility to do so having regard to the fact that it was a submission made by the wife).
In Sinclair & Sinclair [2012] FamCA 388, I considered a number of reported inheritance cases for the purpose of providing some guide in determining what is just and appropriate. It was there that I noted the cases show ‘the importance of not fettering the judicial discretion’. The examples that I have considered above put me in a position where I will not simply accept that the total sum of money received by the wife should be seen as a contribution to the extent of $555,000. Having said that, there can be no doubt the amount that the wife received and contributed to the use of the family was very significant. It must be so recognized.
The Bonus
Some four months after separation, the husband received an employment bonus of $220,000. That was in April 2012, but was for his work performed during the 2011 working year. His evidence, which was unchallenged, was that that money was used to pay tax, holidays, school and university fees for the children, the furnishing of his rental property in Melbourne, medical expenses, clothing expenses and a birthday party for the parties’ 18 year old son. He also made regular child support payments. Those were made during his period of unemployment.
It was the wife’s submission that that money had been earned as part of the husband’s employment contract during the marriage. Whilst that is partially correct, the receipt of the bonus was undoubtedly discretionary and as far as I am aware, not a contractually enforceable right. His eligibility for the bonus would certainly be dependent on a number of factors, which include the employer’s employee incentive program, his skills, expertise, reputation, experience and performance. These are factors that are directly attributable to him; he was clearly good at his job because of the amount he was paid and the bonus that he received.
All of that could only have come about as a result of the efforts of the husband. It was, in part, a windfall. That too must be given weight having regard to the fact that it was used for the benefit of the family after separation but its relevance lies in the period from 2008 onwards.
From 2008, the wife ceased her employment and the husband was the sole financial provider for the family which then included the two children who were aged 14 and 9 years respectively. In the period around 2010 or 2011, the wife received the windfall of the inheritance just mentioned. I find that absent a clear understanding of what happened to all of the wife’s money, it is appropriate to accept that the husband was the major financial provider. That does not diminish the importance of, as a contribution, the wife’s role in caring for the family particularly with its attendant responsibilities for two teenage children but on any view, the parties and their children were able to enjoy the benefits of a reasonably good lifestyle because of the husband’s earnings and there must be a fair and judicious assessment of the worth of the husband’s bonus. The husband’s evidence which was not challenged was that in the children’s teenage years (particularly from 2000), he fulfilled a greater parenting role than he had when the children were young. He set out that he had to take on that greater role because of the wife’s drinking. He arranged for a cleaner for the home, paid for after-school care for the children so that he could collect them, made the majority of their lunches and prepared family meals. For a time, the wife was in a rehabilitation centre. Whilst all of these tasks have to be seen in the context of the whole of a long relationship, they take on some significance here because it would appear that the husband continued his employment and earned the bonus accordingly.
The wife was diagnosed with Ovarian Cancer in 2011 and she underwent major surgery and chemotherapy. No details were given about the impact that had on the parties’ respective contributions.
The parties did not otherwise distinguish between their contributions over their marriage save for their unusual financial contributions at the end of the relationship.
I will deal with the assessment of the weight to be given to the respective contributions over the whole of the marriage but there can be little doubt that much of what the parties currently have has come from the inheritance of the wife and the dedication to employment by the husband. I do not consider that the husband’s bonus can simply be seen as part of his contract of employment and that in some way, the wife has contributed towards that by virtue of having been in a marriage partnership. The contributions here are not the same for that discrete period. I say discrete period because the husband conceded that during the early years of the children’s life he was away to earn the family’s financial support but the evidence does not support a conclusion that the husband’s role as a financial provider was all-consuming to the extent that the wife had no support in the parenting role. The husband’s evidence was that he provided support and that evidence was not seriously challenged. To add to this, the wife also commenced travelling for work from 2008 and was consequently away from the family at times during that discrete period. On the evidence, save for this limited period from 2008 onwards, I do not suggest that the husband’s contribution to the welfare of the family has been negligible, but rather, it was not as significant as that of the wife.
The redundancy
The husband also was made redundant in March 2014 by his previous employer. He received a payment of approximately $370,000 which included long service leave and leave entitlements. He was then not paid a salary for some months. In some detail, he set out what happened to that money and a significant portion can be seen as having gone towards the support of the children. For example, he paid the gym fees for the parties’ son, a 2015 holiday for a daughter which was prepaid and various school and university fees. In addition, as has been indicated, the former matrimonial home was encumbered by a mortgage and he made the payments out of that sum notwithstanding he had no other source of income subsequent to being made redundant. Similar payments were made in respect of tax and then National Australia Bank portfolio repayments. During that period of time, the husband was living in rented accommodation whilst the wife remained in the home and he made the payments from that redundancy during that period of time.
I find therefore that there has been a significant financial contribution by the husband subsequent to separation which has not been used entirely for his own benefit but rather shared within the family, including towards the children who had a private school education attributable to the high earning capacity of the husband. There appears to have been no change to the lifestyle of the family subsequent to the husband’s redundancy.
The investment property
Having separated from the wife, the husband acquired an investment property in suburban Sydney. It became clear in cross-examination that the tenant in this property is his new girlfriend. Whist he was challenged about many things associated with that, I am satisfied that he obtained advice about the appropriate rental and indeed is paid it. The fact that he may stay with his girlfriend from time to time when he is in Sydney is irrelevant. It is not suggested he is living with her on a full-time basis which might be a matter of contemplation in s 75(2) of the Act.
It was also suggested to the husband that it was an inappropriate investment having regard to the fact that his employment was in Melbourne as were the children and therefore he should have used the money to purchase a home in Melbourne. I accept his response in relation to that that he contemplated those matters and saw the Sydney purchase as a better investment. Counsel for the wife carefully cross-examined the husband about all of those matters and I am satisfied that the husband had thought carefully about what he was doing and that there was nothing sinister or untoward about the use of funds. He accounted for them properly and I have seen no indication that he prejudiced the wife by his conduct. I accept the husband’s evidence in respect of that.
The capital gains tax liability
One of the issues for which the husband sought credit was the potential liability that might arise out of the sale of shares. The evidence is somewhat unclear but it was the husband’s position that he would be selling the shares to enable him to buy a home in Melbourne. As a result of the orders I propose, he will have the savings that he currently has and a modest sum from the sale of the home but on any view, bearing in mind the lifestyle to which these parties have been accustomed, it is hard for me to see that the husband is likely to retain the shareholdings. The shareholdings total $80,000 and on my understanding of the husband’s evidence, he expects to be paying approximately $10,000. In my view that is an appropriate allowance to make bearing in mind that the sum is modest but most likely to materialise.
The assessment
As indicated, both parties agreed that it was just and equitable to make an order under s 79 of the Act altering their respective interests in property.
The determination of this case is therefore governed by the provisions of Part VIII of the Act and in which, s 79(2) prescribes that a Court should not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to make that order (see Stanford v Stanford (2012) 247 CLR 108).
In that exercise, as was said in Mallet v Mallet (1984) 156 CLR 605 at 647, the Court should not be drawn into a clinical examination of minutiae such as to turn the exercise into one of just mathematical evaluations. Gibbs CJ said in Mallet at 609:
Decisions in particular cases…do no more than provide a guide; they cannot put fetters on the discretionary power which the Parliament has left largely unfettered.It is necessary for the court, in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case.
Once a determination is made that it is just and equitable to alter the parties’ legal and equitable interests, it is necessary to determine what those are. The Court may then approach the evaluation of the contributions towards the assets on either a global or asset-by-asset basis using the factors in s 79.
Superannuation
There was disagreement between the parties about whether their superannuation should simply be added into the list of other assets and treated as if all assets were the same. I consider that to do so would create injustice because of the factors set out below. Before turning to them, it is helpful to look at what the parties had sought about superannuation.
The application of both parties but particularly the wife, proposed orders for an equalization of superannuation interests. The wife’s counsel distanced himself from the orders his client had proposed. He referred to Coghlan and Coghlan (2005) FLC 93-220 where the three members of the Full Court (Bryant CJ, Finn and Coleman JJ) said that despite the fact that neither party sought a particular splitting order, the Court may see the need to make one if it considered that that was the just outcome. In whatever approach the Court took, their Honours said the provisions of s 79(4)(a) to (g) had to be applied. That is, even if a splitting order was not sought, those provisions needed to be applied to the superannuation interests.
In respect of a “pools” concept, the Full Court said there was nothing to prevent a Court from including superannuation as property in the one list of assets. That could be adopted where there was agreement or where the Court was satisfied that the superannuation interest was property within the meaning of the definition in s 4 of the Act. So too, the Full Court said that it might be necessary to have regard to the parties’ future superannuation entitlements. Because of s 75(2), care needs to be taken not to “double dip” if the interest is put in the “pool” as property and then later, the Court looks at “adjusting” the interest because of the potential for one party to increase wealth and financial circumstances through superannuation in the future creating a disparity of economic strengths.
In my view, adding all of the superannuation interest into the one pile of assets is not fair to either party. Their interests are not currently accessible. Each party is over a decade and probably 15 years or so away from triggering the release of the funds. The inaccessibility at present means that it cannot be used for immediate needs even if there are longer term retirement benefits. The wife wanted cash now and was prepared to forego significant superannuation entitlements in the longer term but that was on the basis that she could retain the house. To take that approach would mean that the husband may not be able to achieve his desire to have a house where he could spend time with the children. One of the factors for the Court to take into account in s 75(2) of the Act is the lifestyle enjoyed by the parties during their time together. A home was important to both of them.
Whilst the husband has the greater earning capacity subject to the vagaries of the employment market, he will be able to increase his retirement wealth more so than the wife through superannuation but that also presumes that what the wife does with her assets now does not increase them in value at a similar rate. There is no evidence about that and I am not prepared to simply hypothesise about one but not the other.
Superannuation is not the same as real property. The parties are both at an age where they can plan for their futures. Nothing in the law requires the Court to endeavour to ensure that they each have the same benefits in retirement or indeed, an equivalent lifestyle over the ensuing years. So many things can happen to change financial futures and the Court should not speculate. What is expected of the Court is that it does what is fair. In my view, both parties need to adjust their lifestyles and start to plan for their retirement. There is sufficient property here for each of them to have reasonable accommodation, money to live on and to set the foundation for a retirement package. The adjustments for s 75(2) which were recognised by the husband as justifying an additional sum being given to the wife enable the Court to give her an opportunity to advance herself financially.
Accordingly, I consider that superannuation should be treated separately and altered separately from the non-superannuation property. As I observed, that is the way the wife’s outline of case was presented.
The parties’ property
I accept that the legal and equitable interests of the parties in property is as follows (with the dollar figures rounded off):
The Suburb B home $1,680,000
Encumbrances (250,000) $1,430,000
The wife’s savings 104,000
The wife’s car 32,000
The Suburb R property $1,330,000
Encumbrance (1,012,000) 318,000
Husband’s savings 242,000
Husband’s share holdings 78,000
Tax liability (50,000)
Capital Gains Tax likely (10,000)
Husband’s car 18,000
Total $2,162,000
As can be seen, I have ignored chattels save for motor cars. These were not specifically valued nor agreed and in my view, I should not guess at their values. In the scheme of things, they are of limited impact on the division of property. I have taken the parties’ respective views about their cars which differ insignificantly.
At the very end of the case, the husband produced a schedule of chattels that he desired. I found it interesting that this issue was raised at such a late stage and that there was even a need for an order. There was no opposition to them being provided so I shall make the order. I have presumed that the wife has otherwise retained the chattels in the home that have accrued over the long relationship. That is a just and equitable division in circumstances where the husband has acquired new items, the children enjoy the benefit of both and, as I shall order, the house will have to be sold which may mean that the wife cannot enjoy the existing chattels to the same extent that she currently does if she has to rehouse herself.
I have also left out the parties’ respective credit card debts. Each has a sum accrued but there was no evidence as to the purpose for which the credit was used. Each will have cash from the settlement to satisfy those debts which I suspect but do not know, have come from post-separation uses. That seems a fair approach as well.
I have included the bank debts as an encumbrance even though they may not all be linked to the home. I have rounded those debts up to $250,000 which is slightly higher than the figure calculated by the husband but I am also conscious that the sale of the home will mean a further variation. I have considered that there will be agent’s commission, sale expenses and the mortgage and other bank debts to be paid out that will vary slightly depending upon when the house is sold and for what sum. Having regard for the need for a final determination to enable the parties to get on with their lives, I consider the figures I have used are a good guide to assess what equity the parties have to divide. The various sale expenses will come off the top of the gross sale value and it is in the interests of both parties that they market it properly to achieve their best result.
As things presently stand, if the wife was to retain the home including taking responsibility for the debt on it, she would have:
The Suburb B home $1,680,000
Encumbrances (250,000) $1,430,000
The wife’s savings 104,000
The wife’s car 32,000
That is a total of $1,566,000 out of $2,162,000 or 72% before superannuation is contemplated. If she then took (as she sought in her outline of case) 50 per cent of the superannuation interests, she would globally have about 66 per cent.
I accept the superannuation interests of the parties are as follows (again rounded down or up):
The wife $82,000
The husband $831,000
$913,000
There was discussion in final address about the superannuation figures but I have accepted those shown above on the basis of the balance sheets provided to me but using the stated figures as an admission against interest where appropriate. I am very conscious in this case that for the same reasons earlier articulated about the husband’s employment, he has continued to make contributions well after separation and must be given credit for that in the contribution assessment whilst making some allowance for the fact that the wife fulfilled her roles in the family and as a financial provider when she was working, thus enabling the husband to earn what he did and contribute to a good superannuation scheme. I also do not ignore that the wife’s superannuation interests have largely remained dormant except for natural growth. When the wife was not in the workforce, she was caring for the family and because of the matters described in s 79(4) of the Act, that contribution was significant. Such a contribution can be seen as an indirect contribution to the conservation of property (see In the Marriage of Kowaliw (1981) FLC 91-092).
The submissions
Counsel for the wife focused on his client’s desire to keep the home. The arithmetic gymnastics were designed to show it was not just possible but also fair. I reject that for the reasons set out in these reasons. He submitted that the fairest approach was a global one in which the superannuation was included but failing that, a different percentage approach should be taken. That is, there should be more given to the wife from the non-superannuation assets but still with a mix of both.
Counsel for the wife focused on the contribution through the inheritance and where it went arguing that it was about 20 per cent on the non-superannuation assets. He observed that the husband’s post-separation income had been about a $1 million and he had also received another $500,000 in capital. He stressed that the Court should see the bonus as having accrued prior to separation and the redundancy as not being all that significant a factor because the husband was back in employment less than 5 months later. I accept that the timing of the bonus has some impact but for the reasons elsewhere set out, it is still something specific and unique to the husband regardless of its timing.
Counsel stressed the earning disparity describing it as stark. I accept as did counsel for the husband, that on any view, the husband will earn more than the wife presupposing that he remains in his current line of work. But that cannot be the end of it. The wife has chosen not to return to the workforce in circumstances where her extensive travel in her volunteer work meant that she has clear skills. It is her choice not to pursue the employment opportunities that the husband has. I accept that she would not earn what he would even if she did but the description “stark” becomes less important if I take into account that she has skills, energy and experience. I have also taken into account that although neither party is eyeing off retirement, each has passed the point in their lifetime where a new career is easier to create and develop. That assists the husband more so than the wife.
Counsel for the wife pointed to the wife’s evidence about having registered with Centrelink and had not been successful in gaining employment but at the same time, it was her observation that she would get a job to service the house mortgage if she had to. I consider she has the ability to improve her current financial position. Her previous health problems seem to have abated, she has the support of the husband in respect of the children and she will have funds from the settlement.
Counsel for the wife was critical of the husband for the approach he had taken in buying the property in Sydney but I have rejected that.
It was submitted that there should be a division of 65 per cent of the assets globally. If the Court was minded to only give what the wife had sought in an equal division of the superannuation, it was submitted that the non-superannuation assets should be divided as to 75 per cent to the wife. In my view, that would not be equitable. Counsel conceded that if the wife did not receive such an outcome, the house would have to be sold.
Counsel for the husband began his submissions by conceding there should be a 10 per cent “differential” to the wife. My understanding of the husband’s position therefore was that the non-superannuation assets should be divided as to 55 per cent to the wife, that is, the wife should get 10 per cent or (on my “pool” as set out above) $216,000 more than the husband. As he observed, in dollar terms, that is a significant adjustment. In my view, that would not be a fair outcome.
In respect of contribution, counsel for the husband urged the Court to find that not all of the inheritance went where the wife said it did. I accept that the wife’s evidence was not satisfactory about that issue. It was observed by the husband that requests had been made for documents and they had not been provided. The wife must take responsibility for the absence of establishing that which would have presumably assisted her if she had proved where all of the money went.
Counsel submitted that the husband’s contribution after separation was greater than that of the wife. I agree. He submitted that overall, there should be a finding of equality of contribution. With that I disagree for the reasons earlier set out.
In respect of the matters described as the “section 75(2) factors”, I shall deal with those in the matters set out below.
The approach; global?
In respect of how to approach these bundles of property, the High Court addressed the issue in Norbis v Norbis (1986) 161 CLR 513 where Mason and Deane JJ said:
The general preference which has been expressed for the global approach is not by reason of any notion that it is the only approach authorized by the Act, but by reason of considerations of convenience. Accordingly, quite apart from the fact that its status as a prescribed approach is that of a guideline and not that of a principle of law, the application of the asset-by-asset approach does not of itself amount to an error of law.
There is also a risk that the isolating of one or more items of property creates an artificial approach where percentages are applied to certain items but not others. Such a focus can ignore long and consistent contributions because of the attraction of a very recent financial one. That attention may also ignore long periods of homemaker and parent roles. Guidance can be found in what the Full Court said in Aleksovski v Aleksovski (1996) FLC 92-705, where Baker and Rowlands JJ at 83,437 said that :
It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
It really comes down to questions of weight. Whilst weight would and must be given to a contribution which a party makes shortly before the separation, less weight may be given to a contribution made by one of the parties to a marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties' assets or been used up in the payment of family expenses.
Kay J in that same case held at 83,443:
What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements. (my emphasis)
Similarly, in respect of the assessment, the Full Court in Dickons & Dickons [2012] FamCAFC 154 said attributing percentages to differing periods within the relationship, or types of contribution may gain little. The same must be said of attributing a percentage to each of the relevant s 75(2) factors. The fairest way of approaching the matter is looking at the relationship holistically and then considering the relevant factors in s 75(2) of the Act to decide whether there is a justification for an adjustment by virtue of what is, in reality, an examination of the economic disparities between the parties.
Initial contributions here were largely uncontroversial. I have addressed the facts surrounding that period.
Contributions during the marriage almost to the end were also largely uncontroversial. The wife worked earning an income which was used for the benefit of the family and also fulfilled the major but not exclusive homemaker role. The husband’s role as parent, homemaker and financial provider was significant too.
The parties separated in December 2011. In the preceding 18 months, the wife received the inheritance. I have set out what happened to that money. It can be seen that of the remaining assets of the parties, excluding superannuation, the inheritance amounted to about 25 per cent. Not all of that money ended up in tangible assets.
The husband received about $590,000 in the form of his bonus and redundancy package. That too amounted to about 25 per cent of what the parties now have to divide. That too was used to support the family and some of it has therefore not been reflected in the assets remaining in the same way as perhaps the inheritance money has been. The use to which the husband put that money must be seen as a contribution by him and one not matched to the same extent by the wife for the reasons I have found earlier. The mortgage had to be paid, accommodation after separation had to be provided and children’s needs had to be met. I have dealt with the bonus. The husband earned it and contributed it. The wife physically supported the children after the separation but I cannot ignore the fact that the parties shared the responsibilities for the care of their youngest child and have assisted their now adult child as well. Those are contributions that need to be weighed.
An approach which simply looks at the use to which the parties put money is not a true reflection of all that they have done over the long years together. There is certainly a place for recognising the use to which particular money was put (see for example In the Marriage of Pierce (1998) FLC 92-844) but this is not simply an exercise of mathematical comparisons of what the parties put in and what they did with their money even if that money came from outside the marriage partnership.
Here, the distinguishing feature of the parties’ contributions in respect of non-superannuation interests can be seen in the inheritance which mathematically, over the latter part of the marriage but not necessarily qualitatively over the whole marriage, exceeds the husband’s contributions both during the marriage and also at the end but only marginally having regard to the husband’s bonus, redundancy and homemaker and parent role from around 2008 onwards in particular.
The contributions’ assessment has to now move from the qualitative to the quantitative (see Coleman J’s remarks in Steinbrenner v Steinbrenner [2008] FamCAFC 193).
The Full Court in Clauson & Clauson (1995) FLC 92-595 observed (at 81,909), whilst considering the concept of the assessment of disparity in contributions said that in many of cases, reference only to percentages can be misleading because the reality was to be found in the actual figures. Their Honours went on to refer to the “s 75(2) factors” and said at 81,911 that:
There is, we think, at times a tendency to assess s. 75(2) factors in percentage terms without considering its real impact, and we think there is legitimacy in the views expressed in more recent times that the Court has tended to operate in this area within artificially delineated boundaries ... it is the real impact in money terms which is ultimately the critical issue. (emphasis is mine)
In my view, a 5 per cent difference between the parties in respect of contribution should be recognised in relation to the non-superannuation assets. Translating that into percentages means that I find the wife’s contributions are assessed at 52.5 per cent and those of the husband at 47.5 per cent or, in dollar terms, that her contributions exceed those of the husband by $108,000. That recognises the difference made by the parties. Should there be any other adjustment?
Section 75(2) factors
Section 79(4)(e) is a provision that requires the Court to consider a number of legislated factors, so far as they are relevant, to enable the Court to make any adjustment necessary to achieve a just and equitable outcome. I shall deal with them in order to the extent that they are relevant.
The parties are in their early 50’s and the health of each of them was not controversial. Whilst the wife has had serious health problems, she agreed she had recently been given a clearance.
The income of the parties will vary depending upon whether the husband obtains bonuses and remains in the industry where he currently is but also what the wife does about employment. I accept as I have already said, there will be a difference favouring the husband. Counsel for the wife pointed to the $1 million that the husband had earned since separation but I do not intend to crystal ball gaze to predict that will continue. With the husband in his 50’s and having already been retrenched recently, it would not be fair to presume that his high earning power is a given. Similarly, I do not know what the wife’s earning power is because she indicated little in her evidence. I will simply presume that the husband’s work ethic is such that he will pursue employment at a high level.
The parties each have responsibilities to their younger child but that will not be long-standing having regard to her age. I accept that both parties provide care for their children. I am not obliged to contemplate how the parties provide (and will in the future provide) for their adult children.
Although each party has financial commitments, those are of their own lifestyle choosing and each could rationalise their lifestyles if they wished. Each has a desire for a home. Neither has any formal commitment to support any other person although I accept the husband has undertaken financial support for the parties’ son.
Although there was focus on the husband’s relationship with the woman in Sydney, I am satisfied it is not one which gives rise to responsibilities nor is there any cohabitation which would justify an excursion into that person’s financial position.
The wife is currently a government benefit recipient but I am not at all clear why that continues and in any event, she has maintained a lifestyle consistent with the marriage one. No doubt that will now change.
Maintenance was an issue raised in the outline of argument by the wife but in my view, there is no basis for any such obligation based on the capital that the wife will have and the ability she has to support herself. As spousal maintenance was not seriously pursued by counsel for the wife, I do not propose to do more than formally indicate that I am not satisfied that the wife cannot support herself adequately without it.
The Act requires the Court to contemplate the order to be made and how that will affect the parties. There is little doubt that the wife would like to retain the home but as I have indicated, that is unrealistic having regard to its size and value. The wife does not have the capacity to buy out the husband and take over the various encumbrances.
The husband has a right to move on with his life and desires a home as distinct from the investment property, in which to live. He made clear his desire to continue to house his children and his employment is in Victoria. Thus, the division of the limited amount of the assets of the parties will mean an alteration of their respective lifestyles. Each should bear that burden albeit in different proportions.
I have already mentioned the Full Court’s observations in Clauson (supra) and as such, any adjustment because of s 79(4)(e) must lead the Court to look at the underlying value of what each party’s ultimate entitlement then becomes. The difference between the parties as a result of an examination of those factors lies in the power of the husband to regain through employment what he might lose through an adjustment in the favour of the wife. It cannot be a huge adjustment here because I am not satisfied that the husband’s employment is of such significance that I could presume he will certainly have it in the longer term. I also take into account that the wife can work. In respect of non-superannuation assets, there should be an adjustment to what I have already contemplated. I would adjust in her favour by a further 5 per cent of the non-superannuation assets making the difference between the parties 15 per cent. That is an adjustment of the non-superannuation assets of 57.5 per cent to the wife or in other words, giving her approximately $324,000 more than the husband. It is that underlying value that must be just and equitable. Is it therefore just and equitable that out of all of the parties’ assets totalling $2,162,000, the wife gets about $324,000 more than the husband? Recognising the finding that the wife contributed more than the husband and there is an economic disparity between them, I consider it to be a fair outcome. Nothing in the evidence suggested that the wife would substantially improve her financial position in the future whereas there is at least an inference that what the husband now loses he could make up in the foreseeable future. That inference has to be carefully considered because there is an assumption (using the argument of counsel for the wife about what the husband had earned since separation) that a high earner makes up ground quickly. That argument looks at the gross not the net income. Even allowing for the significant disparity in income and earning capacity, the net position of the husband is not such that his position can be seen more likely than not to improve substantially. It also ignores the reality of having to borrow to buy a home and it also ignores the reality here that the husband has committed himself to expenses associated with his children one of whom is under 18 and involved in private schooling. In my view, the disparity here is not one that will ultimately make a lot of difference in the foreseeable future to the respective lifestyles of the parties.
Assessments regarding superannuation
I turn then to the superannuation. The Court is obliged to consider an alteration even if the parties do not. I see no reason to do so here. I would agree that the contributions favour the wife generally but the husband’s employment and continued contributions after separation are such that I would find he has contributed more than the wife and in respect of s 79(4)(e), the wife is entitled to some adjustment because her income potential would not enable her to build up superannuation as could the husband. The greater contribution by the husband is in my view offset by the adjustment for the s 79(4)(e) factors in favour of the wife. The wife’s proposed equal division of the superannuation is therefore a just and equitable outcome for both parties.
I indicated that to avoid significant costs for the parties to have to again attend court, I would make provision for any costs applications to be made in writing and for those issues (if any) to be determined in chambers.
I certify that the preceding Ninety Three (93) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 28 January 2015.
Associate:
Date: 28 January 2015
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