NAISBY & NAISBY (No.2)
[2020] FCCA 2334
•1 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NAISBY & NAISBY (No.2) | [2020] FCCA 2334 |
| Catchwords: FAMILY LAW – Property – long marriage – where husband claimed disabilities payouts after separation without knowledge of wife – where wife required to run business post separation and sell business – Held a proportion of disability monies to be added back into asset pool – Held wife to receive 55% of asset pool – Held wife’s spousal maintenance application be dismissed. |
| Legislation: Family Law Act 1975 (Cth), ss.72, 74, 75, Pt.VIII |
| Cases cited: C v C [1998] FamCA 143 |
| Applicant: | MR NAISBY |
| Respondent: | MS NAISBY |
| File Number: | BRC 4847 of 2016 |
| Judgment of: | Judge L. Turner |
| Hearing dates: | 25, 26 & 27 February 2019, 11 & 12 June 2019, 15 & 16 August 2019 and 21 October 2019 |
| Date of Last Submission: | 30 April 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 1 September 2020 |
REPRESENTATION
The Applicant appeared in person
| Counsel for the Respondent: | Ms Fraser |
| Solicitors for the Respondent: | Melrose Keys Lawyers |
FINAL PROPERTY ORDERS
That all previous property and spousal maintenance orders are hereby dismissed.
That in relation to the distribution of the proceeds of sale of the Business which are now held by C Pty Ltd (in liquidation):
(a)The parties shall comply with all reasonable requests and adhere to the advice of the liquidators, Mr D and Mr E of F and Partners.
(b)The parties shall do all things and sign all documents necessary to cause the net proceeds available to the Naisby Family Trust upon the winding up of C Pty Ltd, to be transferred to the operating account of Naisby Family Investment Trust where joint signatories of the parties must be established to the operating account of the Naisby Family Investment Trust to be applied in the following manner and priority within 30 days of notification of debts being outstanding and the net proceeds being placed into the operating account:
(i)In repayment of the Commonwealth Bank Viridian Line of Credit in the husband’s name, in the amount of $402,500.
(ii)In payment of any outstanding fees owed to an G.
(iii)In payment of any outstanding ATO tax liabilities incurred by the parties personally on account of historical trust distributions paid to either of the parties from the Naisby Family Investment Trust, as determined by Mr H at his sole discretion.
(iv)Any balance then remaining to be distributed to the wife.
Contemporaneously with the payment to be made pursuant to Order (2)(b)(iv) the husband shall do all things and sign all documents necessary to ensure that:
(a)The security held over the property at J Street, Suburb K (Lot ... on ...) (the J Street, Suburb K property) is released.
(b)The husband transfer to the wife, at the wife’s expense, all of his right title and interest in the J Street, Suburb K property.
That pursuant to section 980XT(1)(a) of the Family Law Act 1975 (Cth), whenever a split of a payment within the meaning of section 90XE of the Act becomes payable to or on behalf of Mr Naisby from his interest in the Military Superannuation and Benefits Scheme Fund (the MSBS fund) (Member No. ...), Ms Naisby is entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (the Regulations) using the base amount of three hundred and forty two thousand four hundred and twelve dollars ($342,412) (the base amount) and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these orders.
The operative time for the purposes of Order (4) is four (4) business days after the service of these orders on the Trustee of the MSBS Fund.
Orders (4) and (5) are binding on the Trustee of the MSBS Fund (the MSBS Fund Trustee) of which the Trustee has been provided procedural notice.
Within thirty (30) days of the date of these orders, Mr Naisby shall deliver to the MSBS Fund Trustee a copy of these orders together with a direction that the MSBS Fund Trustee act consistently with Mr Naisby’s obligations pursuant to these orders. Mr Naisby shall provide to Ms Naisby a copy of the letter and the direction forwarded to the MSBS Fund Trustee.
Mr Naisby is hereby restrained from dealing with, disposing of or encumbering any entitlement he has in the MSBS Fund until such time as Mr Naisby has complied with Order (7).
Mr Naisby is hereby restrained from rolling over any entitlement he has in the MSBS Fund to any other fund until such time as Mr Naisby has complied with Order (7).
Mr Naisby is hereby restrained from exercising any option to commit any lump sum entitlement pursuant to his MSBS Fund into a pension to the extent that it would affect Ms Naisby’s right to recover any monies owing to her pursuant to these orders until such time as Mr Naisby has complied with Order (7).
That the parties shall do all things and sign all documents necessary to close the joint bank accounts.
That subject to and orders affecting any assets and liabilities, the husband shall retain as his sole assets and the wife shall forthwith relinquish any right title and interest she may have and sign all such documents as may be required to transfer that interest to the husband in the following:
(a)Bank accounts in the husband’s sole name.
(b)The motor vehicle, furniture, chattels and personal effects currently in the possession of the husband.
(c)His superannuation entitlements.
(d)His interest as beneficiary of the L Trust.
That subject to any orders affecting any assets and liabilities, the wife shall retain as her sole assets and the husband shall forthwith relinquish any right title and interest he may have and sign all such documents as may be required to transfer that interest to the wife in the following:
(a)Bank accounts in the wife’s sole name.
(b)The motor vehicle, furniture, chattels and personal effects currently in the possession of the wife.
(c)Her superannuation entitlements.
(d)The M shares.
The parties shall do all acts and things and execute all deeds and instruments, necessary to enable the terms hereof to take effect.
On the failure or refusal of either party to do all such matters, acts and things and execute all such deeds, documents and instruments, and such default continues for a period of 7 days from the date of the written request to do all such acts all things and execute such deeds, documents or instruments, the registrar of the Federal Circuit Court of Australia is hereby appointed to execute all deeds, documents and instruments in the name of that person, and to do all such acts and things as may be necessary to give the validity and operation to these orders.
That the wife’s application for spousal maintenance is hereby dismissed.
That the parties have liberty to apply on short notice if there is any difficulties experienced in carrying out the super splitting orders.
IT IS NOTED that publication of this judgment under the pseudonym Naisby & Naisby (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 4847 of 2016
| MR NAISBY |
Applicant
And
| MS NAISBY |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties are in dispute as to a matrimonial property division after a marriage of some 25 years.
Proposals
Husband
The husband is seeking orders whereby the husband receive 70% and the wife receive 30% of the matrimonial pool with the wife to be given the option to retain the J Street, Suburb K property as part of the pool.
Wife
The wife is seeking to retain the J Street, Suburb K property, some cash and superannuation.
In addition the wife is seeking an order for spousal maintenance of $2,000 per month to continue for four years.
Issue
The issues for determination are the division of matrimonial property pool and spousal maintenance.
Evidence
In considering these issues regard has been had to:-
a)The material as marked on the court file.
b)Previous court orders.
c)The exhibits.
d)The written and oral evidence of the parties.
e)Relevant expert reports.
f)The transcripts.
g)The written submissions.
h)The post hearing affidavit filed by the liquidators in April 2020.
i)Part VIII Family Law Act 1975.
j)Relevant authorities.
The husband is self-represented.
In accordance with Johnson & Johnson (2000) 201 CLR 488 and Re F Litigants In Person Guidelines [2001] FamCA 348 the court process was thoroughly explained to the husband and every attempt was made to ensure that fair process was afforded to the husband during the final hearing.
The wife is legally represented.
For the husband, the following witnesses were called and cross-examined:
a)The husband.
Although I find the husband to be credible the husband was at times evasive and difficult in providing clear answers.
For that reason and in that regard, where the evidence differed between the husband and the wife, I prefer the evidence of the wife.
The husband’s partner failed to provide an affidavit and did not give evidence during the proceedings.
Ms N was not required for cross-examination.
For the wife, the following witnesses were called and cross-examined:
a)The wife.
b)Mr H (accountant).
I find the wife and her witness to be credible.
Findings of fact are made on the balance of probabilities having regard to the evidence and in what follows statements of fact constitute findings of fact.
Relevant history
The relevant history is as follows:
a)The wife (51) is a student.
b)The husband (51) is a medically retired health care professional.
c)The husband’s wife Ms O (Ms O) is a health care professional and works part time.
d)In 1990 the parties married.
e)At the time the parties married the parties lived in a unit owned by the wife’s parents with the husband studying health care and the wife completing a graduate diploma in health care.
f)In 1993 the wife obtained employment as a director of a business and the husband completed his degree and became a public servant with the armed forces.
g)In 1994 the husband commenced work as a health care worker.
h)In 1994 the parties purchased a house at Suburb P.
i)In 1994 Mr Q was born.
j)In 1995 the parties moved to Town R, Queensland for the husband’s employment and rented out the house at Suburb P.
k)In 1996 the parties moved to Canberra where the husband continued to work with the armed forces, often away from home.
l)In 1998 parties moved to Town S, Victoria for the husband’s employment.
m)In 1998 Mr T was born.
n)In late 1998 to early 1999 the husband was deployed to work in Country U.
o)In 2000 the parties moved back to Queensland for the husband’s employment.
p)From February 2000 to September 2000 the husband was deployed to Country V.
q)In 2001 the Suburb P house was sold on the parties purchased a property at Suburb W.
r)In 2002 the husband received compensation of approximately $23,500 due to a shoulder injury.
s)In 2002 Mr X was born.
t)In 2002 the parties moved to the United Kingdom for the husband’s appointment.
u)In 2003 the parties returned to Australia with the wife living at the Suburb W whilst the husband was based in Sydney.
v)In late 2004 to early 2005 the husband was deployed to Country U to assist after the natural disaster.
w)In 2005 the husband was discharged from the armed forces.
x)In 2005 the husband commenced appointment as a health care professional at the Employer B in Suburb Z.
y)In 2006 the parties purchased the Business 1 at Suburb Z and acquired additional businesses at Suburb AA / Business 2 and Suburb BB / Business 3.
z)In 2008 the parties sold the Suburb W property and purchased the house property at J Street, Suburb K (the J Street, Suburb K property).
aa)In 2009 CC was born.
bb)In 2011 DD was born.
cc)In 2012 the husband was diagnosed with post-traumatic stress disorder (PTSD) and Major Depressive Disorder (MJD) due to what the husband witnessed in Country Y.
dd)In 2015 the parties separated with two of the children moving in with the husband.
ee)In 2015 the husband commenced a relationship with his current partner.
ff)In 2016 the husband and Ms O married.
gg)In 2018 the two younger children went to live with the husband.
hh)During 2019 and 2020 the matter proceeded to a final hearing over several days.
ii)In June 2020 final parenting orders were made for the two younger children, CC and DD to live primarily with the wife.
The law
In determining property matters consideration must be had to Part VIII Family Law Act 1975.
A clear framework exists in determining property division.
The first question that must be asked is articulated by the High Court in Stanford v Stanford (2012) 293 ALR 70 at [79] and [80] is whether “it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.”
If answered in the affirmative, then the matter can proceed to a property division, applying the various principles.
Consideration must be given as to whether a global or asset by asset approach is to be adopted.
The four step process to be applied in accordance with the Full Court decision of Hickey v Hickey & Attorney-General of the Commonwealth (Intervener) (2003) FLC 93-143 at [39] which can be summarised as follows:-
a)Identify and value, as at the date of the hearing, the parties’ property, liability and financial resources;
b)Identify and assess the parties’ contributions;
c)Identify and assess the parties’ ongoing future needs; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.
The question in Stanford
I find that this is a matter where it is just and equitable to determine a matrimonial property division based on the following:-
a)The parties were in a long term relationship of some 25 years.
b)The parties are divorced.
c)There is a substantial property pool capable of division.
d)The parties agree that a property division is required to enable the parties to sever their financial commitments.
As the question posed by Stanford is in the affirmative, I will now proceed through the four step process in order to determine the percentage division.
Before doing so however it must be determined how the matter will be dealt with.
Global or asset by asset approach
The husband seeks an asset by asset approach whereas the wife seeks that a global approach be adopted.
Conclusion
In Tuck and Tuck (1981) FLC 91-021 it was held that a global approach involves the division of the parties’ assets on an overall proportion taking into account a global view of the assets.
In McMahon and McMahon (1995) FLC 92-606 it was held that an asset by asset approach involves the determination of the parties’ interests in individual items of property.
In Norbis v Norbis (1986) 161 CLR 513 the High Court at 75,168 noted:
“Although it is natural to assess financial contributions under s79(4)(a) by reference to individual assets, it is also natural to assess the contribution of a spouse as home maker and parent either by reference to the whole of the parties’ property or to some part of that property. For ease of comparison and calculation it will be convenient in assessing the overall contribution on the same basis, i.e. on a global or, alternatively on an ‘asset-by-asset’ basis. Which of the two approaches is more convenient will depend on the circumstances of the particular case. However there is much to be said for the view that in most cases the global approach is more convenient”.
In Zyk and Zyk (1995) FLC92-644 the Full Court at 82,510 explained the two approaches:-
“The global approach allows the Court to assess the contributions aspect of s.79 exercise in an overall way by considering the parties’ contributions to their property as a whole although factoring into that exercise the circumstance, if it be so, that they have made varying contributions to the total property at trial or which formed part of the history of their property during the marriage. It is generally preferred and the generally adopted approach. It enables a broad approach to be taken to the varying contributions of the parties over the years of marriage and in particular it usually has the advantage of more easily dealing with and giving proper recognition to paras(b) and (c) contributions. However where the contributions to the components of the total property are disparate, caution needs to be exercised in this approach and the overall conclusion tested against the requirement that the orders be just and equitable”.
I find having considered the evidence that it is appropriate in this matter for a global approach to be adopted based on the following:
a)This was a long marriage of some 25 years.
b)The parties worked together in what could be called a traditional type arrangement where the wife raised the children and looked after the household and the husband was the breadwinner.
c)Each party made their own contributions to the acquisition of the property pool, whilst working together for joint goals.
d)The property pool is not complicated consisting mainly of a house property, proceeds of the sale of a business, superannuation and possible addbacks.
e)The possible addbacks relate primarily to claims for disability by the husband which were made for an injury sustained during the marriage and in respect to policies that were taken out and paid into during the marriage.
f)There were no “disparate” contributions in this matter.
g)As a “generally preferred” and “generally adopted approach”, a global approach is appropriate in this matter.
A global approach has therefore been adopted.
One pool or two pool approach
The husband seeks a two pool approach with superannuation to be dealt with separately to the non-superannuation pool.
The wife seeks for a one pool approach.
Conclusion
This is a long marriage where the non-superannuation asset pool was acquired during the marriage.
Neither party had superannuation at the commencement of the relationship.
The superannuation was acquired during the marriage.
There is no evidence that either party has significantly increased their superannuation since separation.
I therefore find that there is no basis for a two pool approach.
A one pool approach has been adopted.
Application of the four step process in Hickey’s case
Property pool
I find that the matrimonial property pool available for distribution is $2,851,031 consisting of the following:-
Non-Superannuation Assets
$ Value
J Street, Suburb K property (joint)
1,100,000
Household contents (wife)
9,000
Household contents (husband)
23,200
M shares (joint)
2,750
Sale proceeds of the business
682,860
Addback from disability payments
914,812
Total non-superannuation assets
$2,732,622
Liabilities
$ Value
Business 1 liquidator fees
4,840
Tax on dividend from Business 1 sale
132,171
Tax on trust distribution
60,678
CBA Viridian credit
402,500
Total liabilities
$600,189
NON SUPERANNUATION ASSETS
$2,132,433
Superannuation assets
$ Value
Super Fund EE (wife)
82,830
Super Fund FF (husband)
158,896
Military super (husband)
570,684
Total superannuation assets
$812,410
MATRIMONIAL PROPERTY POOL
$2,944,843
In making this determination the following assets and liabilities have been included or excluded for the reasons provided:
a)Addback of disability payments
i)As a consequence of policies taken out by the husband in 2005 during the course of the marriage, the husband within months of separation made, without the wife’s knowledge, three claims for total and permanent disability receiving in total the sum of $914,812 by mid-2016 (GG Insurance - $387,832, Super Fund FF- $83, 846 and Super Fund HH - $443,135).
ii)Initially it was planned by the husband that he and Ms O would use the monies to purchase a 55 acre farm property at JJ Street, Town KK (JJ Street, Town KK property) and on that basis a contract was signed by the husband and Ms O in 2015.
iii)However by late 2015 it was evident that sufficient monies would not be available to enable the husband and Ms O to make the purchase.
iv)In late 2015 Ms O in an email to her accountant Mr LL wrote “I would like to ask you for your help with a property purchase I am making with my new partner. We have had some complications regards funds my partner was expecting that would have allowed a mostly cash purchase; this has meant we need to rather urgently arrange for a loan. What has been advised is that my business, MM, set up a discretionary family trust, L Trust, with me as a sole trustee but with myself and my partner, Mr Naisby, as beneficiaries. This has been suggested for future business and financial reasons, but also as protection against Mr Naisby’s rather vindictive ex from whom he is still trying to get a property settlement”
v)In 2015 NN Pty Ltd was set up by Ms O as the trustee of and Ms O and the husband as the beneficiaries for the L Trust (L Trust).
vi)Initially Ms O was the sole director of NN Pty Ltd but by late 2015 the husband became a director.
vii)In or around late 2105 L Trust the purchased the JJ Street, Town KK property subject to a mortgage.
viii)A house and shed were built on the JJ Street, Town KK property.
ix)The husband in total deposited $821,000 of the $914,812 received by way of disability payments into the L Trust bank account.
x)As at the date of the final hearing L Trust’s net interest in the JJ Street, Town KK property is around $220,000.
xi)The husband accepts that his share of the L Trust should be included in the property pool ($110,000).
xii)The wife is not seeking for the husband’s share of the L Trust to be included in the property pool but for the monies he has received from the disability payments ($914,812) to be added back into the property pool, as these are matrimonial assets which have been unilaterally used by the husband.
Conclusion
xiii)An addback is where assets that no longer exist are included back into the property pool.
xiv)Whilst there has been recent concerns that the High Court in Stanford effectively put an end to the argument as to addbacks because of the reference to identifying “existing” legal and equitable interests of the parties in property in determining a property division, the Full Court in Trevi & Trevi [2018] FamCACF 173 at [47] concluded “the essence of a claim for addbacks is that the asserted sum/s should be added to the value of the existing property interests of the parties and, subsequent to the assessment of contributions, credited to the spending party as part of the value of their assessed entitlements. Doing so does not offend what was emphasised by the High Court. Adding back does not seek to create property interests that do not exist. Rather, doing so emphasises that satisfying the respective requirements of ss 79(2) and (4) of the Act to do justice and equity can require an ‘accounting’ or ‘balance sheet’ exercise for the purposes of s 79(2) and (4), so as to include the value of the dissipated property or expended sums within the total value of the parties’ existing interests in property, and to credit the value of same against the assessed entitlement of the dissipating or spending party”
xv)Addbacks are the exception and not the rule as noted by the Full Court in C v C ([1998] FamCA 143) at [46] “whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool, ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives….”
xvi)In considering whether to include an addback the Full Court in M and M [1998] FamCA 42 at [210] and [211] held “the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation…whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial judge”
xvii)The Full Court in Milankov & Milankov (2002) FLC 93-095 at [114] explained “the inclusion of these notional add-backs to the pool of assets ought not to be seen as a method of increasing the size of the pool but merely assists the Court in determining what should be a fair share of the pool that is available for distribution”
xviii)Addbacks fall into three categories as noted by Murphy J in Kouper v Kouper (No 3) [2009] FamCA 1080 at [97] “the Full Court in Omacini & Omacini [2005] FamCA 195; (2005) FLC 93-218 noted that circumstances in which it is appropriate to notionally add-back to the pool of assets, fall into ‘three clear categories’: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and in the circumstances outlined in Kowaliw”
xix)Kowaliw & Kowaliw (1981) FLC 91-092) identified that addbacks were justified where there has been a course of conduct by one party designed to reduce or minimise the effective value or worth of the assets or where a party has acted recklessly, negligently or wantonly with assets, the overall effect of which is to reduce or minimise the value of the asset pool.
xx)Murphy J in Kouper v Kouper (No 3) however notes at [112] and [113] “those categories are, of course, convenient descriptors of circumstances in which justice and equity might demand an “add back”, but the consistent theme of the authorities is to the effect that it is the subsequent question to which attention must be directed – by reference to the particular circumstances of the particular marriage - rather than an examination of whether particular conduct might be classified in one manner or another. Put another way, the task is not to examine conduct for the purposes of fitting it within a particular description, or to reward the prudent and punish the imprudent. Rather, the task is to examine and make findings about the particular circumstances surrounding expenditure and to determine, within that context, the manner in which overall justice and equity indicates the diminution in the pool ought be treated”
xxi)I find having considered the evidence that for the “overall justice and equity” that this is a matter where the addback of the disability monies is justified based on the following:
· The policies which enabled the husband to make a claim for disability payments post separation were obtained during the marriage.
· The husband suffered from the effects of PTSD and major depressive disorder during the marriage.
· The wife during the marriage supported the husband as well as being responsible for running the household and raising the five children whilst the husband worked.
· The husband made the claim for disability payments within days of resigning from the businesses and within two to three months of separation without informing the wife.
· When asked in cross-examination why the husband did not inform the wife, the husband replied “I don’t know that I have a good answer for your Honour. I don’t know the particular reason why I wouldn’t have, other than, I was at that time certainly looking forward to the way I could move forward, and I presume that I was seeing how I could manage two households”.
· The husband was secretive as to making the claims and did not want the wife to know that he was going to be in receipt of large sums of money.
· One such example is the husbands email to the wife in 2015 where the husband wrote “I have no intention of giving you access to any other bank accounts that are in my name alone”.
· Another example is where the husband in an email to the wife in late 2015 wrote “I propose that we both attend mediation for parenting and finance ASAP”.
· The husband whilst legally represented did not disclose to the court that he had applied for and received payouts for disability in his May 2016 affidavit which accompanied the initiating application.
· By this time the husband had received his first payment for disability with the subsequent payments received in mid-2016.
· The husband did not inform the wife once the disability payments were received.
· The husband promptly deposited the majority of the disability monies into the L Trust bank account.
· The husband did not disclose the existence of the monies in November 2016 when interim consent orders were reached as to the debts owing on the business.
· The husband failed to disclose the receipt of the monies or the existence of the monies, with the payments being subsequently discovered by the wife when going through the husband’s disclosed bank statements which were provided in 2017.
· The husband had intended to use the disability funds for his own use only in purchasing the JJ Street, Town KK property with Ms O.
· The husband misrepresented to the wife that the JJ Street, Town KK property had been purchased by Ms O alone as illustrated by an email from the husband to the wife in late 2015 where he wrote “the property is being purchased solely by Ms O”.
· The husband initially misrepresented to the court that the JJ Street, Town KK property had been purchased by Ms O alone with no mention of the L Trust and his interest in the L Trust.
· The husband and Ms O attempted to set up the purchase of the JJ Street, Town KK property to preserve the JJ Street, Town KK property from being included in the matrimonial property pool with the husband explaining in cross-examination “if anything, our intent is to make sure that we would not be forced to sell the home” and “there was concern, given the current proceedings, that the property itself might be at risk”.
xxii)I find that overall the husband orchestrated the obtaining and receipt of the disability monies to the total exclusion of the wife, to be used by the husband to meet his needs.
xxiii)I further find that these actions not only resulted in the premature distribution of matrimonial assets but were designed to misrepresent the true worth of the matrimonial pool.
xxiv)I therefore find that it is appropriate to add back the total amount of the disability monies received.
b)Inheritance
i)After separation in 2015/2016 the husband received an inheritance of $170,260 from his father’s estate.
Conclusion
ii)This money no longer exists and therefore has not been included in the matrimonial pool.
iii)The inheritance however will be taken into account as a financial resource that the husband had access to post separation.
c)Tax refund
i)The husband received a significant tax refund in 2017 of $69,000.
ii)The wife seeks for that to be taken into account as monies received by the husband.
Conclusion
iii)Like the inheritance, this money no longer exists and therefore cannot be included in the matrimonial pool.
iv)The tax return however will be taken into account as a financial resource that the husband had access to post separation.
d)Addback of monies received by wife during management of business
i)Shortly after separation the wife was required to take over the management of the businesses owned by the parties due to the husband resigning as a health care professional and resigning as a director.
ii)In submissions the husband seeks a possible addbacks of various payments received by the wife during the course of her management including monies for legal fees, cash withdrawals and long service leave.
iii)The husband further submits that there was wastage incurred by the wife due to the delays in the sale of the business.
Conclusion
iv)The accountant for the business, Mr H, provided evidence by way of affidavit and cross-examination as to the conduct of the business, including information as to the issue of legal costs incurred by the wife.
v)At no time is it implicated that the wife acted inappropriately in her management of the business.
vi)As to wastage this has not been established on the evidence.
vii)As such I find that there is no basis for addbacks.
e)Household contents
i)Household contents were independently valued, with $9,000 being attributed to the wife’s household contents and $45,000 being attributed to the wife’s household contents.
ii)The husband does not agree with the valuation of the wife’s household items as jewellery, Lego and tools were not included.
iii)The husband does not agree with the valuation of the husband’s household items as it included a car belonging to one of the children, a telescope belonging to Ms O and an inherited model railway.
Conclusion
iv)I find that in the absence of any independent evidence as to the value of jewellery and tools that the valuer’s estimate of $9,000 is to be included in the asset pool in respect to the wife’s household contents.
v)The Lego is not of significance as that belongs to the children.
vi)I find that as to the value of the husband’s chattels it is appropriate to include in the property pool household items of $23,200, having accepted that the valuation is to be reduced by the value of the child’s car ($6,800), Ms O’s telescope ($2,500) and the inherited model railway ($12,500).
f)Motor vehicles
i)The wife has a third interest in a motor vehicle which is owned with her parents.
ii)The husband owns a motor vehicle of very little value.
Conclusion
iii)I find that given the small value of each motor vehicle that each motor vehicle is to be excluded from the property pool with an order to be made for each party to retain their motor vehicle to the exclusion of the other party.
g)Bank accounts
i)Included in the agreed list of assets and liabilities are several bank accounts, including accounts in the husband’s names, the wife’s name, the parties joint names, the children’s names and the L Trust name.
Conclusion
ii)I find that it is inappropriate to include bank accounts that belong to the children.
iii)I find that it is inappropriate to include bank accounts in the individual names of the parties as it is unclear from the evidence as to whether any of these monies are attributable to matrimonial assets.
iv)I find that it is inappropriate to include the joint accounts as the amount is less than $100. The parties need to close these accounts and an order has been made accordingly.
v)As to the L Trust bank account, I find that as there is no evidence to support why this account should be included in the matrimonial property pool given the addback which has been included in the matrimonial pool.
vi)None of the bank accounts have therefore been included in the pool.
h)Rates and urban utilities owing on J Street, Suburb K property
i)The wife seeks to include in the property pool rates and urban utilities incurred by her for the J Street, Suburb K property in 2018/2019.
Conclusion
ii)I find that as to wife was in sole occupation of and had exclusive use of the J Street, Suburb K property during this time, then it is the wife’s responsibility to pay for these outgoings.
iii)These debts therefore have not been included in the matrimonial pool.
i)Centrelink debt
i)The wife is seeking to include in the property pool a debt incurred by her post separation to Centrelink as it was incurred as a consequence of a paper dividend generated in 2017/2018.
Conclusion
ii)I find that as this was a debt incurred post separation where the wife had the benefit of Centrelink payments, then it is debt that belongs to the wife post separation.
iii)Therefore the debt has not been included in the pool.
j)Tax debt
i)The wife seeks in effect to exclude the husband’s tax debt from the property pool by making the husband totally responsible for the debt.
Conclusion
ii)I find no basis for the exclusion of this debt from the property pool and therefore it has been included as a matrimonial debt.
Conclusion on the matrimonial property pool
In conclusion I find that the matrimonial property pool available for distribution is $2,944,843.
Contributions
Initial contributions
The wife submits that at the commencement of the relationship:
a)Neither party had any assets of significant value.
b)Both parties were studying.
c)By 1993 the wife was working as a director in a business and the husband was a public servant in the armed forces.
The husband agrees that neither party held any assets of value when the parties married.
Conclusion
I find that there is no basis for an adjustment in favour of either party because of initial contributions.
Contributions during the relationship
The parties agreed early in their relationship that the husband would be the primary breadwinner and the wife would care for the children and the household.
This transpired with the wife raising the five children and running the household whilst the husband worked as a health care professional, firstly in the employment of the armed forces and then from 2005 in his own business, with the parties purchasing the business in 2006.
Conclusion
I find that the parties made equal contributions during the marriage.
As such I find that there is no basis for any adjustments in favour of either party because of initial contributions.
Post separation contributions
Employer B / Business 1
In 2005 the husband commenced employment as a health care professional at the Employer B, Suburb Z.
In 2006 the parties established the Naisby Family Investment Trust (the Naisby Trust) with the parties as trustees.
Subsequently in 2008 the Naisby Trust was used to purchase the shares in Employer B / Business 1 which ran the Suburb Z business, with the purchase being funded through a Viridian Line of Credit with the CBA.
The husband became the sole director of Employer B / Business 1.
The Viridian Line of Credit is in the husband’s name with the bank holding security over the J Street, Suburb K property.
The husband worked in and expanded the businesses run by Business 1.
In mid 2015 the parties separated at which time the parties owned businesses operating out of Suburb Z, Suburb BB/Business 2 and Suburb CC/Business 3.
In mid 2015 the husband in an email to the wife wrote “I have decided to have no further part of the Business 1 moving in to the future”.
In mid 2015 the husband informed the wife that he was resigning from the businesses. At the time the husband had accumulated debt with an IT company in respect to a computer upgrade.
Within days the husband applied for disability payouts.
In late 2015 the husband in an email to the wife wrote “I need to remove myself completely from the business”.
In late 2015 the husband resigned as a sole director of Business 1 and the wife was appointed as sole director.
By late 2015 the wife was managing the business.
Despite the husband having resigned from being a health care professional and removing himself as a director of Business 1, the evidence supports that the husband continued to involve himself extensively and often behind the wife’s back, in the business.
In November 2016 the husband’s application to the court to have the wife removed as sole director was withdrawn by the husband.
In November 2016 the husband consented to and entered into undertakings not to discuss the business or its sale with the staff at the business or with Mr OO who had expressed an interest in buying the businesses.
The husband admitted in cross-examination to repeatedly breaching the undertakings by:
a)Texting various staff in the businesses (as early as one day after the undertaking was given) and discussing the business and the sale of the business.
b)Texting Mr OO discussing the sale of the business including what the business should sell for.
c)When the husband became concerned that he might be in breach of the undertakings, enquiring about texting Mr OO’s wife about the business with the husband admitting in cross-examination that he was being “a bit of a smartarse”.
d)Writing in a message to Mr OO in June 2017 “my solicitor will be contacting you shortly to have a preliminary discussion. We are knowingly in breach of the court orders but we have decided it is necessary and will manage our potential exposure accordingly”.
The husband accepted in cross-examination that his actions may have undermined the wife in her management of the businesses.
In September 2017 the husband again attempted to remove the wife from being sole director, but was unsuccessful.
The evidence supports that the husband continued in his uninvited involvement in the businesses.
The wife in submissions sets out extensively her involvement in the management of the business since 2015.
The wife submits that since removing himself from the Business 1 in 2015 the husband:
a)“Was doing what he could to cause disruption to the business”
b)“Had little regard for the maintenance of the value of the business and acted in a way to intentionally reduce the value of the business”
In April 2018 the businesses were sold for $2,100,000 which was the value attributable to the business by the court appointed expert valuer.
The husband explained in cross-examination that the wife’s “contributions to the business has at best maintained the value and at worse decimated the reputation of what was a highly respectable community driven business” and “I don’t believe there should be an adjustment to her because of that matter, I’m not asking for an adjustment to me because of that”.
The wife submits that “had it not been for the considerable work of the wife in stepping in to run the business on short notice, continuing to run the business for nearly three years and negotiating the sale, the sale price of $2.1 million would not have been achieved”.
Conclusion
I find that the evidence supports that an adjustment is to be made in favour of the wife in respect to her contributions post separation in preserving and maintaining the business and in organising for the business to be sold.
I make this finding based on the following:
a)The wife was literally dropped into the business to look after it when the husband walked away shortly after separation in 2015, first resigning as a health care professional and then as a director.
b)The wife had no useful assistance from the husband whilst the wife dealt with litigation and other issues surrounding the business.
c)The husband made it difficult for the wife to manage the business by undermining her as he badmouthed her to staff.
d)The husband blatantly disregarded the undertakings and continued to interfere in the wife’s management of the business.
e)The husband interfered in the sale of the business, even to the extent of suggesting to Mr OO that he was offering too much for the purchase of the business.
f)The wife, despite the constant interference from the husband, was able to sell the business for its true value.
J Street, Suburb K property
The wife accepts that post separation the husband made contributions to the J Street, Suburb K property by paying the mortgage and outgoings but argues this could have been avoided if the husband had paid out the Viridian Line of credit from his disability payouts.
Conclusion
Having considered the evidence, I find that an adjustment is to be made in favour of the husband for contributions made post separation to the J Street, Suburb K property.
The evidence supports however that the husband had the financial means to discharge the mortgage over the J Street, Suburb K property in 2016 from the disability monies, but chose not to, preferring instead to invest the money in the JJ Street, Town KK property.
As such I find that the adjustment to the husband for his ongoing contributions to the preservation of the J Street, Suburb K property has been mitigated by the husband failing to disclose the true financial position of the parties, which could have resulted in the J Street, Suburb K property being unencumbered.
Therefore I find that a small adjustment only is to be made in favour of the husband for his post separation contributions.
Parenting
Soon after separation, the two older children commenced living with the husband.
Between April 2015 and April 2018 the two youngest children lived primarily with the wife and then joined to the two older children to live with the husband.
The wife has spent regular time with the younger children since April 2018.
In June 2020 orders were made for the two younger children to return to live with the wife.
Conclusion
I find that as each of the parties have contributed post separation to the ongoing care of the children, that an adjustment is not warranted in favour of either party.
Overall conclusion on contributions
Overall I find that the contributions made by the wife in respect to the running of and sale of the business and the contributions made by the husband in respect to post separation contributions result in a small adjustment in favour of the husband of 2%.
Therefore based on contributions I find that there is to be an adjustment in favour of the husband of 2%.
This reflects the financial contributions made by the husband post separation.
Future needs
Health and employment
In 2012 the husband was diagnosed with PTSD and MDD.
The husband’s treating psychiatrist Dr PP says:
a)In a letter dated 16 September 2015 that the husband “is currently incapacitated for work. This includes both his work as a health care professional but also his work as a public servant in the armed forces”.
b)In a letter dated 10 March 2016 “he remains permanently unfit for his occupation as either a health care professional or public servant. However I considered him fit to commence vocational retraining. Having structured activities during the days, combined with the accompanying sense of purpose, will benefit his medical management”.
c)In a letter dated 11 September 2017:
i)“This patient… is currently incapacitated for work”
ii)“This patient… is currently incapacitated for civilian employment”
iii)“This man is likely to return to some form of employment mainly farm duties”
iv)“I am able to say when this man will be able to return to remunerative work duties. Currently this man is unable to work 8 hours of paid work per week. Eventually I would hope that he would be able to work up to 20 hours of work per week doing general farm duties on his own farm”
v)“I do not believe this man will ever be fit to perform the duties of his preinjury employment”
vi)“The symptom burden remains an ongoing issue and precludes current return to remunerative employment”
The husband because of his PTSD/MDD states that he is unlikely to return to paid employment but is hopeful within 5 years of being self-employed in farming on the JJ Street, Town KK property.
Currently the husband is in receipt of income from his income protection plan with GG Insurance and from DVA which total nearly $320,000 per annum.
In addition the husband has had the benefit of an inheritance and a large tax return post separation.
The wife suffers from anxiety but is able to work
Since the sale of the businesses in 2018 the wife has not received an income from the business.
The wife is completing her Master’s.
The wife submits that upon completion of her studies and given her age that her income will be significantly less than what the husband receives for his income protection.
Conclusion
I find that an adjustment is to be made in favour of the wife as there will be disparity in income as the wife is unable to earn monies similar to that which is currently received by the husband from his income protection.
The adjustment however is small given that the husband is limited in earning an income due to health issues.
Care of children
Orders have been made for the two younger children to return to live with the wife.
The only child left in the husband’s care will be attending university soon.
Conclusion
I find that as the wife is to have the future primary care of the younger two children then a small adjustment is to be made in favour of the wife in respect to their ongoing care.
Overall conclusion on future needs
I find that based on the discrepancy in income and the ongoing care of the children that an adjustment is to be made in favour of the wife of 7%.
Just and equitable
After conducting the first three steps the wife is to receive 55% of the matrimonial pool with the husband to receive 45%.
Each of the parties have already received $25,000 distribution from the liquidators.
I find as to matrimonial pool that to make up the wife’s share of 55% the wife is to receive assets totalling $1,619,663 (55% x $2,944,843 = $1,619,663) that consisting of:
J Street, Suburb K property
1,100,000
Household contents
9,000
M shares
2,750
Sale proceeds of the business
682,860
Super Fund EE
82,830
Superannuation split from husband
342,412
Total assets
$2,219,852
Less liabilities
Business 1 liquidator fees
4,840
Tax on dividend from Business 1 sale
132,171
Tax on trust distribution
60,678
CBA Viridian credit
402,500
Total liabilities
$600,189
Distribution to wife
$1,619,663
This will leave the husband with a 45% share of the matrimonial pool of $1,325,180 (45% x $2,944,843 = $1,619,663) that consisting of:
Household contents
23,200
Addback from disability payments
914,812
Super Fund FF (husband)
158,896
Balance of Military super after split
228,272
Distribution to husband
$1,325,180
I find that this division of assets is just and equitable based on the following:
a)The wife has a house property, cash funds and superannuation which will provide her with the security needed to move on financially into the future.
b)The husband has retained the benefit of the disability payments which have allowed the husband to retain his interest in the L Trust which owns the JJ Street, Town KK property, as well as having the benefit of his superannuation and ongoing income protection payments.
Spousal maintenance
The wife is seeking a continuation for four years of the interim spousal maintenance orders made in August 2019 for the husband to pay to the wife the sum of $2,000 per month.
The husband disputes the wife’s claim for spousal maintenance.
The law
Before considering the issue consideration must be had to the law.
Section 74(1) Family Law Act 1975 allows the Court to make such order as it considers proper for the provision of maintenance to a party for marriage.
The right of a spouse to maintenance is provided for in section 72.
Section 72(1) states that a party to a marriage is liable to maintain the other party to the extent that the party is reasonably able to do so, only if the other party is unable to adequately support themselves.
Once the need is established, then the husband must be capable of reasonably maintaining the wife. Only once these criteria have been met can a spousal maintenance order be made.
The criteria therefore for spousal maintenance is as follows:-
a)The party seeking the maintenance (in this case the wife) must be able to establish that she is unable to adequately support herself.
b)In determining whether this has been established the Court must consider the relevant factors including those factors set out in section 75(2).
c)Once the need is established, then the other party must be capable of reasonably maintaining that party.
d)Only once these criteria have been met can a spousal maintenance order be made.
Application of the law
I find that the wife has not established need.
I base this finding on the following:-
a)The wife up until 2018, when the matrimonial business was sold, was earning income as a manager of the business.
b)The wife has not had the responsibility for the primary care of the children since 2018.
c)The wife has not provided evidence of any attempts to obtain employment since 2018.
d)The wife has numerous skills available to her to obtain employment.
e)The wife has chosen to study, rather than obtain employment.
f)Even upon return of the younger children to the wife’s primary care, the children are of an age where the wife would be in a position to obtain employment.
g)The wife in her property division of receiving an unencumbered house, cash and superannuation now has choices as to how to structure her life financially moving forward.
As need has not been established there is no necessity to consider whether the husband has capacity to pay spousal maintenance.
I certify that the preceding one hundred and twenty-three (123) paragraphs are a true copy of the reasons for judgment of Judge Turner
Date: 1 September 2020
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Fiduciary Duty
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Constructive Trust
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