Nash & Nash

Case [2021] FCCA 384

FEDERAL CIRCUIT COURT OF AUSTRALIA

Nash & Nash [2021] FCCA 384

File number(s): MLC 6493 of 2018
Judgment of: JUDGE HARLAND
Date of judgment: 5 March 2021
Catchwords: FAMILY LAW – 36 year marriage – high conflict – add backs – parties seeking to engage in an accounting exercise – disproportionate legal costs – treatment of inheritance received shortly before separation  
Legislation:

Family Law Act1975 (Cth) ss 79(1); 79(2); 79(4), 75(2), 90XS, 90XT(1) 106A, pt VIII

Family Law (Superannuation) Regulations 2001 Part 6
Cases cited:

Bevan & Bevan (2013) FLC 93-545

Bishop and Bishop (2013) FamCAFC 138

Bonnici (1991) 105 FLR 102

Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143

Mayne & Mayne [2011] FamCAFC 192

Singerson v Joans [2014] FamCAFC 238

Stanford v Stanford (2012) 247 CLR 108

Vass & Vass [2015] FamCAFC 51

Number of paragraphs: 121
Date of hearing: 9 – 11 November 2020
Place: Melbourne
Senior Counsel for the Applicant: Mr Dixon SC
Solicitor for the Applicant: Peter Szabo Family Law
Counsel for the Respondent: Mr Weil
Solicitor for the Respondent: Kennedy Partners

ORDERS

MLC 6493 of 2018
BETWEEN:

MR NASH

Applicant
AND:

MS NASH

Respondent

ORDER MADE BY:

JUDGE HARLAND

DATE OF ORDER:

5 MARCH 2021

THE COURT ORDERS THAT:

1.Within 30 days of the date of these orders the parties do all acts and things necessary to distribute the following:

(a)funds held by Kennedy Partners;

(b)funds held by Peter Szabo Family Lawyers; and

(c)the balance of funds from Mr B and /or the proceeds of sale from the sale of C Street, Suburb D, Victoria, Australia

such that the parties’ assets and liabilities, excluding the E Super Fund which is addressed at Order 4, is distributed such that the wife receive 56% and the husband receives 44% of the parties’ assets.

2.Within 30 days of the date of the Orders (“the Date”) the parties do all things necessary both personally and in their capacities as Trustees of the E Super Fund (“the E Super Fund”) to effect a split of their member accounts in the E Super Fund in accordance with Section 90XS of the Family Law Act1975 (Cth) (“the Act”) so that:

(a)The member accounts of the Husband and the Wife in the E Super Fund be calculated and consolidated as at the Date;

(b)A base amount allocated to the Wife in accordance with Section 90XT(1) of the Act, out of the consolidated interests held by parties in the E Super Fund, being an amount representing 56% of the combined member accounts of the parties at the Date ; and

(c)A base amount allocated to the Husband in accordance with Section 90XT(1) of the Act, out of the consolidated interests held by parties in the E Super Fund, being an amount representing 44% of the combined member accounts of the parties at the Date.

3.Procedural fairness having been accorded, the Orders bind the Trustees of the E Super Fund

4.Whenever the Trustees of the E Super Fund make a splittable…

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AGLC
Nash & Nash [2021] FCCA 384
Case
[2021] FCCA 384
Decision Date

CaseChat Overview and Summary

In the matter of *Nash & Nash*, Harland J of the Federal Circuit Court of Australia made orders concerning the property settlement between Mr Nash (the applicant husband) and Ms Nash (the respondent wife). The dispute involved the division of various assets, including funds held by legal practitioners and proceeds from the sale of property, as well as the distribution of interests within the E Super Fund. The court was required to determine the appropriate allocation of these assets and liabilities between the parties.

The court was tasked with determining the division of the parties' assets and liabilities, excluding the E Super Fund, to achieve a 56% distribution in favour of the wife and 44% in favour of the husband. Furthermore, the court needed to effect a split of the member accounts within the E Super Fund in accordance with sections 90XS and 90XT of the *Family Law Act 1975* (Cth), ensuring the wife received 56% and the husband 44% of the consolidated superannuation interests. The court also had to consider the husband's application for spousal maintenance.

Harland J reasoned that while the parties had made largely equal contributions to the pool of assets, the wife's recent inheritance warranted an adjustment in her favour. This adjustment, combined with a small adjustment in the husband's favour to account for section 75(2) factors, specifically his age, medical conditions, and the resulting impact on his employment prospects, led to the final division of 56% for the wife and 44% for the husband. The court found the husband's medical evidence regarding his inability to work was not challenged, but his future earning capacity remained unknown. The husband's maintenance claim was dismissed due to its unsatisfactory preparation and the lack of clear evidence supporting the requested lump sum. The orders provided detailed mechanisms for the distribution of non-superannuation assets and the splitting of the E Super Fund, including the roles of trustees and specific financial professionals.

Orders

Orders of the court

MLC 6493 of 2018

BETWEEN:

MR NASH

Applicant

AND:

MS NASH

Respondent

ORDER MADE BY:

JUDGE HARLAND

DATE OF ORDER:

5 MARCH 2021

THE COURT ORDERS THAT:

1. Within 30 days of the date of these orders the parties do all acts and things necessary to distribute the following:

(a) funds held by Kennedy Partners;

(b) funds held by Peter Szabo Family Lawyers; and

(c) the balance of funds from Mr B and /or the proceeds of sale from the sale of C Street, Suburb D, Victoria, Australia

such that the parties’ assets and liabilities, excluding the E Super Fund which is addressed at Order 4, is distributed such that the wife receive 56% and the husband receives 44% of the parties’ assets.

2. Within 30 days of the date of the Orders (“the Date”) the parties do all things necessary both personally and in their capacities as Trustees of the E Super Fund (“the E Super Fund”) to effect a split of their member accounts in the E Super Fund in accordance with Section 90XS of the Family Law Act 1975 (Cth) (“the Act”) so that:

(a) The member accounts of the Husband and the Wife in the E Super Fund be calculated and consolidated as at the Date;

(b) A base amount allocated to the Wife in accordance with Section 90XT(1) of the Act, out of the consolidated interests held by parties in the E Super Fund, being an amount representing 56% of the combined member accounts of the parties at the Date ; and

(c) A base amount allocated to the Husband in accordance with Section 90XT(1) of the Act, out of the consolidated interests held by parties in the E Super Fund, being an amount representing 44% of the combined member accounts of the parties at the Date.

3. Procedural fairness having been accorded, the Orders bind the Trustees of the E Super Fund

4. Whenever the Trustees of the E Super Fund make a splittable payment to the Wife the Trustees pay to the Wife the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) and make any necessary adjustment to the entitlement which the Husband would have had but for the Orders.

5. Whenever the Trustees of the E Super Fund make a splittable payment to the Husband the Trustees pay to the Husband the entitlement calculated in accordance with Part 6 of the Regulations and make any necessary adjustment to the entitlement which the Wife would have had but for the Orders.

6. The division of the assets of the E Super Fund necessary to give effect to the split be determined by F Pty Ltd, Stockbrokers, and G Accountants in such manner as effects an equitable distribution in specie of the investments held in the Fund between the Wife’s adjusted account and the Husband’s adjusted account.

7. The Orders have effect from the operative time.

8. The operative time for the purposes of the Orders be the beginning of the 4th business day after the day on which a certified copy of this Order is served on the Trustees.

9. A certified copy of the Orders to be provided to the Trustees of the E Super Fund be served by the Wife

10. The Husband and the Wife each otherwise promptly if and when requested by the Trustees so to do sign all other documents and do all acts and things necessary to comply with all further requirements and directions of the Trustees to facilitate the split of superannuation interests in accordance with the Orders.

11. Upon implementation of the superannuation split:-

(a) The Wife roll her adjusted account in the E Super Fund over into an alternate fund or approved superannuation vehicle and resign as a Trustee of the E Super Fund

(b) The Husband retain the E Super Fund (or at his discretion roll his adjusted account in the Fund over into an alternative superannuation vehicle and the E Super Fund be wound up at the joint expense of the parties); and

(c) Each party sign all documents and do all things necessary to:-

(i) Effect the transfer of the Wife’s death benefit cover from the E Super Fund to any new fund nominated by her; and

(ii) Change the named beneficiary on the respective death benefit cover of each party to that party on such new beneficiary as may be determined by the life assured party

12. In the event that either party fails to comply with Orders 1 and 2 of these Orders, within seven (7) days of a written request to do so, the compliant party shall be at liberty to:

(a) Apply pursuant to Section 106A of the Family Law Act 1975 for a Registrar of the Federal Circuit Court of Australia at Melbourne to sign any and all necessary documents on behalf of the non-complying party to facilitate the implementation of Orders 1 and 2.

(b) Nominate a solicitor practicing in the Suburb D area who is authorised to sign documents for PEXA transfers and such solicitor shall sign on behalf of the non-compliant party upon the written request from the compliant party’s solicitor to do so upon provision of a sealed copy of these Orders

13. Each party otherwise retain to the exclusion of the other all assets and resources in their ownership, possession or control not otherwise dealt with by these orders.

14. Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

15. The husband’s application for maintenance be dismissed.

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

On 4 February 2019 the matter was listed for a two day trial to commence on 28 January 2020. The solicitors with carriage of the file appeared for the parties. In response to chamber’s compliance check on 10 January 2020, the parties’ lawyers indicated the trial would take two days. On the first day of trial the parties’ lawyers advised for the first time that the trial would need 3 days for final hearing. This is an all too common occurrence. Given the number of matters in my docket and the other matters listed for trial that week, all of which has been listed for trial for many months, it was not possible to accommodate this late change of estimate and the trial was adjourned to 9 November 2020 for 3 days.BACKGROUND The husband is 64 years old. The husband is not currently employed. He has medical issues which he says impact on ability to work. The medical evidence the husband filed was not challenged. It is however necessary to consider the scope of the medical opinion given. The wife is 61 years old. She is employed working in two positions earning approximately $104,000 a year.THE ISSUES IN DISPUTE The issues in dispute are:(a)whether or not there should be any addbacks;(b)the treatment of the wife’s inheritance;(c)the husband’s ability to gain employment and future earning capacity;(d)the husband’s maintenance claim.THE PARTIES’ APPROACH TO THE TRIAL, EVIDENTIARY ISSUES AND COSTS I am troubled by the quantum of legal fees the parties have incurred in these proceedings. The parties have incurred approximately $350,000 each. That is a staggering sum. It is almost 20% of the pool. The delay in this case would have contributed to the costs but I suspect that the bitterness between the parties also contributed. Having seen both parties give evidence, I have no doubt that part of this cost is due to the parties themselves. Both were keen to emphasise their respective financial contributions and have gone to great lengths to compile various spreadsheets and complain about needing to source documents and conduct reconciliations. The wife’s approach is particularly problematic. At times both parties had to be directed to answer the question as they were keen to justify their respective positions. Both counsel raised numerous evidentiary objections with respect to the trial affidavits of the parties prior to trial. Both parties make numerous complaints about the other’s conduct in various respects. It is not necessary to comment on them all. Many were not pursued in cross-examination. Both affidavits contain a significant amount of commentary, argument and opinion. The wife filed an amended trial affidavit on 4 November 2020 in response to some of the objections raised by the husband, but still retained much of the material that was not relevant. In response to those objections, the wife in her case outline disagrees with the characterisation by the husband’s counsel of them “being submissions, argumentative and or commentary, opinion based on fact” and said “These paragraphs are, at worst, repetitive of facts deposed to earlier.”

Evidence

Evidence Before The Court

The wife is working two part-time jobs. The wife was not challenged about her evidence in her affidavit that as a result of Covid-19 her employment with Employer Y as an allied health worker was changed from part-time employee to casual employee. As a result of this change she is paid a higher hourly rate because of the casual loading but does not receive leave entitlements and does not have the same security she had as a part-time employee. Her combined gross annual income is approximately $104,000 per annum. The wife refers to historical and health issues of her own but does not provide evidence from any medical practitioners and it is not such that it will have an impact on her earning. The wife says that the husband’s earning capacity is significantly higher than hers. Certainly during the relationship this was true. The wife’s firm belief is that the husband is deliberately choosing not to work until these proceedings are over. I am unable to accept this given his medical evidence. I am satisfied that he has some earning capacity. The difficulty is that the state of the evidence does not enable me to make a finding that his income will return to its previous levels or even to the current level of the wife’s. It is an unknown. Neither has re-partnered. Neither has an obligation to support another person. The husband’s medical evidence The husband’s psychologist Mr Z provided a report dated 17 December 2019. He refers to the husband alleging that he was fearful and anxious about potential future verbal or physical attacks from the wife and had referred to death threats on two occasions where the wife had allegedly drawn a knife from the kitchen knife block in a threatening manner. He saw the husband on three occasions. He diagnosed the husband with an adjustment disorder with mixed anxiety and depressive symptoms. Mr Z states that the husband’s condition renders him unfit for work and that his condition and capacity for work is highly unlikely to improve until the court proceedings and the associated conflict are concluded. Once they are his prognosis is good. There is no CV attached to the report. It is not clear from the report as to what expertise he has to assess the husband’s work capacity. This report does not assist me. The husband says that in 2019 he was hospitalised twice for a medical condition and required surgery on both occasions the husband also describes during this period his supervision and assistance with the renovation works. The husband’s general practitioner Dr AA provided two reports dated 11 October 2020. The husband requires reconstructive foot orthopaedic surgery on his foot which has been delayed due to Covid-19 restrictions. It impacts his mobility. DR BB is the husband’s orthopaedic surgeon. He also swore an affidavit and provided a report dated 13 October 2020. The husband needs reconstructive foot surgery. Full recovery will take up to 12 months. For the first 12 weeks his foot will be immobilised.

Decision

Reasons for decision

I am satisfied that the husband will seek employment after his foot surgery, that what his income earning capacity will be is unknown, and it seems unlikely that he will be able to obtain the type of employment that he enjoyed overseas. It is necessary to take a realistic approach about this, as in a competitive job market, employers may well be more attracted to hiring younger employees. Whilst I am satisfied that the husband will have some sort of earning capacity in the future, it is not possible to estimate what that might be and whether or not he will be able to earn an income similar to the wife’s income or a higher income as he did previously.CONCLUSIONS In closing submissions, senior Counsel argued that if the loan to Ms O is included in the pool, the $70,000 the husband owes his mother should also be included. I reject these submissions. There is no correlation between the two. Having considered the myriad of contributions the parties have made, apart from the wife’s inheritance near the end of the relationship, the parties contributed equally. The wife’s recent inheritance represents a little over 12% of the pool. There needs to be some recognition of this but not in isolation from the contributions both made over the long marriage. There also needs to be a small adjustment in the husband’s favour because of his s 75(2) factors. Considering the s 75(2) factors, I am satisfied that the husband’s medical conditions have hampered his ability to find employment after he returned to Australia, and that there will continue to be a period where he has some restrictions post-surgery. His age may also make it more difficult. Apart from this factor and the uncertainties associated with that as I have outlined above. EFFECT OF THE ORDERS The wife will retain: The husband will retain: In order to achieve the outcome the following needs to be divided: Taking into account all of the matters I have discussed, I find that there should be an adjustment in favour of the wife, acknowledging the inheritance of 10%. There should be a small adjustment in favour of the husband because of s 75(2) factors of 4%. This results in an adjustment of 56% in favour of the wife and 44% in favour of the husband.HUSBAND’S MAINTENANCE APPLICATION The husband seeks maintenance. The husband amended his initiating application on 23 December 2019 to seek a lump sum spousal maintenance order of $200,000. It is not expressed as a s77A order. In his opening address Senior Counsel for the husband submitted that the Court may choose to take into account his maintenance claim as part of the property settlement by giving the husband a 5 to 10% uplift or separately. When pressed in closing submissions he said it represented maintenance for six years at $30,000 a year. The husband’s maintenance application was prepared and prosecuted in a most unsatisfactory manner. I do not know if the proposed sum of $30,000 a year reflects an analysis of the husband’s needs. There was no explanation as to why periodic maintenance was not sought and why a lump sum was appropriate. It is the husband’s case that he has been seeking work and intends to continue to seek work after his surgery. What success he may have and what income he can earn is unknown. A lump sum payment to reflect the next 6 years is potentially unfair to the wife. Periodic maintenance would address the current need to the wife’s current capacity.

Ratio Decidendi

Legal Principle Established

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