Nash & Nash
[2021] FCCA 384
•5 March 2021
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 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 Act1975 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.
IT IS NOTED that publication of this judgment under the pseudonym Nash & Nash is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE HARLAND
The parties were married for over 36 years. They have two adult children, Ms H born in 1986, aged 34 who is a health care worker and Mr J born in 1989, aged 31 who is a construction worker. Both are financially independent.
The parties separated in August 2017. The parties disagree as to who initiated the end of the relationship. It is not necessary for me to resolve that dispute.
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.”
A significant portion of the wife’s affidavit filed on 12 October 2020 complains about the mediations and alleged agreements reached. She refers to and quotes from a series of exchanges between the solicitors with respect to disclosure. At a couple of points the wife was complaining about the husband’s disclosure, and points to the husband not making requests for disclosure of a significant period and her producing documents voluntarily. The obligation to provide disclosure is ongoing and is not dependent on the other party making a request for particular documents. These complaints were not pursued at trial. Much of those complaints remained in the 4 November 2020 Affidavit. The major area of controversy between the parties was with respect to the wife’s references to mediation which took place in January 2019. It is common ground that no heads of agreement were entered into. The wife seeks to have cash withdrawals made by the husband after the mediation notionally added back. The husband objects to this and objects to any references to the mediation. Counsel took a pragmatic approach in the end and did not require formal determination of those objections. I will address this further when discussing the addbacks the wife seeks.
Both parties have spent considerable time and costs in preparing various schedules, summaries and reconciliations of various bank accounts. On several occasions beginning and during the trial, I raised my concerns about this and their lack of evidentiary value and relevance to the task of the court. I raised concern with both Counsel at the beginning and during the trial that the task of the Court is not to engage in an accounting exercise or audit. It must be remembered that in this case the parties were in a very long marriage. The wife’s case outline is 47 pages long almost half of which are various schedules.
The difference between the parties’ approaches is that the husband annexes his spreadsheets to his trial affidavit and makes it clear in his affidavit that he has done so in order to answer the wife’s allegations. For example the wife alleges that the husband retained a significant portion of his overseas income for his own benefit. The husband disputes this and answers those allegations. He maintained this position under cross examination. He does not seek to add back the wife’s expenditure.
Both parties tendered lengthy bundles of documents including numerous bank statements. Many of these were not specifically referred to at trial.
This does not apply to the schedules the parties have prepared. At least in the case of the husband he annexes schedules to his affidavit where he has sworn to the truth of its contents.
The wife’s schedules are annexed to her case outline. The case outline is not a sworn document. It is not evidence. It is merely an aid. Senior Counsel submitted that it was not necessary for him to cross-examine on an inadmissible document. The wife’s counsel included the schedules in her tender bundle. When cross-examined about the figures in these schedules, the husband did not agree with those figures. Tendering the schedules does not assist as the schedules do not refer to what source documents they are based on.
LEGAL PRINCIPLES
Part VIII of the Family Law Act 1975 (Cth) (“the Family Law Act”) governs property, spousal maintenance and maintenance agreement between married couples. The major provisions relating to marital property division are contained in ss.79(1); 79(2); 79(4); & 75(2) of the Family Law Act.
Until the High Court decision in Stanford v Stanford (2012) 247 CLR 108, the position in respect of the process to be applied to the resolution of matrimonial property cases was said to be well settled with a preferred approach as set out by the Full Court in Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39].
The High Court considered the operation of s.79 of the Family Law Act (which has almost identical terms to s.90SM) in the matter of Stanford. In this case, the majority stated at [35]-[36] that:
It will be recalled that s 79(2) provides that "[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.”
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [Footnotes omitted]
The High Court found three fundamental propositions with respect to the application of s.79, which can be summarised as follows:
(1)Firstly, in order to ascertain whether it is just and equitable to make a property settlement order, it is necessary to identify the existing legal and equitable interests of the parties in the property. The High Court emphasised the word ‘existing’.
(2)Secondly, although s.79 gives the court a broad power to make property settlement orders it may not be exercised in an unprincipled fashion. There must be no assumption that the parties’ interests are or should be different to their existing interests.
(3)Thirdly, when considering whether making a property settlement order is just and equitable the court must not assume that one or the other party has the right to a property adjustment order. The court must give separate consideration to s.79(2) in addition to the matters referred to in s.79(4).
In Stanford the High Court indicated that, in the vast majority of matrimonial property cases, the requirements of s.79(2) will be readily satisfied, largely as a result of a consideration of the circumstances of the parties concerned, particularly the nature of their separation. Both parties seek property adjustment orders.
The High Court also pointed out that what is just and equitable is different in every case.
It is important to have regard to the myriad of contributions the parties have made over the whole of their long relationship and take a holistic approach to the assessment of the parties’ contributions.
Much of the wife’s evidence focusses on add backs the wife contends for. The Court has a broad discretion with respect to add backs. This has been in several appeal cases including Bevan & Bevan (2013) FLC 93-545 and Vass & Vass [2015] FamCAFC 51. In some cases it will be considered just and equitable to notionally add back property to the asset pool. In other cases, it will be more appropriate to consider it under s 75(2)(o).
THE WIFE’S INHERITANCE
About a month before the parties separated, the wife received an inheritance from her father of $420,000 who died in 2016.
The wife seeks to quarantine her inheritance. If the inheritance is quarantined from the pool it must be taken into account pursuant to s75(2). The husband seeks to have the inheritance included in the pool. If the inheritance is included in the pool it must be recognised as a significant contribution by the wife.
In Bishop and Bishop (2013) FamCAFC 138 the Full Court of the Family Court stated endorsed the comments of the Full Court in Bonnici (1991) 105 FLR 102 that an inheritance is not in a protected category property.
The comments of the Full Court in Singerson v Joans [2014] FamCAFC 238 at paragraphs 65 and 66 state:
We are of the view that his Honour misled himself, and thus fell into error, in identifying only the four years between separation and trial as being the appropriate time upon which to assess contributions to the inheritance rather than across their 15 year relationship.
Section 79(4) of the Act is clear. There is nothing to suggest that any category of contributions needs to be quarantined and applied solely to particular assets. The court is mandated to look at the totality of what the parties have contributed in a financial and non-financial sense, including contributions to the welfare of the family and to the acquisition, conservation and improvement of assets. The court is required to evaluate the significance of all the various contributions to the property, notwithstanding there may be different categories of that property.
These comments are applicable in this case given the length of the marriage. In my view, it is appropriate to include the $180,000 of the wife’s inheritance placed in the parties’ self-managed superannuation fund in the pool. I will add back the remaining $240,000.
The wife placed $180,000 of her inheritance into the parties’ superannuation fund. She says this was at the husband’s behest. She claims that the superannuation fund has increased by $47,000. She wants credit for this. The husband does not agree with the wife’s assertion. I cannot see where the wife derives this figure from in her evidence. Sheet 11 annexed to the case outline is simply a calculation where she says the fund had a balance of $1,214,412 that has since grown to $1,532,032. She seeks credit for the growth of the fund being $180,000 plus $47,000. The wife’s approach is flawed as it assumes that she can simply assume that her injection of funds is solely responsible for the increase, conveniently ignoring the previous balance which is much greater than the $180,000. When the wife was re-examined about this issue, she referred to looking at the particular class of investments and the $180,000 and said as the night before the increase was $30,000. Tendering the superannuation financial statements does not assist as it is not possible to isolate what increase is due to the injection of $180,000. It ignores the significant amount of superannuation already in the fund. It also ignores the nature of superannuation investments and rising and failing markets.
THE PARTIES’ LEGAL AND EQUITABLE INTERESTS
Apart from the issue of addbacks, which I will address separately, the parties’ legal and equitable interests are largely agreed.
K Shares
The husband sold 350 K shares in April 2018 for $37,771. He used that sum and he withdrew $38,700 from his ANZ account to purchase the Motor Vehicle 1 for $75,000, as the Motor Vehicle 1 is included in the pool, the sale of those shares is already taken into account.
The husband sold his remaining K shares for $44,236 in October 2019. At paragraph 118 of the husband’s trial affidavit, he states the total net sum he received from selling the K shares in October 2019 was $44,258. However, in his updated financial statement and in the wife’s affidavit, the sum referred to is $44,236. I will rely on the $44,236 amount. The husband used the proceeds to pay outstanding legal fees. This amount should be added back as the K shares existed when the parties separated.
Jewellery
There was controversy between the parties as to whether or not three loose diamonds referred to in the valuation of 2011 should be included in the pool. The husband produced part of a valuation which referred to loose diamonds. The wife tendered the full valuation which the husband refers to as a pendant and lists various diamonds that make up the pendant underneath. The husband could not see that the diamonds referred to on the second page of the report he obtained were the diamonds referred to in the complete report and are part of the pendant which the parties agree was given to the daughter on her 21st birthday. I am satisfied that the diamonds referred to are included in the valuation of the pendant, which is their daughter’s. I accept the wife’s evidence that at that time the daughter was living with them and the wife arranged for it to be insured as part of their household insurance and nominated as a separate item. Insurance value is not the value used in family law proceedings. I am satisfied that the valuation relates to Ms H’s pendant and should not be included in the asset liabilities pool.
The parties agreed that the wife’s jewellery is valued at $38,215.
Motor Vehicle 1
The husband enjoys cars. In his trial affidavit he refers to a Motor Vehicle 2 and a Motor Vehicle 3 that he purchased whilst overseas. He will be retaining the two Motor Vehicle 2 and Motor Vehicle 3 he has referred to in the balance sheet below. He purchased the Motor Vehicle 1 for $78,000 in 2018 when he was unemployed.
The husband was cross-examined about his purchase of the car. He purchased it in mid 2018 for about $75,000. When it was put to him that he could have bought a cheaper car he said he has always bought large cars. By the time of closing submissions, the husband conceded that his Motor Vehicle 1 should be valued at $78,000, not the lower figure he contended for during the trial. Given his concessions it is not necessary to discuss this further.
There is no dispute about the value of the other cars and the boat trailer.
C Street, Suburb D Street property
The parties purchased C Street, Suburb D, Victoria (the “C Street, Suburb D property”) with a friend. They later transferred their half share into the wife’s sole name pursuant to tax advice. Consent orders made on 10 June 2020 provided for the transfer of the C Street, Suburb D property to Mr B. Mr B was party to those orders which provided for him to purchase the parties’ half share. Mr B was so pay the applicant and the respondent the sum of $206,000 into the trust accounts of their respective solicitors within 21 days of the approval of finance of $412,000 failing this, he was to provide each of the parties with $20,000 by 30 June 2020 and a further $186,000 each by 30 October 2020. To date, Mr B has not complied with those orders and the parties have filed an enforcement application for the sale of the property.
LIABILITIES
The husband seeks to include as a liability, the sum of $9,218 for the NAB overdraft account ending in ...60. The wife disputes that and gave evidence that she understood that the joint overdraft account together with the other mortgage accounts were all discharged upon the settlement of the sale of M Street, Suburb N (the “M Street, Suburb N property”. There is no evidence that this remains outstanding. I will not include it in the pool.
Money husband alleges the parties owe Mr J
Mr J is the parties’ son. He is a construction worker. He assisted the parties with building works at the M Street, Suburb N property.
The husband submits that the parties owe Mr J for unpaid invoices with respect to the renovation work he did on the M Street, Suburb N property. Mr J refers to this in his affidavit. Mr J was not cross-examined about this. As the wife’s counsel pointed out, nor was the wife. In the circumstances there is insufficient evidence for me to be satisfied that there is an outstanding debt to Mr J. If he chooses to, Mr J can pursue this in another forum.
Motor Vehicle 4
The wife seeks to include the Motor Vehicle 4 in the assets and liabilities table. The vehicle is their son’s. The parties funded half the purchase and Mr J funded the other half. It is because of the contribution by the parties that the wife seeks to include it in the pool, presumably at half value. She claims that it was an arrangement between the husband and son. She claims that she was not aware of it at the time period which he briefly disputed in cross-examination.
I accept the husband and Mr J’s explanation as to the reason the insurance is in their joint names. I accept the husband and Mr J’s evidence about the vehicle. In closing submissions the wife did not press for the inclusion of the vehicle.
Addbacks sought by the wife
The wife’s case outline includes an annotated balance sheet. She sets out the following under add backs:
Add backs Owner Balance Note 23. Transfers to persons overseas other than Ms O/Ms P H $2,406.75 See sheet 4 24. Cash withdrawals in Australia (Jan 18-mediation) H $19,445.00 See sheet 5 25. Cash withdrawals in Australia (Mediation-part-property settlement) H $48,297.90 See sheet 5 26. Cash withdrawals overseas (Jan 18-Jan 19) H $38,072.32 See sheet 6 27. Overseas expenditure (Jan 18-Jan 19) H $17,475.99 See sheet 7 28. Reconciliation adjustment H $29,402.91 See sheet 8 29. Legal fees paid other than as paid from inheritance, income or already
accounted for aboveW $NIL See sheet 9 30. Legal fees paid other than as already accounted for above H $95,890.60 See sheet 10 31. Qantas Frequent Flyer points given to son H $N/K To be disclosed TOTAL ADDBACKS: $250,991.47
The wife lists items 23 through to 31 as the add backs she seeks. She annexes explanatory sheets for each item, apart from Item 31. Those sheets are annexed to her case outline.
Item 23 Overseas transfers
In his trial affidavit the husband says he has advanced about $42,500 to Ms O. He says he has loaned her this money but acknowledges she may not pay it back. He says he used funds from his separate accounts post separation and money he borrowed from his mother. He says he did not use joint funds and resists an addback on this basis.
Item 23 is referred to as overseas transfers by the husband other than to Ms O or Ms P totalling $2,406.75. Sheet 4 actually deals with a raft of transfers totalling according to that spreadsheet of $61,802.68, including transfers to Ms O. This document provides no assistance with respect to item 23 and given that the amount sought is less than $2,500 in the pool in excess of $3 million it is utterly disproportionate. The wife also includes three transactions from 2014 three years before separation. The husband was cross-examined about sheet 4 to the wife’s case outline. He did not accept that it was accurate and said he had some queries and thought that there had been some double counting particularly with respect to western union entries. He certainly accepted that he transferred funds to Ms O and referred to it in his affidavit.
What is of some significance in terms of timing is that at the same time as sending significant funds overseas to a friend, the husband’s position was that he was unable to support himself as he did not have an income and borrowed funds from his mother. The wife’s counsel referred to the husband’s financial statement sworn on 12 June 2018 where he said his living expenses were $421 a week. The husband agreed that that was approximately three weeks of his weekly expenses. The husband’s June 2018 financial statement is included in the wife’s tender bundle. There is a clear error in that document at item 32 as there is no amount for other expenditure which refers to items such as food, utilities, entertainment, clothing and the like.
His living expenses have now increased to $1,689 a week according to the financial statement filed with his trial affidavit. The husband explained when cross-examined that in large part the increase was rent but also increased medical expenses.
The issues is whether the loan to Ms O should be included in the asset pool. In her trial affidavit, at paragraph 66.2 the wife gave the total amount as $59,400. In her case outline the wife gives the figure Ms O owed as $59,396. She refers to sheet 4 annexed to her case summary as support this figure although the total is $61,802,68, includes a few entries pre-dating separation and various bank fees. She refers to sums of money also being advances to Ms O’s sister and $2,400 to Ms Q. In his updated financial statement, the husband states that the amount owing to him From Ms O was $43,000. During cross-examination, the husband was questioned on the total amount of money he had transferred to Ms O. The wife’s Counsel put to the husband that the total amount owing was $59,902, to which the husband said “it’s within that vicinity. I think there’s some double counting…it’s around those figures.” The slight variation to the figure in these documents and the figure put the husband in cross-examination were not explained. Whilst the husband’s evidence is that he did not use joint funds to pay Ms O, it is clear that at the same time he was using joint funds to pay for his living expenses. In these circumstances it is appropriate to include the loan as an asset of the husband’s however as the figures the wife gives includes other sums I will include the loan as an asset of the husband but will adopt the figure of $50,000.
Cash withdrawals items 24 and 25
Item 24 is the husband’s cash withdrawals in Australia dated from January 2018 to mediation and refers to sheet 5. Sheet 5 summarises ATM withdrawals with the highest being $4,000 and the lowest being $100. Item 25 is cash withdrawals in Australia after the mediation and also refers to sheet 5. Sheet 5 includes the summary of these items and includes bank fees as little as four dollars.
The major area of controversy between the parties was with respect to the wife’s references to mediation which took place in January 2019. It is common ground that no heads of agreement were entered into. I am not satisfied that there is a basis for adding back the sums the wife seeks based on some sort of informal agreement. The reality is the husband did not have an income at that time and it is clear from the evidence that both parties made post separation expenditures on discretionary items such as travel just as they did during the relationship.
Overseas expenditure items 26 and 27
Item 26 refers to withdrawals overseas from January 2018 to January 2019 totalling $38,072.32 and refers to sheet six. The list of transactions at sheet 6 again goes into minutiae and includes bank fees incurred during 4 trips to Country R. This is precisely the type of accounting exercise that the Court is not to engage in and is utterly unhelpful. I am concerned about how much time has been spent on preparing these unhelpful sheets.
The husband was cross-examined about this expenditure. He said the first Country R trip was on his way home to Australia after his employment ended. He said it was part holiday and part business trip as he made enquiries about employment opportunities there.
Item 27 is overseas expenditure for the same period of January 2018 to January 2019 totalling $17,475.99.
The wife conceded in cross-examination that she had undertaken a number of overseas trips post-separation. She has also used joint sums in some instances such as the redundancy payment she received around the time of her father’s death, which was pre-separation. She clearly has not engaged in this accounting exercise with respect to her own expenditure.
I am not satisfied that the amounts the wife seeks at items 26 and 27 should be added back.
Reconciliation adjustment item 28
Item 28 is described as a reconciliation adjustment of $29,402.91 and refers to sheet 8. In essence it shows the difference between the amounts that the wife says she has withdrawn since mediation and husband has withdrawn since the mediation, with her complaint being that the husband withdrew $29,402.91 more than she did. The wife’s reconciliation includes things such as purchases at Coles, payments of mobile phone bills and interest paid, her complaint being that some of these were taken from joint funds.
As discussed earlier, the wife’s affidavit contains several paragraphs which are objected to because they refer to mediations. Whilst the paragraphs do not refer to the ultimate proposal it does refer to several ancillary matters which the wife claims were agreed to. It is clear that the parties did not enter into any agreement at either mediation. They did not even sign a heads of agreement. Whether or not there was any oral agreement is immaterial. In those circumstances it is not appropriate to engage in the exercise the wife asks the Court to do.
The wife complained that the husband continued to use joint funds to pay for his living expenses whereas she largely pays for expenses from her income. Of course during this period the wife had access to her income and to her inheritance whereas the husband’s only income was job keeper payments. I am satisfied having heard the evidence that during this period the husband did try to find work and had numerous health issues which he was not challenged on.
The husband did have the benefit of remaining in the M Street, Suburb N property pending sale and not having to pay rent living elsewhere. The benefit to both parties was that he was able to prepare the property for sale. The husband was not challenged about the work he deposes to do to get the property ready for sale.
Legal fees items 29 and 30
Items 29 and 30 deal with the wife’s contentions as to the treatment of legal fees. The wife paid her legal fees from her inheritance and post separation earnings. I accept the wife’s Counsel’s submissions that in those circumstances they should not be notionally added back.
Any legal fees either party paid from their partial property settlements should also not be added back as the partial property settlement is included in the pool.
As stated earlier, the sum of $44,236 from the sale of the K shares which the husband used to pay his legal fees should be added back, as the K shares formed part of the asset pool at separation.
The wife seeks a higher figure of $95,890.60. At sheet 10 the wife says that the husband paid $51,654.50 in legal fees from joint funds prior to 13 March 2019. She gives no indication as to where this figure comes from. At paragraphs 133 and 147 of her affidavit, she refers generally to the husband using joint funds to pay for his legal costs. She does not refer to the specific figure of $51,654.50 in her affidavit. The husband was not cross-examined about this figure. The husband was cross-examined about the legal fees he paid from the $320,000 partial property settlement he received. As I cannot be satisfied as to where this figure of $95,890.60 comes from, I will not add back the higher figure the wife seeks.
As the partial property settlements both parties received are included in the asset pool it would be double counting to add back the legal fees either party paid from the part property settlements.
Qantas Frequent Flyer points item 31
Item 31 refers to Qantas Frequent Flyer points the husband gave to the son and notes that they have not been disclosed. This is not addressed anywhere in the affidavits, evidence or cross examination of either the husband or Mr J and should not have been included.
Superannuation
The parties have a self-managed superannuation fund which they are the trustees of.
Their superannuation entitlements form a significant part of the pool. The parties both received a draw down from their superannuation fund. Both are over 60 years in age. In those circumstances, I will include it in the one pool.
The husband’s Counsel submitted that there should be a single pool approach given the myriad of the parties’ contributions over a long marriage. I agree that it is appropriate to include the parties superannuation and the wife’s inheritance in the one pool
I find that the parties’ assets for the purpose of this trial are as follows:
Assets ownership $ Remaining proceeds of M Street, Suburb N Wife 333,000 Balance of deposit M Street, Suburb N held by wife’s solicitors Wife 68,000 Equity in C Street, Suburb D Wife 372,000 Balance of the C Street, Suburb D property deposit held by husband’s solicitors on trust Wife 1,044 C Street, Suburb D property deposit held by wife’s solicitors on trust Wife 20,000 Jewellery Wife 38,215 Jewellery Husband 1,375 Motor Vehicle 1 Husband 78,000 Motor Vehicle 5 Wife 16,800 Motor Vehicle 2 Husband 33,000 Motor Vehicle 6 Husband 70,000 Boat and trailer Husband 9,350 S Shares Wife 2,288 Part property settlement Wife 320,000 SMSF drawdown Wife 20,000 Part property settlement Husband 320,000 SMSF drawdown Husband 20,000 Loan owing by Ms O Husband 50,000 Husband’s paid legal fees from join assets Husband 44,236 Wife’s inheritance (not put into superannuation) Wife 240,000 Total 2,017,495 Superannuation E Super Fund Joint 1,515,626 T Super Fund Wife 9,452 TOTAL SUPERANNUATION 1,525,078 Total Including Superannuation 3,591,782
CONTRIBUTIONS
When the parties started living together they were in their early to mid-20s and both were working full time. Neither had assets of any significance. The parties bought a block of land, both contributing to the purchase.
The husband says that the parties contributed equally during and after the relationship. He refers to the husband making a greater contribution to preparing the M Street, Suburb N property for sale between November 2018 and January 2020 and the wife contributing more to the parenting and homemaking role during the periods that the husband was overseas.
His mother also made significant contributions gifting the parties money each year, including giving them $50,000 in 1984 and paying $30,000 towards their daughter, Ms H’s university fees. She also provided regular assistance with caring for children. The wife conceded this during cross-examination.
The husband says he put his $220,000 redundancy which he received in 2009 into the parties joint mortgage account. The wife conceded that he placed a significant amount into the mortgage account and further considered that she did not dispute the husband’s claim in her affidavit. The wife also conceded that she received a $25,000 redundancy around the time of her father’s death. She conceded that she used some of that money on an overseas trip with a girlfriend. She said she did not think she used all of it. However she does not address it in her trial affidavit at all. This does the wife no credit at all when she has gone to great lengths to analyse and challenge the husband’s expenditure. She was cross-examined about other expenditures she made post separation, including a trip to the Country U with her sister and other trips to Country V and Country W.
The wife agreed when cross-examined that the parties enjoyed a comfortable lifestyle and had holidays interstate and overseas. She conceded that up until 2010 when the husband was overseas, they contributed equally to the support of the family. She also agreed that she assisted the husband to obtain his overseas employment and in fact she received a commission in her role as a salesperson. During the years the husband was working overseas he of course was more limited in the assistance he could provide with respect to parenting and homemaking responsibilities. However the husband’s move to take up employment overseas was very much a joint venture for the benefit of the family. The wife with her experience as a sales consultant assisted the husband find his employment.
The husband earnt a higher income during his years overseas. The wife alleged that the husband sent back less than half of his salary to Australia. Annexure -10 is a schedule setting out the parties’ respective incomes and his calculation that he sent approximately 74% of his salary to Australia. He was cross-examined at some length on this topic. His evidence was clear that he took the figures from the joint bank account. Several of these statements are included in the husband’s tender bundle. The husband tendered correspondence where he addressed the wife’s allegation and bank statements.
The wife included some documents going to this issue in her tender bundle, including parts of employment contracts. The difficulty is that these refer to different currencies dating back many years. There is no reference to Australian currency. It would be necessary to adduce evidence of the official exchange rates published by the Reserve Bank of Australia applicable at the relevant time.
It was squarely put to the wife by the husband’s senior Counsel that she did not produce evidence contradicting the husband’s evidence about his salary, noting that the schedules attached to her case outline are not evidence. She conceded that she did not have any in her affidavit. She referred to employment contracts and invoices suggesting different figures. None of what she tendered advances her case in this respect. Furthermore, many of the figures the husband referred to come from the joint account, which the wife could have clearly checked. The wife agreed she set up a separate bank account after their marriage broke down, and had her salary paid into that account instead of the joint account. She said the husband also set up a joint account.
Having considered these together with the parties’ evidence in cross-examination, I prefer the husband’s evidence on this point and accept that he remitted approximately 74% of his income to Australia. It was reasonable for him to retain the rest to cover his expenses.
I am also not satisfied that there was any foundation for the suggestion that the husband has failed to disclose overseas assets.
The husband’s counsel cross-examined the wife about her affidavit pointing out that she did not acknowledge the husband’s contributions in her affidavit, in contrast to his acknowledgement of hers in his trial affidavit. Where she did refer to financial contributions by the husband, she conceded that she did not put in figures although stated she was aware of them.
In closing submissions the wife’s counsel submitted that except for the inheritance it has never been disputed that it was a long marriage with the parties working in a joint venture. This was not her position in her affidavit or in her case outline.
The wife’s case outline emphasised the wife making greater “day to day contributions” during the matter. Paragraph 11 of the wife’s case outline states:
Leaving aside the wife’s very late inheritance, the wife made greater contributions during the relationship. If the wife’s very late inheritance is not effectively excluded from the asset pool by virtue of that proportion of her fees not being added back, and is instead taken into account as a contribution, the wife made the far greater contributions.
Indeed, much of the flavour of the wife’s case in her affidavit and case outline is that she made greater contributions during the relationship and after it ended. Senior Counsel for the husband referred to Mayne & Mayne [2011] FamCAFC 192 at paragraph (78):
73.Parties to proceedings about the division of property before the Family Court (and the Federal Magistrates Court) frequently urge the Court to add-back assets or funds that have been applied by one party or another for allegedly his or her own purposes after separation. The rationale is that one party should not benefit from a premature distribution of the assets. An obvious example is withdrawing and using money from a bank account either joint or owned by one of the parties. It is also the case that the parties may decrease the pool by increasing liabilities. The issue in such cases is whether the liability should be a joint liability or a liability only of the party who created it.
74.The application of the funds removed (or the debt incurred) may have been for a personal purpose (for example, to pay legal fees) or it may have been applied in the sustenance of a party or the children of the parties
75.If the former is the case this has generally found to be a pre-emptive unilateral division of property. If the latter is the case then the principles enunciated in Marker v Marker [24] and Chorn NH & Hopkins RC[25] apply. If the money was, or part of the money, was used to meet reasonable living expenses then that money, or that part of the money, is not “added-back” or regarded as a pre-emptive distribution.
76.Ordinarily a trial judge would identify from the evidence what the property of the parties, or each of them, was at the trial (and perhaps for obvious reasons in the light of what has been set out above also at separation).
77.What then is the situation when one party appropriates to his or her own purposes assets (or funds) of the parties before separation. Sometimes it is difficult to be precise about the actual date of separation and hence in many cases this may be an important factor to be determined by the judge.
78.It seems that human experience (and common sense) shows that while parties are together, each might, from time to time and with the consent of the other, either express or implied, apply or appropriate assets or funds to his or her own purposes. When the relationship is good, no-one is likely to care – let alone keep records. Individual amounts may stand out, as is the case here, but many small transactions in combination may exceed, in total value, one large transaction.
M Street, Suburb N renovations
The parties renovated M Street, Suburb N. The parties engaged their son Mr J to assist as he is a construction worker. Significant renovation work was unfinished at the time the parties separated. The husband was cross-examined about the funding of the renovations. He agreed that he approached their daughter Ms H seeking a loan and offering to pay interest after the wife refused to access her inheritance for the purpose of funding the renovations post separation. The wife’s Counsel cross-examined the husband that the wife had proposed to advance the funds and sought interest. The husband did not agree to pay the wife interest. The wife and their daughter are in different positions. There is nothing unreasonable or inconsistent in the position of offering to pay interest to an adult child and not being willing to pay interest to a former spouse after a long marriage for a joint venture that both would benefit from. There was a controversy between the parties as to the reconciliation of the funds the wife advanced but in the end he accepted she advanced approximately $88,000. She was repaid this sum from the deposit. By the end of the trial, the husband accepted the wife’s figure. As the wife pointed out, many of those costs were to pay their son Mr J’s invoices with respect to his renovation work on the property.
The husband was cross-examined about annexure -2 to his trial affidavit where he sets a table of his expenditure with respect to the M Street, Suburb N property from May 2019 to February 2020. Some of this expenditure, such as internet and other non-renovations related expenses is from the husband’s personal expenses account. The total of this expenditure is $37,760.
It was of course in both parties’ financial interests to complete the renovations before selling the M Street, Suburb N property.
After about seven months of living in the M Street, Suburb N property post separation, the wife moved to a rental property. The husband remained in the M Street, Suburb N property until the property was sold. Whilst the husband had the benefit of living in the property and did not pay rent, in contrast to the wife, he also worked on the property including getting it ready for inspections.
MS X
Ms X, the husband’s mother, was briefly cross-examined. In 1983, she gifted $50,000 to the parties from the husband’s estate.
During the marriage she provided significant support to the parties including looking after the children whilst the parties were at work. She assisted taking the children to and from school and would look after the children during school holidays when the parents were not on leave. From 1984 until the parties separated she gifted the parties between $5,000 and $8,000 a year, providing cheques on their birthdays and Christmas.
In addition to the annual monetary gifts, she paid $30,000 towards her granddaughter Ms H’s university fees.
The wife does not dispute the contributions that the husband’s mother made but emphasised the gifts were to both of them.
Although not referred to in her affidavit, Ms X has advanced sums totalling $70,000 to the husband in 2018 and 2019. She says these are loans. She says she did not ask the husband what he needed the money for. She is not charging interest and says this was not discussed. None of the money has been repaid. There is nothing in writing. She is confident that the husband will repay her when he is able to. She said she believed he would try to repay her if she told him she needed it. Appropriately, the husband does not seek to include the loan in the pool.
SECTION 75(2) FACTORS
The parties are of a similar age. Both will be looking at winding down and looking to retirement in the coming years.
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.
In mid 2020 he was hospitalised due to severe pain and was diagnosed with a rare form of cancer. His oncologist Dr CC provided a report dated 1 October 2020. The treatment plan is careful observation and review. He does not anticipate the husband experiencing significant symptoms or side effects from his diagnosis. He will need follow ups over the next 2 years. His prognosis is good as these types of cancers are usually low grade and do not spread or cause major symptoms.
The medical evidence establishes that currently the husband’s ability to work is hampered by his need for surgery.
From Dr CC’s report it does not appear that the husband will be restricted in his capacity to work by the cancer. The husband has been able to earn a high income particularly whilst overseas. His future earning capacity must be seen as uncertain given his age.
The husband was cross-examined about his efforts to find work and his tender bundle included a summary of jobs he applied for unsuccessfully in Australia since separation. He said many of the applications were made through jobseeker websites such that the actual employer was not identified.
The husband was also cross-examined about $3,000 he spent on obtaining his truck drivers licence. The husband opposes to having the opportunity in late 2018 to purchase a business within this context that he obtained a truck driving licence for medium and small trucks. In addition to the health conditions he has suffered post separation, the husband deposes to being hospitalised again in 2018 and having further surgery. He says he was unable to drive or walk for several weeks and realised that at that stage he did not have the physical strength to engage in a business. He denied that this was wasteful though he acknowledged he has not used that license, given his need for the foot operation his explanation is reasonable.
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:
Item Value $ Jewellery 38,215 Motor Vehicle 5 16,800 S shares 2,288 Part property settlement 320,000 SMSF draw down 20,000 Inheritance 240,000 T Super Fund 9,452 Total: 646,755
The husband will retain:
Item Value $ Motor Vehicle 1 valued 78,000 Motor Vehicle 3 valued at 33,000 Motor Vehicle 6 valued at 70,000 Boat and trailer valued at 9,350 Part property settlement valued at 320,000 SMSF draw down valued a 20,000 Jewellery valued at 1,375 Loan owing by Ms O 50,000 Husband’s legal fees paid from joint funds 44,236 Total: 625,961
In order to achieve the outcome the following needs to be divided:
Item Value $ Remaining proceeds of sale of M Street, Suburb N valued 333,000 C Street, Suburb D 372,000 Money in trust held by the wife’s solicitor, being the balance of the C Street, Suburb D deposit 20,000 Money in trust held by the husband’s solicitor, being the balance of the C Street, Suburb D deposit 1,044 Deposit balance held by the wife’s solicitor 68,000 Self-managed superannuation fund 1,515,626 Total: 2,309,670
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.
The husband’s approach invites conflation of considerations under s75(2) when considering the property adjustment and maintenance. They are two distinct applications and must be considered separately. The maintenance application must be considered separately to and after the consideration of the property adjustment as the property adjustment outcome may mean that there is no longer a need for maintenance.
There are good reasons for maintenance orders to be made on a periodic rather than a lump sum basis. It better reflects the fact that maintenance is to address ongoing needs which can change with the vicissitudes of life. The wife is 3 years younger than the husband so she will also be looking to retirement in the coming years.
I dismiss the husband’s maintenance application.
I certify that the preceding one hundred and twenty-one (121) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Harland. Associate:
Dated: 4 March 2021
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Costs
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Damages
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Duty of Care
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Fiduciary Duty
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Injunction
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