NENDICK & NENDICK
[2019] FamCA 865
•22 November 2019
FAMILY COURT OF AUSTRALIA
| NENDICK & NENDICK | [2019] FamCA 865 |
| FAMILY LAW – PROPERTY SETTLEMENT – Just and equitable – Future needs – Contributions – Section 75(2) factors FAMILY LAW – PROPERTY SETTLEMENT – Where the parties self-managed superannuation fund is likely not compliant due to mismanagement – Where the husband has used funds from the self-managed superannuation fund for personal purposes – Orders |
| Bevan & Bevan [2013] FamCAFC 116 Bonnici & Bonnici (1992) FLC 92-272 Carter & Carter (1981) FLC 91-061 Dickons & Dickons [2012] 50 Fam LR 244 Hurst & Hurst [2018] FamCAFC 146 Stanford & Stanford (2012) 247 CLR 108 |
| APPLICANT: | Ms Nendick |
| RESPONDENT: | Mr Nendick |
| FILE NUMBER: | ADC | 4731 | of | 2017 |
| DATE DELIVERED: | 22 November 2019 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 30 September 2019 to 3 October 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Roberts |
| SOLICITOR FOR THE APPLICANT: | Furler & Co |
| COUNSEL FOR THE RESPONDENT: | Ms Horvat |
| SOLICITOR FOR THE RESPONDENT: | Port Adelaide Lawyers |
UPON NOTING that the wife is to receive a settlement sum of FIVE HUNDRED AND FIFTY EIGHT THOUSAND NINE HUNDRED AND EIGHTY EIGHT DOLLARS ($558,988) and will retain property to the value of FORTY FOUR THOUSAND SIX HUNDRED AND NINE DOLLARS ($44,609).
Orders
That in full and final settlement of any claim that either party may have against the other or at any time in the future for settlement of property or alteration of interests in property:-
(a)That on or before thirty (30) days from the date of this order the parties do all things necessary and sign such documents as may be required to give forthwith effect to the transfer to the trust account of Furler and Co for and on behalf of the wife the following:-
(i)From the Mellor Olsson Trust Account being the net proceeds of the sale of the Suburb E property the sum of ONE HUNDRED AND TWENTY FIVE THOUSAND SEVEN HUNDRED AND SEVENTY THREE DOLLARS ($125,773);
(ii)From the W Bank Maxi Saver Account no. …40 in the name of the husband the sum of ONE HUNDRED AND TWENTY THOUSAND DOLLARS ($120,000); and
(iii)The further sum of TWO HUNDRED AND SIXTY EIGHT THOUSAND SIX HUNDRED AND SIX DOLLARS ($268,606).
(b)That the order of injunction made 3 October 2019 is varied to allow for the transfer of the sum of ONE HUNDRED AND TWENTY THOUSAND DOLLARS ($120,000) from the husband’s W Bank Maxi Saver Account to be paid in accordance with order 1(a)(ii) and upon the transfer of funds as ordered herein the order of injunction is discharged;
(c)That the parties do all things necessary in their capacity as trustees of F Pty Ltd Self- Managed Superannuation Fund (“the Super Fund”) to appoint an accountant to wind up the Super Fund subject to the following:-
(i)That upon the appointment of an accountant the parties instruct Mellor Olsson solicitors to transfer the remaining sum of FIFTY THOUSAND DOLLARS ($50,000) from their trust account to the trust account of the accountant or such other agreed or nominated account for and on behalf of the parties;
(ii)That the fees, costs and charges associated with the winding up of the Super Fund be paid from the money transferred into the said account PROVIDED that if the funds so transferred are insufficient to effect the winding up THEN the parties will be responsible for the shortfall in equal parts, however if there shall be surplus funds remaining after the winding up THEN they are to be distributed to the parties as to 52.5 per cent to the husband and 47.5 per cent to the wife.
(d)That the husband shall indemnify the wife and be responsible for the payment of any default taxation or penalties, fines or levies that are levied or assessed in respect of the Super Fund being non-compliant, the withdrawal of money from the Super Fund by the husband or the non-filing of taxation returns and financial statements.
(e)That unless otherwise specified herein the wife shall have as her sole property and free from any claim, right or entitlement of the husband the following:-
(i)Furniture and effects currently in her possession;
(ii)Clothing and personal effects in her possession;
(iii)All amounts standing to her credit in any bank, building society or credit union account currently in her name;
(iv)All motor vehicles registered to her, subject to any liability attached to same;
(v)All other property in her possession and control whether registered in her name or not and if not as otherwise specified herein.
(f)That unless otherwise specified herein the husband shall have as his sole property and free from any claim, right or entitlement of the wife the following:-
(i)Furniture and effects currently in his possession;
(ii)Clothing and personal effects in his possession;
(iii)All amounts standing to his credit in any bank, building society or credit union account currently in his name;
(iv)All motor vehicles registered to him, subject to any liability attached to same;
(v)All other property in his possession and control whether registered in his name or not and if not as otherwise specified herein.
(g) That each party shall:-
(i)Release the other party from any liability from any claim that either one may have against the other in respect of any property and/or financial resources present or future whether at law or in equity vested or contingent either now or hereafter owned by either of them; and
(ii)Discharge without calling upon the other to contribute thereto their several debts contracted for or by them.
(h)That henceforth each party is restrained and an injunction is hereby granted restraining them and each of them from pledging the credit of the other.
(i)That if either party shall refuse or neglect to execute any document necessary to give effect to the terms hereof within seven (7) days after the same shall have been tendered to him or her for that purpose THEN and in such case a Registrar of this Honourable Court upon proof by affidavit of such refusal or neglect is hereby appointed and any such document on behalf of either party hereto and if in his or her opinion it shall be necessary so to do to settle the same and to do all such other acts and things and execute all such other documents to give full force and effect hereto and shall execute and do the same accordingly and the party in default shall pay the other parties’ costs as agreed or taxed;
(j)That upon the payment of the settlement sum in paragraph 1(a) hereof the wife will transfer to the husband her interest in the property at Street H, Suburb J in the State of South Australia described in Certificate of Title Volume (“the Street H, Suburb J property”);
(k)That in default of the payment to the wife of the settlement sum as described in paragraph 1(a) hereof and should default remain outstanding for a period greater than seven (7) days THEN and in such case the Street H, Suburb J property shall be forthwith listed for sale by private treaty upon such terms and conditions as the parties may agree but failing agreement upon the following conditions:-
(i)A real estate agent to be nominated by the Chief Executive Officer/Secretary of the Real Estate Institute of South Australia at the request of the parties or either of them;
(ii)That the property shall be sold at such sum as may be agreed between the parties but failing agreement within fourteen (14) days of the date of these orders, the list price will be as nominated by the real estate agent;
(iii)The sale price of the property shall be such amount as agreed between the parties and failing agreement any offer to buy the property that is at least 80 per cent of the list price shall be accepted by the parties as the sale price;
(iv)The parties are to cooperate in every way with the real estate agent in relation to the marketing of the property for sale including making the keys readily available, allowing inspection of the property at all times reasonably requested by the agent and ensuring that the property is clean, neat and in good order at the time of inspection by any prospective buyer.
(l)That from the net proceeds of the sale of the Street H, Suburb J property the wife shall receive so much of the settlement sum as shall be outstanding together with default interest calculated pursuant to the Family Law Rules 2004 (Cth).
(m)That until the wife has received the totality of the settlement sums as set out in paragraph 1(a) hereof, the wife shall be deemed to have an equitable interest in the Street H, Suburb J property and the husband be restrained from selling, transferring or further encumbering the said property other than as may be necessary to give effect to the order.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Nendick & Nendick has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 4731 of 2017
| Ms Nendick |
Applicant
And
| Mr Nendick |
Respondent
REASONS FOR JUDGMENT
Introduction & background
The proceedings between Ms Nendick (“the wife”) and Mr Nendick (“the husband”) relate to the settlement of matrimonial property.
The parties commenced cohabitation in 1983 and were married in 1989. They separated after 33 years on 19 November 2016.
The wife has one adult son from a previous relationship, namely Mr C born in 1981 (“Mr C”).
The parties have two adult sons, namely Mr B born in 1986 (“Mr B”) and Mr D born in 1993 (“Mr D”).
Each of the children are in good health and reside independently.
At the commencement of the relationship the wife did not have any significant financial resources or assets. The husband owned property at Suburb G, a motor vehicle worth $5,000 and the F Pty Ltd business (“F Pty Ltd”).
Following the commencement of cohabitation the wife received a debt notice from Centrelink relating to Sole Parent payments she had received following the commencement of cohabitation. The wife did not declare to Centrelink that she had entered into a relationship with the husband and had been overpaid. The husband paid the liability to Centrelink on the wife’s behalf.
The husband initially asserted that the Centrelink debt was $60,000 and the wife asserted that she could not remember but considered that the figure was more likely around $13,000.
F Pty Ltd was established in 1981 and grew into a profitable company, earning up to $1.2 million gross profit per annum before it ceased trading in 2000. The husband attempted to sell the business but was not able to do so and instead sold the plant and equipment of the business.
In approximately 1990 the parties purchased two allotments at Suburb U to use as a depot for F Pty Ltd. The properties were sold in 2004 for approximately $190,000 gross proceeds.
In 1994 the parties purchased a holiday home at Suburb E for approximately $55,000. The Suburb E property was sold in 2017 for $245,000.
In approximately 1997 the Suburb G properties were sold for $152,000 and the parties utilised the proceeds of sale to purchase Street H, Suburb J (“the matrimonial home”) for $400,000.
In 2004 the husband utilised the profit from the sale of a property to commence trading K Pty Ltd. The wife worked in the business full time and the husband worked as required doing deliveries.
The business was wound up in 2005 following the parties each suffering a workplace accident and sustaining injuries.
The wife was injured when a small piece of machinery fell onto her; causing injury to her back and neck. She received a compensation payment of $100,000 and has been able to return to employment following her recovery.
Within three weeks of the wife’s injury, the husband was also injured when a large piece of machinery fell onto him causing crush injury to his left leg and other serious injuries. He received a compensation payment of $550,000 and has not been able to return to employment following a lengthy rehabilitation period.
The husband started a new business which involved the design, patent, the manufacture and distribution of products. The business was called “L Pty Ltd” (“the L business”).
The husband concedes that the wife was against the business enterprise and it is not controversial that all of the business decisions were made by the husband. Significant financial resources were invested in the setting up of the business and the promotion of the products. Within a relatively short period of time the husband realised that the business was not likely to succeed. There is no evidence as to the extent of money invested in the promotion of the business but it is likely to be substantial.
The business ended with the husband selling some of the products but throwing away the balance of the stock. The wife remains critical of the husband’s business acumen and she considers that the business venture was a folly. The husband accepts that the business was not successful but denies that he set out to waste money.
Following separation the wife continues in her employment as a customer service officer.
Neither of the parties has re-partnered, although the husband initially alleged that the wife was in a relationship that commenced in 2018.
Orders sought
The wife seeks that the non-superannuation assets and the superannuation entitlements be divided equally.
At the commencement of trial the husband was seeking addbacks to the pool as follows:
·$60,000 wife’s alleged Centrelink debt.
·$181,610 wife’s alleged gambling losses.
·$13,141 wife’s M Shares allegedly sold undervalue and without the husband’s knowledge or consent.
The husband also sought to have a $200,000 unsecured loan acquired by him post-separation brought to account as a liability of the parties.
Counsel for the husband advised in submissions following the conclusion of the evidence that he no longer pressed for addbacks in relation to the wife’s alleged gambling, the alleged Centrelink debt or the sale of the M Shares.
The husband no longer considers that the $200,000 unsecured loan should be brought to account as a liability of the parties.
The husband seeks that the non-superannuation assets of the parties be divided as to 70 per cent in his favour.
Parties self-managed superannuation fund
During the relationship the parties were the trustees of F Pty Ltd Self- Managed Superannuation Fund (“the super fund”). They each hold a member entitlement.
The information in respect of the super fund is scant. The parties no longer have the trust deed and there was uncertainty as to when the last financial statement and taxation return was prepared for the super fund. It is likely that the fund has been non-compliant in respect of the trustees’ obligations to submit the audited financial statements and returns to the Australian Taxation Office (“ATO”). Neither party provides any information as to the current member balance.
The management of the super fund has been problematic.
A significant component of the corpus of the super fund was a share portfolio.
The husband alleged that the wife had withdrawn the shares to the sum of $89,971.94. Exhibit “3” is a statement from N Pty Ltd who was the financial advisor to the parties in the management of the super fund. The statement confirms that on 13 October 2016 the sum of $89,971.94 was received from the sale of the super fund shares.
The wife denied that she had ever received the proceeds. A W Bank statement for account number #2 highlights that on 18 October 2016 the sum of $89,971.94 was deposited into the husband’s account and on 24 October 2016 the sum of $88,000 was withdrawn.[1] That sum was then deposited into the husband’s W Bank Maxi Saver account #1 on 24 October 2016.[2]
[1] Exhibit “8”.
[2] Exhibit “9”.
It appears that the husband thereafter used the money for his own purposes without recourse to the wife.
The difficulty is that the funds have been intermingled with other money in the husband’s Maxi Saver account. The money was not quarantined and is not now able to be traced to the current balance of the Maxi Saver account.
At the commencement of the proceedings the parties had not addressed the complexity that arises from the manner in which the super fund has been managed. It is likely that the super fund is non-compliant. The parties have no idea as to the member balance or indeed, whatever taxation liability may have arisen given the husband’s conduct in treating the superannuation account as if it were a personal account of the parties.
The wife asserts that the husband was controlling of the finances of the parties and that she had little or no ability to control what he did.
It is also apparent that the parties were not assisted by their solicitors who failed to recognise that the status of the super fund was problematic.
The parties now seek that the super fund be wound up and presumably that following the payment of the considerable accounting costs likely to be incurred together with any fines or taxation penalties, the member entitlements can be rolled over to the parties.
No evidence was presented as to the likely member entitlements. It is possible that one party may have a greater entitlement than the other.
The wife seeks that whilst the costs of winding up of the super fund be shared equally between the parties, any penalties or liability that arises because of the husband’s conduct should be borne by him.
Documents relied upon
The wife relies upon the following:-
·Amended Initiating Application filed 23 August 2019.
·Financial Statement filed 23 August 2019.
·Wife’s Trial Affidavit affirmed 26 September 2019.
·Case Outline Document.
The husband relied upon the following:-
·Response to Initiating Application filed 26 September 2019.
·Financial Statement filed 26 September 2019.
·Husband’s Trial Affidavit filed 26 September 2019.
·Trial Affidavits of Mr O filed 26 and 27 September 2019.
·Case Outline Document.
The parties legal costs
The parties’ Schedule of Costs Statements comprise Exhibit “4” in the proceedings.
The wife has incurred fees totalling $42,753 with the estimate of solicitor’s fees for attendance during the trial of $2,750 per day and counsel fees of $3,850 per day.
The wife has paid her solicitors the sum of $18,799.
I propose to addback that money into the pool of assets.
The husband has incurred solicitor’s fees of $53,142 with solicitors’ fees of $3,080 for each day of hearing and counsel fees of $3,850 per day.
The husband confirmed that he had paid his solicitors from the W Bank Maxi Saver account in the total sum of $77,000 which included the sum of $24,000 currently in trust.
I propose to addback that money into the pool of assets.
The evidence
The wife
The wife relied upon her Affidavit affirmed on 26 September 2019 and filed 30 September 2019.
The wife was challenged as to whether she had re-partnered and denied that she had.
The husband asserted that the wife had re-partnered with a person of significant financial means. It is assumed that the relevance of the topic went to the wife’s future financial circumstances. The wife denied that she had re-partnered and the husband’s counsel did not press the issue.
I accept the wife’s evidence that she has not re-partnered but even if that finding is wrong, in the absence of any evidence, nothing turns on the issue.
The wife sought to bring back to account a Motor Vehicle P to the value of $10,000.
Her evidence is that following the wife lodging a caveat over the Suburb E Property, she claims the husband harassed her at her workplace.
It is alleged that the husband demanded the return of a Motor Vehicle P registered in the husband’s name but given to the wife in 2009 as a birthday gift. It does not appear controversial that the wife was the only driver of the vehicle.
Ultimately the vehicle was returned to the husband at his insistence.
The husband had denied the wife’s allegations that he had intimidated her into returning the motor vehicle to him.
In cross-examination, the wife was asked to confirm whether the gift of the Motor Vehicle P was conditional upon the wife ceasing to smoke. The clear implication was that the wife recommenced smoking and the husband considered that the bargain had been broken and the car should be returned to him as a penalty.
The questions put to the wife on instruction by the husband lend weight to the wife’s assertion that the husband was determined to regain possession of the car.
The husband conceded that the value of the Motor Vehicle P should be brought back to account in the sum of $8,000.
The wife was questioned as to the sale of the shares from the super fund. Given the husband’s concession in his evidence that the shares were sold and were placed into his personal account by him, it is surprising that counsel was instructed to engage in robust cross examination of the wife on the premise that she had transacted the sale of the shares from the super fund.
The parties each received compensation settlements during marriage.
The total sum received by the parties of $650,000 was placed in the husband’s W Bank Maxi Saver account #1.
The wife opines that the funds were “wasted” by the husband on the L business and squandered on lifestyle and other expenses. She contends that she did not see any benefit of the substantial sum received by the parties and held by the husband in his account.
For reasons that are not well understood, there was no attempt by counsel for either of the parties to identify the settlement sums being credited into the husband’s account and then to consider how and when those funds were expended. The evidence supports a finding that at all material times the funds were under the control and at the discretion of the husband but not the wife.
Whether they were utilised in the manner as asserted by the wife or were dealt with in some other way is not able to be answered.
The wife conceded that she currently is in fulltime employment, is in good general health and has a reasonable expectation that her employment will be available to her until she decides to stop working.
Her income is about $65,000 per annum.
I find that the wife is a witness of truth and her evidence is reliable.
The husband
The husband relied upon his Affidavit affirmed and filed on 26 September 2019.
The husband highlights that his care of the wife’s son Mr C from age two until age 24 should be considered as a significant financial contribution. The financial assistance provided to the wife’s son included education expenses, holidays, social and other expenses and a wage of about $500 each week whilst Mr C attended university.
The wife agrees that the husband treated her son well during the early years of the relationship, however since separation the relationship has cooled and is marred by the husband making a civil claim against Mr C seeking damages of $65,000 which was ultimately settled for $10,000.
At the commencement of the relationship the husband contends that he held an interest in two properties situate at Suburb G.
He also held an interest in his business known as F Pty Ltd which he started in 1981.
Following a work-place injury in 2004, the husband received a substantial compensation payout. The injuries left him with deteriorating health. He complains of pain in his legs, back and neck and he has been diagnosed with Emphysema. His current poor state of health has adversely affected his ability to obtain employment.
The compensation proceeds were placed into the husband’s W Bank account number #3 on 23 March 2015. The monies were then transferred into the husband’s W Bank #1 account. The husband’s affidavit provides little assistance as to how the money was disbursed.
At [75], and [91] to [94] of the husband’s trial affidavit, he alleges that his compensation monies together with those of the wife and the sale of shares went into the W Bank #1 account.
The husband was asked about the state of his taxation returns and the financial statements for the super fund.
Apparently the husband instructed his current accountants to bring all of the financial statements up to date, but the previous accountants did not respond.
The husband was scathing of his former accountants and considered that they were unprofessional.
The wife was initially concerned that the husband had gifted to his adult children expensive jewellery including valuable wrist watches and a Motor Vehicle Q. The wife was reminded of the contents of [40] of her Affidavit filed 25 October 2017 in which she conceded that the gifting of the Motor Vehicle Q to the parties’ son was no longer the subject of challenge.
The husband asserted that the wife had little or no active part in the operation or management of F Pty Ltd. He considered that the extent of her involvement was her attendance each Thursday to collect her salary. The husband was not complimentary of the wife’s efforts and intended to convey that throughout the course of the marriage she was lazy and made little or no financial contribution.
The parties set up a business K Pty Ltd. The husband concedes that it was not particularly profitable and it was in the employment of the business that the husband and the wife were injured and received compensation monies.
The husband was able to provide better information as to the extent of his compensation settlement. The gross sum was $800,000 and the husband received $630,000 net of expenses. That sum together with the $100,000 received by the wife went into the W Bank Maxi Saver account which generated a high level of interest.
Much was made of the sum of $200,000 purportedly borrowed from Mr O. The husband initially sought to bring the money to account as a loan but during the course of his evidence abandoned that claim.
Exhibit “7” is a copy of a bank statement for an account allegedly held by Mr O. It shows that on 24 November 2017 there was a debit from that account in the sum of $200,000.
Exhibit “11” is a Commonwealth Bank Statement showing a deposit of $200,186.55 into the account of L Pty Ltd on 12 December 2017. It was then transferred to the business transactions account of the company on 20 April 2018, with the sum of $223,170.40 being debited on the same day into the husband’s W Bank Maxi Saver account #1.
The husband relies upon the evidence of Mr O to corroborate his assertion that he and Mr O have been longstanding friends. Apparently Mr O had hobbies with the husband and although there had been little or no contact between the husband and Mr O for some time, presumably in deference to their longstanding friendship Mr O was prepared to give the husband $200,000 in circumstances where the husband may have difficulty in repaying the money should the L Pty Ltd business not succeed.
The husband does not press that the money provided by Mr O should be treated as a loan, but he does not concede that the money allegedly provided by Mr O could be ignored completely.
The husband agreed that he had received the proceeds of the sale of the shares in the sum of $89,971.94 and that the shares were sold and the monies retained without the prior consent or knowledge of the wife.
At [39] of the wife’s trial affidavit she refers to funds being withdrawn from the super fund including $48,000 withdrawn on 7 and 8 December 2012 which went into the husband’s W Bank account #4 and a further $20,000 on 7 September 2016 which went into the husband’s W Bank #5 account.
The husband agreed that those monies had been withdrawn by him.
The husband was asked to consider the various significant transactions evident in the bank statements pertaining to the L business. In particular, the sum of $100,000 was credited into the account on 8 September 2016.
The wife’s counsel was not intending to conduct an audit of the extensive transactions as appear in the bank statements pertaining to the husband’s various accounts. The apparent focus of the inquiry was to highlight either that the husband’s financial affairs were chaotic and that he considered he could transact large sums of money without recourse to the wife, or that his inability to remember the detail of the transaction was confected.
I find that the evidence supports the wife’s assertion that the husband withdrew significant sums from the super fund in December 2012 and September 2016.
How the money was ultimately spent was a matter entirely for the husband. He did not convince me that the wife had ready access to his accounts and if she did that she was able to manipulate the transactions to her advantage. There is evidence that each of the parties spent modest sums on personal enjoyment including socialising, meals and alcohol and occasionally, utilising poker machines.
Whatever sums may have been available to the wife, her expenditure was necessarily limited and paled into insignificance when compared to the substantial money available to the husband which appears to have been disbursed without recourse to the wife.
The proceedings were adjourned to 10.00 am on 2 October 2019. The husband failed to appear. It transpired that the husband attended at the bank and withdrew the sum of $134,653 from the W Bank Maxi Saver #1 account.
The husband’s cross examination resumed on 3 October 2019. The husband was unsuccessful in being able to cash the bank cheque given the order made on 2 October 2019 which restrained him from dealing with, transferring, accessing or distributing or pledging money currently held in his W Bank Maxi Saver account subject to the injunction being limited to the sum of $145,000. That order was continued until further order.
The husband sought to tender a medical certificate which said that he was unwell and not able to attend Court on 2 October 2019.
The husband’s evidence was that he went to the doctor to have an examination and obtain a medical certificate and decided that he would attend the nearby branch of W Bank and withdraw all of the money in cash. The bank refused the husband’s application but were prepared to give him $15,000 in cash and the balance by way of bank cheque.
The husband could not adequately explain his conduct. He had intended to return the money to Mr O in part payment of the outstanding loan. He could not explain why that was to be done by cash rather than electronic transfer.
The husband’s evidence was unconvincing.
Addback for gambling debt
The husband states that the wife had the ability to access all of the husband’s accounts and at some later stage he “learned she withdrew money to fund her gambling”.
The following paragraphs are relevant:-
92.As part of [the wife’s] deception she also transferred various amounts of money between our bank accounts to make it seem like I was the one spending money and that I was the reason why our money was disappearing. This is evident in our joint W Bank #4 account.
93.Our bank statements show [the wife] funded her gambling addiction with various withdrawals, but discreetly covered her gambling addiction and so was able to deceive me during our marriage. This deception was done through manipulation of the bank accounts. [The wife] would withdraw money from the main account then transfer to other accounts.
94.Throughout our relationship I remained computer illiterate, so [the wife] dealt with all of our online banking. [The wife] would also access our bank accounts from her mobile phone which I still cannot do.
It was a significant focus of the husband’s case that the wife gambled away literally hundreds of thousands of dollars.
The wife was barely challenged in cross examination on the topic of her alleged gambling.
She agreed that she gambled from time to time and considers that she would sometimes gamble with the husband.
She recalls attending the local hotel each Friday with the husband. They would have a meal and some drinks, and engage in gambling. She estimates that on occasions the husband would gamble $1,000 in one session.
The wife estimates that in 2000 – 2002 she gambled once per week and spent up to $100 per sitting. She agrees that she may have put winnings back into the gaming machines, but also considers that she would have brought winnings home on occasion.
She agrees that she would withdraw money from an ATM at a gaming venue in order to gamble on the machines and that she would spend between two and four hours gambling per session.
The husband ultimately abandoned the addback of $181,610 that he sought in relation to the wife’s gambling.
Addback for Centrelink debt
The wife agreed that she received a debt notice from Centrelink and that the parties instructed a solicitor in relation to it. She considers that the debt may have been around $13,000 but says the notice could not have covered a period of more than 18 months. She agrees that the husband paid the debt but considers that it was not to the value of $60,000.
The Australian Government Social Security Guide provides that the maximum Sole Parent Pension (“SPP”) payment in 1983 was $5,402 per annum.[3] It is not possible that the wife was able to accrue $60,000 in SPP overpayments over a period of 18 months.
[3] Australian Government: Social Security Guide (20 September 2019) <>
The husband considered that in addition to the SPP debt he had also paid a fine and some solicitor’s fees but conceded that the sum of $60,000 was likely inaccurate. The husband’s revised position following consideration of the annual SPP rates was that he may have paid $45,000 overall rather than $60,000.
The Social Security Act 1947 (Cth) was in operation at the relevant time.[4] The relevant penalty pursuant to s 138A(1)(b) as enacted was a fine not exceeding $2,000 or imprisonment for a period not exceeding 12 months.
[4]Social Security Act 1947 (Cth) as at 1 August 1984.
I consider that the wife’s best estimate of the debt is likely to be more accurate than the husband’s; even accounting for solicitor’s fees and a fine.
The husband ultimately abandoned the addback of $60,000 and then $45,000 that he sought for the Centrelink debt.
Addback for the sale of M Shares
The husband sought an addback in relation to the sale of 1,163 M Shares by the wife shortly after separation.
The wife purchased the M Shares as an employee. The shares were ultimately sold at a rate of $11.30 per share; totalling $13,141.90 less outstanding balance and interest on a loan account.
The wife agrees that she sold the shares to pay her living expenses following separation. She did not want to sell all of the shares, but the policy of M Shares was that all shares must be sold.
The husband ultimately abandoned the addback of $13,141.90 that he sought for the sale of the shares.
Mr O
Mr O relies upon his Affidavits filed 26 September 2019 and 27 September 2019.
Mr O has known the parties for a number of years and had hobbies with the husband for approximately seven years. He confirmed in evidence that he had not spoken to the husband for approximately 15 years following their friendship “petering out”.
In September 2017 the husband apparently went to Mr O’s business and told Mr O he was having financial troubles with the L Pty Ltd business and his ongoing property settlement with the wife.
Mr O’s oral evidence was that he thought the husband needed the money in relation to the L Pty Ltd business; in order to get out of difficulty with investors.
Mr O was apparently so concerned for the husband’s mental wellbeing that he offered to loan the husband $200,000 as an interest free loan with no time frame for repayment.
In response to questions from counsel, Mr O agreed that he has not spoken to the husband about how the money had been used, or how it might be repaid. He considered that if the husband was able to “get back on his feet” that he might be repaid but otherwise does not expect to be repaid and has no intention of seeking repayment from the husband or pursuing a claim.
He did not concede that the $200,000 should be considered a gift.
Mr O conceded that he did not have a good relationship with the husband; saying that they “don’t get on that well” and agreeing that prior to September 2017 they had not spoken for 15 years. Mr O was apparently so concerned by the husbands presentation in September 2017 he considered the husband may be at risk of suicide and he decided to loan the $200,000.
Mr O was not an impressive witness. The evidence he gave under cross examination was inconsistent with the evidence contained in his affidavits.
Is it just and equitable to alter the property interests of the parties?
The parties both consider that it is just and equitable for the Court to make an order pursuant to s 79 of the Act.
In Stanford & Stanford (2012) 247 CLR 108 the majority held:-
35.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.
36.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. …
In Bevan & Bevan [2013] FamCAFC 116 the Full Court considered at [73] that the decision of Stanford could be reduced to three fundamental propositions:-
(1)The Court needs to consider the existing property interests of the parties and to identify those interests (by reference to common law and equity); and
(2)The discretion must be exercised in accordance with legal principles and not in respect of any assumption that the parties interests should be different from those determined by common law equity; and
(3)Section 79(2) cannot be conflated by reference to matters in s 79(4).
I consider that it is just and equitable for an order pursuant to s 79 to be made.
F Pty Ltd self-managed superannuation fund
The evidence presented in respect of the parties’ super fund is unsatisfactory.
The relationship between the parties is such that there was no prospect of joint instruction being given to the accountants. There is uncertainty as to whether the accountants who are likely to be able to construct the financial statements hold the confidence of the parties.
It is agreed that the super fund is to be wound up. The mechanics of that process remain uncertain.
The evidence supports a finding that from time to time the husband accessed the super fund bank account for his own purposes. At the very least the sum of $20,005.40 was transferred out of the superannuation account on 7 September 2016 and the sale of shares for $89,971 on 13 October 2016, both sums having been transferred into the husband’s personal accounts, are likely to be funds that can be traced back to the super fund.
Those monies are likely to form part of the balance of funds held by the husband in his W Bank Maxi Saver #1 account totalling $149,653 as at the 2 October 2019 when the husband caused a bank cheque to issue in the sum of $134,653 and obtained $15,000 in cash totalling $149,653.
I propose to bring that sum back into account as an addback.
There is no evidence as to what is required to ensure that the super fund is compliant and then the likely costs involved in the fund being wound up.
A further unknown is the extent to which there will be taxation and other penalties that will apply.
The parties agree that the super fund should be wound up and that a sum of $50,000 should be set aside to cover the costs of compliance and related accounting fees, charges and disbursements.
The wife seeks that the husband be responsible for any penalties that apply in respect of the super fund being non-compliant. The husband does not agree.
The husband’s conduct in respect of the management of the super fund has been both negligent in terms of the preparation of the financial statements and returns and wanton in terms of the husband accessing the super fund for his own benefit.
There is no suggestion that the parties acted in concert or that the wife knew of the husband’s conduct. I consider that the parties share equally in the reasonable costs incurred in winding up the super fund but that the husband be responsible for any fines, penalties or the imposition of any penalty taxation levied against the fund.
The husband will indemnify the wife in respect of same.
Given the age of the parties, I propose to treat the wife’s separate superannuation entitlement as if it were the property of the parties. It is a relatively modest sum and its inclusion will not have the effect of distorting the pool.
Moreover, but for her continued employment, the wife would have satisfied a condition of release. Upon her retirement she will be able to access her superannuation.
Assets and liabilities
Exhibit “15” in the proceedings is a list of assets and liabilities of the parties:-
Asset
Ownership
Value
Property at Street H, Suburb J SA
Husband
$725,000
Proceeds of sale of Suburb E property
Joint
$175,773
W Bank Society Cheque A/C no.5
Husband
$36
W Bank Complete Freedom A/C no. 2
Husband
$1,197
W Bank A/C no.6
Wife
$11,000
Motor Vehicle R
Husband
$7,500
Motor Vehicle S 1 (sold in 2018)
Husband
$4,500
Motor Vehicle S 2
Husband
$17,000
Motor Vehicle P
Husband
$9,000
Motor Vehicle T
Wife
$14,000
L Pty Ltd business
Husband
NIL
Sports Memorabilia
Husband
$1,525
Furniture and effects
Husband
$5,375
Furniture and effects
Wife
$175
Trailer
Husband
$550
Trailer
Husband
$200
Tray Back Camper
Husband
$3,000
Quad Bike
Husband
$1,200
Forklift
Husband
$3,500
Ride-on mower
Husband
$200
Jewellery
Wife
$660
Total
$981,391
Addbacks
Ownership
Value
Husband’s legal fees
Husband
$77,000
Wife’s legal fees
Wife
$18,799
$95,799
W Bank Maxi Saver #1 Account (not agreed)
Husband
$149,653
Total
$1,226,843
Liability
Ownership
Value
Loan for Motor Vehicle T
Wife
$16,060
Total
$16,060
Balance
$1,210,783
Superannuation
Ownership
Value
Super Fund V
Wife
$16,035
NET BALANCE
$1,226,818
The total pool of assets available for division between the parties is $1,226,818.
Contributions of the parties
At the commencement of the relationship the wife was employed as a hotel worker on a full time basis. Her income was relatively modest.
The parties’ relationship commenced in 1983. At that time the husband was operating the business of F Pty Ltd and continued to do so until 2000 when the business ceased to operate.
No evidence was presented as to the value of F Pty Ltd but I accept that for a period of time the business produced a reasonable level of income.
The wife had a child at the commencement of the relationship who was aged two years. Until there was significant disagreement between the husband and the wife’s now adult son, he was a member of the household and received financial support.
There is some contention between the parties as to the extent of the wife’s involvement in the day to day operation of F Pty Ltd. The wife considers that she played an active role, whereas the husband is disparaging of her efforts that he limited to the wife attending to collect her wages but no more.
The parties have two adult children. Mr B was born in 1986 and Mr D in 1993. There is little doubt that whatever else the wife did in relation to either the F Pty Ltd business or the operation of K Pty Ltd as and from 2004, she made the principal homemaker contribution.
The more interesting consideration is the extent to which the settlement funds received by each of the parties following work related injuries should be brought to account.
As discussed, each of the parties received substantial compensation payments as a consequence of injuries received in 2004 as employees of K Pty Ltd.
Neither of the parties presented any separate evidence setting out with precision the basis on which the settlement sums were paid. The wife considered that she received net of $100,000. The husband received a net sum of $630,000. Both sums were paid into the husband’s W Bank Maxi Saver #1 account.
Over the ensuing years the money has apparently been spent.
The wife did not have control or access to the account. The husband initially argued that much of the funds held in the account were spent by the wife on gambling. The husband resiled from that assertion and in any event, the evidence did not support that contention. I find that at all relevant times, only the husband had access and effective control of the account.
For reasons that are not obvious, the parties did not introduce evidence as to the expenditure by the parties and the transaction history of the husband’s account which may have cast some light on how the husband dispersed funds. It is a reasonable finding that some monies were spent on the L Pty Ltd business, however, the extent of the investment by the husband is not known. Given the spending history of the husband, it is likely that he accessed his account for his day to day living and household expenses. Some of the money is likely to have been utilised for his legal fees. The uncertainty of how the parties compensation monies were dealt with by the husband renders any attempt at a detailed consideration of the extent to which expenditure was reasonable as opposed to wanton or negligent and problematic.
The husband considers that considerable weight should be placed upon the disparity in compensation monies received by the parties, whereas the wife argues that she received little or no benefit or opportunity arising from the settlement monies because at all times they remained under the husband’s control and he has not disclosed how they were spent.
What is known is that other than the period of about two years from the receipt by the husband of the settlement monies in 2012 and the parties’ separation in 2014, the wife received no other benefit.
In Bonnici & Bonnici (1992) FLC 92-272 the Full Court considered the treatment of an asset inherited by a party. They did not consider that it should be quarantined or protected simply because there is no financial nexus with both parties.
In Carter & Carter (1981) FLC 91-061 at 76,492 the Full Court said:-
Where property is absolutely owned by one spouse before marriage, different considerations may apply under sec. 79(4)(a) and (b), in the sense that the other spouse may not be able to show any direct or indirect contribution to the acquisition of that property… Nevertheless, the other spouse may be able to rely on a contribution to the conservation or improvement of that property…
The Full Court in Hurst & Hurst [2018] FamCAFC 146 referred with approval to the decision of Dickons & Dickons [2012] 50 Fam LR 244 and in particular the following paragraphs:-
16.While that apparent “causal connection” might be seen in s 79(4)(a) (and (b)), no such connection is apparent from the terms of s 79(4)(c); contributions of that latter type are not linked by the words of the subparagraph to the “acquisition, conservation or improvement of any of the property” or, indeed, to “property” at all. This is not a legislative oversight; the 1983 amendments to the Act which inserted the current s 79(4)(c) were specifically intended, relevantly, to remove any suggestion that there needed to be a causal link between contributions of that type and any particular asset or property. The explanatory memorandum to the Family Law Act Amendment Bill 1983 provides, at cl 36, that a specific purpose of the re-casting of s 79(4) was, relevantly, to:
…revise sub-section 79(4) to remove the possibility of an interpretation of the sub-section requiring that there be a nexus between a spouse’s contribution and a specific item of property in section 79 proceedings …
17.Within that context, then, it is self-evident that financial contributions (whether direct or indirect) can be made to a relationship that have an effect on the property of the parties without those financial contributions finding their way directly into, or being directly linked to, specific property or, indeed, directly to the totality of the property available for distribution at the time of trial. Financial contributions can be made to the “acquisition, conservation or improvement” of property “directly or indirectly” (s 79(4)(a), emphasis added). A financial contribution can be made indirectly by, for example, the use by parties of income or assets for purpose A freeing up the use of other income or assets for purpose B. Moreover, a particular financial contribution might have been used wholly in discretionary expenditure which, but for that contribution, would not have been available to the parties or would have required borrowings or a diminution of capital. Such a contribution can also, in that way, be seen, for example, as an indirect contribution to the conservation of property. Indeed, the principles discussed for example in In the Marriage of Kowaliw (1981) FLC 91-092 and In the Marriage of Townsend …(1995) FLC 92-569, can be seen as an exception to that general proposition.
In Hurst (supra) the Full Court considered the approach of the trial judge in quarantining a property that had been inherited by the husband. The gravamen of her Honour’s reasoning is to be found in the following statement:-
It cannot be said that the wife has made any contribution to this property other than indirectly by the rates and slashing costs being paid.
Whilst the Full Court considered that there was no error in her Honour considering separately any such contributions, the following is stated at [17]:-
However, there is a danger in doing so. Isolating indirect contributions to but one part of the property interests of the parties in the context of a global assessment of contributions risks ignoring significant contributions made by both parties that do not have a nexus with that particular property. We consider, with respect, that her Honour did not heed that risk. …
And at [22]:-
The corollary of seeking a nexus within a global assessment is, relevantly, the quarantining of other indirect contributions made by each of the parties across all the property during the entirety of the approximately 39 year period between cohabitation and trial. We respectfully consider that here, by isolating the Suburb C property, her Honour did in fact quarantine those contributions from having any application to it in the finding earlier highlighted. In our respectful view, that is an error.
The husband does not seek that the settlement monies received by him, to the extent that they exceed those received by the wife, should be quarantined.
The evidence does not enable a tracing exercise to be undertaken that might provide a nexus between the settlement monies and the property of the parties.
The husband’s argument was not to seek a consideration of the benefit to the parties of his compensation payout by reference to current assets but rather, to seek an addback on the basis that the wife spent the money on gambling and other frivolous or wanton conduct. That argument was not pressed, however, the wife asserted that the compensation monies have been spent.
I am satisfied that the funds no longer exist and should not be the subject of an addback.
It is a question of the weight, if any, that should be given to the disparity in the compensation monies received by the parties. The evidence does not enable any finding to be made that would assist in determining the weight to be given to the respective contributions of the parties by reason of the settlement money received other than the observation that the husband had access to those funds to the exclusion of the wife.
Given the paucity of the evidence, I am not able to find that the husband’s pre-cohabitation contribution should be considered anything other than equal to the wife. During the relationship I accept that the husband had the effective control and operation of F Pty Ltd, but in doing so, I do not ignore the very significant contribution of the wife as a homemaker.
It is reasonable to bring to account that some component of the parties’ financial resources were directed to the support of the wife’s son from her prior relationship. Following separation, the parties’ circumstances were very different. The wife supported herself by modest income received from her employment with her current employer.
Following separation she lived in rented accommodation and was required to purchase furniture and effects. The husband remained in the former matrimonial home. The husband had access to substantial funds and it does not appear that there was any significant diminution in lifestyle. Motor vehicles and expensive gifts were provided to the adult children. The husband suffers from poor health and following the demise of the L Pty Ltd business he has not worked.
It is necessary to consider the contributions of the parties by way of a global assessment. I consider that the countervailing weight that is given to the respective contributions of the parties should be reflected by an assessment that their contributions are equal.
Section 75(2) factors
The wife is 60 years old and in good health.
She is in secure full time employment and earns $65,000 per annum. The husband concedes that if she lost her current employment she would not easily find another job. The wife enjoys her employment and whilst not intending to retire in the short-term, she recognises that by sheer dint of age, her working life is limited to a maximum of five years.
She lives in rented accommodation.
The husband is 64 years old and is not in employment. His health appears poor. He suffers from “obesity, sleep apnoea, emphysema, hypertension, hypercholesterolaemia, ischemic heart disease and prostatomegaly” which renders him unfit and unable to work.
The wife did not immediately concede the extent of the husband’s infirmity. I am not troubled by such a finding. I accept the husband’s evidence that he has no reasonable prospects of employment. No evidence was presented as to any issue affecting the longevity of the parties and having considered the relevant s 75(2) factors, I propose to make an adjustment of 2.5 per cent in favour of the husband.
Accordingly, the property of the parties should be apportioned between them as to 52.5 per cent in favour of the husband and 47.5 per cent in favour of the wife.
Conclusion
The husband currently resides in the Street H, Suburb J property which has an agreed value of $725,000. The husband was questioned as to his ability to retain the property given that on his case and in particular after he resiled from his argument that a substantial sum should be added back arising from the wife’s gambling, in circumstances where he has no income, his ability to obtain a loan to pay out the anticipated sum to the wife was suspect.
The husband’s position was unequivocal. He remains determined to retain the Street H, Suburb J property and is confident as to his ability to find the funds necessary to pay any settlement sum as may be ordered. The husband was confident that he would be able to borrow money from his brother who he described as “wealthy” or from other associates.
Accordingly, I propose to accede to the husband’s position such that the orders will reflect that he will retain the Street H, Suburb J property.
The parties are agreed that $50,000 should be set aside in anticipation of the likely costs of winding up the self-managed super fund. That sum should be sourced from the solicitor’s account that currently holds the proceeds of the sale of Suburb E Property.
I propose to reduce the proceeds of sale of Suburb E Property from $175,773 to the notional sum of $125,773.
On the basis of a pool totalling $1,226,818, the balance that remains for division between the parties is reduced to $1,176,818.
The wife is to receive 47.5 per cent of the net pool being the sum of $558,988.
The wife retains the following property:-
W Bank account
$11,000
Motor Vehicle T
$14,000
Furniture and effects
$ 175
Jewellery
$ 660
Legal fees added back
$18,799
Superannuation
$16,035
Total
$60,669
Less motor vehicle loan
-$16,060
Balance
$44,609
On that basis the wife is entitled to a settlement sum of $514,379 payable by the husband.
The orders will reflect that the balance of the proceeds of the sale of Suburb E Property, less the sum of $50,000 quarantined in anticipation of the winding up of the super fund, will be forthwith transferred to the wife. I propose to order that the injunction currently in place in respect of the husband’s W Bank Maxi Saver #1 account be lifted such that the sum of $120,000 is to be paid to the wife, leaving the balance available to the husband whilst he arranges the balance of the settlement sum payable to the wife of $268,606. Given the husband’s confidence in his ability to find the necessary funds, settlement shall occur in 30 days from the date of this order.
Should there be any balance remaining following the winding up of the super fund, such sum shall be divided between the parties as to 52.5 per cent to the husband and 47.5 per cent to the wife.
I propose to order that over and above the reasonable costs of winding up the super fund, the husband will be responsible for any penalties, fines or default interest arising from the mismanagement of the super fund.
An order of injunction will be made restraining the husband dealing with the Street H, Suburb J property until such time as the settlement funds have been paid. In default of payment, the Street H, Suburb J property is to be sold.
I make orders as appear at the commencement of these reasons.
I certify that the preceding two hundred and three (203) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 22 November 2019.
Associate:
Date: 22 November 2019
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