NOOGLE & NOOGLE
[2017] FamCA 140
•14 March 2017
FAMILY COURT OF AUSTRALIA
| NOOGLE & NOOGLE | [2017] FamCA 140 |
| FAMILY LAW – PROPERTY SETTLEMENT – Where both parties recognise property adjustment orders would be just and equitable – Where, save for two discrete issues, the parties agreed their contributions and future needs should result in equal distribution – Where the wife contended for greater entitlement due to her rendering contributions under arduous conditions and the husband’s disproportionately greater post-separation use of the parties’ corporate structure – Application of Marriage of Kennon (1997) 22 Fam LR 1 – Where there was a lack of evidence about the wife’s adversity due to the husband’s conduct and any discernible effect upon her contributions – Concluded the wife’s Kennon submission is rejected – Where the post-separation income disparity alleged by the wife amounted to relatively modest amounts – Where the husband worked within the corporate structure and derived his income from that work – Where that work was a contribution unmatched by the wife – Ordered the parties have equal entitlement to their net assets and superannuation FAMILY LAW – PROPERTY– Superannuation – Where a parcel of real property was the only material asset of the parties’ self-managed superannuation fund – Where the parties agreed the asset should be sold, converted to cash, and the cash made available for their payment – Where the entirety of the superannuation interests were accrued after the parties’ relationship began, neither made any material post-separation contribution to the fund, and the superannuation interests are in the payment phase – Decided the aggregation of their property and superannuation interests is the better course – Ordered superannuation splitting orders so the parties enjoy equal distribution of the fund assets once in liquid form |
| Evidence Act 1995 (Cth), s 135 Family Law Rules 2004 (Cth) rr 15.64B, 15.65 |
| Baranski & Baranski [2012] FamCAFC 18 Bevan & Bevan (2013) 49 Fam LR 387 Kennon v Spry (2008) 238 CLR 366 Marriage of Kennon (1997) 22 Fam LR 1 Marriage of Kowaliw (1981) FLC 91-902 Marriage of Townsend (1995) FLC 92-569 S & S [2003] FamCA 905 Seltsam Pty Ltd v McGuiness & Anor (2000) 49 NSWLR 262 Stanford v Stanford (2012) 247 CLR 108 |
| APPLICANT: | Ms Noogle |
| RESPONDENT: | Mr Noogle |
| FILE NUMBER: | NCC | 2229 | of | 2013 |
| DATE DELIVERED: | 14 March 2017 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Austin J |
| HEARING DATE: | 20, 21 & 22 February 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Duane |
| SOLICITOR FOR THE APPLICANT: | Boyd Olsen Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Page QC & Mr Kelly |
| SOLICITOR FOR THE RESPONDENT: | Mr Martin Reilly |
Orders
The parties shall forthwith do all such things and execute all such documents necessary in their capacity as directors to cause Noogle Nominees Pty Ltd as trustee of the Noogle Pty Ltd Superannuation Fund to sell the real property comprising Folio Identifier …, being the property situated at and known as B Street, Suburb C, NSW (“the property”) on the following terms and conditions.
For the purpose of implementation of Order 1 hereof:
(a)Mason Lawyers shall act for the vendor on the sale;
(b)The property shall be initially offered for sale to D Ltd (ACN …) at a price of $1,060,000;
(c)If a contract for sale to D Ltd at a price of $1,060,000 cannot be exchanged within 21 days hereof, the property shall be listed for sale by private treaty with the licensed real estate agent agreed between the parties, and in default of agreement, with the agent chosen by ballot from the respective choices of the parties;
(d)The listing price for the property shall be as agreed between the parties, and in default of agreement, the listing price nominated by the listing agent;
(e)In the event of the property not being sold within two months from the date of these orders, the property shall be put by the parties to sale by auction on the following terms:
(i)The auctioneer shall be agreed between the parties, and in default of agreement, with the auctioneer chosen by ballot from the respective choices of the parties;
(ii)The auction shall take place within six weeks of the deadline date for sale by private treaty;
(iii)The reserve price shall be as agreed between the parties, and in default of agreement, the reserve price nominated by the auctioneer; and
(f)In the event of the property not being sold by auction or private negotiation within a further seven days, the property shall be put by the parties to successive auctions within further six week periods until sold, otherwise upon the same terms and conditions as applied to the first auction.
Upon completion of the sale of the property, the proceeds of sale shall be applied as follows:
(a)First, to pay all costs, commissions, and expenses of the sale and to pay any adjusted Council and water rates and strata levies in respect of the property;
(b)Secondly, the payment of $3,594 to “specialistsaudits.com.au pty ltd” to discharge the liability of Noogle Nominees Pty Ltd to that entity for that sum; and
(c)Thirdly, the balance shall be paid into the Noogle Pty Ltd Superannuation Fund Macquarie Bank Cash Management account number …38.
Declaration that Noogle Nominees Pty Ltd, the trustee of the Noogle Pty Ltd Superannuation Fund, has been accorded procedural fairness in respect of these superannuation splitting orders, and orders ancillary thereto.
Order that these orders are binding upon Noogle Nominees Pty Ltd.
Order, pursuant to s 90MT(2) of the Family Law Act, that for the purpose of these orders:
(a)The value of the husband’s interest in the Noogle Pty Ltd Superannuation Fund is determined to be $708,571; and
(b)The value of the wife’s interest in the Noogle Pty Ltd Superannuation Fund is determined to be $395,000.
Order, pursuant to s 90MT(1)(b) of the Family Law Act, that whenever a splittable payment becomes payable in respect of the husband’s interest in the Noogle Pty Ltd Superannuation Fund:
(a)The wife is entitled to be paid 100 per cent of the splittable payment out of the husband’s member account;
(b)There is a corresponding reduction in the entitlement of the husband to that splittable payment; and
(c)The parties shall cause Noogle Nominees Pty Ltd to pay the respective entitlements whenever a splittable payment is made.
Order 7 hereof has effect from the operative time, which is one business day after compliance with Orders 1-3 hereof.
Order, pursuant to s 90MT(1)(b) of the Family Law Act, that whenever a splittable payment becomes payable in respect of the wife’s interest in the Noogle Pty Ltd Superannuation Fund:
(a)The husband is entitled to be paid 50 per cent of the splittable payment out of the wife’s member account;
(b)There is a corresponding reduction in the entitlement of the wife to that splittable payment; and
(c)The parties shall cause Noogle Nominees Pty Ltd to pay the respective entitlements whenever a splittable payment is made.
Order 9 hereof has effect from the operative time, which is one minute after compliance with Orders 7-8 hereof.
The wife shall:
(a)Notify Noogle Nominees Pty Ltd in writing of the compliant superannuation fund into which her member account in the Noogle Pty Ltd Superannuation Fund should be rolled over;
(b)Authorise and direct Noogle Nominees Pty Ltd to roll out her interest in the Noogle Pty Ltd Superannuation Fund to that other compliant superannuation fund immediately upon compliance with Orders 7-10 hereof; and
(c)Immediately thereafter:
(i)Resign as a director of Noogle Nominees Pty Ltd; and
(ii)Transfer to the husband all shares she holds in Noogle Nominees Pty Ltd.
Upon compliance with Order 11(c) hereof, the husband shall indemnify and keep indemnified the wife against any past or future liability in relation to her former directorship of Noogle Nominees Pty Ltd.
Upon the liquidation or wind-up of the following entities, and subject to the husband’s compliance with Order 14 hereof, the parties shall do all such things and execute all such documents necessary in their capacity as directors and/or shareholders to cause the distribution of the dividends paid on their respective shareholdings to be divided between them in equal shares:
(a)H Pty Ltd;
(b)E Pty Ltd;
(c)F Pty Ltd;
(d)G Pty Ltd; and
(e)The Noogle Partnership.
The husband shall do all such things and execute all such documents necessary to:
(a)Pay and discharge his liability under the H Pty Ltd debit loan account in the sum of $165,108; and
(b)Indemnify and keep indemnified the wife against any liability in respect of that debit loan account.
The wife shall pay to the husband the sum of $403,942 within six months of the date of these orders.
Subject to compliance with Order 15 hereof, and in consideration of that payment, the wife is declared the sole legal and beneficial owner (as between the parties) of the real property and improvements comprising Folio Identifier …, being the property more commonly known as I Street, Suburb C, NSW (“the home”), and the husband shall do all such things and sign all such documents necessary to transfer all his right, title, and interest in the home to the wife contemporaneously with his receipt of payment pursuant to Order 15 hereof.
Subject to compliance with Order 16 hereof, and in consideration of that transfer, the wife shall indemnify and keep indemnified the husband against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the home.
In default of compliance with Order 15 hereof, the parties shall do all such acts and things and sign all such documents necessary to list the home for sale by public auction on the following terms.
For the purpose of implementation of Order 18 hereof:
(a)The solicitors chosen by the wife shall act on the sale;
(b)The home shall be listed by the parties for auction sale within six weeks of the date of default of Order 15 hereof;
(c)The real estate agent, in the event of disagreement between the parties, shall be the agent chosen by ballot from the respective choices of the parties;
(d)The auctioneer, in the event of disagreement between the parties, shall be the auctioneer chosen by ballot from the respective choices of the parties;
(e)The reserve price shall be as agreed between the parties, and in the event of disagreement between them, the reserve price nominated by the auctioneer;
(f)In the event the home is not sold by auction or private negotiation within a further seven days, then the home shall be submitted to successive auctions within further six week periods until sold, otherwise on the same terms and conditions as applied to the first auction;
(g)Other than to permit the wife’s compliance with Order 15 hereof, the parties are restrained from charging, mortgaging, or otherwise encumbering the home; and
(h)The wife may occupy the home pending its sale pursuant to these orders, provided she meets all expenses incurred in respect of the home as and when those expenses fall due (including Council rates, water rates, strata levies and insurances), maintains the home in a reasonable state of repair, and facilitates inspection of the home by prospective purchasers.
Upon completion of the sale of the home pursuant to Orders 18 and 19 hereof, the proceeds of sale shall be applied as follows:
(a)First, to pay all costs, commissions, and expenses of the sale and to pay any adjusted Council and water rates and strata levies in respect of the home;
(b)Secondly, to pay $3,942 to the husband; and
(c)Thirdly, to pay the balance to the parties in equal shares.
The husband is declared the sole legal and beneficial owner (as between the parties) of the painting entitled “…” and for that purpose:
(a)The wife shall forthwith transfer to the husband all her right, title, and interest in the painting; and
(b)The husband shall forthwith indemnify and keep indemnified the wife in respect of all storage fees owed to the proprietor of the J Gallery in respect of the painting.
Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder and superannuation entitlements are deemed in the possession of the superannuant; and
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession and any debts incurred in their respective sole names.
In the event of either party refusing or neglecting to sign within seven days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s 106A of the Family Law Act.
Any and all other outstanding applications are dismissed.
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 Noogle & Noogle 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 NEWCASTLE |
FILE NUMBER: NCC 2229 of 2013
| Ms Noogle |
Applicant
And
| Mr Noogle |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings concern the adjustment of the parties’ property and superannuation interests under Part VIII of the Family Law Act 1975 (Cth) (“the Act”) after a very long marriage.
The parties married in 1970 and finally separated in December 2009, so their relationship lasted some 39 years. They had no children.
Ultimately, their dispute was quite narrow. They eventually agreed their private superannuation fund would need to sell the real property it beneficially owns, they agreed their superannuation interests would then need to be split equally, and they agreed upon the estimated amount of the equal dividends they would receive upon final liquidation of their private corporations. The controversy was essentially confined to their overall proportional property entitlements, about which they were only eight per cent apart.
Adjournment applications
The wife commenced these proceedings in September 2013 before the Federal Circuit Court, though the proceedings were transferred to this Court in August 2015. Thereafter, many obstacles impeded the timely progress of the proceedings to final trial. More than once, the parties were warned they risked their respective applications being struck out for want of prosecution if they failed to comply with procedural orders.[1]
[1] Notation G made on 18 March 2016; Notation C made on 16 June 2016
In December 2016, the proceedings were finally listed for trial commencing on 20 February 2017.[2]
[2] Order 2 made on 21 December 2016
On 2 February 2017, the husband filed an application to vacate the trial dates, but his application was dismissed and some ancillary orders were made to give him more time within which to file his evidence in readiness for the trial.[3] Ex tempore reasons were given for the orders and they were not appealed.
[3] Orders made on 8 February 2017
On the first day of trial (20 February 2017), the husband was legally represented and he renewed his application for adjournment of the trial, but on different grounds. This time he relied upon s 79(5) of the Act.
Section 79(5) of the Act provides:
(5)Without limiting the power of any court to grant an adjournment in proceedings under this Act, where, in property settlement proceedings, a court is of the opinion:
(a)that there is likely to be a significant change in the financial circumstances of the parties to the marriage or either of them and that, having regard to the time when that change is likely to take place, it is reasonable to adjourn the proceedings; and
(b)that an order that the court could make with respect to:
(i) the property of the parties to the marriage or either of them; or
(ii)the vested bankruptcy property in relation to a bankrupt party to the marriage;
if that significant change in financial circumstances occurs is more likely to do justice as between the parties to the marriage than an order that the court could make immediately with respect to:
(iii)the property of the parties to the marriage or either of them; or
(iv)the vested bankruptcy property in relation to a bankrupt party to the marriage;
the court may, if so requested by either party to the marriage or the relevant bankruptcy trustee (if any), adjourn the proceedings until such time, before the expiration of a period specified by the court, as that party to the marriage or the relevant bankruptcy trustee, as the case may be, applies for the proceedings to be determined, but nothing in this subsection requires the court to adjourn any proceedings in any particular circumstances.
(emphasis added)
The husband contended s 79(5) was engaged by two features of the evidence: first, a number of private corporations in which the parties have an interest are in the course of liquidation and the lack of reliable evidence about the dividends payable by the liquidator to them in fulfilment of their shareholdings meant their financial circumstances will change once those entitlements crystallise; secondly, the valuation of the jointly-owned former matrimonial home was stale, which compounded the difficulty of ascertaining the value of the parties’ current property interests. The husband’s submissions were rejected and his adjournment application dismissed with reasons to follow. These are those reasons.
The parties have direct and indirect interests in various private corporations, four of which are currently in liquidation. Those corporations are H Pty Ltd (“H”), which was placed into liquidation on or about 26 August 2016, and G Pty Ltd (“G”), F Pty Ltd (“F”), and E Pty Ltd (“E”), all three of which were placed into liquidation on or about 20 January 2017. The liquidation of those corporations will also entail the partnership between G and F being wound-up (“Noogle Partnership”), if that has not occurred already.[4]
[4] Exhibit W2
The husband contended it was “not possible” to assess the parties’ proportional entitlements to matrimonial property and fairly adjust their proprietary interests in circumstances where the quantum of the eventual dividends payable to the parties upon liquidation of those corporations was unknown. He contended variables such as the liquidator’s costs, the corporations’ final liabilities, and the tax levied on the parties’ dividends would all preclude findings that necessarily underpin the s 79 adjustment process, but the submission was misconceived because the evidence did impart an estimate of the dividend returns. The parties both adduced evidence about the preliminary reports given to them by the liquidator in January 2017[5] and the husband also adduced evidence of the liquidator’s updated report in February 2017.[6]
[5] Wife’s affidavit, para 40, Annex H; Husband’s first affidavit, paras 279-282, Annex I
[6] Exhibit A (paras 29-30, Annex A)
G owns all of the shares in both F and E.[7] G owns 80 per cent of the shares in H, with the other 20 per cent of the shares owned by third parties unrelated to these proceedings.[8] Consequently, upon completion of the liquidations of F, E, and H, all net dividends will be paid to G. The parties have equivalent, though not identical, shareholdings in G.[9] Nevertheless, their shareholdings are sufficiently equivalent for the liquidator to regard their entitlements as “50/50”,[10] with which another professional advisor agreed,[11] even though the husband asserted his share amounts to 51 per cent.[12] Regardless, upon eventual liquidation of G, the parties will have largely equivalent entitlements to the dividends paid upon completion of all four liquidations. As it transpired, once the adjournment application was dismissed and the trial proceeded, the parties agreed they would receive an estimated amount of $900,000, which amount they would share equally and upon which their individual taxation liabilities would be assessed.
[7] Husband’s first affidavit, paras 118-119, Annex F; Exhibit W2
[8] Husband’s first affidavit, paras 118-119, Annex F; Exhibit W2
[9] Husband’s first affidavit, paras 118-119, Annex F; Exhibit W2
[10] Wife’s affidavit, Annex H (page 69)
[11] Exhibit W2
[12] Husband’s financial statement, para 38
As the wife submitted, the situation is analogous to one in which parties may jointly own a parcel of real property, the value of which is not established by the evidence, the sale price of which cannot be predicted exactly, and hence the net proceeds received by each party upon its eventual sale cannot be precisely ascertained. The voluntary liquidation of the corporations to realise the parties’ ultimate proprietary interest in G is much like the sale of such hypothetical real property. In each case, the process entails transformation of an asset into cash, the quantum of which remains uncertain until the transformation process is complete.
Contrary to the husband’s submission, the case is quite unlike the uncertainty of entitlement to and the quantum of any prospective capital distribution to a beneficiary under a discretionary trust. Such a beneficiary has no right to insist upon any discretionary distribution, only a right to insist on due administration of the trust by the trustee (see Kennon v Spry (2008) 238 CLR 366 at 390, 411). As shareholders of G, the parties have a legal right to the distribution of the corporation’s surplus assets proportionately to their shareholdings and the quantum of those distributions is capable of estimation now the liquidations are underway.
The wife acknowledged the valuation report procured by the parties from a single expert about the value of the former matrimonial home was stale so, to cure that defect, she was willing to submit to an order compelling the parties to urgently update the report. The husband acknowledged the updated report could be swiftly obtained, which subsequently occurred and it eradicated all dispute between the parties on that issue.
In light of those considerations, the husband was unable to demonstrate there was likely to be a significant change in the parties’ financial circumstances (s 79(5)(a)) or that an adjournment of the trial would enable the Court to make property settlement orders that would more likely do justice between the parties (s 79(5)(b)). Even if the husband had been able to satisfy those conjunctive elements, it would not have ensured an adjournment because the terms of the Act are permissive, not mandatory. Other considerations militated against an adjournment: the litigation was already more than three years old, the parties’ could have liquidated the corporations much earlier and their delay in doing so was unexplained,[13] they were free to obtain an updated valuation of the former matrimonial home much earlier, neither party had conferred with or interrogated the single expert about any change to the value of the former matrimonial home as permitted by rr 15.64B and 15.65 of the Family Law Rules 2004 (Cth), and their self-managed superannuation fund was unable to pay their pensions, which default required urgent remediation.
[13] Notations to orders made 27/11/15, 18/3/16; Orders made 19/8/16; Notations made 19/9/16
The adjournment application was therefore dismissed, but the parties were ordered to immediately obtain an updated valuation report in respect of the former matrimonial home from the existing single expert witness.
Evidence
The wife relied upon:
(a)Her affidavit filed on 3 February 2017; and
(b)Her financial statement filed on 3 February 2017.
The husband relied upon:
(a)His affidavit filed on 15 February 2017;
(b)His affidavit sworn on 19 February 2017,[14] which was filed in Court on 20 February 2017; and
(c)His financial statement filed on 15 February 2017.
[14] This affidavit was Exhibit A on the failed adjournment application
Both parties successfully sustained objections to some parts of the other’s affidavit evidence.
Legal principles
Orders under s 79 of the Act altering the property interests of parties may only be made if the Court is first satisfied, pursuant to s 79(2), it is just and equitable to make such orders. The Act then identifies in s 79(4) the matters the Court must take into account in considering what order, if any, should be made (see Stanford v Stanford (2012) 247 CLR 108 at [22], [35]). While those two inquiries are not to be conflated (see Stanford at [35], [40], [51]), it is permissible for the s 79(4) factors to inform the inquiry under s 79(2) (see Bevan & Bevan (2013) 49 Fam LR 387 at [83]-[89], [163], [169], [171]-[172]).
It is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying the existing legal and equitable property interests of the parties. It must not be assumed that the parties’ rights to or interests in marital property should be different from those that then exist or that a party has the right to have the parties’ property divided by reference to considerations set out in s 79(4) of the Act (see Stanford at [37]-[40], [50]). Commonly, however, it will be just and equitable for the parties’ property rights to be altered because the breakdown in their relationship will end their fiscal unity and deprive them of common use of their property (see Stanford at [42]; Bevan at [68]-[70], [82], [164]-[165]).
If and once determined it is just and equitable for the property interests of the parties to be altered, the process of evaluating the proper orders to make is dictated by the factors enumerated within s 79(4) of the Act. The Court must necessarily identify and assess the parties’ contributions within the meaning of ss 79(4)(a)-(c) and then take account of the relevant matters referred to in
ss 79(4)(d)-(g) and 75(2) of the Act.
Existing proprietary interests
On 19 December 2016, both parties filed documents entitled “Balance Sheet”, but the contents of the two documents were discrepant in some respects and the documents were not relied upon by the parties in evidence at trial. The parties did not compile and tender any composite schedule of their assets and liabilities during the trial so the findings about the identity and values of their assets, liabilities, and superannuation interests depend entirely upon the contents of their financial statements (which were read in evidence) and the numerous factual agreements they reached and announced during the trial.
Each party asserted the other retained items of personal property, which the other denied. It was correctly conceded in final submissions that the state of the evidence about the personal property was “grossly unsatisfactory”. Neither party gave significantly more credible evidence than the other so the findings about their possession of personal property are made on the basis of admissions in their respective financial statements.
According to such evidence and agreements, the wife’s assets, liabilities, and superannuation interests comprise:
No.
Assets
Value
Total
1
Former matrimonial home (50 per cent)
400,000
2
Shares in G (approx. 50 per cent)
est. 400,000
3
Painting (50 per cent)
7,500
4
CBA Acc #...06
5,500
5
German car
11,000
6
Jewellery
6,189
7
Household contents
8,000
Sub-total
838,189
838,189
Liabilities
8
Personal loans
22,000
9
Citibank visa
1,800
Sub-total
23,800
23,800
Net assets
814,389
Superannuation
10
Noogle Pty Ltd Super Fund
395,000
Net assets and superannuation
1,209,389
On the same basis, the husband’s assets, liabilities, and superannuation interests comprise:
No.
Assets
Value
Total
1
Former matrimonial home (50per cent)
400,000
2
Shares in G (approx. 50per cent)
est. 400,000
3
Painting (50per cent)
7,500
11
Building Society Acc #...05
5
12
4WD car
7,000
13
Jewellery
30,000
14
Household contents
1,000
Sub-total
845,505
845,505
Liabilities
15
CBA mastercard
39,000
16
Personal loan
15,000
Sub-total
54,000
54,000
Net assets
791,505
Superannuation
17
Noogle Pty Ltd Super Fund
708,571
Nest assets and superannuation
1,500,076
The ultimate values of the parties’ respective shareholdings in G (consequent upon the liquidations of F, E, and H, and the wind-up of the Noogle Partnership) are unknown. The liquidator estimated that assets of $1.79 million will be notionally available for distribution between the parties. Of that sum, $1.044 million is cash and the residue is in the form of “debit loans”.[15] During final submissions, as already mentioned, the parties agreed the G dividends would be an estimated total amount of $900,000 and they would individually incur personal taxation on their respective equivalent shares. Their individual taxation liabilities are estimated at $46,768, though the payment of the dividends to them over several financial years could save tax.[16] On the strength of that evidence, their respective shareholdings in G are expected to yield about $400,000 net.
[15] Husband’s second affidavit, paras 29-30, Annex A
[16] Exhibit W2
Those calculations assume the husband’s prior payment of the $165,108 debt he individually owes to H under a loan account.[17] That debt must be repaid before the liquidation of H is finalised and it was common ground the husband must meet the liability from his share of the property settlement. The debt is not to be counted among his current liabilities in the property adjustment calculations, for otherwise the parties’ proportional entitlements would be distorted.
[17] Husband’s first affidavit, paras 116, 152, 154; Husband’s financial statement, para 50
The values of the parties’ superannuation interests in the Noogle Pty Ltd Superannuation Fund (“the Super Fund”) were agreed during final submissions. The parties both urged that their agreement be accepted by the Court as proof of the value of the superannuation interests so as to enable the superannuation splitting orders they both sought to be made (s 90MT(2)). Noogle Nominees Pty Ltd (“Noogle Nominees”) is the trustee of the Super Fund and the parties are both directors of and equal shareholders in that corporation. The only material asset of the Super Fund is a parcel of real property, which the parties agreed should be sold so their superannuation interests can be converted to cash and made available for their payment.
The parties both submitted for the global percentage division of all assets and superannuation interests, though they did not expressly confront the issue of whether their contributions to superannuation assets should be treated separately from their contributions to property interests. The aggregation of their property and superannuation interests is the better course because the entirety of both superannuation interests were accrued after the parties’ relationship began, there was no evidence either party made any material superannuation contribution to the Super Fund after their separation, and both superannuation interests are now in the payment phase.
Section 79(2)
After such a long marriage, it would not be just and equitable for the husband to retain assets and superannuation worth about $300,000 more than the assets and superannuation retained by the wife. Additionally, the parties’ financial affairs are still intertwined through the jointly-owned former matrimonial home. Both parties recognised the need for property adjustment orders and urged such adjustment be made, albeit in different forms.
Sections 79(4) &75(2)
The parties began their cohabitation upon marriage. At that time, neither party had any asset of material value. The wealth they have since accumulated is due to their mutual hard work. Although each party had different responsibilities within their marriage, their commitment was equivalent.
It is unnecessary to analyse their respective contributions because, save for two discrete issues, the parties agreed their contributions and future needs should otherwise result in equal distribution of their property and superannuation interests.
The husband contended for an overall equal division, but the wife contended for her entitlement to 58 per cent (and hence 42 per cent to the husband) of their combined property and superannuation interests because she asserted:
(a)Her contributions attracted greater weight because of the arduous conditions under which she made them, due to the husband’s abusive and oppressive conduct (see Marriage of Kennon (1997) 22 Fam LR 1); and
(b)The husband took disproportionately more income from the parties’ corporate infrastructure after their separation, which he spent.
In respect of the first issue, the restrictive limits of the Kennon guideline principle must be acknowledged. The majority stated (at 24), without dissent (at 66-67):
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s 79.
In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that…
However, it is important to consider the “floodgates” argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters – a circumstance which proved so debilitating in the past…
However, in our view, s 79 should encompass the exceptional cases which we described above…
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had discernable impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass…conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions).
(emphasis added)
The wife adduced evidence about her abusive treatment by the husband, which drew objection, so at the beginning of the trial it was necessary to contemplate the prospective validity of the Kennon argument to determine the admissibility of her evidence, which was otherwise inadmissible by reason of its irrelevance (see S & S [2003] FamCA 905 at [37]-[40]).
The wife deposed to her frequent abusive and disrespectful treatment by the husband throughout their marriage, but she adduced no evidence at all that his conduct caused her to suffer the adversity of impaired emotional health or that there was any “discernible impact” upon her contributions, thereby rendering them qualitatively greater. The wife’s claim was only that she was “humiliated” and “embarrassed” by the husband’s conduct. The wife deposed she sought out counselling in about 2006, when she acted on her decision to vacate the former matrimonial home, but she later returned home and continued the counselling intermittently in 2007 and 2008. There was no evidence, from the counsellors or otherwise, about any deterioration of the wife’s psychological condition or any cause of such deterioration. If she was treated by the husband in the disrespectful manner she alleged, she would undoubtedly have been melancholy and probably even frightened on occasions, but that is not enough to sustain the argument she mounted.
The lack of evidence about any connection between the husband’s alleged conduct, the adversity of the wife’s situation, and the discernible effect upon her contributions was fatal to her argument. It is impermissible to simply speculate about such facts and the links between them (see Kennon at 18, 24). The links could not be validly inferred because inferences are probabilities that spring from proven facts and should be distinguished from conjecture, which is simply the contemplation of possibilities (see Seltsam Pty Ltd v McGuiness & Anor (2000) 49 NSWLR 262 at 275-278). In such circumstances, allowing the parties to cross-examine each other about the past friction in their relationship would have served no useful purpose and would merely have wasted time (s 135(c) Evidence Act 1995 (Cth)). For those reasons, much of the wife’s evidence about alleged violence was ruled inadmissible.[18]
[18] Wife’s affidavit, paras 75-83, 89-109
The only incident of overt physical aggression admitted by the husband occurred in August 2008, and the parties’ versions of that incident were received in evidence.[19] The husband denied he assaulted the wife on that occasion and alleged he grabbed and pushed her away from him only in self-defence. Nevertheless, the wife was frightened and injured. She moved away from the matrimonial home for about two weeks, so she clearly had the emotional fortitude to separate from the husband when she felt the need. She did it once before in 2006. She was not trapped in the marriage due to any responsibility for young children and she enjoyed financial autonomy. The wife chose to reconcile with the husband and move back home about two weeks later, but not because of any inability to support herself. She said she did so because of her religious faith and her deep commitment to her marriage vows,[20] but her faith and commitment only sustained the marriage for another year before she decided to finally separate from the husband in December 2009. Although she left the matrimonial home for a day,[21] she returned and has occupied it exclusively ever since.
[19] Wife’s affidavit, paras 84-88, 110; Husband’s first affidavit, paras 191, 234-242, 244-246
[20] Wife’s affidavit, para 88
[21] Wife’s affidavit, para 41
Well after separation, the wife applied for and received an award of victim’s compensation,[22] but the award was based on her uncontested allegations of physical and/or psychological injury caused by the husband’s conduct. Applications for such awards of compensation are made under State legislation and are assessed by a tribunal without recourse to the alleged perpetrator of the misconduct. The husband had no say in the process, so the award does not create an issue estoppel in these proceedings, precluding him from asserting he did not commit the conduct alleged against him by the wife in her administrative application.
[22] Wife’s affidavit, para 110
Even if the incident in August 2008 occurred as the wife alleged, it was most probably “conduct related to the breakdown of the marriage”, which the Full Court expressed to be irrelevant to the application of the Kennon principles. The parties’ marriage was obviously faltering by that time, perhaps compounded by the emotional “breakdown” the husband admitted he suffered in 2003 and which affected his demeanour thereafter.
The parties have now been separated for more than seven years. Even though one party may still render the other party’s post-separation contributions more arduous for the purpose of application of Kennon principles (see Baranski & Baranski [2012] FamCAFC 18 at [257]-[259]), that situation did not arise in this case. The wife conceded she and the husband had little, if any, contact after their final separation. She asserted that, for most of the time since separation, they did not even speak.
On the admissible evidence, the wife’s Kennon submission is rejected. She failed to establish her contributions were rendered more arduous and therefore deserved more weight as a consequence of the husband’s conduct, either during their marriage or after their separation.
The second issue pursued by the wife related to the husband’s post-separation income and expenditure, but her position on the issue was not articulated clearly. Her asserted entitlement to a greater share of the parties’ property was initially premised on an allegation of the husband’s waste through gambling and expenditure on alcohol (with Marriage of Kowaliw (1981) FLC 91-902 cited), but then appeared to transform into a contention he unfairly received more of the parties’ bounty following their separation, much like a premature distribution (see Marriage of Townsend (1995) FLC 92-569). The manner in which the wife contended for the husband’s income and expenditure to be treated was also fluid. She initially proposed the “add-back” of the expenditure (which she computed to total some $1,106,000) and its treatment as the husband’s notional asset, but then eventually submitted for its consideration as a factor that bore upon the overall percentage division of the parties’ assets and superannuation interests.
At the outset, part of the wife’s contention can be readily acknowledged as valid. The husband admitted he used a H credit card to pay for his personal expenditure, which he acknowledged was almost exclusively on gambling and alcohol purchases. Such expenditure was characterised in the corporate accounts as debits to his loan account, the debit balance of which is currently $165,108. As already noted, the husband accepts his sole liability to H for the entirety of that debt, which he must pay as part of its current liquidation.
Aside from the expenditure recorded in the corporate debit loan account, the remainder of the evidence about the income received and spent by the husband was relatively unspecific or, if tabulated accurately,[23] was erroneously considered in isolation from his other orthodox expenditure. Who is to say the nature of the entertainment enjoyed by the husband, in the form of gambling and socialising at licensed premises, was unreasonable? People have an entitlement to spend their leisure hours as they wish. Many choose to do just as the husband did. Who is to say the amount of the husband’s expenditure upon his chosen form of entertainment was unreasonable anyway? He may have contained his necessary living expenses to keep his overall expenditure within his means. The wife failed to adequately explain why the husband’s overall post-separation expenditure was unreasonable.
[23] Wife’s affidavit, paras 54, 142-143, Annex R, Annex OOO, Annex PPP
The other aspect of the wife’s grievance was her contention the husband should not have received any income from H, or at least not as much as he did, because he either did nothing or too little to earn it. She said in cross-examination she believed he received an “excessive amount”, but she was unable to say what amount she would have regarded as reasonable. She implied he did no work at all for H because, in these proceedings, the corporate accountant reported to the single expert the husband did “zero average weekly hours” in the business.[24] However, that answer was given in June 2016. The business wound down in late 2015 and the corporation was placed in liquidation in August 2016. It was not, as the wife inferentially contended, evidence of him doing no work for the business for the whole period between separation in December 2009 and the time the statement was made in June 2016.
[24] Wife’s affidavit, para 148, Annex QQQ
The wife’s analysis was flawed because the husband was integral to the success of the business conducted by H. Even after he introduced other personnel to the business to take over management responsibilities from him, he remained an important component in the business’ financial success. He ceased to be involved in the daily operations, but he was the one who helped maintain the loyalty of the major recurrent customers because of his personal association with the heads of those organisations. The husband asserted his post-separation income was “well and truly justified” and rejected the wife’s suggestions he no longer had any part to play in the business operation. His evidence was uncontradicted and there was no proper basis upon which to reject his evidence as false.
The annual income paid to the husband by H, either as wages or consultancy fees, was disclosed in the corporate accounts. Even though the wife was not a director of H after 2005,[25] she was still able to obtain the H financial statements because of her directorship of G, the parent company of H. She could have taken steps to challenge the quantum of the husband’s income after their separation in 2009 had she wanted, but she did not. The accountant for H directed the husband to curb his spending in June 2013,[26] so the money paid to him as income did not go completely unchecked.
[25] Wife’s affidavit, para 15
[26] Wife’s affidavit, para 150, Annex SSS
The husband was free to choose how to spend his own post-separation income. The amount he was paid did not evoke any undue concern among the other management personnel within H, at least until 2013 in response to which he ceased use of the corporate credit card, and the wife did not use her corporate power to challenge it.
In any event, the disparity between the parties’ incomes over the years since their separation in December 2009 was not as pronounced as the wife implied.
The parties received equal capital distributions of about $183,000 from the Super Fund during 2011 and 2012.[27]
[27] Wife’s affidavit, paras 59, 64
As for income, it is impossible to be precise with the calculations, but the husband appears to have earned gross income of about $900,000 over the seven years since separation,[28] which money was paid to him in the guise of wages or consultancy fees by H. Allowing for tax paid, that would likely have reduced to approximately $600,000 net, which represents an average of about $85,000 per annum over the seven financial years between 30 June 2010 and 2016 inclusive. He did not receive any welfare benefits.[29] In addition, he received a pension payment of nearly $21,000 in 2011,[30] and superannuation payments of $1,000 per month from the Super Fund from October 2013 onwards.[31] His total net income after separation therefore probably approximated $660,000. Allowing for the rent of $545 per week he has paid since separation,[32] the cost of his accommodation equated to nearly $200,000. Accordingly, he received total net income of some $460,000 after payment of his accommodation costs.
[28] Husband’s first affidavit, para 269; Exhibit H2
[29] Husband’s first affidavit, paras 71-75
[30] Wife’s affidavit, para 53(c)
[31] Husband’s first affidavit, para 76
[32] Husband’s first affidavit, para 54
By comparison, the wife’s only income was in the form of payments made to her out of the Super Fund. From the time of separation, she received $5,477 per month for about six months,[33] then a capital payment of $17,510 in 2010,[34] then fluctuating payments for the next three years averaging about $4,000 per month,[35], then $5,000 per month from the time interim orders were made in October 2013.[36] In all, the wife’s net income approximated some $370,000 over the seven years since separation. She might also have received the benefit of another $58,000 paid from the Super Fund to cover the cost of the car used and now retained by her,[37] but a firm finding about that issue is precluded by the paucity of evidence, the absence of any cross-examination, and the absence of any submission. Unlike the husband though, the wife had no accommodation cost because she lived rent-free in the former matrimonial home. Although she paid rates, utilities, and strata fees, the property was unencumbered and the parties agreed its current rental value is $550 per week.
[33] Wife’s affidavit, para 52
[34] Wife’s affidavit, para 55
[35] Wife’s affidavit, paras 56-57
[36] Wife’s affidavit, para 57
[37] Wife’s affidavit, para 62
It follows that the husband has received more net income than the wife since their separation but, averaged over some seven years, the annual disparity was not great, probably amounting to no more than about $13,000 per annum and perhaps much less. In any event, as the husband correctly observed, he worked for H to justify his payment of post-separation wages and consultancy fees. The work he did to derive the income was a contribution unmatched by the wife. The wife’s income was paid from the Super Fund because of her age entitlement. The parties’ equal contributions to the accumulation of their superannuation interests were all made prior to their separation, by which time the wife’s superannuation interest was already in the payment phase.[38]
[38] Wife’s affidavit, para 52
The wife’s submissions for the “add-back” of monies spent by the husband, or alternatively, her entitlement to a greater share of the parties’ wealth on account of his expenditure of disproportionately greater post-separation income are rejected.
Conclusions and orders
The parties have an equal entitlement to their net assets and superannuation interests. Their contributions were equivalent. An equal entitlement would leave them each with combined property and superannuation worth approximately $1,354,732.50 net.
Neither party had a greater claim than the other to an adjustment for their future needs, though the husband will be obliged to repay the $165,108 due to H to clear his debit loan account, which will then leave him with $1,189,624.50. The wife should have no responsibility for that debt, which the husband accepted (s 75(2)(o)).
There was some commonality between the property settlement orders proposed by the parties, but also some divergence.
The parties agreed on the nature of the superannuation splitting orders that should be made. First, as directors of Noogle Nominees, they will act to cause the sale of the parcel of real property owned beneficially by the Super Fund and the deposit of the net proceeds of sale into the Super Fund. Secondly, the wife will receive 100 per cent of the husband’s superannuation interest, which will then be aggregated with her own superannuation interest in the Super Fund. Thirdly, the husband will then receive 50 per cent of the wife’s enlarged superannuation interest. The overall result will be their equal division of the Super Fund once its assets are converted to liquid form.
The parties also agreed they should share equally in the dividends paid on their respective shareholdings following the liquidations of H, E, F, and G, and the wind-up of the Noogle Partnership. However, they each proposed different orders to achieve that outcome.[39] Because of the divergence between their proposed approaches, no orders could be made consensually. Although the manner of their receipt of the dividends will affect their individual taxation liabilities,[40] the specific differences between their proposals were not the subject of any evidence or submission, so adoption of either party’s proposal would be arbitrary. Therefore, both proposals are rejected and the orders only provide for equal distribution of the dividends paid on their shareholdings. Of course, the parties are free to inform the liquidator how and when they would prefer to be paid their dividends but, in the absence of their agreement, no orders can be properly made binding one party to the arbitrary proposal of the other.
[39] Exhibit W1, Orders 12-14; Exhibit H1, Order 16
[40] Exhibit W2
Otherwise, the husband wants to retain the personal property he possesses, together with the painting which the wife is willing to relinquish. That would mean he retains assets and liabilities (items 3, 11-16) with a net negative value of $995.
The wife wants to retain the personal property she possesses, together with the former matrimonial home. The husband is prepared to relinquish his proprietary interest in the former matrimonial home, provided the wife is able to buy out his one-half interest. That would mean the wife retains assets and liabilities (items 1, 4-9) with a net value of $806,889. To ensure equality, the wife will therefore need to pay the husband $403,942 (which is one-half the difference between $806,889 and negative $995).
The orders allow the wife six months within which to make the payment to the husband. She needs reasonable time within which to gather funds, which could conceivably be from the rationalisation of the parties’ superannuation interests and the corporate liquidations or by loan. If she cannot raise the funds, there will be no option but for the home to be sold and the net proceeds divided to ensure overall equality. That would require payment of the first $3,942 to the husband, being the difference between the value of the personal property and debts retained by the wife (items 4-9) and the personal property and debts retained by the husband (items 3, 11-16), with the balance divided equally between them.
The orders enable the wife to remain in occupation of the former matrimonial home pending implementation of the orders, but her occupation is conditional upon her meeting recurring expenses on the property and maintaining it in reasonable condition. The husband will continue to incur the cost of renting his own accommodation, but the benefit to the wife of further rent-free accommodation in the former matrimonial home over the next six or more months only partly redresses the modest imbalance of their income over the last seven years.
The wife sought that a number of facts be recorded as notations to the orders,[41] but they are not. The Court makes orders within its power to quell disputes under Part VIII of the Act. The notations proposed by the wife purported to record agreements between the parties, but they did not, because the husband did not signify his agreement to such notations.
[41] Exhibit W1, Notations A-C
The orders set out at the commencement of these reasons represent a just and equitable adjustment of their property and superannuation interests.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 14 March 2017
Associate:
Date: 14 March 2017
NOOGLE & NOOGLE [2017] FamCA 140
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