Norris & Ishikawa (No 3)
[2024] FedCFamC1F 190
•22 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Norris & Ishikawa (No 3) [2024] FedCFamC1F 190
File number(s): SYC 4494 of 2021 Judgment of: ALTOBELLI J Date of judgment: 22 March 2024 Catchwords: FAMILY LAW – PROPERTY – Where the husband seeks a 60:40 split and the wife seeks a 50:50 split – Where both parties agree there were equal contributions up to separation – Where the husband made greater post-separation contributions and has greater future needs – Where the wife will soon receive an inheritance – Where the inheritance is put into a separate pool – Where the husband will be given the opportunity to retain the family home – Where the Court orders a 60:40 split in the husband’s favour. Legislation: Family Law Act 1975 (Cth) ss 75,79 Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Division: Division 1 First Instance Number of paragraphs: 31 Date of hearing: 18–19 March 2024 Place: Sydney Counsel for the Applicant: Mr Fermanis Solicitor for the Applicant: Phillip A Wilkins & Associates Counsel for the Respondent: Mr Batey Solicitor for the Respondent: Kydon Segal Legal Lawyers ORDERS
SYC 4494 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS NORRIS
Applicant
AND: MR ISHIKAWA
Respondent
ORDER MADE BY:
ALTOBELLI J
DATE OF ORDER:
22 MARCH 2024
THE COURT ORDERS THAT:
1.No later than three months of the date of these orders, the Applicant Wife (“the Wife”) shall do all acts and things and sign all documents necessary to transfer to the Respondent Husband (“the Husband”) all her right, title and interest in the property at F Street, Suburb G (“the Suburb G property”), and that to give effect to the same simultaneous with the said transfers the Husband shall refinance all existing loans secured by way of mortgage registered against the property into his sole name and indemnify the Wife accordingly.
2.Contemporaneous with the transfer above, the Husband shall pay to the Wife the sum of $575,890.40.
3.If the Husband cannot make the payment in accordance with these orders, the parties shall, within 21 days, do all things and sign all documents to list the Suburb G property for sale by private treaty with such real estate agent as agreed and failing agreement as nominated by the President for the time being of the Real Estate Institute of NSW, at such price as agreed and failing agreement as determined by a valuer nominated by the President for the time being of the Australian Property Institute Inc. NSW Division.
4.In the event that the Suburb G property has not sold within six months of the date of these orders, the parties shall do all things and sign all documents to cause the said property to be sold by auction at a reserve price as agreed and failing agreement as determined by a valuer nominated by the President for the time being of the Australian Property Institute Inc. NSW Division.
5.Upon completion of the sale of the Suburb G property, the parties apply the proceeds of sale as follows:
(a)To pay all costs, commissions and legal expenses of the sale and to pay any council or water rates and maintenance and levies outstanding in respect of the property;
(b)The mortgage secured over the property; and
(c)The balance to be divided at to 60 per cent to the Husband and 40 per cent to the Wife.
6.Except as otherwise provided for by these orders, each party shall remain solely entitled, in law and in equity, to the exclusion of the other, to all other items of property, personalty and superannuation in their respective names or to which they have an entitlement.
7.Within 14 days of the date of these orders, the Wife is permitted to have an authorised agent access the Suburb G property for no more than one hour, with the Husband and the children not to be present, for the purpose of collecting the following:
(a)The Wife’s clothing;
(b)The Wife’s personal effects such as jewellery and documentation;
(c)Personal photographs;
(d)Motor Vehicle 1;
(e)Bicycle; and
(f)Bedroom suite including, a bed, two bedside tables and a dresser.
8.In the event that either party refuses or neglects to sign or execute any document, instrument or writing or comply with any order herein after seven days of being requested to do so by the other party in writing, then the Registrar of this Court be empowered pursuant to s 106A of the Family Law Act 1975 (Cth) to sign and execute such document, instrument or writing on behalf of either party as may be necessary to give full force and effect to the orders herein.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Norris & Ishikawa has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
INTRODUCTION
These brief reasons for judgment explain the orders the Court has made for the alteration of property interests between a husband (“the husband”) and wife (“the wife”) in this matter.
BRIEF BACKGROUND
The wife is the applicant in this case. She is 51 years old. The husband is the respondent. He is 49 years old. Both are in full-time employment. The wife experiences mental health issues but this does not affect her employment. They have two children, X and Y, aged 14 and 11 respectively (“the children”). The children live with the husband and spend time with the wife in accordance with their wishes, consistent with consent orders that the Court made on 19 March 2024. The parties met in 1998, commenced cohabitation in 1999, and married in 2013. They separated in March 2021. In 2004, the parties purchased a property at F Street, Suburb G (“the Suburb G property”), equally funding the deposit.
COMPETING PROPOSALS AND ISSUES
The wife seeks orders in accordance with her Amended Application filed 17 March 2024. In short, she seeks that the husband make a cash payment to her, in which case she will transfer her interest in the family home to the husband, but failing which the property is to be sold and the net sale proceeds be divided equally between them.
The husband seeks orders in accordance with his Amended Response filed 28 September 2023. In short, he seeks the opportunity to buy out the wife’s interest in the family home so that he and the children may continue to live there.
Part of the wife’s case is that an inheritance she received after the date of separation should for all practical purposes be excluded from the present application for alteration of property interests on the basis that the husband made no contribution thereto. Her case is, in fact, that it is a mere financial resource as it has not been received by her but, even if it were treated as property, it should go into a separate pool to which she has made a 100 per cent contribution.
The husband’s case is that contribution and future needs should be assessed at approximately 60 per cent in his favour. Doing the best the Court can to understand this contention, the wife’s inheritance should be treated as property and included in the pool for the purposes of a 60:40 split.
Both parties agreed that, apart from the wife’s inheritance, both superannuation and non‑superannuation assets should be treated as being part of a single pool.
The issues for the Court to determine, therefore, include:
(1)The treatment of the wife’s inheritance;
(2)Assessment of contribution;
(3)Assessment of future needs; and
(4)Making a just and equitable order.
EVIDENCE BEFORE THE COURT
In support of her case, the wife relied upon the following material:
(a)Amended Initiating Application filed 17 March 2024;
(b)Her affidavit filed 27 October 2023; and
(c)Financial Statement filed 27 October 2023.
In support of his case, the husband relied upon the following material:
(a)Amended Response filed 28 September 2023;
(b)His affidavit filed 27 October 2023; and
(c)Financial Statement filed 27 October 2023.
APPLICABLE LAW
This is an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) which relevantly provides:
79 Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d)an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)The 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.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 79(4) incorporates the provisions contained in s 75(2) of the Act, which states:
(2) The matters to be so taken into account are:
(a)the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party’s role as a parent; and
(m)if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In Bevan & Bevan (2013) FLC 93-545 (“Bevan”), the Full Court considered the High Court’s decision in Stanford v Stanford (2012) 247 CLR 108, which provided guidance on how s 79 was to be interpreted and implemented. Bevan endorsed the continuing application of the four-step approach articulated by the Full Court in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 (“Hickey”), but on the basis that it is a shorthand distillation of the words of s 79, as opposed to being a statutory edict. The four steps articulated in Hickey at [39] are:
(1)Identify and value the property, liabilities and financial resources of the parties;
(2)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property;
(3)Identify and assess the other facts relevant under s 79(4)(d)–(g) including s 75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
(4)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
BALANCE SHEET
The balance sheet contained in the husband’s Outline of Case Document filed 15 March 2024 is reproduced below, with an amendment regarding item 8 (the wife’s inheritance):
Description Applicant Respondent ASSETS 1 J F Street, Suburb G $1,575,000 $1,575,000 2 W Motor Vehicle 2 $4,000 $4,000 3 W Motor Vehicle 1 $3,000 $3,000 4 J Household contents $1,000 $1,000 5 W H Bank Account – …12 $7,000 $7,000 6 H NAB Account – …74 $3,261 $3,261 7 H Bank Account $31,000 $31,000 Total assets $1,624,261 $1,624,261 ADDBACKS 9 H Funds withdrawn from the offset account $35,000 $35,000 10 W Partial Property Settlement - 21.12.21 $60,000 $60,000 11 H Partial Property Settlement - 21.12.21 $40,000 $40,000 Total addbacks $135,000 $135,000 LIABILITES 12 J Mortgage $130,608 $130,608 Total liabilities $130,608 $130,608 SUPERANNUATION 13 W Superannuation Fund 1 $197,142 $197,142 14 H Superannuation Fund 2 $293,036 $293,036 Total superannuation $490,178 $490,178 FINANCIAL RESOURCES/SECOND POOL 8 W Inheritance from the mother’s estate $166,439 $166,439 Total financial resources/second pool $166,439 $166,439 POOL Total assets $1,624,261 $1,624,261 plus Total addbacks $135,000 $135,000 less Total liabilities $130,608 $130,608 plus Total superannuation $490,178 $490,178 Net (excluding item 8) $2,118,831 $2,118,831 Net (including item 8) $2,285,270 $2,285,270
Item 8, the wife’s inheritance, is noted in the above table as being a financial resource/second pool. This reflects the competing contentions about how the inheritance should be characterised. The Court prefers to treat the wife’s inheritance as a second pool, indeed a pool of property, rather than a financial resource. It may well not have been received in the wife’s hands, but it is clearly either an equitable or legal entitlement and should thus be characterised as property. However, given the husband’s concession that he made no contribution to it, to include it with the other superannuation and non-superannuation assets in the balance sheet would be to unnecessarily confuse the process of assessing contribution and is likely to lead to error. The wife’s inheritance will become Pool 2, having a value of $166,439. The remaining superannuation and non-superannuation assets will constitute Pool 1, having a value of $2,118,831.
DISCUSSION
In relation to Pool 2, the wife’s inheritance, given the reasonable, and, with respect, obvious concession that the husband made no contribution to the wife’s inheritance, the Court assesses contribution in her favour at 100 per cent. To the extent that the husband’s counsel submitted that her inheritance was, somehow, available to be included in assessing the ultimate amount of his client’s entitlement, the Court disagrees except to this extent: the existence of the inheritance contra-indicates the wife having a future needs adjustment in her favour.
The parties agreed that both superannuation and non-superannuation assets should go into Pool 1. Neither party sought superannuation-splitting in the orders they sought. There was an allusion in closing submissions by counsel for the husband that there be a superannuation-splitting order of his superannuation to reduce the cash payment to the wife. No further submission was made about this. No form of order was submitted. There is no evidence of the trustee’s consent. The prejudice to the wife was not closely considered. The Court takes this allusion no further.
In relation to Pool 1, the wife contends that there should be an equal adjustment. It is common ground that there was negligible difference between any assets either party had at the time of cohabitation, or that their contribution as at the date of separation should be assessed as anything but equal. Moreover, the wife contended that there is no basis for any post-separation contribution by either party. She also contends that because of the income disparity between the parties, the husband should not be entitled to any future needs adjustment.
The husband contends for a post-separation contribution assessment of 2 per cent which would result in a final assessment of contribution in his favour of 52 per cent. Doing the best the Court can to understand the basis of this, the husband was solely responsible for the care of the children between the date of the hearing and the date of separation in 2021, a period of approximately three years. The wife paid child support during this period, but whilst this was a meaningful contribution by the wife towards the actual costs of the children, when one has regard to the respective Financial Statements of the parties, a strong inference is drawn that the husband bore the majority of the costs pertaining to the children. Against this adjustment, the wife contends that the husband had the benefit of occupying the family home, while she had to rent accommodation. Indeed, her current rental is $270 per week, and the husband’s current mortgage payments are $230 per week. This contention ignores the obvious fact that it was in the best interests of the children, at an otherwise highly unstable time in their lives, to remain in the family home.
In the circumstances the Court agrees that the husband’s post-separation contribution should be recognised. The Court assesses contribution as at the date of the hearing in the husband’s favour at 52 per cent.
On behalf of the husband, it was contended that there should be a future needs adjustment in his favour of at least 7.5 per cent. When the evidence before the Court, and the submissions made about this issue, are considered in the context of s 75(2) of the Act, the following matters are relevant. Whilst the husband earns more than the wife, he will also bear a disproportionate share of the cost of attending to all of the needs of the children and caring for them. The amount of child support the wife will pay in the future is an important contribution, but unquestionably leaves the husband carrying a disproportionate share of the financial burden associated with caring for the children. The wife will receive an inheritance, probably within a short period of time. Despite the wife’s evidence to the contrary, which sought to minimise this, it is likely that she will re-partner after the conclusion of these proceedings, with the consequential financial and emotional benefits that are likely to accrue with this. The Court also takes into account, in a general sense, that the husband’s responsibility to care for the children includes providing appropriate accommodation for them, and seeking to minimise dislocation arising out of unnecessary residential relocation.
In all the circumstances of this case, an adjustment in the husband’s favour of 7.5 per cent is appropriate.
This means the husband would be entitled to an overall adjustment of 59.5 per cent in relation to Pool 1, which the Court will round up to 60 per cent. It is clear from his case that he would like to retain the family home, if possible. He will be given the opportunity to do so. His counsel suggested he be given three months to achieve this, and in the circumstances the Court considers that to be appropriate.
A 60:40 split of Pool 1 (with the father retaining the home and the mortgage) on the balance sheet as found by the Court would result in the father receiving $1,271,298.60 and the mother receiving $847,532.40, each of the parties having assets, or notional assets, and liabilities and superannuation as follows:
POOL 1 Applicant Respondent Description Value Description Value ASSETS 1 F Street, Suburb G $1,575,000 2 Motor Vehicle 2 $4,000 3 Motor Vehicle 1 $3,000 4 Household contents $500 Household contents $500 5 H Bank Account – …12 $7,000 6 NAB Account – …74 $3,261 7 Bank Account $31,000 Total assets $14,500 $1,609,761 ADDBACKS 9 Funds withdrawn from the offset account $35,000 10 Partial Property Settlement - 21.12.21 $60,000 11 Partial Property Settlement - 21.12.21 $40,000 Total addbacks $60,000 $75,000 LIABILITIES 12 Mortgage $130,608 Total liabilities $0 $130,608 SUPERANNUATION 13 Superannuation Fund 1 $197,142 14 Superannuation Fund 2 $293,036 Total superannuation $197,142 $293,036 NET ASSETS $271,642 $1,847,189
Thus, in order for the husband to retain the home, this would require a payment from him to the wife in the sum of $575,890.40.
If he cannot pay this amount within three months, the property will need to be sold.
ORDERS MADE
The wife shall do all acts and things and sign all documents necessary to transfer to the husband all her right, title and interest in the Suburb G property, and the husband shall refinance all existing loans secured by way of mortgage registered against the property into his sole name and indemnify the wife accordingly.
Within three months of the date of these orders, the husband shall pay to the wife the sum of $575,890.40.
If the husband is unable to come up with these funds, the Suburb G property shall be sold, with the net proceeds of sale being divided 60:40 in the husband’s favour.
The parties shall otherwise remain solely entitled to all other items of property, personalty and superannuation in their respective names.
The wife will be permitted to have an authorised agent to collect any of her personal belongings from the Suburb G property within 14 days of these orders.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 22 March 2024
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