O’Khelleher & O’Khelleher
[2022] FedCFamC1F 393
•1 June 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
O’Khelleher & O’Khelleher [2022] FedCFamC1F 393
File number(s): SYC 8592 of 2016 Judgment of: SCHONELL J Date of judgment: 1 June 2022 Catchwords: FAMILY LAW – PROPERTY – Division of assets – Where both parties sought a 70% division of the assets in favour of themselves – Where the husband had joined the Australian Defence Force (“ADF”) when he was aged 18 – Where a significant issue at trial was the husband’s pension entitlements and various lump sum payments received post-separation due to his employment in the ADF and the injuries he suffered – Where the Court found that it was not just and equitable to make a splitting order in relation to the husband’s invalidity pension and [Super Fund 1] – Where the Court took the invalidity pension into account at the adjustment stage under s 75(2) of the Family Law Act 1975 (Cth) – Where both parties had made significant contributions – Where a just and equitable outcome for division of assets was found to be 55% to the husband and 45% to the wife. Legislation: Family Law Act 1975 (Cth) ss 75, 79, 106A, 117
Family Law (Superannuation) Regulations 2001 (Cth)
Cases cited: Aleksovski v Alexsovski (1996) FLC 92-705; [1996] FamCA 111
Cahill and Cahill (2006) FLC 93-253; [2003] FamCA 172
Chorn v Hopkins (2004) FLC 93-204; [2004] FamCA 633
Coghlan& Coghlan (2005) FLC 93-220; [2005] FamCA 429
Craig and Rowlands (2013) FLC 93-535; [2013] FamCAFC 45
Dickons v Dickons (2012) 50 FamLR 244; [2012] FamCAFC 154
Hall and Hall (2016) FLC 93-709; [2016] HCA 23
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143; [2003] FamCA 395
Semperton & Sempterton (2012) 47 FamLR 626; [2012] FamCAFC 132
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Welch v Abney (2016) FLC 93-756; [2016] FamCAFC 271
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Division: Division 1 First Instance Number of paragraphs: 119 Date of hearing: 16 – 18 May 2022 Place: Sydney Counsel for the Applicant: Mr Liedermann Solicitor for the Applicant: Falzon Legal Pty Ltd Counsel for the Respondent: Ms Snelling Solicitor for the Respondent: Suzanne Wyman & Associates ORDERS
SYC 8592 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS O’KHELLEHER
Applicant
AND: MR O’KHELLEHER
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
1 June 2022
THE COURT ORDERS THAT:
1.The parties do all acts and things and sign all documents necessary to cause the funds held in Westpac Bank account number …43 to be paid to the wife within seven days of the making of this Order.
2.Within three months of the date hereof, the husband pay to the wife a sum of $216,006 and consequent upon that payment, the wife do all acts and things and sign all documents necessary to transfer to the husband all of her interest in the property at B Street, C Town, NSW (“the [C Town] property”), subject to the husband refinancing the existing mortgage over the property such that the wife is removed as a borrower, guarantor and mortgagor.
3.In the event that the husband fails to make the payment referred to in Order 2 within the time stipulated then the parties shall forthwith do all acts and things and sign all documents necessary to list for sale, by public auction, the C Town property with an agent as agreed upon by the parties and failing agreement as nominated by the Real Estate Institute of New South Wales, instruct a solicitor and/or conveyancer to prepare a Contract for Sale to act on sale of the property, and failing the agreement as to the nomination request, the Law Society of New South Wales to nominate a solicitor to act on the sale.
4.The parties do all acts and things and sign all documents necessary to attend at the auction of the property to effect a sale of the property at the agreed reserve price and failing the agreement at a price as nominated by a valuer nominated by the President of the Real Estate Institute of New South Wales and thereafter to sell the property.
5.On the settlement of the sale of the C Town property, the parties shall cause the proceeds of sale to be paid in the following manner and priority:
5.1.all costs and expenses of sale including legal costs and disbursements, agent’s commission, marketing and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties, provided they are agreed in writing);
5.2. the amounts required to discharge the mortgage;
5.3.the amounts required to pay all municipal and water rates outstanding with respect to the property;
5.4. pay to the wife an amount calculated as follows:
$(45% x X) – Y
where:
X = $791,370 plus the net proceeds of sale of the C Town property after the payments required by Orders 5.1 to 5.3.
Y = $449,580.
5.5. the balance to the husband.
6.Other than as provided for herein, the wife be entitled to all other items of real and personal property in her possession, custody and control as at the date of these orders.
7.Other than as provided for herein, the husband be entitled to all other items of real and personal property in his possession, custody and control as at the date of these orders.
8.In the event either party refuses or neglects to execute a document or deed required to give effect to these orders within 7 days of being presented with such document or deed, then pursuant to s 106A of the Family Law Act 1975 (Cth), a Registrar or other officer of the Federal Circuit and Family Court of Australia be appointed to execute the said document or deed in the place of the defaulting party.
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 O’Khelleher & O’Kelleher is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings for financial adjustment under s 79 of the Family Law Act 1975 (Cth) (“the Act”) arising out of the breakdown of the marriage between the parties.
One of the significant issues in the proceedings is the treatment of the respondent husband’s (“the husband’s”) pension entitlements and the receipt by him, post-separation, of various lump sum payments as a consequence of both his employment in the Australian Defence Force (“ADF”) and the injuries he suffered while in the ADF.
Short Background
The husband was born in 1979 and is aged 42 years.
The applicant wife (“the wife”) was born in 1985 and is aged 36 years.
The husband joined the ADF when he was aged 18 and commenced contributing to Super Fund 1 on 12 May 1998.
The husband sustained an injury in 2003.
The husband was deployed overseas to Country D in 1999 and 2002, Country E in 2007 and to Country F in 2012–2013.
The parties were at issue about when they commenced cohabitation, with the wife contending that it was in or about January 2008 and the husband contending that it was around March 2008.
The parties were married in 2011. There is one child of their relationship, namely, X born in 2014.
During the course of the relationship, the husband was a serving member of the ADF.
The parties purchased a property at C Town in early 2014 and following separation, the husband has continued to reside in the C Town property.
The parties separated on 3 November 2015 according to the husband, or 26 December 2015 according to the wife. Nothing turns on the date of separation for the purposes of these proceedings.
In early 2017, the husband was discharged from the ADF as medically unfit for duty.
Post-separation the husband received various lump sum payments as a consequence of his employment in the ADF and as a consequence of the suffering of injuries, totalling in excess of $760,000.
The husband has re-partnered, commencing a relationship with his new partner sometime in 2016.
They married in late 2019 and there are two children of that relationship, Y born in 2017 and Z born in 2018.
Final parenting orders were made as between the parties on 6 October 2020, which provide for the wife to have sole parental responsibility of X, that X live with the wife, and that he spend daytime only with the husband each alternate Sunday during school terms and on other occasions.
Documents Relied Upon And Position Of Each Party
The wife relied upon the following documents:
(1)Amended Initiating Application filed 24 June 2021;
(2)Affidavit of wife filed 28 March 2022;
(3)Financial Statement filed 28 March 2022; and
(4)Case Outline document.
The husband relied upon the following documents:
(1)Amended Response to Amended Initiating Application filed 2 March 2022;
(2)Affidavit of husband filed 27 April 2022;
(3)Financial Statement of husband filed 27 April 2022;
(4)Affidavit of Ms G filed 27 April 2022;
(5)Affidavit of Dr H filed 3 August 2020; and
(6)Case Outline document.
The wife sought orders that saw the pool of assets as determined by her divided as to 70% to the wife and 30% to the husband (Exhibit 2). To achieve that outcome, the wife sought the sale of the C Town property and that she receive that entire net proceeds of sale with a further payment to her to achieve a 70% split. Alternatively, she sought that the home at C Town be sold and that the proceeds be paid as to 70% to her and an equal split of the husband’s superannuation entitlements.
The husband in his Case Outline sought that the pool of assets as determined by him be divided as to 70% to the husband and 30% to the wife. To achieve that outcome, the husband sought a set sum be paid to the wife and that there be a superannuation split of $80,000 from the husband’s defined benefit fund in the growth phase.
The husband did not provide a Minute of the orders he sought until the second day of the hearing, which became Exhibit 10 in the proceedings. In that Minute, he sought a superannuation splitting order for the first time. The Trustee of the Fund had not been accorded procedural fairness. Counsel for the husband assured the Court that notice would be provided. By the time of closing submissions there remained no evidence that the notice had been given.
The matter was subsequently relisted and the husband sought leave to reopen to tender documents and withdraw a submission made earlier. Leave was granted and a further Minute of Order was tendered, which included evidence of the according of procedural fairness to the Trustee.
The Court raised with the husband’s counsel that in light of the correspondence from the Trustee (which is in the same terms in Exhibit 14 and Exhibit 21), that it would appear that it was not possible to split only the husband’s defined benefit fund in the growth phase. In that respect, Exhibits 14 and 21 and contain the same statement:
General Information
Please note, as a result of an amendment to the [SF1] Trust Deed with effect from 1 July 2011, a family law split will now apply to both the invalidity pension and the preserved member benefit.
Rule 95 of the [SF1] Rules provides, where a pension (whether invalidity or not) is being paid from the member’s interest at the operative time of a splitting Order, the non-member spouse is entitled to an associate pension. Under Rule 95, regardless of whether the member’s interest consists of both growth (preserved lump sum) phase and payment (pension) phase components, the non-member spouse is only entitled to an [SF1] associate pension based on the capitalised value of the member’s pension phase component at the operative time.
(Emphasis in original)
The husband’s counsel submitted that it was possible to just split the fund in the growth phase and by implication leave the pension unaffected. In light of the above statement by the Trustee, I do not accept that that position is absolutely clear.
On the relisting, the parties agreed that the wife should receive an interim payment of $140,000, being the amount that the wife was to receive on the husband’s case. In circumstances where that represented an agreed position, an order was made accordingly. I will take into account in my final determination that the wife has already received a sum of $140,000.
In my view and for the reasons set out below, neither of the positions of the parties represents a just and equitable outcome.
Each of the parties have incurred a significant debt in relation to legal fees (Exhibit 9). In the case of the wife, the costs notice indicates that she has paid $71,195 and still owes in excess of $364,000. This is a huge sum of money that is disproportional to both the size of the pool and the issues in the proceedings, which are not complex.
The husband’s costs notice evidences that he has incurred fees of $78,000.
There has been a complete lack of focus and proportionality brought by the parties in relation to what are relatively straightforward financial proceedings arising out of their 8 year relationship. Perhaps emblematic of the absence of focus in the proceedings is the reliance by the wife on a tender bundle comprising some 1,197 pages of which, at best, 75 pages were tendered in evidence.
The husband was no better. He failed to comply with directions, was consistently tardy in his obligations as to disclosure, and filed his affidavits late.
The Court has determined that it will not make a splitting order in relation to the husband’s invalidity pension. To make such an order would not be just and equitable as between the parties. Likewise, no splitting order will be made in relation to the husband’s Super Fund 1 in the growth phase, as the Court is not satisfied, in light of Exhibits 14 and 21, that it is possible to simply split that fund alone. To make such an order could have the effect of otherwise reducing the husband’s periodic pension, which the husband argued should not happen.
Any reduction in the husband’s pension will reduce the amount of available income that is relied upon to support the husband, his new wife and two children. The husband’s Financial Statement reveals that the husband has a weekly deficit of $488. Any reduction in his pension will only exacerbate an already parlous financial position for the husband and his dependents. It will also have a knock on effect of in all likelihood reducing the amount of child support received by the wife. There is other property sufficiently available for distribution between the parties to permit a just and equitable division without recourse to a splitting order. For these reasons, I conclude that it would not be just and equitable to make a make a splitting order.
Approach to Property Proceedings
The approach to be adopted in a financial adjustment case under s 79 of the Act is to follow the well-recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143). Following such an approach, the Court identifies and values the assets and liabilities at the date of hearing for the purposes of division. Secondly, the Court assesses the contributions of the parties within the meaning of s 79(4) of the Act and determines a contribution based entitlement. Thirdly, the Court identifies the relevant matters under s 75(2) and determines such adjustment as is necessary to the contribution based entitlement. Finally, the Court considers the effect of the findings and must then determine whether the order as proposed is in all the circumstances just and equitable.
Whilst no submission was made consistent with the ratio arising out of the High Court’s determination in Stanford v Stanford (2012) 247 CLR 108, I am of the view that it is just and equitable that an order be made adjusting the property interests of the parties. The parties are no longer living together and there is no longer the common use of their property. The assumptions and undertakings that governed the use of their property ended with separation and both parties sought that there be an adjustive order.
Pool of Property Available for Distribution
The parties held disparate views as to the number of pools, the composition of the pool of assets and also as to division of the assets.
The parties ultimately reached some agreement as to what they each contended to be the composition of the pool of assets for division (Exhibit 18), which is reproduced as follows:
Ownership Description Wife / de facto partner’s value Husband / de facto partner’s value ASSETS 1. H/W B Street, C Town $1,250,000 $1,250,000 2. H Westpac Bank Account …43 $363,273 $363,273 3. H Motor Vehicle 1 $6,415 $0 4. W Motor Vehicle 2 $18,000 $18,000 5. H Motor Vehicle 3 $133,000 $133,000 6. H Personal Effects $10,000 $2,000 7. W Personal Effects $600 $600 8. H J Bank Account …70 $3,000 $3,000 9. W Jewellery $18,900 $18,900 10. H Motor Vehicle 4 $76,777 $30,000 11. H Motor Vehicle 5 $ 1,500 $1,500
Total $1,881,465
$1,820,273
ADDBACKS 12. H Gambling & Drinking (15 June 2015 to 6 Dec 2015) $10,737 $10,737
Total $10,737 10,737
LIABILITIES 13. H/W Mortgage B Street, C Town $562,389 $562,389 14. W Legal Fees $E364,094 $0 15. H Loan from parents $0 $27,000 16. H J Bank Visa Card $4,881.99 $4,881.99 17. H K Bank Mastercard $4,154.58 $4,154.58
Total $935,520 $598,426
SUPERANNUATION Member Name of Fund Type of Interest Wife / de facto partner’s value Husband / de facto partner’s value 18. H Super Fund 1 Defined $1,847,291 $0 19. H Super Fund 1 Defined $138,419 $138,419 20. H Super Fund 1 (AB) Defined $23,134 $23,134 21. W Super Fund 3 Accumulation $48,807 $48,807
Total $2,057,651
$210,360
FINANCIAL RESOURCES Ownership Description Wife / de facto partner’s value Husband / de facto partner’s value 22. H Money in Ms G’s Control $187,662.21 $0 23. H Ms G’s Savings $ 159,100.93 $0 24. H Super Fund 1 $0 $1,847,291
Total $346,763.14 $1,847,291
The wife contended that the Court should approach the assessment of contribution and adjustment stage by assessing the property of the parties as identified above by looking at three pools. Pool 1 constituted Items 1–11 and 13–17, with contribution assessed to be 45% to this pool. Pool 2 constituted Item 12 and contribution was assessed to be 50%. Pool 3 constituted Items 18–21 to which contribution was assessed to be 20%. A 10 % adjustment under s 75(2) with a further 5% adjustment was said to be necessary to do justice and equity.
The husband’s counsel submitted that there should be two pools, one containing the husband’s invalidity pension, which she described as a financial resource, and the other containing the items in the balance sheet as contended by him excluding Items 15–17, which it was said should be ignored as post-separation liabilities.
I do not propose to include Item 3. This is an asset that no longer exists. It was not submitted that it should be an addback. There is no evidence as to the value of Items 6 and 10 as proposed by the wife and I propose to adopt the husband’s admissions against interest.
I would not have ordinarily included Item 12 but as it was common ground, I will not interfere with the parties’ agreement.
As to Item 14, a party’s liability for legal fees is not one that is ordinarily included as a liability for the purposes of determining a pool of assets for division (Chorn v Hopkins (2004) FLC 93-204 at [59]). I see no basis for its inclusion, particularly in circumstances where it is so high. Its inclusion would have the result of the husband, in effect, contributing to the payment of the wife’s costs contrary to the general rule expressed in s 117.
In light of the submissions by the husband’s counsel (and only because such an approach was urged), I propose to ignore the husband’s post separation liabilities but will have regard to them under s 75(2). Counsel for the wife ultimately submitted that Items 22 and 23 should be dealt with at the adjustment phase under s 75(2).
As stated earlier, each of the parties contended for different pools of assets. The authorities seem to adopt somewhat different approaches. I conclude that it is appropriate to adopt a one pool approach comprising the property and superannuation entitlements of the parties but recognising the husband’s invalidity pension at the adjustment stage under s 75(2). Such an approach avoids any risk of double dipping, better reflects the ‘real nature’ of the husband’s invalidity pension and more properly permits of a just and equitable outcome.
In reaching the conclusion as to the appropriate way to deal with the husband’s invalidity pension, I have also had regard to the Full Court’s decision in Craig and Rowlands (2013) FLC 93-535, where their Honours said:
41. Of course, any consideration of the principles applicable should also recall the majority decision in Coghlan and Coghlan (2005) FLC 93-220 in particular the following:
• There is no mandate to include the value of the superannuation interests of the parties in the pool of assets to be divided in proceedings under s 79. The preferred approach is to prepare a list of any superannuation interests separate to any items of property. The trial judge has a discretion as to how superannuation interests will be treated; and
• Consideration must be had to the overall justice and equity of any proposed order, including the “real nature” of the superannuation interests, ie whether the superannuation represents for example a present sum or a future periodic sum.
…
43. The comprehensive discussion of the authorities in the recent case of Semperton & Semperton [2012] FamCAFC 132 (a decision given on 23 August 2012 after the hearing of this matter) in the reasons of May J and also Thackray and Ryan JJ, should be read in conjunction with these reasons.
44. The difficulty in balancing specific and general requirements in taking DFRDB entitlements taken into account in property proceedings was summarised by May J in Semperton:
3. Amendments to the Family Law Act 1975 (Cth) (“the Act”) and the introduction of the Family Law (Superannuation) Regulations 2001 (Cth) (“the Superannuation Regulations”) had the effect that a DFRDB pension in its payment phase, though incapable of being capitalised, must be valued in accordance with the Superannuation Regulations.
…
76. Certain questions about such entitlements have been considered and answered by the Full Court. It is clear from those authorities, which are set out below, that it is a matter of discretion for the judicial officer. That discretion is guided, however, by some qualification and statements of principle by the Full Court.
77. Notwithstanding a clear requirement that such interests must be taken into account in the determination of property proceedings, and that a specific dollar value is to be assigned to the interest under the Superannuation Regulations, careful consideration must be given to the nature and characteristics of the interest. A recurring theme in both the appellate authorities and first instance decisions is the primacy of the s 79 requirement for just and equitable orders over provisions in the Superannuation Regulations and Part VIIIB of the Act.
45. In addressing DFRDB cases the Full Court has provided some guiding principles and considerations, emphasising the requirements to consider the nature of the asset and to step back and consider the just and equitable effect of the overall orders. In numerous cases, the Court has also cautioned against the risk of double-dipping on DFRDB entitlements, and found appealable error where this has occurred.
46. It is first important to understand in each case what is the nature of the interest. In Semperton the features of the husband’s DFRDB entitlement in that case, which are generally common characteristics to DFRDB, were explained. In Semperton, as commonly appears in these cases, the husband had already commuted the maximum sum possible upon his earlier retirement from the Defence Force. May J explained the main features of the entitlement at the relevant time of the trial:
48. The husband’s DFRDB pension was characterised by his counsel as a guaranteed “income stream indexed for life”; a benefit which could never be commuted to a capital sum, was in its payment phase, and was received by the husband as a fortnightly pension payment. It was submitted that in practical terms, the benefit was an income stream or a financial resource, made splittable only because the Superannuation Regulations make it so, and in any event, only capable of being split to the wife in the form of a fortnightly payment not a lump sum.
…
48. In the reasons of Thackray and Ryan JJ another significant feature of DFRDB, that of taxation, was explained:
159. The DFRDB was valued by reference to a formula that pays no regard to the fact that the payments are taxable in the hands of the veteran. In some circumstances, the pension will be taxed at the highest marginal rate, while in other circumstances it will be tax-free. No formula can determine the real value to an individual recipient because of the myriad factors that would impact on the tax treatment of the benefit. But the fact remains that for so long as the husband continues to enjoy a high income, a proportion of his DFRDB will be lost to tax, albeit the burden should be reduced when he turns 60.
…
53. As mentioned, the Federal Magistrate relied on PJM & STM reported as McKinnon and McKinnon (2005) FLC 93-242. That case in instructive on two bases. First in relation to the general approach, Coleman J sitting as a single judge exercising appellate jurisdiction, considered the then recent decision of Coghlan and found that as the DFRDB entitlement was in its payment phase and could not be commuted, it was preferable to adopt an asset by asset approach and isolate the pension in its own pool. His Honour said:
4. Where this Court differs from the learned Federal Magistrate, albeit this Court has had the benefit of the decision of the Full Court in [Coghlan and Coghlan] (2005) FLC 93-220 which the learned Federal Magistrate did not have, is that this Court prefers an asset by asset approach to the evaluation of contributions rather than the global approach adopted by the learned Federal Magistrate. This Court prefers to consider “two pools” of property, they being the net assets referred to by the learned Federal Magistrate and totalling $844,000.00 less the sum of $248,774.00 referrable to the husband’s “DFRDB pension”, which the Court prefers to consider in a second “pool”.
5. The reasons the Court prefers this approach are essentially that the evidence establishes that the husband’s DFRDB pension is and will in future continue to be a fortnightly pension benefit which can never be commuted or otherwise converted to a lump sum, either of $248,774.00 or any other amount. Thus, whilst undoubtedly, in accordance with the regulations, the value of the superannuation interest is as found by the learned Federal Magistrate, consistent with the judgment of the majority in [Coghlan and Coghlan], this Court considers the preferable approach in terms of achieving a just and equitable resolution of the proceedings between the parties to be to consider the superannuation interest separately from the remaining assets of the parties.
…
120. As has been seen the Federal Magistrate placed the capitalised value of the husband’s DFRDB pension in a separate pool from the superannuation and non-superannuation assets of the parties. It is suggested by the husband’s senior counsel that that led the Federal Magistrate into error, however that is not readily apparent to me. It is quite appropriate to place an entitlement such as a DFRDB pension entitlement into a separate pool (see for example McKinnon and McKinnon (2005) FLC 93-242); indeed, in my view in order to properly address the presence of such an entitlement it is at the very least helpful, and sometimes essential, to separate it from the other assets including any other superannuation interests.
(Emphasis in original)
As stated earlier, the husband commenced contributing to Super Fund 1 in 1998.
In or about May 2018, the husband commuted his Super Fund 1.
Annexure B to the husband’s affidavit is the husband’s Contributing Member Statement as at 30 June 2008. Thus, approximately ten years of his 18 years of contributions to the fund, are represented by a period of service prior to the commencement of the marriage.
In relation to the fund, the husband gave evidence that was not the subject of any serious challenge as follows:
65. As deposed above I was medically discharged from the [Australian Defence Force] in [early] 2017. On discharge I was entitled to two pensions:-
Pension from [Super Fund 2] ([Pension 1])
Pension from Department of Veterans Affairs.
66. Prior to official discharge I was given all paperwork from the [Australian Defence Force] to complete. The Discharge Cell consisting of a military representative and a civilian representative attended at my home in or about May 2017 due to my mental condition and assisted me as to the best way to proceed with the discharge process from the [Australian Defence Force]. They guided me in completing the paperwork for submission to [Super Fund 2]. Attached to the documents were all my medical records and reports. This process took approximately 12 months.
67. The decision made by [Super Fund 2] was, I be placed onto [Pension 1]. As a result, I am on a fortnightly pension. [Super Fund 2] took the money the Service had contributed into my fund and converted it into [Pension 1]. At no time was I ever asked if that was what I wanted to occur. It was a decision that was made by the Trustee, based on all my medical information and on the determination, I would never be able to work again.
The effect of this was that the husband became entitled to a pension which is paid fortnightly. A valuation in accordance with the Family Law (Superannuation) Regulations 2001 (Cth) values the pension at $1,847,291 (Exhibit 7). The valuation by reference to a formula does not recognise that the fortnightly payment is subject to tax.
It is an agreed fact that the pension cannot be commuted to a lump sum payment and is an income stream payable to the husband. The husband’s personal contributions to super are separated out into two separate funds, which it is agreed have a combined value of $161,553 and remain in the growth phase.
In Semperton & Sempterton (2012) FamCAFC 132 (“Semperton”), May J, sitting as a member of the Full Court, referred to and approved of Coleman J’s approach in Cahill and Cahill (2006) FLC 93-253. Her Honour in Semperton recorded as follows:
91. In Cahill per Coleman J at first instance again considered treatment of DFRDB entitlements. In that case, his Honour considered in more detail the nature and characteristics of the entitlement (which was once again non-commutable) and the requirements of the legislation (at [75]–[82]):
75. It will be discerned that the Court at first instance, dealing with this case, is suggesting a distinction between taking into account, for the purpose of determining the assets of parties to proceedings, assets which have a theoretical value such as the husband’s DFRDB entitlements, and having regard to the realities of life surrounding such entitlements and reflecting them in the evaluation of contributions. The terms of s 90MC do not appear to raise an obstacle in the path of so doing. It is one thing to “treat” superannuation as “property” to enliven the jurisdiction of the Court to make an order in respect of superannuation, another altogether to suggest that superannuation must thereby be treated the same way as existing or tangible assets when entitlements of parties are determined pursuant to s 79 of the Act.
76. The Court thus moves to consider the DFRDB pension. As has been said, the formula provides a figure of $429,805 for that fund. The superannuation amendments to the Act do not detract from the Court’s duty to do justice and equity to litigants appearing before it, as directed by s 79 of the Act.
77. The $429,805 is a conversion of what is clearly income to capital. The husband’s DFRDB pension is not, and can never be, capital. It is as simple as that. To apportion $429,805 as if it were an asset would be an exercise in artificiality no matter how it was approached. If one had regard to it and if one concluded that the wife’s entitlement was any significant percentage that would be, in the Court’s view, grossly unjust so far as the husband was concerned.
78. On the other hand, to avoid that kind of injustice and reflect the reality that this is no more and no less than a notional calculation of the capital value of an income stream and reflect the wife’s entitlement in contribution terms as zero per cent would be grossly unjust to the wife.
79. As a reading of the transcript would reveal a number of possible approaches to this issue were canvassed yesterday and it would be accurate to say that none appeared at that time to be without fictional, artificial or undesirable features. The approach for which the Court has ultimately opted could be criticised in precisely that way, but the Court is persuaded that it is the least unjust approach to this difficult problem.
…
81. The Court is not persuaded that it is obliged to make a contribution entitlement finding in respect of the DFRDB figure thrown up by the formula. The Court is constrained under s 79(2) from doing things which are not just and equitable. In the Court’s view any contribution finding in relation to this notional value of the superannuation would be unjust to both parties, the only question being which party would be more unjustly treated.
82. Accordingly, the Court does not propose to make a contribution finding in relation to this notional asset. It ought not however, be thought that so doing means that the DFRDB pension entitlement ceases to be relevant, nothing could be further from the truth. What it does mean is that, a guaranteed income stream, of a substantial order, will be treated within the context of s 75(2). It is income, it will always be income and it is a powerful s 75(2) factor.
92. I would also agree with Coleman J’s analysis in Cahill, particularly at [77]–[82].
I am of the view that to properly do justice to these parties, I must take recognition of the real nature of the invalidity pension but also have regard to the contributions made by the wife and the fact that the husband will have a guaranteed income stream moving forward. To achieve that, consistent with a just and equitable outcome, I am not persuaded that I need to make a contribution finding to the pension but propose to take it into account at the adjustment stage under s 75(2). As May J observed in Semperton (referring to the Full Court’s decision in Coghlan& Coghlan (2005) FLC 93-220):
82. The majority emphasised that in circumstances where superannuation interests are dealt with separately from other property, then their “real nature”, as explained by their Honours, can be taken into account at both the adjustment stage and at the just and equitable orders consideration stage:
67. If this approach is adopted, whereby superannuation interests are dealt with separately from property as defined in s 4(1), but are subject to the considerations in s 79(4), then not only will any contributions, both direct and indirect, by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account, both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.
68. When we refer to “the real nature” of the relevant superannuation interest, we are referring to the fact that notwithstanding that its value according to the Regulations may well be calculated to be a very significant amount, that superannuation interest may be no more than a present or future periodic sum, or perhaps a future lump sum, the value of which at date of receipt is unknown.
(Emphasis in original)
I also note the observations of O’Ryan and Thackery JJ in Semperton, where their Honours observed:
174. Murphy J referred to both HRDW and Trott in his judgment in Hayton (above), where he found a judicial pension to be a “superannuation interest” within the meaning of the legislation. Having carefully explained why the law now requires such an interest to be included in the property of the parties, Murphy J went on to say (at [67]):
67. Once an interest is a “superannuation interest” as defined, the court is mandatorily required to determine an amount in relation to the interests in accordance with the Regulations, if the Regulations provide for the determination of that amount in relation to the interest: s 90MT(2)(a). In the event that the Regulations do not so provide there is an alternative mandatory requirement upon the court, namely to “determine the value of the interest by such method as a court considers appropriate”: s 90MT(2)(b).
175. The mandatory requirement to which Murphy J referred arises only when the superannuation interest is to be split. That this is so may be deduced from the opening words of s 90MT(2), namely “Before making an order referred to in subsection (1)”.
(Emphasis in original)
This approach was approved in Welch v Abney (2016) FLC 93-756, where the Full Court said
61. Crucially, at [175] of their joint judgment the plurality in Semperton emphasised that the mandatory requirement expressed in s 90MT(2) of the Act to determine an amount in relation to a “superannuation interest” as defined arises only when the superannuation interest is to be split.
I note that the wife has already received $140,000 from the funds in the bank account at Item 2. I do not propose to amend the balance sheet to reflect this but rather to consider it in my final determination when I divide the parties’ assets.
Accordingly, I find the pool of assets for division to be as follows:
Ownership Description ASSETS 1. H/W B Street, C Town $1,250,000 2. H Westpac Bank Account …43 $363,273 4. W Motor Vehicle 2 $18,000 5. H Motor Vehicle 3 $133,000 6. H Personal Effects $2,000 7. W Personal Effects $600 8. H J Bank Account …70 $3,000 9. W Jewellery $18,900 10. H Motor Vehicle 4 $30,000 11. H Motor Vehicle 5 $ 1,500
Total $1,820,273
ADDBACKS 12. H Gambling & Drinking (15 June 2015 to 6 Dec 2015) $10,737
Total $10,737
LIABILITIES 13. H/W Mortgage B Street, C Town $562,389
Total $562,289
SUPERANNUATION Member Name of Fund Type of Interest Wife / de facto partner’s value 19. H Super Fund 1 Defined $138,419 20. H Super Fund 1 (AB) Defined $23,134 21. W Super Fund 3 Accumulation $48,807
Total $210,360
TOTAL $1,479,081 Assessment of Contribution
Much of the evidence in the affidavits was of limited assistance and much of it amounted to broad ranging submissions and criticisms of the other party’s behaviour or conduct, which was irrelevant. Its irrelevancy was highlighted by the absence of cross-examination on many of the assertions, or any submission by each of the parties’ representatives as to its relevance.
I have, however, read all of the evidence relied upon in the proceedings including the Exhibits but do not propose to repeat all of it in these reasons. As the High Court reminds in Whisprun Pty Ltd v Dixon (2003) 200 ALR 447:
62. … A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.
The assessment in a property case calls for the exercise of a discretion and a holistic value judgment of the respective contributions of the parties. The Court is required to consider all of the contributions of the parties as the Full Court in Dickons v Dickons (2012) 50 FamLR 244 makes plain:
24.… the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25.Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “giving overzealous attention to the ascertainment of the parties’ contributions” (Norbis v Norbis (1986) 161 CLR 513 at 524 ; 65 ALR 12 at 18 ; 10 Fam LR 819 at 825 ; [1986] HCA 17) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26.The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
Guided by such Full Court determination, I propose to assess the parties’ contributions.
In reaching my findings as to contribution, I recognise, notwithstanding the contentions of the wife’s counsel for three separate pools of assets, that it was not suggested at any time during the course of his submissions that the contribution-based finding should be greater than one of equality. In that respect, his submission was that in relation to the non-superannuation assets with the exception of the addback for waste, that the contribution findings favoured a division as to 45% to the wife. Likewise, in relation to the superannuation entitlements of the parties, counsel for the wife recognised the imbalance of contributions in favour of the husband such that it was submitted that the contributions favoured a finding as to 20% to the wife and 80% to the husband.
Conversely, the husband’s counsel, in his Case Outline document, contended the following:
Contributions as to property interests, superannuation and financial resources
9. …
c. …
It is contended on behalf of the husband, that the parties made equal contributions during their cohabitation, as prior to the birth of their son, they both worked in paid employment until the wife left her employment for the birth of their child. Thereafter, the wife was the primary caregiver for the child until returning to part time employment toward the end of the marriage. The husband continue to work until illness forced him to give up work in 2015 and ultimate invalidity retirement after separation, in 2017.
Contributions
1.It is the husband’s case, he had significant property and savings and a superannuation balance of $148,506.00. at commencement of cohabitation. His total assets were valued at approximately $233,506.80. The wife had [Motor Vehicle 6] subject to finance.
As stated earlier, the parties are at issue about when they commenced cohabitation, with the wife contending they commenced cohabitation in or about January 2008 and the husband contending commencement of cohabitation in or about March 2008. Nothing turns on when the parties commenced cohabitation.
At the commencement of cohabitation, the husband contended that he had a motor vehicle, savings, household furniture and effects together with superannuation entitlements having a value of $233,506.80. A significant portion of this was the husband’s military super, which had a withdraw benefit of $148,506.80. These values were not the subject of any challenge. For her part, at the commencement of cohabitation, the wife had a motor vehicle. The husband’s assets at the commencement of cohabitation clearly exceeded those of the wife.
I note that each of the parties, during the course of the cohabitation, were in employment. The wife had a number of jobs and was required to keep changing jobs as a function of following the husband in his employment as a member of the ADF. I accept the wife’s evidence that there was a priority given to the husband’s employment and I accept her evidence as follows:
83.With the constant travelling and moving to different military bases, I have not been able to maintain a stable job and income.
84. It was very difficult for me to progress professionally …
I otherwise find, however, that nothing turns on any disparity in income between the parties and find that they each made an equal contribution by way of the application of income.
The parties purchased a home in C Town in 2014. The parties are at issue as to the amount contributed to the purchase of the property, acknowledging that the property was purchased for $640,000 and the parties borrowed approximately $607,000 to acquire the property. The husband contended that he contributed an additional $100,000 to the property whereas the wife contended that the parties contributed approximately $32,000. As a consequence of concessions made by the husband during the course of cross-examination, I do not accept that the husband contributed approximately $100,000 but rather that it was a lesser sum. Nothing, however, turns on the proposition because the husband’s counsel in submissions contended that the parties’ contributions to the purchase of the property were equal and the wife’s counsel did not suggest otherwise.
There is one child of the parties’ marriage, namely, X who was born in 2014. I agree with the concession made by the husband, that the wife was the primary carer during the course of the parties’ relationship. I find that following separation she has made almost all of the parenting contributions. Such finding is consistent, both with the evidence and also the orders that were ultimately made on a final basis that provide for the wife to have sole parental responsibility and for X to live with her and spend time with his father every second Sunday plus some extra time in the school holidays. The father’s time with X is significantly limited. This position in relation to X was consistently the case following the parties’ separation, namely, that he has never spent overnight time with his father.
I find that the wife has made a significant and substantial contribution in relation to the care of X, both during the course of the parties’ relationship but more significantly in the more than six and-a-half years’ since separation. I recognise, however, that the husband has paid child support for X.
I also accept the wife’s evidence that she made the more substantial contribution as a homemaker during the course of the parties’ relationship. I also accept her evidence that as the husband was often away she undertook significant non-financial contributions in relation to maintaining the property and attending to various payments.
It would appear that from about October 2014, the husband’s problem with alcohol came to a head. In March 2015, the husband stopped working. The wife gives unchallenged evidence as follows:
229.Around 2014 to 2015 [Mr O’Khelleher] often drank to excess predominantly Jack Daniels and Coke. …
She also gives evidence of the expenditure of funds by the husband at hotels on alcohol and gambling. In late 2015, the husband entered into a drug and alcohol rehabilitation program for approximately three weeks. The wife gives evidence that the husband remained sober for approximately six weeks but thereafter resumed drinking. I accept that the wife’s contributions by necessity must have increased because of the husband’s drinking. He agreed in cross-examination that around this time he withdrew from the family. There has been added back to the pool of assets a sum of money referable to the husband’s gambling and drinking in an agreed amount during a period prior to separation.
The parties separated in either November or December 2015. As at the date of separation, the wife had approximately $19,000 in a bank account. It would appear that at separation, the parties divided the funds in an offset account equally, such that they each retained approximately $10,000. The wife retained possession of Motor Vehicle 7, which was written off in a motor vehicle accident and the wife received the proceeds of the insurance of approximately $18,000. Those funds were applied to the purchase of Motor Vehicle 2 which is brought to account in Exhibit 18. The husband retained two motor vehicles both of which were subsequently sold and the proceeds utilised by the husband.
The wife contends that as at February 2016, her superannuation entitlements were valued at $27,588.92. The husband otherwise had superannuation entitlements with Super Fund 1 which it would appear had a value as at 30 June 2015 of approximately $440,000 (wife’s affidavit, paragraph 100).
There is no doubt that the husband’s mental health deteriorated in the latter part of the marriage and subsequently over the period since the parties’ separation. The husband’s treating psychiatrist prepared a report dated 2 August 2020, which was not the subject of cross-examination or challenge in which he recorded:
[Mr O’Khelleher] has been under my care since 18 March 2015. He has been suffering from [a number of psychiatric conditions]
He served for Australian Defence Force for 20 years and medically discharged in 2017
He was deployed overseas several occasions since 1999.
[Country D] in 1999 for 5
[Country D] in 2002 for 3 months
[Country E] in 2007 for 6 months
[Country F] in 2012-2013 […] for 6 months
He had experienced multiple traumatic incidents during the above deployments including witnessing deaths and destruction of civilians, near death experiences and death of his colleagues. As a result of the above traumatic experiences he has been experiencing recurrent and intrusive memories, flashbacks, and nightmares of trauma, mood swings, irritability, and inability to tolerate crowd and people. He has been experiencing persistent anxiety and depressed mood. His symptoms are partially controlled with treatment and he tends to experience exacerbation of his symptoms related to triggers such as anniversary reactions, any news is (which reminds him of his traumatic experiences and death of a close family or friends. He used to drink alcohol excessively in the past to cope with his PTSD symptoms. However, he has reduced his alcohol consumption after he was initiated on treatment. He has maintained long period of abstinence from alcohol. However, relapse of depression and exacerbation of PTSD leads to relapse of alcohol use.
(As per the original)
I also note that the husband has been hospitalised on a number of occasions in the period post-separation. In that respect, I accept the unchallenged evidence of the husband as follows:
43. As a result of my various military deployments I suffer from Post Traumatic Stress Disorder which was diagnosed in 2015 and a number of physical incapacities. I came under the supervision of Department of Veteran's Affairs. [Dr H] was and continues to be my treating psychiatrist. Annexed hereto and marked "E" is a true copy of medical report of [Dr H] dated 02/08/2020.
44. Ever since returning from [Country F] in 2013 I had difficulty sleeping. I did not realise I was suffering from Post Traumatic Stress Disorder, as I was not diagnosed until 2015. From the date of my return, I suffered increasing sleep loss, nightmares and stress. I could not stand the smell of cooked meat as it made me recall the smell of burning bodies and I attempted to deal with my feelings by self medicating with alcohol. My condition caused serious difficulties in our marriage. When I became very stressed in order to cope, I turned to alcohol.
45. I attended a local hotel where I drank alcohol and played poker machines. These activities would give me some short-term relief and distraction from the symptoms I was experiencing. At home after [X] was in bed, I would go out into the backyard and stare at the fence and drink alcohol. Often I had suicidal thoughts. Life was extremely difficult and [Ms O’Khelleher] and I had many arguments during this time, leading to our separation.
…
47. During the times my mental health deteriorated, which happened frequently, I went to the local hotel and played the poker machines just to escape the noises in my head and my thoughts. I was in a very dark place. I am not proud of my behaviour during that time. I have not gambled in 2 years. My behaviour was part of my mental illness.
…
49. In the last 12 months I am no longer able to maintain the lawns and gardens of the property due to increasing physical problems resulting from my injuries. Department of Veteran Affairs have provided me with assistance to undertake those jobs, whenever I am in too much pain or my mental illness flares up.
50. There are occasions when I relapse and drink alcohol to cope with my condition. However with my wife [Ms G’s] support these incidents are no longer as frequent and I receive immediate medical assistance.
51. In order to treat my condition, I have been admitted to [L Hospital] on the following dates:-
03/09/2015 until 22/09/2015
09/05/2016 until 14/05/2016
03/10/2017 until 09/10/2017
26/04/2018 until 21/05/2018
11106/2019 until 25/06/2019
08/04/2020 until 29/04/2020
Annexed hereto and marked "F" is a copy of a schedule forwarded to me by [L Hospital] regarding my admissions and discharges.
…
54. I am on the following medication:
Thiamine twice per day
Esomeprazole one per day
Diazepam - 1-2 per day as required
Nortriptyline - 2 per day
Panadeine Forte for pain management when required.
55. I sustained injuries in a work related […] accident and suffer the following disabilities:-
i) [A lower back condition]
ii) Severe should pain in both shoulders.
iii) Severe neck pain.
iv) Severe pain in my left ankle.
56. I have also been diagnosed in 2015 with Post Traumatic Stress Disorder.
As a consequence of the husband’s service in the ADF, he has, in the period post-separation, received a number of payments. Those payments are as follows:
(1)On 5 May 2017, the husband received the sum of $53,965.33. This represented a payment to the husband of annual leave and long service leave consequent upon his discharge from the ADF.
(2)On 6 July 2018, the husband received a payment of $36,288.96 by way of an invalidity payment.
(3)On 15 October 2018, the husband received a payment of $66,495.23. Such payment was paid to the husband, consistent with Exhibit 12, as a payment of compensation for economic loss and a degree of permanent impairment as a consequence of injuries sustained by the husband in the ADF consequent upon an injury sustained in 2003.
(4)On 15 April 2019 and 17 April 2019, the husband received two further payments, one of $334,797.36 and one of $2,489.62. Annexure G to the husband’s affidavit identifies that these payments were described by the Department of Veteran Affairs as “compensation payments for permanent impairment under the Military Rehabilitation and Compensation Act 2004 (MRCA)”.
(5)On 10 May 2019, the husband received a further payment of $268,179. Consistent with Annexure H to the husband’s affidavit, these payments were described by the Department of Veteran Affairs as follows:
Under section 80 of the MRCA, where the total degree of impairment suffered by a person is at least 80 impairment points, the person is entitled to an additional payment for each dependant who is an eligible young person. This is known as the Eligible Young Person Payment (EYPP).
The husband received a sum of $89,393 for each of his three dependants, one of who included the parties’ child X.
The total of the payments received by the husband post-separation is $762,215.50.
With the exception of the amount of $53,965.33, which was referable to the husband’s long service leave and annual leave that had accumulated over at least part of the parties’ relationship, the balance of the other payments was all in the nature of compensation payments paid to the husband as a consequence of injuries sustained in the course of his employment.
In that regard, I note the observations of the Full Court in Aleksovski v Alexsovski (1996) FLC 92-705, where their Honours held at 83,437:
In our view, having regard to the facts of this case, his Honour was entirely correct in that the wife’s damages award and, in particular, that portion of it which related to pain and suffering, should be regarded as contribution by her to the marriage and to the family.
Similarly, that portion of a damages award which relates to economic loss, representing income lost during the marriage or period of cohabitation may also be regarded as a contribution by the party who has suffered the loss.
These observations are apposite to this case. The husband’s injuries arose from his overseas deployments, three of which occurred prior to the relationship, and an accident. It is a significant contribution by the husband that is in part reflected in the pool of assets in the funds at bank in excess of $363,000 and the husband’s cars. In so finding, I do not disregard the other contributions made by the wife during the course of the relationship and subsequently.
A significant focus in the wife’s affidavit was what had happened to these funds?
Large sections of her affidavit were devoted to an analysis of expenditure by the husband in the period post-separation. The purpose of doing so remains illusory. On the one hand she seems to have established that large sums of money received by the husband post-separation have been expended on lifestyle issues, thereby, I presume contending waste, whilst on the other hand, contending that there were monies that were retained by him or otherwise, in some sense, not brought to account. Initially the wife contended that there was approximately $800,000 that was unaccounted. By the time submissions closed, it had reduced to the amount identified by her at Item 22, which was characterised as a financial resource. Ultimately, the matter was not properly articulated by the wife’s counsel as to how the Court should otherwise treat these monies other than in a very generic way under s 75(2). The Court remains unclear as to whether it was contended this should be characterised as waste or undisclosed funds
Notwithstanding suggestions of there being a fund of money available and undisclosed, I do not accept such a proposition. I do not accept it because it is inconsistent with much of the wife’s evidence about the husband spending large sums of money post-separation, and it is inconsistent with the evidence of the husband and his partner, which I accept.
Parties do not live in suspended animation in the period post-separation. It is unrealistic to suggest that parties should not spend their own money nor does the Court expect there to be an audit or accounting of funds received in the period post-separation, particularly in circumstances where it is represented by a period of approximately six and-a-half years. I do not propose to do so in this case.
The wife was also critical of the husband in converting his superannuation into a pension and seemed to suggest this was done to defeat an order. It was suggested that in response to her making an enquiry as to his superannuation, the husband converted the superannuation into a pension. I do not accept this submission. I accept the husband’s evidence as to the circumstances in which he obtained the pension, which indicates that the process commenced 12 months before the wife made any enquiries in relation to his superannuation.
There were also suggestions of the transfer of assets by the husband into his wife’s name such as cars to defeat an order but I note these are in the pool of assets for division.
I recognise that in the period post-separation, the husband has had occupation of the former matrimonial home. The wife sought to contend that the husband has had the benefit of approximately $38,000 by reference to various applications made by him to the mortgagee for financial relief. I recognise, however, that the mortgage balance at the time of separation was $584,769 (wife’s affidavit, paragraph 86) and when the husband first sought financial relief from the bank, it was approximately $572,000. I note that it currently is approximately $562,000. Contrary to the wife’s suggestion, the mortgage balance on the above evidence has reduced by approximately $22,000.
I do not accept that it is appropriate to undertake some form of accounting to determine the benefit of the financial relief to the husband in a mathematical sense. It is inconsistent with the holistic exercise that I am required to undertake. I do, however, recognise that the husband has had the benefit of occupation of the former matrimonial home to the exclusion of the wife. I note, however, as well, that the property has increased in value, which is to the benefit of the parties.
I otherwise note that the superannuation entitlements of the parties. Clearly, the wife has contributed to her superannuation fund in the period post-separation. The husband’s fund has not otherwise changed in circumstances where he has not been contributing to the fund having ceased work. I also acknowledge that the husband contributed to that fund for about 10 years prior to commencing cohabitation with the wife.
I am of the view that a contribution-based finding as to 70% in favour of the husband overvalues the husband’s contributions and fails to have regard to the significant contributions made by the wife both during the course of the relationship and in the period post-separation, particularly in relation to her role as a caregiver for X.
Likewise, I am of the view that a contribution-based finding in favour of the wife as to 45% fails to have proper regard to the significant initial contributions made by the husband at the commencement of the relationship and the monies that are currently contained in the balance sheet represented by post-separation payments to the husband for injuries sustained by him as a consequence of his employment in the ADF. These are contributions that weigh heavy in the ultimate holistic assessment and outweigh the other contributions by the wife.
Taking all of the above matters into account and in particular what I have referred to at [65] (excluding the value of his Super Fund 1), [69]–[71], [78], [81]–[ 83], and [90]–[94], and assessing the contributions in a holistic way, I am of the view that a proper assessment of the contributions of these parties during the course of this relationship and in the period post-separation is properly determined by a contribution-based finding in favour of the husband as to 65% and in favour of the wife as to 35%. This gives proper recognition to his financial contribution of the moneys received after separation, reflected in the funds at bank and motor vehicles.
Section 75 Adjustment
The wife contended that there should be a 10% adjustment in favour of her across the three pools. The relevant matters as far as the wife submitted were that the she has a significant caring responsibility in relation to the parties’ child X, that the marriage has impacted her earning capacity, that there are financial resources of the husband as a consequence of his lack of disclosure and transfer of assets to his partner Ms G, that the husband has the benefit of an invalidity pension, that he has the benefit of financial resources from his partner Ms G, and that there is little evidence to demonstrate an inability on the part of the husband to work.
The husband for his part contended that each of the parties have children for whom they are primarily responsible, that the husband’s financial circumstances and health issues are matters that call for an adjustment in his favour, and that there is no fetter on the wife’s earning capacity. Overall, the husband contends, therefore, that there should be no adjustment under s 75(2), leaving the parties assets to be divided in the proportions as to 70% to the husband and 30% to the wife.
I am of the view that it is appropriate that there be an adjustment under s 75(2). In that respect, I note that the wife has the responsibility of caring for the parties’ child X. I accept that the husband pays child support of $200 per week and that this assists in financially supporting X but the orders that have been made by consent leave almost all of the actual care of X in a parenting sense to the wife. In that regard, I note that X lives with his mother and spends time with his father each alternate Sunday from 9.00 am to 4.00 pm and on other times during school holidays. The mother contends, and it was not the subject of challenge, that the father has not exercised all of the opportunities available to him under the orders in relation to spending time with X. The consequence is that the wife is the party who is undertaking almost all of the major parenting responsibilities in relation to X. X is currently eight years of age and, thus, for at least the next ten years, she will be responsible for almost all of his parenting.
I note that the wife is in receipt of an income of approximately $384 gross per week. She otherwise is in receipt of a single mother’s benefit. I accept that she is attempting to improve her skills to increase her earning capacity. She, nevertheless, is in a far inferior financial position to that of the husband on an income basis.
The husband is in receipt of a pension. The pension, according to the husband’s financial circumstances, provides him with a net income (together with various pharmaceutical benefits) of $1,471 per week. I accept that the husband has three dependants, namely, his current partner and two children who are aged four and three. It was suggested, both through cross-examination and in submissions, that there are benefits to the husband of his relationship with his partner in that she represents a financial resource having contributed $159,000 to the relationship.
I accept that that sum of money has been contributed to the relationship but it is questionable as to whether or not his partner represents a financial resource. In that respect, I note the High Court observed the following in Hall and Hall (2016) FLC 93-709 in relation to a financial resource:
54. The reference to “financial resources” in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”. The requirement that the financial resource be that “of” a party no doubt implies that the source of financial support be one on which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee’s discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation.
55. Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.
(Footnotes omitted)
In light of what the High Court has said, I am not satisfied that the husband’s new partner represents a financial resource. It may be in the future that that changes but currently that is not the case.
In response to questions about why she has not sought employment, his new partner responded in words to the effect that the husband has good days and bad days’ dependent on his PTSD and that she is not sure when he will have a good day or a bad day. I accept her unchallenged evidence in her affidavit:
7. Since I have been living with and married to [Mr O’Khelleher], I have contributed my savings to assist in paying the mortgage on the [C Town] property and some outgoings and maintenance costs on the property. I have also contributed to day to day family expenses including, food, household needs, pharmaceutical expenses and other expenses relating to the children, including [Y’s] day care costs.
8. It has been necessary for me to make extensive contributions to the family expenses due to [Mr O’Khelleher’s] compromised mental health and his difficulties with disordered thinking, his treatments for his physical disabilities and issues related to his PTSD, including his regular hospital admissions.
…
26. From May, 2016 to April, 2020 [Mr O’Khelleher] experienced periods of relapse of his PTSD which resulted in his hospitalisation on 5 separate occasions. Family life was difficult as there were periods when I was his carer and also pregnant with and then caring for our young sons. During periods of relapse, [Mr O’Khelleher] self medicated with alcohol and alcohol misuse became a feature of his PTSD, together with playing poker machines. For these reasons, I took every opportunity to protect his payout from DVA by depositing the money into an account in my sole name as was the only way I could be sure the money would not be wasted.
…
29. … I am now reliant on [Mr O’Khelleher’s] pension for support. I am unable to work in paid employment as I am [Mr O’Khelleher’s] carer and also care for our sons. [Mr O’Khelleher] assists me in caring for the boys and the home, to the extent he is able to do so.
The husband has a number of significant health issues and, to that extent, is somewhat dependent upon the support of his partner. I have previously referred to the husband’s health problems and his admissions into hospital.
I accept the husband’s evidence as follows:
63. [Ms G] attends counselling with [Organisation M] called “[Organisation M]” once per fortnight. This is a counselling and support service for veterans and families. It helps [Ms G] to understand my condition and how she can assist me with my mental health problems. I have experienced [Ms G] to be a wonderful support to me and she is loving, compassionate and understanding with regards to my illness.
64. I am reliant on my pension to support my wife, children, payment of child support of $200 per week for [X], mortgage, groceries, utilities, day care for [Y] and all other day to day expenses. I have had to reduce the number of days [Y] attends day-care from 3 days to 2 days as I can no longer afford the fees and I do not receive any child care subsidies. It costs me $108.00 per day for his attendance. I cannot afford day care for [Z].
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93. I have been assessed as medically unfit for any kind of employment and will not have the opportunity to return to a career and earn an increasing income until retirement age. I will be dependent on my pension for life.
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101. I have had extreme difficulty complying with my duty to disclose documents and records in accordance with the rules of Court, as during bouts of illness, I have had difficulty with concentration and attending on appointments with my solicitors to provide instructions. When I am suffering from a relapse of my PTSD I am unable to concentrate, to keep appointments and to provide accurate information. As a result, my solicitor has been required to continuously correspond with me in an attempt to obtain relevant information. All of this has occurred in the context of my ongoing hospitalisations for PTSD and the accompanying alcohol abuse issues. My hospitalisations commenced in 2014/2015 and continued every year after separation on the following dates:-
09/05/2016 until 14/05/2016
03/10/2017 until 09/10/2017
26/04/2018 until 21/05/2018
11/06/2019 until 25/06/2019
08/04/2020 until 29/04/2020
I would be discharged from hospital and within months my condition would deteriorate to the point where I required readmission for further treatment. I was unable to keep up with the constant demands from the wife's solicitor for further disclosure and the requests would trigger a further deterioration in my condition and hospitalisation.
Whilst I accept that there is no evidence beyond that of Dr H’s report dated 2 August 2020 in relation to the husband’s medical condition, it was not suggested that he no longer suffered from any medical disability.
I accept that the husband is in receipt of a pension to which the wife indirectly contributed during the course of the parties’ relationship.
I recognise that each of the parties have commitments to support other people, the wife in relation to X, and the husband in relation to his partner and their two children as well as to X.
I accept that a relevant factor for consideration is that the wife's earning capacity has been impacted by continually changing jobs but note that she has now been settled in one area for some time and that she is only 36 years of age and has no health problems.
The husband does have the benefit of cohabitation with a partner while the wife does not. I note that I have previously made contribution-based findings as to 65% to the husband and take that into account in relation to the matters under s 75(2).
The wife made a number of submissions in relation to non-disclosure by the husband and in relation to what was described as monies under his partner's control and her savings of $159,000. I have made findings that I do not accept that there is an undisclosed sum of money. The husband’s partner did contribute $159,000 to the relationship with the husband and it has all gone. I have identified earlier that this money no longer exists.
The wife also submitted that there has been waste by the husband in relation to gambling and alcohol, suggesting in her Case Outline that during the relationship it totalled $13,408 and post-separation it totalled $92,411. In relation to the amount pre-separation, I note the parties agreed to an addback of $10,737, whilst in relation to the post-separation amount I also take into account that the husband has suffered significant mental illness and recognise the evidence of his psychiatrist that he has used alcohol to deal with his PTSD.
I accept that the husband has been tardy and lackadaisical in relation to his obligations of disclosure and refer to those parts of his affidavit where he admits as much. It has not, however, been established before me that there exists property that has not been disclosed or that is not otherwise captured in the current assets of the parties.
That said, the proper place to address the effect of non-disclosure and the impact upon the wife in a financial sense may be through an application for costs.
I recognise that the husband does have liabilities, being a loan to his parents and various credit card debts, which are not recognised in the pool of assets. I also note that each party has a liability for legal fees.
Taking into account the above matters, I am of the view that justice and equity requires, in percentage terms, an adjustment of 10% to the wife. I reach that conclusion recognising the above matters, including the husband’s health problems, but regard the wife’s ongoing obligation to support X and the benefit to the husband for life of the pension to which the wife contributed indirectly, as matters that call for a further adjustment in the percentage identified.
The effect of that adjustment means that the wife will receive a property settlement in percentage terms as to 45%.
In monetary terms, the pool, including superannuation entitlements, is some $1,479,081 and 45% of that pool to the wife, in monetary terms, is a sum of $665,586. To give effect to that payment, if the wife retains the balance of the funds in account number …43 (noting that she has already received $140,000), and the assets that she already has, there will need to be a further payment by the husband to the wife of $216,006. I propose to give the husband an opportunity to raise this sum of money if it is possible to do so, otherwise by default a sale of the home will be ordered.
Having regard to the above amount, both in percentage and in dollar terms, I am of the view that it represents a just and equitable division of the parties' assets. I am not satisfied that any further adjustment is called for to do justice and equity as between the parties.
I certify that the preceding one hundred and nineteen (119) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 1 June 2022
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