Orchard and Orchard

FAMILY COURT OF AUSTRALIA

ORCHARD & ORCHARD

[2008] FamCA 979

FAMILY LAW – PROPERTY SETTLEMENT - Contributions
FAMILY LAW – PROPERTY SETTLEMENT - Bankruptcy of party

Family Law Act 1975 (Cth)

APPLICANT:

Ms Orchard

RESPONDENT:

Mr Orchard

FILE NUMBER:

MLF

2759

2003

DATE DELIVERED:

29 October 2008

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Dessau J

HEARING DATE:

29,30 September 2008, 1-3 October 2008, 6-8 October 2008`

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Hutchins

SOLICITOR FOR THE APPLICANT:

John Denton & Associates

COUNSEL FOR THE RESPONDENT:

SOLICITOR FOR THE RESPONDENT:

Orders

That by no later than 20 November 2008 the wife shall do all acts and things and sign all documents to transfer to the husband at his expense all of her right, title and interest in the real property situate at and known as K property, being the land comprised in Certificate of Title Volume … Folio ….
That the husband shall retain his interest in the business F Pty Ltd.
That the amount of $106,847.40 shall be allocated to the wife (“non member spouse”) as required by Section 90MT(4) of the Family Law Act 1975 (“the Act”) as the base amount out of the interest of the husband (“the member spouse”) in the Australian Super Fund (“the fund”).
That pursuant to s 90MT (1)(a) of the Act whenever Australian Super Pty Ltd (“the trustee”) makes a splittable payment out of the interest of the husband in the fund, the trustee shall:
(a)Pay to the wife, her administrators, executors, beneficiaries, heirs or assigns the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b)Make a corresponding reduction in the entitlement of the husband or such other person to whom the splittable payment would have been made but for this order.
That the operative time for this order is 20 November 2008.
That the wife’s solicitor shall forthwith serve a sealed copy of these orders on the trustee who shall have liberty to apply to the court within 14 days thereafter if it requires to be heard, failing which these orders shall be binding upon the trustee.
That until the happening of any of:
(a)The establishment of a separate account in the name of the wife in the fund; or
(b)The transfer or “rolling over” into another superannuation fund or superannuation account of the payment split created by Order 3 hereof; or
(c)The wife satisfies a condition of release and is paid the payment split which was created by Order 3 hereof; or
(d)The wife executing a waiver of rights within the meaning of Section 90MZA of the Act in relation to the payment split created by Order 3 hereof:
The husband shall be and is hereby restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of his interest in the fund a “not splittable payment” within the meaning of Regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001 and the husband is hereby ordered to revoke any death benefit nomination currently executed as at the date of these Orders in favour of any person other than the wife.
That each party shall otherwise:
(a)Be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of this order;
(b)All insurance policies shall be the sole property of the beneficiary named therein;
(c)Each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)Any joint tenancy of the parties in any property real or personal is hereby expressly severed.

IT IS DIRECTED

That all existing applications shall be otherwise dismissed and the case removed from the list of cases awaiting finalisation.
That there shall be no order as to costs.

IT IS CERTIFIED

That pursuant to the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

IT IS NOTED that publication of this judgment under the pseudonym Orchard is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2759 of 2003

MS ORCHARD

Applicant

And

MR ORCHARD

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

Mr Orchard (“the husband”) and Mrs Orchard (“the wife”) cannot agree on a property settlement, after a marriage in which they lived together for eight years, being full time for six years, and later part-time for almost two years. Before their marriage, they lived together for about a year.
They have litigated for several years. They were fighting over their seven-year-old son, until I made final consent orders on 5 June 2008, providing for him to live with his mother, and spend alternative week-ends, half school holidays, and other special occasions with his father. That left only this property case.
In November 2007, the Official Trustee in Bankruptcy intervened in the property proceedings, following the husband’s bankruptcy on his own petition in August 2007. Consent orders were made on 13 August 2008, providing for the payment to the Official Trustee of $100,000 from a cash management account in the parties’ names, and for the balance from that account, being $43,937, to be paid to the wife. The orders removed the Trustee as a party, but left open the option for him to be joined again later.
The Trustee was joined again upon his request at the time of the final submissions. His solicitor confirmed that $50,000, plus rising interest, remained to be paid to annul the bankruptcy. He also made a submission in relation to the formulation of property orders. I shall return to that submission below.
There are four steps for me in a property case:
·First, I must determine the assets and liabilities. In this case the major argument is about potential add-backs. There is also a dispute as to the value of the wife’s jewellery and the husband’s radio collection, about the existence of property in Thailand, and as to the source of monies in an account.
·Secondly, I must determine each party’s contributions, including direct and indirect financial contributions, and contributions as home-maker and parent. Mr Hutchins, counsel for the wife, ultimately submitted that the parties made equal contributions. It is agreed that the husband brought assets into the marriage, but the wife claims wastage on his part, particularly by way of gambling. She claims that all her earnings during the marriage were used for family expenses, while the husband’s were not. She also claims a contribution as home-maker and parent during and since the marriage. The husband relies upon his substantial assets at the start of the relationship, but also particular contributions during the marriage, and the preservation of real estate since.
·Thirdly, I need to consider a range of factors under s 79(4) and s 75(2) of the Act. The wife ultimately claimed an adjustment of 5% in her favour, because of her care of the child. The husband pointed to the wife’s financial security with her partner, a successful professional, Mr W, and that she is five years’ younger than the husband.
·Finally, I must arrive at a decision that is just and equitable in all the circumstances. Each party has a different perspective in that regard. The wife seeks 55% of the asset pool, to be satisfied by her retaining the home, her jewellery, her own superannuation, and a lump-sum from the husband’s superannuation. The husband dearly wants to retain the home. That is his clear priority in the way orders are framed, although he found it difficult to articulate the precise form of orders. The Trustee in Bankruptcy asks me to take into account the rights of creditors and in particular that the husband’s superannuation is exempt from vesting in the Trustee, while the house or other assets are not.

BACKGROUND

The husband is a 53-year-old technician. The wife, born in Thailand, is 48 years’ old. She is engaged in home duties.
The parties started to live together in January 1993 (she says) or 1994 (he says). They married in September 1994. From 1998 or 1999 the wife was also in a relationship with Mr W. From the start of 2001, she established an unusual arrangement whereby she lived with the husband on three nights’ per week, but with Mr W the other four nights. That persisted until she finally separated from the husband in August 2002. She has lived in a de facto relationship with Mr W since then.

MATERIAL RELIED UPON

The wife relied upon:
·Her Outline of Case document filed on the first day of the hearing
·Her Amended Application filed 1 March 2007
·Her affidavit filed 5 September 2008
·Her Financial Statement filed 5 September 2008
·The affidavit of her de facto partner Mr W filed 5 September 2008
The husband represented himself. He failed to comply with orders to file up-to-date material for the trial. Ultimately, with his agreement, and the agreement of counsel for the wife, the husband relied upon material previously filed, being:
·His Outline of Case document dated 24 November 2006
·His Further Amended Response filed 5 October 2006
·His affidavits filed 2 June 2006, 13 July 2006, 11 January 2007 (referring to his “exhibit affidavit” sworn 22 June 2006), and 19 December 2007
·His Financial Statement filed 5 February 2008
At the start of the case I ensured that the husband was given a copy of s 79 and s 75(2) of the Family Law Act. Mr Hutchins, while properly representing his client, made reasonable and sensible concessions so that the trial could proceed in an orderly manner. For example, he agreed that he would make submissions before the husband, so that the husband might understand what he needed to address and the form of such submissions. Mr Hutchins also did not object to the husband having a friend, Mr O, at the bar table, to help him with his case.
The case ran longer than anticipated. That was for several reasons, amongst them, that at times the husband found it difficult to formulate questions and marshal materials. The wife used an interpreter and there were delays and issues involved in having properly qualified interpreters provided at court. And some documents that could have been produced earlier, notably by Mr W, were produced late in the piece, requiring the recall of Mr W and the loss of court time in that part of the evidence.

THE ASSETS AND LIABILITIES

The parties agree that a home in K, registered in joint names, in which the husband currently lives, is valued at $220,000. They also agree that each of them has previously received $10,000 by way of court order. They have agreed that the $100,000, paid out to the Trustee in Bankruptcy, is to be deemed as a partial apportionment of property in favour of the husband. Similarly, the balance of $43,937, received by the wife, shall be treated as a partial apportionment of the property in her favour.
Otherwise they disagree about:
·The value of the husband’s radio collection
·The value of the wife’s jewellery
·The existence of property owned by the wife in Thailand
·The source of monies held in a bank account in the joint names of the wife and Mr W.
They also disagree as to whether the following sums should be added back into the pool:
·$24,000 received by the husband when he left the employment of P company in about 1998
·$32,593 from the proceeds of a Tower Life Australia Ltd policy in November 2001
·$35,254 on an AA Pty Ltd mortgage in about August 2002
·$21,251 withdrawn by the husband from an ANZ deferred annuity in late 2002
·$25,000 from the husband’s superannuation in 2003.
·$21,373, being her share of the rent foregone on the K property since separation, according to the wife
The wife had also sought to add back $8,244 withdrawn by the husband in April 2001 from an ANZ Investment Bond, and $4,589, withdrawn from the husband’s superannuation account in October 2002. In the end she did not pursue these relatively small amounts, conceding they were mostly derived before the relationship in any event.
Otherwise, the husband has superannuation currently valued at about $137,932 and the wife has superannuation currently valued at about $16,159.
As to liabilities, as noted above, it is agreed that the husband presently requires $50,000 plus, for his bankruptcy to be annulled. The wife also claims that she owes Mr W $20,000 for land she purchased in Thailand.

The Husband’s Radio Collection

The husband collected old radios and parts, before and during the marriage. The wife says the collection is worth around $63,000. She arrived at that figure by adding up various records that she said were “mistakenly” delivered to her by the removalist, showing what he spent on the radios. In May 2004, an expert she consulted estimated the value of the collection at $30,000 ‑ $40,000. He did so without seeing the collection. He based it on the records she has produced in court. Dissatisfied, she said she made her own calculation based on the same records. That is her evidence about the collection. She says it is not in her possession.
The husband agrees that his hobby throughout the marriage – and many years before that – was collecting, repairing, selling and trading old radios. The husband was questioned about one period in 1998 to 1999 when he appeared to spend an average of $1,350 in six transactions. He explained that he at that point acted on behalf of another man, a Mr S. He was adamant that he never made any substantial money from what was only a hobby, and that the collection would not be worth more than $10,000. He was also adamant that he now has no radios: that, like other chattels, they disappeared when the wife moved out of the home. A few that he did retain, are now held by the solicitor who is the major creditor under his bankruptcy.
Parts of the evidence of both the husband and wife caused me to doubt their veracity. For example, the husband made some extravagant claims such as the wife’s jewellery being worth $250,000 (that he reduced to “possibly $25,000”, later). The wife for her part “forgot” one of her previous marriages when cross-examined about them. On this radio issue I cannot choose between them. I cannot make a definitive finding as to where the radios have ended up, nor of their current value, save to say that it seems they were never more than just a hobby. I leave them out of the pool.

The Wife’s Jewellery

The husband claims the wife has a valuable jewellery collection. As noted, he reckoned it at different sums, up to $250,000 in opening, at possibly $25,000 in closing. The wife produced an out of date valuation, as at 15 December 2003, at just under $5,000. Again, there is no agreement as to what jewellery exists. He said she had “briefcases full” of jewellery. She disputes that, saying she had only one.
There is no evidence to support the jewellery being worth anything like $250,000. That was obviously hyperbole on the husband’s part at the start of the case. But it is hard to make a definitive finding as to its value. In cross-examination, the wife had to concede that the $5,000 valuation did not include all of her jewellery, such as dress-watches or an engagement ring. Her evidence was vague and unimpressive on the topic. She claimed she “gave away” her engagement ring to a niece.
I cannot guess at the value of jewellery. Doing the best that I can, I shall include it in the pool at $5,000, although for s 75(2)(o) purposes below, I bear in mind that she also had other jewellery at separation.

The Wife’s Property in Thailand

The wife says that in 2000 she paid $20,000, fully borrowed from Mr W, to buy land from her mother in Thailand. The title documents support that the land was bought from her mother at that time.
The husband says that the wife has up to seven valuable properties in Thailand. She denies it. There was no independent evidence of other properties. I proceed on the basis of the one property. In the absence of other detailed evidence, I accept its value at $20,000.
I accept that Mr W provided the full purchase price. He says it was a loan. It was not documented. He says he retains the title, to secure repayment, if it is sold. Whether or not such a repayment will or will not eventuate is not clear to me. However, I am satisfied that it is not a property to which the husband has made any contribution at all and I put it to one side.

The Wife’s Joint Bank Account with Mr W

The wife and Mr W have a joint bank account containing $134,908.53. The wife says it is irrelevant to this case, as it contains monies Mr W inherited from his mother. The husband says it is money the wife took from the marriage. He referred in particular to a sum of $133,723.42 paid into the account on 22 February 2002.
Mr W claims that he borrowed that money from his mother, after she took out a loan, secured over her home. A letter produced by Mr W, after he had first given evidence, appears to support that. On the strength of Mr W’s evidence, and the letter, I am satisfied that the monies in the joint account were not monies from this marriage.
It is unimpressive that neither the wife nor Mr W produced the supporting material until so late in the piece. It was material well within Mr W’s control as an executor of his mother’s estate.
The husband was criticised for having pursued this issue. In my view his suspicions about the monies were entirely understandable. On Mr W’s evidence, he started a relationship with the wife early in the husband and wife’s marriage (in 1998 or 1999). For nearly two years, the wife lived with both the men, in two separate households. Her evidence clearly suggests she was (until she stopped work to have the child) employed by a company connected with Mr W, although he denied that. Certainly Mr W seems to have been involved in the hire or purchase of two consecutive BMW cars for the wife (in October 2000, and in February 2003), although the wife claims the former was provided by her employer. The second BMW was purchased in the name of a company owned by Mr W, M Pty Ltd. The wife claims M Pty Ltd was the name of her employer. Mr W denies he employed her.
Given the long-standing affair between the wife and Mr W, the ambiguity in the wife’s living arrangements during 2001 to 2002, and the confused evidence about the cars and employment, the husband’s suspicions about the monies in an account in the joint names of Mr W and the wife is not unreasonable. I had the impression that the wife and Mr W were high-handed in producing the relevant material to put the issue to rest, only after Mr W’s evidence, and only upon pressing by me.

The Add-backs

$24,000 received by the husband when he left the employment of P Company in about 1998

In 1998, the husband was retrenched from his employment with P Company. He received a $39,000 payout for annual and long service leave. It is agreed that he used $15,000 to purchase a share in the business, F Pty Ltd, (which now has no value) in which he worked for some years. The wife says he has failed to account for the remaining $24,000.
He says that $8,000 was used towards credit card debts on 22 January 1998, $5,000 was spent on the wife’s holiday in Thailand that year, $3,000 on having her car repaired and resprayed, and the balance on family living expenses.
In closing submissions, Mr Hutchins for the wife sought that only one third of the total amount ($7,900) be added back, the concession being that a significant proportion was attributable to the husband’s many years of employment with P Company prior to marriage.

The husband says some of the monies were used on the wife’s trips to Thailand. There is conjecture as to the number and expense of such trips. At one point the husband made an exaggerated claim as to the number of trips. The wife’s 1995 Australian passport shows there were three major trips during the marriage, including a six-week trip in late November 1997, that took her to Europe as well as to Thailand. Even if she had free accommodation provided in Thailand – and there is a dispute about that – such travel must have impacted on the family finances to some extent, given the parties’ modest incomes.
There is also a dispute as to whether the wife spent extravagantly on clothes and shoes and other items. I cannot be certain about that. I do note that when they met, she may have had some credit card debt. She was vague as to how she was provided with two successive new BMWs late in and after this marriage. Despite her modest income, she travelled a fair bit. I am left with the suspicion that the wife has sought and enjoyed as comfortable lifestyle as could be arranged. But I cannot make a definitive finding that she was extravagant.
I am satisfied on the balance of probabilities that the P Company payment was used to meet household, travel, and/or lifestyle expenses, as claimed by the husband. He received it at a time when, although it seems the wife may have commenced her relationship with Mr W, there was no suggestion that the husband was aware of that, or of significant problems in his relationship with his wife. Nor did the evidence suggest he had gambling problems at that time. It is reasonable to assume that he used the monies for himself and his wife as a family.

$32,593 from the proceeds of a Tower Life policy

In about November 2001, the husband surrendered a Tower Life insurance policy that he had taken out in 1991. He swore that its value in September 1992 was $841, and only marginally more when he met the wife. He paid $250 per month towards the policy. When he surrendered it in November 2001, he received a sum of $32,593. On 16 December, $20,000 was deposited into his ANZ Access Account, and $12,593 into the parties’ joint ANZ Interest Saver Account. The husband attached the relevant bank statements to his affidavit of 28 June 2006, which is incorporated into his affidavit of 11 January 2007.
The wife says the husband has not properly accounted for the funds. He says those funds were used on living expenses and mortgage repayments. Allowing for some being genuinely expended in that way, it being unclear how much, counsel for the wife ultimately submitted that two-thirds, or $21,837, should be added back to the pool.
The husband had no explanation as to why $20,000 was paid into the account in his name alone. What is clear from the statement of account is that by early January 2002 the money was gone.
It is significant that at a time when the wife says the husband was gambling, he made repeated ATM withdrawals from various hotels, whereby even sums (such as $100, $200 or $300) were withdrawn, often numerous times in one day. For example, on 26 November 2001, four sums of $200 and one sum of $300 were withdrawn, several from different hotels. On 27 December 2001, two lots of $200, one of $500, and one of $600 were withdrawn. On 31 December, there was one lot of $200 and two lots of $500. On 2 January 2002, there was one lot of $600. On 3 January, there was one lot of $200 from a hotel. On 4 January there were four lots of $200 from Zagames.
I note that in addition, on 20 November 2001, a sum of $1,500 and another of $500 was withdrawn. The following day, a sum of $5,000 was withdrawn. The husband had no cogent explanation.
It appears that mortgage repayments and other household expenses were met from the joint account, as claimed by the husband. I do not propose adding back the $12,593 that was put into that account.
I am satisfied that some of the $20,000 was used by the husband for gambling. It is difficult to determine how much. Certainly, before his life spiralled out of control, with his wife setting up the arrangement of living half time with another man, at just the time when she was expecting a baby, the husband appears to have been a solid and stable worker and saver. Sadly, it seems there was this patch when things got beyond him. Even so, it seems that in the relevant time-frame, a few genuine household expenses were met from the husband’s account.
The wife claims she was also contributing to bills at the time. She produced a book of her notes of payments. It is hard to tell which household most of the payments relate to, although she apparently met some bills for the household. It is hard to accept her as a witness of truth when she was living a bizarre double life, and I found her evidence in parts incredible, for example her feigned ignorance as to how she came by the two new BMW motor vehicles.
I conclude that a substantial part of the $20,000 was used for gambling. I cannot conclude that all of it was used in that way. Doing the best that I can, factoring in that the husband was responsible for most household expenses at the relevant time, I propose adding back only $15,000 from the Tower Life monies.

$35,254 from the AA Pty Ltd mortgage

With what turned out to be awful timing, the parties committed to the purchase of a second property (in D) in late 2000. Almost simultaneously with settlement in early 2001, the wife, who was expecting the parties’ child, stopped work and started living with Mr W for more than half of each week. It is apparent that the husband struggled emotionally and financially.
It is agreed that a second mortgage was taken over the D property in August 2002, securing a loan of $50,214, from AA Pty Ltd, paid back when the property was sold some months later. It is agreed that $9,511 was used to meet ANZ mortgage repayments and arrears. It is agreed that some of the monies were used for fees and the costs of the loan, and $1,875 was paid for one month’s interest in advance. The wife says that $35,254 was unaccounted for and should be added-back into the pool.
The records that were produced showed $35,254 arriving in the husband and wife’s joint account on 27 August 2002. Two days later the sum of $28,000 was transferred into the husband’s account, which he conceded the wife could not access. On that same day, two cash cheques were withdrawn, one for $12,000, and another for $9,000. The husband said that he paid those to the wife as she was blackmailing him, or threatening him that he could not see his son. As his evidence proceeded, he claimed that other sums too were paid to the wife, so that she received about $25,000 from the AA Pty Ltd monies in total.
I do not accept the husband’s evidence on this topic. He has no independent evidence or proof. It is unlikely that he would have paid those substantial cash sums to the wife, without record, at a time shortly before separation, when there was tension between them, and inevitable unhappiness about the living arrangements and Mr W’s role with the wife and with the child. It made no sense that he would have first paid the money into his own account, simply to pay it on to her. The husband’s claims of blackmail or threats seemed to lack substance. They grew in accordance with the intensity of the cross-examination of him. There was no evidence that he had ever complained to police, or that he had previously alleged that he paid monies to meet any form of blackmail.
The wife claims that the husband was feeding his gambling habit. He denies that. It is likely to be true. On the same day that he withdrew the $12,000 and the $9,000, he withdrew sums of $100, $600 and $2,000. The next day he withdrew another $1,000. A few days later he withdrew $2,000. Between 2 and 4 September, he withdrew further sums of $150, $400, $2,000, $150, $150, $200, $200, $200, and $300, nearly all of those sums being from hotel ATMs. Seven withdrawals on 4 September 2002 were all from the one hotel ATM. By 12 September 2002, the AA monies were mostly gone.
Mr Hutchins for the wife ultimately conceded that the add-back of the AA monies should be discounted by one third, given the likelihood that some funds were used to meet family payments. That left $23,450 to be added-back. In my view that was a very fair concession, given the strong support in the documents that much of the monies were lost to gambling.

$21,251 withdrawn by the husband from an ANZ deferred annuity

In late 2002, the husband withdrew $21,251 from an ANZ deferred annuity into which he had rolled his P Company superannuation. He said it was used for family loans, to make mortgage repayments, and living expenses. Ultimately, Mr Hutchins submitted that only half ($10,625) should be added back, allowing some for living expenses, and that some was built up before the marriage.
I agree that it is probable that some of the monies were used for family living expenses and commitments. In 2001 and 2002 the parties were heavily over-committed, with mortgage repayments in those two years of $28,848 for the D property, and the mortgage repayments, costs and repairs for the K property of $34,000-odd (although about $15,500 was received by way of rental).
In that same period the husband earned approximately $55,000 and the wife approximately $19,000. They are approximations as the period cuts across tax years. They are gross figures. Tax still had to be paid.
It is realistic to observe that in two years, the husband accessed $8,244 from an ANZ Investment Bond (April 2001), $4,589 from his superannuation account (October 2002), $35,252 from the AA mortgage (August 2002), $32,593 from the Tower Life policy (November 2001) and this $21,251 from the ANZ deferred annuity in late 2002. The total is nearly $102,000. A further $9,511 was also used towards arrears of the mortgage from the balance of the AA loan of $50,000.
The husband obviously used more than required to meet payments on the properties. However, personal tax had to be paid, as well as other household and living expenses, and it is unlikely that all of the wife’s modest income was contributed to the Orchard household at that time.
In this instance I do not propose adding monies back into the pool. Unlike the AA and Tower Life sums, there is no proof that these monies were used on gambling. The wife would say there is simply no evidence as the husband has not produced documents. I note that any evidence against his interests in relation to the previous sums was produced by him. She has not produced even joint account documents to cast light on this particular time-frame.
It is fair for me to assume that some monies were used by the husband to try to keep family commitments in check at a time of enormous ambiguity as to the state of the marriage. That is the probability in relation to this sum. I will not add back the $10,625 as requested on behalf of the wife.

$25,000 withdrawn from the husband’s superannuation

In 2003, the husband withdrew $25,000 from his superannuation when he was unemployed. He said he used it for rent, his medical expenses, and a motor vehicle. He agrees none went to the wife. Ultimately, Mr Hutchins submitted that only $6,250, or 25%, should be added back to the pool, as the husband had a reduced income by then, and much of his superannuation was built up outside the relationship.
I do not agree. In my view the proper approach is for the full amount accessed by the husband after the separation to be added back into the pool. The husband’s contributions can then be considered below.

$21,373, being the wife’s share of the rent foregone on the K property since separation, according to the wife

The husband is living in the K property. When he moved in, is in dispute. He says it was in late 2005/early 2006. The wife says it was in late 2003.
It seems that the wife is right on this point. The husband’s Income Tax Return for 2004, and an Intervention Order Complaint dated 15 December 2003, both show the K property as his address.
The wife calculates 58 months, from December 2003 to the present, at rental of $737 per month, to conclude that $42,746 in rental has been foregone, her share being half or $21,373.
The husband was adamant that the property lay empty, in a state of disrepair, and that he has fixed it up and kept it viable by paying the outgoings.
I do not propose adding back the notional rent. During the relevant period, the wife had the benefit of housing with Mr W. In that same time, the husband has lived in the K property. I accept that he has met the outgoings and provided some upkeep, although he provides no paperwork in that regard, saying generally that his papers were either removed by the wife, or, have been retained by his former solicitors pending settlement of his debt to them. I do not agree with his claim that he should be credited with an additional contribution for his care and upkeep of the property, but nor should there be notional rent added into the pool.

The Liabilities

The husband owes at least another $50,000 to the Official Trustee in Bankruptcy. I will take it into account below. I will not record it in the pool as a debt. It is unrelated to the parties’ marriage. Much of the debt relates to the husband’s own legal fees in these proceedings. It must be met from his share of the property settlement.

Conclusion as to the Assets

The pool of assets is as follows:

The K property $220,000

Distribution to the wife $ 10,000

Distribution to the husband $ 10,000

Distribution to the husband $100,000

Distribution to the wife $ 43,937

Wife’s jewellery $ 5,000

Tower Life Policy add-back $ 15,000

AA Mortgage add-back $ 23,450

Husband’s superannuation add-back $ 25,000

Husband’s superannuation $137,932

Wife’s superannuation $ 16,159

Total $606,478

CONTRIBUTIONS

The case was opened for the wife on the basis that there should be a 60/40 adjustment in her favour, largely because of the husband’s negative contribution to his radio collection, gambling, and various monies that he used, as referred to above. In closing submissions it was submitted that contributions should be regarded as equal. Mr Hutchins acknowledged the husband’s greater initial contribution but referred to the parties’ contributions during the marriage, the husband’s negative contributions, and the wife’s greater role as homemaker.
The husband emphasised his many years of hard work surrounding this relatively short marriage, and the very significant assets that he contributed at the outset. He was not able to articulate with precision how the contributions should be treated by me.
There is no question that the husband brought substantial assets into the marriage, as compared to the wife. And there is no question that Mr Hutchins’ approach on the wife’s behalf grossly underestimates the husband’s contributions.
In 1982 the husband purchased the property at E from his parents, paying $65,000. That was 11 or 12 years before he started to live with the wife. Just shortly before the marriage, the K property was bought and registered in both names. The purchase price was $100,000. The parties borrowed the monies for the purchase but the husband paid all the expenses and stamp duty.
The husband assessed the E property’s value at the time of cohabitation at $200,000-$220,000. The wife reckoned it at $150,000. There was no expert evidence. What I do know is that the property sold in 2000 for $285,000. The proceeds were used towards the purchase of the property in D for $408,000 in November 2000. When that property was sold in January 2003, for $410,000, just over $201,000 was retained on trust for the parties. It is from that sum that the parties have received some funds, and the Official Trustee in Bankruptcy has received $100,000 from the husband’s share.
Returning to the husband’s assets when the relationship commenced, the wife said that he owed his parents $50,000 which was repaid during the marriage. I accept the husband’s account that it was repaid for a short time at the start, but not thereafter. Repayments are apparent in early bank statements but not after that. He says he owes the money to his parents. I have not heard from them. He says they are old and frail and cannot give evidence. I can make no finding about whether or not he will ultimately repay that loan. The passage of time since any demands have been made suggests that it is more probable than not that it is forgiven.
At the start of the relationship the husband also owned a motor vehicle, furnishings, a life insurance policy with a surrender value of around $8,000 and the Tower Life policy which at that point had little value. He had $12,000 in savings and his P Company superannuation, valued at about $83,500.
At the start of the relationship, the wife had only some personal possessions, and a car that was being repaid. There was an issue as to whether or not she brought debts into the relationship. She had three credit cards. She said the credit limit was $3,000 in total. The husband said she had substantial debts of around $12,000. Ultimately I could not make a definitive finding as to the level of the wife’s debt at the time of the marriage, but it is clear that on any view the husband made the far more substantial contribution in terms of the assets he brought into the relationship.
Although the affidavit material is full of allegations and counter-allegations as to contributions in the course of the marriage, it was conceded during the hearing that each party made equal contributions, at least whilst they lived fully together. They each worked and contributed their income. They each contributed to the home. The concession that each made about that was reasonable. The husband’s claims that he was paying the upkeep and repayments for properties would not have fully taken into account the wife’s contributions. The wife’s claims that she was the greater contributor to the child’s care failed to take into account the bizarre living arrangements that she put in place whereby she and the husband’s baby lived half the time with another man.
Although the wife ultimately conceded the equal contributions in the course of the marriage, she did of course claim that towards the end of the marriage the husband was gambling. It was on that basis that she sought some of the add-backs I have dealt with above. In dealing with them, I have dealt with the gambling issue. It should not be dealt with again as a negative contribution.
There is some conjecture as to whether the parties started to live together in 1993 or 1994. They either lived together for eight or nine years. More accurately, they lived together fully for six to seven years, and then only partially for the remaining two years.
I am satisfied that the husband made a very significant contribution of assets at the start of the marriage of relatively modest duration.
As to superannuation, the husband has contributed for 36 years. Obviously only a relatively small part of that time relates to this relationship. His superannuation was about $83,500 at the start of the relationship. The material shows it was $90,350-odd late in 2002, at around separation, noting I have found that another $21,251 had been withdrawn and used on family expenses. He was unemployed between 2003 and 2004.
As to the wife’s superannuation, I have heard little about it, but in the absence of evidence to the contrary, I proceed on the basis that it was built up in the course of the marriage. She has not sworn that she brought it into the relationship. Nor has she worked since the relationship.
The husband’s superior contribution at the start of the marriage, with the combination of valuable real estate, and long-standing superannuation, must be recognised. So too must the building of assets by the parties’ hard work and/or the passage of time and inflation in the relatively short time they were together. On balance, it is fair to recognise a contribution by the husband of 70%, and 30% by the wife.

SECTION 75(2) AND OTHER FACTORS

In opening, counsel for the wife sought a 10% adjustment in the wife’s favour, taking into account that she is 48, caring for their 7-year-old son, and not in paid employment. It was conceded that she has the financial support and resources of Mr W, and the husband pays $360 per month in child support. In closing, the increment sought under this heading was 5%.
It is reasonable to take into account the wife’s responsibility for the child. In this case, however, I do not propose making an adjustment in her favour. That is because on the other hand, of the two parties to this marriage, she is in the stronger financial position going into the future.
She has been in a relationship with Mr W, a commercial lawyer, for 10 years. She has lived with him full-time for six years and part-time for two years. Throughout that time Mr W has given her and her son full financial support. The case has proceeded on the basis that it will continue.
I do not know the precise details of Mr W’s financial affairs, nor do I need to. Suffice it to say that he spoke of being able to draw what he liked from his business, he has provided the wife with consecutive new BMW cars, and he has recently had access to at least half a million dollars from his mother’s estate to build a new home. Through his support of her, the wife has a much brighter financial situation and future than the husband.
The husband earns $640 per week, and as noted, pays $360 per month in child support. He is 53. He talks of health problems but produces no evidence. He hopes to continue to work, but he is not getting younger. He needs to pay more than another $50,000 for his bankruptcy to be annulled. While the wife has the security of a home with Mr W, the husband risks losing the K property. All in all, he faces a challenging time.
Taking into account the child’s expenses, but the wife’s brighter financial future, I do not propose any adjustment in either direction under this heading.

CONCLUSION

The asset pool is $606,478. The husband would be entitled to $424,534.60 as a 70% share. He has already received $100,000 (towards the bankruptcy), $10,000 by way of distribution, and $63,450 from Tower Life, AA Pty Ltd and superannuation pay-outs. In total he has received $173,450. The wife has received $58,937, being her jewellery, and distributions of $43,937 and $10,000. She shall also retain her superannuation of $16,159. That gives her a total of $75,096. A 30% share would entitle her to $181,943.40, that is an additional $106,847.40.
I must arrive at a decision that is just and equitable in all the circumstances. That is, I must apply more than a simple mathematical calculation. In the mix in this case, the Official Trustee in Bankruptcy has urged me, pursuant to s 75(2)(ha) of the Act, to consider the effect of the orders on the ability of a creditor to recover a debt, so far as is relevant. To that end, the fact that the husband’s superannuation is exempt for bankruptcy purposes, (according to s 116(2)(d)(iva) Bankruptcy Act 1966), is a relevant consideration.
I propose an order whereby the father shall retain the K property and $31,084.60 from his superannuation. The wife shall receive the balance of the fund, being $106,847.40, via a Splitting Order. I note that the wife’s solicitor has, as requested, afforded the Trustee procedural fairness by notifying it of the splitting order being sought. The Trustee does not wish to be heard. I do note however that the Trustee was advised of the sum of $72,689 being allocated to the wife. My orders shall provide for a higher figure. It is unlikely to affect the attitude of the Trustee but in an abundance of caution I shall order the wife’s solicitor to serve my orders forthwith on the Trustee who shall have liberty to apply in 14 days from the date of service.
The effect of the order is that the wife shall not receive further assets immediately. She has received some, but I am conscious that the balance of her share of the settlement will be in superannuation that she cannot yet access (she is 48 years’ old). However, she is housed and financially secure with Mr W. She moves into the future secure, and this gives her her own financial resource.
The effect of the order is the opportunity for the husband’s creditors to be satisfied, as he shall retain the non-exempt asset.
Finally, the effect of the order will be to extend to the husband at least an opportunity to retain his home. His long working life shall no longer be rewarded with the expectation of any but the most modest superannuation, but he should be securely housed, without paying rent. That is, if he can negotiate with the Official Trustee in Bankruptcy to retain the home. The Trustee’s solicitors indicated it may be a possibility. At least the husband will have the opportunity to give it his best shot.
I acknowledge that in the course of the husband’s final submissions I forewarned him that he was likely to need to sell or transfer the house to pay out the wife. I had not had the benefit of assessing the complex evidence, and although he tried, the husband was unable to make the cogent submissions that counsel would have made on his behalf. Having had the opportunity to reflect, I am satisfied that this is a just and equitable settlement of this case.
One small matter remains. The wife seeks a few chattels. There is contention about them. I have no certain evidence about their existence or where they may be. I do not propose making orders for chattels.

THE ORDERS

The orders that I propose, subject to submissions as to form, are as follows:
1.That by no later than 20 November 2008 the wife shall do all acts and things and sign all documents to transfer to the husband at his expense all of her right, title and interest in the real property situate at and known as K property, being the land comprised in Certificate of Title Volume … Folio ….
2.That the husband shall retain his interest in the business F Pty Ltd.
3.That the amount of $106,847.40 shall be allocated to the wife (“non member spouse”) as required by Section 90MT(4) of the Family Law Act 1975 (“the Act”) as the base amount out of the interest of the husband (“the member spouse”) in the Australian Super Fund (“the fund”).
4.That pursuant to s 90MT (1)(a) of the Act whenever Australian Super Pty Ltd (“the trustee”) makes a splittable payment out of the interest of the husband in the fund, the trustee shall:
(a)Pay to the wife, her administrators, executors, beneficiaries, heirs or assigns the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b)Make a corresponding reduction in the entitlement of the husband or such other person to whom the splittable payment would have been made but for this order.
5.That the operative time for this order is 20 November 2008.
6.That the wife’s solicitor shall forthwith serve a sealed copy of these orders on the trustee who shall have liberty to apply to the court within 14 days thereafter if it requires to be heard, failing which these orders shall be binding upon the trustee.
7.That until the happening of any of:
(a)    The establishment of a separate account in the name of the wife in the fund; or
(b)    The transfer or “rolling over” into another superannuation fund or superannuation account of the payment split created by Order 3 hereof; or
(c)    The wife satisfies a condition of release and is paid the payment split which was created by Order 3 hereof; or
(d) The wife executing a waiver of rights within the meaning of Section 90MZA of the Act in relation to the payment split created by Order 3 hereof:
The husband shall be and is hereby restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of his interest in the fund a “not splittable payment” within the meaning of Regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001 and the husband is hereby ordered to revoke any death benefit nomination currently executed as at the date of these Orders in favour of any person other than the wife.
8.That each party shall otherwise:
(a)    Be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of this order;
(b)    All insurance policies shall be the sole property of the beneficiary named therein;
(c)    Each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)    Any joint tenancy of the parties in any property real or personal is hereby expressly severed.
9.That all existing applications shall be otherwise dismissed and the case removed from the list of cases awaiting finalisation.
10.That pursuant to the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

I certify that the preceding ninety-eight (98) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau

Associate:

Date: 29 October 2008

[2008] FamCA 979

29 October 2008

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Family Law

Equity & Trusts

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Injunction

Procedural Fairness