Osman & Caspar (by his litigation guardian Caspar)
[2024] FedCFamC1F 441
•27 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Osman & Caspar (by his litigation guardian Caspar) [2024] FedCFamC1F 441
File number(s): BRC 11058 of 2019 Judgment of: BAUMANN J Date of judgment: 27 June 2024 Catchwords: FAMILY LAW – PROPERTY – Long marriage with periods of separation – Kennon adjustment considered – Two pools approach – Differential contribution adjustment Legislation: Family Law Act 1975 (Cth) ss 75, 79, 117 Cases cited: C & C (2005) FLC 93-220
Hickey & Hickey (2003) FLC 93-143
Kennon & Kennon (1997) FLC 92-757
Osman & Caspar (by his litigation guardian Caspar) [2023] FedCFamC1A 237
Stanford & Stanford (2012) 247 CLR 108
Townsend & Townsend (1994) 18 Fam LR 505
Division: Division 1 First Instance Number of paragraphs: 80 Date of hearing: 28 May 2024 Place: Brisbane Counsel for the Applicant: Ms Horsley Solicitor for the Applicant: Simonidis Steel Lawyers Counsel for the Respondent: Mr Brown Solicitor for the Respondent: CIF Lawyers ORDERS
BRC 11058 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS OSMAN
Applicant
AND: MS CASPAR AS LITIGATION GUARDIAN FOR MR CASPAR
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
27 JUNE 2024
THE COURT ORDERS:
1.That these proceedings be listed for pronouncement of Orders at 9.30am on 16 July 2024 in the Federal Circuit and Family Court of Australia (Division 1) at Brisbane.
2.That prior to 16 July 2024, the parties shall exchange a minute of order consistent with these Reasons.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Osman & Caspar(by his litigation guardian Caspar) has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
INTRODUCTION
These proceedings involve competing proposals for alteration of property interests between the Applicant, Ms Osman (“the wife”), and the Respondent, Mr Caspar (“the husband”), who is represented in these proceedings by his mother, Ms Caspar, as his Litigation Guardian.
As these Reasons will demonstrate, this case has had numerous delays and difficulties. When the matter finally came before me for trial on 28 May 2024, the actual proceedings, in terms, of cross-examination and oral submissions, with Ms Horsley of Counsel, representing Ms Osman (who hereafter I shall call “the wife”) and Mr Brown of Counsel, representing the Litigation Guardian, took less than two hours.
It is important to identify the principles which apply under the Family Law Act 1975 (Cth) (“the Act”) to alteration of property interests first, and then to deal with the history and facts, which help shape the ultimate orders the Court believes will do justice and equity to the parties.
STATUTORY PATHWAY
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
(a)to identify the pool of assets and liabilities generally, and usually at the time of hearing; to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4);
(b)to consider the factors as are relevant contained in s 75(2) of the Act; and
(c)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
Both Counsel submitted, and I agree, that it is just and equitable, within the meaning of s 79(2) of the Act and the principles identified in Stanford & Stanford (2012) 247 CLR 108, for the Court to make property adjustment orders.
SUCCINCT HISTORY OF THE RELATIONSHIP
Statements of fact hereafter shall be regarded as findings of fact.
The wife was born in 1961 and the husband was born in 1963. The wife is an educator and began working as a 21-year-old in about 1982.
Shortly prior to cohabitation, beginning in late 1994/1995, the wife had purchased vacant land at C Street, Town D, which is referred to later in these Reasons. I am satisfied on the evidence that the land was purchased for approximately $45,000, a form of land/house package to construct the home cost approximately $98,000 and the equity that the wife created by this transaction at the time of cohabitation was approximately $8,000.
When cohabitation began at least by early 1995, the wife had the care and control of her son, Mr E, who was born in 1988 and he became a member of the household that comprised the husband and wife. Mr E was approximately six to seven years of age at the time of cohabitation.
Whilst the parties initially live in the husband’s rented unit, upon completion of the construction of the home on the C Street land, the parties moved into that property in late 1995. The parties were married in late 1996.
In these Reasons, although I refer to the parties at times as “husband” and “wife”, I am aware that a divorce was granted in early 2020.
The parties were blessed with two children, Mr F, born 1997, who is now 26 years of age and Mr G born 1999, who is now 24 years of age.
The husband who is a tradesman by occupation suffered an injury in late 1998. The nature of the injury was such that he was unable to work for a period, at least until approximately March 2001, and took a more active role in the care of the two children, the wife continuing to work. Clearly, the wife’s income at that stage was critical to the support of the family. As future events reveal, the parties at different stages developed strategies to create wealth through the ownership and development of property.
In early 2014, the parties purchased a property at H Street.
Although there is a dispute about the nature of the separations during the course of the period from cohabitation in 1994, until final separation, which occurred in approximately mid-2017, there is no doubt that even during periods of separation (the most significant period of separation I accept being between January 2010 and mid-2014) the parties sought to maintain a relationship for the benefit of their children, and it seems because they were satisfied that there was some benefit in trying to rekindle the relationship which broke down from time to time. The wife’s evidence gives details of a number of separations of shorter duration than the one just mentioned and I accept that evidence.
I accept that there were difficulties in the household arising from, at least, the tensions between the parties, many of them caused by the growing disharmony between the husband and Mr E, who left home when he was 18 years of age.
As I say, despite the major separation between January 2010 and mid-2014 and other separations, the parties continued to be involved in property acquisitions for profit. For example, in 2002, they purchased a property at J Street, Suburb K, which was sold in 2008 for a gross profit of approximately $99,000. In 2005, they purchased a property at L Street, Suburb M, which was sold in 2012 for a gross profit of approximately $31,000.
The fact that the relationship was unstable is not only reflected by the number of separations, but also the fact that in late 2008, the wife sought and obtained an Apprehended Violence Order under New South Wales legislation in her favour.
I am satisfied that after separation, the wife moved with the children form the C Street property and the husband took over possession. The wife criticises the husband for his failure to maintain mortgage repayments, as he promised to do and, in fact, was later ordered to do.
Post-separation, there was an incident of family violence which occurred at the H Street property in approximately early 2018 that resulted in a further Apprehended Violence Order being made in favour of the wife for her protection for a period of three years, on or about mid‑2018. It is clear on the evidence, and this will be dealt with more clearly shortly, that the husband was suffering some significant mental health challenges as the relationship deteriorated.
I accept the evidence that there were approximately eight mental health admissions (I infer mostly voluntary, but sometimes not) between mid-2019 and early 2022.
PROCEDURAL HISTORY
On 3 September 2019, the wife commenced proceedings in what was then the Federal Circuit of Australia, seeking property orders. On 4 February 2020, a Registrar made Orders by consent to facilitate the sale of the H Street property and to distribute the proceeds. The husband was ordered, as he was occupying the C Street property, to be responsible for the payment of the mortgage and various costs.
Sadly, for reasons not totally explainable to me on the material, despite an initial listing for trial on 4 July 2022, the matter was listed for further trials on 7 September 2022, 22 May 2023 and 18 October 2023. None occurred.
The very extensive material of the parties, particularly the wife, contains numerous paragraphs relating to, what she says, was the effect of these delays attributable to, she would say, the conduct of the husband.
I made a ruling at the commencement of these proceedings, confronted by such voluminous material, that I could not see the relevance of that evidence other than when the Court, if required, is asked to consider making a costs order. Both Counsel agreed that was appropriate and as a result the wife was not cross-examined about those issues. Certainly, the husband would say that the adjournment of the trial in May 2023 was because, he asserts, late disclosure made by the wife. Whilst this matter was tracking towards a trial in October 2023, a serious incident occurred in mid-2023.
On all the evidence, it seems more likely than not that the husband, in a state of unwellness, caused a fire in the former family home at C Street. I am somewhat guarded in expressing what the husband actually did on the evidence because it is clear that on that same day, having been alerted to the fire, the husband was admitted as an involuntary patient to a mental health institution in New South Wales. The wife, who was engaged by authorities as soon as the fire was detected and was, of course, clearly distressed at the time and supported by her eldest child, Mr E, to manage her distress, took steps after the fire to deal with the insurance company.
To the credit of the wife, which I give her, I am satisfied that she both negotiated a payout of an insurance claim of slightly less than a $100,000 for the damage and ensured that the property was repaired as much as possible to its original state.
If one wonders why the husband was not particularly involved in that exercise, the answer lies in the fact that Judge Lapthorn, on 25 July 2023, granted an application for the husband’s mother, Ms Caspar, a resident of Country V, now aged 83 years of age, to be his Litigation Guardian. Shortly thereafter, New South Wales Civil and Administrative Tribunal (“NCAT”) made an order appointing Ms Caspar as the financial manager/guardian for the husband. As I will observe, there is some confusion about whether Ms Caspar was in a position from afar or because of actions of her son, able to properly fulfil the role as financial manager. Nonetheless, the Order made by Judge Lapthorn for the appointment of a Litigation Guardian was the subject of an appeal that was dismissed by the Full Court constituted by Schonell J on 22 December 2023 (see Osman & Caspar (by his litigation guardian Caspar) [2023] FedCFamC1A 237).
It meant that after the proceedings had been transferred to the Family Court of Australia (as it then was) and noting also that the husband’s Application in a Proceeding seeking leave to commence proceedings for spouse maintenance out of time was not pressed at the trial before me, the proceedings were listed on 8 February 2024 for a trial to commence on 28 May 2024, and trial directions were made.
HOW THE TRIAL PROCEEDED
The husband did not file, and his advocate asserted he was not capable of both filing an updated affidavit or to be available for cross-examination, because of his mental health condition. As I will soon indicate, however, some of the husband’s earlier material was relied upon was permitted to be relied upon and has been considered by the Court. The clear disadvantage and limitation arising from the inability to test the husband’s sworn testimony from an earlier affidavit is problematic for the Court and for the husband. The issue of the husband’s incapacity was itself not, in the Court’s view, fully and totally explained. The only evidence before the Court, in that respect, was from a Psychiatrist, Dr N who is a Psychiatrist employed by a Local Health District, and who provided some reports about the husband. She was not available for cross-examination on her opinions and, ultimately, Ms Horsley accepted that it was important to have some evidence about the husband’s condition and challenges, but that the failure to be able to test the evidence, relied upon by the husband (Dr N having affirmed an affidavit filed 7 May 2024), meant the weight that could be applied to the evidence of Dr N was reduced. In short, the evidence contained in the most recent report prepared on 4 March 2024 (noting that there had been an early report of 19 December 2023), which identified that the husband has a history of a mental health disorder was, there are recent admissions to mental health units, and that the husband only seen Dr N, after the initial consultation in December 2023, on limited occasions.
The collective evidence suggested that although the husband, as at 4 March 2024, had reflected on earlier periods of admission, that he was not “currently” displaying symptoms that affect his day-to-day functioning. However, the health service was monitoring his mood and mental state and it is possible that he may switch into a depressive phase of his illness. He, as a result of his diagnosed conditions, suffers potentially some impairment to his ability to concentrate. Cognitive screening in February 2024 by his case manager showed borderline results for his attention. Dr N said that “whilst he is managing to work currently it is likely that his capacity to manage the demands of full-time work is reduced, through partial inter-episodic functioning and time taken to recover from episodes of clear [mental health symptoms]”. Dr N opined that she was “unable to comment on [Mr Caspar’s] capacity to give evidence under [o]ath”.
In her opinion, at the time of that last report, the husband “is stable in his mood”, but she could take the matter no further. To the best of the Court’s knowledge, the husband was not in court at any time during the brief proceedings before me.
EVIDENCE RELIED UPON
The wife relied upon:
(a)her trial affidavit which was of significant length (but as I say, much of it related to the legal delays and may be more relevant to any cost application);
(b)an affidavit by her son, Mr E, who was cross-examined, as was the wife; and
(c)an affidavit by her treating Psychologist, Mr O. Mr O swore an affidavit attaching reports on 27 June 2022.
Rather than be cross-examined, the parties accepted there were some limitations to the report of Mr O, and on the basis of those agreed limitations, Mr Brown, Counsel for the husband, did not seek to cross-examine Mr O. Those limitations were conceded to be that Mr O:
(d)had not seen the subpoena material;
(e)had not seen photographs of the wife, which he asserted demonstrated the physical injury she had incurred;
(f)has not had any other documents produced to him since he prepared his report; and
(g)he has not had any consultation with the wife for over two years.
On that basis, his “formulation and diagnosis” has some limitations. However, it was his opinion that:
[Ms Osman] is a 60 year old [educator]. It is my opinion she is experiencing post traumatic stress disorder and depression. She has regularly sought services to help her with mood problems and other issues since 2008.
[Ms Osman] is currently experiencing symptoms of depression, and she is treated with medication for this ([…]). In addition, [Ms Osman] experiences posttraumatic stress disorder. [Ms Osman] reports her first probable episode of depression being in 2008. She describes periods of remittance and relapse of symptoms with stress, often marital. Recently, ([…] 2022) she reports the death of her father, which has also contributed to her current symptoms. It is my opinion her treatment has not been optimal until recent. For instance, she reports only two treatment episodes involving psychotropic medication, and did not report engaging in psychological treatments deemed best practice for PTSD or depression ([…]). These treatments would assist her obtaining and maintaining employment.
[Ms Osman] reports taking more sick leave from her employment than is usual for her, that is, she has had [over 20] days of sick leave/bereavement leave approved between […] June 2021 and […] June 2022. [Ms Osman] also reports some difficulties with mental effort and organisation related to her financial administration. She reports feeling overwhelmed and procrastinating over financial and other household and personal tasks. These problems with mental effort and procrastination are best described as difficulties not barriers. Further, these problems are often normal components of depression and usually remit with treatment/improvement. She may feel these tasks are more onerous than usual and take longer to complete them. I would make similar observations regarding her ability to maintain and obtain employment. Ms Osman has maintained employment but with some difficulty and has managed her household affairs and cared for her children adequately but with difficulty. In addition, Ms Osman has established and maintained an intimate relationship for 3 years following her relationship with [Mr Caspar]. She reports being less trusting in relationships after her experiences with [Mr Caspar], however she has demonstrated a willingness and ability to have intimate relationships despite her mental health complaints and previous relationship experiences.
[Ms Osman’s] reports, and objective measures, are consistent with PTSD. From her descriptions, the onset of this was in 2003 after a domestic violence incident. She also reports these symptoms typically lasting 1-4 months after a domestic violence incident before remitting. Her current episode of these symptoms (ptsd) has been precipitated by the stress of her current matters before the courts.
The diagnostic considerations for [Ms Osman] are (DSM-5 codes in brackets)
1. Posttraumatic Stress Disorder […], ([…]).
2. […] Depression[…] ([…]).
The recommendations made by [Mr O] were:
It is recommended [Ms Osman] comply with her regime of anti-depressant medication (currently […]) and that she liaises with her treating GP regarding this medication. It is also recommended [Ms Osman] engage with a clinical psychologist for optimal treatment and assessment of depression and PTSD.
It is my opinion [Ms Osman] will experience remittance from her symptoms of PTSD and depression as she has previously. In addition, her current treatment will increase the probability she will experience significant improvement in her ability to manage her finances, care for her children, maintain employment, and establish relationships.
As indicated, the husband had not filed and, I am prepared to accept, was incapable of reliably swearing a more recent affidavit. In the circumstances, the Court did, however, read and the husband did rely upon, now, the affidavit of Dr N; an earlier affidavit of the husband sworn by him and filed on 31 March 2023; and an affidavit by the Litigation Guardian filed 7 May 2024. During the course of the hearing, as the record will reveal, I was critical of the preparation of a Financial Statement by the litigation guardian, which purported to be an accurate statement, apparently, of the current financial position of the husband. I am not satisfied that it was entirely accurate.
Under cross-examination, the Litigation Guardian did not satisfy me that she had undertaken any steps to verify the accuracy of many of the statements she made in the Financial Statement, seemingly because she relied totally upon the efforts of the lawyer, Mr Q. It became apparent in her brief cross-examination that she really has very little knowledge of the husband’s financial dealings, work practices, or such similar issues. She even challenged the fact that she was appointed as financial manager, when clearly that is the order of NCAT.
She preferred to regard herself as the “financial guardian”, which I took to be that she did not regard herself as having any responsibility for keeping an eye on the husband’s access to funds, and the use of those funds but rather just sign things for her son. I found her evidence, to a large degree, unhelpful, but in so saying, I am not critical of her when she, at her age, lives full-time in Country V and has limited contact with her son. Her statement to the Court, as prepared and sworn by her, could have been more effectively and accurately drawn, in my view.
THE POOL
By the conclusion of the hearing of evidence and cross-examination, the items that constituted the pool were largely agreed. What was not agreed is whether, as asserted on behalf of the wife, it was appropriate for there to be two pools – one of non-superannuation interests and the other of superannuation interests, or one combined pool. Guided by the principles identified by the Full Court in C & C (2005) FLC 93-220 and considering the level of the wife’s superannuation; the significant balance in that superannuation that accrued prior to cohabitation by the wife’s employment as an educator; and the post-separation contributions for her superannuation. I was satisfied by the considered submissions of Ms Horsley for the wife, that this is a case where the preferred approach of two pools should be adopted.
Marked Appendix One to these Reasons is the pools as I find them to be. In that regard, most of the items are agreed as to value and identity. There is a dispute as to whether the husband’s access to the proceeds of sale of a small share portfolio should be added back at $7,445, and proceeds withdrawn by him from his Superannuation Fund 1 ($20,000) should also be “added back”.
I am satisfied that these payments received by the husband are in the form of a premature disposition (noting the authority of Townsend & Townsend (1994) 18 Fam LR 505), and that in the absence of proper consideration or evidence from the husband as to how the funds were used, it is just and equitable that the wife’s admission that the funds be added back as a credit against the husband is appropriate. As can be noted from Exhibit 3, the wife did not press some add-backs in the form of arrears of payments on the C Street property, where the husband had failed to comply with the Order of the Court.
I also acknowledge that the husband did draw from his superannuation, it seems, as best I can infer from the evidence under the “hardship” conditions, on about 15 April 2024, a net sum of $14,901. This sum reduced his superannuation entitlement, but I am satisfied by reference to Exhibit 8 that the funds were paid to the housing loan account, thus reducing the balance on that account. As a balance sheet item, it is of no material effect to the pool.
CONTRIBUTIONS
The Court is required to consider, in a holistic way and not a strict mathematical or balance sheet way, the financial and non-financial contributions from the time of cohabitation until the time of trial. Authority does not encourage trial judges to divide up certain periods of the relationship, for example, into pre-separation and post-separation periods, although, as in these Reasons, some reference to the differences and nature of contributions at different stages of the relationship will be made.
I accept that the husband is disadvantaged, to some degree, by the inability to have his evidence, where it differs from the wife, tested by cross-examination. The wife was a subject of cross-examination. I regarded her as a reliable witness, although I will say that in some respects, my impression was some of the events she says related to family violence may have been slightly exaggerated. Nonetheless, as I will soon identify, it is my view on all the evidence that a small adjustment for what is known as the “Kennon” argument (Kennon & Kennon (1997) FLC 92-757) is available on the evidence and should be allowed in the wife’s favour.
At the commencement of cohabitation, I am satisfied that the wife had an equity in the C Street property of approximately $8,000. Importantly, for the purposes of the second pool of interests, I am satisfied that she had a superannuation entitlement at that stage which would have had a value of approximately $149,000. The husband bought few assets in to the relationship.
During the course of the relationship in terms of financial contributions, the wife’s income was both superior and more consistent, arising from her employment as an educator than was the husband’s, arising from employment or income streams in the trade industry. The wife’s consistent employment enabled her superannuation to grow, in particular, post-separation, based on the calculations for the defined benefit scheme. There was a period of some three years where the husband was unable to work because of his injury. During that period the wife was the primary earner. I take into account that during the period at least of the longest separation of some four years, the husband was assessed for child support, but the wife says, and I accept, he was inconsistent in payment and fell in arrears.
I accept during that period of separation therefore the wife’s income was the primary support for the family. I accept on the evidence, however, that despite the changes in the living arrangements over the course of the relationship, the parties did effectively contribute equally to mortgages through contributions to an account from which the mortgage were paid, and that continued until approximately December 2018.
In respect of the contribution as homemaker and parent, I regard the wife’s contributions to be superior to those of the husband. I do not accept entirely the wife’s assertion that the husband did nothing. I accept that during periods of separation the husband would visit the home, and there were periods where the family continued to have family holidays even though physically separated. I also infer that when the husband was not working after his injury, he was more available to contribute non-financially and to the role of homemaker and parent.
The husband as a tradesman, I accept, made non-financial contributions to the maintenance and improvement of various of the properties, but again, most of the major structural work was performed by independent building contractors and paid for by the parties. I do not underestimate that the husband would have attended to more of the outside maintenance work required, both in respect to the home in which the parties lived and, at times, some of their investment properties. The wife says in her affidavit that she made certain payments solely (see paragraph 130). I accept that evidence.
Although the wife says she did not know that the net proceeds from the sale of the L Street property in early 2013 was $81,902.71 (see Exhibit 5), it seems clear that the parties reconciled after a period of separation when the property was sold, in mid-2014, and continued the relationship, thereafter, until final separation in mid-2017. The wife has not established on the balance of probabilities that any funds that were received from the L Street sale were dissipated for the sole benefit of the husband. I think it more likely than not that the funds found their way into the marital pool to meet the needs of the family, as the husband asserts in his affidavit. I accept that the wife was responsible and, no doubt, this was an emotionally difficult exercise in ensuring that the contract of insurance for the property allowed a payment to be made for the damage caused by the fire.
In respect of the asserted Kennon adjustment, a combination of the evidence of the wife and the evidence of her son combine to persuade me that a small adjustment is appropriate.
The evidence of Mr E, who was the subject of cross-examination and whose credit was not seriously diminished by that cross-examination, about a number of incidents variously called, for example:
(a)“the king hit”, (paragraphs 13 to 19);
(b)“the dishes incident” (paragraph 20 to 24);
(c)being “dragged by the leg” (paragraph 25 to 29);
(d)the “clothes dryer incident” (paragraph 30 to 37);
(e)“mum’s black eyes” (paragraph 38 to 41)
should broadly be accepted as corroboration of the mother’s allegations of the husband’s abusive behaviour at times – although many related to actual physical contact between the husband and Mr E.
Although there are limitations to the report of psychologist, Mr O, he also offers some connection between what the wife asserted to be the unhappy relationship, and actions of the husband (which I accept at times were likely to be shaped by his mental health challenges and mood swings), and the effect upon her.
I am not satisfied on the evidence, as asserted by the husband in his affidavit, that Mr E threatened to stab the husband. I also note there is corroboration for some of the intervention by police in the documents tendered in the wife’s case, and marked as Exhibit 5.
It is not necessary to attribute a particular percentage when considering a Kennon argument. I am, however, on all the evidence satisfied that at various times the contributions made by the wife were made more arduous by the conduct of the husband.
However, I do note that the wife continued to progress and maintain steady employment. The wife in her evidence sought to connect a failure to get a promotion, (in particular, on one occasion when she embarrassingly attended an interview with a black eye, she says, and I accept, caused by the conduct of the husband), with the failure to be able to get better paying positions in her field.
The absence of any evidence from senior people from her employer makes it impossible for the court to be satisfied that that was the only reason the wife was unable, at times when she sought it, to obtain a promotion. Certainly, the wife was frank enough to indicate that after a while she decided she would not pursue options for promotion, felt less valuable as an educator; had some self-esteem issues, all of which meant that she felt, it seems to me, somewhat trapped in her position. On more than one occasion in her material, she asserts that she would have left her employment earlier than she now intends to do, which is in the next 12 months or so.
Considering all these factors in relation to the pool one interests, it is the submission of the husband that the Court would assess the contributions as equal. I disagree. In my view, the appropriate contribution entitlements to the pool one interests should be assessed as being 62.5 per cent to the wife and 37.5 per cent to the husband, equivalent to a payment by the husband to the wife of 12.5 per cent on a nett pool of $1,504,329, or approximately $188,000. With respect to the superannuation interest, I regard the wife’s initial contribution as requiring a slightly greater adjustment in her favour, and I would assess the respective superannuation interest contributions to be 67.5 per cent to the wife, and 32.5 per cent to the husband a differential of 35 per cent on a total superannuation pool of $1,212,967 or approximately $425,500.
SECTION 75(2)
Neither Counsel asserted that this is a case where an adjustment ought to be made for the factors prescribed for consideration under section 75(2) to either contribution assessment of the two pools. I agree for the reasons which follow.
The husband and wife are of similar ages.
Whilst neither has perfect health, I find that they are both able to work at present. The wife’s current income is, I assess, likely to be superior to that of the husband, but she intends, and she is perfectly entitled to do, to retire within the next 12 months.
There is great uncertainty about what actually is the husband’s current income. There was a failure by him to explain, and no capacity for the litigation guardian to clarify, what the payments he received from an entity called, “[P Company]”, between November 2023 and January 2024 of $22,500 (an average of $2,250 a week) actually related to.
On the basis of Dr N’s statement that the husband was working, it seems in my view, clear that this is employment of some nature. That being the parties’ income, their earning capacity very much depends on long they choose to work. I have no evidence from the husband to answer that question. The wife has given me her answer, namely, she seeks to retire in approximately 12 months. She should be entitled, of course, to do so.
FORM OF ORDERS
The Court is required to consider the effect of any property adjustment orders not merely percentages. Because I propose to make a superannuation splitting order as sought by the wife, but in a slightly different sum, in favour of the husband, the husband’s increased superannuation will, in my view, at his age, be accessible in some form through the transition to retirement pension process if he chooses to do so, before ultimately being available, on current legislation, tax free.
The various scenarios can be mathematically assessed as follows:
Pool of non-superannuation interests
$1,504,329
Wife’s share of 62.5%
$940,205
Made up of (if the wife retains the C Street and R Street):
C Street (nett)
$538,867
R Street (nett)
$647,817
Furniture
$29,080
Interim distributions
$124,580
$1,340,344
Her payment to the husband
$400,139
$940,205
Husband’s share of 37.5%
$564,124
Made up of (on this scenario):
Interim distributions
$124,580
Proceeds of Sale U Shares
$7,445
Superannuation Fund 1 withdrawn
$20,000
Furniture
$11,960
Payment by wife
$400,139
$564,124
On this scenario, the wife would be required to refinance the loans secured over the properties (other than those supporting loans created by the husband for his legal costs funding) and pay the husband a sum of $400,000 (rounded down).
If the wife is unable to pay the husband and refinance under the scenario above, and where the wife wishes to retain the R Street home, then the notional nett proceeds of sale of the C Street property will need to be distributed in a manner with enables the nett pool to be divided in the proportions of 62.5 per cent to the wife and 37.5 per cent to the husband.
In this scenario, and not allowing for costs of sale of the C Street property (but using for this example a notional nett return on sale of $538,867), the respective shares of that nett return would be approximately:
Pool of non-superannuation interests
$1,504,329
Wife’s share of 62.5%
$940,205
Made up of:
R Street (nett)
$647,817
Furniture
$29,080
Interim distributions
$124,580
$801,477
Plus share of nett sale proceeds of the C Street property
$138,728
$940,205
Husband’s share of 32.5%
$564,124
Made up of:
Interim distributions
$124,580
Proceeds of Sale U Shares
$7,445
Superannuation Fund 1 withdrawn
$20,000
Furniture
$11,960
$163,985
Plus share of nett sale proceeds of the C Street property
$400,139
$564,124
On this basis:
(a)the wife should receive 25.75 per cent of the nett proceeds (accepting the nett funds could be more or less than the notional figure of $538,867 being $138,728/$538,867; and
(b)the husband should receive 74.25 per cent of the nett proceeds being $400,139/$538,867.
The husband, who is occupying the C Street property, has a real interest in maintaining the property so as to increase the nett proceeds of sale or at least preserve the value.
The superannuation pool of $1,212,967 divided in the proportions of 67.5 per cent to the wife and 32.5 per cent to the husband would compute to a splitting order of $300,560 from the wife’s superannuation entitlements of $1,119,313 to the husband from her Superannuation Fund 2 balance, increasing the husband’s total superannuation balance as follows:
Current Superannuation Fund 1
$93,654
$300,560
$394,214
and this would leave the wife a total superannuation (post the splitting order) of $818,753.
In respect of these different scenarios, I regard the outcome is just and equitable to both parties.
Now that the wife is aware of the amount she will need to refinance and pay to the husband, it is reasonable to give her 14 days to elect if she wishes to do so.
If she chooses not to take up that option, then the order proposed by the wife’s minute of order for the sale of C Street is satisfactory. If the wife is willing and able to take on the extra debt so as to acquire the husband’s interest in the C Street property, then I am comfortable for the wife to have 45 days from the date of the orders I made to perfect that transaction.
In the circumstances, I propose to list the applications before me at 9.30am on 16 July 2024 for pronouncement of orders, with the parties to exchange or engage in the form of orders consistent with these Reasons, before then.
The orders that I propose to make, considering that the husband concedes he has no capacity, to undertake and commit to any mortgage, includes a cash payment. During the course of final submissions, the wife’s Counsel, Ms Horsley, identified that the wife, depending on the ultimate conclusions by the Court, would like to have the opportunity of retaining the C Street property (which she brought into the relationship). She accepts that would require the wife to pay out some funds to the husband. I propose to give her that opportunity.
Once she retires, the wife will have a capacity to obtain the balance of her superannuation benefits in the form of a payment akin to a pension or perhaps, at her election, computed to a cash sum. I accept that if she does elect to take over the C Street property, she will have more debt, but that will be her choice, and no doubt a financial choice based on how she might, in turn and in time, provide more financial security for herself. If, however, the wife does not wish to take over the C Street property in the final analysis, she also will have the benefit of some cash funds arising from its sale.
The initial form of orders that the wife sought are reproduced as Appendix Two to these Reasons. Based on the fact that the contribution and contribution assessment is different than that contended for by the wife, clearly the figures also differ. Furthermore, with the husband’s concern that he cannot afford to refinance any loans and with the wife seeking an opportunity to retain the C Street property.
COSTS
It seems almost inevitable that one or both of the parties will be seeking some form of costs order. I would, of course, in time in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) consider any costs application, and if it is being pressed, I will make directions for filing of submissions to any further quantification with a view that costs be determined on the papers in chambers, if possible, so as to reduce the parties’ costs of further assessment. I would, however, caution both parties, notwithstanding the significant costs they have incurred in a case like this (considering the litigation history and the cost notices filed), to carefully consider whether they do pursue an order for costs, noting the general rule in s 117(1) of the Act. That is, of course, a matter for the parties.
I certify that the preceding eighty (80) numbered paragraphs is a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 27 June 2024
APPENDIX ONE
Property pool – two pools (C & C (2005) FLC 93-220)
Non superannuation pool
Assets
Ownership
Property
Amount
Joint
C Street
$850,000
Joint
R Street
$1,050,000
Wife
Furniture etc.
$29,080
Husband
Furniture etc.
$11,960
$1,941,040
Liabilities
Joint
C Street Loans
(No’s … and …)
$311,133
Joint
R Street Loans
(No’s … and …)
$402,183
$713,316
$1,227,724
Add backs
Wife
Interim Distributions
$124,580
Husband
Interim Distributions
$124,580
Husband
Proceeds of sale U Shares
$7,445
Husband
Proceeds withdrawn from Husband's Superannuation Fund 1
$20,000
$276,605
TOTAL NON-SUPERANNUATION POOL
$1,504,329
Superannuation pool
Wife
Superannuation Fund 2 – Accumulation
$1,096
Superannuation Fund 2 – Defined Benefit
$1,118,217
Husband
Superannuation Fund 1
$93,654
TOTAL SUPERANNUATION POOL
$1,212,967
APPENDIX TWO
1.That within forty-five (45) days of the date of these orders, and contemporaneously with the other:
(a)The applicant shall do all such acts and things and sign all such documents as may be required to transfer to the respondent at the expense of the respondent all of her right title and interest in the property situated at C Street, Town D in the State of New South Wales (“the C Street property”);
(b)The respondent shall do all acts and things necessary to refinance the mortgage, and any other encumbrances, secured over the C Street property into the respondent's sole name, and shall release and indemnify the applicant in relation to same;
(c)The respondent shall do all such acts and things and sign all such documents as may be required to transfer to the applicant at the expense of the applicant all of their right title and interest in the property situated at R Street, Town D in the State of New South Wales (“the R Street property”);
(d)The applicant shall do all acts and things necessary to refinance the mortgage, and any other encumbrances, secured over the R Street property into the applicant's sole name, and shall release and indemnify the respondent in relation to same;
(e)The applicant shall do all acts and things necessary to procure a discharge and/or release of the caveats lodged by S Pty Ltd over the C Street and R Street properties; and
(f)The respondent shall pay, or cause to be paid, the sum of $176,337 to the applicant, with such funds to be paid into the Simonidis Steel Lawyers trust account.
2.That in the event the applicant fails, refuses or neglects to comply with order 1(d) herein and that default does not arise solely from the respondent's default of order 1(b), then within fourteen (14) days of her default, the parties shall do all such acts and things and sign all documents as may required to list the R Street property for sale on the following terms and conditions:
(a)A Real Estate Agent be engaged, as agreed by the parties and failing agreement, as nominated by the chief executive officer of the Real Estate Institute of New South Wales or his nominee;
(b)The property shall be listed for sale by private treaty for a period of three (3) months, unless sold earlier;
(c)The listing price shall be as agreed between the parties in writing after consideration of any recommendation by the agent, and failing agreement, as determined by the chief executive officer of the Real Estate Institute of New South Wales or his/her nominee;
(d)The property shall be sold at such price as is agreed in writing between the parties after consideration of any recommendation by the agent, and failing agreement, the property shall be sold for and the parties shall accept any offer and counter sign any contract presented, with a contract/sale price which is at least 95% of the list price;
(e)Should the property not sell by private treaty within three (3) months from the date it was listed for sale by private treaty (“the listing date”), the property shall be listed for sale by public auction on the following terms and conditions:
(i)The auction shall occur within four (4) months of the listing date;
(ii)The parties shall agree upon the auctioneer and failing agreement, the auctioneer shall be nominated by the agent appointed pursuant to these orders;
(iii)The parties shall execute all documents required by the auctioneer for sale of the property by auction;
(iv)The reserve price shall be as agreed between the parties in writing and failing agreement, as is nominated by the chief executive officer of the Real Estate Institute of New South Wales or his/her nominee;
(v)The parties are to attend the auction (including by telephone) and should the reserve price not be reached at auction, the parties shall enter into negotiations with the highest bidder at auction;
(vi)Unless otherwise agreed between the parties in writing, the sale price shall be the reserve and it shall be sold for any amount in excess of the reserve; and
(vii)If the reserve is not reached, the sale price shall be such amount as is agreed between the parties in writing and failing agreement, any offer received after the auction to buy the property at a price that is at least 90% of the reserve price shall be accepted by the parties.
(f)Unless otherwise agreed between the parties in writing, should the property not sell at auction, then further auctions shall be arranged until it is sold, with the timing of such auctions and reserve price to be as agreed between the parties and failing agreement as is nominated by the chief executive officer of the Real Estate Institute of New South Wales or his/her nominee;
(g)Upon agreement being reached for sale of the property (whether by private treaty or at auction), the parties shall execute the contract of sale and all other documents necessary to complete the sale of the property, including but not limited to all transfer documentation, forthwith upon receipt, and by no later than within three (3) business days of receipt or the date requested by the agent and/or solicitor/conveyancer;
(h)Unless otherwise agreed between the parties in writing, the contract of sale for the property shall provide for completion / settlement of the sale within thirty (30) to ninety (90) days after the date of the contract;
(i)Pending the sale of the property, the parties shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the key available to the agent;
(ii)Allowing inspection of the property at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Ensuring the property including the grounds are in a neat and clean condition at the time of inspection by the agent; and
(v)Signing all necessary documentation upon any such request by the agent;
(j)The proceeds of sale of the property shall be disbursed in the following manner and priority:
(i)To discharge any registered encumbrances secured over the property;
(ii)To meet all reasonable and usual costs of the real estate and auctioneer, including commission;
(iii)To meet all reasonable and usual costs of the solicitors and/or conveyancer appointed to conduct the sale;
(iv)Payment of all rates and usual adjustments of sale; and
(v)To the applicant, the balance.
3.That in the event the respondent fails, refuses or neglects to comply with orders 1(b) and/or 1(f) herein, and that default does not arise solely from the applicant’s default of order 1(d), then within fourteen (14) days of the default, the applicant may elect in writing to have the property transferred to her, and in the event she does so:
(a)The respondent shall do all such acts and things and sign all such documents as may be required to transfer to the applicant at the expense of the applicant all of their right title and interest in the C Street property;
(b)The applicant shall do all acts and things necessary to refinance the mortgage, and any other encumbrances, secured over the C Street property into the applicant's sole name, and shall release and indemnify the respondent in relation to same; and
(c)The applicant shall pay the respondent the amount of $362,530 into such account as nominated by the respondent in writing.
4.That in the event the respondent fails, refuses or neglects to comply with orders 1(b) and/or 1(f) herein, and that default does not arise solely from the applicant's default of order 1(d), and the applicant does not elect to have the property transferred to her pursuant to order 3 herein, then within seven (7) days of the applicant's written election to not have the property transferred to her, the parties shall do all such acts and things and sign all documents as may required to list the C Street property for sale on the following terms and conditions:
(a)A Real Estate Agent be engaged, as agreed by the parties and failing agreement, as nominated by the chief executive officer of the Real Estate Institute of New South Wales or his nominee;
(b)The property shall be listed for sale by private treaty for a period of three (3) months, unless sold earlier;
(c)The listing price shall be as agreed between the parties in writing after consideration of any recommendation by the agent, and failing agreement, as determined by the chief executive officer of the Real Estate Institute of New South Wales or his/her nominee;
(d)The property shall be sold at such price as is agreed in writing between the parties after consideration of any recommendation by the agent, and failing agreement, the property shall be sold for and the parties shall accept any offer and counter sign any contract presented, with a contract/sale price which is at least 95% of the list price;
(e)Should the property not sell by private treaty within three (3) months from the date it was listed for sale by private treaty (“the listing date”), the property shall be listed for sale by public auction on the following terms and conditions:
(i)The auction shall occur within four (4) months of the listing date;
(ii)The parties shall agree upon the auctioneer and failing agreement, the auctioneer shall be nominated by the agent appointed pursuant to these orders;
(iii)The parties shall execute all documents required by the auctioneer for sale of the property by auction;
(iv)The reserve price shall be as agreed between the parties in writing and failing agreement, as is nominated by the chief executive officer of the Real Estate Institute of New South Wales or his/her nominee;
(v)The parties are to attend the auction (including by telephone) and should the reserve price not be reached at auction, the parties shall enter into negotiations with the highest bidder at auction;
(vi)Unless otherwise agreed between the parties in writing, the sale price shall be the reserve and it shall be sold for any amount in excess of the reserve; and
(vii)If the reserve is not reached, the sale price shall be such amount as is agreed between the parties in writing and failing agreement, any offer received after the auction to buy the property at a price that is at least 90% of the reserve price shall be accepted by the parties.
(f)Unless otherwise agreed between the parties in writing, should the property not sell at auction, then further auctions shall be arranged until it is sold, with the timing of such auctions and reserve price to be as agreed between the parties and failing agreement as is nominated by the chief executive officer of the Real Estate Institute of New South Wales or his/her nominee;
(g)Upon agreement being reached for sale of the property (whether by private treaty or at auction), the parties shall execute the contract of sale and all other documents necessary to complete the sale of the property, including but not limited to all transfer documentation, forthwith upon receipt, and by no later than within three (3) business days of receipt or the date requested by the agent and/or solicitor/conveyancer;
(h)Unless otherwise agreed between the parties in writing, the contract of sale for the property shall provide for completion / settlement of the sale within thirty (30) to ninety (90) days after the date of the contract;
(i)Pending the sale of the property, the parties shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making the key available to the agent;
(ii)Allowing inspection of the property at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Ensuring the property including the grounds are in a neat and clean condition at the time of inspection by the agent; and
(v)Signing all necessary documentation upon any such request by the agent;
(j)The proceeds of sale of the property shall be disbursed in the following manner and priority:
(i)To discharge any registered encumbrances secured over the property;
(ii)To meet all reasonable and usual costs of the real estate and auctioneer, including commission;
(iii)To meet all reasonable and usual costs of the solicitors and/or conveyancer appointed to conduct the sale;
(iv)Payment of all rates and usual adjustments of sale; and
(v)To the respondent, the balance.
5.That in the event the applicant is in default of order 1(d) herein solely as a result of the respondent's default of order 1(b) herein, then:
(a)The timeframe required for the applicant to comply with order 1(d) be extended to sixty (60) days after the settlement of the sale of the C Street property pursuant to these orders; and
(b)The holding costs reasonably incurred by the applicant arising from the respondent's default, including but not limited to, additional bank fees and charges, shall be paid by the respondent.
6.That in the event the respondent is in default of orders 1(b) and/or 1(f) herein solely as a result of the applicant's default of order 1(d) herein, then:
(a)The timeframe required for the applicant to comply with order 1(b) be extended to sixty (60) days after the settlement of the sale of the R Street property pursuant to these orders; and
(b)The holding costs reasonably incurred by the respondent arising from the applicant's default, including but not limited to, additional bank fees and charges, shall be paid by the applicant.
7.That in the event the applicant elects to have the C Street property transferred to her pursuant to order 3 herein, but fails, refuses or neglects to comply with orders 3(b) and 3(c) herein, then within seven (7) days of her default, the C Street property shall be listed for sale on same the terms and conditions provisioned in order 4 herein.
8.That the parties have liberty to apply for further consequential and machinery orders in relation to the giving effect of orders 5 and 6 herein on the giving of seven (7) days’ written notice to the other.
9.That pending the transfer and/or settlement of the sale of the C Street and R Street properties, other than in accordance these orders, the parties be restrained by injunction from transferring, selling, gifting, disposing of, encumbering or further encumbering their interest in the said real properties.
10.That the applicant forthwith retain as her absolute property, the title and possession of and the respondent forthwith relinquish and/or transfer all right, title and interest that they may have in and to the following property and financial resources:
(a)The applicant’s bank account(s);
(b)The furniture, chattels, jewellery and motor vehicles in the applicant’s possession;
(c)The applicant’s superannuation entitlements, subject to the super splitting order herein; and
(d)All other proprietary interests of whatsoever nature in the applicant’s current possession and/or control.
11.That the respondent forthwith retain as their absolute property, the title and possession of and the applicant forthwith relinquish and/or transfer all right, title and interest that she may have in and to the following property and financial resources:
(a)The respondent's bank account(s);
(b)The furniture, chattels, jewellery and motor vehicles in the respondent’s possession;
(c)The respondent's superannuation entitlements; and
(d)All other proprietary interests of whatsoever nature in the respondent’s current possession and/or control.
12.That save as otherwise provided for in these orders, the applicant and respondent each be responsible for liabilities incurred in their name including all borrowings, personal loans and credit card facilities and tax debts and shall indemnify and keep indemnified the other against any liability that occur in respect thereof.
13.That the base amount allocated to the respondent out of the interest of the applicant in the T Trust (the “Fund”) is $270,236 (“the base amount”).
14.That pursuant to section 90XT(1)(a) of the Family Law Act 1975 (“the Act”), whenever a splitable payment becomes payable to the applicant from the interest in the T Trust, the respondent shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using the base amount and that there be a corresponding reduction in the entitlement that the applicant would have in the Fund but for these orders.
15.That order 14 herein has effect from the operative time.
16.That the operative time for the purpose of order 14 herein is four (4) business days after the date of service of a sealed copy of the orders upon the Trustee of the Fund.
17.That the Trustee of the Fund, in accordance with the obligations set out under the Act and the Regulations shall do all acts and things and sign all such documents as may be necessary to calculate the entitlement of and make payment to the respondent in accordance with these orders.
18.That the applicant and respondent each do all acts and things necessary, including signing all necessary documents, so as to give full force and effect to the provision of these orders and in the event that either party refuses or neglects to comply with any provision of these orders within fourteen (14) days of a written request to do so by the other party, then a Registrar of the Federal Circuit and Family Court of Australia at Brisbane (Division 1) be hereby appointed, pursuant to section 106A of the Act, to execute all documents in the name of that party and do all acts and things necessary to give validity and operation to these orders.
19.That all outstanding applications be otherwise dismissed.
20.That the respondent pay the applicant’s costs of and incidental to the proceedings.
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