PANAGAKOS & PANAGAKOS
[2013] FamCA 463
•18 June 2013
FAMILY COURT OF AUSTRALIA
| PANAGAKOS & PANAGAKOS | [2013] FamCA 463 |
| FAMILY LAW – PROPERTY – ASSETS AND LIABILITIES – Where there is no formal valuation of the wife’s business – Where add-backs do not exist FAMILY LAW – CONTRIBUTIONS – Where the parties cohabited for about 17 years and where they lived with the husband’s parents rent free for over 13 years – Where the husband’s father made a valuable contribution to the home building project – Where the husband’s contributions were greater than those of the wife – Where the parties’ non-superannuation assets should be divided equally and that the superannuation should be dealt with as to 60 per cent to the husband and 40 per cent to the wife – Where a 5 per cent adjustment to the wife will effect a just and equitable settlement of their property FAMILY LAW – SUPERANNUATION – Whether there should be a superannuation split of the husband’s entitlement in his superannuation scheme – The quantum of that split – Where it is just and equitable that the wife receive 20 per cent of the husband’s entitlement pursuant to s 90MT(1)(b) of the Family Law Act 1975 (Cth) |
| Child Support Assessment Act 1989 (Cth) s 117 Family Law Act 1975 (Cth) ss 75(2), 79, 79A, 90ME, 90MT(1)(b) |
| In the Marriage of Clauson (1995) 18 Fam LR 693 In the Marriage of Coghlan (2004) 33 Fam LR 414 In the Marriage of Ferraro (1992) 16 Fam LR 1 In the Marriage of Hickey (2003) 30 Fam LR 355 In the Marriage of Lenehan (1987) 11 Fam LR 615 In the Marriage of Omacini (2005) 33 Fam LR 134 In the Marriage of Shewring (1987) l2 Fam LR 139 In the Marriage of Zyk (1995) 19 Fam LR 797 Mallett v Mallett (1984) 9 Fam LR 449 Norbis v Norbis (1986) 161 CLR 513 |
| APPLICANT: | Mr Panagakos |
| RESPONDENT: | Ms Panagakos |
| FILE NUMBER: | SYC | 1341 | of | 2009 |
| DATE DELIVERED: | 18 June 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 14, 15 & 16 May 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr P Friedlander |
| SOLICITOR FOR THE APPLICANT: | J Kartsounis & Co |
| COUNSEL FOR THE RESPONDENT: | Mr G Gersbach |
| SOLICITOR FOR THE RESPONDENT: | Clinch Long Letherbarrow Pty Limited |
Orders
Within 30 days of the date of these Orders the wife shall:
(a)discharge all mortgages to National Australia Bank Limited or any other mortgagee which are secured on the property known as and situated at … C Street, Suburb D, being the whole of the land contained in folio identifier … (hereafter “the Suburb D property”);
(b)pay $32,884 into an interest bearing account in the joint names of the parties on trust for E and F Panagakos; and
(c)pay to the husband the sum of $573,072.
Simultaneously with the wife’s compliance with Order 1 the husband shall do all things necessary to transfer all of his right, title and interest in the Suburb D property to the wife.
In the event that the wife does not comply with Order 1, the husband and wife shall forthwith do all things and execute all documents to cause the property to be listed for sale by public auction and the proceeds of sale of the property, after payment of legal fees, agents’ commission and advertising fees, auctioneers’ fees and payments of the outstanding mortgage to the mortgage shall be distributed as follows:
(a)$32,884 shall be paid by the parties into an interest bearing account in their joint names on trust for E and F;
(b)57.5 per cent of the remaining balance to the wife; and
(c)the balance to the husband.
In the event that the parties cannot agree as to the selection of a real estate agent for the sale referred to in Order 3 the parties shall forthwith request the President of the Real Estate Institute of New South Wales to nominate the said real estate agent.
The parties shall fix the reserve price for the property at such figure as the parties shall agree in writing or, where no agreement is reached within 21 days prior to the auction, then the parties shall forthwith request the President of the Real Estate Institute of New South Wales to appoint a valuer to nominate the reserve price at the joint expense of the parties.
Paragraphs 7-12 (inclusive) of these Orders are binding on the Trustee of the B Superannuation Scheme (“the Fund”).
In accordance with Section 90MT(1)(b) of the Family Law Act1975 (Cth) (“the Act”) whenever a splittable payment within the meaning of Section 90ME of the Act becomes payable to the husband from his interest in the Fund the wife is entitled to a specified percentage being 20 per cent of the husband’s entitlement and there is a corresponding reduction in the entitlement that the husband would be entitled to receive but for this Order.
Order 7 has effect from the operative time.
The operative time for the purposes of Order 7 of these Orders is four (4) business days after the date of service of these Orders upon the Trustee of the Fund.
Apart from the above Orders each of the parties is declared to have the sole right, title and interest in all other real and personal property in their possession, custody or control at the date of these Orders and for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank records thereof, insurance policies are deemed to be in the possession of the beneficiary thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or whose future provided the conditions for payment out of such entitlements.
The husband and the wife do all things and sign all documents necessary to achieve implementation of these Orders and in the event that either party should neglect or refuse to sign any documents after seven (7) days of a request being made, the Registrar of the Family Court of Australia shall sign any necessary documents on behalf of the husband or the wife pursuant to s 106A of the Act.
Liberty be granted to either party to relist the matter within 28 days and upon seven (7) days notice to the other party and to the court in relation to the wording of these Orders or for the purpose of seeking further orders or directions as may be necessary to fully implement these Orders.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Panagakos & Panagakos has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1341 of 2009
| Mr Panagakos |
Applicant
And
| Ms Panagakos |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr and Ms Panagakos were married for 18 years. Following the breakdown of their marriage they cannot agree on a settlement of their property. Although the parties are divorced, for convenience I will refer to them as the husband and wife.
Applications
The husband seeks the following orders emailed to my chambers on 13 May 2013:
1. That within one (1) month of the date of these orders the husband and wife shall do all things and execute all documents to cause the property known as [C Street, Suburb D] to be listed for sale by public auction and the proceeds of sale of the property, after payment of legal fees, agents’ commission and advertising fees, auctioneers’ fees and payments of the outstanding mortgage to the mortgage shall be distributed as follows:
(a) 45% (percent) to the wife; and
(b) the balance to the husband.
2. That in the event that the parties cannot agree as to the selection of a real estate agent for the sale referred to in order 1 the parties shall be granted liberty to relist this party upon seven (7) days notice to the other party and to the court within seven (7) days of this order then the President of the Real Estate Institute of New South Wales shall be forthwith requested by the parties to nominate the said real estate agent.
3. That the parties shall list the reserve price for the property at [C Street, Suburb D] for such price as the parties shall agree in writing or, where no agreement is reached within 21 days prior to the auction, then the parties shall be granted liberty to relist this party upon seven (7) days notice to the other party and to the court forthwith request the President of the Real Estate Institute of New South Wales to appoint a valuer to nominate the reserve price at the joint expense of the parties.
4. That the husband and the wife do all things and sign all documents necessary to achieve implementation of these Orders and in the event that either party should neglect or refuse to sign any documents after seven (7) days of a request being made, the Registrar of the Family Court of Australia shall sign any necessary documents on behalf of the husband or the wife pursuant to section 106A of the Family Law Act.
5. That liberty be granted to either party to relist the matter upon seven (7) days’ notice to the other party and to the court for the purpose of seeking further orders or directions as may be necessary to fully implement these orders.
6. That paragraphs 7-12 (inclusive) of these Orders are binding on the Trustee of the [B Superannuation Scheme] (“The Fund”).
7. That the base amount of $247,718.00 be allocated to the wife out of the interest of the husband’s interest in the Fund.
8. That, pursuant to Section 90MT(1)(a) of the Family Law Act 1975 (“The Act”) whenever a splittable payment becomes payable in respect of the husband’s interest in the Fund the wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using a base amount and that there be a corresponding reduction to the entitlement the husband would have had in the [B Superannuation Scheme] but for these orders.
9. That Order 8 has effect from the operative time.
10. The operative time for the purposes of Order 10 (sic) of these Orders is four (4) business days after the date of service of these Orders upon the Trustee of the Fund.
11. That until such time as the superannuation split to the wife pursuant to these orders can be rolled over into a separate account to the wife.
11.1 That husband provide to the wife no less than twenty-eight (28) days’ notice before such time as he elects to retire from and/or take voluntary retirement and/or for any reason accept or become entitled to access in whole or in part his entitlement in the Fund.
11.2 The husband direct and authorise the Trustee of the Fund to communicate with the wife and/or any person authorised by her in writing.
11.2.1 To answer any reasonable enquiries as may be made by her or on her behalf from time to time in relation to her entitlement I the fund; and.
11.2.2 To provide to the wife and/or her authorised representative with a copy of any notice of any application or request by the husband which seeks release of entitlements in the fund insofar as that release may affect the wife’s entitlement in the Fund pursuant to these Orders.
11.3 The husband by himself, his servants and/or agents be and hereby are restrained from doing any act or thing which would prevent the wife, here heirs, executors, administrators or nominees from receiving the benefits in the Fund to which she is entitled pursuant to these Orders.
12.That the wife deliver to the husband all his personal items of clothing, tools and personal property including his electrical goods and furniture, including bed, side table and lawn mower within seven days of this Order.
13.That apart from the above Orders both parties be declared to have the sole right, title and interest in all other real and personal property in their possession, custody or control at the date of these Orders and for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank records thereof, insurance policies are deemed to be in the possession of the beneficiary thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or whose future provided the conditions for payment out of such entitlements.
14.That the wife pay the husband’s costs of this application.
The wife seeks orders set out in her counsel’s Case Outline save that she seeks a division based on 55 per cent to her and 45 per cent to the husband in paragraph 1(b) as follows:
1.That within 90 days of the date of these Orders the Wife:
(a) discharge the mortgage to National Australia Bank Limited which is secured on the property known as and situated at [C Street, Suburb D], being the whole of the land contained in folio identifier … (hereafter ‘the [Suburb D] property’) and
(b) pay to the Husband by way of cash adjustment such amount as will cause the Wife to receive in total of 55% of the net joint asset pool and cause the Husband to receive 45% of the net joint asset pool.
2.That simultaneously with the Wife’s compliance with Order 1 the Husband do all things necessary to transfer all of his right, title and interest in the [Suburb D] property to the Wife.
3.That, as between the Husband and the Wife, the Husband be and is hereby declared the sole owner of the 2007 Subaru … motor vehicle registration number … .
4.That the Wife be and is hereby declared solely entitled to the exclusion of the Husband to the accumulated balance of all her superannuation interests, including but not limited to her interests in [G Superannuation Scheme].
5.That the Husband be and is hereby declared solely entitled to the exclusion of the Wife to the accumulated balance of all his superannuation interests, including but not limited to his interests in his [B Superannuation Scheme].
6.That, as between them and unless otherwise provided in these Orders, the Husband and the Wife shall and are each declared to be the sole owner to the exclusion of the other at law and in equity of all items of furniture and other personal property presently in their respective possession and control; including but not limited to money, jewellery and the proceeds of bank accounts.
7.That, as between the Husband and the Wife, unless otherwise specified in these Orders and without limiting these Orders:
(a) Each party be responsible for their own debts in their own names or in the name of any entity in which they have an interest, including but not limited to credit card debts; and
(b) Each party be solely liable for and indemnify the other against any and all liability encumbering any item of property to which that party is entitled pursuant to these Orders.
8.That the Husband and the Wife each do all acts and things, and sign all documents necessary to give effect to these Orders.
9.That in the event either party refuses or neglects to sign any deed or instrument to give effect to these Orders, the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975 to sign such document on behalf of such party to give effect to the operation of the deed or instrument.
The Hearing
The final hearing was listed in Sydney for three days commencing 14 May 2013. On 16 May 2013 judgment was reserved.
Documents read
The husband relied on the following documents:
Husband’s Affidavit filed 6 May 2013
Husband’s Affidavit filed 19 April 2013
Affidavit of Ms H filed 19 April 2013
Husband’s Financial Statement filed 6 May 2013
Affidavit of Mr J filed on 13 May 2013
Answers to questions by Mr K dated 12 November 2012[1]
[1] Exhibit 1.
The wife relied on the following documents:
Wife’s Affidavit sworn 23 April 2013 and filed 8 May 2013
Affidavit of Mr K sworn 26 April 2013 and filed 2 May 2013
Wife’s Financial Statement sworn and filed 10 May 2013
Short History
The husband was born in 1961 and, as at the date of hearing, he was 52 years of age. The wife was born in 1965 and as at the date of hearing, she was 47 years of age. The parties married in January 1991 and they separated on 24 or 26 December 2007 under the one roof. The parties were divorced with effect from … May 2009. The parties ceased to live under one roof when the husband moved out of the former matrimonial home on 29 April 2011.
Children
There are two children of the relationship:
E who was born in 1993 and as at the date of the hearing was 19 years of age; and
F who was born in 1996 and as at the date of the hearing was 16 years of age.
Background Facts
The husband was born in 1961 and, as at the date of hearing, he was 52 years of age.
The wife was born in 1965 and as at the date of hearing, she was 47 years of age.
In 1981 the husband purchased an investment property at I Street, Suburb L (“the Suburb L property”) for $41,500.
In 1986 the wife and her two sisters were given M Street, Suburb N (“the Suburb N property”). The property was unencumbered at the date of the marriage.
In 1988 the husband purchased an investment property at O Street, Suburb P[2] (“the Suburb P property”) for $80,000.
[2] Throughout the documents the property is variously referred to as being in Suburb P or Suburb Q.
In November 1984 the husband commenced working in the public service.
In January 1991 the parties married and commenced cohabitation in the home of the husband’s parents. The husband’s father promised that the parties could live there for as long as they wanted.
The wife says the parties received $7,000 in wedding gifts. The husband owned the Suburb L property which was then worth $145,000[3] and the Suburb P property which was then worth $165,000 and encumbered as to about $30,000. The husband had at least $50,600 in savings, $47,538 in superannuation and no other liabilities.
[3] Historical valuations of the Suburb N, Suburb L and Suburb P properties were undertaken by a single expert, Mr A and were not the subject of contest.
The wife held a one-third interest in the Suburb N property, a Toyota motor vehicle valued at about $5,000, furniture and effects and $2,000 in liabilities. The Suburb N property was then worth $315,000. The husband contended that she owed $8,000.
In February 1991 the husband paid $25,000 to have a kitchen installed in part of his parents’ home and to make that part self-contained, so the parties could live there. He also paid for paint for that part of the home.
The parties purchased a Mazda motor vehicle for $25,500.
In April 1991 the wife commenced a personal services business, ‘Business R’ in rented premises at S Street, Suburb D (“the S Street property”). The husband paid $5,000 to fit-out the premises.
On 1 February 1992 the parties purchased the S Street property for $170,000. With stamp duty and fees, the purchase cost of $179,450 was funded by a loan secured over the Suburb P and Suburb L properties of $191,000. The husband said that the loan also paid out an existing mortgage on the Suburb P property which he thinks stood at $30,000.
In September 1993 E was born.
In or around 1995 the wife sold her one third interest in the Suburb N property to her sister and her sister’s husband. The wife’s sister and her husband paid the parties $100,000. The husband contends that he read a valuation for the property at that time which put the value of the property at $400,000. The property was then unencumbered. The husband asserts and the wife denies that a further $33,000 is owing to the wife from her sister. The wife’s sister was not called for cross-examination.
In November 1995 the parties purchased C Street, Suburb D (“C Street”) for $340,000. $100,000 came from the proceeds of sale of the Suburb N property and the balance of the purchase price was borrowed from the National Australia Bank (“NAB”) and secured by way of mortgage.
In May 1996 F was born.
In late 1997 the wife commenced running her personal services business from the home of the husband’s parents. One bedroom of the self contained accommodation was given over to that purpose.
On 30 August 2001 the husband sold the Suburb L property for $320,000. At the time of sale it was unencumbered.
In May 2002 renovations commenced at C Street. The parties initially engaged a project manager but dispensed with his services in 2003. The wife thereafter managed the project.
On 14 October 2004 the parties moved out of the husband’s parents’ home after residing there for 14 years and moved into C Street. Thereafter the wife ran her business from that property.
On 24 or 26 December 2007 the parties separated under the same roof.
On 20 August 2009 the husband sold the Suburb P property for $512,000. Capital gains tax was later levied on the husband for a capital gain of $206,218 and was paid on 21 March 2011 in the sum of $99,167.15. The tax was funded as to $75,162.28 from the proceeds of sale and $24,008.87 from the husband’s savings.
On 24 September 2009 the parties sold the S Street property for $450,000.
On 29 April 2011 the wife changed the locks at C Street and the husband moved out of the property. The husband thereafter lived with his parents.
Credit
The Evidence of the Witnesses
The husband was very controlled and careful in the witness box. However his affidavit was carelessly drawn in some aspects and no explanation was given for that fact. He made some concessions against interest, revealing, for example, that he had not consulted with the wife about the disposition of joint funds after separation. Although he was challenged in relation to a great deal of his evidence, he was not revealed to be an unreliable witness. Like the wife he no doubt reflects on past events from his own perspective but in my view, he attempted to give accurate evidence.
The husband’s father gave evidence in the Greek language, and was assisted by an interpreter. He was challenged in relation to a number of matters, albeit not in relation to his evidence that the parties made no financial contribution to the T Street outgoings when they lived there.[4] He conceded that his evidence to the effect that the husband drove his (the husband’s father’s) car to work each day was wrong and that it was only one, two or three days a week and or when it rained. He conceded that contrary to what he set out in his affidavit, he did not do any work on a special ceiling in the C Street property. Thus the husband’s father exaggerated some of his evidence and his affidavit is not entirely accurate. However, he was a generally credible witness and I accept the thrust of his evidence. Indeed the broad facts are common ground. It is also common ground that he attended at the construction site on occasions and provided assistance in relation to the project. It is common ground that he worked on one retaining wall. The dispute is as to whether he built the whole wall or just part of it. Of course where he was not challenged, his evidence stands in any event.
[4] It was put to the husband’s father that he had deposed that the parties made no contributions to utilities. He was asked if his son had ever offered to pay and he said that his son had asked and words to the effect of “I told him ‘no’ and he never paid anything”. He said he never spoke to the wife about the outgoings and never again spoke to his son about them.
The wife falsely swore on at least two occasions[5] that she had read the rules of court in relation to disclosure. The wife said that she did not include on her client cards any reference to what the clients of her personal services business paid. However, she was obliged to accept that she had recorded that information on three client cards put to her in cross-examination. She conceded that those cards, each including some references to what the client had paid, were representative of all of her client cards. The wife made no effort to engage with the demands of the Financial Statement she completed on oath. She omitted any reference to the income of E and F. Although she set out the income from her business she omitted any reference to the outgoings of the business. She omitted those of her abilities for which she does not claim the husband should bear any responsibility. Thus an asserted unquantified[6] debt to a friend is not included in the Statement. She does not even know the total of those liabilities.
[5] Financial Statement and Undertaking of Disclosure.
[6] The wife gave evidence in cross-examination that the debt to her friend was of the order of $5,000 but then attributed more than $5,000 worth of advances to that same friend. She then said that the debt must be more than $5,000.
The fundamental problem with the wife’s evidence is that she does not know much of the financial history of the marriage and she does not maintain even the most rudimentary records in relation to her business. In large part that is not her fault, the parties’ arrangement had the family finances managed by the husband. However, as to what seems to be the main contention in her case, that all matrimonial debts could have been discharged from the proceeds of sale of the Suburb P, Suburb L and Suburb N properties, she made no effort to check the figures. She asserted that the C Street construction cost $700,000 while the husband says it was $1.2 million. Some two years ago the husband provided receipts and invoices to the wife to support his claim and although she flicked through them, she made no effort to verify his claim.
Despite it being pointed out to her, the wife persisted in seeking to minimise the contribution made by the husband through his parents.
The wife is not a reliable witness.
A vexing issue of the case was the fact that each of the parties raised but did not pursue allegations that the other party received unreported income in the past. For example the husband inferred that the wife had a business in design. People known to him came to the house and consulted with the wife about their building project. No subpoena was issued for those people or their records.
It was inferred in the wife’s case that the husband was paid for preparing what turned out to be as many as 30 tax returns each year for friends and family. When I asked during cross-examination if she asserted that he was being paid, the wife said ‘no’. Why then was the issue raised?
The parties know the truth of these matters. In relation to the wife’s personal services business the husband did her tax throughout the marriage. Even if she did not manage the records of that business as he instructed, as she deposed, it beggars belief that he did not know about the income of that business.
It was as if each of the parties thought to blacken the name of the other without causing any collateral damage, such as having the issue referred to the relevant authorities. In any event, it was distracting.
Property Proceedings
The approach in proceedings under Section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79, involving four inter-related steps. First, I make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determinations and identify orders that are just and equitable in all the circumstances of the case.[7]
[7] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370.
There is no mention of steps in s 79 but it is convenient to approach the exercise of discretion in a structured way. The Full Court has supported such an approach.[8]
[8] In the Marriage of Hickey above.
The property of the parties at the date of the hearing
The Court is required to make a finding as to the property of the parties. That involves identifying assets, liabilities and financial resources and their values.
There are circumstances whereby assets can be included in the list for division although they no longer exist. The same logic would apply to the exclusion from the relevant list of liabilities, debts that do exist at the date of the hearing. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
30.To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b)Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c)In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
The parties settled an agreed balance sheet on which all but two items were in dispute. The final version referred to in submissions was as follows:
ASSETS
Ownership Description Wife’s value Husband’s value Joint [C street, Suburb D] $1,700,000 $2,100,000 H NAB Cheque account …31 $2,004.86 $2,004.86 Joint NAB Classic Banking $0 $0 H Shares $22,378 $22,378 W “[Business U]” [personal services] business $6,000 $16,875 H 2007 Subaru … motor vehicle $11,400 $11,400 H 2010 Subaru motor vehicle … $0 $22,000 Joint Household contents $20,000 $20,000 W Monies owed to wife by [Ms V] $0 $33,000 $1,760,303.00 $2,231,257.86
ADDBACKS
Ownership Description Wife’s value Husband’s value H Unexplained transfers by husband out of NAB iSaver account $104,594.69 $0 H Funds diverted and not paid to reduce mortgage loan and extra interest incurred on loan $84,948.26 $0 H Cost of enquiries relating to husband’s superannuation fund $12,420 $0 H Interest incurred due to payment to [Mr BB] $8,010 $0 H Expenses arising from Land and Environment proceedings $9,062.68 $13,492 W Monies paid to wife for motor vehicle $0 $11,000 W Reimbursement for monies paid by husband for property valuation $0 $11,100 W Cost of enquiries relating to husband’s superannuation fund $0 $12,420 W Capital gains tax paid by husband on sale of [Suburb Q] $0 $24,004.87 W Child support wrongly claimed by wife $0 $2,289 W Legal costs paid by husband in relation to joint proceedings commenced by [Suburb W] Council $0 $2,213.75 $219,035.63 $76,519.62
LIABILITIES
Ownership Description Wife’s value Husband’s value Joint Loan secured against [C Street] property account …92 $96,757.32 $96,757.32 Joint Loan secured against [C Street] property account …26 $71,396 $71,396 W Legal fees - estimated $30,000 $0 H Legal fees $0 $0 W HECS debt $26,858 $0 W Loan from wife’s father $56,000 $0 H NAB credit card $12,152.55 $12,152.55 H Loan to [Mr and Ms H] plus interest $0 $72,425 H Money owing to children used by husband from the trust fund established by his father $0 $32,884 $293,163.87 $285,614.87
SUPERANNUATION
Ownership Description Wife’s value Husband’s value H [B Superannuation Scheme] – Defined benefits $800,033 $197,179 W [G Superannuation Scheme] - accumulation $2,200 $2,200 $802,233.00 $199,379.00
As to the disputed issues:
Assets
Former matrimonial home C Street, Suburb D
The home was valued by a single expert at $1,550,000 and there was no challenge to that opinion.
Wife’s business “Business U”
There was no formal valuation evidence in relation to the business. The husband’s counsel conceded that the only value that could be put on the business was the value asserted by the wife at $6,000.
Wife’s 2010 Subaru
There was no formal valuation evidence in relation to the motor vehicle. Without complaint on the part of the husband’s counsel, learned counsel for the wife told me that the parties had adopted a mid point figure of Redbook values for motor vehicles and the 2010 Subaru was to be included at $13,450.
Household contents
There was no formal valuation evidence in relation to the contents. The parties agreed at a value of $20,000. Although there was some discussion during submissions about a division in specie, there was no cross-examination about this issue. There was mention of furniture used by the children but there is no basis on which I can identify the items in question, let alone their value. The wife seeks that personalty remain where it is. The husband seeks that the wife retain the contents and of course, that their value be credited to her.
I will assume that all of the contents are with the wife and that she will retain them.
Monies owed to the wife by her sister Ms V
The husband asserts that the wife is owed $33,000 because she transferred her interest in the Suburb N property for $100,000 and the property was worth $400,000. The wife rejected that evidence.
The husband set out in his affidavit his understanding of how the wife came to have a one third beneficial interest in the Suburb N property despite having a one half legal interest with her brother. There is no dispute that the wife came into the marriage with that one third interest.
The husband’s contention about a $33,000 debt owed to the wife is largely based on his recollection of things she said to him. It is his evidence that in 1994 the wife told him that she had come to an agreement with her sister that the sister would pay her the market value of her share in exchange for the wife transferring her interest to the sister. The husband says that he sighted a valuation of the property indicating that it was then (1994) worth $400,000. He gave evidence of $100,000 being paid to the parties by way of two cheques for $34,000 and $57,000 and $9,000 in nine cash payments. Importantly it was the husband’s evidence that the wife said to him that her sister owed her a further $33,000 that she was going to repay when she could.
In cross-examination the wife rejected the assertion that she told the husband that her sister would pay her the market value of (her interest in) the property. She did not agree that she was aware of a valuation undertaken at that time. The wife was not challenged in cross-examination about there being an outstanding debt from her sister.
The historical valuation by Mr A puts the Suburb N property at $315,000 at the date of marriage. There is no evidence before the court of a valuation undertaken in 1994. The husband did not apply to subpoena the wife’s sister in relation to the alleged loan. There is no evidence before me that the Suburb N property had a value of $400,000 when the wife transferred her interest to her sister.
It falls to the husband to make this case and he has not done so.
Add-backs
Unexplained transfers by husband out of NAB iSaver account
The wife accepted that it was proper for the husband to transfer to each of his niece and nephew, $23,705.50, being their share of the funds resulting from a gift from the husband’s father, held on trust for them and the parties’ children until they attained a certain age. However, she does not accept that the husband properly applied the proceeds of various deductions from the parties’ NAB joint account. The joint balance sheet asserts that she claims $104,594.69 but that would be reduced by the concession referred to above. Thus the claim is for an add-back of $57,183.69 ($104,594.69 – (23,705.50 * 2)).
In paragraphs 112 to 117 of the wife’s affidavit the wife refers to the following withdrawals from the joint account:
Payee
Amount
To Business X & Business Y
$19,130
To his NAB visa account
$10,088.69
To Mr H
$27,965
Total
$57,183.69
As to the repayment of a loan to Mr H, the notes to the balance sheet reveal that the complaint relates to whether there was a loan or not. The husband and his sister have deposed to the husband borrowing $25,000 from his sister in July 2008. A copy of a deed evidencing the loan is attached to the affidavit of Mr H. The term of the loan and interest rate are identified in the agreement. Mr H was not called for cross-examination. There is no basis for an add-back in relation to the payment of $27,965 to Mr H.
As to the payments to Business X and Business Y, the husband’s affidavit apparently addressed an allegation from an earlier version of the balance sheet but he deposed that he paid $9,680 on “21 September 200i” (it appears that should be 2009) to Business X for excavations and $9,450 to Business Y for electrical work. In the current Balance Sheet the wife’s notes record “Payment for alleged renovations to cousins. Payment in 2009. Wife alleges no work had been conducted on the property by the husband’s cousins for some 10 years.” The wife’s complaint seems to be that these were payments made from joint funds without her knowledge or approval, after separation and they were made to relatives of the husband. It is implicit in the wife’s case that the payees were not owed money by the parties for work associated with C Street. I say implicit because she does not give that evidence. The husband was only briefly taken to this in cross-examination. He was asked to confirm that the wife alleged that he paid relatives to disguise payments to himself and the husband agreed. It was put to him that he asserted that the payees were not relatives and again, he agreed. I have no other record of a question or proposition put to the husband.
Add-backs normally do not exist. The Court’s task under s 79 is to change the parties’ interests in assets. In Omacini referred to above, circumstances are described where the court previously allowed the inclusion in a pool of assets for division, of assets that no longer exist. Add-backs are not presumed, nor are they more likely than not. It falls to the party calling for an add-back to establish it to the required standard. Here there is no reason to add back payments made to the entities in question. There is no evidence that the principals of those entities are relatives of the husband. It is not even asserted that those entities did not work on the project or that the parties never had an obligation to pay them for work. I have no record of those propositions being put to the husband in cross-examination.
I will not add back any sum in relation to those disbursements.
As to the payments to the husband’s NAB visa account, the complaint is that the payment was in relation to post separation expenditure by the husband. Just stopping there, that would of itself not be a reason for adding back any amount. To labour the point, the pool of assets for division is not the pool made up of assets and liabilities as they stood on the day of separation. That is why the formal valuations are aimed at the date of the hearing. That is why bank balances and superannuation interests are assessed at the date of the hearing. Life goes on after separation. Income is earned and expenses are paid and except in the type of limited circumstances canvassed in Omacini, income earned after separation and expenses paid after separation are not ignored.
It is therefore not relevant that the unchallenged evidence of the husband at paragraph 62 of his affidavit is that the credit card debt was incurred while the parties were residing under one roof.
There is no basis for adding back this sum.
Funds diverted and not paid to reduce mortgage loan and extra interest incurred on loan
In a way that is not entirely made clear, it is the wife’s case that the balances of the two loans secured over C Street should be at a combined lower balance of $84,948.26. The husband continued, after separation as he had before, in charge of the management of the parties’ finances. Given that the parties were separated it was not appropriate that he do so without keeping the wife informed and where appropriate, securing her informed consent to major transactions and financial decisions. The wife has attempted a “use and application of funds” analysis without the necessary ground work.
There was no proposition put to the husband that he mismanaged the parties’ funds after separation, let alone that he misappropriated some of those funds. When the husband gave the wife source documents in relation to the C Street project she “flicked through them” but did not check them to confirm her suspicions or the husband’s contentions.
There is no basis for adding back this sum.
Wife’s cost of enquiries relating to husband’s superannuation fund
This claim was not pursued on behalf of the wife.
Interest incurred due to payment to Mr BB
After separation, on 10 December 2010 the husband lent $50,000 of joint funds to his nephew, Mr BB. He did not seek or obtain the wife’s agreement, nor did he notify the wife of the advance at that time. The advance was repaid on 13 July 2011. On 19 July 2012 the husband paid that sum into the NAB mortgage account. The wife claims an add-back of $8,010 for the interest paid by the parties on $50,000 of the home loan for the period from 10 December 2010 to 19 July 2012. The husband’s argument is that there should be no add back at all. If there was an add-back it should only relate to the period when Mr BB had the funds because once the money was paid back the situation was as it was before the loan and the husband was prudently managing the parties’ assets and liabilities as he had always done. At the time the money was repaid he kept it available against obligations such at CGT obligations.
In my view there is something in the wife’s complaint. The husband was the trustee of joint funds for himself and the wife. There could be no complaint if he continued managing the parties’ funds for their benefit. He was not free to disburse joint funds for his own purposes. He did not even do the wife the courtesy of telling her.
Once he acted in this unilateral way all of the consequences are his responsibility. He is responsible for the unnecessary interest on $50,000 of the mortgage for the time Mr BB had the money. I do not understand why the husband needed to hold the $50,000 once it was repaid. I do not understand why he could not put it in the mortgage account and redraw it if the CGT obligation arose. It is not for me to struggle with the explanations. It is appropriate that the husband be responsible for the apparent loss.
I accept the calculations at paragraph 119 of the wife’s affidavit. I will add back to the list of assets, $8,010 as an asset already in the hands of the husband.
Expenses arising from Land and Environment proceedings
Each of the parties claims expenses associated with the proceedings about the fence. It is agreed that these expenses cancel each other out.
There is no basis for adding back these sums.
Monies paid to wife for motor vehicle
The husband took the jointly owned Subaru. He paid the wife $11,000 on the basis that that was half the value of the car. The husband seeks that the wife be credited with the $11,000 she was paid. She bought a car with that sum and it was written off. Cars are typically assets that depreciate. There is no reason to depart from the general rule in the circumstances described.
There is no basis for adding back this sum.
Reimbursement for monies paid by husband for property valuation
There is no basis for adding back this sum. Other than considerations under s 117, the parties should equally bear the costs of the valuations. The husband has paid some valuation fees. However, there is no evidence to suggest that he did so out of funds that would not be treated as joint funds.
I will not add this amount back.
Cost of enquiries relating to husband’s superannuation fund
The fees rendered to date were paid by the husband. However, there is no evidence to suggest that he did so out of funds that would not be treated as joint funds. There is no basis for adding back this sum.
Capital gains tax paid by husband on sale of the Suburb P property
The CGT was paid from the proceeds of sale of joint assets. There is no basis for adding back this sum.
Child Support wrongly claimed by wife
There is no basis for adding back this sum. The vehicles for challenging the appropriate financial support for children who fall within the scope of the child support scheme are the vehicles provided for in the child support legislation. The husband has an argument that he should not have been required to pay a backdated amount. The wife says that was appropriate.
The husband says that on physical separation in April 2011, the wife made an application for child support “backdated for three months”. Once a child support Assessment issues, the question of child support is beyond the jurisdiction of a court except in specific circumstances.
This claimed add-back is a child support matter and cannot be addressed here. There will be no add-back.
Legal costs paid by husband in relation to joint proceedings commenced by Suburb W Council
A complaint was made by a neighbour of the parties about the lack of a fence at C Street. Ultimately proceedings were taken by the local council in the NSW Land and Environment Court. The parties were estranged at the time. The wife represented herself in the proceedings. The husband retained a solicitor. The solicitor was able to negotiate a substantial reduction in the fine levied by the council. The wife conceded in cross-examination that she benefited from the work of the solicitor retained by the husband. The fee should be treated as a joint debt. However, there is no evidence to suggest that the husband paid the fees out of funds that would not be treated as joint funds.
There is no basis for adding back this sum.
Legal fees paid by the wife
The wife has paid $45,743.08 in legal fees. Contrary to the obligation, the costs advice letter of 8 May 2013[9] does not specify the source of the funds paid. There is no other evidence of the source of the funds paid. I infer then that the pool of assets would be greater but for that payment. I will add back as an asset in the wife’s hands the amount paid.
Legal fees paid by the husband
[9] Part of Exhibit 6.
The husband has paid $69,785.94 in legal fees. The source of the funds was the moneys advanced by his sister. I told the parties that I would either include the loan as a relevant debt and add back the legal fees or ignore both. There was no complaint from counsel about those propositions. The rationale for adding back paid legal fees is that the pool of assets would have been greater but for the payment and if the responsibility for the fees of these proceedings is to be changed, that should only be done when considering an application under s 117. The better course is to include both, that way the cost of borrowing the funds is brought to account.
I will add back as an asset in the husband’s hands, the amount paid.
As a result of the parties’ agreement and the above findings, I find that the assets are:
Assets Value Joint C Street, Suburb D $1,550,000 H NAB Cheque account …31 $2,004.86 H Shares $22,378 W “Business U” personal services business $6,000 H 2007 Subaru motor vehicle $11,400 W 2010 Subaru motor vehicle … $13,450 W Household contents $20,000 H Interest incurred due to payment to Mr BB $8,010 W Legal fees paid $45,743.08 H Legal fees paid $69,785.94 Total $1,748,771.88
Superannuation
The single expert is Mr K. Although there is some reference in the notes to the balance sheet complaining about the valuation of the husband’s superannuation interest, Mr K’s evidence and opinions were not challenged. Thus, subject to the caveat in relation to the figures being based on the fund as at 30 June 2012, the husband’s interest has a value of $800,033.
The effect of Mr K’s evidence is that the husband’s B Superannuation Scheme interest has two components. There is a funded component made up of the husband’s contributions, the productivity contributions by his employer and interest. The unfunded component is his entitlement, provided he meets the qualifying conditions, to a pension for life. The pension would be calculated on a formula based on his years of membership of the fund and his final average salary. The entitlement is described as unfunded because no contributions were made to the husband’s interest by his employer at any time since he joined the fund. If the husband qualifies for an indexed pension, it will be paid out of Consolidated Revenue. The dollar value placed on that component is in effect an actuarial calculation of the value of that entitlement.
The husband’s superannuation interest can be the subject of a splitting order but the order cannot be isolated to only one component of the husband’s interest. Whether the splitting order was framed as based on a dollar amount or on a percentage, the wife would then in effect become a member of the fund, in her own right. Upon service of the order the trustee would make certain calculations and establish the wife’s fund, called an ‘associate deferred pension entitlement’ and make a consequential reduction to the husband’s entitlement in the fund. When the wife meets the conditions of release, like the husband in relation to his reduced fund, she would become entitled to the benefits of the two components of her fund. However, unlike the husband who could elect to take the funded component as a non-indexed pension, the wife must take that component as a lump sum. As with the husband, in the normal course she must take the unfunded component as an indexed pension for life.
A splitting order using a base amount is likely to be less advantageous to the wife because the base amount would rely on the current valuation ($800,033) which is nearly 11 months out of date (as at 30 June 2012). A percentage order would require the trustee to make the necessary calculations based on a revised and current valuation.
The wife cannot roll her funded component out of the super fund until she meets the conditions of release. In her case, apart from a hardship claim or her suffering a form of incapacity, the wife will only be able to access her fund when she reaches 60 years of age and leaves the full-time work force.
Importantly, that contrasts with the situation of the husband who will have the advantageous option of retiring early, referred to as the 55(11) option in Mr K’s report. Under that option the husband could retire immediately before the statutory qualifying date (at 55 years and 11 months) and receive a different but beneficial treatment of his termination benefits.
Thus the husband could access his superannuation in a little under four years whereas the wife must wait 13 years. There is no evidence that the husband will retire in four years but he has more options than the wife. Because his contributions to his superannuation were greater than those of the wife, his interest will be greater than hers. Therefore he is more likely than her to achieve a self funded retirement, particularly as contributions will continue to the funded part of his entitlement. In relation to the unfunded part, with more years of service and increases in his wage, the resultant pension entitlement will continue to grow. On the other hand the wife is not permitted to contribute to the funded part of her interest and there will be no significant increases in her unfunded entitlement. Of course the wife will be free to make other provision for superannuation and if she obtains work as an employee there will be compulsory contributions from her employer. Being five years younger than the husband, she has the potential for more time in the paid workforce than he, time during which she can build a superannuation interest.
The parties have the following superannuation interests:
Superannuation interest Value H B Superannuation Scheme – Defined benefits $800,033 W G Superannuation Scheme - accumulation $2,200 $802,233.00
Liabilities
Loan from wife’s father
It is the wife’s evidence that she owes her father $56,000. She says that in or about 2008 or 2009, she asked her father for financial help. She deposed that she told him she was running behind on school fees and expenses for the children. According to the wife, her father said that he had sold some property overseas and could lend her “some money”. The wife said that she would repay it as soon as possible. The wife asserts that the total sum she borrowed from her father was applied to credit card debts incurred for E’s school fees and school associated expenses. Annexure DP10 is said to evidence the deposit of funds by the wife’s father and the payment out for credit card debt and school fees. DP10 contains two pages of statement 9 of the wife’s St George Bank Power Saver account for the period 31 October 2008 to 30 January 2009 and I can find no deposit or combination of deposits on that statement that add up to $56,000.
The wife has not given evidence about precisely when the advances were made or of the conversations or writing whereby the amount of the loan was settled. The wife’s father has not given evidence. There is no evidence as to why he has not given evidence.
It was put to the wife that she does not owe her father that sum and she rejected that proposition.
It falls to the wife to establish this liability. She has provided no corroboration. Of the evidence that exists, there was no writing in relation to the debt and the terms of the alleged loan are vague to the point of being non-existent.
If there was evidence of a debt, then in my view, it should be included in the balance sheet. The girls attended a fee paying school. Before a child support assessment existed, the expenses for the children are not matters caught by the child support scheme and the restrictions on the courts’ jurisdiction. If the debt arose because of school fees and expenses, it would be a joint debt. To this day the husband pays, in addition to the periodic sum assessed by the Registrar, one half of F’s school fees.
However, I will not include this asserted debt in the debts going to make up the net pool of assets.
Wife’s HECS debt
The wife has a HECS[10] debt of $26,858 arising from her tertiary studies which commenced in about 2006. There is room for debate about the approach to this but the default position is that the pool of assets is established at the time of the hearing. The wife owes the debt.
[10] HECS refers to the Commonwealth’s Higher Education Contribution Scheme which was the predecessor to the Higher Education Loan Program. I take it that the wife has a HECS – HELP debt.
There is no evidence about this but I understand that the debt does not attract interest but is indexed and is automatically recovered if the debtor’s income[11] reaches a certain level. The only matter of interest here is whether the wife would ever be obliged to repay the debt. The repayment income threshold for 2013-2014 will be $51,309 and if her income is above that figure the repayments start at 4 per cent of income. Greater income attracts greater percentages. Of course the wife could also choose to pay out the loan.
[11] Income is specially calculated for this purpose.
The cases for both parties were run on the basis that the wife will energetically seek out paid employment. In my view, the debt will be repaid.
I will include the debt in the list of relevant liabilities. What might seem like an unfairness about that will be addressed below in s 75(2)(h) or if that is read as literally limited to maintenance cases, in s 75(2)(o).
Husband’s NAB credit card
It is an agreed fact that the husband paid out $12,152.55 on a credit card at some point after separation. The argument is that the expenditure was on joint expenses.
The argument runs that the husband has applied after separation earnings to pay this debt and those earnings should not be seen as joint funds. Again different approaches can be taken to this issue. For my part, it follows from the obligation to assess the assets and liabilities at the date of the hearing and not at the date of separation that the impact of post separation income is not excluded from the calculations. But for the payment of $12,152.55 after separation, the husband would have $12,152.55 more in savings. If the source of payment was a borrowing, then, as I have done with the loan from the husband’s sister, that debt too should be included in the balance sheet. If the source of income was wages after separation then in my view that should be treated as a joint debt being met from joint funds. Again, any unfairness in that approach is accommodated by credit being given for contributions.
I will not include this amount in the balance sheet.
Loan to Mr and Ms H plus interest
As is referred to above, the husband borrowed money from his sister to pay some of his legal fees. The debt stands at $72,425. The husband and his sister depose to the circumstances under which the debt arose. Copies of two deeds evidencing the advances are annexed to the affidavit of Ms H. She was not called for cross-examination. For the reasons set out above in respect of the add-back of paid legal fees, I will include this as a relevant debt.
Money owing to children used by husband from his father’s trust fund
The parties agree that the claimed amount should be held in a trust account in joint names of the parties until the terms of release, set by the husband’s father are met for each of the children in turn.
I will include this asserted debt in the debts going to make up the net pool of assets and will make the agreed order to deal with that debt.
The relevant liabilities are:
Liability Value Joint Loan secured against C Street property account …92 $96,757.32 Joint Loan secured against C Street property account …26 $71,396 W HECS debt $26,858 H Loan from Ms and Mr H plus interest $72,425 J Money owing to children used by husband from the trust fund established by his father[12] $32,884 Total $300,320.32 [12] It is agreed that the claimed amount will be placed in a trust account in the names of the parties, on interest, to await distribution to the parties’ children under the terms of the gift from the husband’s father.
Net Assets
The assets have a value of $2,551,004.88 ($1,748,771.88 + $802,233). The liabilities total $300,320.32. Therefore the net assets of the parties are $2,250,684.56. Of that, $802,233 is in the form of superannuation and $1,448,451.56 is in the form of non-superannuation assets.
Financial Resources
There are no relevant financial resources.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in a merely token way, but in terms of their true worth to the building up of the assets.[13] There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties.[14]
[13] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1.
[14] In the Marriage of Shewring (1987) l2 Fam LR 139.
As to whether the Court should apply the considerations in s 79(4) to the assets globally or asset by asset, the authorities have it the former approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best (see Norbis v Norbis (1986) 161 CLR 513, In the Marriage of Lenehan (1987) 11 Fam LR 615 and In the Marriage of Zyk (1995) 19 Fam LR 797).
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests at [61] that:
… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.
Albeit in different ways the parties argue that the superannuation interests should be treated differently from the other assets. Given the nature of the husband’s interest the orders are necessarily different for superannuation assets and each of the parties seeks different treatment to the superannuation adjustment than that for the other assets. I too will apply s 79(4) separately to superannuation and non-superannuation assets.
Contributions to Non Superannuation assets
Section 79(4)(a) Contributions
Financial contributions, both direct and indirect were made by each of the parties.
At the commencement of the marriage the husband owned:
·The Suburb L property which was then worth $145,000;
·The Suburb P property which was then worth $315,000 and encumbered as to about $30,000;
·At least $50,600 in savings; and
·$47,538 in superannuation interests.
The husband was cross-examined about the savings. The effect of his evidence is:
·he has no written record of his savings at that time;
·he has no independent recollection of his savings at that time;
·he recalls applying his savings to:
othe purchase of a Mazda motor vehicle for $25,500;[15]
othe purchase of a kitchen and other works at his parents’ T Street, Suburb D property for $25,000; and
othe payment of $5,000 to fit out the S Street property premises for the wife’s business.
[15] The husband’s recollection and written evidence put the vehicle at $25,600. The purchase documents were produced and the parties agree that the price was $25,500.
The husband is not certain what savings he had at the commencement of the marriage.
The wife did not otherwise account for those purchases and ultimately conceded the husband’s assessment of $50,600.
I note that on 1 February 1992 the parties purchased the S Street property for $170,000. With stamp duty and fees the purchase cost $179,450 and was funded by a loan secured over the Suburb P and Suburb L properties of $191,000. The husband said that the loan also paid out an existing mortgage on the Suburb P property which he thinks stood at $30,000. If the parties borrowed $191,000 to finance a purchase at $179,450 and to refinance a $30,000 debt, that would leave $18,450 not accounted for. It could be that the parties saved enough in the first year of their marriage to pay the $5,000 fit out costs for the S Street property and to supply the missing $18,450, although an after-tax saving of $23,450 in one year is remarkable. If the parties did not save that amount, it is likely that the husband’s initial savings were greater than $50,600.
At the commencement of the marriage the husband had no liabilities other than the borrowings associated with the properties.
The wife owned:
·a one third interest in the Suburb N property which was then worth $315,000 and which was unencumbered;
·a Toyota motor vehicle later sold for $4,400; and
·furniture and effects.
As to her debts, the wife contends that at the commencement of the marriage she owed $2,000. It is the husband’s opinion that she owed about $8,000. There are no records. The wife was asked about that in cross-examination and confirmed her estimate. I prefer the evidence of the wife.
There were no injections of funds during the marriage, apart from the proceeds of sale of the parties’ properties.
Learned counsel for the wife sought to make a virtue out of necessity. He contended that because the proceeds of the Suburb N property were realised before those of the Suburb L and Suburb P properties, the wife’s property contribution was relatively more valuable. He cannot have that argument. Of the properties only the Suburb N property lost value during the marriage. The wife’s one third interest went from $105,000 to $100,000.
On the other hand the Suburb L property came in at $145,000 and was sold for $320,000. The Suburb P property came in at $315,000, was encumbered as to about $30,000, and was sold for $512,000. Even after the CGT of about $100,000 and sale costs, the parties enjoyed the benefit of a considerable capital gain. Further, unlike the Suburb N property each of the Suburb L and Suburb P properties produced income from rent. Income that was applied to the benefit of the marriage.
The husband had paid employment with the public service throughout the marriage. He received a modest recompense for refereeing football games. Although he prepared tax returns for friends and family he received no payment or other remuneration for doing so.
The wife worked as an employee briefly at the time of the wedding but has mainly worked on her own account since, in a personal services business. The wife has an interest in design but although she provided advice to people in that regard, like the husband and his tax returns, she has never been paid for such work or advice.
The parties lived with the husband’s parents for nearly 14 years, rent free and without the costs of utilities. They had the use of the husband’s father’s car at no cost. Although she professed to be grateful for the accommodation and assistance provided by the husband’s parents the wife does not concede that it was a significant contribution. Lest it be suggested that there was any meaningful compensating benefit to the husband’s parents by this exercise, there is no evidence that the expenditure by the parties of $25,000 to establish the kitchen and self-contained features of the parents’ T Street property provided any such benefit to Mr and Ms Panagakos senior. Even if it did, and counter-intuitively, the husband’s parents’ property increased in value by $25,000 as a result of the work done, apportioned over 13 years that amounts to nearly $37 a week.
The contribution made by the husband’s parents represents a very substantial indirect, financial contribution made on behalf of the husband.
I will refer to other assistance provided by the husband’s mother and father below.
Like the contributions of the wife, the husband’s financial contributions continued after separation. Having the greater income the husband was able to pay significant expenses of the parties after separation, including those associated with the fence proceedings.
The husband made a substantially greater financial contribution than the wife. It was greater in that he brought substantially more assets into the marriage than the wife and was in paid employment throughout the marriage, whereas the wife was not. Albeit of less importance, when they were both working his remuneration was substantially greater than hers. A significant additional indirect contribution was made on the husband’s side of the ledger by his parents.
Section 79(4)(b) contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions.
The husband managed the family finances.
Both of the parties worked on C Street as did the husband’s father. The wife did more work than the husband. Importantly, the wife took over the management of the project in 2003. As was the case with the household finances, the husband managed the financial aspects of the build.
It is the evidence of the husband and his father that the husband’s father built a 26 metre retaining wall at C Street and installed an outside toilet on the block. The wife disputes that, contending that a plumber built the toilet and that she and the husband’s father built the retaining wall. There was no challenge to the evidence of the husband’s father that he attended at the site in the morning to give access to the tradesmen and cleaned up. It is common ground that he contributed to the building of the retaining wall. He asserted that he laid about 40 x 25 kilogram blocks but it is the wife’s evidence, without challenge, that the wall in question contained about 200 blocks. Again without serious challenge, the wife gave evidence about laying out the site, pouring a foundation with the husband’s father, and herself laying the first two courses of blocks. She says that she laid drainage pipe behind those courses and filled the back of the new wall with gravel. It follows that the husband’s father laid some if not all of the higher courses. It also follows that the wife is likely to have laid some further blocks.
Neither the wife nor the husband’s father was an ideal witness and each of them has exaggerated aspects of their evidence.
It is a major aspect of the wife’s case that her contributions to the C Street project warrant special recognition. Indeed, when I asked her counsel about her claim to have made greater contributions than the husband overall, he nominated that aspect of her contributions as the key element. The wife took over the management of the project in 2003, when the parties terminated the project manager. As the parties became estranged in recent years, the husband increasingly left the wife in charge of the project. There are disputes of greater or lesser degree but I accept the thrust of the wife’s evidence in paragraphs 62 – 72 inclusive of her affidavit.
In the countervailing arguments it is difficult to ascertain whether the parties contend that the project was well managed or not. Certainly the husband contends that the property is over-capitalised. The husband says the project has cost over $1.2 million and the wife says it was $700,000. The husband provided documents to the wife so she could confirm his contention and she did not review that material. I prefer the evidence of the husband because he is a more reliable witness and because he managed the finances of the project as he did with the marriage. Therefore he is more likely to know.
Not many development projects could survive this measure of success but at $352,000 for the block and $1,263,432.83 in building costs, the parties might have hoped for a valuation of more than $1,550,000 for the C Street property. Of course contributions do not require a financial dividend.
In 2004 the husband painted ceilings at the C Street property. There is a dispute about the extent of that contribution and about whether the wife undertook most of that work. Suffice it to say that, as with the wife, the husband undertook some physical work associated with the project.
Particularly when the family lived with the husband’s parents, the husband’s mother and father minded and transported the children. They fed the parties and their children once a week. Again there was grudging acknowledgment of these contributions on the part of the wife. As I have recorded, the husband’s father was obliged to concede that he had exaggerated some of his evidence. Nevertheless, he was a more reliable reporter of history than the wife and I accept the thrust of his evidence. Section 79(4)(c) does not accommodate contributions to the family by persons other than the parties. In my view this was another important contribution made on behalf of the husband and should be recognised. It can be seen as a non-financial contribution made on behalf of the husband. If not, it could have a home in s 75(2)(o). I will record the contribution here.
The wife, the husband and the husband’s father made non-financial contributions. It is likely that the wife made a greater non-financial contribution than the husband but the role of the husband’s father more than balanced that difference.
Section 79(4)(c) contributions
This provision deals with contributions to the family including contributions in the form of homemaker contributions and contributions to children of the marriage.
The husband mainly worked at Suburb W and was at those times only five minutes away from home. His hours of work had some flexibility. He was available for transporting the children to and from school and other events. The husband asserts that on occasions he delivered or dropped of at school but more commonly, he did so at the railway when the girls travelled to and from their high school at Suburb AA.
The parties’ arrangement had the wife more immediately available for the children than the husband. Her work was even closer to their homes than that of the husband, and for many years, she worked from home. The issue is contentious but in my view the wife performed most of the parenting tasks.
That is not to say that the husband was not involved. While his parents cannot be credited with parent and homemaker contributions, they relieved the parties of the need to make those contributions on occasions.
The wife made the greater parent and homemaker contribution.
Superannuation assets
Section 79(4)(a) Contributions
The only direct financial contributions to superannuation were made by each party and or their employers to their respective interests.
The wife’s interest is not substantial.
The husband’s superannuation interest stood at $47,538 as at the date of the marriage. As is explained by the expert Mr K, a component of the husband’s retirement benefit, the indexed pension, is not a function of contributions. In fact no contributions are made to that component. It is a benefit, if the husband qualifies by meeting the terms of the fund, funded from consolidated revenue and quantified by reference to the husband’s years of membership of the fund and his final salary. Thus the interest is more than is usually the case, an incident of the husband’s employment.
Section 79(4)(b) contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions. There is no evidence about contributions of this type.
Section 79(4)(c) contributions
This provision deals with contributions to the family and not to a specific asset. The findings above apply equally to superannuation. The wife’s role no doubt made it easier for the husband to retain full-time employment throughout the marriage. The wife took time off after the birth of each child and had part-time employment throughout the marriage. With some assistance from the husband’s parents, the wife allowed the husband to focus on his work.
Conclusion on Contributions
Each of the parties contends that they made the greater contribution to the assets. The husband contends that he made a 65 per cent contribution to superannuation and 55 per cent to the other assets. It is the wife’s case that her contributions overall were 55 per cent compared to 45 per cent by the husband.
As to the non-superannuation assets, the husband conceded in cross-examination that between her business, her care of the children, and her management of the C Street project, the wife was fully engaged. No reciprocal concession was made by the wife. The wife would have it that the husband provided very little help with the children and performed only some chores around the house and mainly outside the property and played a minor role in relation to the C Street project.
It is difficult to do much with this dispute. It does not help that the wife is not a credible witness. In the end I must rely on the broad facts.
The husband made a greater financial contribution to the marriage. The non-financial contributions were equal, if not favouring the husband. The wife made the greater contribution as parent and homemaker.
The assessment of contributions is far from an exact science. The Court has been warned off the concept of special contributions, particularly where they are simply a reflection of the time spent in one activity or another. That addresses what I understand was to be the claim on behalf of the wife.
In many ways the parties’ contributions continued after separation much as they had before, with the wife as the primary care giver and the husband providing the main financial support.
The husband did take time away from the family for non-remunerative pursuits. He played and refereed football. Throughout the marriage and since he prepared tax returns, free of charge for friends and family. Over recent years that involved the returns of between 24 and 30 individuals and in respect of 4 of them, their associated businesses. That said, those individuals included the wife’s two sisters, one sister’s husband and his business. I presume that the wife does not resent the diversion of family resources to assist members of her family. The wife too provided free advice, in her case in relation to design and building projects.
I find that the contributions of the husband and on his behalf exceeded those of the wife. The husband puts the difference at 55 per cent by him and on his behalf compared to 45 per cent by the wife. In my view that would be a proper finding.
As to superannuation, in my view the husband is again, close to the mark in relation to the contributions. These are not mathematical calculations but the parties were together for about 17 of the 28 years of his contributory service. There is not the opportunity for non-financial contributions to superannuation. The husband’s interest was largely an incident of his employment. A proper apportionment of contribution has the husband making about twice the contribution of the wife. The wife has her own modest fund. I find that the contributions to superannuation were made in the proportions 65 per cent by the husband and 35 per cent by the wife.
The other matters in Section 79
Once contributions have been assessed, the other factors in s 79(4) need to be considered. They are:
Section 79(4)(d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties.
Since the late 1990’s the wife has worked from home. That means that she has been spared the costs of renting or acquiring separate premises from which to conduct her personal services business. Unless she works as an employee she will have the need of some space to do the work of her projected career in design. Perhaps the space demands of that field might be less extensive than for her current business. In any event I accept that the orders made in these proceedings could have an indirect effect on the wife’s business. It would no doubt be convenient for the wife to retain the C Street property but that consideration would not bridge any significant gap between the wife’s overall entitlement and a division aimed at maintaining the wife in that property.
Otherwise nothing comes to attention under this provision.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in s 75(2) would seem to be paragraphs (a), (b), (c), (d), (h), (j), (m) & (na).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the parties. The wife and husband are 47 and 52 years of age, respectively. The wife has been diagnosed with an auto-immune condition for which she has been prescribed Tertroxin. There is no significant evidence about the health of the husband.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The wife’s Financial Statement was badly completed and the problems were not all corrected in the witness box. The wife deposed that her income is $1,164 per week made up of her income from her personal services business at the rate of $846 per week, child support at the rate of $284 per week and $34 by way of family tax benefit. She deposed that there are no other income earners in her household.
It transpired that the wife has no records from which her income can be accurately divined. In common parlance, she lives out of the till. The wife said something like - she calculates her income by paying the expenses of the business from the takings and after some living expenses, the amount left over, plus the business expenses represents the net business income. She gives no receipts for payments; only invoices one client; does not formally bank the takings, save that she pays some of the takings off her credit card; and the invoiced client pays by direct deposit. She maintains no cash book, nor any other record of what she is paid except on the client cards she sometimes records the charge for the treatment in question. That has been her practice since she left the Suburb D shop in 1996 and started to work from home.
No harm is done; the asserted income figure is irrelevant as it is not balanced in the document by the business expenses. The wife said she did not realise that the expenses were not in the Statement.
It transpired that the wife neglected to include in the Statement, the fact and the amount of the income earned by each of the parties’ children. E earns about $150 per week made up of football refereeing; working one day a week at her old school – School CC; and part time work at a store and a take away food business. F too works at the food business and earns about $60 per week.
The husband contends that the wife currently has a business as a designer. There is no probative evidence to that effect. The husband has a copy of an invoice for a business called “Business DD” which has an obvious similarity to the name of the wife’s personal services business. It is the wife’s evidence that the invoice is a mock-up prepared for her university course. I accept that evidence. The husband knows and spoke to people he says, engaged the wife in that capacity. The husband did not call those persons to give evidence.
According to her Financial Statement and without the business expenses, the wife’s expenses are:
| Expense | Amount | |||
| Income tax – subject to verification by an accountant | $155.00 | |||
| Rates and unit levies | $72.00 | |||
| Home building and contents insurance - NRMA | $27.00 | |||
| Health Insurance – Medibank Private | $124.00 | |||
| Motor vehicle insurance - GIO | $25.00 | |||
| Motor vehicle registration – Subaru [2010] – … | $8.00 | |||
| Other expenses. | $948.00 | |||
| Type of expense | Total | Wife | Children | |
| Food | $310 | $100 | $210 | |
| Household supplies | $8 | $8 | $0 | |
| Household repairs | $8 | $8 | $0 | |
| Gas | $26 | $26 | $0 | |
| Electricity | $43 | $43 | $0 | |
| Telephone | $36 | $20 | $16 | |
| Motor vehicle – petrol | $50 | $50 | $0 | |
| Motor vehicle - maintenance | $21 | $21 | $0 | |
| Fares car parking | $8 | $8 | $0 | |
| Clothing and shoes | $49 | $10 | $39 | |
| Children’s activities | $38 | $0 | $38 | |
| Child minding | $0 | $0 | $0 | |
| Medical dental and optical | $6 | $3 | $3 | |
| Entertainment & hobbies | $8 | $8 | $0 | |
| Holidays | $0 | $0 | $0 | |
| Education expenses | $264 | $8 | $256 | |
| Chemist pharmaceuticals | $4 | $2 | $2 | |
| Cleaning the pool | $7 | $7 | $0 | |
| Books and magazines | $18 | $6 | $12 | |
| Gifts | $6 | $3 | $3 | |
| Hairdressing, toiletries | $7 | $3 | $4 | |
| Internet | $12 | $6 | $6 | |
| Foxtel | $19 | $8 | $11 | |
| Sub-total | $948.00 | $348.00 | $600.00 | |
| Total[16] | $1359.00 | |||
[16] The wife’s Financial Statement puts the total of her expenses at $1,196.
The wife was not challenged about her expenses.
As to her earning capacity, the wife has less than 12 months to go of a design degree course through university.
The wife’s medical condition has not affected her earning capacity.
It was put to the wife that indicative income figures suggest that she might aspire to an income of the order of $970 per week as a designer. She seemed to accept that such a rate of income would be achievable by her, after she attained a job and had some experience. After eight years of study the wife is keen to work in that field although she intends to continue with her personal services business. On that evidence there is probably potential for the wife to increase her income when she completes her course, after securing a job and gaining experience. It must be said, however, that there is no indication that she could aspire to an income of the order of that of the husband.
The husband receives $2,055.71 per week made up of his salary as an officer of the public service at $2,044.66 per week and dividends from shares at $11.05 per week. He lives with his parents who are retired and each has an income of $276.00 per week. The husband no longer lives in the self-contained accommodation at the T Street property which is now allocated to other family members. He sleeps in the living room or spare room. The husband benefits from food purchased by his father at $10.00 per week.
The husband deposed to the following expenses:
| Expense | Amount |
| Income tax | $556.00 |
| Superannuation contributions – [B Superannuation Scheme] | $104.00 |
| Rates and unit levies | $10.00 |
| Motor vehicle insurance – NRMA | $17.00 |
| Motor vehicle registration – Subaru – … | $6.21 |
| Visa card repayments - NAB | $650.00 |
| MasterCard repayments – Coles | $260.00 |
| Child Support | $284.00 |
| All other expenditure | $660 |
| Total | $2547.21 |
The husband clearly pays living expenses by credit card and that would explain him making greater credit card repayments than the required minimum rate.
Each year the husband prepares income tax returns for between 24 and 30 people. In the case of four or so of those people, the husband also prepares business returns for them. He receives no payment or recompense for that work. Despite this, it was not suggested that the husband is not exercising his earning capacity.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
F is 16 years of age and attends School CC. She and her adult sister, E, live with the wife and spend six hours with the husband each week, made up of some time on the weekend and some on Tuesday afternoons.
The husband estimates that he has left work early to collect F from the railway on about 12 occasions since the parties separated in 2011.
The main parenting role is with the wife. It needs to be said that F is at an age where the parenting demand, albeit significant, does not involve as close supervision as it would for a younger child.
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the evidence in relation to the parties’ expenses.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia, and the rate of any such pension, allowance or benefit being paid to either party;
I have referred to the superannuation interests above.
The wife is in receipt of an income tested benefit, namely a Family Benefit.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
It is difficult to assess the standard of living enjoyed by the parties. The children have each had a private, secondary education. The C Street property sounds like a very comfortable home. The parties enjoyed some overseas travel in the short period before children.
There is no obligation established by the legislation for the Court to seek to preserve the standard of living enjoyed during the marriage, for either party. Nor is that standard necessarily something beyond which the parties should not aspire.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
The wife is currently studying a degree course in design which she is due to complete in 2014. The studies call for a commitment of time to attend university and to complete work at home.
The wife would like to move into that field albeit, at least at this stage, not at the entire expense of her current business.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
This is not a relevant matter.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
By the fact of the wife’s HECS-HELP debt being included in the balance sheet, the husband has probably contributed to the wife’s earning capacity.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
There is no significant evidence about this. To the extent that the wife’s career aspirations might have been delayed or impacted by her need to maintain part-time work, the marriage has allowed her some time and support for study. I have already referred to the treatment of the HECS-HELP loan.
(l) the need to protect a party who wishes to continue that party’s role as a parent;
Given F’s age this is not an important factor.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
I have referred to what there is of that evidence in relation to the girls and the husband’s parents.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
The current child support assessment has the husband paying $284 per week. He also pays half of F’s school fees.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
The wife has had the use of the main physical asset of the parties, the C Street property since April 2011, to the exclusion of the husband. Whether the lounge room or a spare room in his parents’ house, the husband has not lived as comfortably as the wife since he was excluded from the home.
Otherwise nothing comes to attention here.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
There need be no reference to earlier orders made under the Family Law Act1975 (Cth).
Section 79(4)(g)
As is referred to above, there is a child support assessment.
Conclusion
The wife seeks a 5 per cent adjustment in her favour, to bring the overall division, on her case, to 60 per cent in her favour. The husband argues that there should be no adjustment.
The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
oThe wife works from home and that will have an impact on her need for housing;
oDespite her failure to disclose aspects of her financial circumstances, it is likely that the husband’s income and earning capacity are greater than those of the wife. The husband continues to have the benefit of his parents’ accommodation;
oThe main responsibility for F will continue with the wife;
oAlbeit she has less than 12 months to go, the wife is still studying;
oThe wife is five years younger than the husband;
oThe wife has had the use of the main physical asset of the parties since April 2011, to the exclusion of the husband;
oThe husband contributed to the wife’s upcoming qualification;
There are factors favouring each of the parties but in my view these matters support an adjustment in favour of the wife.
In my view the proper adjustment is 5 per cent. With the net assets at $2,250,648.56, expressed as a proportion of that figure 5 per cent represents about $112,532. An adjustment at that level would create a differential between the parties of twice that sum. In relation to the non-superannuation assets, the parties have agreed that $32,884 represents trust moneys held for the benefit of the children and should be invested in an account for the girls.
In the context of the contribution findings above, the adjustment proposed would mean that the non-superannuation assets (save for the moneys held on trust) should be divided equally and that the superannuation should be dealt with as to 60 per cent to the husband and 40 per cent to the wife.
Just and Equitable
The assets have a value of $2,551,004.88 ($1,748,771.88 + $802,233). The liabilities total $300,320.32. Therefore the net assets of the parties are $2,250,684.56. Of that, $802,233 is in the form of superannuation and $1,448,451.56 is in the form of non-superannuation assets.
An equal division would have the net non-superannuation assets applied as follows:
Net non-superannuation assets
$1,448,451.56
Distribution to the husband
$724,225.78
Distribution to the wife
$724,225.78
Similarly, a division in the proportions 60 per cent to the husband and 40 per cent to the wife would have the net superannuation interests addressed as follows:
Superannuation assets
$802,233
60% distribution to the husband
$424,670
40% distribution to the wife
$377,563
Albeit he argued for a different percentage adjustment, the husband seeks orders that would give effect to those distributions.
The wife does not seek a superannuation splitting order. She would like to retain C Street and to buy the husband out. Clearly that would be easier if the wife receives all of her property settlement in the form of non-superannuation assets.
As is set out earlier in these reasons:
o the husband’s superannuation interest can be the subject of a splitting order;
o if a splitting order is made, when the wife meets the conditions of release, she would become entitled to the benefits of the two components of her fund but unlike the husband who could elect to take the funded component as a non-indexed pension, the wife must take that component as a lump sum. As with the husband, in the normal course she must take the unfunded component as an indexed pension for life;
o the wife cannot roll her funded component out of B Superannuation Scheme until she meets the conditions of release;
o apart from a hardship claim or suffering a form of incapacity, the wife will be able to access her fund when she reaches 60 years of age and leaves the full-time work force, whereas the husband could access his benefit if he retired at 56 years of age and he will have the advantageous option of retiring early, referred to as the 54(11) or 55(11) option in Mr K’s report;
o therefore the husband could access his superannuation in a couple of years whereas the wife must wait 13 years;
o the husband will have a significantly greater superannuation interest than the wife and it is more likely that his interest will grow;
o like the husband, the wife could make additional provision for superannuation and if she obtains work as an employee, the wife too might benefit from compulsory contributions from her employer;
o being 5 years younger than the husband, the wife has the potential for more time in the paid workforce than he, time during which she can build a superannuation interest.
As things stand, superannuation will not be of as much benefit to the wife as it will to the husband.
Each of the parties has the need for accommodation. I accept, that although the husband does not currently have F staying overnight with him, that is likely to change when he has suitable accommodation. That said, it is likely that F will spend more time with the wife than with the husband. Of the parties, the wife will have greater need for accommodation because she runs a business from her home and has done so for 17 years. Of the parties, the husband is likely to be a better prospect for borrowing money. Although the wife has more potential years in the workforce, I imagine that the wife’s record of income will be less attractive to a financier than the husband’s long standing, well-paid and secure employment history and prospects. Of course if either of the parties has access to funds from family members then those considerations may well be irrelevant. There is no evidence of the likelihood or quantum of funds available to the parties from family.
The legislative provisions for making orders about superannuation that would bind a third party trustee, signal the legislative intent that those mechanisms should not be ignored. A splitting order ensures that the differences in the character of superannuation and non-superannuation interests, both advantageous and disadvantageous (and with changes in government policy and general economic circumstances, unpredictably so) are shared equitably between the parties.
In my view it would be appropriate for there to be a superannuation splitting order in favour of the wife in relation to the husband’s interests but not in the full proportions that would reflect in superannuation form, a just and equitable apportionment of the superannuation interests. I will reflect one half of the wife’s s 79 entitlement to a superannuation split in that form and will make a discounted adjustment for the balance of that entitlement out of non-superannuation assets.
In terms of the agreed valuations, the wife is to receive $320,893.20 in the form of superannuation interests. She already has $2,200 and therefore the adjustment in relation to the husband’s fund would be $318,693.20. For the reasons indicated I will make a splitting order based on a percentage aimed at achieving half that adjustment or $159,346.60. As to the splitting order. For the reasons identified by Mr K a percentage approach is preferable – s 90MT(1)(b)(i). Expressed as a proportion of the husband’s fund $159,346.60 is 19.917 per cent which I will round up to 20 per cent. That will be the percentage for the purposes of s 90MT(1)(b)(i).
That will leave $159,346.60 worth of superannuation interests to be adjusted in the wife’s favour, out of the non-superannuation assets. For the wife’s part she will be getting today what she would in the normal course have had to wait 13 years for. Even then, as to most of that value, it would be received in the form of a small increment to a modest pension. In 13 years, $100,000 at 4 per cent would realise over $155,000. In my view a proper discount would be achieved if the adjusting amount in non-superannuation assets is marginally more than that, at $110,000.
Thus, in addition to $724,225.78 in non-superannuation assets the wife should receive $110,000 for an adjustment for superannuation, making $834,225.78. The husband will receive $724,225.78 in non-superannuation assets minus $110,000, making $614,225.78.
Of the non-superannuation assets and liabilities, the wife has, or has had the benefit of:
Assets Value “Business U” personal services business $6,000 2010 Subaru motor vehicle $13,450 Household contents $20,000 Legal fees paid $45,743.08 HECS debt -$26,858 Total $58,335.08
In order to bring her to $834,225.78, the wife should receive a further $775,890.70 from the remaining joint assets, including C Street.
The wife will also receive the benefit of a splitting order based on 20 per cent of the husband’s fund. She will retain her superannuation and her liability for legal fees for these proceedings and any other liabilities not included in the joint balance sheet.
The husband has or has had the benefit of the following assets and liabilities:
Assets Value NAB Cheque account …31 $2,004.86 Shares $22,378 2007 Subaru motor vehicle $11,400 Interest incurred due to payment to Mr BB $8,010 Legal fees paid $69,785.94 Loan from Mr and Ms H plus interest -$72,425 Total $41,153.80
In order to bring him to $614,225.78, the husband should receive a further $573,071.98 from the remaining joint assets, including C Street.
The husband will retain his superannuation, subject to a splitting order in favour of the wife, based on 20 per cent of the value of his fund. He will retain the liability for legal fees for these proceedings and any other liabilities not included in the joint balance sheet.
In my view those distributions and orders will represent a just and equitable settlement of property.
The wife seeks the opportunity to retain C Street and so I will express the orders in a way that gives her a brief opportunity to do that. In that event she will need to discharge the mortgages, pay the $32,884 into a joint account for the girls and pay the husband about $573,071.98, which I will round up to $573,072. It seems unlikely that the wife will be able to raise those funds.
If C Street must be sold the orders should be expressed in percentage terms to allow for costs of sale and any profit or loss arising from the sale price being different to the valuation.
The value of C Street is expressed as follows:
C Street Value Joint C Street, Suburb D $1,550,000 Joint Loan secured against C Street property account …92 -$96,757.32 Joint Loan secured against C Street property account …26 -$71,396 Total $1,381,846.68
If the property is sold, after discharge of the mortgages and costs of sale, $32,884 will be paid into an account for the children and the balance will be divided between the parties. Ignoring sale costs and relying on current valuations, the amount to be divided between the parties would be $1,348,962.68 ($1,381,846.68 - $32,884). That sum expressed in the ratio $775,890.70:$573,071.98 means that the wife should receive about 57.5 per cent and the husband about 42.5 per cent of the net proceeds.
The calculations and orders are complicated and therefore I will allow the parties an opportunity to bring the matter back before me within 28 days in relation to the wording of the orders.
Conclusion under Section 79
Significant contributions were made by each of the parties and on their behalf. They acquired assets and supported each other and provided for their daughters, in the course of about 17 years of cohabitation and since the parties shared the work of the marriage in different ways. The husband’s contributions were greater than those of the wife. More so in respect of superannuation assets than non-superannuation assets. A five per cent adjustment to the wife pursuant paragraphs s 79(4) (d), (e), (f) & (g) will effect a just and equitable settlement of their property.
I certify that the preceding two hundred and forty-six (246) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 18 June 2013.
Associate:
Date: 18 June 2013
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Remedies
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Jurisdiction
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Procedural Fairness
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