Parkinson and Parkinson
[2010] FMCAfam 1016
•17 September 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PARKINSON & PARKINSON | [2010] FMCAfam 1016 |
| FAMILY LAW – Property – short marriage – add backs – contributions. |
| Family Law Act 1975, ss.75(2) & 79 |
| Hickey & Hickey & Attorney for Commonwealth of Australia (Intervenor) [2003] FLC 93-143 Quinn (1979) FLC 90-677 Kerr EA99 of 1994 (unreported) Rosati (1998) FLC 92-804 Farnell & Farnell (1996) FLC 92-681 Re NHC and RCH (2004) FLC 93-204 Townsend & Townsend (1995) FLC 92-569 AJO v GRO (2005) FLC 93-218 Stay & Stay (1997) FLC 92-751 Weir& Weir (1993) 110 FLR 403 C (2005) FLC 93-220 Doherty (2006) FLC 93-256 Bondar-Twersky & Twersky (2009) FMCAfam 163 Dodge & Meldrum (2010) FMCAfam 119 |
| Applicant: | MS PARKINSON |
| Respondent: | MR PARKINSON |
| File Number: | ADC 3822 of 2008 |
| Judgment of: | Cole FM |
| Hearing dates: | 3 & 4 May; 17 June 2010 |
| Date of Last Submission: | 19 August 2010 |
| Delivered at: | Adelaide |
| Delivered on: | 17 September 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms T Lewis |
| Solicitors for the Applicant: | Barnes Brinsley Shaw Lawyers |
| Counsel for the Respondent: | Ms M Dickson |
| Solicitors for the Respondent: | David Burrell and Co. |
ORDERS
That as and by way of property settlement:
The husband or cause to be paid to the wife within 30 days the sum of $270,766.
The husband have as his sole property free from any claim right or entitlement of the wife the following:-
(a)any motor vehicle presently in his possession;
(b)any monies standing to his credit at any financial institution;
(c)all items of furniture and articles of domestic use or ornament presently in his possession;
(d)all his estate and interest both at law and in equity which he has now or may hereafter have in any superannuation scheme, retirement benefit, early retirement redundancy benefit or rollover fund;
(e)all his estate and interest both at law and in equity which he has now or may hereafter have in any life assurance, insurance or endowment insurance policy;
(f)All other items of property presently in his possession of whatsoever nature and from whatsoever source.
The wife have as her sole property free of any claim right or entitlement of the husband the following:-
(a)any motor vehicle presently in her possession;
(b)any monies standing to her credit in any financial institutions;
(c)all items of furniture and articles of domestic use or ornament presently in her possession;
(d)all her estate and interest both at law and in equity which she has now or may hereafter have in any superannuation scheme, retirement benefit, early retirement redundancy benefit or rollover fund;
(e)all her estate and interest both at law and in equity which she has now or may hereafter have in any life assurance, insurance or endowment insurance policy;
(f)All other items of property presently in her possession of whatsoever nature and from whatsoever source, and the Christening dress for [X].
That the husband indemnify the wife and keep her forever indemnified with respect to all debts and liabilities of the husband including personal loan credit card debts and the debts to the Australian Taxation Office in the sole name of the husband or severally with others.
That the wife indemnify the husband and keep him forever indemnified with respect to all debts and liabilities of the wife including personal loan and credit card debts in the sole name of the wife or severally with others.
That each party do all such acts and sign all such documents as shall be necessary to give full effect to the terms of this order.
The applications of the parties be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Parkinson & Parkinson is approved pursuant to s.121(9)(g) of the Family law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 3822 of 2008
| MS PARKINSON |
Applicant
And
| MR PARKINSON |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant and the respondent were in a relationship for approximately two and-a-half years commencing cohabitation in or about January 2006 and separating [in] 2008.
There is one child of their relationship, namely [X] born [in] 2007. The parties to their credit agreed to final orders in respect of [X].
The parties cannot, however, agree on how the matrimonial assets should be divided. The wife submits she should receive 35 per cent of the net value of the asset pool.
The husband submits to provide the wife with 15 per cent of the net value of the asset pool.
The wife relies on:
a)her Amended Application filed 30 March 2009;
b)her Affidavit filed 20 April 2009;
c)her Financial Statement filed 20 April 2010;
d)the Affidavit of her father, Mr T, filed 10 April 2010.
The wife and Mr T gave evidence and were subjected to cross-examination.
The husband seeks to rely on:
a)his Amended Response filed 11 June 2009;
b)his Trial Affidavit filed 13 April 2010;
c)his Financial Statement filed 13 April 2010.
The husband gave evidence and was subjected to cross-examination.
Background
The husband is forty-one and the wife thirty years of age this year. They each have a child from a prior relationship. There is one child of this relationship namely [X] who was born [in] 2007.
The parties commenced cohabitating in January 2006, married [in] 2006 and separated [in] 2008.
These proceedings were commenced in respect of children’s and financial issues.
Final orders were made in respect of [X] on 24 August 2009. Pursuant to those orders [X] lives with her mother and spends time with her father. The parties have agreed to review those orders once [X] is aged five and a half years (by which time [X] will be living with the husband each alternate weekend (Friday to Sunday) and every other Wednesday night.
The parties divorced [in] 2010.
This matter was listed for trial in March 2010 however was subsequently vacated. The hearing proceeded on 3 and 4 May 2010. Counsel provided written submissions and were to address those submissions in June 2010. By agreement, the matter was adjourned to be concluded on 9 August 2010.
The Law
In determining what orders should be made for the division of the matrimonial assets I am required to take an approach that involves four inter-related steps, namely to:
a)identify and value the property, liabilities and financial resources of the parties at the date of the hearing (“the asset pool”);
b)identify and assess the contributions of the parties within the meaning of s.79(4)(a), (b) and (c) of the Family Law Act 1975 (“the Act”), and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties (“the contributions”);
c)identify and assess the relevant matters referred to in s.79(4)(d), (e), (f) and (g), including the matters referred to in s.75(2) of the Act so far as they are relevant and determine the adjustment (if any) that should be made to the contributions-based entitlements the parties established at step two (“financial resources and needs”); and
d)consider the effect of these findings and determination and resolve what order is just and equitable in all the circumstances of the case (see Hickey & Hickey & Attorney for Commonwealth of Australia (Intervenor) [2003] FLC 93-143).
I will now consider these matters.
Financial structures
The parties acknowledge that the husband has a financial structure centred around the [Parkinson] Family Trust.
The Trustee of the [Parkinson] Family Trust is [Parkinson] Nominees Pty Ltd. The husband is the sole director and shareholder.
The appointor of the [Parkinson] Family Trust is the husband.
The Trust owns:
a)a one-third interest in [T Company] (in partnership with Mr D & Ms L Family Trust and Mr A);
b)a one-third interest in [the second T Company] (in partnership with Mr D & Ms L and Ms V);
c)a 10 per cent share in [N Nominees Pty Ltd] ([Motor vehicle Company]);
d)[Property H], which has now been sold;
e)[Property T], which has now been sold.
In addition, there is the company known as [Parkinson] Investments Pty Ltd, the husband being the sole director and shareholder. The company is a beneficiary of the [Parkinson] Family Trust and from time to time receives distributions from the Trust.
When cross-examined, the husband conceded that the structure set up, being the [Parkinson] Family Trust together with its corporate beneficiary, was set up in such a way as to properly minimise tax.
It is clear that within such structures there is, upon the realisation of any assets, an inherent potential for Capital Gains Tax (CGT) to be assessed on the sale proceeds.
The issue is whether the taxation consequences (such as CGT) of the assets being held in that structure and the income from those assets being received through that structure should be brought to account.
The asset pool
The parties, after lengthy negotiations on the first day of trial, substantially agreed a schedule of assets and liabilities as at the date of cohabitation and as at the date of trial.
It is submitted by Counsel for the husband that it is open in short marriage cases for the Court to depart from the usual global approach and to adopt amongst other things an asset by asset approach. Counsel however concedes that this approach may not be appropriate where the parties have had children and have not kept their assets separate. Quinn (1979) FLC 90-677, and Kerr EA99 of 1994 (unreported). I accept this submission and consider the global approach to be the proper method to deal with this matter.
It is appropriate when considering the current asset pool to first examine the assets and liabilities at the commencement of cohabitation. This is a relatively short marriage and the disposal of some of the assets is of significance.
The schedule presented by the parties is as follows
Husband’s Assets/Liabilities at Date of Cohabitation Agreed Value [Property H] $360,000 [Property T] $330,000 [Property C] $300,000 Loan to [A Bank] re: [Property C] (-$170,000) [A Line] of Credit (-$55,879) [T Company] $69,030 10 per cent share [N Nominees Pty Ltd] $117,353 Loan to [N Nominees Pty Ltd] (-$103,965) [A Bank Account] $2,783 [A Visa] (-$1,601) [Motorcycle] $13,500 Long Service Leave Entitlements $7,796 Annual Leave Entitlements $5,199 [O Superannuation] $41,056 [M Superannuation] $105,639 Furniture & Effects $2,595 SUB TOTAL $1,023,506
Contingent CGT on [Property T] (not agreed) (-$48,700) Contingent tax on Dividend (not agreed) (-$28,000) TOTAL (if items included) $946,806
Wife’s Assets/Liabilities at Date of Cohabitation Agreed value Furniture & Effects $1,431 Proceeds of sale of [Property L] received by the wife and paid to the husband $94,604 Personal Loan (-$9,313) [S Bank] Credit Card (-$1,348) Superannuation $9,432 TOTAL of wife’s position at date of cohabitation $94,806
The parties agree the quantum of the Capital Gains Tax and contingent tax liability but could not agree whether there should be any allowance for:
a)Capital Gains Tax on [Property T] (which has now been sold ), and
b)Tax that would have been payable had the loan account held by the husband with [Parkinson] Nominees Pty Ltd been extinguished at that time.
CGT on [Property T]
It is common ground that the:
a)Property was owned by the [Parkinson] Family Trust (and I will refer again to the financial structures used by the husband later);
b)The property has now been sold and there are net proceeds of $281,806 available for distribution (some of the funds having been utilised to pay off debt);
c)There is capital gains tax to be paid on the sale proceeds which is included in the estimate of tax payable by the husband for 2010 being $124,851.16 (see exhibit M of the Husbands trial affidavit).
There would be no dispute that a Court should take into account the CGT applicable to the sale of an asset where it has been sold.
There is however some “confusion” where it is sought to be brought to account as a potential liability. The Full Court in Rosati (1998) FLC 92-804 considered this and noted that the following general principles could be said to emerge from the cases namely:
(1)Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset.
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
The property was treated in the husband’s returns as an investment.
Regardless of the husband’s intentions at the commencement of cohabitation the property was sold within a period of less than three years.
The taxation consequences of the sale are significant.
It is appropriate that there be an allowance for the Capital Gains Tax that was inherent in the asset and the structure in which it was held. It is not appropriate to claim a credit for a contribution, which in effect was the sale proceeds of the land without accounting for the liability attached to those proceeds.
While the parties do not agree that the amount should be brought to account, the parties do agree that the appropriate amount to be allowed for the potential capital gain at 2006 is $48,700.
I therefore find that when considering the assets and liabilities at the commencement of cohabitation that the amount of $48,700 should be brought to account as a potential liability.
Tax payable on the husband’s loan account with Parkinson Nominees Proprietary Limited
It is common ground that at 2006 the Husband had a loan account with [Parkinson] Nominees Pty Ltd of some $103,965. This related to funds the husband had borrowed from his business [N] Nominees Proprietary Limited [omitted] which the company received and which were subsequently provided to the husband (there being no dispute that funds were borrowed from [N] Nominees Proprietary Limited by the Trust, distributed to the beneficiary company and then lent to the husband). That amount had grown to $281,784.10 by 30 of June 2009, (being $215,171.99 in 2008).
The husband has been advised by his accountant that he has three options for clearing what risked being characterised as a division 7A loan with the company. He has elected to do this by having the company pay the husband a dividend which will effectively extinguish the loan.
The taxation consequences following this transaction when combined with the capital gain from the sale of the property are significant leaving the husband with an estimated debt to the Australian Taxation Office of $124,851. It is conceded that this should be brought to account.
The loan account was an issue that had to be addressed, either in 2006 or now. It would be inequitable in all the circumstances to now allow for the debt incurred as a result of the fact that the husband’s finances were handled in this matter, without recognising that it was a debt that existed in 2006 that would have crystallised should the husband have sought to attend to it then. To credit him with the full amount of the equity without bringing to account a liability that was inherent in the structure and which has now crystallised would not be just and equitable.
The parties agree that the estimated or contingent Capital Gains Tax liability in respect of this loan account was $28,000. They do not agree that it should be brought to account. For the reasons set out above I consider it just and equitable that it be included as part of the calculation of the assets held by the husband when the parties commenced cohabiting.
I have therefore altered the table to allow for the inclusion of these items. This then means that the initial financial contributions of the parties are comprised of $946,806 on the part of the husband with $94,806 on the part of the wife.
The asset pool at trial
As noted above the parties substantially agreed the asset pool. There remains however, the issues of whether the following should be included:
a)the invoice received by the husband from his accountants [omitted] for early preparation of the 2009 Financial Statements in the sum of $6,433;
b)the loan from [F Business] of $105,000 which the wife says is largely comprised of money borrowed to pay the wife’s legal fees of $85,958 ;
c)the personal loan obtained by the wife post separation from [S Bank] of $11,998;
d)the fees paid to date to [D Company]. by the husband, being a sum of $36,092 (which is conceded were drawn down on the line of credit secured against one of the properties which was subsequently discharged at the time of sale);
e)the fees owing to [D Company] of $60,063.
Add backs
Consideration has been given to the issue of adding back items into the asset pool for some time. The decision has often arisen in the context of one or both parties of receiving drawn funds to pay legal fees.
In Farnell & Farnell (1996) FLC 92-681 the husband withdrew $20,000 from a joint account and spent it on legal fees. The trial judge treated the $20,000 as a notional asset which he added back to the total property pool. The Full Court dismissed the husband’s appeal.
His Honour Justice Fogarty said at paragraph 83,068 that:
My strong impression from sitting on Appeals in a large number of property cases over the years is that the common or usual practice is that, unless parties themselves choose to approach it another way,
(a) the liability of the parties for costs is generally disregarded in the sense they are not treated as liabilities to be deducted in order to arrive at the net property figure;
(b) costs already paid are not generally added back as notional property unless the particular circumstances justify it (such as here);
(c)the circumstance that each party does have legal costs needs to be taken into account in a general way considering the overall impact of the orders on the parties;
(d)the circumstance that the parties have or have paid legal costs is a basic factor in determining, at the conclusion of the proceedings, whether an order for costs should be made within the parameters of section 117.
In Re NHC and RCH (2004) FLC 93-204 the Full Court summarised earlier Full Court authorities on the issue and said:
56. In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57. If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58. If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.
59. Outstanding legal fees themselves are generally not taken into account as a liability.
60. If in the exercise of the discretion, it is determined that legal fees already paid should be taken into account as a notional asset, then normally any liability associated with the acquisition of the monies used to pay the legal fees should also be taken into account.
To some extent, one of the issues is whether it can be said there has been a premature distribution of a proportion of the matrimonial assets (Townsend and Townsend 1995 FLC 92-569 Nicholson CJ at 81,654) from funds that existed at separation.
[Accountant’s] invoice
The preparation of the accounts for the 2009 financial year were necessary to enable the parties to properly identify and calculate the net value of the matrimonial asset pool. It is clear from the accounts that some significant adjustments have to be made for the net value of the pool.
I consider the incurring of this cost to be reasonable in the circumstances as without that information it would have been very difficult to proceed.
I note the Husband rightly concedes that the cost will be tax deductible which in effect means that the net value of the cost to him would be less to him. I therefore propose to bring it to account at approximately 60 per cent of its current value being $4,116.60.
Loan from [F Business] / Wife’s father
The wife’s evidence is that this is a loan that was essentially used to pay her legal fees.
The loan was incurred post separation and is a loan due and owing she says to her father’s company. She cannot say with any certainty as to what the terms and conditions of the loan are.
Her evidence contrasted with that of her father who advised that the funds were essentially borrowed by him from his company and then provided to his daughter. In other words, the amount due and owing is from the wife to her father. I accept his evidence on this point.
Counsel for the husband submits that in order to justify an “add back” it would be necessary to make some assessment of the reasonableness of the expenditure incurred by the wife AJO v GRO (2005) FLC 93-218. The submission is that this is not possible here as the wife has not provided a breakdown as to where specifically the funds have been distributed or spent. I accept this submission.
The loan is a debt that was incurred post separation and in my view it is not appropriate to add that amount back to the asset pool. To do so would inflate the asset pool by $105,000 and would not correctly reflect the net value of the asset pool as it stood for distribution between the parties.
To paraphrase the words of the Full Court in Re NHC and RCH (supra) it is a borrowing undertaken by a party post separation to pay legal fees and in the circumstances I do not consider it should be taken into account as a liability in the calculation of the net property of the parties.
Personal Loan from [S Bank]
This again is a borrowing undertaken by a party post separation. As counsel for the husband submits particulars of the drawdowns on the loan have not been given. It is not possible to determine if the expenses were reasonable. Furthermore the funds were not taken from funds occurring at the date of separation. It is not appropriate in all the circumstances to add this back to the asset pool. To do so would artificially inflate the net value of the pool available for distribution between the parties.
Fees paid to [D Company]
The evidence is clear that these fees were drawn against a line of credit secured against one of the investment properties. When the investment property was sold, the proceeds of sale were used to pay out the line of credit thereby extinguishing this debt.
If the fees had not been drawn against the line of credit, then the net value of the asset pool would have been increased by $36,092. In the circumstances, it is appropriate that this be added back into the net value of the asset pool.
Fees owing to [D Company]
Again, to paraphrase the judgment of the Full Court in Re NHC and RCH (supra) “outstanding legal fees themselves are generally not taken into account as a liability”.
The husband seeks to add back unpaid fees of some $60,063. To add these back would, in effect, artificially increase the value of the matrimonial asset pool and would not be appropriate. In the circumstances it is not appropriate to bring these fees to account.
To summarise, the fees paid to [D Company] from the line of credit of $36,092 should be added back to the asset pool. The remaining items sought to be added back are not included in the calculation for the net asset pool.
After giving consideration to counsel’s submissions, I find the net value of the matrimonial asset pool including the superannuation to be the sum of $1,275,184.40 as shown in the wife’s asset pool as at date of trial plus the amount to be added back, namely $36,092 making a total of $1,311,276.40.
The table of assets and liabilities for distribution between the parties is therefore as follows.
Pool as at date of trial
Assets & Liabilities as at present date | Parties Value | Value in Pool |
| [Property C] (H) | $820,000 | $820,000 |
| [Property T] (H) | $281,806 | $281,806 |
| 1/3 interest in [T Company] (H) | $134,027 | $134,027 |
| 1/3 interest in [T Company] (H) | $134,027 | $134,027 |
| 10 per cent share [N Nominees Pty Ltd] (H) | $75,730 | $75,730 |
| Loan to [N Nominees Pty Ltd] (H) | (-$236,738) | (-$236,738) |
| [A Bank Account] (H) | $955 | $955 |
| [C Bank Account] (H) | $1,905 | $1,905 |
| [Motorcycle] (H) | E$8,000 | E$8.000 |
| Long Service Leave Entitlements (H) | $9,024 | $9,024 |
| Annual Leave Entitlements (H) | $1,585 | $1,585 |
| Dividend pending for 09/10 (H) | $19,186 | $19,186 |
| Tax Debt 08/09 Financial Year (H) | (-$93,734) | (-$93,734) |
| Parkinson Nominees Tax Debt 08/09 (H) | (-$5,973) | (-$5,973) |
| Tax Debt 09/10 Financial Year (H) | (-$78,300) | (-$78,300) |
| [Accountant] Invoice for 2009 Financials (H) | (-$6,861) | (-$4116.60) |
| Furniture & Effects (H) | $6,433 | $6,433 |
| Furniture & Effects (W) | $2,676 | $2,676 |
| Jewellery–inc wedding/engagement rings (W) | $300 | $300 |
| Net Pool (excluding superannuation) | $1,074,048 | $1,076,792.40 |
| [O Superannuation] (H) | $62,578 | $62,578 |
| [M Superannuation] (H) | $121,075 | $121,075 |
| Australian Superannuation (W) | $14,739 | $14,739 |
| Total Superannuation | $198,392 | $198,392 |
| TOTAL NET POOL (including super) | $1,272,440 | $1,275184.40 |
Legal Fees and Post-Separation Loans – Treatment not agreed
| Loan from [F Business] (W) | $105,000 | Not included |
| Personal Loan from [S Bank] (W) | $11,998 | Not included |
| Fees paid to [D Company] (H) add back | $36,092 | $36,1092 |
| Fees owing to [D Company] (H) | E$60,063 | Not included |
| TOTAL POOL (including add back) | $1,311,276.40 |
Contributions
Consideration has been given to the initial financial contribution of the parties to the acquisition, conservation and improvement of the assets.
I have found that the net value of the husband’s assets at the commencement of cohabitation were $946,806 and the wife’s were $94,806 as per the following table.
The wife submits that the $7,000 provided by her family by way of cheques as a wedding present and that these should be brought to account. She says these were deposited by the husband into a bank account. There is no evidence save for that of the wife to show that what then happened to these funds. Nor is there evidence to support the husband’s assertion that the funds were used to pay off the debt incurred during the honeymoon.
The husband also gave evidence of cash gifts that he received from his family members. I accept the submission of Counsel for the wife that it is of significance that no reference was made to these in his Trial Affidavit. Whilst I note that the wife concedes a gift of $1,000 was received by the parties from “Mr D and Ms L” she does not concede the rest. In view of the fact that there is no corroborating evidence, the allegation was raised late, there is no evidence as to what the funds were applied for, and there is no concession as to the funds being received save for the sum of $1,000 on the part of the wife, I do not accept the husband’s allegations in respect to the remaining funds.
In any event the funds being $7,000 and $1,000 are not significant and were used for the joint benefit of the parties. I do not consider that they affect the outcome of these proceedings and do not bring them to account.
Post cohabitation contributions
I will now propose to consider the contributions of the parties from the date of commencement of cohabitation through to the date of separation and post separation.
It is clear that the husband throughout the course of the relationship made the superior financial contribution to the acquisition, conservation and improvement of the assets.
The husband is employed [omitted] by [a Motor Vehicle Company]. As a consequence, he receives a salary in the vicinity of $55,000 per annum.
He also receives as part of his employment package the free use of a motor vehicle and mobile phone.
In addition, he has been salary sacrificing his additional superannuation contributions.
The parties through the family trust structure also have a one-third interest in two [T Companies] which provides an income on current figures of some $14,000 per annum.
In addition, the husband receives an annual dividend from [N Nominees], being the parent company of [a Motor vehicle Company], that on his evidence would rarely be below $20,000.
The wife at the commencement of cohabitation was working five days a week from 9.00am to 3.30pm.
Her expertise is in the area of bookkeeping and administration.
Upon becoming pregnant, the wife’s ability to work and receive an income was reduced due to the forthcoming pregnancy and the subsequent parenting duties to care for the parties’ young child.
On considering the evidence it is appropriate to say that the parties made equal non-financial contributions to the acquisition, conservation and improvement of the assets.
The evidence is the husband, in addition to his employment at [a Motor Vehicle Company], which would have occupied him for the substantial portion of his working week, also assisted with the running of the [T] business that the parties entered into and worked with the wife on the construction and landscaping of the former matrimonial home.
It is common ground that during the marriage the parties utilised the following services, namely child care whilst the wife was at work, a nanny whom the parties employed three days a week from 9am until 1pm, and a cleaner who was employed to attend at the house on the wife’s evidence for one hour per week, and on the husband’s for two hours per week.
The allegation of the husband is that the majority of the cleaning and care of [X] was undertaken by the employees of the parties paid for by the husband. I do not accept this.
On the husband’s own admission, the childcare and nanny services were utilised whilst the wife was at work.
Furthermore, I do not accept that the running and maintenance of a large house comprising some six bedrooms and three bathrooms, amongst other things, could be undertaken by a cleaner employed even on the husband’s evidence for two hours per week.
Furthermore, it appears to be common ground the allocation of work responsibilities went along “traditional” lines in that the wife was responsible for the inside duties whilst the husband was responsible for the outside duties.
Having said that, however, it is acknowledged that the wife assisted the husband with the work that had to be done on the property at [Property C] during and after construction and when the parties had moved in.
I do not agree with the contention of either party that they made the superior non-financial contribution. It is clear that this young couple worked hard, not only in respect of their employment commitments but also in respect of the business they entered into, being the running of the [T Company]. They also worked hard on settling into a new house at [Property C].
The husband argues that both parties assisted in the care of [X] during the marriage subject to their various work commitments.
At the same time he argues that he was working at [a Motor vehicle Company] from 9.00am until 5.30pm on four days per week, working until 9.00pm on Thursday nights. He was also required to work from 9am until 5.30pm each alternate Saturday.
In addition to that, the husband on his evidence was responsible for, amongst other things, running [T Company] and arranging for the purchase of [Property C] and the subsequent construction of the dwelling on the property together with the consequential work once the dwelling was completed, being landscaping and general maintenance.
It is therefore difficult to see how he would have had time to have played an equal role in the early care of [X].
Therefore, when having regard to the non-financial contributions made by the parties to the acquisition, conservation and improvement of the asset pool and the contribution of the parties to the welfare of the family, I come to the conclusion that this young couple worked essentially as a partnership whereby if one party was doing one thing, then the other was looking after another task such as the care and maintenance of their child.
For the reasons set out above including the evidence of the husband of his work commitments I find that the wife, because she had the time, made the superior contribution to the welfare of the family.
I do not accept that the wife’s contributions were over and above those of the husband. I do not consider he made out this case. He alleged for example he did the date entry on MYOB for the [T Company] and yet was unable to answer questions about the systems such as the codes for data entry.
I accept her submissions that the husband in his Affidavit and oral evidence to the Court attempted to minimise the wife’s contribution.
I have, already, commented on the employment of a cleaner and I note and accept the submissions and evidence of the wife in respect of her use of the credit card. Nevertheless, I am unable to find that there is anything on the evidence that suggests that the wife’s contributions were over and above those of the husband.
I therefore, find taking into account all of the above that the contributions of the parties through their personal efforts for the two and-a-half years of cohabitation to be equal.
The husband submits that he should receive some credit for the fact that he has continued to contribute to the maintenance and preservation of the assets post separation.
Whilst this may have some weight, it cannot be regarded in isolation. It is appropriate to note, amongst other things that:
a)the wife has continued to be the primary caregiver for the parties’ child;
b)the husband on his own concession has structured his finances such that his income is treated in the most tax effective manner; and
c)significant issues remain in respect of his financial support.
In the circumstances I consider it appropriate to set off the wife’s ongoing contributions to the welfare of the family against the husband’s financial and non-financial contributions to the maintenance and improvement of the assets.
The husband submits that there has been a marked increase in the value of the assets since the date of separation. This evidence was not produced at trial and it is impossible to make any findings in respect of that issue.
Submissions are made that the wife made no financial contributions to [Property H] or [Property T] and made only a non-financial contribution to one of the two [T Companies]. This, to some extent, invites an asset by asset approach, which I have already ruled on. It also ignores the fact that the parties’ income and resources have been applied to the maintenance of these properties and the resourcing from their subsequent sale.
In any event, the submissions are simply examples of the primary submission that the husband continued to financially contribute to the maintenance and improvement of the matrimonial assets and should be credited with the rise in the value and the benefit received therefrom. In my view, whilst acknowledging his contributions, there are issues as to whether these contributions were at the expenses of their obligation to financially support her child. In the circumstances, it is my finding that these are offset against the wife’s ongoing contribution to the welfare of the family.
The wife is the primary caregiver for [X]. The husband has continued to pay child support however his financial support has to some extent been affected by the manner in which he has structured his finances. In view of the above and the offset of the contributions I am not prepared to give him credit for post separation contributions and would treat the rise in the value of the properties, if any, as a wind fall to the parties.
I would therefore, round up the apportionment for the wife’s contributions for the reasons set out above, assess the contributions of the parties as 10 per cent to the wife and 90 per cent to the husband.
Financial resources and needs
The husband continues to work in a full-time capacity [omitted] for [a Motor Vehicle Company]. The husband’s submissions are silent in respect of his financial capacity.
It is notable that:
a)the husband swears that he is earning an income of approximately $50,000 to $55,000 per annum. (He concedes that a commercial rate for his role and expertise is in the order of $80,000 per annum.);
b)the husband has arranged his finances so that his income is received in the most tax effective manner;
c)the husband concedes that he advised the Child Support Agency he had no other sources of income and no other allowable tax deductions. This not only ignores the husband’s financial structure but ignores the income received from the investment properties and the [two T Companies];
d)the husband concedes that his expenses set out in his Financial Statement were incorrectly claimed as he does not pay for any mobile telephone expenses nor vehicle maintenance expenses;
e)the husband failed to disclose in his Financial Statement that he is residing in a defacto relationship with Ms O; and
f)the husband failed to make any allowance in his Financial Statement for:
i)any income received by Ms O; and
ii)any contribution made by Ms O to his weekly expenses.
In the circumstances it is open to me to find that the husband is in a superior financial position to that of the wife and is likely to continue to remain in that position.
In the circumstances it is open to me and I find that the husband has been less than forthcoming when dealing with his financial situation.
I note the authorities quoted by Counsel for the wife regarding the positive obligation of a party to make full disclosure of all relevant financial affairs being the matter of Stay and Stay (1997) FLC 92-751 and the authority of Weir and Weir (1993) 110 FLR 403, that a Court should not be unduly cautious in making findings in favour of the innocent party.
At the same time I cannot ignore the significant financial support received by the wife from her family.
She has been able to borrow from her father who in turn has borrowed from his company, a sum in excess of $100,000. It is noted that she says most of those monies have been used to pay the ongoing costs of these proceedings.
Nevertheless, she is not without some resources and in the circumstances I consider it appropriate that her family’s support be considered. That is not to say that it mitigates in any significant way, the superior financial position of the husband.
The wife is currently working part-time, she says, to allow for, amongst other things, her care of the parties’ child [X].
The husband alleges that she is reducing her working hours in order to maximise the s.75(2) adjustments at trial. There is no evidence to support this and I do not accept this submission.
Both parties appear to be in good health.
The husband alleges that as the wife is significantly younger than the husband by 12 years she has additional years of employment in which to save for her future. This ignores the fact that under the arrangements reached by the parties the wife is the primary care giver of [X] and will to some extent be restricted by her parenting commitments.
The husband pays child support for [X] in accordance with the assessments issued by the Child Support Agency. At present there appear to be some arrears. It is not clear how these arrears came about. The parties are currently undertaking steps to enable the Agency to examine the husband’s income allowing for the fact that some of it is streamed through a Unit Trust to a discretionary Trust and mingled with the income received by the husband from the [T Business] and investment properties.
The wife advises that she is currently undertaking a course to further her [business] qualifications and that this course will take approximately another three years. That evidence was not contested by the husband.
At present on the evidence before me there is nothing to suggest that the wife will be in a position whereby she will be able to earn an income similar to that of the husband.
Both parties clearly have financial support and in this respect I note the involvement of the family in the [T Companies] on the part of the husband and the generous terms of the loan afforded to the wife by her father and her ongoing role as an employee of his company.
Nevertheless, having regard to all the factors set out in s.75(2), I consider it appropriate that there be an adjustment of 12 per cent in favour of the wife. This means the property should be divided such that the wife receives 22 per cent of the net value and the husband the remainder.
I have found that the net value of the matrimonial asset pool is $1,311,276.40.
This means the wife’s share of the pool amounts of $288,481. The wife has:
a)furniture and effects $2,676
b)jewellery $300
c)superannuation $14,739
d)TOTAL $17,715
The remaining assets are held by the husband. The amount therefore to be paid or transferred to the wife is $270,766.
The wife sought the delivery up of a number of chattels. This was opposed. The evidence about the issue was minimal save that it was agreed that [X’s] dress would be delivered up.
The parties separated over two years ago. The chattels have been in the husband’s possession since then. I am not minded to order that they be delivered up now, in whatever condition they may currently be in.
The wife seeks the delivery up of property pursuant to the order of Federal Magistrate Kelly. There is a dispute as to whether these items are still with the husband. The orders of Federal Magistrate Kelly remain on foot. In the event that these are with the husband, then they should be delivered up. I decline to make an order requiring compliance with the previous order.
Just and equitable
The husband in closing submissions and in his Case Outline seeks an order that there be a split of the husband’s superannuation in such an amount as this Honourable Court deems appropriate. Save that I am referred to the matter of C v C (2005) FLC93-220, no guidance is given in the Case Outline nor is any received from the written submission as to how that should be calculated. The majority of the Full Court in that matter noted that the trial judge has a discretion as to how superannuation interests will be treated in a certain case.
If the superannuation is considered separately and apart from the asset pool then the Court should consider the factors set out in s.79 as they relate to the parties contributions to the superannuation. This was not the case in these proceedings. Save that the submission is that it should be split to meet part of the husband’s obligations, neither party suggested it be treated separately. The mix of superannuation and non-superannuation is discretionary Doherty (2006) FLC93-256.
It is clear from the comments I have set out above that the husband’s financial position is far superior to that of the wife’s.
In addition, there are assets that can be used for the purposes of securing a loan or in the alternative can be sold to meet any order that I propose to make.
The wife is the primary carer for the parties’ child [X] and her evidence is that her parenting commitments will to some extent restrict her earning capacity.
The wife does have some financial support from her family however it is not such that it impacts in a significant way on the outcome of this matter.
In the circumstances I do not consider it would be just and equitable to expect the wife to take her portion of the matrimonial assets or any part thereof by way of a superannuation split.
Having regard to the division of the assets and the proposed distribution of it as a whole, I do not consider there is any reason for any further adjustment of the division of the assets and that the proposal is just and equitable in all the circumstances.
Conclusion
This is a relatively short marriage. The parties have one child of their relationship.
Each party is responsible for another child, both children being twelve years old.
Each party was able, prior to the commencement of cohabitation, to accumulate some assets, the husband’s being relatively significant.
Each party worked hard during the course of the relationship.
Each party has continued to contribute in their own way post separation.
Whilst the value of the asset pool may have increased post separation, it is to be noted that the wife’s interest in the asset pool was unable to be realised until this matter proceeded through the Court.
There is no reasonable grounds to support the proposal that the Court should take the value of the assets as at the date of separation.
Counsel have each referred me to a number of authorities in respect of short marriages. I note in particular the discussion of the authorities in the matters of Bondar-Twersky & Twersky (2009) FMCAfam 163 and Dodge & Meldrum (2010) FMCAfam 119. I have amongst other things acknowledged the differences in the financial resources and needs of the parties and the ongoing care of the parties child by the applicant
In the circumstances, I consider just and equitable that orders be made as set out at the commencement of this judgment.
I certify that the preceding one hundred and forty-eight (148) paragraphs are a true copy of the reasons for judgment of Cole FM
Date: 17 September 2010
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