Penner & Conroy (No. 2)
[2021] FamCA 411
•21 June 2021
FAMILY COURT OF AUSTRALIA
Penner & Conroy (No. 2) [2021] FamCA 411
File number(s): SYC 8355 of 2017 Judgment of: HARPER J Date of judgment: 21 June 2021 Catchwords: FAMILY LAW – PROPERTY – Where parties married for 6 years – Where parties maintained separate property and bank accounts but purchased joint matrimonial home –
Where evidence did not allow clear findings about all contributions to superannuation or business interests –
Whether global or asset by asset approach is appropriate – Where initial contributions substantially equal – Where wife made greater contributions during the marriage – Where husband used joint funds for living expenses and superannuation after separation.Legislation: Family Law Act1975 (Cth) ss 75, 79, 80, 81. 117
Succession Act 2005 (NSW)
Cases cited: Ashforth & Ashforth [2012] FamCA 621
Barnell & Barnell [2020] FamCAFC 102
Benson & Drury [2020] FamCAFC 303
Bevan & Bevan [2013] FamCAFC 116
C & C (2005) FLC 93-220
cf Van der Linden & Kordell [2010] FamCAFC 157
Dickons v Dickons (2012) 50 Fam LR 244
Elliott & Elliott and Ors [2007] FamCA 1232
Ellison v Sandini Pty Ltd [2018] FCAFC 44
Fielding and Nichol [2014] FCWA 77
G & G [2000] FamCA 1075
Greer & Mackintosh [2013] FamCAFC 16
Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143
Horrigan & Horrigan [2020] FamCAFC 25
In the Marriage of Burke (1981) FLC 91-055
In the Marriage of Crapp and Crapp (No 2) (1979) FLC 90-615
Jabour & Jabour [2019] FamCAFC 78
JEL & DDF (2001) FLC 9
Keirn & Moxey [2017] FamCA 487
Kowalski and Kowalski (1993) FLC 92-342
Manolis & Manolis (No 2) [2011] FamCAFC 105
McMahon and McMahon (1995) FLC 92-606
Norbis v Norbis (1986) 161 CLR 513
Norman & Norman [2010] FamCAFC 66;
Stanford & Stanford (2012) 247 CLR 108
Trevi & Trevi (2018) FLC 93-858
Vass v Vass (2015) 53 Fam LR 373
Warbrick & Warbrick [2021] FamCAFC 60
Zagari & Habib [2010] FamCAFC 159
Zyk and Zyk (1995) FLC 92-644
Number of paragraphs: 234 Date of hearing: 30 November – 3 December 2020 Place: Sydney Counsel for the Applicant: Mr Campton SC Solicitor for the Applicant: Somerville Legal Counsel for the Respondent: Mr Lloyd SC Solicitor for the Respondent: Blanchfield Nicolls ORDERS
SYC 8355 of 2017 BETWEEN: MS PENNER
Applicant
AND: MR CONROY
Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
21 JUNE 2021
AMENDED on 22 June 2021 pursuant to r.17.02 of the Family Law Rules 2004 (Cth)
THE COURT ORDERS THAT:
1.That within seven days of the date of these orders, the parties do all acts and things and sign all documents necessary to cause NN Lawyers (“NNL”) to pay the wife the balance of proceeds of sale of E Street, Suburb F held in a controlled monies account operated by NNL, in the name of the parties, to the Applicant Wife (“the Wife”).
THE COURT NOTES THAT:
A. C Pty Limited as trustee for C Superannuation Fund (“C Superannuation”) is a self managed superannuation fund listed by the Australian Taxation Office on the Super Fund Lookup website ( as a complying superannuation fund.
B. The Husband is the only members of C Superannuation.
C. The trustee of C Superannuation is C Pty Limited. The Husband is a Director of that corporation (“the Trustee”).
D. On the basis that the husband is the only director of the Trustee, the procedural fairness requirements of section 90AE(3) (c ) of the Family Law Act 1975 (“the Act””) are satisfied.
E. Having been accorded procedural fairness, these Orders bind the Trustee.
F. In accordance with Section 90XS of the Act, the following Orders are made under Section 79 of the Act in relation to the superannuation interest of the Husband in C Superannuation.
THE COURT FURTHER ORDERS THAT:
2.That in accordance with paragraph 90XT(1)(a) of the Family Law Act 1975:
(a)the Wife is entitled to be paid using a base amount as at the date of these Orders of $300,000 from the husband's interest in C Superannuation calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b)the Husband’s superannuation entitlement (and the entitlement of any other person to payments out of the Respondent’s superannuation interest) in C Superannuation is correspondingly reduced.
3.The Trustee shall do all such acts and things and have signed all such documents as may be necessary to:
(a)calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Applicant in the clause immediately preceding this clause of this Order; and
(b)pay the entitlement whenever the Trustee makes a splittable payment out of the Respondent’s superannuation interest in the Super Fund.
4.That orders 2 and 3 of these Orders operate from the operative time and the operative time is the beginning of the day upon which these orders are made.
5.That, after service by the trustees of C Superannuation of the payment split notice in relation to each of Orders
10-122-4 pursuant to r.7A.03 of the Superannuation Industry (Supervision) Regulations 1994 the wife shall do all such acts and things and sign all such documents as may be necessary, including but not limited to requesting the trustee to transfer or rollover her benefit in C Superannuation to a superannuation fund of the wife's choosing which complies with the Superannuation Industry (Supervision) Act 1993 and its associated regulations;6.Pending the transfer of the benefits to the wife’s new superannuation fund, the husband is restrained from dealing with or disposing of any of the assets of C Superannuation other than in accordance with the terms of this Order and the husband shall immediately revoke any binding death nomination already made and be and is hereby restrained from:
(a)Making any binding death nomination in favour of a child described in regulation 13 of the Family Law (Superannuation) Regulation 2001;
(b)Making any other nomination where the effect of such nomination would be to render any splittable payment not splittable.
7.Upon compliance with Orders 1 to 6 inclusive, the Wife shall otherwise be declared the sole legal and beneficial owner of all property in her name, possession and/or control to the exclusion of the Respondent Husband (“the Husband”) including but not limited to the following:
(a)Motor Vehicle 1;
(b)Motor Vehicle 2;
(c)Shares in G Group Pty Limited;
(d)Interests in:
(i)The H1 Trust
(ii)The H2 Trust
(iii)The J Trust
(e)Shares in publicly listed companies
(f)Any bank accounts in the Wife’s name;
(g)The superannuation entitlement standing in the Wife’s name in respect of:
(i)The K Super Fund;
(ii)The L Super Fund.
(h)Any other property or chattels of whatsoever kind and whatsoever nature in the wife’s name.
8.Upon compliance with Orders 1 to 6 inclusive, the Husband shall otherwise be declared the sole legal and beneficial owner of all property in his name, possession and/or control to the exclusion of the Wife including but not limited to the following:
(a)Motor Vehicle 3;
(b)Motor Vehicle 4;
(c)Shares in M Pty Limited;
(d)Shares in the following publicly listed companies:
(i)N Company;
(ii)P Company;
(iii)Q Company;
(iv)R Company;
(v)S Company.
(e)Shares in C Pty Ltd (In its own right and as Trustee for C Superannuation Fund).
(f)The Superannuation entitlement standing in the husband’s name in respect of:
(i)C Superannuation Fund;
(ii)Super Fund 1;
(iii)Super Fund 2.
(g)Any other property or chattels of whatsoever kind and whatsoever nature in the husband’s name.
9.The Wife shall indemnify and save harmless the Husband and keep the Husband indemnified and saved harmless from and against all claims, actions, suits or demands arising out of or in connection with any and all liabilities including but not limited to:
(a)Any liability attaching to any property referred to in Order 2;
(b)The Wife’s CBA Mastercard x…90 Credit Card;
(c)The Wife’s CBA Visa x…72 Credit Card;
(d)The Wife’s AMEX x…08 Credit Card;
(e)Any amount owing to the Australian Taxation Office.
10.The Husband shall indemnify and save harmless the Wife and keep the Wife indemnified and saved harmless from and against all claims, actions, suits or demands arising out of or in connection with any and all liabilities including but not limited to:
(a)Any liability attaching to any property referred to in Order 3;
(b)The Husband’s O Bank Credit Card;
(c)The Husband’s Division 293 Deferred debt;
(d)Any amount owing to the Australian Taxation Office.
Costs
11.If any party seeks an order for costs, an application to the Court may be made by Application in a Case within 28 days of the date of these orders, with an affidavit in support, to be filed and served within that time period and a copy forwarded to my Chambers.
The Court further notes:
G. If an application for costs is made in accordance with Order 11, the Court will make procedural orders for any questions costs to be determined.
H. If no such application is made within the time period specified, no order will be made as to costs.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Penner & Conroy (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
Ms Penner (“the wife”) and Mr Conroy (“the husband”) (together referred to as the “parties”) have been unable to agree on the division of their property following the breakdown of their marriage. These parties have been involved in property proceedings in this Court since December 2017.
Both parties accept some property adjustment would be just and equitable and should be made. The parties have entirely different approaches to how contributions should be assessed and whether the assessment should be undertaken globally or by reference to the central joint asset, the former matrimonial home. Neither approach is patently wrong, and the determination of this matter presents surprisingly difficult questions of property adjustment. The parties were able to agree a large portion of the balance sheet. Some residual controversies remain and will be dealt with later in these reasons. But, as became clear in final submissions, the central debate focussed on how an amount of $3,214,692, presently held in a Controlled Monies Account, should be distributed. These funds are the remainder of the proceeds of sale of the former matrimonial home, as explained later in these reasons. The parties have sharply divergent views about this. The wife claims she should receive the entire amount, while the husband argues he should receive up to 60 per cent, with the wife to receive the balance. The wife also claims there should be a split of superannuation interests, with her to receive $1,500,000 from the husband’s superannuation. The husband claimed the superannuation interests should be left undisturbed. For the reason which follow I have decided that the wife should receive $3,214,692, from Controlled Monies Account together with $300,000 of the husband’s superannuation.
BACKGROUND
The husband was born in 1961, and is presently 60 years old. Although he historically had gainful employment for many years, he was made redundant in September 2013 and has been unemployed since.
The wife was born in 1966, and is presently 54 years old. She is employed by G Group Pty Ltd (“G Group”), a business in the CBD, which she established in 1993.
It is unclear exactly when the parties commenced their relationship. The husband said that they have been financially involved since early-2008 (husband’s trial affidavit filed 3 December 2019, paragraph 89-90). At this time, both parties had young children from previous relationships; the wife had Mr X who was 10 years old, Mr Y who was 9 years old and Mr Z who was 7 years old, while the husband had Mr V who was 12 years old and Ms T who was also 10 years old. It seems clear the parties had formed a relationship by early 2008.
On about 26 May 2008, the parties had exchanged contracts for the joint purchase of E Street, Suburb F (“Suburb F”) for $6,510,385 including stamp duty and legal costs. This was the former matrimonial home.
The parties were married in 2008. Cohabitation commenced at this time.
On 24 July 2008, the parties applied for a flexible loan facility. A NAB Portfolio Facility (“Portfolio Facility”) was established on 20 August 2008 in the parties’ joint names with an overall limit of $5,495,000. The principal purpose was to provide funds for the purchase of Suburb F. The evidence showed that such a portfolio facility can be broken into a number of subaccounts, from which funds can be drawn down in total up to the overall facility limit. When the NAB Facility was first arranged, an offset account #...39 was also established which was intended to hold a credit On 10 March 2014, the parties made the decision to separate.
Upon separation, the wife left Suburb F with her children, whilst the husband continued to reside in the property. The wife rented elsewhere, for a number of years.
Suburb F was eventually put on the market for sale in August 2015.
In order to prepare the property for sale, significant expenditure was required. This included the renovation of a structural wall, costing $60,000. In addition, the husband, according to his oral evidence, purchased $55,000 worth of furniture to style the property.
Although the quantum and value of work is in contention, it appears as though both parties agree that the husband himself also completed work on Suburb F to ready it for sale whilst he was living there.
In September 2016, two separate offers for approximately $10 million were received for the purchase of the former matrimonial home, however neither were accepted. On 30 November 2016, a third offer was received, with the prospective purchasers offering $11 million for the property. This offer was accepted, and a deposit of $200,000 was paid.
By December 2016, the wife had decided to cease paying her half of the rates of the former matrimonial home.
On 21 February 2017, the prospective purchasers of Suburb F rescinded their contract and forfeited the $200,000 deposit.
From this point, the wife claims to have started borrowing money from friends, namely Ms U, and selling items such as her engagement ring in order to pay for her living expenses.
The parties were granted a divorce order on 31 July 2017. This order came into effect on 1 September 2017.
By early 2018, the husband had the heritage listing over the house removed. I discussed this in more detail later in these reasons.
The wife filed her Initiating Application in this Court on 15 December 2017, and the matter first came before the Court on 17 January 2018. On 5 March 2018, the husband filed his Response to the Initiating Application.
On 16 March 2018 contracts were exchanged for the sale of Suburb F for $11,200,000.
The parties were able to reach consent orders on 19 March 2018 which substantially dealt with the proceeds of sale of the matrimonial home. Specifically, they provided for all relevant loan accounts to be discharged, for all legal and real estate fees to be paid, and for each party to retain $3 million each by way of partial property settlement. The remaining funds were placed in controlled monies account. As noted, those funds remain the main point of contention between the parties, apart from superannuation.
In addition, the 19 March 2018 consent orders provided that the husband should remain in Suburb F until settlement, and should continue to pay all associated costs, up to $10,000, at which point both parties were to bear such costs equally.
The sale of Suburb F settled on 12 October 2018. The Portfolio Facility was paid out and discharged. Each party received $3,000,000 from the proceeds of sale as partial property distribution.
On 3 June 2019, the matter came before Chief Justice Alstergren who made orders appointing Mr W as single expert to value the wife’s interest in the G Group.
Further orders were made on 5 March 2020 appointing Mr AA as single expert to value the properties at BB Street, Suburb CC (“the Suburb CC property”), which was purchased by the wife and her new partner post-separation, and DD Street, Suburb EE (“the Suburb EE property”), which was owned by FF Pty Ltd as trustee for FF Trust and the HH Trust, and to facilitate an updated report from Mr W as to the value of the wife’s interest in the G Group.
Mr AA’s engagement as single expert was expanded on 10 July 2020, when orders were made for him to value the market rental value of Suburb F for the years 2014 to 2018. The wife was to pay the costs of this report in the first instance.
Orders were additionally made on 10 July 2020 progressing the matter towards trial.
As outlined below, the matter was eventually heard across four days in November-December 2020.
balance of cash. The husband claims there was agreement that the parties would each pay all residual income into #...39. As will be described later in these reasons, a number of sub accounts were brought into existence later in 2008.
Settlement of the purchase of Suburb F occurred on 29 September 2008. The parties purchased the property as joint tenants. The parties shared equally the payment of legal fees of $2,276. Other details of the purchase of Suburb F are important on the question of contributions and I will return to them later in these reasons.
It appears that the contract of sale referred to a heritage listing in relation to Suburb F. Advice from an architect in 2009 confirmed that an old fence built on the property was put on the heritage study list.
MATERIAL RELIED UPON
The husband relies upon the following:
(a)His Trial Affidavit filed 3 December 2019 (including exhibits);
(b)His Updating Affidavit filed 20 November 2020 (including exhibits);
(c)His Further Affidavit filed 23 November 2020 (including exhibits); and
(d)His Financial Statement filed 20 November 2020.
In addition to these documents, and for the assistance of the Court, the husband has provided a Case Outline dated 25 November 2020. This has also been accepted into evidence.
I also note that there was an Application in a Case brought by the husband on 24 November 2020 to rely upon an affidavit of Mr B, giving expert opinion evidence as to the liabilities payable in relation the liquidation of a single investment portfolio structure owned by C Pty Ltd (“C Company”) calculated as at June 2020. This structure included a superannuation fund, of which C Company was trustee. The investment structure was designed to provide retirement income for the husband from March 2026. The application was heard on the third day of trial. On 3 December 2020, I delivered an ex tempore judgment concerning the details of C Company, the investment structure, the utility of a tax calculation as at June 2020 and the admissibility of this expert evidence: Penner & Conroy [2020] FamCA 1128 (“ex tempore judgment”). I will refer to this judgment and C Company again and in more detail later in these reasons. The husband’s Application in a Case was dismissed.
The wife relies upon the following:
(a)Her Trial Affidavit filed 28 November 2019 (including exhibits);
(b)Her Updated Affidavit filed 20 November 2020 (including exhibits); and
(c)Her Financial Statement filed 20 November 2020.
Similarly to the husband, the wife has provided a Case Outline for the assistance of the Court. It is dated 25 November 2020 and has been accepted into evidence.
In addition, as described above, there were a number of Single Expert Witnesses appointed for the purpose of valuing certain marital assets. These Single Experts filed the following affidavits, which were also accepted into evidence;
(a)The Affidavit of Mr W, relating to the wife’s business interests, filed 15 November 2019, and additional questions and responses put to Mr W pursuant to the Family Law Rules 2004 (Cth);
(b)The Affidavit of Mr AA, relating to the rental assessment of the formal matrimonial home, filed on 11 November 2020;
(c)The Affidavit of Mr AA, relating to the valuation of the properties at Suburb CC and at Suburb EE, filed on 17 November 2020; and
(d)The Affidavit of Mr W, relating to the wife’s trust interests, filed 5 November 2020 and later amended on 24 November 2020, as well as additional questions and responses put to Mr W pursuant to the Family Law Rules 2004 (Cth).
In addition to the above, the following documents were also accepted into evidence:
Exhibit Label Document Tendered by Court 1 Joint Balance Sheet Joint A Wife’s Minute of Orders Sought Wife B Wife’s Tender Bundle Wife C Chain of emails commencing 31 January 2017 Wife D Letters between the Wife’s solicitors and the Husband in relation to disclosure of job applications Wife E Letters between the Wife’s solicitors and the Husband in relation to “taxable income history” Wife F C Company Financial Report – 2016 Wife G Schedule created by the Husband as to the time spent working on the former matrimonial home Wife 1 Wife’s Affidavit of 15 December 2017 together with Annexure B Husband 2 Husband’s Court Book p, 133 Husband 3 Husband’s Tender Bundle Husband 4 Annexures to Affidavit of Husband filed 3 December 2019 Husband 5 Letter dated 12 June 2020 from the Wife’s solicitors, together with the Joint Document of Outstanding Issues Husband 6 Bundle of documents in relation to the removal of the heritage listing Husband 7 Minute of Orders Sought by the Husband Husband
COMPETING PROPOSALS
As set out in Annexure ‘A’ of the wife’s Case Outline dated 25 November 2020, the wife seeks the following orders;
WIFE’S PROPOSED MINUTE OF ORDER
Annexure “A” to Wife’s Case Outline
Controlled Monies Account
1.That within seven days of the date of these orders, the parties do all acts and things and sign all documents necessary to cause NN Lawyers (“NNL”) to pay the wife the balance of proceeds of sale of the Suburb F property held in a controlled monies account operated by NNL, in the name of the parties, to the Wife.
Husband’s Self Managed Superannuation Fund
2.IT IS NOTED
2.1 C Pty Limited as trustee for C Superannuation Fund (“C SUPERANNUATION”) is a self managed superannuation fund listed by the Australian Taxation Office on the Super Fund Lookup website ( as a complying superannuation fund.
2.2 The Husband is the only members of C SUPERANNUATION.
2.3 The trustee of C SUPERANNUATION is C Pty Limited. The Husband is a Director of that corporation (“the Trustee”).
2.4 On the basis that the husband is the only director of the Trustee, the procedural fairness requirements of section 90AE(3) (c ) of the Family Law Act 1975 are satisfied. That having been accorded procedural fairness, these Orders bind the Trustee.
2.5 That, in accordance with Section 90XS of the Act, the following Orders are made under Section 79 of the Act in relation to the superannuation interest of the Husband in C SUPERANNUATION.
Husband to Split to Wife
3.That in accordance with paragraph 90XT(1)(a) of the Family Law Act 1975:
3.1 the Wife is entitled to be paid using a base amount as at the date of these Orders of $1,500,000 from the husband's interest in C SUPERANNUATION calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and 3.2 the Husband’s superannuation entitlement (and the entitlement of any other person to payments out of the Respondent’s superannuation interest) in C SUPERANNUATION is correspondingly reduced.
4.The Trustee shall do all such acts and things and have signed all such documents as may be necessary to:
4.1 calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Applicant in the clause immediately preceding this clause of this Order; and
4.2 pay the entitlement whenever the Trustee makes a splittable payment out of the Respondent’s superannuation interest in the Super Fund.
5.That orders 3 and 4 of these Orders operate from the operative time and the operative time is the beginning of the day upon which these orders are made.
Notice by each of the Parties
6.That, after service by the trustees of C SUPERANNUATION of the payment split notice in relation to each of Orders 10-12 pursuant to r.7A.03 of the Superannuation Industry (Supervision) Regulations 1994:
6.1 The wife shall do all such acts and things and sign all such documents as may be necessary, including but not limited to requesting the trustee to transfer or rollover her benefit in C SUPERANNUATION to a superannuation fund of the wife's choosing which complies with the Superannuation Industry (Supervision) Act 1993 and its associated regulations;
7.Pending the transfer of the benefits to the wife’s new superannuation fund, the husband is restrained from dealing with or disposing of any of the assets of C SUPERANNUATION other than in accordance with the terms of this Order and the husband shall immediately revoke any binding death nomination already made and be and is hereby restrained from:
7.1 Making any binding death nomination in favour of a child described in regulation 13 of the Family Law (Superannuation) Regulation 2001;
7.2 Making any other nomination where the effect of such nomination would be to render any splittable payment not splittable.
Personalty [sic] to the Wife
8.That within seven days of the date of these orders, the husband shall do all acts and things to deliver up to the wife, at his own expense, the stone top table purchased in Country RR from GG Company in Country RR on 14 June 2008 as described in paragraph 178 of the Wife’s affidavit dated 29 November 2019 and its accompanying metal base.
9.To give effect to order 8, within 48 hours of the date of these orders, the wife shall provide to the husband an address to which the husband can deliver the item set out in order 8.
Procedural Orders
10.Both parties be and are hereby ordered to sign all necessary documents [sic] instruments, writings, authorities or things required to give effect to these orders.
11.That except as otherwise provided for by these orders to the contrary, each of the husband and the wife releases the other from all debts owing from one to the other.
12.In the event that either party refuses fails or neglects to sign any document instrument, writing, authority or thing required to give effect to this property order or any part of it then pursuant to s.106A of the Family Law Act,1975, as amended (Cth), a Registrar or Deputy Registrar of the Family Court of Australia, Sydney Registry, be and is hereby appointed to sign such document instrument writing authority or thing on behalf of the defaulting party upon being satisfied of the relevant default by affidavit evidence.
Declarations
13.That the Wife shall otherwise be declared the sole legal and beneficial owner of all property in her name, possession and/or control to the exclusion of the Husband including but not limited to any and all other real estate properties not referred to in the Orders herein including but not limited to the following:
13.1 Partial property distribution of sale proceeds of Suburb F pursuant orders dated 19 March 2018;
13.2 Funds held in CBA bank accounts in the wife’s sole name or jointly with any other person;
13.3 Motor Vehicle 1;
13.4 Motor Vehicle 2;
13.5 Shares held in wife’s name;
13.6 Shareholding in JJ Pty Ltd;
13.7 Shareholding in G Group Pty Limited;
13.8 Shareholding in SS Pty Ltd;
13.9 Registered partnership “KK Partnership (ABN…)”;
13.10 Registered partnership “LL Partnership (ABN …)”;
13.11 Member interest in K Super fund;
13.12 Member interest in The L Super Fund;
13.13 any other Superannuation interest in the wife’s name
13.14 MM Street, Suburb NN;
13.15 H1 Trust (ABN …);
13.16 Y Trust (ABN unknown);
13.17 Z Trust (ABN unknown); and
13.18 FF Trust (ABN …)
13.19 Her share of BB Street, Suburb CC;
13.20 Any jewellery;
13.21 Any prospective inheritance from her Mother’s estate;
13.22 Household contents;
13.23 Any other real estate shares or chattels of whatsoever kind and whatsoever nature in the Wife’s name;
13.24 Any other real estate shares or chattels of whatsoever kind and whatsoever nature in the wife’s name.
14.That the Husband shall otherwise be declared the sole legal and beneficial owner of all property in his name, possession and/or control to the exclusion of the Wife including but not limited to the following:-
14.1 Partial property distribution of sale proceeds of Suburb F pursuant orders dated 19 March 2018;
14.2 Motor Vehicle 3;
14.3 Motor Vehicle 4;
14.4 O Bank Maxi Saver account #...79;
14.5 O Bank account #...79;
14.6 NAB account #...67;
14.7 CBA account #...73;
14.8 N Company Shareholding;
14.9 P Company Shareholding;
14.10 Q Company Shareholding;
14.11 R Company Shareholding;
14.12 S Company Shareholding;
14.13 Life insurance;
14.14 Household contents
14.15 O Bank Gold Credit Card
14.16 Shareholding in C Pty Ltd (Trustee for C Superannuation Fund);
14.17 C Superannuation Fund;
14.18 Super Fund 1;
14.19 Super Fund 2;
14.20 Shareholding in M Pty Limited.
14.21 Any disclosed prospective inheritance from his Father’s estate;
14.22 Any other real estate shares or chattels of whatsoever kind and whatsoever nature in the husband’s name;
Costs
15.That the husband pay the wife’s costs of and incidental to these proceedings.
As set out in a document titled “MINUTE OF ORDER SOUGHT BY THE HUSBAND” and sent to the Court following the completion of the parties’ respective closing submissions, the husband seeks the following;
1.That the parties do all things and give all authorities necessary to cause the funds held on deposit by NN Lawyers to be paid as follows:
a. As to 65% of those funds to the husband;
b. As to the balance to the wife.
2.Upon compliance with Order 1, the Wife shall otherwise be declared the sole legal and beneficial owner of all property in her name, possession and/or control to the exclusion of the Husband including but not limited to the following:
a. Motor Vehicle 1;
b. Motor Vehicle 2;
c. Shares in G Pty Limited;
d. Interests in:
i. The H1 Trust
ii. The H2 Trust
iii. The J Trust
e. Shares in publicly listed companies
f. Any bank accounts in the wife’s name;
g. The superannuation entitlement standing in the wife’s name in respect of:
i. The K Super Fund;
ii. The L Super Fund.
h. Any other property or chattels of whatsoever kind and whatsoever nature in the wife’s name.
3.That the Husband shall otherwise be declared the sole legal and beneficial owner of all property in his name, possession and/or control to the exclusion of the Wife including but not limited to the following:
a. Motor Vehicle 3;
b. Motor Vehicle 4;
c. Shares in M Pty Limited;
d. Shares in the following publicly listed companies:
i. N Company;
ii. P Company;
iii. Q Company;
iv. R Company;
v. S Company;
e. Shares in C Pty Ltd (Trustee for C Superannuation Fund).
f. The Superannuation entitlement standing in the husband’s name in respect of:
i. C Superannuation Fund;
ii. Super Fund 1;
iii. Super Fund 2;
g. Any other property or chattels of whatsoever kind and whatsoever nature in the husband’s name.
4.The wife shall indemnify and save harmless the Husband and keep the Husband indemnified and saved harmless from and against all claims, actions, suits or demands arising out of or in connection with any and all liabilities including but not limited to:
a. Any liability attaching to any property referred to in Order 2;
b. The Wife’s CBA Mastercard x…90 Credit Card;
c. The Wife’s CBA Visa x…72 Credit Card;
d. The Wife’s AMEX x…08 Credit Card;
e. Any amount owing to the Australian Taxation Office.
5.The Husband shall indemnify and save harmless the Wife and keep the Wife indemnified and saved harmless from and against all claims, actions, suits or demands arising out of or in connection with any and all liabilities including but not limited to:
a. Any liability attaching to any property referred to in Order 3;
b. The Husband’s O Bank Credit Card;
c. The Husband’s Division 293 Deferred debt;
d. Any amount owing to the Australian Taxation Office; [sic]
THE LAW
Part VIII of the Family Law Act1975 (Cth) ("the Act") sets out the legislative provisions relating to property orders that may be sought when parties are or were married. The central provision is s 79 of the Act which gives the Court power to make such orders for alteration of property interests as it considers appropriate.
Section 79(2) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(4) of the Act set outs the factors to be taken into account in considering what order, if any, should be made (these will be discussed in detail below).
Section 80 grants specific powers to the court to adjust property interests. Specifically, s 80(1) provides, inter alia, for orders for lump sums, weekly, monthly, yearly or other periodic sums, or the transfer of specified property. Part VIIIB gives the Court powers to make superannuation splitting orders.
Section 81 is also relevant, although the Full Court has held it is neither a 'head of power' nor an absolute requirement; it reflects a policy of making orders which finally determine the financial relationship between the parties and avoid further proceedings, but this is only to be taken “as far as (is) practicable”: In the Marriage of Crapp and Crapp (No 2) (1979) FLC 90-615; (1979) 5 Fam LR 47; [1979] FamCA 17.
The approach to be taken
Prior to the High Court of Australia's decision of Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52 (“Stanford”), there became established a "four step process”, as set forth in Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143 (“Hickey”) in the determination of an application under s 79, as follows:
1.Identify and value, the parties' property, liabilities and financial resources at the date of the hearing;
2.Identify and assess the contributions of the parties as referred to in s 79 of 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, whether examined on a global approach or an asset by asset approach;
3.Identify and assess the other factors relevant including, the matters referred to in s 75 of the Act and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
4. Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.
The Full Court of the Family Court of Australia in Bevan & Bevan [2013] FamCAFC 116 (“Bevan”) has held that the decision in Stanford has not overruled the four step approach, but serves as a reminder that the four step process "merely illuminates the path to the ultimate result" being "no more than a shorthand distillation of the words of a statute which has but one ultimate requirement, namely not to make an order unless it is just and equitable to do so."
In relation to the just and equitable requirement, the Full Court in Bevan emphasised that although the pre-condition to making any order for property adjustment is a finding that it is just and equitable to do so in accordance with s 79(2) of the Act, such a finding does not form a threshold issue nor must the requirements of s 79 be followed in a particular order.
The Full Court in Bevan also summarised three "fundamental propositions" laid down by the High Court in Stanford to provide "useful guidance to trial judges in approaching the task under s79" as follows:
Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties' interests in the property are or should be different from those determined by common law and equity;
A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4) and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.
The High Court has held that the very fact of separation may lead to the ready satisfaction of just and equitable requirement: Stanford at [41] - [42]. In most cases the court will not need to discuss the s 79(2) issue, because the cases will be conducted on the basis of acceptance by the parties that it is just and equitable to make some form of adjustment: Fielding and Nichol [2014] FCWA 77 at [43]. Here the parties accept it would be just and equitable to make some form of adjustment. The just and equitable requirement has been satisfied by the issues joined and the way the case was conducted. The Court must also be satisfied that its proposed final orders are themselves just and equitable. I will return to this question later in these reasons.
I will therefore approach the determination of this matter by first identifying the assets and liabilities of the parties, then by dealing with s 79(4) factors, including s 75(2).
ASSETS, LIABILITIES AND FINANCIAL RESOURCES AT THE DATE OF THE HEARING
The High Court of Australia made clear in Stanford at [39] that the question whether it is just and equitable to make an order "is not to be answered by assuming that the parties' rights or interests in marital property are or should be different from those that then exist". The first step requires identification of parties' property, liabilities and financial resources at the date of the hearing, according to ordinary principles of law and equity.
The identification of assets and liabilities in this matter raised four primary areas of dispute.
C Company
The husband’s interest in C Company, was explained in my ex tempore judgment. It is only necessary to repeat that C Company forms the “growth assets” component of the husband’s single investment portfolio, created in the 1990’s for his retirement. C Company is also the trustee of the C Superannuation Fund, which will be dealt separately on the balance sheet. The equity holdings of C Company and the superannuation fund together are intended to constitute a tax efficient diverse portfolio to provide the source of the husband’s retirement income.
As explained in the ex tempore judgement, the dispute about the value of C Company centred on the treatment of the capital gains tax liability upon the liquidation of C Company’s holdings of equities. According to the husband, the sale of C Company’s assets will not, indeed, must not happen until he turns 65 in 2026. So no capital gains tax liability will accrue until then. The wife argued that it was open to the husband to bring forward the liquidation of C Company’s assets by changes to the relevant constitution and trust deeds, but I found this is unlikely. The capital gains tax liability will initially fall on the corporate entities holding the equities but will ultimately be borne by the husband. The tax liability at that point in time cannot be known. Senior counsel for the husband accepted in closing submissions that any tax payable could not be considered in this stage of the four-step process.
The wife proposed that the assets of C Company be attributed the value of $6,664,033 in the balance sheet. In cross-examination, the husband accepted this as its present value. There was no dispute that C Company also holds $3,073,134 in assets as trustee of the C Superannuation Fund.
In submissions, the wife conceded there was no dispute that upon the liquidation of C Company’s holdings of equities a significant tax liability would accrue which would ultimately be borne by the husband.
I accept the value husband’s interest in C Company should be included in the balance sheet as $6,664,033. However, the ultimate taxation impost which will fall upon the husband after March 2026 should be taken into account under s 79(4)(e) when considering the s 75(2) factors. I discussed the relevant authorities and reasons for this approach in my ex tempore judgment. It is unnecessary to repeat them here.
The Loan to C Company
The Financial Statement of C Company for the financial year ending 30 June 2020 discloses a loan made by the husband to it in the sum of $97,700. The husband gave evidence that this loan account arose from dividends declared by C Company in favour of the husband, but which were not actually paid to him. Rather they were treated in the accounts of C Company as a loan by the husband.
The wife submits that this loan should be included in the balance sheet as an asset of the husband. She also claims to have taken this liability into account in determining the value of C Company, meaning that if it is not treated as a loan owed to the husband, the value of C Company should be increased by $97,700. The husband argued the loan should not appear on the balance sheet because he took it into account reaching his value for C Company, although the evidence for his value was unclear.
In my view, it is appropriate to include the loan as an asset of the husband, separately to the value of his interest in C Company. As a liability of C Company, I find it is likely it will be repaid as a loan to the husband, if only for consistency of maintaining a beneficial tax treatment between the husband and C Company. A repayment to the husband of a loan would not attract any tax liability in the ordinary course.
Loan to M Pty Ltd (“M Company”)
The Financial Statement for M Company for financial year ending 30 June 2020 reflects a loan from the husband in the amount of $57,942. The husband said M Company was a consulting business he tried to start. The husband gave evidence that he transferred $50,000 from his redundancy payment to sub account #...81 which was used to fund the start-up of M Company. He transferred funds from the Portfolio Facility to his sole O Bank account and then eventually to M Company. This loan facility was then discharged upon settlement of the sale of the former matrimonial home. As a result, the wife submits that the loan should be included in the balance sheet.
The husband gave evidence that M Company is a failed business venture which no longer trades, has no assets and has nominal funds in banks accounts. As a result, he argues that it is unlikely that the loan will be repaid. I accept this loan will not be repaid. It should not be included on the balance sheet.
However, the wife argued in closing submissions that the amount loaned to M Company should be notionally added back to the asset pool or treated as a contribution by the wife. This submission will be discussed below.
ATO Liability
Pursuant to his Financial Statement filed 20 November 2020, the husband has a tax liability to the ATO in the approximate sum of $4,619. He describes this liability as “Division 293 Deferred Tax”. I accept the husband owes this money. The wife contended that this should not be included in the balance sheet because the parties have been separated for seven years. On that basis this liability is not one in which the wife should share. I accept this argument.
Superannuation
The Full Court of the Family Court of Australia's decision in C & C (2005) FLC 93-220 requires the Court, in the majority of cases, to consider the parties superannuation interest as a separate species of property, unless the parties consent to it not being treated separately. It is open to the Court to decide whether to treat superannuation interests as a separate list of assets, or as part of one asset list. The majority of the Full Court in C & C (2005) FLC 93-220 said there is no binding principle as to the exercise of the Court's discretion in deciding whether a one list or a two list approach should be adopted.
The wife seeks a superannuation split. The husband does not. I have taken the view that superannuation should not be treated as a separate pool of assets. I will return to this later in these reasons.
Expenditure after Separation and Addbacks
As already noted, the wife initially argued that two items should be included on the balance sheet as addbacks. These were the husband’s loan to M Company, and his post separation utilisation of the Portfolio Facility, specifically to draw down on sub-account #...43, increasing the debit balance from $220,998 to $727,416 at the point in time when the Portfolio Facility was discharged upon the settlement of the sale of the Suburb F property. That is an increase of $506,418. There was no claim by either party to addbacks for paid legal fees.
The approach to add backs in connection with the determination of the parties’ existing interests in property was stated in Vass v Vass (2015) 53 Fam LR 373; [2015] FamCAFC 51; as follows:
138. There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 – is authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered.
139. The decisions referred to seek to remind the Court that, however the exercise of discretion might seek to deal with property that is said to be the subject of “add back”, proper consideration must be given to existing interests in property, and the question posed by s 79(2) as a separate inquiry from any adjustment to property interests by reference to s 79(4) if a consideration of s 79(2) reveals that it is just and equitable to alter existing interests in property.
Vass was recently applied by the Full Court in Warbrick & Warbrick [2021] FamCAFC 60 at [30].
In Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173 (“Trevi”) at [27]-[42] the Full Court set forth the guidelines relating to addbacks as follows:
Guidelines for adding back to the property available at trial
(a) Dissipation of property and expenditure other than on legal fees
[27] The Full Court held in Omacini and Omacini that addbacks fall into "three clear categories": where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and "waste" or wanton, negligent, or reckless dissipation of assets.
[28] However, the Full Court also made it clear that an addback does not necessarily occur whenever "a party has expended money realised from the disposition of assets that existed as at the date of separation", the Full Court describing such a proposition as "unduly simplistic". An earlier Full Court made the same point, saying that adding back is "the exception rather than the rule".
[29] The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, "the Family Court must take the property of a party to the marriage as it finds it" at trial. An important parallel proposition is that the parties do not "go into a state of suspended economic animation" after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
[30] Two fundamental premises emerge from Omacini and the authorities preceding it. First, "adding back" is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not "exceptional" justice and equity can be achieved, not by adding back, but by the exercise of a different discretion - usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is "a course which is, perhaps, technically more correct" than adding back to the list of existing interests in property.
Citations omitted.
The Full Court also pointed out that the decision in Stanford concerning identification of the parties’ assets is not offended by the proper approach to add backs. At [47] the Full Court said:
[47]The essence of a claim for addbacks is that the asserted sum/s should be added to the value of the existing property interests of the parties and, subsequent to the assessment of contributions, credited to the spending party as part of the value of their assessed entitlements. Doing so does not offend what was emphasised by the High Court. Adding back does not seek to create property interests that do not exist. Rather, doing so emphasises that satisfying the respective requirements of ss 79(2) and (4) of the Act to do justice and equity can require an "accounting" or "balance sheet" exercise for the purposes of s 79(2) and (4), so as to include the value of the dissipated property or expended sums within the total value of the parties' existing interests in property, and to credit the value of same against the assessed entitlement of the dissipating or spending party.
(Citations omitted)
With regards to subaccount #...43, the wife submits that after separation the husband was spending money in an extravagant way, on international and domestic travel, school fees, rates, and even placing some funds into his superannuation account.
The wife drew adverse comparisons between these spending patterns and her own, pointing out that she had to borrow money, sell properties and sell assets in order to raise enough money to cover her spending after separation. She did this rather than draw down on the Portfolio Facility.
The husband gave evidence that he drew down $395,472 from #...43. He denied the amount was $506,418. He contended that there was no wastage; that his spending was for a legitimate purpose and therefore should not fall into a category of addbacks. Senior counsel for the husband stressed that it was never put to the husband in cross-examination that he was wasteful in his spending, and therefore he submits that the wife cannot suggest that it was wasteful.
Although initially the wife pressed for $506,418 to be entered on the balance sheet as an add back in favour of the husband, in final submissions, senior counsel for the wife accepted that the parties were entitled to get on with their lives after separation and that, in accordance with authority, such as Trevi, it was difficult to treat the amount drawn down by the husband as an addback. Rather he argued the Court should treat the amounts drawn down from #...43 by the husband as a post separation contribution by the wife. He argued as a matter of justice and equity this was appropriate because while the wife left the Portfolio Facility untouched after separation, the husband used it extensively for his lifestyle and expenses.
I accept there is force in the wife’s argument. While the precise amount drawn down by the husband after separation from #...43 is unclear, I am satisfied it was no less than $395,472, and he gave no explanation of the difference between $395,472 and $506,418, although interest may account for some of it. The debit balance of #...43 will not be included as an addback in the balance sheet. However, I accept broadly speaking it is appropriate to treat half of the amount borrowed by the husband by these drawdowns was contributed by the wife because both parties were jointly liable for the debit balance of #...43 and thus this subaccount was discharged by the wife and the husband upon the settlement of the sale of Suburb F. I discuss contributions further later in these reasons.
Similarly, I do not think justice and equity require the loan to M Company to be included as an asset of the husband. In relation to this question it is necessary to express a view about the husband’s disclosure. The wife argued that several aspects of the husband’s financial circumstances post separation were not clear and that this was because of inadequate disclosure by him. Examples were his failure to provide anything more than the first page of his taxation returns for recent years. The wife also included in these criticisms inadequate disclosure of the source of funds to start up M Company. The wife contended it was open to the Court to infer the husband used #...43 for this purpose. If so, it should be treated as part of the overall debit balance of #...43. I accept this is likely. I find that part of the money drawn down by the husband from #...43 was likely used by him to start up M Company, and consequently forms a component of the #...43 partial contribution by the wife. I will include this amount in the assessment of contributions but not as an addback.
I note that some items on Exhibit Court 1 were not the subject of any evidence or submissions. I will ignore these items. Both parties also expect to receive some distributions from the estates of deceased parents. These have not yet been crystallised. I will take account of them under s 79(4)(e).
In light of the above findings, the assets and liabilities of the parties at the date of hearing are, as follows:
as follows:
Ownership Description Applicant’s value ASSETS 1. JT Sale proceeds of Suburb F property (CMA Account) $3,214,692 2. W 50% of BB Street, Suburb CC
Agreed single expert value for hearing$2,375,000 3. W CBA Bank Account #...83
Wife’s Financial Statement filed 20 November 2020$7,364 4. W CBA Offset Account #...29 (see notes) $8,226 5. W CBA Offset Account #...96 (joint with Mr PP) $720 6. W Motor Vehicle 1 (see notes) $14,000 7. W Motor Vehicle 2 (see notes) $16,000 8. W Wife’s business interests in the G Group of businesses (see notes) $2,550,768 9. H CBA Term Deposit #...89 $2,400,000 10. H O Bank Term Deposit #...25 $1,138 11. H O Bank Account #...94 $4,494 12. H O Bank Maxi-Saver #...99 $43,060 13. H 13,713 N Company Shares $532,613 14. H 887 P Company Shares $1,193 15. H 334 Q Company Shares $1,576 16. H 8,600 R Company Shares $23,736 17. H 2,194 S Company Shares $4,937 18. H Motor Vehicle 3 $71,450 19. H Motor Vehicle 4 $20,950 20. H Loan to C Pty Ltd $97,700 21. H C Pty Ltd $6,664,033 22. H Direct Investment Account #...73 $44 23. W Loan account HH Trust (as at 30.6.2019) $120,193 24. W Household contents $40,000 25. H Household contents $20,000 Total $18,233,887 LIABILITIES 26. W Wife’s share of Home Loan over Suburb CC property $758,435 Total $758,435 SUPERANNUATION Member Name of Fund Type of Interest Applicants value 27. W K Super Fund as at 30 June 2020 (see note) SMSF $323,028 28. W The L Super Fund SMSF $876,536 29. W Super Fund 1 (balance as at 12 November 2020) Accum $304,530 30. H C Superannuation Fund as at 30 June 2020 SMSF $3,073,134 31. H Super Fund 1 (see notes) Defined Benefit & Accum $168,456 32. H Super Fund 2 (see notes) Accum $143,745 Total $4,889,429 NETT POOL (INCLUDING SUPERANNUATION): $22,364,881 PERCENTAGES OF NET ASSETS AT HEARING
Consequently, if there was no property adjustment, the applicant would hold 33% of the parties' net assets and the respondent 67%. As noted both agree there should be an adjustment to this position.
I turn now to consider the application of Part VIII of the Act and the factors set forth in ss 79 & 75(2).
CONTRIBUTIONS UNDER SECTION 79
I will deal first with s 79 of the Act. Section 79(4) of the Act sets out the considerations to be taken into account by the Court in considering what order (if any) should be made under s 79 of the Act in property settlement proceedings.
In closing submissions, the husband suggested that I take an asset by asset, or two pools, approach in considering the contributions made by the parties; the wife suggested that I take a global approach. The High Court has made clear the Court has a discretion as to which approach to take: Norbis v Norbis (1986) 161 CLR 513 (“Norbis”).
In Norbis Mason and Deane JJ said at 523:
For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, i.e. on a global or, alternatively, on an ‘asset-by-asset’ basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient.
...
As a matter of construction of sec. 79 Nygh J. is right in saying that the section imposes no obligation on the Family Court to pursue in relation to this issue either the global approach or the asset-by-asset approach to the exclusion of the other. We do not understand the Full Court in the present case to suggest otherwise. What the Full Court asserts is that the global approach is the only ‘realistic’, that is, convenient, means of arriving at the entitlements of the parties. Again, it seems to us that it will depend on the circumstances of the particular case, though in the majority of cases the global approach will be the more convenient and for this reason the Full Court is entitled to prescribe its adoption as a guideline in the majority of cases...
It has not been suggested that there is any fundamental difference between the two competing approaches which we have considered, in the sense that one will yield more just and equitable entitlements than the other. The general preference which has been expressed from the global approach is not by reason of any notion that it is the only approach authorised by the Act, but by reason of considerations of convenience. Accordingly, quite apart from the fact that its status as a prescribed approach is that of a guideline and not that of a principle of law, the application of the asset-by-asset approach does not of itself amount to an error of law.
Following Norbis, in McMahon and McMahon (1995) FLC 92-606 the Full Court (Nicholson CJ, Ellis and Buckley JJ) discussed when an asset by asset approach may be appropriate, saying at 82,043:
In our view, the particular circumstances of this case made an asset -by-asset approach preferable to a global approach.
The short duration of and the unhappy nature of the marriage, coupled with the parties' strict division of assets and their method of dealing with them lent itself to an asset-by-asset approach, particularly where they had separately identified another group of assets as joint.
We are conscious of the remarks of Mason CJ and Deane J in Norbis v Norbis [1986] HCA 17; (1986) FLC 91-712 at p 75,168; [1986] HCA 17; (1985-1986) 161 CLR 513 at 523, where their Honours indicated that in most cases the global approach is more convenient.
However, it should be remembered that they stressed that they were not to be understood as denying the legitimacy of the trial Judge's ascertainment in the first instance of the financial contributions of the parties by reference to particular assets.
...
One of the reasons why their Honours expressed a preference for the global approach is because it is natural to assess the contribution by a spouse as a homemaker and parent, either by reference to the whole of the parties' property, or to some part of that property as distinct from individual assets.
However, this is not a case where the homemaker and parent contribution looms large and, having regard to the parties' agreement that it should be regarded as equal for the period of the marriage, this presented no obstacle to the adoption of the asset-by-asset approach in this case.
We consider that this is a case which falls conveniently into the class of cases referred to by Wilson and Dawson JJ in Norbis at FLC pp 75,173-75, 174; CLR 532-3, when they said:—
‘If the parties' interests in specific items of property differ or they have made differing contributions, it may be desirable to proceed upon an item by item basis in the division of property between them. In such a case, justice and equity may best be served by treating the items separately for the purpose of determining the proportions in which they are to be divided, particularly if the overall division is to be effected by the transfer or retention of interests in individual assets, as was convenient in this case.’
Clearly it is the circumstances of the case which primarily determine which approach may be preferable and either approach should yield a similar just and equitable outcome. While a global approach is often preferable, generally speaking, the asset by asset approach may be appropriate in cases where the nature of the financial relationship of the parties during the marriage was such that they treated some property as exclusively the property of one party to which the other party made no contribution: Zyk and Zyk (1995) FLC 92-644 at 82,509-10.
While other cases, in which a choice between the approaches has been considered, do tend to turn on their own facts, they are helpful giving some insight into common issues where an asset by asset approach has been adopted. For example, in Elliott & Elliott and Ors [2007] FamCA 1232, O’Reilly J adopted a two pool approach by treating separately a garage property owned by the wife for the following reasons at [28]:
… (1) the wife owned it before the parties’ cohabitation and marriage; (2) it was, and remained throughout the parties’ cohabitation and marriage, a separate or exclusive interest of the wife, in that it did not become “mixed” into the parties’ financial affairs during the period of their cohabitation and marriage; (3) the period of the parties’ cohabitation and marriage was short; and (4) the husband made no contribution to this asset.
In Ashforth & Ashforth [2012] FamCA 621, Fowler J determined that an asset by asset approach was appropriate because the Court was faced with a short marriage of approximately 18 months, and the pre-existing assets and liabilities of the parties were kept in basic form as to the father during the marriage. In Keirn & Moxey [2017] FamCA 487, Rees J took an asset by asset approach by quarantining from the global pool a specific property owned by the wife to which the husband made no contribution. In that case, the parties married in 2006 and separated in 2014.
However, a short marriage of itself does not determine that an asset by asset approach should be adopted; it is but one factor which may weigh in favour of such an approach: Zagari & Habib [2010] FamCAFC 159 at [83]; Greer & Mackintosh [2013] FamCAFC 16 at [101].
In the present matter, the husband argued that the central joint asset in the relationship was the Suburb F property. In other respects the husband contended the contributions of the parties were equal, and otherwise they each made immaterial contributions to the other’s assets. He points out that during the relationship the husband kept his interests in C Company separate, while the wife kept her interest in G Group and both parties maintained separate bank accounts.
In accordance with s 79(4) of the Act, it has been settled for many years that the Court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties' assets as well as to the welfare of the family during cohabitation and after separation. The Court must consider the contributions in an overall sense: Norman & Norman [2010] FamCAFC 66; Hickey; Kowalski and Kowalski (1993) FLC 92-342; G & G [2000] FamCA 1075. It has long been settled that a broad approach is preferred, rather than reference to precise mathematical calculations: In the Marriage of Burke (1981) FLC 91-055, although an evaluation of each party's respective contributions is necessary: JEL & DDF (2001) FLC 93,075. Assumptions about equality of contributions should not be made.
In Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154 the Court expressly rejected the notion that there must be a relationship between contributions and what they produced in terms of property. At [14] the Full Court said:
14. As is plain from earlier decisions of this Court, regard must be had to the use made of contributions of various types so as to compare the contributions made by each of the parties during the course of, and over the length of, their relationship (see, for example, In the Marriage of Pierce (1998) FLC 92-844). But that is an entirely different proposition to, as it were, causally linking contributions with their asserted financial “product” or “value”. The former recognises that the nature, form and extent of contributions made by each of the parties might differ; the latter suggests that the absence of a causal link counts as no contribution at all.
At [17] - [22] the Full Court continued:
17.…it is self-evident that financial contributions (whether direct or indirect) can be made to a relationship that have an effect on the property of the parties without those financial contributions finding their way directly into, or being directly linked to, specific property or, indeed, directly to the totality of the property available for distribution at the time of trial. Financial contributions can be made to the “...acquisition, conservation or improvement...” of property “...directly or indirectly...” (s 79(4)(a). Emphasis added). A financial contribution can be made indirectly by, for example, the use by parties of income or assets for purpose A freeing up the use of other income or assets for purpose B. Moreover, a particular financial contribution might have been used wholly in discretionary expenditure which, but for that contribution, would not have been available to the parties or would have required borrowings or a diminution of capital. Such a contribution can also, in that way, be seen, for example, as an indirect contribution to the conservation of property. Indeed, the principles discussed for example in In the Marriage of Kowaliw [1981] FamCA 70; (1981) FLC 91-092 and In the Marriage of Townsend [1994] FamCA 144; (1995) FLC 92-569, can be seen as an exception to that general proposition.
18. Any and all such contributions, whether or not they sound in, or are directly linked to, the property available for distribution, should be considered and assessed together with the nature, form and extent of all other contributions of all types contemplated otherwise by s 79(4).
19. That is true of assets or income generated within the relationship and it is equally true of assets or income coming from outside of the relationship (for example, as here, in the form of inheritances). In the same way, s 79(4) specifically requires the Court to take into account contributions made to the welfare of the family (and substantively and “...not in any merely token way...”; see, Mallett v Mallett [1984] HCA 21; (1984) 156 CLR 605 at 636 per Wilson J) notwithstanding that those contributions may not be, or cannot be seen to be, directly linked to the available property at trial, or any increase or decrease in the value of the property.
20. Put another way, consistent with authority, the s 79 discretion involves as a necessary requirement that “... trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such an assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.” (In the Marriage of Aleksovski [1996] FamCA 111; (1996) FLC 92-705 at 83,437). In Aleksovski, Kay J outlined the well-known “gold bar” analogy and said “[w]hat is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship” (at 83,443).
21. Those same principles can be expressed as saying that the requirements of the section are met by approaching the assessment of contributions holistically and by analysing the nature, form, characteristics and origin of the property currently comprising that to which s 79 applies, and, in turn, analysing the nature, form and extent of the contributions (of all types) contemplated by s 79. That task is also undertaken by reference to the nature and form of the particular marriage partnership manifested by the particular circumstances of this particular marriage. Is it, for example, a relationship, as Deane J put it in Mallett at 640-641 “...where the parties have adopted the attitude that their marriage constituted a practical union of both lives and property...” or is it, for example, a union where parties lived very separate domestic and financial lives?
More recent authority has emphasised the necessity for a holistic approach: Jabour & Jabour [2019] FamCAFC 78 at [31] - [87]; Horrigan & Horrigan [2020] FamCAFC 25 (“Horrigan”) at [35] - [49]; Barnell & Barnell [2020] FamCAFC 102 (“Barnell”) at [30]-[43]; Benson & Drury [2020] FamCAFC 303 at [35].
In Horrigan at [35] the Full Court said:
35. It is well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties’ respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment. (Pierce v Pierce [1998] FamCA 74; (1999) FLC 92-844; Singerson & Joans [2014] FamCAFC 238; Dickons v Dickons [2012] FamCAFC 154; (2012) 50 Fam LR 244; Marsh & Marsh [2014] FamCAFC 24; (2014) FLC 93-576; Lovine & Connor and Anor [2012] FamCAFC 168; (2012) FLC 93-515 at [39]- [42]).
In Horrigan at [48] the Full Court further said: “Inevitably the length of the relationship under consideration informs the holistic assessment of contributions. Here the parties’ relationship subsisted for a little less than eight years.” In Horrigan the relatively short duration of the relationship did not change the correctness of the holistic approach.
I accept there are facts here which militate in favour of a two pool approach. It could not be said the parties adopted the attitude that their marriage constituted “a practical union of both lives and property”. The wife said in her evidence “With the exception of the purchase of the Suburb F property and the management of the Suburb F NAB facility, Mr Conroy and I maintained our finances separately.” They did maintain separate bank accounts into which they paid their individual incomes. They largely, but not entirely, kept their superannuation separate. The husband maintained C Company while the wife kept G Group separate. The parties were married for a little over six years. However, equally it could not be said lived “very separate domestic and financial lives”. As the discussion of contributions below makes clearly, the boundaries between the assets and financial resources of each were blurred in material ways. Suburb F was a jointly owned asset which was used as security for significant borrowings of both parties under the Portfolio Facility, for which they were jointly and severally liable. Each sold their solely owned real estate to contribute to the acquisition of Suburb F, in the case of the wife, or to reduce joint liabilities in the Portfolio Facility, secured against Suburb F, in the case of the husband. The wife used the joint Portfolio Facility to purchase office space from which the business of G Group was in part conducted. There was no evidence of the value of C Company at cohabitation, nor at separation. The wife paid utilities and outgoings for Suburb F, while the parties shared expenses for food and groceries although the wife paid the larger share. So the evidence does not permit a finding of how much the husband may have been able to contribute to C Company assets from his income during the marriage, as a result of the wife’s income being available to meet other expenses, such as household expenses, for example, or whether its value at trial was purely the result of increases in the value of share market equities since cohabitation. Answers to these questions were purely in the knowledge of the husband, but he gave no evidence which would allow the Court to know the answers. As discussed elsewhere in these reasons, the husband’s disclosure was incomplete, and in particular he did not make clear how he disbursed his income during the marriage. It is open therefore to infer some of his income during the marriage may have been applied to the increase of C Company assets. Similarly, the drawings by the husband from Portfolio subaccount #...43, discussed in detail below, which helped to fund his post separation expenses, as well as a contribution of $35,000 to his superannuation, was a utilisation of a joint resource rather than his individual resources. There was no evidence of any superannuation balances as at cohabitation or separation so the impact of the $35,000 on the husband’s overall superannuation position is impossible to assess in any precise way. But again his evidence could have addressed these questions. The wife gave no clear evidence of what proportion of her income was paid into her superannuation during the marriage. Again she could have provided such evidence. The evidence overall did not permit quantification of the parties’ contributions to their superannuation funds outside of the period of their marriage, and in the case of the wife, to some extent post separation: cf Van der Linden & Kordell [2010] FamCAFC 157 at [34]. For these reasons, I am satisfied a global approach is preferred. I consider a holistic approach to the assessment of contributions accords with authority. I will adopt a global approach. Below is a discussion of the evidence and my findings in relation to the relevant contributions under s 79(4) of the Act.
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage
Initial contributions
At the commencement of the relationship, the wife gave evidence, which I accept, that she held the following property;
(e)The Suburb UU Property;
(f)Interest in G Group;
(g)An interest in FF Pty Ltd ATF FF Trust and the HH Trust;
(h)One-third interest in 75 per cent of MM Street;
(i)A member interest in the self-managed superannuation fund, K Super Fund, which through the HH Trust owned a property at Suburb EE ;
(j)Personal effects;
(k)A Motor Vehicle 5; and
(l)A Motor Vehicle 6.
In addition, however, she had secured loans amounting to $422,969. These loans were made up of four loans accounts held with National Australia Bank (“NAB”) and were secured against the Suburb UU property.
In comparison, the husband claims to have had the following;
(m)The Suburb OO property;
(n)A NAB bank account with the amount of approximately $92,000;
(o)An O Bank account with the amount of approximately $441,031;
(p)Furniture and collectibles;
(q)An unencumbered Motor Vehicle 5;
(r)A share portfolio, which included N Company shares;
(s)Interest in C Pty Ltd, as well as his entitlement to the C Superannuation Fund;
(t)Additional Superannuation member entitlements in two pooled managed by Super Fund 1 and Super Fund 2
(u)A one-third interest in a property owned by his father in Suburb TT;
The husband also accepts that he had a number of credit card liabilities, and an O Bank loan secured by mortgage over the Suburb OO property.
Neither party appeared to dispute the other’s initial contributions.
The wife argued the initial contributions of each party were not substantially dissimilar. I agree. The husband did not contend otherwise.
An initial contribution has to be weighed against all the other relevant contributions of the parties: Pierce (supra) at [28]. I turn to consider those now.
Financial contributions during the relationship
Purchase of Suburb F
The most substantial acquisition during the relationship was Suburb F. As foreshadowed, there is a dispute about the contributions of each to the acquisition. My findings and conclusions about the acquisition of Suburb F are as follows.
The parties paid the deposit of $613,500 for the purchase of Suburb F on 29 May 2008. The husband drew $400,000 from an existing O Bank account which held $441,031 at the time. The wife drew down $213,500 from an existing NAB loan account #...18. These payments were not in dispute.
I have already made reference to the establishment of the Portfolio Facility, which the parties brought into existence to fund the balance of the purchase of Suburb F.
The payment of stamp duty on the purchase of Suburb F was a matter of controversy. The total amount payable was $369,944. In her trial affidavit, the wife claimed that on 22 August 2008 she drew $91,768 from NAB account #...48 and $278,176 from NAB loan account #...18. The wife put NAB bank statements for these accounts on these dates into evidence. On 22 August 2008 $91,768 was debited to #...48 (Exhibit B, p. 34), and $278,176.17 was debited to #...18 (Exhibit B, p. 35), in each case for a bank cheque in favour of the wife. The husband on the other hand claims that he gave a cheque for $91,768 to the wife for the balance of the stamp duty. He said this money came from the remaining balance of a NAB HomeSide account. However, no statements or other supporting documentation concerning this account were produced by the husband. The wife submitted this was notable because in other respects the husband had been assiduous in producing documentary support for his affidavit evidence. He agreed in cross examination that he could not identify where the wife deposited the asserted cheque. The wife’s evidence would appear more compelling, except she swore an affidavit filed on 15 December 2017, at the start of the proceedings, to which she annexed a spreadsheet as Annexure B, said to record the parties’ contribution during the relationship. The affidavit and spreadsheet became Exhibit 1 in the trial. The spreadsheet, among other matters, records the wife’s recollection about payments for the purchase of Suburb F. It shows the wife accepting the husband paid $91,768 towards the stamp duty. The available evidence therefore contains conflicts which cannot be easily reconciled.
On balance, I prefer the wife’s evidence in this regard. The bank statement for NAB account #...48 clearly shows a debit of $91,768 on 22 August 2008. There was no dispute this was the wife’s account. The bank statement is a banking record and a standard business record which records an indisputable transaction. It is not subject to any vagaries of memory. The wife’s spreadsheet attached to her affidavit of 15 December 2017 was subject to such vagaries. It is inherently less reliable than the bank statement. There was no other explanation of why $91,768 was debited to account #...48 on 22 August 2008. Since this is the same date as the additional payment of $278,176, and since $91,768 plus $278,176 adds up to $369,944, I infer the debit was made for the purpose of paying part of the stamp duty. The spreadsheet could have been the result of a mistaken memory by the wife. As already pointed out, the husband produced no documentary support for his claim to have drawn a cheque for $91,768. I find the wife paid the disputed amount of $91,768 for stamp duty.
The wife also sold D Street, Suburb UU (“the Suburb UU property”) in tandem with the purchase of Suburb F. The sale settled on 29 September 2008 concurrently with settlement of the purchase of Suburb F. The wife received $2,950,000. $71,392 was paid for legal costs and real estate agent commission. $201,372 was applied to discharge the wife’s pre-exiting NAB loan account #...48. $2,448,022 was paid to the vendor to settle the purchase of Suburb F. The balance of the deposit, $229,214, was deposited into the Portfolio sub-account #...18.
The balance of the purchase price for Suburb F, $3,076,643, was drawn from #...18 on 29 September 2008.
At settlement of the purchase of Suburb F, three existing loan accounts of the wife became subaccounts of the parties’ joint Portfolio Facility, specifically, the wife rolled over existing debt as follows: #...18 with a debit balance of $177,865, #99 with a debit balance of $47,785 and #...80 with a debit balance of $84,386.
I do not accept this argument. I have already discussed the expenditure the husband claims to have made towards Suburb F. Since the parties wished to sell Suburb F it is likely not all of this expenditure could be avoided. I discuss below the substantial work required to maintain Suburb F and present it for sale. It is hard to see how the property could have been continuously rented if such work had to be undertaken. From March 2018 until the sale of the home in October 2018, the husband was ordered to pay the costs associated with the property, because he was in sole occupation. If the husband was not in occupation, prima facie both parties would have been liable for such costs.
The husband was not entirely responsible for the time it took to sell Suburb F. I accept the order to remediate the retaining wall and the heritage listing delayed the sale to some extent.
Furthermore, if he did not reside in Suburb F, the husband would have had to accommodate himself somewhere else, likely paying rent. The wife argued that if so, his rent would have been substantially lower than hers because he lived alone. I do not accept this contention. There was evidence that, Ms T and Mr V, two of the husband’s adult children lived with him until about mid-2015 in Suburb F while he was in sole occupation. There is no secure basis to determine what level of rent the husband may hypothetically have paid.
I reject the wife’s argument that the husband should be held accountable for lost rental income from Suburb F between March 2014 and October 2018.
The wife retains a number of shareholdings and interests in trusts and corporations. It is unnecessary to refer to these in detail. After separation she sold and acquired shares or interests in various corporations businesses, or benefitted from property dealings. For example, on 14 June 2016, MM Street was sold for $2,950,000. Details are set out in the wife’s trial affidavit at paragraphs 90 to 120. The wife did not utilise any joint funds for any of these dealings.
In summary, as regards financial contributions, I find that the parties initial contributions were broadly equal, the wife contributed more to the purchase of Suburb F than the husband, the wife contributed more of her income during the relationship, and post-separation the wife made a slightly greater financial contribution, primarily because of the amount borrowed by the husband through subaccount #...43, the use of a large proportion of which was not adequately explained.
(b) the contribution (other than a financial contribute on) made directly or indirectly by or on behalf of a party to the marriage
The husband argues that he made substantial non-financial contributions to Suburb F, particularly following separation and prior to the sale of the home. He gave evidence that the property had to be maintained in an “inspection ready” condition at all times, because of the way it was marketed, which allowed inspections at almost any time by arrangement with the selling agent.
In particular, he suggests that he worked 12,000 hours of his time between March 2014 and October 2018 on the maintenance and presentation of the home, including tending to the lawns, shaping the hedges and decorative trees, removing fallen fronds from the palm trees, blowing pathways, driveways and the tennis court to clear leaves, hosing down pathways, weeding, cleaning gutters and roof tiles, cleaning the windows and glass pool fence, and the removal or wastes to nearby collection services. This included sourcing quotes for work on the property, for example on the brick retaining wall, and being present whilst the work was undertaken by professionals. The husband claimed that after the remediation of the retainer wall, he had to clean up after the builders, which took him more than three weeks. The husband also deposed that he had to remove mould due to excessive moisture in the property and numerous maintenance tasks on the property.
While the wife accepts that the husband likely spent time and effort on the maintenance of the home, she generally rejected these contributions claimed by the husband. She contended the estimate of 12,000 hours was exaggerated. She pointed out that the husband’s own evidence of health problems made his claims unlikely. For example, the long periods of time claimed by the husband are not consistent with assertions that his health prevents him taking paid employment.
On balance, while I accept the husband has likely exaggerated his contributions in this regard, I also find that he made substantial contribution of time and effort in maintaining Suburb F and presenting it for sale.
As part of the work done to the property, the husband placed great weight on the work done to remove the heritage listing from the property.
In October 2014, the husband was made aware by the Land Cove Council that the former matrimonial home had been entered into the NSW State Heritage Inventory in February 2010. The parties had no prior knowledge of this. This heritage listing included the entire property.
The husband commenced steps to remove the heritage listing whilst the property was on the market. He claims that a number of prospective purchasers lost interest in the property as a result of the heritage listing.
On 15 December 2017, following communication between the husband and the Special Minister for State for the NSW Government, the heritage listing was removed. The husband claims that this contributed to the eventual sale of the property.
The wife accepted that there was benefit to the removal of the heritage listing. The wife cast doubt on the impact of this removal on the sale price, pointing out there were four separate offers for purchase of the property prior to the listing being removed. All these offers were around $10 - $11 million. As a result, she would suggest that little weight should be given to the husband’s work to remove the heritage listing.
In cross-examination the husband accepted that there were offers whilst the home was subject to the heritage listing. He seemed to suggest that the prospective purchasers who rescinded in February 2017 did so as a result of the heritage listing. However, the evidence was equivocal on his point and it was not pressed in final submissions.
The wife additionally argues that she made an indirect contribution to the conservation and improvement of property of the husband, by virtue of allowing him to continue to draw down on the NAB joint accounts. She argued that she was forced to sell the property in order to pay her expenses, whilst the husband increased debt and therefore was not forced into selling any property. This is true. But as already made clear, the activities of the husband in maintaining and presenting Suburb F for sale, conserved and improved a joint asset.
In my view overall the husband made slightly greater non-financial contributions post separation.
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent
At the time of cohabitation, the parties both had children from previous relationships. As previously stated, the wife’s children lived with the parties 12 nights per fortnight, whilst the husband’s children lived with the parties six days per fortnight.
During the relationship, the wife worked part-time, approximately three days per week. She suggests that this allowed her to take the children to school or pick them up once or twice a week. Additionally, she claims she took the children to appointments, helped them with school work and took her youngest son, Mr Z, to his regular medical appointments.
As previously stated, the wife engaged the help of Ms QQ, her nanny. Both parties appear to accept that Ms QQ did a large amount of the domestic duties during the week, including grocery shopping, cleaning, cooking, caring for the children, organising trades people, as well as the washing and ironing.
The wife argues that she did 70 per cent of the remaining internal chores; it is unclear whether the husband accepts or denies this specific assertion, as he only briefly states that he “attended to some of the tidying and cleaning tasks” in his affidavit evidence. That said, the wife accepts that the husband completed approximately 60 per cent of the “gardening and outdoor work”, whilst she completed the remaining 40 per cent.
I find that the wife made a greater contribution as homemaker and in a parenting role.
ASSESSMENT OF CONTRIBUTIONS
On balance, taking account of all the above considerations, I assess the applicant wife’s contribution entitlement at 53.5% and the respondent husband’s at 46.5%.
I now turn to s 79(4)(e) and the s 75(2) factors.
SECTION 75(2) ADJUSTMENT
The Act requires me to take into account the matters referred to in s 75(2) of the Act, so far as they are relevant, when considering what orders should be made in these proceedings. The relevant matters to be so taken into account on these facts are, as follows:
(a) the age and state of health of each of the parties;
The wife is 54 years old. There is no evidence that she is in anything but good health.
The husband is 60 years old, and appears to have a number of health issues. These health issues include issues with blood clotting, which has been a problem for him since 1995, as well as a period in 2010 where he had glandular fever. The wife put these in issue in final submissions, on the basis that the husband produced no medical evidence in support. However, I accept it is likely the husband suffers from such medical conditions as he claims.
In addition, the husband details issues with his balance, which started in 2013. Initially, it appears as though he was diagnosed with having experienced an episode of vertigo. Eventually, this condition was diagnosed as “vestibular neuritis”.
This condition appears to effect the husband’s right-side vestibular function, causing him disorientation and nausea; he is often unable to get out of bed following an episode. Additionally, he claims this condition has caused blurred vision and a loud ringing in both ears.
As a result of his blood clotting, additionally, the husband experiences “leg swelling and pain on a daily basis” (husband’s trial affidavit filed on 3 December 2019, paragraph 285) and is unable to sit at his desk for “extended periods”; this condition is known as Post-Thrombotic Syndrome.
Ultimately, the husband suggests that he will need “extra resources” in order to manage these health conditions.
Ultimately, I accept the husband health is poor in various respects, and overall in worse health than the wife. However, in the absence of medical evidence it is difficult to form a view about the impact of these health issues in the future.
(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;
I have already discussed the property and financial resources of the parties. I will not repeat that discussion. However, a number of other matters need to be considered under this head.
The husband was made redundant in September 2013. He claims to have been searching for full time employment since then. He has been unsuccessful and is currently unemployed. There was some evidence of applications for full time employment. The husband gave evidence, which I accept, that rather than rely upon obtaining employment with a third party he established M Company as his own business, which was a failed enterprise. He undertook a small project for a friend in 2015. The husband argues that he is unlikely to obtain further gainful employment due to his age and specialised experience, his health problems, and because of the time he has been out of work following his redundancy.
Whilst the wife argued there was no proper evidence about the husband’s health, in argument she seemed to accept that the husband’s health may be a barrier to employment. However, the wife does not accept that he has attempted to gain employment in the past six years, and little can be inferred from his failure to obtain employment in that time. She points to an absence of job applications disclosed by the husband in his evidence. Additionally, she suggests that she has called for the production of the husband’s tax returns; other than the first page of the returns, the husband has failed to produce them.
On balance, I accept that the husband made real attempts to gain employment after redundancy, but was unsuccessful. I have also found that he spent a significant amount of time and effort on Suburb F between separation and its sale. The fact is that he has not had a fulltime job since 2013. His prospects of gainful employment are now likely to be diminished. He may be able to obtain periodic or part time work, but I accept his age, time out of the work force and health problems make his future chance of full time employment to be modest.
According to his Financial Statement filed 20 November 2020, the husband has an income of $1,046 per week, derived from dividends payments and interest from a term deposit with O Bank. His average weekly expenditure is $4,692. The wife did not dispute this.
As already noted the wife holds a range of interests in trusts and corporations which are financial resources, according to her evidence (see above at [163]), in addition to G Group. However, she gave evidence that the Covid-19 pandemic had a negative impact on the business and earnings of G Group during 2020, and consequently her individual earnings were adversely affected.
In final submissions, the wife renewed an argument that the husband could alter the constitution of C Company at any time, and could potentially bring forward the liquidation of its equities giving the husband access to significant financial resources before he turns 65 in 2026. I accept it is open to the husband to do so. However, I am not persuaded it is likely. I expressed a view about this argument in my earlier judgment at [23], a view from which I see no reason now to deviate:
But it is also important to emphasise that, according to the husband’s own case, the sale of C Company’s assets will not, indeed, must not happen until he turns 65 in March 2026. So no CGT liability can accrue until then. The wife argued that because the husband has full control of C Company, he may change by resolution its constitution and cause its assets to be sold either before or after March 2026. While this is theoretically correct, on the evidence given by the husband, I consider this to be unlikely. The whole purpose of the C Company structure is to provide for the husband’s retirement at age 65. The overall matrimonial pool in these proceedings, on any view, is something in excess of $14 million, so there is no obvious reason in the evidence why the husband would begin disposing of C Company assets before he turns 65.
In comparison, according to the wife’s Financial Statement filed 20 November 2020, she has an average weekly income of $7,506.28. This figure is made up of a salary, as well as income from G Group. Her weekly expenditure is $12,408.28. This also was not disputed.
The wife accepts that her weekly income is greater than that of the husband. But senior counsel for the wife also argued that the value of G Group on the balance sheet took account of her future income because the valuation was based on future maintainable earnings, which supported the goodwill element of the valuation. Consequently, it would constitute a form of double counting to take account of her future earnings under s 75(2)(b) as well. Senior counsel for the husband argued that this was incorrect, pointing out the valuation of the wife’s interest in G Group gave a present day value. The question under consideration is the capacity of the wife for gainful employment in the future.
The wife’s argument in my view conflates separate questions. The fact that the value of her interest in her present business includes a component for notional future maintainable earnings does not mean her capacity for gainful employment can simply be ignored under s 75(2)(b). The husband argued that the wife clearly has a significant capacity for gainful employment. If she sold her interest in G Group, she would receive the benefit of that component of the sale price referrable to the future maintainable earnings associated with her interest which a willing but not anxious purchaser would be likely to pay. If then the wife moved to a different legal practice or employment, or conducted her own legal practice, the evidence shows she was likely to continue to earn a substantial income. In such a scenario, the wife would enjoy the benefit of the notional component of future maintainable earnings as well as the potential to actually enjoy substantial future earnings. I accept the husband’s submission in this regard.
Both parties expect to receive further funds from the estates of a deceased parent. The husband has been involved in proceedings under the Succession Act 2005 (NSW) and anticipates receiving $83,233. The wife expects to receive $17,500 from her mother’s estate.
I note here that both parties have substantial funds invested in superannuation. The husband has $3,385,335, including $3,073,134 in the C Superannuation Fund. The wife has $1,504,094.
I also take account of the fact both parties have received an interim property distribution of $3,000,000 each from the sale proceeds of Suburb F.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
This consideration is not relevant; the parties did not have children together, and both have children who have attained the age of 18 years old.
(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;
Both parties suggest that they have responsibilities to support their adult children.
In the case of the wife, she suggests that she contributes a total of $600 per week for her 22-year old son, $800 per week for her 21-year old son, and $1,250 for her 19-year old son. This includes expenses such as food, clothes, utilities, medical bills and gym memberships. Additionally, she pays student fees on behalf of Mr Y.
She claims that her expenses as they relate to Mr Z, her youngest child, are increased due to his particular circumstances. Mr Z has been diagnosed with autism, ADHD and Dyspraxia. As such, his medical bills are increased and include a psychologist, psychiatrist, physiotherapist, sleep therapist, and podiatry, as well as the costs of medication.
The wife gave affidavit evidence about the extent to which her adult children remain reliant on her. In cross-examination, the wife confirmed that her children remain reliant on her. The eldest, Mr X, works as a professional and pays his own phone bill and entertainment costs, but otherwise resides rent-free with the wife. The middle child, Mr Y, currently lives with her rent-free and makes music in his own time; she accepted that due to COVID-19 he was no longer attending TAFE, although she was not questioned on whether those fees were still payable. The youngest, Mr Z, just finished high school and is “solely dependent” on the wife. The children’s father does not contribute.
In comparison, the husband claims to contribute $450 per week towards his daughter, Ms T, for rent, health care, car registration and insurance, as well as $108 per week to his son, Mr V for his health fund and “other expenses”.
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
The parties enjoyed an affluent standard of living during the marriage. There are sufficient financial resources available to enable both to continue to enjoy such a standard of living.
(j) the extent to which a party has contributed to the income, earning capacity, property and financial resources of the other party;
I have discussed extensively above issues of contributions. I have nothing to add here.
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation;
The wife has re-partnered. Her evidence showed that she has purchased property with her new partner, subject to a mortgage liability.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
As discussed above, there was no dispute that after the assets of C Company in March 2026 are utilised for the husband’s retirement, there will accrue a substantial liability for capital gains tax. In Ellison v Sandini Pty Ltd [2018] FCAFC 44; 263 FCR 460 at [150], Jagot J commented, in the context of considering the capital gains tax consequences on the value of assets to be transferred under certain orders made by this Court under s 79(1), “The value of the asset to be transferred could be far less than that contemplated on the face of the orders, given the potential associated capital gains tax liability”. While the magnitude of this liability here cannot now be quantified, it is nonetheless necessary to recognise that the value of the husband’s interest in C Company will ultimately be materially less than the value given on the balance sheet. In saying this I accept the timing of asset disposals by C Company may sensibly try to minimise the taxation liability after the husband turns 65. However, there will be a substantial liability.
The wife will be required to service her share of the mortgage secured over the property at Suburb CC which she owns with her new partner.
I also take account of the wife’s evidence that between separation in March 2014 and the sale of Suburb F in October 2018 she was unable to make any contribution to her superannuation. She points out that prior to 1 July 2017, the amount that able to be held in a super fund member's tax-free retirement phase account was uncapped, but after 1 July 2017 it was capped at $1.6 million over a lifetime. The wife gave evidence, which I accept, that between separation in March 2014 and 1 July 2017, by reason of her constrained financial circumstances, she was unable to build an uncapped amount in superannuation and benefit from the concessional tax treatment of superannuation investments. As already noted, the husband utilised $35,000 from subaccount #...23.
ASSESSMENT OF SECTION 75(2) FACTORS
On weighing and taking account of all the s 75(2) factors, I am satisfied there should be an adjustment of 11.5 per cent in favour of the husband. I reach this view on the basis of all the relevant s 75(2) factors but particularly because of the husband’s age, lack of employment, likely health issues, and the ultimate significant capital gains tax liability in relation to C Company, the fact that he likely will not access the wealth held by C Company for another 5 years, compared to the wife’s younger age, better health, continuing employment and income earning capacity.
Accordingly, the assets of the parties will be divided 42% to the applicant and 58% to the respondent. This result can be achieved by the wife receiving the entirely of the $3,214,692 held in the Controlled Monies account, together with a superannuation split in her favour of $300,000, but otherwise the parties retain their assets and liabilities including superannuation. I will give further reasons for the superannuation split below.
Therefore the parties will each hold the following assets and liabilities:
Description Value APPLICANT’S ASSETS Sale proceeds of Suburb F property (CMA Account) $3,214,692 50% of BB Street, Suburb CC
Agreed single expert value for hearing$2,375,000 CBA Bank Account #...83
Wife’s Financial Statement filed 20 November 2020$7,364 CBA Offset Account #...29 (see notes) $8,226 CBA Offset Account #...96 (joint with Mr PP) $720 Motor Vehicle 1 (see notes) $14,000 Motor Vehicle 2 (see notes) $16,000 Wife’s business interests in the G Group of businesses (see notes) $2,550,768 Loan account HH Trust (as at 30.6.2019) $120,193 Household contents $40,000 Subtotal $8,346,963 SUPERANNUATION Name of Fund Type of Interest Value K Super Fund as at 30 June 2020 (see note) SMSF $323,028 The L Super Fund SMSF $876,536 Super Fund 1 (balance as at 12 November 2020) Accum. $304,530 Superannuation split $300,000 Subtotal $1,804,094 LIABILITIES Wife’s share of Home Loan over Suburb CC property -$758,435 Total Assets $9,392,622 RESPONDENT’S ASSETS CBA Term Deposit #...89 $2,400,000 O Bank Term Deposit #...25 $1,138 O Bank Account #...94 $4,494 O Bank Maxi-Saver #...99 $43,060 13,713 N Company Shares $532,613 887 P Company Shares $1,193 334 Q Company Shares $1,576 8,600 R Company Shares $23,736 2,194 S Company Shares $4,937 Motor Vehicle 3 $71,450 Motor Vehicle 4 $20,950 Loan to C Pty Ltd $97,700 C Pty Ltd $6,664,033 Direct Investment Account #...73 $44 Household contents $20,000 Subtotal $9,886,924 SUPERANNUATION Name of Fund Type of Interest Value C Superannuation Fund as at 30 June 2020 SMSF $3,073,134 Superannuation split -$300,000 Super Fund 1 (see notes) Defined Benefit & Accum $168,456 Super Fund 2 (see notes) Accum $143,745 Subtotal $3,385,335 Total Assets $12,972,259 ARE THE ORDERS JUST AND EQUITABLE?
Section 79(2) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
The Full Court of the Family Court of Australia in Manolis & Manolis (No 2) [2011] FamCAFC 105 considered the relevant provisions of the Act in relation to this fourth step. At paragraphs [65] and [66] the Full Court made the following observations, which I adopt and follow:
It can be seen that power to make orders in regard to property is not exhausted after the third step. It is not until orders are made that the power is exhausted. The exercise of power pursuant to s 79 of the Act remains subject to the overarching requirement of justice and equity imposed by s 79(2) until it is exhausted…The section does however oblige the court to "stand back" from its preliminary determination, and consider its impact. So doing may inform the terms of the orders appropriate to produce a just and equitable outcome in those terms. It may result in a re-consideration of s 79(4) and or s 75(2) factors, and a different outcome. Whatever the scope of s 79(2), the court's determination with respect to it cannot be dependent upon findings or conclusions which are irreconcilable with those recorded in the context of a consideration of s 79(4) or s 75(2).
The High Court of Australia in Stanford commented at [36] on the meaning of "just and equitable" as follows:
The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
I also take account of the caution expressed in Stanford (supra) at [40] that to conclude that making an order is "just and equitable" only "because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act".
The overall question of the justice and equity of the outcome raises for consideration the wife’s claim to a superannuation split of $1,500,000 in her favour. She made this argument on the basis that such a payment split would be the only way to achieve something approaching equality in the outcome. Otherwise she argued the husband would retain a very substantial excess over the wife’s assets.
Despite superficial attraction, I am unable to accept this argument. The authorities make clear there is no assumption of equality in dividing assets. I accept that the initial contributions of the parties were broadly equal, as the parties submitted. But the evidence does not permit a finding about how their respective assets may have increased in value during the marriage or after separation, apart from Suburb F, by way of contributions or natural market increases. Any aspiration of equality must yield to the Court’s conclusions concerning the percentage entitlements of the parties (above at [218]).
The wife’s argument relies upon the value of assets as found for the purposes of settling the value of the matrimonial pool at the date of trial. A very substantial matter this leaves out of account is the tax impost on the liquidation of the C Company assets, discussed at length earlier in these reasons. The figure of $13,272,259 for the husband’s assets includes the value of C Company untaxed at $6,664,033 and the value of the C Superannuation Fund at $3,073,134, before taxation. There is of course no calculation of the taxation as at 2026, but the wife accepted it would be significant. The point can be illustrated by noting that allowing for, in real terms, a tax liability, on C Company non-superannuation assets, of somewhere between 30% and 45% of the value of those assets in 2026 would significantly reduce their value in the hands of the husband at that future date. I accept the value of share market investments may increase between now and 2026. But the value may also fall. The husband on any view will not receive the full value of $6,664,033 for his retirement income. Furthermore, the wife’s age of 56 means she will not have need of superannuation as soon as the husband, and she already has substantial superannuation. She will continue to earn and may make additional contributions to superannuation.
If the only property adjustment is a release of $3,214,692 to the wife, on the values given in balance sheet, the husband would receive total assets of $13,272,259 while the wife would receive $9,092,622. While I have rejected the wife’s argument for superannuation split of $1,500,000, I find that a superannuation split of $300,000 in her favour would achieve a just and equitable outcome which is consistent with my assessment of contributions globally, and because the husband used $35,000 of joint funds for his own superannuation after separation and the wife, through constrained financial circumstances, was unable to make contributions to her superannuation between March 2014 and 1 July 2017 before the tax free cap of $1,600,000 was introduced. If a superannuation splitting order of $300,000 is made in favour of the wife, she would then receive $9,392,622 or 42 per cent of the available pool while the husband would receive $12,972,259 or 58 per cent of the available pool. This accords with my assessment of contributions. I will make orders to effect this outcome. When account is taken of the likely substantial impact of the tax impost on the realisation of C Company non-superannuation assets in 2026, the result also approaches equality, although no calculation is possible. For these reasons, I propose to order a superannuation split of $300,000 in the wife’s favour. This can most conveniently come from C Company superannuation assets.
If the Court takes the husband’s approach of treating Suburb F as the only real joint enterprise between the parties, the outcome is also just and equitable, in my view. According to the figures provided by the parties, the net proceeds of sale of Suburb F in October 2018 were approximately $9,011,057 after discharge of the Portfolio Facility. Since both parties received an equal amount of $3,000,000 from these proceeds, if the wife receives the existing balance of $3,214,692, in total she would have received approximately two thirds of the proceeds of sale of Suburb F. That broadly accords with her greater financial contributions to its acquisition and during the marriage. According to the husband’s argument he should receive up to 60 per cent of the $3,214,692, an outcome which would result in him receiving more than 50% of the value of the main joint asset in respect of which, as I have found, he made a materially lower contribution, for acquisition, and during the marriage, than the wife. If she also receives $300,000 by way of a superannuation splitting order this also recognises her post separation contribution through the husband’s use of the $35,000 of joint funds for his superannuation and the wife’s post separation inability to take advantage of the absence of any tax free cap on superannuation before 1 July 2017.
I also take account of the fact that if the wife receives $3,214,692 as available cash, the husband nonetheless has access to other cash resources and shares, quite apart from C Company.
I am satisfied the proposed orders are just and equitable.
COSTS
Section 117 of the Act sets out that each party shall bear his or her own costs, subject to the considerations in s 117(2) of the Act.
Any order for costs must also be determined in light of the substantive judgment and the relative success or failure of the parties. This is naturally something that can only be addressed after judgment has been delivered.
The Court proposes to make the orders and directions in relation to any application for costs that might be made as set forth in the orders at the commencement of these reasons.
I certify that the preceding two hundred and thirty-four (234) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 21 June 2021
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