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…
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- Penner & Conroy (No. 2) [2021] FamCA 411
- Case
- [2021] FamCA 411
- Decision Date
CaseChat Overview and Summary
The court was required to determine the appropriate approach to property adjustment, specifically whether a global or asset-by-asset method was more suitable, and how to assess contributions to various assets, including superannuation and business interests, where clear findings were difficult to make. Further issues included the treatment of post-separation expenditure by the husband and the wife's claim for a significant portion of the proceeds from the sale of the former matrimonial home, as well as a substantial split of the husband's superannuation.
Harper J determined that the wife should receive the entire balance of the proceeds from the sale of the former matrimonial home, amounting to $3,214,692, from the controlled monies account. Additionally, the court ordered a split of the husband's superannuation interest in the C Superannuation Fund, awarding the wife $300,000. The reasoning acknowledged that while initial contributions were substantially equal, the wife made greater contributions during the marriage. The court also addressed the husband's post-separation use of joint funds for living expenses and superannuation, applying principles from cases such as *Vass v Vass* and *Trevi v Trevi* regarding the exceptional nature of "add-backs" for dissipated assets. The final orders declared each party the sole legal and beneficial owner of specified assets in their respective names, with provisions for indemnities regarding liabilities and credit card debts.
Orders
Orders of the court
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 (www.superfundlookup.gov.au) 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 10-12 2-4 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).
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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.