PERRIN & PERRIN
[2017] FCCA 1606
•18 May 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PERRIN & PERRIN | [2017] FCCA 1606 |
| Catchwords: FAMILY LAW – Property proceedings. |
| Legislation: Family Law Act1975, ss.72,75,79, Part VIII, VIIIB |
| Schmidt & Schmidt [2009] FamCA 1386 Kowaliw & Kowaliw (1981) FLC 91-092 Craig & Rowlands [2013] FamCAFC 45 Stanford & Stanford [2012] 293 ALR 70 Hickey & Hickey [2003] FLC 93-143 Bevan & Bevan [2013] FamCAFC 116 In the Marriage of Lee Steere (1995) FLC 91-226 In the Marriage of Ferraro (1993) FLC 92-355 In the Marriage of Clauson (1995) FLC 92-595 Whitton & Whitton [2015] FamCA 102 Vass & Vass [2015] FamCAFC 51 Robb & Robb (1994) 18 FamLR 489 |
| Applicant: | MR PERRIN |
| Respondent: | MS PERRIN |
| File Number: | NCC 556 of 2015 |
| Judgment of: | Judge Myers |
| Hearing dates: | 6 June 2016, 7 June 2016, 8 June 2016, 19 October 2016 and 20 October 2016 |
| Date of Last Submission: | 2 February 2017 |
| Delivered at: | Sydney |
| Delivered on: | 18 May 2017 |
REPRESENTATION
| Solicitors for the Applicant: | Collett Lawyers |
| Solicitors for the Respondent: | Mitchell Lawyers |
THE COURT ORDERS PENDING FURTHER ORDER THAT:
The court finds it is just and equitable to make an adjustment of property as to 56.5% to the husband and 43.5% to the wife.
The parties have liberty to provide a Minute of Order to the court reflecting an adjustment of property as to 56.5% to the applicant husband and 43.5% to the respondent wife of those assets and liabilities the court found in the document titled “balance sheet” attached hereto and marked with the letter ‘A’.
Should the parties fail to submit to the court within 14 days of receiving these orders, the Minute of Order referred to in order 1 above, the court will thereafter relist the matter and make orders dividing the assets and liabilities between the parties without further recourse to the parties.
IT IS NOTED that publication of this judgment under the pseudonym Perrin & Perrin is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
NCC 556 of 2015
| MR PERRIN |
Applicant
And
| MS PERRIN |
Respondent
EX TEMPORE`REASONS FOR JUDGMENT
This is a final property decision in the matter of Perrin. The applicant husband, Mr Perrin, commenced property proceedings filing an initiating application on 6 March 2015. At the commencement of the hearing the husband sought final orders as set out in his outline of case document filed 20 April 2016, that essentially provides:
i)the property at Property G be sold by private treaty;
ii)the proceeds of sale be applied to discharge the mortgage over the Property G, pay out any unspecified joint debts, pay agent’s commission and legal costs in respects of the sale;
iii)payout any shortfall owing on the sale of Property W sold by the mortgagee in possession, pay the then remaining balance to the wife;
iv)that each party be declared to be the owner of moneys held in bank accounts or invested by that party, furniture and furnishing in that party’s possession, any superannuation entitlements of that party that stand in that party’s name. The husband sought to retain his interest in what is termed in the orders as the (omitted) timeshare unit.
In accordance with the husband’s amended initiating application filed on 17 March 2016, (subject to the amendment set out in the husband’s supplementary case outline handed to the Court on 6 June 2016 that provided for the wife to receive a split of 15 per cent of the husband’s superannuation interest), the Court made orders for a superannuation split by consent on 8 June 2016 with the split having effect prior to the matter returning to the Court in October. The result of the consent orders were that one of the joint debts of the parties – namely, the (omitted) Bank debt, being the shortfall on the sale of Property W – was paid from the superannuation funds split to the wife. The husband’s subsequent position was that the sale proceeds of the Property G property would be retained by the wife.
The orders sought by the wife are those as contained within her Amended Interim and Final Orders document that was e–filed on 17 October 2016. The document contains orders sought on an interim basis requiring a superannuation split or interim spousal maintenance to the wife; final orders on the basis of no interim orders being made; and final orders on the basis that interim orders were made.
Counsel for the husband, in his written submissions at page 3, correctly points out that the interim orders were not pressed at the hearing.
The wife seeks an orders on a final basis as contained, in the view of the Court, at pages 7 and 8 and 9 of the document e–filed on 17 October 2016 that provides as follows:
(1)
(a)the applicant husband pay to the respondent wife by lump sum spousal maintenance such sum as is necessary to pay out the following debts:
(i)50,000 to the respondent’s mother;
(ii)all debts secured against the title of the property known as Property G;
(iii)the (omitted) Bank credit card debt;
(iv)the overdraft debt in the name of the respondent; and
(v)any amounts owed for rates and water rates for Property G; and
(b)this is an order to which section 77A of the Family Law Act applies and the total of payments for maintenance of the wife;
(2)To enable the payments referred to in order (1) to occur, the following orders shall be made:
(a)That the following order has effect from the operative date;
(b)that pursuant to section 90MT(4) of the Family Law Act the base amount of $727,996.28 shall be allocated to the respondent wife, MS PERRIN in respect of the applicant husband, Mr Perrin, superannuation interests in the (omitted) Superannuation Scheme and that pursuant to section 90MT(1)(a) of the Family Law Act, whenever a splittable payment becomes payable in respect of the interest, MS PERRIN is entitled to be paid an amount calculated in accordance with the Family Law Superannuation Regulations in respect of that base amount and there is to be a corresponding reduction in the entitlement of Mr Perrin.
(c)that having been accorded procedural fairness in relation to the making of this order, this order binds the trustee of the (omitted) Superannuation Scheme.
(d)that the operative date is the fourth business day after the date upon which the copy of this order is served upon the trustee for the (omitted) Superannuation Scheme.
(e)Upon the base amount being split, the respondent wife withdraw the base amount less any tax and fees that may be payable and pay it into the said trust account of Mitchell Lawyers and apply the amount in payment of the debts referred to in order (1), and the remainder shall be applied in payment as set out in order number (3);
(3)that the following property shall be divided in the portions of 75 per cent to the respondent wife and 25 per cent to the applicant husband:
(a)the remainder of the funds referred to in order (2);
(b)the property known as Property G valued at $450,000;
(c)the (omitted) Motor Vehicle valued at $12,830;
(d)the (omitted) boat valued at $20,000;
(e)the (omitted) timeshare rights valued at $5000;
(f)the tools and household items in the possession of the husband valued at $10,000;
(g)the old boat and Holden utility in the possession of the applicant valued at a total $650;
(h)the sum of $87,296.53;
(i)the amount of $209,400.95;
(ii)for the purposes of this division referred to in part (i) of this order;
a) the respondent shall retain the sum of $87,296.53 and the property known as Property G valued at $450,000, and the applicant shall transfer to the respondent all of his right, title and interest in the property;
b) the applicant shall retain the (omitted) Motor Vehicle, the (omitted) boat, the (omitted) timeshare (with the respondent to transfer his interest to the applicant), the tools in his possession, the old boat and the Holden at a total value of $48,400;
c) The applicant shall retain the sum of $209,400.95;
d) the remainder of the funds referred to in order (2) shall be applied so that after taking into account the value of the property to be retained by the applicant and the respondent respectively, the property is divided in the percentages referred to in part (i) of this order provided, however, that before the remainder of the funds is so applied, the wife shall be entitled to retain any amount for tax which she will be liable arising out of the payment of the moneys referred to in order number (2) and to retain from the applicant’s share of the superannuation, half for the amount of any fee payable for the splitting of the superannuation as charged by the trustee of the (omitted) Superannuation Scheme;
(4)That the applicant shall pay to the respondent an amount equal to 75 per cent of the total of the pension paid to him each week, calculated from 8 June 2016 to the date of the making of the final orders, with such sum to be deducted from any amount that would otherwise be payable to the applicant in his share of the amount split from his entitlements in the (omitted) Superannuation Scheme.
(5)
(a)The amount of compensation and damages less any legal costs payable to the applicant arising from the applicant’s compensation action is to be divided in portions of 75 per cent to the respondent and 25 per cent to the applicant.
(b)The respondent is hereby authorised on behalf of the applicant to obtain from time to time any information or documents from (omitted) vehicle or any other lawyers acting for the applicant in relation to his compensation damages claim.
(6)The applicant shall deliver to the respondent the trailer, the three green canisters and the Seiko watch.
(7)The husband shall pay to the wife:
(a)for maintenance the sum of $600 per week with the first payment to be made on the date of the making of this order (7)(a);
(b)on 1 July each year the sum of $600 per week shall be increased by an amount equal to the percentage increase for the preceding 12 months in the Australia Consumer Price Index for Sydney;
Amount payable to (omitted) Pty Ltd;
Any amount to be paid to the wife and to be retained by her as her property from the funds held in trust in account of Mitchell Lawyers shall after payment of any legal costs owed to Mitchell Lawyers, be applied in payment of the sum of $23,665.75 to (omitted) Pty Ltd and, thereafter the remaining funds shall be paid to the wife;
Land at Property R, NSW: until all amounts payable to the wife, including costs received by the wife, the applicant husband is restrained and an injunction is hereby granted restraining the husband from selling, transferring, assigning or encumbering, carrying out improvements on or otherwise dealing with his interest in the property known as Property R, New South Wales;
Legal costs:
1. The applicant pay the respondent her legal costs of these proceedings with such sum to be deducted from any amount to be paid to the applicant pursuant to the final orders made;
2. The amount of legal costs to be paid is to be fixed by the trial judge.
Counsel for the husband somewhat critically suggested at page 3 of the final written submissions the husband’s understanding of the orders sought by the wife, where the wife:
“seeks orders in accordance with the documents filed on her behalf on 17 October 2016. That documents (sic) seeks a number of interim orders (pages 2 to 4) and a number of final orders if those interim orders are made (pages 5 to 7). Noting the interim orders were not pressed at the hearing, it is assumed those orders were no longer pressed. Ms Perrin seeks a set of final orders if the interim orders were not made (pages 7 to 9) comprising:
lump sum spousal maintenance (order (1)) funded by the superannuation split (order (2));
property adjustment (order (3));
interim spousal maintenance funded by the husband’s pension but only payable on the making of the final orders (order (4));
what appears to be a property adjustment order in respect of sum compensation claim by the husband together with an authority that the wife can contact the husband’s solicitors and obtain information (order (5));
property adjustment orders in respect of particular items of property (order (6));
ongoing spousal maintenance forever (order (7));
a restraint–type order to secure her former solicitors fees are numbered on page 9;
a restraint on the husband from dealing with the property at Property R (unnumbered on page 9); and
costs.”
The Court has read and considered the following documents in support of the husband’s case:
a)affidavit of Mr Perrin filed 13 September 2016 sworn 13 September 2016;
b)affidavit of Mr Perrin filed 24 March 2016 sworn 21 March 2016;
c)financial statement of Mr Perrin filed 12 October 2016 sworn 12 October 2016;
d)financial statement of Mr Perrin filed 24 March 2016 sworn 23 March 2016;
e)affidavit of Ms M filed 12 October 2016, sworn 12 October 2016;
f)affidavit of Mr Y filed 31 March 2016, sworn 32 March 2016;
g)superannuation experts’ joint report filed 14 October 2016, signed 13 October 2016;
h)affidavit of Mr P filed 10 June 2016, sworn 9 June 2016;
i)affidavit of Mr P filed in court 8 June 2016, sworn 7 June 2016;
j)affidavit of Mr P filed 3 May 2016, sworn 3 May 2016;
k)affidavit of Mr P filed 24 March 2016, affirmed 21 March 2016;
l)husband’s written submissions e–filed 4 November 2016; and
m)husband’s written submissions in reply e–filed 4 March 2016.
The Court has read and considered the following documents in support of the wife’s case:
a)case management document filed 3 June 2016;
b)further amended response to final orders filed 8 May 2016;
c)affidavit of MS PERRIN filed 22 March 2016;
d)affidavit of MS PERRIN filed 15 April 2016;
e)affidavit of MS PERRIN filed 23 May 2016;
f)financial statement of MS PERRIN filed 22 March 2016;
g)affidavit of Mr A filed 23 March 2016;
h)notice to admit facts and authenticity of documents filed 6 May 2016; and
i)written submissions of the wife e–filed 14.02.2016.
The Court notes that some parts of the husband’s substantive trial affidavit filed on 24 March 2016 were the subject of successful objections, leading to a number of those parts being excluded. Similarly, the wife’s affidavit filed on 23 May 2016 and 22 March 2016 were the subject of successful objections.
By way of background, the wife was born on (omitted) 1952 and is 64 years of age. The husband was born on (omitted) 1960 and is 57 years of age. The husband suggests at paragraphs 9 and 36 of his affidavit e–filed 24 March 2016 that he commenced employment with the (employer omitted) in (omitted) 1982. The wife notes this date as accurate within the chronology contained within a case management document filed 3 June 2016. The husband suggests at paragraph 5 and 8 of his affidavit that the parties commenced cohabitation in September 1998. The wife suggests at paragraph 2 of her affidavit the parties began living together in late 1997.
During cross-examination on the topic of the date of cohabitation, the wife’s attention was drawn to an earlier affidavit filed by her on 16 April 2015 in which the wife set out:
Mr Perrin and I met in late 1997, early 1998 and commenced living together in mid–1998.
Counsel for the husband suggested in written submissions the wife had been inconsistent in her version of the date of cohabitation, whereas the husband had not. Further, counsel for the husband correctly suggested the wife could offer no adequate explanation for her change in memory. The Court accepts that the parties commenced cohabitation, living together some time between the middle to late 1998.
At paragraph 10 of the husband’s affidavit and paragraph 24 to 25 of the wife’s affidavit, the parties are in agreement that at the time the parties commenced cohabitation the husband was employed full–time as a (occupation omitted) and the wife was employed as a casual (occupation omitted) what she described as “almost full–time”. In 1999, the wife commenced full–time employment at the (employer omitted). The parties married on (omitted) 1999 and separated, for the purposes of these proceedings, in May 2014.
At the time of the marriage, both parties had children of previous relationships namely, Mr S born (omitted) 1989, Mr C born (omitted) 1991, Ms M born (omitted) 1982, and Mr A born (omitted) 1984. It is not controversial that during the course of the marriage the children of the parties lived with them from time to time. The wife suggests at paragraph 5 of her affidavit she did not seek or receive any Child Support from Ms M and Mr A’s father, nor did they spend any time with their father. Mr Perrin and Mr C lived with the parties essentially on alternate weekends and for some time during school holidays. The wife suggests at paragraph 6 of her affidavit that Mr C was diagnosed with Asperger Syndrome such that his behaviour was what she described as “difficult”.
In (omitted) 1999, the parties purchased a property at Property G.
In October 1999, the wife sold a property she had owned prior to the commencement of the parties’ relationship at Property D. The wife gives undisputed evidence at paragraph 38 of her affidavit that she received approximately $500,000 net proceeds from the sale. The wife suggests at paragraph 39 of her affidavit that she actually received the sum of $530,225.78 net, but had no documentation that could confirm that exact amount. It is uncontroversial that the wife paid into a (omitted) Account, from the sale proceeds, an amount of $490,797.77. On 3 December 1999, the wife withdrew from (omitted) Bank the sum of $250,000, paying the same into an (omitted) Account.
By way of contrast, the husband suggests at paragraph 15 of his affidavit that, at cohabitation, he had the following assets: cash in the bank, $40,000; Toyota (omitted), value unknown; box trailer; tools; furniture; entitlement in the (omitted) Superannuation Scheme; and had no liabilities.
At paragraph 17 of the husband’s affidavit, he suggests that the wife had her investment property in Sydney, (the Court accepts the husband was referring to the Property D property), a Toyota (omitted) wagon, and assorted furniture.
There is a real issue in these proceedings as to the value of the husband’s superannuation entitlements as at the date of cohabitation. Orders were made by the Court for the appointment of a single valuer, in these proceedings, for the purposes of valuing the husband’s interest in the (omitted) Superannuation Fund. Despite the orders of the Court, as a result of the failings of the solicitors’ for the parties and the parties’ themselves in respect of their communication, the solicitor for the husband engaged Mr P as an adversarial expert. Ultimately, the wife engaged Ms T as an adversarial expert.
Mr P sets out in his affidavit affirmed 21 March 2016 his assertion as to the value of the husband’s superannuation interest as at 30 September 1998. The report suggests 30 September 1998 is the date of cohabitation. Having found earlier in the decision that commencement of cohabitation occurred between mid to late 1998, the Court accepts for the purposes of the said expert’s valuation, the date of 30 September 1998 as being an appropriate date on which to calculate the husband’s interest in the (omitted) Superannuation Fund at commencement.
Mr P, at page 9 in the affidavit being annexure B, gives evidence of the value of the husband’s interest in the (omitted) Superannuation Fund stating:
a)Question 1: the family law value of the superannuation interests of the husband as at the date of cohabitation; namely, 30 September 1998. Answer: $178,374.28.
The affidavit sworn by Ms T affirmed 10 August 2016 annexes a report, or what might be better described as a critique of Mr P’s opinion. Under the heading September 1998 Valuation, Ms T suggests:
We question the relevance of the calculations Mr P has made. Firstly, the valuation methodology for valuing superannuation interest is relevant to current values when a superannuation interest is to be split. They were not, in my opinion, envisaged to be used to calculate valuations many years in the past.
The (omitted) Super has its own scheme, a specific method. In fact, it is regarding superannuation interests and the factors reflect the complexity of the scheme. The actuarial calculations are based on assumptions about the future of the whole population of superannuants at the age and state of their career. The future outcomes of any individual member may or may not be reflected in the actuarial assumptions. For example, a calculation of the value of an interest more than 20 years ago using the actuarial formula may reflect what could be reasonably expected of an average interest, but not reflective of the value of the particular interest being valued. Therefore, using actuarial calculation to calculation of an interest in 1998 is not reasonable.
Prior to reaching age 55, a (omitted) Fund member has two options if he or she resigns and crystallises their superannuation benefit. They can withdraw their benefit, in which case they are entitled to the return of their contribution plus interest or they can get a further benefit in which case they will receive their contribution plus employer contributions. Annexed hereto and marked with the letter B is a copy of the (omitted) Fund 1997 statement of Mr Perrin. We note that Mr Perrin's (omitted) Super statement at 30 June 1987 shows a withdrawal benefit of $44,423 or a deferred benefit of $87,435 plus a basic benefit of $10,402.
If a valuation is needed of Mr Perrin’s superannuation at September 1998, we would recommend using this amount shown on the actual statement. We do not have access to the 1998 statement.
The opinion of Ms T does not suggest an actual alternate figure. For the purposes of the proceedings, the Court notes the parties prepared a final joint written report that reflects values, at different times and those areas of agreement and disagreement. The joint report was prepared and signed by Mr P and Ms T. The joint report was e–filed on 14 October 2016. Nothing contained within the report suggests an agreed initial value of the husband’s superannuation interest as at commencement.
Having heard the experts give evidence during the course of proceedings in circumstances where they were cross-examined together, the Court finds that the value of the husband’s interest in his (omitted) Superannuation Scheme as at commencement was that of $178,374.28. Ms T’s suggestion in her report that using the value shown in the statement from 1998 carries little weight where Ms T’s conceded she did not have access to the 1998 statement and therefore no knowledge of what that statement provided.
The husband seeks to diminish the effect of the wife’s initial contribution in the form of the Property D property, giving evidence at paragraph 19 that the wife engaged her own personal financial adviser, Mr W to advise the wife on how to invest the proceeds of the Property D sale. The husband suggests he did not like Mr W, nor did the husband agree with his advice that the wife invested proceeds of sale from Property D into the share market. The husband suggested it was his opinion that the wife should have invested the money in property and that the wife said to him following the sale of the Property D property, “It’s my money and I will do with it what I like.” It was the husband’s view Mr W’s investment strategy was risky.
In cross-examination on the topic, the husband agreed that he had met with Mr W. The husband agreed that he had no skill or training in investment advice, and that he had discussed the investment advice with the wife. It was clear to the court having listened to the husband’s cross examination that the husband felt it was probably the wife’s call as to how the proceeds were invested. The Court does not however accept that at the husband objected to the course of investment or, for that matter, the Court is not satisfied that the parties had in any way made a determination to keep their finances separate.
The wife suggests at paragraph 42, 43 and 44 that apart from the sum of $250,000 placed into an (omitted) Investment, the wife caused to be paid $205,000 into a (omitted) Investment Plan. The wife gave evidence as to providing cheques to Mr W of the firm (omitted), to invest monies based upon his financial advice. The wife additionally gave evidence as to providing Mr W the sum of $10,000 to be invested into a (omitted) Fund for Mr A and Ms M. Eventually, that investment was cashed in and both children received the sum of $5000 each.
The wife gave evidence at paragraph 46 of her affidavit of using some of the monies in the amount of $10,000 to purchase a Toyota (omitted) for the parties. The wife suggested that the husband traded in his motor vehicle and received $4000 towards the purchase price of the Toyota (omitted). The wife gave evidence that in December 1999 she paid her father the sum of $10,000, repaying a loan he had advanced to her for work done on the Property D property years earlier.
The wife suggests at paragraph 54 of her affidavit that she and the husband decided to purchase a (business omitted) at (omitted). The Court listened to cross-examination of the husband on the topic. The Court accepts that the parties reached a joint decision to proceed with the purchase of the (business omitted). Rather than cashing in the investment and paying cash for the (business omitted), the parties obtained a joint margin loan from (omitted) using the shares in the (omitted) and (omitted) investments as security. The (business omitted) was purchased for $137,500 plus stock of $25,000. The wife gave evidence at paragraphs 57 and 58 of her affidavit the margin loan had an approved limit of $190,000. Annexure C to the wife’s affidavit shows a margin loan document with (omitted), with an interest rate of 9.15 per cent. Mr W was noted as the financial adviser on the loan.
It is the wife’s evidence that margin calls were made on the loan. The wife was forced to sell shares and use the moneys from the sale of the shares to ensure sufficient equity against the loan, where the share portfolio originally had a market value of $403,225.62, with an estimated security value of $278,996.99. Sadly for the parties, the wife gave evidence at paragraph 58, the (business omitted) traded badly and the share portfolio fell in value due to losses on the share market. The wife suggests that she lost $180,000 in value on the shares due to what she describes as the “market crash in 2000 to 2001”.
Despite trading badly, the wife gave evidence of the parties attempting to make the business a success with the husband working in the (business omitted). The wife gave evidence that, for a period, she could not work in the (business omitted) after she broke her leg. The wife suggests that sales at the (business omitted) were dependent on such things as holiday peak periods, and (omitted) being opened by council. The wife gave evidence at paragraph 60 and 61 of having cashed in most of the (omitted) and (omitted) investments in order to pay out the margin loan in 2000.
At paragraph 61, the wife suggested that she and the husband sold the (business omitted) to (omitted) and received a net amount from the sale of $174,726. The parties had a remaining GST liability after the sale of $50,769. The wife gave evidence of being unable to locate documents to show what happened to the sum of $174,726 paid on the sale. The husband offered no evidence on the topic of the sale.
The wife gave evidence of the parties purchasing a property at Property W for $275,000. The wife suggests at paragraph 63 to paying the deposit of $27,500 from the remainder of the share account, and that the parties borrowed the sum of $274,500 from (omitted) Bank to fund the purchase. The husband gave evidence about the purchase, suggesting at paragraph 22 of his affidavit the parties purchased the Property W property with the wife paying the deposit of $27,500 from monies left over from the sale of the Property D investment property, and that such a purchase was made towards the end of the time the wife owned the (business omitted).
At paragraph 51 of the wife’s affidavit, she gave evidence of the husband attending to a number of renovations on Property G, including building a new Colorbond garage, internal renovations and extending the rear of the house. The wife suggests such renovations extended over a number of years with the costs of renovations being met largely from money withdrawn from the investments with (omitted) and (omitted). The wife suggests that her son, Mr A, helped to complete the renovation work.
Similarly, the husband suggested at paragraph 33 of his affidavit that he carried out major renovation works to Property G, including removing the existing garage, building a new large Colorbond garage, “gutting” the inside of the home and doing what the husband describes as completing internal renovations, extending the back of the home and putting a second storey on the house. The husband suggests that he did all of the yard work and assisted from time to time with cooking, but that the wife did the housework and was the main cook for the home.
In March 2007, the husband left the (employer omitted) due to what the Court might describe as numerous injuries. The husband gave evidence at paragraph 36 to applying for injury superannuation payment in 2007 that was awarded uncontested. The effect of the husband’s award on the value of the husband’s then interest in the (omitted) Superannuation Scheme was the subject of argument in these proceedings.
Mr P provides evidence in his report dated 20 March 2016, annexed to his affidavit sworn 21 March 2016, that the effect of what is described as “injury benefit” saw a significant increase in the value of the husband’s interest in the superannuation fund. At pages 3 and 4 of his report, Mr P suggested a value of the husband’s interest in the (omitted) Superannuation Fund on 2 March 2007 was 422,316.31 and on 3 March 2007, $930,861.73.
In the joint report of the experts e–filed 14 October 2016, Mr P and Ms T list agreed facts as follows:
a)The value of the husband’s interest as at 2 March 2007: $422,316.31.
b)The value of the husband’s interest as at 3 March 2007: $1,044,271.46.
c)Current value as at 15 September 2016, (that the Court notes follows the making of the splitting order referred to earlier in this judgment): $727,996.28.
At paragraph 101 of the submissions for the husband, it is suggested that the husband being injured and the pension that has then flowed from those injuries is tantamount to a damages award, such that the wife cannot be said to have made any contribution to the injury component. Counsel for the husband drew attention to the decision in various cases, including the decision of Watts J in Schmidt & Schmidt [2009] FamCA 1386 at paragraph 108 where Watts J concluded:
The wife could not claim any direct contribution arising from the husband being injured.
The Court finds favour with this argument and accepts as at 3 March 2007, the husband’s then increase in value of his superannuation interest was as a result of receiving an injury pension entitlement and should be taken into account as a contribution made by the husband; a change in value of close on $620,000.
The parties give evidence of their employment during the course of the relationship. For a period, the wife was unable to work because of depression. The parties gave evidence of (omitted) Bank commencing proceedings and taking possession of the Property W property as mortgagee in possession. The property was thereafter sold leaving a shortfall on the loan of some $78,000. The Court heard in cross-examination of the husband’s failure to financially assist the parties to pay arrears owing to the (omitted) Bank either from a commutation of a portion of his superannuation or otherwise from cash he had, but otherwise used for the purchase of a motor vehicle for his new partner.
The parties advanced to the wife’s son, Mr A, the sum of $150,000 for the purposes of purchasing, renovating and selling a property at (omitted). Unfortunately for the parties, Mr A and his partner, Ms S, separated and the husband and wife, in effect, lost their money. The husband gave evidence of having undertaken renovation and building work on the (omitted) property.
In some relationships people take financial risks and are met with financial rewards or otherwise, through little effort, accumulate wealth through such things as rising property prices. In other relationships however, even with prudent financial management, couples can lose vast sums of money. The husband and wife in these proceedings worked hard, they sought financial advice (as poor as that advice might have been) in order to be prudent with their finances. Despite these efforts they were what might be described as ‘financially unfortunate’.
In the decision of Kowaliw & Kowaliw [1981] FLC 91–092, the Full Court of the Family Court held that:
Financial losses incurred by the parties, or either of them, in the course of their marriage should be shared by them although not necessarily equally, unless one of the parties has embarked upon a course of conduct designed to reduce the value of the assets or where one party has acted recklessly, negligently or wantonly with the assets, causing a reduction or minimisation of their value. This is often referred to as waste.
No finding is made by the Court in these proceedings that either party had acted recklessly, negligently or wantonly with the assets causing a minimisation or reduction of their value.
Argument was advanced by counsel for the husband to the effect that the Court should adopt a two–pool approach when adjusting property between the parties; the first pool being that of what is described as “tangible assets” and interest in the wife’s (omitted) Superannuation Fund; the second pool being that of the husband’s interests in the (omitted) Superannuation Fund. If the Court were to adopt such an approach it would see, in effect, two pools where the first pool of assets had diminished well below the value of the wife’s initial contribution; and the second pool, being that of the interest in the (omitted) Superannuation, had significantly gained in value. The two–pool approach would see the husband as making little contribution to the first tangible pool and the wife making little contribution to the (omitted) Superannuation pool. An adjustment of property based on a two pool approval would see the husband receive a disproportely large adjustment of property because he would receive a larger share of the second pool that had increased in value, whereas the wife would receive a larger share of the first pool that had reduced in value.
Counsel for the husband pointed in submission to the Full Court decision in Craig & Rowlands [2013] FamCAFC 45 that set out in part;
Consideration must be had to the overall justice and equity of any proposed order, including the real nature of the separate interest.
It is not just and equitable to consider a two–pool approach in this matter. The argument advanced by the husband is accordingly rejected.
These are proceedings governed pursuant to section 79 of the Family Law Act 1975 and, in general, Part VIII of the Family Law Act1975. In the case of Stanford & Stanford [2012] 293 ALR 70, the High Court at paragraph 78 and 79 considered the manner in which the Court should approach and determine property proceedings and held:
It is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according the ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
The Court has historically determined property proceedings in accordance with its well–established principles set out in the case of Hickey & Hickey [2003] FLC 93–143, embarking upon a four–step process.
The first step requires the Court to identify and value assets, liabilities and financial resources of the parties at the time of the hearing. The second step requires the Court to consider the parties’ contributions and consider any adjustment that should be made between the parties. The third step requires the Court to consider the actual circumstances of the parties and to make adjustment for all those circumstances, considering a variety of factors set out at section 75(2) of the Family Law Act. The last step, step 4, requires the Court to satisfy itself as to the actual effect of the orders being just and equitable.
In the Full Court decision in the case of Bevan & Bevan [2013] FamCAFC 116, the Full Court considered the decision in Stanford and the implications of that decision when looking at the four–step approach taken by the Courts. In that decision, Bryant CJ and Thackray J held at paragraph 59:
Prior to Stanford, property applications were commonly dealt with by reference to what the trial judge called a four–step process. This process was described at paragraphs 31 and 32 of his Honour’s reasons. The jurisprudential basis for the process was well–established – see the lines of the authority in a case cited in Hickey & Hickey.
The four–step process involved: the identification and a valuation of the property of the parties; identification and evaluation of contributions of the parties, including property no longer owned by the parties; identification and assessment of the various matters set out at section 75 and 75(2); and the consideration of matters of justice and equity.
Although the four–step process has been regularly applied, the Full Court has stressed it is no more than a means to an end, since the statutory obligations to alter existing interests only if just and equitable to do so. Thus, in Norman & Norman [2010] FamCAFC 66 at 60, Finn, May and Murphy JJ said:
It is the mandatory legislative imperative to reach a conclusion that is just and equitable that drives the ultimate result. For all its usefulness and merit as a disciplined approach or a structured process of reasoning, the three or four–step approach merely illuminates a path to the ultimate result.
To like effect, in discussion of the four–step approach, see the joint judgment of Martin & Newton [2011] famCAFC 233; (2011) FLC 93-400, we said (original emphasis):
305. That approach is not legislatively mandated and the Full Court [in Hickey] said, is simply the preferred approach. This is because it will be sufficient, in most cases, to have regard to the overall just and equity of the orders after determination of the asset pool, consideration of the contributions and assessment of the relevant section 75(2) matters.
306. But in our view, there is no requirement that the justice and equity of the order, as prescribed by s.79(2), must only be considered at the fourth (and last) stage. In our view, the requirement to make an order that is just and equitable permeates the entire decision-making process, and it is not impermissible to consider it at an earlier point if the particular case requires it. We consider this such a case.
What is clear from the case law is that the four–step approach, while not legislatively mandated, continues to be adopted by the Courts when determining applications under section 79 of the Family Law Act1975 for adjustment of property interests as it is a means by which the Court is able to illuminate a pathway towards a result that is just and equitable. This approach is well–established in authorities. In this regard see in the case of: In the Marriage of Lee Steere (1995) FLC 91–226, In the Marriage of Ferraro (1993) FLC 92–355; and In the Marriage of Clauson (1995) FLC 92–595.
In the case of Whitton & Whitton [2015] FamCA 102, Johnston J stated:
It is our view it will be less likely that a separate issue arises under section 79(2) and (4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentages of monetary terms until such time as they are, firstly, determined it will be just and equitable to make an order.
This is a case where the assets of the parties are not divided evenly between them and the Court takes the view, in this case, the Court ought to make a finding as to whether it is just and equitable to make an order when identifying according to the ordinary common law principles of equity the existing legal and equitable interests of the parties.
In Stanford [at 42], the High Court suggested:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as a result of a choice made by one or both of the parties, the husband and wife are no longer living in a matrimonial relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be a common use of property by the husband and wife.
This is one of those cases. The Court finds that it is just and equitable to make a property settlement order adjusting the parties’ property interests.
During the hearing the Court will sometimes utilise the evidence of experts such as valuers, agreements between parties or the making of findings upon the evidence presented to identify the values of property, liabilities and financial resources. Tendered during the proceedings as a joint balance sheet forming exhibit B that the Court has read and considered.
The Court noted earlier in the decision the superannuation split to the wife. Proceeds of the split were used to discharge the remaining liability to the (omitted) Bank resulting from the mortgagee in possession sale. After the payment of monies to (omitted) Bank the sum of approximately $22,000 remains in the wife’s possession. The Court notes that the wife suggested that she owes her mother the sum of $50,000. The Court further notes there was no evidence of the wife’s mother as to the alleged debt. There is insufficient evidence available to the Court to make a finding as to the existence of the alleged debt.
Concessions were made and evidence was given as to the parties having withdrawn money from their respective superannuation interests to funds legal fees. The Court accepts submissions of the counsel for the husband that those sums ought to be added back to the pool of assets available for distribution as an add–back in this regard. See the case of Vass & Vass in respect of the Court continuing to include add backs, as a notional asset to the pool of property available for distribution between the parties.
The Court, accordingly, finds the following.
| ASSETS | ||
| DESCRIPTION | OWNERSHIP | VALUE |
| Matrimonial home –Property G | Joint | $450,000.00 |
| (omitted) Motor Vehicle | Husband | $12,850.00 |
| (omitted) boat | Husband | $20,000.00 |
| Boat | Husband | $0.00 |
| (omitted) time share rights | Husband | $5,000.00 |
| Funds remaining from super split | Wife | $22,060.00 |
| Property R | Husband | $220,000.00 |
| (omitted) Bank | Husband | $91,547.00 |
| TOTAL ASSETS | $821,457.00 |
| ADD-BACKS | ||
| Legal fees paid from (omitted) super funds | Husband | $16,473.00 |
| Legal fees paid from (omitted) super funds | Wife | $65,209.00 |
| Funds withdrawn from (omitted) Fund | Wife | $5,222.00 |
| TOTAL ADD-BACKS | $86,904.00 |
| LIABILITES | ||
| Property G Mortgage | Joint | $289,430.00 |
| Debt owing to (omitted) Bank re: Property W | Joint | $0.00 |
| Overdraft | Wife | $3,228.00 |
| (omitted) Bank credit card | Joint | $10,306.00 |
| Loan from wife’s mother | Wife | $0.00 |
| Property R Mortgage | Husband | $176,000.00 |
| (omitted) Bank | Joint | $4,956.00 |
| TOTAL LIABILITIES | $483,920.00 | |
| NET VALUE (including Add-backs) | $424,441.00 |
| SUPERANNUATION | ||
| (omitted) Super | Husband | $727,996.00 |
| (omitted) Super | Wife | $3,000.00 |
| TOTAL SUPERANNUATION | $730,996.00 |
The Court notes the greater initial financial contribution made by the wife and subsequent contribution made by the husband by virtue of the increase in the value in his superannuation interest as a result of receiving an injury entitlement. The Court notes the parties to the marriage both worked to the best of their ability. The Court notes the greater non‑financial contributions made by the husband in the form of the husband’s improvements to Property G and accepts the greater contribution having been made by the wife in her capacity as homemaker.
The Court considers that there will be no effect upon the earning capacity of either party should the Court make orders in the terms contemplated by the Court as being just and equitable. The Court allows an adjustment for contributions as to 54% to the husband and 46 % to the wife.
The wife is 64 years of age and the husband, 57 years. There is, between the parties, a seven–year age difference. Ordinarily, a disparity in age of seven years will make little difference. In this case however, given the parties’ age, seven years is significant when one considers the length of the parties’ potential working life.
The wife’s health is, in the view of the Court, well less than perfect but superior in respect to that of the husband, given his injuries. The Court accepts that the husband’s capacity for appropriate gainful employment is inferior to that of the wife. Both parties have what the Court might describe as extremely modest incomes.
Neither party has the care or control of the child of marriage. The Court has considered the commitments of the parties to support themselves and any other person.
The husband has an interest in the (omitted) Superannuation Scheme paying to him a pension benefit. The Court accepts the submissions of counsel for the husband to the effect that the Court must avoid double–counting where the value of the husband’s interest is recorded in the balance sheet. The Court considers that an adjustment of property between the parties, that is just and equitable will afford the parties a standard of living that is perhaps less than they both might like but that, in all the circumstances, is reasonable.
There is no evidence before the Court that would allow the Court to make a finding that the duration of the marriage had any effect upon the parties’ earning capacity. The Court notes the husband now resides with his new partner, Ms M, and the circumstances of that cohabitation. The Court notes the wife resides with her mother without payment of accommodation costs.
Neither party is liable to pay Child Support. The Court considers the decision in Robb & Robb (1994) 18 FamLR 489 as to both parties’ contributions to the welfare of the other’s children where there was no legal obligation to do so. There is no financial agreement binding upon the parties, nor a Part VIIIB financial agreement binding upon the parties.
Having considered those matters set out at section 75(2), the Court allows 52.5% to the husband and 47.5% to the wife based on section 75(2) factors.
The Court finds an overall adjustment of 56.5% to the husband and 43.5% to the wife. When standing back and considering the actual effect of the orders, the Court finds that it is not just and equitable to make a further adjustment between the parties.
The Court considers the lump sum spousal maintenance claim by the wife. The power to make orders for spousal maintenance is found at section 72 of the Family Law Act1975. Section 72 provides:
(1) A party to a marriage is liable to maintain the other party, to the extent that the first–mentioned party is reasonably able to do so if, and only if, the other party is unable to support herself or himself adequately whether:
a) by reason of having the care and control of a child of the marriage who has not obtained the age of 18 years;
b) by reasons of age or physical and mental incapacity for appropriate gainful employment;
c) or for any other adequate reason; having regard to any relevant matters referred to in section 75(2).
The Court is not satisfied, where there will be a significant adjustment of property in the wife’s favour, by virtue of this decision, that the wife is able to demonstrate in any way that she is unable to support herself adequately by reason of having the control of a child of the marriage under the age of 18 years which, of course, she does not. Again noting the significant adjustment of property in favour of the wife the Court is not satisfied on the evidence of the wife that she is unable to support herself adequately by reason of age, physical and mental capacity for appropriate gainful employment or for any other adequate reason. Accordingly, the wife’s application for spousal maintenance must fail.
The Court will allow the parties 14 days in which to provide terms as agreed between them that provide for an adjustment of property as to 56.5% to the husband and 43.5% to the wife of those assets found in the balance sheet. A failure to do so will result in the Court relisting the matter and thereafter make orders for adjustment of the assets found in the balance sheet.
The court makes the following orders.
I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Judge Myers
Date: 7 July 2017
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