Pethridge and Pethridge
[2008] FamCA 775
•12 September 2008
FAMILY COURT OF AUSTRALIA
| PETHRIDGE & PETHRIDGE | [2008] FamCA 775 |
| FAMILY LAW - PROPERTY SETTLEMENT – Pool of assets – assets acquired after separation – Contributions – equal to separation, impact of contributions after separation in long marriage – Adjustment for other matters – very large imbalance in earning capacities, husband re-partnered – Just and equitable |
| Family Law Act 1975 (Cth) ss 75 and 79 |
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
Gaunt & Scanlan (2007) FLC 93-319; (2007) 37 Fam LR 428
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) 12 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
Clauson and Clauson (1995) FLC 92-595; (1994) 18 FamLR 693
| APPLICANT: | Mr Pethridge |
| RESPONDENT: | Ms Pethridge |
| FILE NUMBER: | SYC | 6689 | Of | 2007 |
| DATE DELIVERED: | 12 September 2008 |
| PLACE DELIVERED: | Sydney |
PLACE HEARD: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
| HEARING DATE: | 7 August 2008 |
REPRESENTATION
COUNSEL FOR THE APPLICANT: | Mr G. Foster |
| SOLICITOR FOR THE APPLICANT: | McDonell Milne Toltz Family Lawyers |
COUNSEL FOR THE RESPONDENT: | Mr J. Millar |
| SOLICITOR FOR THE RESPONDENT: | Anthony Ziade & Associates |
Orders
Each party shall take all necessary steps and execute all necessary documents forthwith to cause the property situated and known as P property, being the whole of the land in folio identifier …/… (“the home”) to be listed for sale by private treaty on the following basis:
(a) The property will be listed with such agent as the parties agree to appoint and in default of agreement as to such agent within fourteen days after this order comes into effect, with such agent as the president of the Real Estate Institute of New South Wales or his nominee appoints, the costs of and incidental to such appointment to be borne equally by the parties as and when they fall due
(b) The parties will list the home for sale at a price as may be agreed upon by the parties, but failing agreement within seven days at the price of $600,000.00;
(c) The parties will each cooperate in every way with the agent including but not limited to:
(i) Making the key available to the agent;
(ii)Allowing inspection of the home at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Ensuring that the home including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v)Signing all documents requested by the agent in relation to the listing for sale of the home except a contract or agreement for sale which has not been authorised by the parties solicitors.
(d) The parties will each execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at a price agreed upon by the parties or, in the absence of any agreement, at or above the price nominated in (b) above;
(e) The wife’s solicitor will have the primary conduct of the sale on behalf of both parties provided the husband’s solicitor will be entitled to be independently advised and represent the husband in respect of the sale and all matters arising thereon and any costs properly payable to the husband’s solicitor will be and form part of the legal costs of sale and be deducted from the proceeds;
(f) Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the home or to any commission;
(g) In the event that the home remains unsold for a period of three months from the date upon which it was first listed for sale the parties will list the home for sale by public auction with such agent as the parties agree to appoint and in default of agreement as to agent, with such agent as the President of the Real Estate Institute of New South Wales appoints, the cost of and incidental to such appointment to be borne equally by the parties;
(h) A reserve price for the purpose of such auction will be such that the parties agree upon or failing agreement will be the price nominated as a fair market value by a licensed valuer appointed by the President of the New South Wales Division of the Australian Property Institute, the costs of such valuation to be borne by the parties equally;
(i) In the event that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the home at a price which is not more than 10% below the reserve price;
(j) If the home remains unsold, the parties will do all acts and things and sign all documents necessary to immediately re-list the home for sale by public auction again on a date nominated by the agent and at such auction there will be no reserve price;
On settlement of the sale of the home the proceeds be paid in the following manner and priority:
(a) All costs and expenses of sale including legal costs and disbursements.
(b) Agents commission, valuers fees and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties.
(c) The amounts required to discharge the mortgage (if any);
(d) The amounts required to pay all municipal and water rates outstanding with respect of the home;
(e) The balance then remaining to the wife.
Pending the sale of the said property the Wife shall have sole use and occupation thereof and shall pay as they fall due and be liable for Council and Water rates, insurances and statutory outgoings, and shall maintain the property in good repair and condition having regard to the condition of the said property as at the date of these orders.
The husband shall pay to the wife by way of property settlement the sum of $167,000 within one month.
In the event that the net sale proceeds of the home are less than $600,000, the husband shall pay to the wife an amount calculated to be 30% of the difference between the net sale proceeds and $600,000. In the event that the net sale proceeds of the home are greater than $600,000, the wife shall pay to the husband an amount calculated to be 30% of the difference between the net sale proceeds and $600,000.
A payment required by order 5 shall be made forthwith upon the completion of the sale or within such later time as the parties may agree.
Within 21 days the husband shall do all things and execute all documents forthwith to cause to be transferred to the wife the life insurance policy upon the wife’s life with MBF.
Within 21 days of the date of these orders, the Husband and the Wife do all acts and things and execute all documents necessary to formally close the joint Citibank Savings Account.
The husband shall do all things and pay all moneys to indemnify the wife and keep her indemnified with respect to any liabilities of taxation of any kind upon the interest earned by funds invested in the joint names of the parties with Citibank.
Within 21 days the husband do all things and execute all documents to transfer all his right, title and interest in the caravan owned by the parties at B Caravan Park to the wife.
Within 7 days of being provided with the relevant documents the wife shall do all things and execute all documents to cause her right, title and interest in 284 IAG shares presently held in the joint names of the husband and the wife to be transferred to the husband.
Except as otherwise provided by these orders and upon compliance with these orders in full each party is to be declared the owner as against the other of all items of personality presently standing in the name of that party or in the possession of that party including without limitation motor vehicles, funds to the credit of a party in a bank account, household contents and furniture and superannuation entitlements.
The operation of these orders is stayed for a period of 14 days and the parties are at liberty to apply within that period, on giving notice to the other party and the Associate to Judicial Registrar Loughnan, in relation to the wording of the orders.
IT IS NOTED that publication of this judgment under the pseudonym Pethridge & Pethridge is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 6689 OF 2007
| MR PETHRIDGE |
Applicant
And
| MS PETHRIDGE |
Respondent
REASONS FOR JUDGMENT
After living together for about 22 years the parties cannot agree on a settlement of their property. They are divorced but for convenience I will refer to them as the husband and wife.
Applications
I was told during the hearing that the parties would settle an agreed format for the orders. It transpired that they could not agree. On 19 August 2008 two documents were provided to my chambers. Thus the husband seeks the following orders:
1.That the Husband and Wife do all acts and things and execute all documents necessary to place the former matrimonial home situate at [P] on the market for sale by private treaty forthwith at a price agreed between the husband and wife or failing such agreement at a price of $600,000 and in particular shall:-
(a) Appoint a firm of solicitors to act on the sale of the said property or in default of their agreement, such solicitors as shall be nominated by the President of the Law Society of New South Wales.
(b) Place the said property with an agreed agent for the sale of the property by private treaty at the earliest possible date or in default of agreement such agent as may be nominated by the President for the time being of the Real Estate Institute of New South Wales and the letter nominating such agent shall be taken to be conclusive evidence of such nomination by the parties.
(c) Execute all documents requested by the agent for the sale of the said property.
(d) Pay to the agent equally, any sums reasonably requested for advertising expenses in relation to the sale.
(e) Co-operate in every way with the agent in relation to the sale of the said property.
(f) Execute contracts for sale.
(g) Execute all other documents necessary to complete the sale.
2.That in the event that the property is not sold by private treaty within three (3) months from the date of these orders the Husband and Wife are to forthwith do all acts and things and execute all documents necessary for the sale of the said property by public auction within 5 months from the date of these orders and in the event that the said property is not sold by public auction when first offered for sale by auction the said property shall thereafter be resubmitted for sale by public auction pursuant to the provisions of these orders at intervals of not less than two (2) months until such property shall eventually be sold, and in particular are to:
(a) Place the said property with an agreed auctioneer or in default of agreement L.J. Hooker Ltd (hereinafter called "the auctioneers") for the sale of the property by public auction at the earliest possible date.
(b) Execute all documents requested by the auctioneers for the sale of the said property.
(c) Request the auctioneers to recommend a reserve price to be placed on the said property for the purpose of the auction sale and accept such recommended reserve price.
(d) Pay to the auctioneers equally, any sums requested for advertising expenses in relation to the auction.
(e) Co-operate in every way with the auctioneers in relation to the auction of the said property.
(f) Attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached and accept the advice of the auctioneers as to the acceptance of a price less than the reserve price.
(g) Execute contracts for sale.
(h) Execute all other documents necessary to complete the sale.
3.That upon completion of the sale of the said property the Husband and Wife do all acts and things necessary to cause the proceeds of sale to be paid in the following manner and priority:
(a) in payment of agent's commission and auction expenses (if any) due on the sale;
(b) in payment of legal costs of sale;
(c) in discharge of the mortgage encumbrance secured thereon
(d) in payment to the Wife of 57.5% of the balance then remaining together with a further sum of $252,755 and then in payment of the balance (if any) then remaining to the Husband and in the event that on sale there are insufficient funds to pay to the Wife the sums provided for, the Husband shall pay any shortfall concurrently on settlement of the sale of the property.
4.That pending sale of the said property the Wife shall have sole use and occupation thereof and shall pay as they fall due and be liable for Council and Water rates, insurances and statutory outgoings, and shall maintain the property in good repair and condition having regard to the condition of the said property as at the date of these orders.
5.That within 14 days of the date of these orders the Wife do all acts and things necessary to transfer to the Husband her interest in jointly owned IAG Ltd shares.
6.That within 14 days of the date of these orders, the Husband and the Wife do all acts and things and execute all documents necessary to formally close the joint Citibank Savings Account.
7.That within 14 days of the date of these orders, the Husband do all acts and things and execute all documents necessary to transfer to the Wife all of his right title and interest in the caravan.
8.That within 14 days of the date of these orders the Husband do all acts and things and execute all documents necessary to transfer to the Wife ownership of the life insurance policy on the life of the Wife.
9.That other than as provided by these Orders, the Wife be entitled to retain the ownership of the following:-
a.The Ford Focus motor vehicle;
b.The furniture, furnishings and household effects contained within the former home;
c. Her bank accounts;
d. Her entitlements to superannuation benefits;
f.All other items of property presently in her name, possession or control including but not limited to interests in real estate, money, shares, motor vehicles, insurances, entitlements to superannuation benefits, furniture, furnishings and personal effects.
10.That other than as provided by these Orders, the Husband be entitled to retain the ownership of the following:-
a. The Jaguar motor vehicle;
b. His bank accounts;
c.His shares in E Limited including rights accruing to him under the E Limited Long Term Incentive Plan;
d.His options in E Limited;
e. The ANZ Deferred Annuity;
f.His entitlements to superannuation benefits in the ING, AMP and ANZ Superannuation Funds;
g.All other items of property presently in his name, possession or control including but not limited to interests in real estate, money, shares, motor vehicles, insurances, entitlements to superannuation benefits, furniture, furnishings and personal effects.
The wife seeks the following orders:
1.(a) That each party shall take all necessary steps and execute all necessary documents forthwith to cause the property situated and known as [P property] being the whole of the land in folio identifier […]/[…] (“the home”) to be listed for sale by private treaty with such agent as the parties agree to appoint and in default of agreement as to such agent within fourteen days after this order comes into effect, with such agent as the president of the Real Estate Institute of New South Wales or his nominee appoints, the costs of and incidental to such appointment to be borne equally by the parties as and when they fall due;
(b) The parties will list the home for sale at a price as may be agreed upon by the parties, but failing agreement within seven days at the price of $600,000.00;
(c) The parties will each cooperate in every way with the agent including but not limited to:
(i) Making the key available to the agent;
(vi)Allowing inspection of the home at all reasonable times requested by the agent;
(vii)Doing or saying nothing to hinder or prevent a sale being effected;
(viii)Ensuring that the home including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(ix)Signing all documents requested by the agent in relation to the listing for sale of the home except a contract or agreement for sale which has not been authorised by the parties solicitors.
(d) The parties will each execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at a price agreed upon by the parties or, in the absence of any agreement, at or above the price nominated in (b) above;
(e) The wife’s solicitor will have the primary conduct of the sale on behalf of both parties provided the husband’s solicitor will be entitled to be independently advised and represent the husband in respect of the sale and all matters arising thereon and any costs properly payable to the husband’s solicitor will be and form part of the legal costs of sale and be deducted from the proceeds;
(f) Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the home or to any commission;
(g) In the event that the home remains unsold for a period of three months from the date upon which it was first listed for sale the parties will list the home for sale by public auction with such agent as the parties agree to appoint and in default of agreement as to agent, with such agent as the President of the Real Estate Institute of New South Wales appoints, the cost of and incidental to such appointment to be borne equally by the parties;
(i) A reserve price for the purpose of such auction will be such that the parties agree upon or failing agreement will be the price nominated as a fair market value by a licensed valuer appointed by the President of the New South Wales Division of the Australian Property Institute, the costs of such valuation to be borne by the parties equally;
(j) In the event that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the home at a price which is not more than 10% below the reserve price;
(k) If the home remains unsold, the parties will do all acts and things and sign all documents necessary to immediately re-list the home for sale by public auction again on a date nominated by the agent and at such auction there will be no reserve price;
2.On settlement of the sale of the home the proceeds be paid in the following manner and priority:
(f) All costs and expenses of sale including legal costs and disbursements.
(g)Agents commission, valuers fees and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties.
(h) The amounts required to discharge the mortgage (if any);
(i)The amounts required to pay all municipal and water rates outstanding with respect of the home;
(j) The balance then remaining to the wife.
3. In the event that the sale price of the home is less than $600,000.00 the sum payable by the husband pursuant to order 5 shall be increased by 75% of the difference between the sale price and $600,000.00 but in the event that the sale price of the home exceeds $600,000.00, the sum payable pursuant to order 5 by the husband shall be reduced by 75% of the difference between the sale price and $600,000.00.
4. The husband shall do all things and execute all documents forthwith to cause to be transferred to the wife the life insurance policy upon the wife’s life with MBF.
5. The husband shall pay to the wife by way of property settlement the sum of $253,633.00 within one month.
6. The husband shall do all things and pay all moneys to indemnify the wife and keep her indemnified with respect to any liabilities of taxation of any kind upon the interest earned by funds invested in the names of the parties with Citibank.
7. That within seven days the husband do all things and execute all documents to transfer all his right, title and interest in the caravan owned by the parties at [B Caravan Park] to the wife.
8. That within seven days of being provided with the relevant documents the wife shall do all things and execute all documents to cause her right, title and interest in 284 IAG shares presently held in the joint names of the husband and the wife to be transferred to the husband.
9. That except as otherwise provided by these orders and upon compliance with these orders in full each party is to be declared the owner as against the other of all items of personality presently standing in the name of that party or in the possession of that party including without limitation motor vehicles, funds to the credit of a party in a bank account, household contents and furniture and superannuation entitlements.
10. That there be liberty to apply upon seven days notice in relation to the implementation of these orders.
Affidavits
The parties rely on the following sworn documents:
Husband’s affidavit filed 4 August 2008.
Husband’s Financial Statement filed 4 August 2008.
Wife’s Affidavit filed 5 August 2008
Wife’s Financial Statement filed 5 August 2008
Issues for determination
The main issues for determination are:
Whether or not the husband’s interest in the property at H and his share of the contents of that property should be included in the pool of assets;
Whether the E Limited share rights that vested in the husband in October 2006 and October 2007 should be reflected in the list of assets for division;
Whether the husband’s E Limited share options should be identified as a financial resource to him;
Whether the section 79(4) considerations should be applied to separate pools of superannuation and non-superannuation assets or to a combined pool of assets;
Whether contributions were equal overall or favour the husband marginally because of an imbalance of contributions after separation;
The extent of an adjustment in favour of the wife for the non-contribution factors of section 79(4).
The hearing
The matter was listed for a one day hearing on 7 August 2008. In fact the parties and their legal representatives worked to narrow the issues and the oral hearing commenced at 11.45am and submissions concluded at 1.15pm. One can always complain that concessions could have been made earlier and thereby the proceedings could have resolved by agreement. Nevertheless, the parties, their solicitors and particularly, their counsel, are to be congratulated for the manner in which the hearing was conducted. It took another 12 days for them to tell me what orders they wanted.
Short History
The husband and wife are 51 and 49 years of age, respectively. They were married in February 1983, separated on 27 November or 3 December 2005 and their divorce became final on 19 February 2007.
Children
There are three adult children of the marriage:
C who was 23 years of age as at the date of the hearing;
L and Y who were 19 years of age as at the date of the hearing.
Background Facts
The parties were married in February 1983.
At the time of marriage the husband was employed at CP Company in Information Technology. The wife was employed as a Licensing Officer.
At that time the husband had the following assets:
Ø An interest in a B home unit with his first wife, subject to a mortgage and personal loan
Ø A motor vehicle
Ø Furniture and contents
Ø Citibank Superannuation having a value of either $25,000 or $46,297
The wife had the following assets:
Ø Savings of about $5,000;
Ø Furniture and contents; and
Ø Motor vehicle
On 8 April 1983 the parties bought G property for $63,500. They borrowed $53,975 from CP Company at a reduced rate of interest. The wife asserts that the parties borrowed $3,000 from her parents to assist with the mortgage and bridging finance for the purchase.
On 27 May 1983 the husband transferred his interest in the B unit to his ex-wife and received either $10,000 or $6,000.
In April 1985 the wife ceased work in expectation of the birth of C.
C was born in May 1985.
In September 1987 the wife obtained part time work as an Administrative Assistant for about 9 months.
In March 1988 the parties sold the G property and bought P property for $148,000. They borrowed $80,000 and the balance of the purchase price came from the net proceeds of the G property sale.
L and Y were born in August 1988.
In 1995 the wife obtained part time work with the NSW Public Service.
In March 1996 the parties refinanced the home mortgage to $180,000 to undertake renovations. The wife says the loan extension was used to pay $80,000 in renovation costs and $20,000 in debts. It is not necessary to resolve that issue.
In 1998 the parties commenced further renovations over a period. An in-ground pool was installed and landscaping and garden paths were constructed in 1998. A new bathroom was built in 1999 and a new kitchen installed in 2001.
The husband left CP Company in May 1998 and formed X Pty Ltd. He worked as a self employed sub-contractor.
In April or May 2000 the parties purchased a holiday home at N for $165,000.
On 1 January 2000 the husband commenced salaried employment with IN Company.
In April or December 2003 the parties purchased a Caravan on site at B Caravan Park for either $18,500 or $20,000. It is not necessary to resolve that issue.
In December 2003 the parties sold the N property for $380,000. The proceeds were deposited into the joint ING account and later a Citibank account.
In October 2004 the husband commenced salaried employment with E Ltd. As part of his salary package he was given 200,000 Share Rights.
On 27 May 2005 the husband received an inheritance from his mother’s estate of $29,017. Those funds were later used for a family trip to London.
On 5 October 2005 the first tranche of 66,666 share rights vested under the E Limited Long Term Incentive Plan.
On 25 October 2005 the lease on the wife’s Astra motor vehicle ended, the residual was paid out and the car was traded on a Ford Focus Ghia for her to drive. The Ford cost $34,000. $25,000 was allowed for the trade-in and the balance of the price came from the Citibank funds.
The parties separated in November / December 2005. The husband vacated the former matrimonial home on 5 December 2005 and moved into rented premises.
As at the time of separation the mortgage on the home had been reduced to nil and the husband’s superannuation with AMP totalled $19,053.
In December 2005 the husband commenced to deposit funds to the mortgage account for the wife to access for expenses. He deposited $158,938 over 2 years. In addition the husband paid other expenses totalling $12,613.
In April 2006 the parties used $30,796 from the Citibank funds to pay out the lease on the husband’s motor vehicle.
On 5 October 2006 the second tranche of 66,666 share rights vested under the E Limited Long Term Incentive Plan.
On 15 October 2006 the husband received an income bonus of $62,942 after tax.
On 18 January 2007 a Decree Nisi of Dissolution of Marriage was granted.
On 5 April 2007 the husband and Ms A purchased a home at H for $810,000 plus purchase costs. Ms A contributed $302,885 and they borrowed $540,000. The husband contributed a total of $5,624 to the purchase.
On 30 July 2007 E Ltd issued the husband with 500,000 share options at 65 cents to vest in equal tranches on 23 July 2009 and 23 July 2010.
On 15 September 2007 the husband received an income bonus of $108,697, after tax.
On 24 September 2007 the husband transferred $250,000 from the joint Citibank account to an ING account in his name. The wife transferred the balance of $90,000 to her Citibank account.
On 5 October 2007 the third tranche of 66,666 share rights vested under the E Limited Long Term Incentive Plan.
The husband and Ms A were married on 10 November 2007.
In January 2008 the husband commenced providing the children with $1,500 per month each for expenses. Since February 2006 he has paid various tertiary tuition fees totalling $32,244.
As at the date of the hearing the E Limited shares stood at about 50 cents.
As at the date of the hearing all three children had some paid employment.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties.
There is no relevant factual dispute and therefore credit findings are not required.
Submissions
The written submissions made on behalf of the husband are as follows:
3. Husbands Contention as to the Pool for Division:
Asset:
H Value:
W Value:
Agreed:
Non Superannuation Pool:
Jt
[P property]
600,000
600,000
Y
Jt
IAG shares (284) [1]
1,074
1,065
N
(601,074
W
Furniture and contents
7,000
7,000
Y
W
Citibank account
90,000
90,000
Y
W
St George account
2,000
2,000
Y
W
Caravan
18,000
18,000
Y
W
ING account
1,000
1,000
Y
W
HSBC account
400
400
Y
W
ANZ account
8,000
8,000
Y
W
Ford car
16,000
16,000
Y
(142,400)
H
ING account
247,812[2]
H
ANZ account
1,600[3]
H
[H property][4]
0
N
H
Contents [H property]
0[5]
H
Employment Bonus Sept 07[6]
0
105,687
N
H
Employment bonus 2006[7]
0
68,000
N
H
Jaguar car [8]
18,500[9]
31,000
N
H
[E Ltd] share rights[10]
16,050
55,200
N
H
Furniture and contents [H] property[11]
0
N
H
[E Ltd] Share Options[12]
0
N
(283,962)
Total:
1,027,436
Superannuation Pool:
H
AMP Superannuation[13].
65,159[14]
50,230
N
H
ING Superannuation
57,706[15]
66,500
Y
H
ANZ Superannuation
34,476[16]
33,000
Y
H
ANZ ADF Superannuation
85,196[17]
99,000
N
W
First State Superannuation
46,000
46,000
Y
288,537
[1] H asserts that value will be market value at hearing
[2] H Updated Financial Statement
[3] H Updated Financial Statement.
[4] H asserts this asset acquired after separation with funds earned by him after separation and should be excluded from the pool for division. (Gollings and Scott (2007) FamCA 397). The price was $810,000 plus acquisition costs. The capital cost of the purchase was funded by the H new wife and a mortgage of $540,000. The H contribution was funds totalling $5,624.
[5] H asserts that these should be excluded as a post separation acquisition.
[6] H asserts this post separation income not capital and should be excluded. (Gollings and Scott (2007)FamCA 397).
[7] H asserts this post separation income not capital and should be excluded. (Gollings and Scott (2007)FamCA 397).
[8] H asserts this Red Book value for mid range private sale
[9] H Updated Financial Statement
[10] H granted rights to 200,000 shares on 5 Oct 2004 to vest as to one third on employment continuing for each of the next three years. Rights that vested during cohabitation (Oct 05) should be included in the pool for division subject to the incidence of income tax. Otherwise the remaining rights fully vested on the 5 Oct 2007 and represent an after acquired asset by reason of continuing employment and should be excluded from the pool for division. The H entitlement to the balance of after acquired Rights net after income tax is a Section 75(2) factor only.
[11] H asserts that these items are after acquired property.
[12] H was granted 500,000 options on the 30 July 2007. Exercise price is $0.65c which exceeds the current share price. The Options comprise two tranches, the first vesting on continuation of employment as at 23 July 2009 and the second vesting on 23 July 2010. The Options lapse on the 23 October 2010. The exercise of the Options is also contingent upon performance hurdles. It is submitted that the Options have no value as date of hearing.
[13] H asserts that AMP Super at separation ($19,053) should be included in the pool for division. The Court would have regard to actual balance ($65,159) as a s75 (2) factor.
[14] H Updated Financial Statement.
[15] H Updated Financial Statement.
[16] H Updated Financial Statement.
[17] H Updated Financial Statement.
4. Husband’s Contentions as to Contributions:
A. Non Superannuation Pool:
At Cohabitation:
It is contended that at cohabitation there is little to distinguish the contributions of either party in the context of a marriage of 22 years. The Court would regard such contributions as equal.
During Cohabitation:
Whilst the husband was the primary income earner, he concedes that the wife has the primary responsibility for the household and the care of the children. The husband introduced into the pool an inheritance of $29,000 6 months before separation. It is contended that such would require recognition in a small way in the context of the overall pool.
Post Separation:
The wife has continued to have the sole occupation of the unencumbered home for almost three years post separation. The husband has made significant financial provision for the wife, and the children who have remained in the home post separation, notwithstanding that the wife has been in employment.
Overall: It is contended that such contributions will favour the husband by 2.5%. (52.5% to 47.5%) This would create a disparity of about $50,000 between the parties within the Non Superannuation Pool.
B. Superannuation Pool:
Contributions will be seen as equal as at separation.
Post separation the husband superannuation with AMP has increased by reason of his continuing contributions from employment. The Super Pool totals $288,537 of which about $46,000 about 16% represents the husband post separation contributions.
It is contended that the contributions to the Super Pool should be seen as 58% to the husband and 42% to the wife.
The wife’s present entitlement is about $46,000 (16%). Her top up would be about $75,000 of Super. Neither party seeks a superannuation split. Allowing for a modest discount if the wife is to receive her adjustment in present day terms as the husband is still 8 years (Age 60) from being able to access his super it is contended that an adjustment to the wife of $60,000 (6% of the non superannuation pool) in present day value would be appropriate.
5. H Contentions as to Relevant s75(2) factors.
(a) the age and state of health of each of the parties;
The husband is 52 years of age, the wife 50 years of age,. Neither party asserts any health issues.
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The husband is in full time senior executive employment The wife in permanent employment with the [State government], although her lack of full time employment is not explained. Her present income is about $38,000 per annum, should she seek full time employment this would increase. It is conceded that there is significant disparity.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
Not applicable.
(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;
See the Financial Statements as filed.
(e) the responsibilities of either party to support any other person;
Both parties provide support for the three adult children.
(f) subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
The parties Superannuation entitlements are set out above.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The wife had been out of the workforce for extended periods. It is conceded that her capacity to earn is limited by this factor. Yet she is capable of full time employment but chooses not to obtain same.
(m) if either party is cohabiting with another person the financial circumstances relating to the cohabitation;
The husband resides with his new wife. She is in employment. They have purchased a home together as referred to above.
(n)the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
See the Orders sought by the husband.
Overall it is submitted on behalf of the husband that the relevant s75(2) matters set out above would result in an adjustment of contributions to the non superannuation pool of not more than 5% in favour of the W. This would create a disparity of about $100,000 in favour of the wife.
6. Just and Equitable:
Overall the husband contends that contribution based findings as to the pool for division will be 52.5% to 47.5% in his favour, with an adjustment for the superannuation pool of 6% to the wife and a further adjustment for s75 (2) factors to the wife of 5%. Thus the Non Superannuation Pool would be adjusted in favour of the wife as to 58.5% and to the husband 41.5%.
This would result in a sum of $601,050 to be received by the wife.
This is achieved as follows:
Wife retains: Home at [P] $600,000
Other assets $142,400
$742,400
Less payment to H $141,350
$601,050
and her superannuation. $ 46,000
$647,050
51.The submissions made on behalf of the wife include the list of assets and liabilities prepared by a Registrar in February. I assume that the wife asserts that in accordance with that document the assets are $1,232,281, the liabilities are $16,000 by way of L’s HECS debt and the superannuation amounts to $294,730. Her written submissions about section 79(2) and (4) are as follows:
F. Property and liabilities
See attachment.
G. Contributions
1.It will be submitted that contributions to the date of separation should be assessed as equal. It is understood that this assessment is common ground between the parties.
2.It will be submitted for the wife that contributions to the date of hearing should be assessed as equal. Although it will no doubt be submitted for the husband that his financial contributions have been greater than the wife's when account is taken of the whole period from date of cohabitation to the date of hearing the period post-separation is so short that in the circumstances there should be no change to the assessment of contributions which applies at the date of separation.
H. Section 75(2) Factors
3.The husband is aged 51 years and the wife is aged 49 years.
4.The husband earned $644,000 in the year to 30 June 2007. He has at least that earning capacity. The wife earns $36,000 per annum. That is the extent of her earning capacity. There is a very great disparity of earning capacity between the husband and the wife which is a direct consequence of the roles each of them adopted during the marriage.
5.There is no child under the age of 18 years.
6.The wife has the continuing responsibility for the support of the three children of the marriage who live at home and have been undertaking tertiary education.
7.The wife has suffered a significant reduction in her standard of living since separation as she does not have the considerable disposable income which is available to the husband. The husband has maintained and improved his standard of living since separation.
8.The wife has made a substantial contribution to the income and earning capacity and financial resources of the husband during the marriage.
9.The duration of the marriage has adversely affected the wife's earning capacity as she was unable to continue the work she was undertaking prior to the birth of the first child. As a result of the passage of time during the long marriage the wife does not have the skills to resume that employment and her earning capacity is very limited as a result of her absence from the workforce by reason of the need for her to be available to care for the children during the marriage particularly in the times when the husband was absent from home.
10.The husband cohabits with [Ms A] who is in receipt of significant income and has had substantial funds available to her to invest in the home which she has recently purchased with the husband. The husband has financial advantages flowing to him from his cohabitation with his present wife. He has obtained rehousing at a higher standard than that which is and will be available to the wife, has the income to service borrowings to fund that housing and is able to rely on the financial support of his wife to the extent that it is necessary in order to share their joint living expenses.
11.In considering the adjustment to be made by reason of the s75(2) factors regard must be had to the real money value of the adjustment being made and the adjustment must recognise the value of the factors in respect of which the adjustment is being made.
12.It will be submitted that if contributions are assessed equally then there should be an adjustment of 25% in favour of the wife so that the wife receives 75% of the net property of the parties and the husband receives 25% of the net property of the parties. Orders reflecting this disparity between the parties will be just and equitable when account is taken of the husband's far superior earning capacity since it provides the husband with the ability to quickly increase his asset position to be equal to and exceed that of the wife in the near future.
The approach in proceedings under section 79
52.The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [18]
[18] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
The property of the parties at the date of the hearing
- The Court is required to make a finding as to the property of the parties at the date of the hearing.
- There are circumstances whereby assets and liabilities are included calculating the net assets for division although they no longer exist. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
55.In a decision reported as Gaunt & Scanlan [2007] FamCA 397; (2007) FLC 93-319 ; (2007) 37 Fam LR 428 the Full Court discussed add backs. Starting at paragraph 68 of that judgment the following observations appear:
68. As a general rule once the parties have separated, subject to obligations of maintenance and support, and subject to the type of considerations described in Kowaliw (1981) FLC 91-092 relating to waste, each party is entitled to get on with his or her life independent of the other. The husband would be free to go about spending the money he earned post-separation in the furtherance of his relationship with Ms Sosa if he chose to do so providing that at the same time he properly met his obligations towards his wife and children for their due support. It would not normally be appropriate some years after separation to require each of the parties to account for any monies they had spent post-separation so as to determine whether or not that expenditure was reasonably necessary for their own self-support, and to the extent that it was not, to determine whether it would be proper to add it back into the pool of assets available for division between the parties. …….
69. In Cerini (1998) FamCA 143 the Full Court (coram: Nicholson CJ, Ellis and Kay JJ) when examining some small add-backs into a pool of $3 million said:
45.Although it is not one of the Grounds of Appeal, we would also like to make the observation that we were troubled by her Honour adding back into the pool of assets the sum of $15,000 provided by the wife to [A] to enable her to place a deposit on a unit. The provision of modest amounts of capital by parents to their adult children to enable the children to get a start in life is a normal experience in our society. In a case involving the magnitude of the assets of this case, in our view it is unreasonable to conduct a microscopic examination of each of the parties’ items of post-separation expenditure with a view to determining whether or not it is appropriate that they be brought into account in dividing up the asset pool between them. The cases which deal with notional add-backs are generally examples of circumstances in which it would be clearly unjust and inequitable not to take those matters into account. (See Kowaliw (1981) 7 Fam LR 13; [1981] FLC 91-092, esp at FLC 76,645; Townsend (1994) 18 Fam LR 505; [1995] FLC 92-569; Farnell, (1995) 20 Fam LR 513 (expenditure on legal costs notionally added back because of s117).
46.Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. Providing modest support for their adult children or taking not inappropriate holidays for themselves seems to fit comfortably within that description.
70. This passage was cited with apparent approval by Finn, Kay and May JJ in Chorn and Hopkins at para 24.
- The contested items are:
The husband’s interest in the property at H and his share of the contents of that property
57.It is argued for the husband that these assets should be omitted from the pool because they were funded by post-separation earnings while the husband was also making generous provision for the wife and the parties’ adult children. It is argued for the wife that they should be included because the general approach is to identify and value assets that exist on the date of the hearing.
58.The general approach should apply. The H property and its contents exist at the date of the hearing. There is no formal valuation of the husband’s interest in the property but as admissions against interest we have his evidence about what he put towards the costs of the property and his estimate of the value of his interest in the contents at item 43 of his Financial Statement.
59.I concede that the treatment of these assets involves an exercise of discretion and the opposite argument is also available. That argument is that in the scheme of things these are modest amounts. It cannot be argued that the husband neglected his obligations to provide support to his wife by the provision of the exclusive use of the P property and various payments. He has also volunteered generous support to the parties’ adult daughters. There is an argument that these purchases are simply part of getting on with life and normal living expenses that are referred to in various authorities.
60.The fact is that the general position takes the parties as they are at the date of the hearing and values their assets at that time. If he had not applied funds to those purposes, the pool, in the form of his savings, is likely to have been larger by those amounts.
The E Limited share rights that vested in the husband in October 2006 and October 2007
61.As with the H property and contents it is argued for the husband that the share rights are a product of his post separation earnings, represent a relatively small sum and therefore should remain outside the pool. The wife would have it that they should be included. I will make the same ruling as above.
62.The rights are an incident of the husband’s employment. Just as any savings made to the date of hearing are normally included in the relevant pool, these rights should be included, notwithstanding that they vested after separation.
63.I should note for completeness that the parties agreed to ignore paid legal costs that were in a similar amount for both parties and a Mazda motor vehicle which is used by the parties’ daughters. Otherwise the parties agreed that the relevant list of assets is as set out below:
Non-Superannuation Assets Value P property
$600,000
IAG shares (284)
$1,144
Furniture and contents (W)
$3,500
Citibank account (W)
$56,429
St George account (W)
$2,000
Caravan (W)
$18,000
ING account (W)
$1,000
HSBC account (W)
$400
Ford car (W)
$16,000
ING account (H)
$247,812
ANZ account (H)
$1,600
H property (H)
$5,624
Contents H property (H)
$10,000
Jaguar car (H)
$18,500
E Ltd share rights October 2005(H)
$17,666
E Ltd share rights October 2006 & 2007 (H)
$35,333
$1,035,008.00
Superannuation Assets
First State Superannuation (W)
$46,000
AMP Superannuation (H)
$66,656
ING Superannuation (H)
$60,177
ANZ Superannuation (H)
$33,943
ANZ ADF Superannuation (H)
$87,499
$294,275.00
Liabilities:
64.The parties agree that there are no liabilities relevant to the division of assets under section 79.
65.The net non-superannuation assets have a value of $1,035,008 and the superannuation is $294,275.
Financial Resources
66.It is submitted for the wife that the husband’s E Limited share options should be identified as a financial resource to him. It is submitted for the husband that they should not.
67.The option is to take up 500,000 shares at 65 cents, half on 23 July 2009 and the balance, one year later. I do include them as a financial resource but their potential value is very much qualified. The husband would need to meet the conditions of the offer as to continued employment and the shares would need to be sufficiently above 65 cents on each of those days, to warrant him taking up the option. Although the current share price is about 50 cents, there is current interest in a general acquisition at 65 cents and slightly above that figure[19], the only reports[20] in evidence suggest reason for optimism in relation to the profitability of the company. There is no suggestion of the husband leaving his employment.
[19] Exhibit 4
[20] Exhibit 6
68.Any profit would be subject to tax and there may be costs of purchase and sale.
69.Otherwise, there is no evidence about financial resources available to the parties.
Contributions
70.The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[21]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[22].
[21] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[22] In the Marriage of Shewring (1987) l2 Fam LR 139
A separate pool for superannuation
71.As to whether the Court should assess contributions asset by asset or globally, the authorities have it that the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
72.In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court opined that it is preferable for contributions to superannuation to be assessed separately from those made to other assets. However the Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The majority of the Full Court suggests at Paragraph 61 that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
73.The majority summarised the approach as follows:
65.In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case. If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
(a)value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
(b)consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
(c)consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and
(d)ensure that pursuant to s 79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.
66.In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of the cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse’s present and/or future entitlements under the fund.
67.If this approach is adopted, whereby superannuation interests are dealt with separately from property as defined in s 4(1), but are subject to the considerations in s 79(4), then not only will any contributions, both direct and indirect, by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account, both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.
74.Here neither of the parties seeks a splitting order. The wife’s case is argued on a global basis because this is a long marriage and no splitting order is sought. The husband seeks to distinguish between the treatment of superannuation and non-superannuation assets because of different issues applying to superannuation and non-superannuation assets, including in relation to the contributions made to each type of asset.
75.Where there is no agreement, the Full Court advocates that I adopt a two pool approach and apply the section 79(4) considerations ((a) to (g) inclusive) to both pools. I will take that approach.
Non-Superannuation Assets
Contributions
76.It is agreed that the contributions to the date of separation were equal. I can see the sense of that concession but it is necessary to touch on the pre separation contributions to provide some context for the post separation argument.
Section 79(4)(a) Contributions
77.In the context of a long marriage the difference in the initial contributions of the parties is not significant.
78.Each of the parties had paid employment. The husband’s employment was continuous and at a higher rate of remuneration than that of the wife. As the years went by the difference in their levels of remuneration increased. At least since 2004, the husband’s remuneration has included bonuses and the fruits of share schemes. The wife’s paid employment was broken by periods associated with the birth of children and their early years.
79.The parties borrowed $3,000 from her parents to assist with the mortgage and bridging finance for the purchase of the G property in 1983.
80.On 27 May 2005 the husband received an inheritance from his mother’s estate of $29,017. Those funds were later used for a family trip to London.
81.After separation the wife had the use of the P property to the exclusion of the husband. He was in rented premises until April 2007. The husband made significant financial contributions to the children and those contributions continued notwithstanding the younger children turned 18 in August of 2006, less than a year after separation.
82.The only direct contribution to share schemes and bonuses was that of the husband, they being incidents of his employment. What happened after separation was a continuation of the arrangements during the marriage. The husband has always provided the lion’s share of financial support to the family and that continued after separation.
Section 79(4)(b) contributions
83.There is scant evidence of non-financial contributions to assets. The husband says that he assisted with renovations, although he does not say how. He says that most of the work was undertaken by tradesmen.
84.There is no evidence of significant non-financial contributions after separation.
Section 79(4)(c) contributions
85.There are three children of the marriage. It is agreed that the wife was the primary care giver. The husband assisted with that role and homemaking when he was available.
86.After separation the wife continued to house and support the children. The parenting task for 17 year old children through the last year of high school is not one of close supervision but there is still a job of parenting to do. It has pleased the parties to provide support to all of their children even after they turned 18 and attained a capacity for some self support. In making these contributions the wife undertook the role that she had throughout most of the marriage.
Conclusion on Contribution
87.The husband argues that the parties’ contributions favour him in the proportions 52.5% compared to 47.5% by the wife because of an imbalance of contributions after separation. The wife argues that the contributions were equal.
88.This is a marriage where cohabitation spanned about 22 years and contributions were made for more than 24 years.
89.The husband made greater financial contributions and the wife was the main parent and homemaker.
90.The husband’s financial contributions have probably increased since separation. The need to support two separate households must have caused additional expense. Similarly the wife’s parenting role, albeit diminished from that required by infant children cannot have been made easier by the fact of separation.
91.The range of dispute on this issue is very small and deals in units of difference with which judges over the years have often been reluctant to deal. Care is needed in a case like this because of the context. What impact should a 5%, 10% or 20% difference in contributions made over 2 years and 9 months, have on the overall assessment of valuable contributions made over 24 years?
92.The husband’s contributions after separation were greater than those of the wife but the impact of that is not of such significance as to make an impact of the impressive various contributions made by the parties since 1983. The parties’ contributions were equal.
The other matters in Section 79
93.Dealing with the matters identified in the legislation:
Section 79(4) (d)
94.Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. No such effect was identified in the course of submissions.
Section 79(4)(e) - Section 75(2) Factors
95.The relevant matters in Section 75(2) would seem to be paragraphs (b), (j), (k) and (m).
(a) the age and state of health of each of the parties;
96.First, as to the age and state of health of each of the parties. The husband and wife are 51 and 49 years of age respectively. There is no significant evidence about their health.
(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;
97.In his Financial Statement the husband said that he receives $5,881 per week made up of $5,576 in wages from his work at E Limited, $200 in interest, $5 in dividends on IAG shares and $100 in the form of parking, mobile telephone and internet fees being benefits from his employment. The husband has the financial resource of the E Limited share option scheme.
98.As to his income, I take it that the husband has not included in the above figure, bonuses or some other payments. He was paid a $200,000 bonus in September 2007. That would explain the husband’s PAYG Summary (Group Certificate) for the year ending 30 June 2008 which puts his income at $466,055 which is more like $8,900 per week.
99.He lives with his current wife and her daughter. His wife earns about $850 per week. She earned about $1,100 per week in the 2007 financial year but the husband understands that much of that came from interest on an inheritance of about $400,000. $300,000 of that inheritance has since been applied to the H property purchase. Thus the husband understands that his current wife has about $100,000 in savings. He understands that she has about 1,000 shares in E Ltd, some interest in superannuation and some furniture and appliances. In relation to superannuation, his wife has an MLC Masterkey Personal Superannuation policy which was worth $11,965.10 as at 30 June 2007.
According to his Financial Statement the husband’s expenditure is as follows:
Expenditure
Amount Income tax $2,002.00 Superannuation contributions – AMP $460.00 Mortgage payments to ING $1,090.00 Rates and levies $50.00 Other rates and levies $50.00 Term Life Insurance AMP $150.00 Term Life Insurance AMP $80.00 House and Contents insurance P property CGU $50.00 House and Contents insurance H property AAMI $20.00 Motor vehicle insurance – Jaguar / Mazda AAMI/ NRMA $60.00 Visa card payments – ANZ $80.00 Payments for the benefit of the children $1,040.00 Total $5,132.00
The income tax figure is likely to be wrong if his income is of order of that revealed in his 2008 PAYG Summary. The tax withheld in that financial year was more like $3,780 per week. His actual tax will depend on the assessment of his 2008 Return.
As far as I know the husband is fully exercising his earning capacity. As to his future income there is no evidence of a possible reduction. The company report to 31 December 2007 is optimistic and discloses a significant growth in profit. There is a take-over in prospect in relation to which there is a premium of 15 to 20 cents suggested for the company’s shares. Pursuant to an agreement with his employer, the husband will receive a $50,000 retention payment in October 2008, in addition to any short term incentives received by him. Depending on the success of the proposed share acquisition he will receive a further $50,000 payment on completion of the acquisition if he is then still with the company.
The wife’s income is $997.50 per week by way of her wages at $695, IAG dividends of $1.50 and board from the children at $230 per week. The wife generally applies that board to household bills such as the utility bills. She lives with the parties’ twin daughters and she does not know what income they have. L works as a Bar Maid and Y as a Shop Assistant. C has left her previous casual work for 2 weeks work at the University where she studies. Each of the children receives $1,500 per month from the husband. The husband pays household insurance premiums for the P property.
The wife’s fixed expenses are as follows:
Expense Amount Income tax $180.00 Rates and levies $28.30 Life insurance MBF Life $16.00 Caravan insurance NRMA $8.00 Motor vehicle registration – Ford Focus Ghia – Mazda 626 $34.00 Caravan fees $77.00 Total $343.30
As to the wife’s earning capacity, she currently works for the NSW Public Service. She has a permanent, full-time position, working from 8 am to 3.30 pm, 5 days a week. She is giving some thought to leaving that position once she finds a job doing office work in the city. Whatever she does the wife cannot aspire to an income anything like that of the husband.
(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 does not arise.
(d) commitments of each of the parties that are necessary to enable the party to support:
himself or herself; and
a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the detail of those commitments above.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
Neither of the parties receives distributions by way of pension or superannuation entitlements.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is little evidence about the parties’ lifestyle. The parties had a holiday house for a period and a caravan at B Caravan Park. There was at least one overseas holiday. Since separation the husband has bought a house that cost more than the value of the P property. He has paid over $9,000 for travel and $48,000 for a wedding.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
This is not relevant. Neither of the parties has foreshadowed further study.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
This is not relevant.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
The wife had the main role with the children and that assisted the husband in building his career.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The wife was out of the paid workforce for periods associated with the children and therefore was not able to build up the benefits that come with an unbroken history of paid employment.
(l) the need to protect a party who wishes to continue that party's role as a parent;
This is not relevant.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
In addition to the evidence referred to above, the husband pays for the food, mortgage instalments and running costs of the H household. He pays for holidays that he and his current wife have together. He covers her with his Medibank Private Health Insurance. His wife buys her own clothes.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
These provisions are not relevant.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
Nothing comes to attention here.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
There are no relevant orders.
Section 79(4)(g)
There is no child support assessment.
Conclusion
The wife argues for an adjustment of 25% for the “other matters” referred to above.
Albeit very different to the written submission made in his case, the husband argues that the upper limit of an adjustment of the non-superannuation assets for the other matters in section 75(2) is 15%. That would be in addition to an adjustment of 6% by reference to the imbalance of superannuation.
Favouring an adjustment to the wife there is:
ØThe fact that the husband’s income and income earning capacity is vastly superior to that of the wife;
ØThe fact that the wife’s parenting and homemaker role enabled the husband to build experience and seniority for which he is now well remunerated while denying the wife the benefits of unbroken paid employment.
ØThe fact that the husband lives with his wife who is a person of some means. She is paid employment, has provided the very significant equity in their H home and has about $100,000 at bank. This means that the husband’s future housing costs are and are likely to continue to be subsidised. The wife’s are not.
The only adjustment in contemplation is one in favour of the wife. I am not permitted by the adjustment for the other matters under section 79(4) to try and even up the financial circumstances of the parties. To do so would involve the type of social engineering criticised in Clauson and Clauson (1995) FLC 92-595; (1994) 18 FamLR 693. In a pool of $1,035,008 25% is $258,752 and an adjustment of that amount would create a disparity of over $500,000. It was submitted that such an adjustment leaves the husband with little but his superannuation after 25 years of contributions and is outside the permitted range of discretion. On the other hand it was argued for the wife that such an adjustment could be readily caught up by the husband, given his large income. Both arguments have merit.
There must be a substantial adjustment. It is conceded in the husband’s case that 21% (15% + 6%) could be the upper limit of the non-superannuation pool adjustment. I think that 20% will adequately address the competing claims.
Superannuation Assets
Contributions
Section 79(4)(a) Contributions
Similar matters apply here to those in relation to the non-superannuation assets. The husband came into the marriage with a superannuation interest. The husband’s contributions since separation have significantly increased his interest. It is likely that the wife’s interest also increased over that period. For the 23 years in the middle, the wife made indirect contributions to the building of the husband’s superannuation interests and he did the same for the wife’s superannuation.
Section 79(4)(b) contributions
There is scant evidence of non-financial contributions to any assets, let alone superannuation.
Section 79(4)(c) contributions
The findings in relation to the contributions to the family, including as parent and homemaker apply with equal force in relation to superannuation interests.
Conclusion on Contribution
The husband argues that although equal at the date of separation, the contributions to the Super Pool should be seen as 58% by the husband and 42% by the wife. That is said to translate to a need for an adjustment of about $75,000 which the husband argues should be discounted to $60,000 or 6% of the non superannuation pool, given that the husband is still 8 years from being able to access his super.
The wife argues that the contributions were equal.
I prefer the approach advocated on behalf of the wife. The pattern was set over the 23 years of cohabitation and was continued to the date of hearing. There is an argument for an adjustment for the events after separation but it is hard to identify the significance of differences occurring over less than 3 years in the context of a 24 year relationship.
The other matters in Section 79
Dealing with the matters identified in the legislation. The problem with the approach advocated on behalf of the husband is that only part of the Coghlan approach is applied. That approach requires that all of section 79(4) be applied to both pools, not just paragraphs (a), (b) and (c). There is logic in the other matters applying with similar force to each pool. The differences are important and can be accommodated under section 75(2)(o). In particular there is the characteristic of superannuation that has it not generally available until certain conditions are met – usually the attainment of a particular age and departure from the paid workforce. Here there are likely to be those restrictions on the parties accessing their interests. They may impact more on the wife than the husband, because she is younger than him. On the other hand there are advantages to superannuation in terms of favourable tax treatment of the interest itself and if the returns whether lump sum or income generated by the interest, again, once certain requirements are met.
Conclusion
In my view the proper adjustment is again 20%. The options for the husband in relation to building his superannuation are likely to be far greater than those presented to the wife. He will be able to build provision for a level of self funded retirement. The wife will struggle to achieve that.
Just and Equitable
Based on their contributions and the other matters in s 79 the appropriate division of the superannuation and non-superannuation assets property is 70% to the wife and 30% to the husband. I must consider whether it would be just and equitable within the context of s 79 if the net assets of the parties were divided in those proportions.
The net non-superannuation assets have a value of $1,035,008 and the superannuation is $294,275.
Neither of the parties seeks to retain the P property. Thus there will be sale costs. I will deal with those costs by ordering an adjusting payment to accommodate any loss or profit on the sale.
In relation to superannuation, a division in the proportions 70% to the wife and 30% to the husband would give the wife about $206,000 and the husband about $88,280.
The husband has:
Superannuation Assets AMP Superannuation (H) $66,656 ING Superannuation (H) $60,177 ANZ Superannuation (H) $33,943 ANZ ADF Superannuation (H) $87,499 $248,275.00
The wife has
Superannuation Assets First State Superannuation (W) $46,000 $46,000.00
An arithmetic adjustment would require an increase of about $160,000 to the wife.
Neither of the parties seeks a splitting order so the superannuation entitlements will need to be adjusted out of the non-superannuation assets. There is force in the approach proposed on behalf of the husband whereby there would be a discount of the adjusting figure because of the restrictions on accessing superannuation. I will make an adjustment of $140,000.
In relation to non-superannuation assets, a division in the proportions 70% to the wife and 30% to the husband would give the wife about $724,500 and the husband about $310,500. The wife has:
Non-Superannuation Assets Value Furniture and contents (W)
$3,500
Citibank account (W)
$56,429
St George account (W)
$2,000
Caravan (W)
$18,000
ING account (W)
$1,000
HSBC account (W)
$400
Ford car (W)
$16,000
$97,329.00
In order to bring her to 70% she should receive a further $627,171 together with $140,000 to adjust the superannuation. I will order that she receive the net proceeds of the sale of the P property and a further payment from the husband, rounded down to $167,000.
That would leave the husband with the benefit of:
Non-Superannuation Assets Value IAG shares (284)
$1,144
ING account (H)
$247,812
ANZ account (H)
$1,600
H property (H)
$5,624
Contents H property (H)
$10,000
Jaguar car (H)
$18,500
E Ltd share rights October 2005(H)
$17,666
E Ltd share rights October 2006 & 2007 (H)
$35,333
Payment to the wife
-$167,000
Total
$170,679.00
Of the two sets of orders proposed the wife’s proposal seems to meet the situation best save that it calls for an adjustment of an amount payable to the wife within one month, based on the outcome of a sale which would not complete within that period. The problem is that the wife will retain the net proceeds of sale of the P property but we do not know what the net sale proceeds will be. I will order that the husband make the payment within a month, as proposed but will provide for adjusting payments either way depending on the extent to which the net sale proceeds exceed or fall short of the estimated value of the property. The adjustment should reflect the proportions of the overall division.
Conclusion under Section 79
The effect of the orders will be an overall division in the approximate proportions 70% to the wife and 30% to the wife. That will be effected by an adjustment solely out of the non-superannuation assets, with the wife retaining the net proceeds of sale of the P property and receiving a further $167,000 from the husband. If the net proceeds of sale of the property is not $600,000 then once the amount of those net proceeds is identified, there will be an adjusting payment of 30% of any shortfall by the husband to the wife or of 30% of any profit by the wife to the husband.
I will stay the operation of the orders for a period of 14 days and give the parties liberty to relist the matter in relation to the drafting of the orders within that period.
I certify that the preceding one husband and forty seven (147) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 12 September 2008
Key Legal Topics
Areas of Law
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Family Law
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Property Law
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Equity & Trusts
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