Pfeiffer & Pfeiffer
[2023] FedCFamC2F 1131
•29 August 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Pfeiffer & Pfeiffer [2023] FedCFamC2F 1131
File number(s): LNC 123 of 2022 Judgment of: JUDGE TURNBULL Date of judgment: 29 August 2023 Catchwords: FAMILY LAW – PROPERTY ADJUSTMENT – substantial agreement about the facts — agreement that there be a 15% adjustment in the Wife’s favour for s75(2) factors — agreement regarding a superannuation splitting order— narrow issues – whether Husband’s expenditure of his long service leave should be added back to the pool — assessment of contributions to the acquisition and maintenance of the property pool Legislation: Family Law Act 1975 (Cth) ss 75(2), 79, 79(1), 79(4) Cases cited: Briginshaw v Briginshaw (1938) 60 CLR 336
C & C [1998] FamCA 143
Clauson & Clauson (1995) FLC 92—595
Dawes & Dawes [1989] FamCA 71
Dovgan & Dovgan [2021] FamCA 306
Gadhavi & Gadhavi [2023] FedCFamC1A 117
Grier & Malphas [2016] FamCAFC 84
Hickey & Hickey & Hickey [2003] FamCA 395
Jabour & Jabour [2019] FamCAFC 78
Kowaliw & Kowaliw (1981) FLC 91—092
Lotta & Lotta [2017] FamCA 50
Mallett & Mallett (1984) 156 CLR 605
Mayne & Mayne [2011] FamCAFC 192
Omacini & Omacini; sub nom AJO & GRO [2005] FamCA 195
Stanford & Stanford (2012) 247 CLR 108
Teal & Teal [2010] FamCAFC 120
Vass & Vass [2015] FamCAFC 51
Warwick & Cutler [2016] FamCA 934Division: Division 2 Family Law Number of paragraphs: 47 Date of last submission/s: 24 August 2023 Date of hearing: 22 – 24 August 2023 Place: Launceston Counsel for the Applicant: Mr R Murray Solicitors for the Applicant Murray & Associates Counsel for the Respondent: Mr T McKenna Solicitors for the Respondent Murdoch Clarke ORDERS
LNC 123 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS PFEIFFER
Applicant
AND: MR PFEIFFER
Respondent
ORDER MADE BY:
JUDGE TURNBULL
DATE OF ORDER:
29 AUGUST 2023
THE COURT ORDERS THAT:
1.Within sixty (60) days of the date of this Order the Wife transfer (‘the transfer’) to the Husband all her right, title and interest in the property at B Street, Suburb C in Queensland being more particularly described as lot … on registered plan …, Title reference Volume … Folio … and the Husband be solely liable for all liabilities, outgoings and expenses relating to that property;
2.Contemporaneously with the transfer, the Husband payout in full or refinance into his sole name and at his expense the D Bank loan secured by registered mortgage number … and obtain a full discharge of such mortgage;
3.Within seven (7) days of the date of this Order, the parties do all such necessary acts and things and sign all documents so as to pay to the parties' the following sums from the balance net proceeds of sale of the property at E Street, Suburb F held in the conveyancing solicitors trust account — such balance being approximately $167,109.00:
(a)$31,350 to the Husband;
(b)The balance (including any interest earned) to the Wife.
4.In accordance with section 90XT(1)(a) of the Family Law Act 1975 (the Act), whenever a splittable payment within the meaning of section 90XE of the Act becomes payable to or on behalf of Mr Pfeiffer from his interest in Super Fund 1, Ms Pfeiffer is entitled to be paid (by the Trustee of Super Fund 1) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of $103,000 and there is a corresponding reduction in the entitlement Mr Pfeiffer would have had but for this Order;
5.The operative time for paragraph 4 of this Order is four (4) business days after the service of this Order on the Trustee;
6. Unless otherwise specified in this Order:
(a)Each party be solely entitled to the exclusion of the other to all other property, including any real estate registered in a party’s sole name, motor vehicles and chattels of whatsoever nature and kind in the possession of such party as at the date of this Order and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank's record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions of payment out of such entitlement;
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to this Order;
(c)Either party is at liberty to provide a copy of this Order to any third party necessary to ensure implementation and compliance with this Order.
7.Both parties' do all acts and things and sign all necessary documents so as to give full effect to the terms of this Order;
8.In the event of either party refusing or neglecting to sign any documents required to be signed to give full effect to the terms of this Order, including the necessary documents to effect a sale, transfer or assignment of relevant property, within seven days of being requested by a party, then the Registrar of the Court, pursuant to Section 106A(1) of the Family Law Act, 1975, is hereby appointed and empowered, to execute such documents in the name of the defaulting party and to do all acts and things necessary to give validity and operation to such;
9.Save for this Order, all extant property and spousal maintenance orders are discharged;
10.All extant property and spousal maintenance applications are dismissed.
AND THE COURT IS ASKED TO NOTE
A.The parties note that this splitting Order, and payments made as a result, will be affected by the Superannuation Legislation Amendment (Family Law) Act 2004 which came into effect on 18 May 2004, the Family Law (Superannuation) Regulations 2001 and the Super Fund 1 Trust Deed which together may provide for a separate superannuation interest to be created for the non-member spouse and for consequential effects on payments.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE TURNBULL
Overview
These are property and spousal maintenance proceedings initiated by the Applicant Wife (‘the Wife’) on 8 March 2022. During the life of the proceedings the respondent Husband (‘the Husband’) paid interim spousal maintenance—initially $300 per week and then by Order of $400 per week.[1] The Husband ceased paying spousal maintenance in November 2022. He also paid child support post-separation.[2]
[1] Order of an SJR, In Pfeiffer & Pfeiffer (Federal Circuit and Family Court of Australia, LNC123/2022), 7 June 2022.
[2] Affidavit of Mr Pfeiffer, filed 15 August 2023 [263] (‘Husband’s affidavit’). It is unclear as to whether the spousal maintenance order was discharged.
An application had also been made for parenting Orders concerning their 1 year old son X, which were resolved by way of consent Orders at the commencement of the trial.[3] Consent Orders were also made regarding child support arrangements.[4]
[3] Order of Judge Turnbull, in Pfeiffer & Pfeiffer (Federal Circuit and Family Court of Australia, LNC123/2022), 22 August 2023.
[4] Order of Judge Turnbull, in Pfeiffer & Pfeiffer (Federal Circuit and Family Court of Australia, LNC123/2022), 22 August 2023.
The property aspects proceeded to final hearing on 23 August 2023 and continued on 24 August 2023. Helpfully, an agreed statement of facts and amended balance sheet was tendered,[5] which narrowed the issues significantly.
[5] Exhibit J1 – the balance sheet set out in these Reason’s has slightly modified the balance sheet in that Exhibit.
By the time of final submissions the Wife sought a 65% of the parties' non-superannuation assets[6] whilst the Husband sought an Order reflecting a 55% division of such assets in favour of the Wife. The parties' Counsel helpfully tendered a draft Order detailing the assets that each party will retain, with the Court left to insert into the document the amount of any cash amount to be paid by one party to the other.[7] The parties' also agreed upon a division of their superannuation assets — resulting in a splittable payment to the Wife of $103,000. Further, the parties' jointly submitted that there should be an adjustment of 15% in favour of the Wife for 75(2) factors — subject to Court approval.
[6] At the commencement of the trial the Wife sought to argue that the Court should exercise discretion to increase cash payment and in turn reduction of a superannuation payment. That position was not argued at the point of final submissions and the parties' agreed to a separate alteration of the superannuation pool.
[7] The Order set out at the commencement of these Reason’s has slightly amended the draft order supplied by the parties'.
The Court was, therefore, left to make an assessment of the parties' financial and non-financial contributions to the non-superannuation net assets, which required the determination of a small number of issues including:
(1)whether all of the Husband’s expended long service leave ($30,000) should be added back to the pool, and
(2)the impact (if any) of the Husband’s agreed initial contributions and greater income on the overall assessment of the parties' contributions as a whole.
Facts and Chronology as agreed between the parties
As stated the parties' agreed a significant number of facts which were exhibited at J1 — which is extracted here:
Statement of Agreed Facts
(1)The applicant Wife is 30 (Wife) and the respondent Husband is 31 (Husband).
(2)The Parties commenced their relationship in about 2016 sharing a room at a defence force base and commenced living in a property of the relationship in 2017, married in 2019 and separated on 1 July 2021.
(3)Cohabitation was interrupted by COVID and work deployments, however their relationship and subsequent marriage subsisted for some 4 years.
(4)There is one child X who was born in 2021. At the date of hearing X is 1 year old. He has lived with the mother since his birth. That is a post-separation contribution.
Revised Balance Sheet
(5)The parties have agreed the attached revised balance sheet. The only change relates to the part property settlement received by each party. It has been reduced by $20,000 for each party.
(6)One item not listed on the balance sheet is the $30,000.00 long service leave entitlement received by the Husband post-separation and whether the expenditure of same should be added back.
Initial Contributions
(7)Husband’s initial contributions:
(a)Car $3,000.00
(b)Bank Account $49,828.60
(c)Share at 30 June 2016 $45,163.00
(d)Savings $6.090.12
(e)Profit on Shares $15,920.51
Sub total (non super) $120,002.23
(f)Super $79,662
Total combined $198,663
(8)At cohabitation the Husband had accrued $15,000 of long service leave accrued from his employment with the Military.
(9)Wife’s Initial Contribution
a.Car $12,500
b.Savings $16,000
Sub total (non super) $28,500
c.Superannuation $41,000
Total Combined $57,000
Contributions from cohabitation
(10)Throughout their relatively short relationship both parties worked hard using their respective skills and resources to accumulate assets to provide themselves with a good life and for their future children.
(11)The parties each received $13,500 from the ADF Home Purchasing Assistance Scheme. The payments were applied to the parties’ property. The Wife approval pre—dating the relationship.
(12)The acquisition of property irrespective of whose name it was registered in was a joint endeavour using the party’s respective property and income.
(13)The parties used their respective skills sets when they were able to do so to maintain and improve their properties.
(14)In mid-2020 both parties received injury payments from the Department of Veteran Affairs of $35,000 (Husband) and $40,000 (Wife). The parties applied those funds to the benefit of their marriage and property.
(15)The properties of the parties that were used as investment properties during cohabitation, generated their own income. Shortfalls (if any) in income from properties was supplemented by the parties’ income (see for example Husband’s Affidavit at [228] and Wife’s Affidavit (at [59]) or provided further funds available to them (see Wife’s Affidavit at [75]).
(16)During the course of the relationship, the parties taxable income disclosed in their affidavit is agreed as an accurate reflection of the income they each earned.
Year
Mr Pfeiffer
Ms Pfeiffer
2017
$100,667
$92,000
2018
NO FIGURE PROVIDED
NO FIGURE PROVIDED
2019
$156,041
$66,255
2020
$100,270
$57,625
2021
$106,719
$83,975
2022
$126, 617
$33,296
(17)In relation to the Wife’s income, she also undertook Reserve work that is not reflected in her taxable income and the investments properties in her name were negatively geared. The parties' agree that the Wife earned $15,000 from this employment throughout the relationship.
Contributions Post-separation
(18)Post-separation, Wife was X’s sole carer.
Future Needs
(19)The Wife is X’s primary carer.
(20)The Father will spend time X in accordance with Parenting Orders made by Consent on 22 August 2023.
(21)The Wife will have the on ongoing financial responsibility for X save that the father will pay child support in accordance with Orders made by Consent on 22 August 2023. The annual rate of child support payable by the Husband to the Wife is $15,600 indexed annually.
(22)The parties agree the Wife should receive a future needs uplift of 15%.
Asset Pool
The agreed joint asset pool[8] (save for the question of an add-back) as derived from J1 is:
[8] The disputed item regarding the potential add-back of $20,000 for the expenditure of the Husband’s long service leave payments has been removed from the balance sheet forming part of J1 and will be assessed separately in these Reasons.
Applicant’s Value
Respondent’s Value
Who to retain
B Street, Suburb C
$1,050,000
$1,050,000
Husband
G Street, Suburb H
$355,000
$355,000
Wife
J Street, Suburb K
$315, 000
$315,000
Wife
Sale proceeds of E Street, Suburb F
$167,109
$167,109
Wife
Motor Vehicle 1
$12,500
$12,500
Wife
L Finance
$3
$3
Husband
Husband’s furniture and effects including Husband’s second watch (agreed at $2,401)
$10,461
$10,461
Husband
Wife’s furniture and effects
$4,720
$4,720
Wife
Super Fund 2 – Wife
$277,000
$277,000
Wife
Agreed addback legal fees from LSL
$10,000
$10,000
Husband
TOTAL
$2,201,793
$2,201,793
The liabilities of the parties are:
Home Loan Suburb C (D Bank)
$498,276
$498,276
Husband
Home loan – Suburb K
$200,378
$200,378
Wife
Help loan
$3,804
$3,804
Husband
TOTAL
$702,458
$702,458
NET NON-SUPERANNUATION ASSETS $1,499,335 $1,499,335 Documents relied upon
The Applicant relied upon
·Her amended Initiating Application, filed 25 November 2022;
·Her trial affidavit, filed 9 August 2023;
·Her financial statement, filed 9 August 2023;
·Affidavit of Single Expert Mr M, filed 27 September 2022;
·Affidavit of Mr N, filed 28 September 2022.
The Respondent relied upon
·His trial affidavit, filed 15 August 2023;
·His financial statement, filed 18 August 2023;
·Affidavit of Mr N, filed 28 September 2022;
·Further Amended Response to Initiating Application, filed 18 August 2023.
Both parties' were briefly cross-examined and each answered questions directly and made appropriate concessions. Both parties' are impressive, hardworking people who have accumulated a significant asset pool within a relatively short period of time. They are ambitious as well as being community minded — they both choose to serve their country in the defence force. They are wonderful role models for X and are likely to succeed in any endeavour to which they are committed.
Standard of Proof
I note briefly, before continuing, that all facts in issue in these proceedings must be proved on the balance of probabilities. A fact in issue is 'proved' if I am reasonably satisfied, on the evidence, that it is more likely than not that the fact existed or occurred in the manner ultimately determined.
Dixon J, as he then was, also remarked upon the standard of proof for civil proceedings in Briginshaw v Briginshaw (1938) 60 CLR 336, which remain relevant and authoritative:
The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.
I must ground my assessment of the issues in dispute in facts, of which I am persuaded, on the balance of probabilities.
Property adjustment: the law
Property proceedings under Part VIII and the approach in Hickey and Stanford
Part VIII of the Act governs the scope of the Court’s power with respect to property and financial matters. The Court’s powers under ss 79(1) — as ‘very wide discretion[s]’ — must be exercised according to principled reason,[9] and are constrained by a number of factors to which the Court must direct itself.[10] To this end a typical approach, which I intend to follow, is that set out in Hickey & Hickey & Hickey [2003] FamCA 395 and Stanford & Stanford (2012) 247 CLR 108,[11] comprising four steps:
(1)identify the parties’ existing legal and equitable property interests, liabilities, and financial resources at the time of trial, and then determine whether it is just and equitable to adjust their interests pursuant to s 79(1);[12]
(2)consider the parties’ contributions under s 79(4)(a)–(c);
(3)consider the factors under s 79(4)(d)–(g) including, by virtue of s 79(4)(e), the ‘subjective considerations’ under s 75(2) insofar as they are relevant;[13] and then
(4)‘stand back’ to consider the justice and equity of the actual terms of order proposed to be made.[14]
[9] Stanford & Stanford (2012) 247 CLR 108, 122 [41].
[10] Mallet & Mallet (1984) 156 CLR 605, 608 (Gibbs CJ), noting that the ‘very wide discretion to make such order as [the court] thinks fit’ is conferred only ‘when [the court] is satisfied that it is just and equitable that an order should be made’, with his Honour further stating that ‘there are some broad principles to which the court is required to give effect, and some circumstances which it is required to take into account’ in making an order, and with Dawson J (at 647) referring to the just and equitable requirement as the ‘overriding requirement’.
[11] Hickey & Hickey [2003] FamCA 395, [39], noting the remarks of the Full Court in Norman & Norman [2010] FamCAFC 66, [60], at which their Honours state that ‘[i]t is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result’ and that ‘[f]or all its usefulness and merit [the four—step approach] merely illuminates the path to the ultimate result’. I also note the three ‘fundamental propositions’ set out in Stanford & Stanford (n6) 120 [36], as alternative guidance for trial judges, ultimately towards the same objective as the approach in Hickey, namely to cover off on all necessary points and criteria in pt VIII.
[12] Stanford & Stanford (n9) 120 [37], noting the explanatory remarks in Lotta & Lotta [2017] FamCA 50, [283]–[284], importantly that ‘[s]uch a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist’ and that ‘the court needs to conclude that it would be unjust or unfair to leave property rights intact under s 79(2) of the Act’.
[13] Lotta & Lotta (n12) [289].
[14] Teal & Teal [2010] FamCAFC 120, [70], referring to Phillips & Phillips [2002] FamCA 350 in which, at [68], their Honours discuss the importance of considering the ‘real impact’ of an order to assess whether the result is just and equitable.
Identifying the parties' legal and equitable interests
A extracted above, the parties' were able to largely agree upon the asset pool — save for the question as to whether there should be an add-back of all of the Husband’s post-separation expenditure of his long service leave entitlements of $30,000 (noting $10,000 of the $30,000 expended was agreed to be added back as it was spent on legal fees).
Whether monies expended post-separation should be added back to the pool of assets to be divided has been the subject of much judicial consideration. A marriage is, in countless ways, a shared endeavour. Married or de facto couples ordinarily work together to strengthen their economic position and endure side by side the financial highs and lows of domestic life. In Kowaliw & Kowaliw (1981) FLC 91—092 (Kowaliw), Baker J summarised the Court’s view:
Marriage is for most couples an economic partnership. Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living. The reported decisions in respect of applications for settlement of property under sec. 79 of the Act are unanimous hat both parties should share the economic fruits of a marriage, having regard to the provisions of sec. 79(4) and sec. 75(2), although not necessarily equally.[15]
[15] Kowaliw & Kowaliw (1981) FLC 91—092, 76,643—76,644.
The inverse is also true — parties should generally share the financial losses incurred in the course of their relationship.[16] This statement of general principle is, of course, guided by the overarching requirement of justice and equity in property adjustment Orders.
[16] Ibid 76,644.
Where one party has ‘prematurely and inappropriately obtained the benefit of property of the relationship prior to it being considered by the Court at final hearing’,[17] it is often inappropriate for the loss, caused by that party’s expenditure, to be shared by both parties. A common example, as given in Mayne & Mayne [2011] FamCAFC 192, is a party withdrawing and using joint funds for their own purposes post-separation.[18]
[17] Warwick & Cutler [2016] FamCA 934, [127] (McClelland J).
[18] Mayne & Mayne [2011] FamCAFC 192, [73] (Faulks DCJ) (‘Mayne’).
A Court faced with an application under ss 79 or 90SM may address any such injustice or inequity in three ways — taking it into account under ss 75(2)(o) / 90SF(30(r), notionally adding back the expenditure, or taking the expenditure into account as a contribution according to Grier & Malphas [2016] FamCAFC 84.
The circumstances in which it may be inappropriate to share a loss are, as extracted in Omacini & Omacini; sub nom AJO & GRO [2005] FamCA 195 (‘Omacini’), below. Their Honours in that case discussed add-backs, but the categories extracted may also be addressed through other means at the Court’s discretion.[19]
[19] Omacini & Omacini; sub nom AJO & GRO [2005] FamCA 195 (‘Omacini’) [30]; Mayne (n 15), [180] (Strickland J).
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 DJM and JLM (1998) FLC 92—816 the Full Court said at 85,262:
11.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 Townsend and Townsend (1995) FLC 92—569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 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 Kowaliw and Kowaliw (1981) FLC 91—092 at 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.[20]
[20] Omacini (n19) [30].
The Full Court in Vass & Vass [2015] FamCAFC 51 clarified that neither Stanford nor Bevan & Bevan [2013] FamCAFC 116, had the effect of making add-backs unavailable to first instance judges where they are an appropriate solution.[21] It is, however, ‘beyond doubt’ that notional add-backs are exceptional,[22] and that the Full Court’s remarks in C & C [1998] FamCA 143 at [46] remain authoritative:
Whilst not seeking to place a fetter upon the exercise 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.[23]
[21] Vass & Vass [2015] FamCAFC 51, [138]—[139] (Strickland, Murphy and Tree JJ). See Bevan & Bevan [2013] FamCAFC 116, [79] at which Bryant CJ and Thackray J in applying Stanford said that ‘“notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. The case ultimately did not turn on the issue, with their Honours stating that ‘in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.’
[22] Mayne (n 18), [185].
[23] C & C [1998] FamCA 143, [46] (Nicholson CJ, Ellis and Kay JJ).
The Wife contends that the Husband held $30,000 in long service leave entitlements that was unreasonably spent post-separation. The Husband agreed that he spent these monies, but save for $10,000 that was spent on legal fees, he contends that the balance should not be added back as it was used to meet living expenses and child support.[24] The Husband was not cross‑examined about his use of the monies and the Wife did not produce any evidence to show that the monies were spent wantonly or recklessly. I have no reason not to accept the Husband’s explanation and note his financial circumstances diminished after he left the ADF in 2022.[25] I accept that these funds were used to meet his necessary expenses, including payments to the Wife for child support. This, of course, means that the Wife has contributed to her own maintenance by receiving the proceeds of an asset of the relationship — which I will take into account when considering the parties' contributions generally. I do not, however, intend to add $20,000 back to the pool for the Husband’s expenditure of the balance of his long service leave entitlements, as such expenditure was reasonable in the circumstances.
[24] Husband’s affidavit (n2) [143]—[148].
[25] The parties' were at odds as to whether the Husband needed to resign from the ADF. The Husband claimed that he had no choice following the making of the wife’s family violence order. Ultimately, the Court did not need to determine this issue.
Given this finding, I conclude that the asset pool for division is that extracted at paragraph 7 of these Reasons. The net non-superannuation pool therefore has a value of $1,499,335.
The parties' positions based on the asset pool as determined
The parties' net property pool has a value of $1,499,335. The Wife sought 65% of the non‑superannuation pool — being net assets with a value of $974,567.75. With her retaining her assets and liabilities identified in the balance sheet,[26] she will, in her preferred outcome, be due a further cash payment from the Husband of $43,616.75.
[26] He Wife will retain net assets valued at $930,951.
The Husband sought a 45/55 division of the net pool in the Wife’s favour. Taking into account the net assets he will retain,[27] he will be entitled to a cash payment of $106,316.75 from the Wife, if his position is accepted by the Court.
By reference to the parties’ existing legal and equitable property interests, is it just and equitable to make an order pursuant to s 79?
[27] The Husband will retain net assets valued at $568,384.
As foreshadowed above, the law requires that any interference with regard to the legal and equitable interests of the parties' adheres to principled reason.[28] Justice and equity, with respect to property settlement in s 79(2), does not admit of exhaustive definition and it is ‘not possible to chart its metes and bounds’.[29] The principles contained within the Act also accommodate ‘stated or unstated assumptions and agreements about property interests during the continuance of the marriage’.[30] It is just and equitable, according to Stanford, for a Court to make a property settlement order if such agreements or assumptions with respect to property interests during the marriage have been brought to an end, which usually occurs with the end of the marriage or relationship.
[28] Stanford & Stanford (n9) 121 [41].
[29] Ibid 120 [36].
[30] Ibid 122 [41].
Both parties' submit that there should be a property order — I agree. The parties' own real estate, a significant cash sum and other property as well as holding liabilities. They both own superannuation and agree on the amount of the Husband’s superannuation that will be split to the Wife’s fund. The assumptions and agreements that the parties' held during their relationship as to the arrangement of their property interests and liabilities, were brought to an end when the parties' separated. They both made significant contributions towards the accumulation of their assets, amplified upon the birth of X post-separation. It is just and equitable for there to be a property order in this case.
Section 79(4)(a)–(c) — assessment of contributions
In assessing the parties’ contributions I must ‘weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation’.[31] A trial judge must not disproportionately account for one contribution over and above the ‘myriad of other contributions’ made during the relationship.[32] This means that any contribution, whatever its size or significance, should not be weighed against the other ‘miscellany’ of contributions made, but instead should be assessed as one of those myriad contributions.[33] In essence, as expressed by Harper J in Dovgan & Dovgan [2021] FamCA 306 [347], the introduction of property by one party to a long relationships must be assessed holistically: ‘all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder’.[34]
[31] Jabour & Jabour [2019] FamCAFC 78, [60].
[32] Ibid [43].
[33] Ibid [59], [73].
[34] Dovgan & Dovgan [2021] FamCA 306, [347].
Recently, the Full Court in Gadhavi & Gadhavi [2023] FedCFamC1A 117 at [30], confirmed that the Court cannot overlook the use and impact of an asset introduced into the relationship by a party:
It was not in dispute that the primary judge applied proper principle in determining that the assessment of the impact of the Husband's initial contributions could only properly occur after she assessed "the totality of the parties' contribution—based entitlement over the entirety of the marriage and post-separation" (at [210]).
In that respect, in Pierce v Pierce (1999) FLC 92—844 ("Pierce"), the Full Court stated at [28]:
…It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the Husband and the Wife. In considering the weight to be attached to the initial contribution, in this case of the Husband, regard must be had to the use made by the parties of that contribution. (Emphasis added)
To similar effect, in Cabbell & Cabbell [2009] FamCAFC 205, the Full Court stated at [54] that in considering the parties' contributions, it is necessary to trace the use of those assets and consider the foundation that they laid for the subsequent accumulation of wealth by the parties.
That is, in evaluating the parties' contributions, it was necessary for the primary judge to have regard to the context of the Husband's initial contribution and specifically, to the opportunity that initial contribution created and the impact of that initial contribution on the subsequent wealth of the parties as at the date of the hearing. (Emphasis added)
The Court must also consider the parties' non-financial contributions, including those as homemaker and parent, and not give such contributions token weight. In Dawes & Dawes [1989] FamCA 71 (‘Dawes’), the Full Court stated:
73.Although it is difficult, as it always is in such cases, to put one's finger squarely on what led his Honour to so undervalue the Wife's contribution, we think that one significant matter which did so was that he failed to give any weight to the fact that the Wife's performance of her role as homemaker and parent during the 30 years of cohabitation was not just a contribution under s.79(4)(c) (which he subsequently recognized to some degree) but was also a significant contribution under s.79(4)(b). That point was made by the Full Court (Nicholson, C.J., Murray and Buckley, JJ.) in In the Marriage of Napthali (1988) 13 Fam LR 146 at p 151, where their Honours said:—
151.Turning now to the second ground of appeal, (which was that 'the court erred in law in failing to take into account contributions made by the Wife during the marriage as homemaker and parent') it is apparent that nowhere in her Honour's judgment does she consider the contribution of the Wife to the business assets as a home—maker and parent. It is clear that the Wife did perform this role and nowhere in the evidence or in the submissions was any criticism directed at her capacities in this regard. It is to be noted that in Mallet v. Mallet [1984] HCA 21; (1984) 9 Fam LR 449; (1984) FLC 91—507, the High Court whilst rejecting the proposition of a presumption of equality, approved statements by this Court that the purpose of s 79(4)(b) is to give recognition to the position of the house Wife who by her attention to the home and the children frees her Husband to earn income and acquire assets and also approved the proposition that the contribution made by the Wife as a home—maker and parent should be recognised not in a token way but in a substantial way: see Gibbs C.J. at Fam LR 451; FLC 79,111; Mason J. at Fam LR 461—2; FLC 119—20.”[35] (Emphasis added)
[35] Dawes & Dawes [1989] FamCA 71, [73] (Lindenmayer, Strauss and Cohen JJ).
I shall have regard to all of these principles when assessing the parties' contributions.
Section 79(4)(a): direct financial contributions
The ‘Statement of Agreed Facts’ confirms that the Husband introduced non-superannuation assets worth $135,002.23 into the relationship — including the Husband’s long service leave entitlements. The Wife contributed a car and some savings worth $28,500.[36]
[36] Paragraph 7—9 of J1.
The parties' invested wisely from the outset of their relationship, purchasing and improving four properties —Suburb K, Suburb H in Tasmania, Suburb F and Suburb C. All of these properties appreciated in value — particularly the Suburb F and Suburb C properties.[37]
[37] The Suburb F property realised a profit (before tax) of $487,950 and Suburb C has increased in value by $448,000
The Husband’s savings and proceeds from the sale of shares, were pivotal to the acquisition of the four properties. He said in his affidavit that he also contributed $12,000 to assist the Wife to purchase the Suburb K property,[38] which was refunded but reinvested into the Suburb F purchase. The Suburb K property was leveraged to purchase the property at Suburb H.[39] The Husband said that he and the Wife purchased the Suburb F property with $30,000 provided by the Wife — redrawn from the Suburb K property — and $118,000 from the monies he introduced to the relationship. The Wife did not accept the Husband’s evidence in this regard, even when shown bank statements evidencing their financial contributions to the purchase of the property.[40] The Wife did, however, accept that the Husband’s financial contributions to the purchase of this property were greater than hers.[41] I accept the Husband’s evidence as to his contributions, as corroborated by Exhibit H1. This property was ultimately sold and produced a profit (before tax) of $487,950. This property was also used by the parties' to leverage them into the Suburb C property.
[38] Husbands affidavit (n2) [221].
[39] Ibid [226].
[40] Exhibit H1 – page 110 of the Husbands Tender Bundle.
[41] Affidavit of Ms Pfeiffer, filed 9 August 2023 [64] (‘Wife’s affidavit’). The Wife claims the Husband’s contribution was $70,000.
Ultimately, without the monies and assets brought into the relationship by the Husband, the parties' would not have been able to purchase all of the properties they owned — in particular those at Suburb F and Suburb C.
The parties' also agreed that the Husband’s income significantly exceeded the Wife’s during the short period of their relationship and post-separation.[42] There was some contention, however, as to whether the Husband had effectively lost the parties' money by living in the Suburb C property post-separation, as opposed to leasing the same for $600 per week.[43] The Wife contended that the Husband allowed his mother, his sister and her fiancé to live in the property whilst he lived in Region O, and that ultimately a greater amount would have been paid off the mortgage if the Husband had rented the property out. The Husband was adamant that he has lived in the property post-separation and that his family assisted him from time to time, in lieu of paying a formal rent. He also confirmed that post-separation he has continued to meet the mortgage payments and outgoings for the Suburb C property, and that the mortgage had a fixed rate which he has always paid. I am not satisfied that the Husband wasted an opportunity to gain $600 per week rent as claimed by the Wife. I accept that the Husband needed accommodation at the time the opportunity arose to rent the property and that it was reasonable for him to reside in the Suburb C property post-separation. The Husband continued to meet the outgoings for that property in addition to his spousal maintenance, child support and other financial commitments. I do accept, however, that the Husband used some of his long service leave entitlements to meet some of his child support obligation in late 2022. This resulted in an asset that would otherwise have been available for division, being used to pay child support owing to the Wife. Notwithstanding this contribution of the Wife, I find that the Husband’s financial contributions were significantly greater than the Wife’s up until the date of hearing.
[42] Based on paragraph 16 and 17 of the Statement of Agreed Facts the Husbands income exceeded the Wife’s by over $200,000 in the short period from 2017 until the end of 2022.
[43] Wife’s affidavit (n41) [82] – [86]. The Husband said under cross—examination that his Mother needed to move in after her property was damaged in a flood.
Section 79(4)(b): direct and indirect non-financial contributions to property
The Wife claimed that she undertook a greater role in preparing and promoting the sale of the property situated at E Street, Suburb F.[44] Under cross-examination, the Husband accepted that the Wife was involved in preparing the property for sale, particularly when he was working away, but said that his mother also helped during these times. He also stated that he organised and paid for significant works to this property after its purchase although the Wife claimed this was a joint effort.[45][46]
[44] Wife’s affidavit (41) [80].
[45] Ibid [67]—[69].
Considering the evidence as a whole, I find that both parties' were heavily involved in the purchase and development of the four properties during their short relationship. I assess the parties' non-financial contributions under this heading to be equal.
Section 79(4)(c): contributions to the welfare of the family, including contributions as homemaker or parent
The parties disagreed as to the extent of their respective homemaking contributions during the relationship. The Husband claimed that the parties' contributions in this regard were equal[47] whilst the Wife claimed her contributions were superior.[48] Neither party was cross-examined about their position. I note that the parties' lived in separate places for periods of the relationship, due to the Husband’s work commitments and because of Covid-19 restrictions.[49] I accept that both parties' contributed to homemaking when residing together.
[47] Husband’s affidavit (n2) [252]
[48] Wife’s affidavit (n41) [78]
[49] The Husband was deployed to Country P for approximately 7 months and lived in City Q for approximately 6 months.
The Husband accepts that the Wife’s contributions as primary carer of X were, and continue to be, greater than his. The parties' live in different States,[50] and the Wife, has taken on the lion’s share of the parenting of X who is yet to turn 2. I give the Wife’s homemaking, and particularly parenting contributions, significant weight.
[50] The Wife resides in the Suburb H property in Tasmania whilst the Husband lives in Queensland.
Conclusion regarding the parties’ contributions
This was a short relationship and the Husband’s initial contribution of cash and shares, and his higher income, enabled the parties' to accumulate a significant property portfolio within a short amount of time. This is not to diminish the importance of the Wife’s financial and non-financial contributions, particularly following the birth of X.
I take into account the myriad of contributions made by the parties' up to the date of hearing. I find that the parties' contributions should be assessed 55/45 in the Husband’s favour. Based on the net asset pool valued at $1,499,335, this results — on a contribution based entitlement — in the Husband receiving net assets valued at $824,634.25 and the Wife $674,700.75 — a differential of $149,933.50.
Section 79(4)(d)–(g), including s 75(2) — other factors
As stated, the parties' jointly submitted that there should be a 15% adjustment to the Wife for these factors. Taking into account a number of factors including — the Wife’s primary care of X (who is yet to turn 2 years of age), the disparity in the parties' income earning capacity, the disparity ($149,933.50) between the parties' positions following my assessment of their contributions, the Husband’s ongoing obligation to pay $300 per week in child support, and his high cost of exercising time with X in Tasmania — I agree that there should be an adjustment to the Wife for 75(2) factors of 15%.
Conclusion regarding the division of parties’ non-superannuation net assets.
I have concluded that the parties' net non-superannuation assets should be divided on a 60/40 basis, in favour of the Wife. Of the net asset pool — valued at $1,499,335 — the Wife is entitled to net assets valued at $899,601 and the Husband $599,734 — a differential of $299,867.
The Wife holds assets valued at $930,951 and the Husband $568,384. To effect a 60/40 outcome, the Wife will need to pay the Husband the sum of $31,350.
Final assessment: a just and equitable exercise of discretion?
After assessing contributions and other factors this Court must consider whether, in light of those assessments and the actual property to be divided, the proposed exercise of the discretion under s 79 is just and equitable. In Clauson & Clauson (1995) FLC 92-595, the Full Court said the following:
… that exercise is not done in isolation; it is done against the background of conclusions already arrived at on contributions, the consequence of which will be in some cases to intrude into the s 75(2) exercise because of the dimension of the former conclusion and the total pool.
It is largely for that reason that it is ultimately necessary to stand back from the process and reach a conclusion which appears overall to be a just and equitable exercise of the discretion.[51]
[51] Clauson & Clauson [1995] FamCA 10; (1995) FLC92—595, 81,911–81,912.
Both parties' will retain real estate, superannuation and cash as a result of the Order I intend to make. There will be a small cash payment to the Husband most easily received from the monies held in trust — and I will so order. Standing back, I am satisfied that Order I intend to make results in a just and equitable outcome.
I wish to thank the parties' and their Counsel for the manner in which they conducted this trial. The parties’, with the assistance of their legal advisors, made every effort to settle matters and narrow the issues in dispute. Consequently, they have both saved a considerable sum in legal fees and enabled the Court to find time to deal with cases for other families. My hope is that both parties' will now move forward and look to creating a collaborative relationship to navigate the inevitable challenges they will confront as X’s parents. The better they can communicate and avoid conflict, the better his life will be. I have every confidence that they will meet this challenge.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Turnbull. Associate:
Dated: 29 August 2023
[46] Husband’s affidavit (n2) [240].
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