Preston & Preston
[2022] FedCFamC1A 157
Federal Circuit and Family Court of Australia
(DIVISION 1) APPELLATE JURISDICTION
Preston & Preston [2022] FedCFamC1A 157
Appeal from: Preston & Preston(No 2) [2022] FedCFamC2F 303 Appeal number(s): NAA 90 of 2022 File number(s): NCC 3843 of 2019 Judgment of: ALSTERGREN CJ, MCCLELLAND DCJ & AUSTIN J Date of judgment: 5 October 2022 Catchwords: FAMILY LAW – APPEAL – Property – Where the husband appeals from property settlement orders – Superannuation – Where the primary judge incorrectly treated a non-commutable military pension as a capitalised asset rather than an income stream – Where no splitting order was sought in respect of it – Where the military pension was double counted as a future source of income – Contributions – Where the primary judge did not holistically weigh the entirety of the parties’ financial and non-financial contributions according to the unique facts and circumstances – Error established – Appeal allowed – Re-exercise – Contributions assessed at 60/40 in favour of the husband – 10 percent adjustment made in favour of the wife – Costs certificates granted for the appeal. Legislation: Family Law Act 1975 (Cth) Pts VIII, VIIIB, ss 75, 79, 117
Federal Proceedings (Costs) Act 1981 (Cth)
Cases cited: Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Carron & Laninga (2019) FLC 93-909; [2019] FamCAFC 115
Chapman & Chapman (2014) FLC 93-592; [2014] FamCAFC 91
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Horrigan & Horrigan [2020] FamCAFC 25
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Mallett v Mallett (1984) 156 CLR 605; [1984] HCA 21
Mayhew v Fairweather (2022) 64 Fam LR 633; [2022] FedCFamC1A 53
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Semperton v Semperton (2012) 47 Fam LR 626; [2012] FamCAFC 132
Number of paragraphs: 56 Date of hearing: 24 August 2022 Place: Newcastle Counsel for the Appellant: Mr O’Reilly Solicitor for the Appellant: Delaney Roberts Family Lawyers Counsel for the Respondent: Mr Gould Solicitor for the Respondent: Baker Love Lawyers ORDERS
NAA 90 of 2022
NCC 3843 of 2019FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR PRESTON
Appellant
AND: MS PRESTON
Respondent
order made by:
ALSTERGREN CJ, MCCLELLAND DCJ & AUSTIN J
DATE OF ORDER:
5 October 2022
THE COURT ORDERED ON 24 AUGUST 2022 THAT:
1.The appeal be allowed.
2.Within 21 days, each party shall file and serve written submissions of maximum 16 pages, to include submissions as to costs, and to be based on the same evidence before and the same findings made by the trial judge (save for any findings that have been impugned by allowing the appeal).
3.The parties have liberty to jointly email to the chambers of the Chief Justice any terms of settlement within 14 days.
THE COURT FURTHER ORDERS THAT:
1.The orders made on 5 April 2022 are set aside.
2.Pursuant to Pt VIII of the Family Law Act 1975 (Cth), it is ordered that:
(a)The appellant shall forthwith:
(i)pay to the respondent the sum of $339,194; and
(ii)do all such things as are necessary to transfer his right, title and interest in the real property and improvements comprising Folio Identifier … being the property more commonly known as the Suburb A property (“the property”) to the respondent, who is declared the sole legal and beneficial owner of the property.
(b)Forthwith upon receipt of payment pursuant to Order 2(a)(i), the respondent shall discharge the mortgage registered over the property and keep the appellant indemnified against any and all liabilities connected to the property.
(c)The appellant is declared the sole legal and beneficial owner of the net proceeds realised upon the sale of the real property known as the Suburb B property.
(d)Within 42 days from the date of these orders the respondent will make available for collection by the appellant the following items that remain at the property:
(i)two (2) brown 2-seater recliner lounges;
(ii)one (1) wall-mounted television and associated electronic entertainment system.
(iii)one (1) low line entertainment unit located in the rumpus room;
(iv)the two (2) drawer timber filing cabinet located in the rumpus room;
(v)copies of the baby photos of the children which are located on the wall in the lounge room;
(vi)the red box trailer registered in the appellant’s name;
(vii)one (1) outdoor setting located on the back deck; and
(viii)the following tools, equipment and materials:
A.two (2) x lathes.
B.disc/belt sander.
C.hydraulic press.
D.compressor.
E.work bench.
F.drill press.
G.the appellant’s tool boxes (including tools).
H.circular saws.
I.high pressure blaster.
J.all “unibuilt” boxes located on the wall of the garage and all fittings located within.
K.all items in the shelves at the back of the garage.
L.one (1) of the ride-on lawn mowers
M.lawn aerator.
N.topsoil spreader.
O.lawn mower.
(e)If the appellant fails to collect items referred to in Order 2(d) within 42 days, they will become the property of the respondent.
(f)Unless otherwise provided:
(i)Each party shall be the sole legal and beneficial owner (as between the parties) of all other real assets, personal assets, and superannuation interests in their respective possession as at the date of these orders, for which purpose superannuation interests are deemed to be in the possession of the named superannuant; and
(ii)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the real and personal property in their respective possession, and any other debts in their respective sole names, including any individual liability for capital gains tax arising out of the sale by the parties of real property pursuant to these orders.
(g)Any and all other outstanding applications between the parties for relief under Pt VIII of the Family Law Act 1975 (Cth) are dismissed.
3.In the event of either party refusing or neglecting to sign, within seven days of a written request to do so, any document necessary to implement the terms of Order 2 a registrar of the Federal Circuit and Family Court of Australia (Division 1) is empowered to execute such documents on behalf of the parties pursuant to s 106A of the Family Law Act 1975 (Cth).
4.The appellant’s application for costs of and incidental to the appeal is dismissed.
5.The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.
6.The respondent is granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by her in relation to the appeal.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Preston & Preston has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALSTERGREN CJ, MCCLELLAND DCJ & AUSTIN J:
By a Notice of Appeal filed on 29 April 2022, the husband appeals from property settlement orders made under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) by a judge of the Federal Circuit and Family Court of Australia (Division 2) on 5 April 2022.
The parties disputed whether their relationship began in 2003 or 2004, but they married in 2006, separated in 2018, and divorced in 2020.
The wife is 18 years younger than the husband. They have four young children, who live primarily with the wife. Happily, the parties resolved their dispute over the children, but could not compromise the dispute over the division of their property.
The trial proceeded in November 2021, with the wife seeking 52.5 per cent of the parties’ aggregated property and superannuation and the husband seeking 57.5 per cent (at [4]). As can be seen, the parties adopted positions 10 per cent apart, which made some difference when the total net value of their assets and superannuation was found to be $4,110,068 (at [42]).
The appealed orders were pronounced and reasons for judgment were delivered in April 2022. The primary judge ordered that the husband would receive 58.5 per cent of the property and superannuation and the wife 41.5 per cent (at [95]).
At first glance, one might wonder why the husband appeals from orders which are ostensibly slightly more generous than those he sought. The answer lies in how the primary judge treated his superannuation interest, received in the form of a defined benefit military pension in the payment phase (“the military pension”), which he retained and was not split between the parties (at [104]). The appealable error in that regard required that the appeal be allowed. So too did the manner in which the primary judge assessed the parties’ entitlements.
The parties agreed at the appeal hearing that, should the appeal be allowed, the orders of the primary judge would have to be set aside and this Court should re-exercise discretion to make substitute property settlement orders between them. Accordingly, orders were made at the hearing allowing the appeal and directing the parties to file written submissions concerning the nature of the substitute orders. These reasons explain why the appeal was allowed and the orders we now make to conclude the cause between the parties.
the appeal
Ground 1
This ground pertains to the military pension, for which the husband qualified upon his medical discharge from the armed services in 2010, following his service of 27 or 28 years beginning in 1983 (at [62] and [74f]).
The ground asserts the primary judge erroneously failed to properly consider the “nature, form and characteristics” of the military pension which, in effect, led to its incorrect treatment as a capitalised asset rather than merely as an income stream and then being double-counted as a future source of income.
The wife began the trial foreshadowing a dispute between the parties over whether the military pension would be treated as a tangible asset or only as a financial resource but, in final submissions, she abandoned her initial application for a superannuation-splitting order. She did not contend for the military pension to be counted as an asset at its capitalised value and anticipated its treatment as only an income stream for the appellant. Her counsel submitted:
[COUNSEL FOR THE WIFE]: …[T]he wife doesn’t seek any superannuation split from the husband. … [The wife] makes an application that enables the husband to keep all of his income streams intact – his pension …
(Transcript 26 November 2021, p.82 line 30, p.89 lines 35–37)
It was impossible to commute the military pension (at [91d]) and neither party ultimately sought a superannuation-splitting order in respect of it (at [14]–[15], [93c] and [104]), so the expert opinion evidence of it having a capitalised value of $638,109 (at [16e], [24] and [91a]) lost its utility.
Her Honour acknowledged the parties initially contested the inclusion of the military pension within the balance sheet as an asset (at [24]) but seemed to overlook the wife’s subsequent abandonment of her contention for its treatment as such. Without explaining why in the reasons for judgment, the primary judge counted it as an asset at the capitalised value (at [42]), even though she acknowledged neither party sought superannuation-splitting orders. The corollary of that conclusion was the husband’s presumed receipt of the military pension in the form of an asset at that capitalised value as an integral part of his proportional share of the divided property (at [107]), notwithstanding he could never liquidate it as an asset and its continued payment was contingent upon future review of his medical condition.
The military pension is only ever payable to the husband whilst his medical condition justifies it, though the parties acknowledged it was unlikely his entitlement would ever wane. The husband’s counsel conceded to the primary judge:
[COUNSEL FOR THE HUSBAND]: …[O]n the balance of probabilities [the military pension] will not be reduced. …
(Transcript 26 November 2021, p.80 line 25)
After having determined the parties’ respective contribution-based entitlements (at [77]), the primary judge then considered what adjustment might be made to such entitlements on account of the factors prescribed by s 75(2) of the Act. In that process, her Honour concluded the husband had a significantly higher income-earning capacity than the wife (at [93]), which in part stemmed from his indefinite receipt of the military pension, then worth $976 per week, but indexed by CPI (at [88] and [91f]). The husband’s greater income-earning capacity was one factor which resulted in an adjustment in the wife’s favour of another 6.5 per cent (at [94]).
There was no need to ascribe a capitalised value to the military pension when no splitting order was sought in respect of it under Pt VIIIB of the Act because, as the Full Court established in Carron & Laninga (2019) FLC 93-909:
36.In property settlement proceedings, there is no need to ascertain the capitalised value of a superannuation interest, much less one in the payment phase being paid in the form of a non-commutable pension, unless a superannuation-splitting order is sought in relation to the interest (Welch & Abney (2016) FLC 93-756 (“Welch & Abney”) at [33]–[34], [61]; Surridge & Surridge (2017) FLC 93-757 (“Surridge”) at [30]). At trial, neither party sought a superannuation-splitting order in respect of the wife’s MSBS pension.
37.The Act only provides that a superannuation interest must be valued before it is amenable to a splitting order (s 90XT(2)), for which purpose the Family Law (Superannuation) Regulations 2001 (Cth) (“the Regulations”) make provision for the manner in which different superannuation interests are valued. …
(Emphasis added)
The military pension ought not have been notionally identified as an asset when it was not, as it could neither be commuted nor alienated. It was no more than a right, entirely personal to the husband, to receive defined income whilst ever medically unfit.
Having been notionally counted as an asset in the balance sheet, despite no superannuation-splitting order either being eventually sought or made, the primary judge’s findings necessarily meant that the husband’s 58.5 per cent share of the assets and superannuation incorporates the military pension at its capitalised value of $638,109, even though he does not and never will have that capitalised sum available for his use.
As the Full Court said in Carron & Laninga:
38.Although any valuation correctly ascribed to the wife’s MSBS pension pursuant to the methodology dictated by the Approval would be unimpeachable, as no superannuation-splitting order was sought by either party in respect of the pension, its “nature, form and characteristics” needed to be considered when both evaluating the parties’ contributions to its existence and how it would be taken into account when determining the nature of the final property settlement orders that should be made between the parties (see Semperton v Semperton (2012) 47 Fam LR 626 at [154]-[197], [203]-[208]; Welch & Abney at [58]-[60], [63], [70]-[71]; Surridge at [29]-[34], [103]-[106]; Pates and Pates [2018] FamCAFC 171 (“Pates”) at [94]-[96]).
39.Relevantly, the wife’s entitlement to the MSBS pension crystallised in 2000 following her redundancy from employment in the armed services, shortly after the parties’ marriage in 1998. She is entitled to receive the pension for life, during which time it cannot be commuted or alienated. While it will continue to be a modest income stream for her, it will not be enough alone to sustain her and she will always need to supplement it with other income from paid work. Such features of the pension made it readily identifiable as a financial resource rather than an asset. Despite the trial judge’s apparent conflation of the wife’s two MSBS superannuation interests, it was certainly open to find that the second superannuation interest should not be taken into account as an asset. The fact the husband did not seek any order to split the wife’s MSBS pension at any point prior to the publication of the trial judge’s reasons made it unnecessary to value the pension under the Approval. That being so, the opinion evidence of Mr T about the notional capitalised value of the pension, calculated pursuant to the Approval, together with the wife’s admission of the capitalised value in reliance upon his opinion, became irrelevant. It was properly taken into account as a continuing income stream (at [33]).
(Emphasis added)
Observations to similar effect were made by the Full Court in Mayhew v Fairweather (2022) 64 Fam LR 633 at [15]–[23].
The primary judge’s methodology caused the military pension to be impermissibly counted twice – first as an asset and then as a source of constant income. Moreover, when taking the military pension into account as a financial resource for the purpose of s 75(2) of the Act, the primary judge did so at its gross value of $976 per week and did not seemingly take into account its taxable component (at [88], [91b] and [93a]).
The Full Court plurality in Semperton v Semperton (2012) 47 Fam LR 626 warned against both of those dangers, saying:
143.The husband complains there was “double dipping” because the Federal Magistrate referred to the benefit to the husband of the DFRDB when making the adjustment in favour of the wife on account of the s 75(2) factors.
144.This was said to constitute “double dipping” because the DFRDB had been included in the pool for the purposes of determining contribution entitlements.
…
148.It will be immediately apparent that the learned Federal Magistrate was alive to the importance of not “double dipping”. It appears he properly accepted it would be impermissible to take the DFRDB into account against the husband’s interest at this stage, unless there was some aspect of the entitlement that had not already been taken into account when assigning it a value. The question that then arises is what additional aspect of the benefit did his Honour have in mind when mentioning it in the context of the proposed adjustment?
…
152.The only benefit we can see to the husband that is not already accounted for in the valuation of the DFRDB is the fact that he might live much longer than the valuation formula assumes. To that extent, we accept it can be seen as providing the husband with “security”, as his Honour said. And the corollary is that if the husband lives longer than the formula assumes, the DFRDB will turn out to be worth more to him than the calculation suggests. However, the flipside is that the husband might die at an age much earlier than the formula assumes, in which case its real value to him would have been much less.
…
154.It is significant that the wife made no submission to the Federal Magistrate to suggest that the retention of the DFRDB by the husband should result in a further s 75(2) adjustment in her favour. Absent such submissions, and absent any evidence of benefit to the husband not accounted for in the valuation, we do not consider it was open to his Honour to take the DFRDB into account at the s 75(2) adjustment stage. To that extent, we consider his Honour erred.
…
157.As we have already said, we consider his Honour erred in allowing the DFRDB to play any part at this stage of the process. …
…
162.It is unsurprising the Federal Magistrate failed to place any emphasis on the fact that the DFRDB would adversely impact on the husband’s current taxation and his future aged pension, since neither party asked his Honour to take those matters into account. However, the evidence disclosed that tax was being paid on the DFRDB. In any event, the fact that tax would be payable is a matter of law. Similarly, it is a matter of law that a DFRDB will impact on a means tested pension, which was one of the reasons the wife did not want any part of the DFRDB.
The primary judge did not heed such principles and so this ground of appeal succeeds.
Ground 3
This ground pertains to s 79(4)(a)–(c) of the Act (but not ss 79(4)(d)–(g)) and alleges the primary judge erred when assessing the parties’ contributions by starting from an assumption of equality, rather than by comparatively weighing their contributions without pre-conception.
In very many cases, the evidence will often lead to a conclusion that the spouses’ contributions were relatively equal when non-financial contributions as a homemaker and parent are properly afforded substantial and not merely token recognition (Mallett v Mallett (1984) 156 CLR 605 at 609, 623, 636 and 646), but there must be no presumption of equality in the assessment of such contributions under s 79 of the Act (Mallett v Mallett at 610, 613, 625, 639–640 and 647; Norbis v Norbis (1986) 161 CLR 513 at 537).
In this instance, the primary judge explained the assessment of the parties’ respective contributions in this way:
74.Having considered the evidence and submissions, and dealing with the contributions on a holistic basis (including the capital gain achieved from the growth in value of these properties as a result of the inflationary effect) I find that a substantial adjustment is to be made in favour of the husband in respect to contributions based on the following: …
…
76.I also find however that the extent of the adjustment to be made in favour of the husband is to [be] discounted by the following significant contributions made by the wife: …
77.I find that it is appropriate for a 15% adjustment to be made in favour of the husband in respect to contributions.
(Footnote omitted) (Emphasis added)
The terminology of “adjustment” employed by the primary judge begs this question: what is the starting point from which the adjustment is made?
The reasons for judgment strongly imply the primary judge improperly assumed a starting point of equality, then first assessed the husband’s contributions to determine the extent to which an adjustment away from the equilibrium in his favour was justified (at [74]–[75]), then determined the extent to which the wife’s contributions counteracted the provisional adjustment to the husband by way of “discount” (at [76]), and then ultimately settled upon a net adjustment of 15 per cent in the husband’s favour (at [77]).
Significantly, that is a 15 per cent adjustment away from equality (being 65/35) – not a 15 per cent differential between the parties’ provisional entitlements (being 57.5/42.5) – because the subsequent adjustment of 6.5 per cent in the wife’s favour under s 75(2) of the Act meant the husband’s final entitlement was reduced to 58.5 per cent (from 65 per cent).
Such methodology repudiates the well-established need to eschew any assumption of equality and to instead holistically weigh the entirety of the parties’ financial and non-financial contributions according to the unique facts and circumstances of the case at hand (Norbis v Norbis at 523, 532–533 and 541; Dickons v Dickons (2012) 50 Fam LR 244 at [23]–[26]; Chapman & Chapman (2014) FLC 93-592 at [100]; Jabour & Jabour (2019) FLC 93-898 at [59]–[69]; Horrigan & Horrigan [2020] FamCAFC 25 at [35]–[48]).
This ground of appeal succeeds.
Ground 2
Having identified frank appealable errors under the preceding grounds, it is unnecessary to consider this last ground, which complains only of implied error.
disposition
All of the orders made by the primary judge on 5 April 2022 are set aside, consonantly with the husband’s proposal in the appeal. It was agreed this Court should re-exercise discretion to make substitute property settlement orders.
Re-exercise of discretion
The re-exercise of discretion under Pt VIII of the Act is premised upon the evidence adduced by the parties at first instance. When asked, each party renounced the opportunity to adduce updated evidence in the appeal (Allesch v Maunz (2000) 203 CLR 172 at 183 and 191–192). Each party also invited this Court to adopt the findings of fact made by the primary judge, though not any findings impugned in the appeal.
Albeit later than directed, the parties filed written submissions advocating for the orders which should be made in substitution for those set aside, which have been taken into account in the following analysis.
The parties’ property and superannuation interests are those found by the primary judge (at [42]), save in two respects. First, the military pension is omitted as an asset. Secondly, the parties have each since received a cash payment of $100,000 from the net proceeds realised on the sale of real property at Surburb B owned solely by the husband, which proceeds are held in escrow.
The parties contended in their submissions that the net proceeds of sale from the Suburb B property are jointly owned and the CGT liability is also joint, but that was not the finding made by the primary judge (at [42]). Her Honour’s finding in that regard was neither challenged nor impugned in the appeal and, as already confirmed, the re-exercise of discretion is to be performed by adoption of the primary judge’s findings of fact.
Accordingly, the wife has existing net property and superannuation of $812,073 and the husband has existing net property and superannuation of $2,659,886, which calculation apportions the parties’ joint ownership of the former family home and their joint liability for the mortgaged debt. It is the only jointly owned asset.
The parties’ joint proprietary interest in the former family home must be severed, as must their joint liability to the mortgagee, and the husband conceded their disparate property interests require revision to ensure the wife has a larger share, so it is just and equitable to make a property adjustment order in the cause (s 79(2)). Attention then turns to the assessment of their respective proportional shares to the property and superannuation.
At or about the time the parties commenced cohabitation in 2003 or 2004, the husband’s capital contributions were significantly superior (at [46]–[54], [74a] and [74c]). He had real property with net value of about $600,000, together with substantial superannuation entitlements built up over the preceding 20 years. The wife had no real property and the putative value of her superannuation interest was a small fraction of the husband’s. Both parties had miscellaneous items of personal property.
The parties cohabited for about 15 or 16 years and had four children together. Each was gainfully employed for periods of the marriage, though the wife was primarily responsible for the care of the children and the performance of home duties. The husband suffered injuries from time to time and convalesced for periods, during which the wife afforded him care. He was medically retired in late 2010 and began receiving his military pension, though he returned to work in a different capacity. The husband continued to manage investment properties, which yielded net income.
Both parties made other capital contributions. The husband received compensation payments of around $530,000 and the wife received compensation payments of around $63,000 (at [13], [74d] and [76a]). The husband also received inheritances of about $70,000 and the wife received gifts and inheritances of about $14,000 (at [13], [74d] and [76a]). It was common ground those sums of money were spent on the advancement of the family.
When the parties separated in April 2018, the wife was not working and continued her role as primary carer for the children. The husband provided financial assistance in relation to the children, but not pursuant to any formal child support assessment. The husband also gave the wife some informal financial assistance, but that arrangement was formalised by a spousal maintenance order made in June 2020, which order expired when the appealed orders were pronounced.
The husband contended his contribution-based entitlement should be assessed at 65 per cent, whereas the wife contended for it to be 58.5 per cent.
We assess the parties’ contribution-based entitlement at 60 per cent to the husband and 40 per cent to the wife. The husband’s contributions were greater than the wife’s by a factor of 1.5, but not by double.
The husband is now aged 58 years. He retired in June 2021, but then returned to some casual work. He will have income for the foreseeable future from several sources: rent derived from investment properties; his military pension; and any income from the casual work he does. His income is taxable at the ordinary marginal rate, which the parties agreed approximated 30 per cent. The husband’s financial situation may require him to sell one or more of the investment properties in due course, which would crystallise his liability for capital gains tax.
The wife is 40 years of age. She will continue to be the children’s primary carer. That role will endure for some time because the eldest of the four children is still only 11 years old. The wife currently works casually, but is retraining with a view to acquiring better paid employment. Even if she fulfils that aspiration, her future income is likely to be far less than the husband’s. As a broad-brush comparison, their gross annual income will conceivably be $30,000 and $100,000 respectively (at [93]).
The husband admitted an adjustment in the wife’s favour of 6.5 per cent, as found by the primary judge, would be appropriate. The wife also contended an adjustment in her favour of that quantum was appropriate, but only if her contribution-based entitlement was assessed at the level for which she advocated. If it was less, as is now found, she sought an adjustment of greater magnitude. She submitted an adjustment of 10 per cent was easily conceivable.
We assess the adjustment in the wife’s favour, taking into account the factors prescribed under ss 79(4)(d)–(g) and 75(2) of the Act, at 10 per cent. The adjustment has the effect of equalising the parties’ overall entitlements, which we regard as a just and equitable outcome.
The combined net value of the parties’ property and superannuation interests is $3,471,959. The value of their respective one-half shares computes to $1,735,980 (rounded to the nearest dollar).
Since the wife already has property and superannuation with net worth of $812,073, she needs to receive an extra $923,907 to fulfil her entitlement (812,073 + 923,907 = 1,735,980).
Both parties sought to acquire the former family home as part of their respective shares of the overall property. The wife and the children live in the property. The husband lives in another of his properties, but he wants the former family home for himself, principally because “he built the house” and has an “emotional attachment” to it (at [100]). The wife will remain the children’s primary carer and their pre-existing occupation of the property, with the husband’s consent until this point in time, is a stronger reason for the wife to retain it than for the husband to instead have it because he feels an emotional attachment.
If the wife assumes exclusive ownership of the former family home, subject to her accepting exclusive responsibility for the mortgaged debt and indemnifying the husband against it, the value of her property will increase by a net amount of $584,713. The husband will then need to pay to her the sum of $339,194 in order that she receives her full entitlement (584,713 + 339,194 = 923,907). That additional sum can be paid by the husband from the residue cash of $536,657 from the sale of the Suburb B property which remains held in escrow. The payment to the wife will enable her to discharge the mortgage ($230,574) and have capital in reserve ($108,620).
We make no order in substitution for the discharged former order concerning the closure of joint bank accounts and the equal distribution of credit balances (Order 9). No such bank accounts were included on the balance sheet (at [42]) and no submissions were made about the need for any such order upon the re-exercise of discretion.
We will make orders to replicate the discharged former orders concerning the destination of miscellaneous items of personal property (Orders 10 and 11). Those orders were separately explained by the primary judge (at [109]–[117]) and there was no argument over those orders in the appeal. In the circumstances, we presume the terms of the orders reflect the wife’s concessions in the concluding phase of her cross-examination about the items of personal property she was content for the husband to have.
Costs
The husband sought costs from the respondent if the appeal succeeded, which application is dismissed as no factor prescribed by s 117(2A) of the Act warrants it. The errors of law identified under Grounds 1 and 3 were not induced by the way in which the respondent eventually presented her case and, upon the re-exercise of discretion, the wife acquires property and superannuation of slightly greater value than under the appealed orders.
Instead, the parties will be granted costs certificates for the appeal pursuant to the Federal Proceedings (Costs) Act 1981 (Cth).
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Alstergren, Deputy Chief Justice McClelland and Justice Austin. Associate:
Dated: 5 October 2022
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