QALE & QALE
[2021] FCCA 506
•19 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
| QALE & QALE | [2021] FCCA 506 |
| Catchwords: FAMILY LAW – PROPERTY – Property dispute after 16 year marriage – parties having no assets at commencement and achieving significant property holdings at conclusion – wife seeing to retain matrimonial home for the benefit of 13 year old autistic son – court finding parties contributions and future needs equal – whether superannuation split appropriate – just and equitable that each side retain their superannuation. |
| Cases cited: Mallet v Mallet (1984) 156 CLR 605 Palumbo & Mandel [2019] FamCAFC 228 Stanford & Stanford (2012) 247 CLR 108 |
| Applicant: | MS QALE |
| Respondent: | MR QALE |
| File Number: | DGC 2120 of 2019 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 5 & 17 February 2021 |
| Date of Last Submission: | 17 February 2021 |
| Delivered at: | Dandenong |
| Delivered on: | 19 March 2021 |
REPRESENTATION
| Counsel for the Applicant: | Mr P |
| Solicitors for the Applicant: | Erol Cinar Lawyers |
| Counsel for the Respondent: | Ms Goldthorp |
| Solicitors for the Respondent: | Barbayannis Lawyers Pty Ltd |
ORDERS
The matter be adjourned to this court for mention before Judge Burchardt on 25 March 2021 at 9.30 am.
IT IS NOTED that publication of this judgment under the pseudonym Qale & Qale is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
DGC 2120 of 2019
| MS QALE |
Applicant
And
| MR QALE |
Respondent
REASONS FOR JUDGMENT
This is a property dispute between parties who were married 2002 and separated on 1 March 2018. The parties have an agreed spend-time regime for their two children, X and Y, both of whom were born 2007. In effect, the children spend equal time with each of their parents. X is autistic and Y has Asperger’s syndrome.
The applicant wife seeks an equal division of the parties’ property, albeit structured in a fashion to enable her to retain the former matrimonial home, for reasons I will expand on in due course. The respondent husband seeks a 56/44 division in his favour, and does not shy away from the sale of the former matrimonial home should that be thought otherwise appropriate.
For the reasons that follow, I think it is just and equitable that the parties should receive 50 per cent of the entirety of the pool, including each retaining their superannuation.
Agreed or Uncontroversial Matters
The husband was born 1971 and the wife 1973. They did not cohabit before their marriage in 2002. They separated in 2018.
The husband worked for a number of years for Employer A, both in Sydney and in Melbourne, and was technically employed by Employer A from 2003 until December 2016. However, in about 2014, he was the victim, as he himself put it, of a concerted campaign of bullying which caused him to become unwell and, it would appear, despite some equivocation in his oral evidence, that he may not have actually worked very much until his employment was finally ended in December 2016, when he received a redundancy payment of some $90,000.
The husband lives with his mother as he has done since separation. She is in her late 80s and has apparently suffered a stroke. He does not appear to pay anything by way of board or other contribution, although he plainly assists his mother by helping to look after her.
The wife remains in the former matrimonial home, which as already indicated, she is very keen to keep. This is in large part because X has lived here all his life and it represents a safe harbour and a known factor in his life, which is important to him, given his autism. It does not appear to be controversial that there are other children living nearby who include X in their play and the like in a fashion that the mother doubts would be replicated if she is forced to move.
The wife worked until the birth of the children, albeit that it seems clear that she did not at any stage earn anything like as much as the husband. The parental grandparents helped with looking after the children for the first few years and it appears that the wife has been depressed for at least some of the time since the children were born.
Notwithstanding that parties had not a great amount of property at the start (the wife says she has $15,000-$20,000 of savings and the husband said had $60,000 of savings, albeit that the wife puts the figure at $30,000), the parties own the formal matrimonial home unencumbered. It has an agreed value of $1,450,000. They also own two rental properties, one in Suburb B and another in C Street, Suburb D. Both of these are encumbered by mortgages. The parties have sold other real property and there is approximately $114,000 held in trust.
Since the cessation of his employment with Employer A in 2016 the husband has not been able to obtain work, notwithstanding that he has attained two PhDs. The wife is employed as a professional and makes $65,000 per annum in part‑time work. The husband has the benefit of a net surplus of rental from the two investment properties and it seems uncontroversial that he has, at all times, been the person charged with responsibility for the management of those properties on behalf of the couple.
It would appear that intervention orders have been taken out by both of the parties from time to time, but it is not clear to me that they now operate in any material way upon the circumstances of the parties.
The Parties Affidavits
The vast bulk of what the parties have to say, and there are all too voluminous affidavits, is covered in the agreed matters above. It should be noted that the wife’s first affidavit described the surplus of rental from rental properties has been about $2,000 a month.
The husband’s, first affidavit contained accusations of multiple extra‑marital affairs on the wife’s part. Once again, this aspect of the matter appears to have dissipated or disappeared during the currency of the trial. He also complained that the wife kept the $129 per week carer’s pension paid in respect for X, notwithstanding that the parties had the children for equal amounts of time.
The husband’s first affidavit put a net profit on the rental properties at $9,500 per year, and I note his ongoing depression and anxiety.
On 5 October 2020 the wife filed an affidavit by Mr E which was designed to assess the husband’s alleged appropriation to his own benefit of moneys paid in respect of the rental properties. That affidavit was not, however, read at trial.
The wife, in her affidavit filed 12 January 2021 sought add‑backs of $34,643. It was asserted, further, that the husband had taken about $34,151 from X’s account and $29,062 from Y’s account. It was also put that a recent variation to the paternal grandmother’s will had removed from the husband a one‑third share in her estate to the value of approximately $266,000. It was also deposed that if both the investment properties were sold by the husband, the maximum capital gains tax would be $32,063. This assumed a tax rate of 47.5 per cent and was based on exhibit 5 to the affidavit, being an email from the wife’s accountant dated 11 April 2020.
The affidavit also annexed as 6 a report from Ms F, psychologist, who has been seeing X for many years, and who has, in her written report, asserted the undesirability of X relocating.
The affidavit also responded to assertions made by the husband’s prime affidavit material about her alleged de facto relations with Mr G. This was a matter explored in more detail in the evidence given at the hearing.
The husband’s responding and final affidavit deposed a roughly equal expenditure by the parties on legal expenses, and noted that the parties drew down $56,900 from the children’s bank accounts, following separation. It was put that $32,000 of this amount was applied to pay a credit card debt in the husband’s name, of which the wife was a secondary card-holder. While the $32,000 seems to be relatively clearly established, the balance of some $25,000 is not detailed. The husband’s affidavit also noted that the refineries at which he might normally have expected to apply his expertise for work have essentially been shut down. He also raised an issue going to the alleged failure of the wife to disclose likely benefits from inheritances from her family.
The husband also asserted in the table of liabilities that CGT on sale of H Street, Suburb B would be $62,938, and referred to an e-mail from the accountant Mr I dated 31 December 2020. That e-mail was not annexed to the affidavit, and so far as I am aware is not in evidence.
The wife filed an affidavit of Mr J on 28 January 2021. Mr J purported to provide expert evidence as to funds allegedly appropriated by the husband. The total thus said to have been appropriated was the sum of $174,189. The husband filed a responding affidavit, taking issue with Mr J’s conclusions.
Finally, the wife filed an affidavit by Mr G, said by the husband to be the wife’s de facto partner.
The Submissions Made and Evidence Given at Court
What follows is taken from my notes.
The Opening and Evidence of the Wife
Counsel opened the case on the basis that add backs in the sums of $45,000 and $170,000 were sought. It was submitted to be a simple, but difficult case. The relationship lasted about 16 years, and the parties had nothing of any moment at the start, but there is now a large pool of about $3.2 million. X is 13, and the home is very significant to him. There are children living in the same street of a similar age, and relocation would isolate X significantly. It was easier for the wife to retain, if there was a one pool approach. The husband can buy a similar property. The husband is capable of earning at $100,000 and has two doctorates. The wife earns approximately $60,000.
The wife was called and adopted her affidavits as true and correct.
She indicated that in the last two or three days, she had been assessed to pay $269 per fortnight to husband by way of child support. The children live in an equal time arrangement at the moment.
Under cross-examination by counsel for the husband, the wife confirmed that she had savings of $15,000 to $20,000 at the commencement of the relationship. She was about 23 at the time. She thought the husband had less than $60,000 but could not prove it. They had dated for six years before that. The husband was 30 when they married. He was undertaking post-doctoral work, averaging about $50,000 income per year. She was aware that the husband bought a property with his brother when he was 19 years of age. She had looked after the children and did the housework.
After the diagnosis of X (she maintained that she had attended about 90 per cent of the various appointments), she returned to part-time work in 2008. The husband would attend medical appointments for X when he was on sick leave. He had flexibility in his work in later years. His parents had looked after the children while she worked. Her parents also later gave them assistance. Between 2008 to 2011, the paternal grandparents looked after the children three days a week. The mother conceded the husband had been a loving father and loves the boys. She said he was not so good, however, at assisting the children.
When X was diagnosed at the age of three, she sought to educate herself to help X. She was diagnosed with depression for a few years but was getting treatment. The husband had been supportive at the time. The husband was always supportive of X receiving therapy, but she was the one who was responsible for effecting it. The father came to almost all paediatrician appointments, but not the psychologist appointments, which were more frequent. He went to more school appointments and the like from 2014. He did more school camps because she was working. There has been shared care since separation. This was based on her hours of work. X needs help to get to school which is why they have a shared care arrangement.
She does worry when the children are in the father’s care, although he does love the children. They want time with both parents, and it is about keeping a routine for the children. COVID had been problematic in this regard. She would like to adjust the time spent in school holidays. She obtained an intervention order against the husband, and he came to collect his property after the intervention order stopped. He has returned to collect chattels. There are a number of items of furniture remaining in the property. There are 10 televisions, some of which are not operable. When it was put to her that it was fair for the husband to have more furniture, the wife said he had already collected lots of it. She conceded he could come and get some more.
It was put to the wife that the husband only returned to the family home once after separation, but the wife denied this. She said he had also been given documents at the police station. He had come with his brother and also with a nephew and also by himself. She undertook to provide a list of chattels the husband could have. Motor Vehicle K is not driveable. She has paid the registration for the last two years, but it is not worth $4,000. She had bought Motor Vehicle L with a loan from Mr G. On occasions, Mr G had taken it in for servicing and she repaid him. She retained the carer’s pension, because the husband does not pay anything. She was in receipt of $64.90 until May 2020. She now pays child support. She does not receive rental income. The husband moved in with his mother after separation and the wife volunteered that he receives a carer’s pension. She does not know his financial arrangements.
The husband managed the rental properties during the relationship and after separation. The husband says the excess rent was $9,000 to $10,000 a year. The husband was, in her view, in capable of working. The wife was keen, in my view not to give the husband credit for the various health difficulties and work-related problems that he has.
The wife has been in a relation with Mr G for four years. They met in 2017. It was a committed relationship. She told the husband she intended to marry Mr G, but only under duress, being in the presence of a number of his family members. Mr G and she visit each other two to three times per week but they do not stay overnight. They stay at each other’s place fairly regularly. There is an agreement about the car loan. Apart from that, she receives no other help. She has had some assistance with legal fees from Mr G. They do not intend to live together. They want a separate environment for their children. Mr G is also involved in family law financial proceedings.
The wife was pressed about discovery. She agreed that there was no will from her father. All his property passed to her mother when he died. They could not locate a will, and her mother says there is no will. She asked her mother, and the mother said she had no will. I should interpolate and say I found the witness’ answers in this regard convincing.
The wife denied that there was a foreign bank account and pension in Country M. She had never worked in Country M, although she was a dual citizen. She owns no land in Country M. She provided title search of a property at Town N. She had done to the best of her abilities. It is her mother’s land. She said it had not been transferred to her “hand on heart.” The husband had taken all her employee contract documents. There had been no change since separation, and she provided her superannuation payment that morning.
The wife was cross-examined about paragraph 10 of her trial affidavit (this dealt with withdrawals from the children’s bank accounts). It was put that both she and the husband had to sign, and she agreed. She said she had never received any funds. She countersigned to enable the funds to be withdrawn. The husband told her where the money was to go, but there was no transparency where the money went. She had read that the husband said that $32,000 was applied to the NAB credit card. It is a credit card in his name. She had removed $9,900 to pay Pearsons Lawyers and also car insurance, together with traffic fines at $400. When it was put to her that they used the children’s bank accounts as their own, she could not answer. He was in charge of the day to day finances. Those accounts were also used to buy the flats in Suburb D. When it was put to her that $10,000 had been spent to get the flats ready for sale, the wife said that that was what the husband had said.
The wife conceded she had appointed two experts to review the accounts involving the investment properties. The first, by Mr O, was not relied upon and a new one was done. She denied that this was because she disliked the Mr O report. She rarely accessed the rental accounts. She did have access to them. The joint NAB account, involved dental payments for X and schoolbooks for Y. She wishes to keep the home and her superannuation. It is almost a fifty-fifty split. She has asked about a mortgage but cannot get one. The bank said no, because of the joint liabilities. She has no spare money. She conceded there could be capital gains tax if the Suburb B property was sold. She had not discussed with Mr G obtaining funds to buy her husband’s interest in the matrimonial home and was aware the court might sell the home. She noted that the children were familiar with the parental grandparents’ home.
In re-examination, the wife confirmed that she had been under considerable pressure when she said she would marry Mr G.
The Evidence of Mr G
Mr G adopted that his affidavit is true and correct.
Under cross-examination, Mr G confirmed they had been in a relationship since 2017 when they first met. They are seeing each other but have not given any formal commitments yet. They have not spoken about marriage. He has family proceedings on foot, but they are not before this court. He and the wife socialise together when time allows. Sleeping over is irregular but is mainly when she stays with him. He advanced a car loan to the wife and loaned her legal fees, but she paid him back. He has twice taken her car in for service and she repaid him the same day. When it was put that the wife could rely upon him for financial support, Mr G said, “To a certain degree.”
At this point, the matter had to be adjourned for some period of time, not least because the parties had wasted time in abortive negotiations. When the matter returned to Court a week or so later, the wife sought to call Mr J. I indicated that I would determine whether or not to admit Mr J’s affidavit into evidence as part of my judgment.
The Evidence of Mr J
Mr J is a Chartered Accountant who adopted his affidavit as true and correct.
Under cross-examination, Mr J agreed that auditing was not listed in his recent work experience. He had undertaken auditing in the 1980s but gave it up in about 1987. He had undertaken an audit of the figures presented. It was not an audit in the fuller sense to which he had referred. He only examined the material as provided in the transaction history and compared this with credit cards. This took a week. It was a very short time, but his office was not open. He had received a letter of instructions from the wife’s solicitors. He first said he had no other instructions. When it was put to him that his various tables did not have corresponding dates he said the dates were shown on bank statements. He conceded that table 1.5 had no dates, but said that all the amounts were compared to bank statements which were dated. Mr P provided the bank statements to him. Mr P’s documents had not identified what he had to do. He instructed Mr P as to what he needed to do the audit. Bank statements showed which payments were personal or rental. The real estate agents gave him. This was Real Estate Q at Suburb R. The real estate documents were not provided. He started the audit on 1 February 2019, although separation was on 21 February 2019.
Matters on 26 February affected his report. It emerged that Mr P had given extra instructions about the date of separation. When challenged about matters on page 12 of his report, to do with loans from the children’s bank accounts, Mr J said this was part of an interview he had had with Ms Qale (the wife). There had to be an interview for the engagement. He is now the wife’s tax agent or accountant. Indeed, he seeks to do this with the husband as well. He had discussed the matter with the wife. To be an expert he has to be a tax agent.
He met the wife over the phone. There are no ongoing emails. There were quite a few emails from Mr P. His views about the attempts of husband to repay set out on page 13 of 22 of his report came from emails from Mr P. The children’s savings are not part of the asset pool. He had not been told the parties swapped moneys to maximise interest receipts. When it was put that both parties withdrew funds from the children’s accounts after separation, being $6,000 in April 2018 and $10,000 on 7 June 2018, Mr J said these applied to the NAB account of the husband on which the wife was a secondary card holder. They were being used for repairs and the like.
He agreed that the wife had put $9,900 on her of legal expenses on the credit card. He also agreed that motor vehicle payments and traffic fines had likewise been paid. It was a good reconciliation. Being asked why no funds were attributed to the wife, Mr J said the actual statements were incomplete in respect of the husband’s credit cards and statements. These had been requested but not given. When asked by the $9,900 legals had not been included in his report, Mr J temporised and said he did not have Mr Qale’s statements. There was nothing he could state but what he was told. There would be a charge back for $9,900 from Ms Qale. You have to be as unbiased as you can be. He understood the requirements for expert witnesses. He hopes to get two clients out of this but has not spoken to the husband at all. He was aware that three properties were sold. When it was put that there were marketing costs of $10,000 which used the children’s accounts Mr J said he did not receive the missing statements. When asked about $420 worth of fees in February 2018 he said he might have seen it but it was not in dispute. He confirmed that table 1.10 in his report was prepared from phone calls and emails with Mr P. When it was put that the husband was required to draw down the funds to meet the mortgage and expenses when the investment properties were not tenanted. Mr J said he was aware this was the husband’s case – he was aware that there were some vacancies. He was aware that the Suburb B rental paid all expenses on the property. He could see no income received when the Suburb D property was vacant. When it was put to him that he had included interest charged by the bank as income for the husband, he was unable to say. He appeared to equivocate and deny this. When he was challenged with table 1.5 including as redraws figures which were interest charges he was unable to say. He did not recall the husband as referring to cash deposits. The husband received requests for information.
The Opening and Evidence of the Husband
Counsel traversed the parties’ ages and the relationship. She noted that the husband had doctorates. He receives about $10,000 in rentals plus a pension and has not re-partnered. Counsel traversed the relationship between the wife and Mr G and the history of the birth of the children and their health. The husband obtained a redundancy of $90,000. The wife works at Employer S part-time. X was diagnosed as autistic at the age of three and receives NDIS funding. Y has Asperger’s. The equal time regime was not going to change. The husband suffered from major depression arising out of bullying and ceased work in December 2016. He had previously earned $130,000 per year but his compensation claim was refused. An appeal to the Federal Court had been unsuccessful. Three of the five investment properties had been sold. There was $114,095 in trust. The husband always managed the properties. There had been drawdowns on the equity of the properties. The husband sought 56 per cent of the non-superannuation and an equalisation of superannuation. The six per cent was to reflect the husband’s poor employment prospects.
The husband was called and adopted his affidavits as true and correct
By leave in evidence-in-chief the husband noted that the wife now has to pay him $120 per week in child support. He has not worked since 2016 but has tried to get work. Even during the COVID the previous year he had been seeking work. He had applied many times. His industry has dried up. He tried to retrain and undertake a masters in IT last year. When he calls for jobs, he does not hear back. He had not taken $176,000. This was impossible. The children’s accounts was agreed. $10,000 was spent by her on her lawyers. The credit card was used a lot for everyday shopping by the wife. She paid her traffic fines on it. It was hard to follow Mr J’s report. He had added interest charged by the bank. $10,800 and $2,400 was paid for settlement of C Street. He needed money to conduct his case. The money was meant to meet monthly payments (it should be noted that the husband’s answers to these questions was not really necessarily directed to the questions put and struck me as self-serving).
Under cross-examination, the husband said the wife had no involvement with investment properties which he managed. He conceded that the wife removed herself from the credit card in about May 2018. He appeared to concede that the wife had spent $1,900 on Pearsons Lawyers on 28 February 2018. She had paid $3,396 to Vic Police for fines on 3 March 2018, and to further payments to Pearsons Lawyers also in April 2018. When it was put to him that these were the only times the wife accessed the card after separation, the husband was adamant in his denial. He had been through the records. There were day to day expenses such as petrol. After she removed herself, the reports went from five pages to two. When asked how much had been spent from separation to 25 May, the husband said, “At least $10,000 had been spent on shopping.” It was hard to say who did what. Her legal expenses were $9,900. The total could be $25,000. That was when they used the children’s accounts to pay the credit card.
Detailed cross-examination took place about the account but the husband did not concede who expended the funds on that account. When he had looked at her bank accounts, it was difficult to say how much she had taken. It was put to him that from separation until now, the husband had extracted $166,430. He denied this and said it was impossible. Every line item had been accounted. When it was put that there was $10,181 rental advance from C Street, the husband agreed and said this was used to pay for bills. There was no rent coming in and the bills were sent directly to him.
The husband agreed that there was a 2014 Comcare claim. Dr T gave evidence before the AAT. When it was put that Dr T’s evidence had been accepted, the husband said there were a number of reports, including 10 psychiatric reports, all of which came to the same conclusion. It was put that Dr T had said he would put be off work for at least three months. The husband agreed and said he had done several return to work plans since. He had undertaken two weeks work in 2014.
When pressed as to when he had last actually attended work, the husband's answer struck me as being extremely prevaricating. He said he left at the end of 2016, taking a voluntary redundancy of $95,000. He had several returns to work and was physically at the base. The 10 medical reports suggested he had major depression with anxiety, but some said he could return to work. He went on to say that a return to work program had been months towards the end of his employment. He moved to a different part of Employer A work to the last day. This was reduced hours but almost full time.
Depression was much worse when these proceedings started. He wants to go back to work. It was put to him that he had only changed his position when the wife got the report of Dr T, but the husband denied this (in my view, completely unconvincingly). He said he is looking after the children on Monday, Tuesday and Wednesday and it would be difficult to work. He is trying to get work but is aged 50 and still depressed. He said he had major depression in June 2020, and his doctor said he is not fit for work. He did not agree that he had told Dr T that the wife did most of the household duties (something that is entirely clear from Dr U's report that he did say). Dr T's report was tendered as exhibit A1.
The husband conceded that he was a post-doctoral supervisor in 2000 to 2003 at University V. He became an employee at Employer A in 2012. This was a demotion. He came back to Victoria to help the wife. He was promoted in 2012. It had a very small management component. He was offered other work as return to work. He has an honours degree and two PhD’s. There are no jobs that require that level of expertise. He cannot obtain university employment.
The husband confirmed that his mother changed her will after separation on 13 April 2018. He is no longer a beneficiary but was one third beneficiary prior to that. He said it was his mother's choice and she can decide. He took her to the lawyer and they discussed the matter in private. He denied suggesting that he made his mother change her will. When it was put to him that he had paid for it, he said he had paid and his mother repaid him. He pays all his mother's bills and she pays him back in cash. The husband said that his mother had said it was better to leave his share of her property to the grandchildren. She might have been worried could have been consumed in these proceedings and it was better to leave to the grandchildren. His mother's stroke was later on in the year in September.
In re-examination the husband confirmed he had not seen Dr T since 2014.
Final Submissions from Counsel for the Husband
Counsel referred to the simplified property pool. No objection was taken to this document and I note it includes the husband’s higher estimate of GST. Counsel noted that each party had made allegations about likely inheritances. The wife’s father had died but there was no proof as to what happened to his property. The maternal grandmother has not made a will, but the entirety of her estate was not in any way certain. The husband’s mother will not include him in her will. It was submitted that the husband was forthcoming to the point of being prolix but was, nonetheless, credible. The wife was also at times reliable, but was rigid in her view of the proceedings. She was rigid about add backs. First, she obtained the report from Mr O, which was not relied on. Mr J’s report had only been filed in January. Counsel relied on the written submissions filed about Mr J’s evidence. Mr J admitted that he had received instructions in excess of those indicated in his report. He had had a conference with the wife and had had conferences with the solicitor. He had admitted not being an auditor since the 1980s. He hopes that the wife will become his client. He was not independent.
The husband admits spending $10,000 on legals, but the wife has spent the same. He also admits $10,000 that he had expended on the purchase of a new car. The husband had answered the expert reports with the tender bundles submitted. He had used rental of approximately $10,000 per year for living since separation. Both parents care for the children. Under cross-examination the wife admitted that the parental grandparents cared for the children for three days a week for three years. The wife got Government benefits for X until May 2020. The recent payments of child support to the husband are, indeed, only recent. The husband managed the property portfolio. He contributed his redundancy of $90,000. The wife had been in the matrimonial home for three years. Counsel referred to the case of Palumbo & Mandel [2019] FamCAFC 228 at [102] where the Full Court made observations about the weight to be allotted to occupation of the matrimonial home by the wife exclusively. Counsel submitted that the parties’ contributions were equal.
Counsel submitted that the future needs component justified a six per cent adjustment in favour of the husband in respect of non-superannuation. The wife has stable employment, earning some $65,000. There was no evidence about her capacity to refinance and no materials filed from any bank, even though the wife has deposed to being unable to obtain bank assistance. The wife has the assistance of Mr G, but the husband has not been employed since 2016 because of his depression and anxiety. The husband worked in a highly specialised field. He had problems at Employer A and he also has the care of the children on Monday, Tuesday and Wednesday. It was not just and equitable that the wife should be permitted to keep the matrimonial home at all costs. The husband cannot refinance. He seeks to retain the funds in trust in the sum of $114,000. He proposes an equalisation of superannuation. If this was not the case he would only obtain $40,000 of the pool.
Final Submissions from Counsel for the Wife
Counsel emphasised that the proceeding was all about one child. X is autistic and has a connection to the home and neighbourhood. Annexure 6 to the wife’s trial affidavit is the psychologist’s letter to which I have earlier referred. The husband would get $830,000 if he sold the investment properties and would also receive $114,000 in trust. Even with capital gains tax liability, the husband would still obtain about $900,000 and he could still obtain a job. He is unemployed, but has no medical pension. Depression, it was submitted, is known not to be permanent. There is no evidence that he is permanently incapacitated. The contributions were equal, but the wife’s homemaker contributions have increased from 2014 onwards. Mr J’s report was independent and should be accepted. Counsel pointed to the changes made to the husband’s mother’s will after separation. Add-backs would lead to there being no payment to the husband. There should be an equal distribution of all assets and if there was any adjustment necessary it should be out of superannuation.
Brief Comments about the Credit of the Parties.
The wife was, in the main, a solid witness. Her evidence about her endeavours to inform herself about X’s autism were clearly true. In the main, she answered questions directly and responsively, although, as early indicated she was somewhat lacking in charity towards the husband’s difficulties. She is plainly very fixated on keeping the family home for X’s benefit and, indeed, counsel’s closing submissions reflected this. She was, to my way of thinking, overly keen to play down the extent of her relationship with Mr G.
Mr G was an excellent witness. He answered all questions put to him directly and responsively and it not necessary to say more than that.
Mr J impressed me as somewhat ingenuous. His touching desire to obtain two clients out of the process of being an independent witness is extraordinarily naïve in the circumstances where he is giving evidence designed to fix one of his proposed clients with $174,000 worth of debt. He was unable to answer a number of the questions put (this being a matter I will return to in more detail when I consider the admission of his report).
The husband was a much less impressive witness than the others. His answers, as already indicated, tended to me to seem to be somewhat self-serving. He was evasive and self-pitying, albeit that it must be remembered that his ill-health is a matter for sympathy and not for criticism. While professing a lack of understanding about the wife’s expenditure on the credit card, he seemed to me nonetheless to have a very precise command of the relevant dates. A number of his answers were non-responsive and/or prevaricating. This was particularly the case in relation to his work history, where I formed a clear view that he had been almost completely absent from work from 2014 onwards, but, for some reason was very keen to suggest otherwise. His attacks on the wife having conducted the majority of the housework are completely debunked by Dr T’s contemporaneous notes.
Stanford & Stanford (2012) 247 CLR 108
The Court’s first task is to identify the legal and equitable interests of the parties and determine whether a property adjustment is just and equitable. At one level of analysis, it might be thought that the answer to this proposition would be negative. In a sense, the wife is seeking very much to ensure that the parties retain that which they already possess. In truth, however, both parties in substance do seek a property division. The basis upon which they ran their financial affairs as a couple has altered extremely radically and it is plain that it is just and equitable that there be an adjustment.
The Property Pool
Despite some momentary vacillation during the currency of the hearing by counsel for the wife, the document marked for identification, is plainly an agreed document. This lists the parties property pool as follows:
a)W Street, Suburb AA, $1,450,000.
b)Investment property at H Street, Suburb B, $745,000.
c)Investment property at C Street, Suburb D, $500,000.
d)Proceeds of sale of other real estate property in Suburb D, $114,095.
e)Shares, $1,047.
The liabilities of the parties are:
a)Mortgage over H Street, Suburb B, $264,618.
b)Mortgage over C Street, Suburb D, $150,044.
c)Federal Court costs (the husband's unsuccessful appeal during the marriage), $15,000.
Additionally, the parties have superannuation:
a)Wife's superannuation, $268,433.
b)Husband's superannuation, $577,638.
Although there was some passing mention of inheritances, I would have no hesitation in excluding them from the pool. There is no satisfactory evidence to satisfy me that the wife will inherit any particular amount from her family, and likewise the husband. I think, however, and contrary to their denials, that each of these people may inherit in the future, but it is wholly impossible to say how much.
I note that the parties included their cars, but they are simply not of sufficient value, in my opinion, to be appropriate for inclusion in the pool. If they sell them, they will simply have to buy another.
I also note that if they property in Suburb B is sold, there will be some capital gains tax liability. The estimated $62,943 put by the husband is based upon tax at 47 per cent, which in the circumstances of each of these parties seems to me unrealistically high. Both parties are in the 32.5 bracket, (up to $90,000).
The shares are of minimal value. They should be sold and the funds received divided equally.
Contribution
As indicated, I will come to Mr J's report momentarily.
Looked at overall, which surely is the position that the court should adopt in relation to contribution, this was a relationship of some 16 years in which the parties had nothing of any great moment at the time the relationship commenced and in which by their joint endeavours they now own three properties and, indeed, have owned others as well. The husband did of course contribute his $90,000 odd redundancy, but he did not work after December 2016 and it is not clear whether he was on full pay before that. There is no doubt that the husband earned very substantially more than the wife throughout the relationship, and there is no doubt in my mind that the wife was the primary caregiver and homemaker.
That was her evidence and, indeed, it is supported by the disclosure made to Dr T. The wife, however, worked part-time for not insubstantial periods of time during the relationship, albeit that this was assisted for at least three years in part by the assistance of the paternal grandparents. The mother has given evidence, which I accept, that she was more engaged, so to speak, in coping with the problems occasioned by the children’s disabilities (Asperger’s is also, after all, a disability although little has been said about Y’s level of functioning). She was the one who educated herself more completely about autism, made and went to all the appointments and so on. That does not say the husband did not attend at all, as he plainly he did do so, but looked at overall the picture could scarcely be clearer.
Balancing all these matters up together it is, in my view, perfectly plain that the parties both contributed as best they were able on all fronts. The husband, of course, ran and managed the investment properties and this is greatly to his credit, and the wife was making more of an effort on the home front. It is important to remember, as the High Court pointed out in Mallet v Mallet (1984) 156 CLR 605, that the wife’s contributions should not be assessed at a tokenistic level. In my view, looking at the matter overall it is abundantly clear that the contributions should be assessed as equal.
The Evidence of Mr J and the Add Backs
There is no getting around it. Mr J was not a satisfactory witness. He impressed me as being an extremely pleasant individual, but he has not done auditing for a very long time. Even accepting, as I do, that really what he was being asked to do was simply to compare the figures in the source documents with the other matters given to him, rather than conducting an audit in the full sense of checking the validity of the underlying assumptions and so on, his report is seriously flawed. First, he was not, in truth, independent. He had referred to the wife as Ms Qale. She is now his client. Whether some formal arrangement has been put in place to reflect this I do not know, but he plainly sees her as a present, future, and hopefully continuing client. His hopes to engage the husband in the same fashion are misconceived for the reasons I have expressed.
Not only was he not independent in the sense that he was too close to the wife, but he had had a conversation with her and numerous conversations with Mr P I think (and texts and the like as well), which gave him additional information which his report did not disclose. This is no mere matter of methodology. Expert reports are expected to be rigorous in their compliance with the expert witness rules. On any view of the matter, Mr J’s report does not meet those standards. This, in my view, is in and of itself enough to cause me to reject it. However, that is not the end of the matter.
There is no question in my mind that the report in part at least allots moneys to the husband as being abstracted by him when they include things like interest charged by the bank. Furthermore, the husband has given a number of tender documents. Although I will make it clear I have not endeavoured to try and undertake a forensic accounting process myself, this bundle appears to suggest that a very substantial amount of the moneys that he is said to have abstracted were, in fact, not so abstracted.
In circumstances where the document has been before the court and the witness has been cross-examined, I think there is practical utility in striking Mr J’s affidavit and report in its entirety. I note that there are difficulties in reconciliation caused by the way he sets his tables out, and some of the tables appear to have been derived solely from information given to him behind Mr P. This only adds to the difficulties that his report represents. In all the circumstances, I propose to leave the report on the court file, but the weight I propose to give to that report is, in effect, nil.
Add-backs
The husband has deposed that they, he and the wife, withdrew $56,000 from the children’s accounts following separation. He has deposed that $32,000 of this was applied to what, in effect, was their joint credit card. I accept that the wife did not get any of this money. That was her evidence, and I believe it. It was given with conviction. That of the husband’s was not. That leaves a shortfall of some $25,000 (rounded off), which might remain otherwise unexplained. The husband has deposed, however that some of these funds were applied to the sale of properties. I found his evidence convincing. $10,000 was applied to ready two of the properties that had been sold for sale. That still leaves a $14,000 shortfall.
It should be noted that these are figures over and above the net rental gains that the husband admits receiving on an ongoing basis. In my opinion, the $14,000 should be added back.
While the wife has remained in the matrimonial home, which has been unencumbered since separation in 2018, she has paid all utilities and associated bills. In my opinion, a loading in the husband’s favour in this regard is inappropriate, especially given the relatively restricted amount of time with which we are concerned. The husband, after all, lives rent free with his mother and does not appear to defray any of the expenses of the household, save to the extent that he makes advances, which his mother then repays.
The Future Needs Factors
The wife has a salary of around about $65,000 per annum. While she is obviously in a relationship with Mr G, I found Mr G's evidence, as I have said, impressive. They are not a conjoint family unit and do not have joined finances. Doubtless he might be available to give her interim assistance, as he did when he leant her the money to buy her car and, in the first instance, repay some legal fees. Nonetheless, I am not prepared to find and expressly do not find that the support of Mr G alters the wife's financial future in any material way.
The wife will continue to have the care of the children for half the time, and her capacity to work any more extended hours is going to be very significantly limited by the very proper and selfless commitment that I find she makes towards the benefit of X and Y.
The same to an extent can be said of the husband. His evidence to the effect that his skills are so specialised that they could now only really realistically possibly offer him work in City BB or City CC was given with conviction. Despite his obviously very considerable academic intelligence, his work seems to have been highly specialised and most unlikely to be repeated.
Against this, I formed the clear impression that to an extent the husband is waiting for these proceedings to be over before moving on his life. He complains that he may not be able to re-establish himself, but in circumstances where he lives with his mother and the home is one well-known to the children, it seems to me more probable than otherwise, having heard and seen him give his evidence, that he will stay there for a considerable period of time. I also suspect that one way or the other his family will sort out his mother's estate to their mutual satisfaction. I emphasise, however, that there is no direct evidence as to this, save the clear evidence, as I find it, the husband, at the very least, aided and abetted his mother's immediate change of her will when separation took place.
Given his intellectual capacities, the husband will have no difficulty retraining. He could do so, one would assume, in any area requiring some kind of science based professional intuition. While he says that at age 50 his phone calls are never replied to, I did not find his evidence about seeking work convincing, and I think that in time he will find remunerative employment despite his present difficulties.
The husband is a devoted father and will doubtless continue to look after the children for his half-share of the time and this will make work more difficult for him to find albeit perhaps slightly less so than the wife who works Monday, Tuesday, Wednesday. The husband’s care is Thursday/Friday so far as working days are concerned.
Calibrating all these matters together and noting the parties’ similar age, in my opinion, there should be no adjustment in favour of either party in respect of future needs.
Just and Equitable
The mother’s case was strongly focused on keeping the matrimonial home for X. The split she seeks of the parties’ property is very much one designed to achieve this end and everything as it were works back from there.
In the particular circumstances of the case, where the mother’s assertions as to the benefit to X of staying in the same property (which have some measure of professional support) is significant, if she can properly remain in the matrimonial home it is desirable that she do so.
I have calibrated the 50 per cent of the total pool that the husband should, in my view, receive. It would seem that if superannuation is maintained within the pool as part of the single pool, the result the wife seeks may be attainable. The husband’s insistence on an equalisation of superannuation (against his own immediate interest) is plainly designed to make sure that he receives as much cash as possible. If he receives both the investment properties and pays out the mortgages he will have approximately $830,000 left over and even after capital gains tax will have most of that funds. If he obtains his superannuation as well, he will have approximately $1,410,000. With the $14,000 addback, of course, that goes up to about $1,425,000.
In my view, and noting the likely overestimation of the capital gains tax (which will benefit the husband if he gets the investment properties) the result would produce a shortfall to the husband of about $160,000 (see attached schedule).
It is of course by no means certain the husband will sell both properties, as it seems he can live with his mother as long as he wishes.
I will give the parties an opportunity to consider these reasons for judgment and will hear them further as to the precise orders to be made.
I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of Judge Burchardt
Associate:
Date: 19 March 2021
SCHEDULE
A.Assets
Matrimonial home
$1,450,000
H Street Suburb B
$745,000
C Street, Suburb D
$500,000
Proceeds sale other properties
$114,095
Husband’s addback
$14,000
Husband’s superannuation
$577,638
Wife’s superannuation
$268,433
TOTAL ASSETS:
$3,669,166
B.Liabilities
Suburb B Mortgage
$264,618
Suburb D
$150,044
Federal Court Costs
$15,000
Capital Gains Tax
$62,938
TOTAL LIABILITES:
$492,600
C.The pool found by the Court:
i.$3,669,166 - $492,600 = $3,176,566
x50% = $1,588,283
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2
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