Rabino & Rainsford (No. 2)

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FAMILY COURT OF AUSTRALIA

Rabino & Rainsford (No. 2) [2021] FamCA 551

File number(s): BRC 4468 of 2019
Judgment of: BAUMANN J
Date of judgment: 29 July 2021
Catchwords: FAMILY LAW – PROPERTY – Dispute as to what constitutes the pool of interests – non-vested severance pay – ‘add back” for alleged excessive post separation expenditure – further submissions as to what orders achieve justice and equity required
Legislation: Family Law Act 1975 (Cth) ss 79, 75
Cases cited:

Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337

Chorn & Hopkins (2004) FLC 93-204

Clauson & Clauson (1995) FLC 92-595

Hickey & Hickey (2003) FLC 93-143

Line and Line (1997) FLC 92-729

M & M [1998] FamCA 42

Omacini & Omacini (2005) FLC 93-218

Rabino & Rainsford [2020] FamCA 142

Rix & Rix [2020] FamCA 165

Sand & Sand [2012] FamCAFC 179

Stanford & Stanford (2012) 247 CLR 108

Townsend & Townsend (1994) 18 Fam LR 505

Trevi & Trevi (2018) FLC 93-858

Watson & Ling (2013) FLC 93-527

Number of paragraphs: 89
Date of last submission/s: 15 May 2020
Date of hearing: 14 and 15 May 2020
Place: Brisbane
Counsel for the Applicant: Mr P Hackett
Solicitor for the Applicant: Hirst & Co
Counsel for the Respondent: Mr R Maurice
Solicitor for the Respondent: Fox & Staniland Lawyers

ORDERS

BRC 4468 of 2019
BETWEEN:

MS RABINO

Applicant
AND:

MR RAINSFORD

Respondent

ORDER MADE BY:

BAUMANN J

DATE OF ORDER:

29 JULY 2021

THE COURT ORDERS:

1.That these proceedings be adjourned for pronouncement of final property orders at 10.00am on 18 August 2021, for further submissions and if possible the pronouncement of orders, in the Family Court of Australia at Brisbane.

2.That within seven (7) days of the date of this Order, the wife provide to the husband’s solicitors a draft minute of order consistent with the Reasons for Judgment delivered 29 July 2021.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Rabino & Rainsford has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

BAUMANN J:

INTRODUCTION:

  1. The property dispute between the Applicant wife, Ms Rabino, and the Respondent husband, Mr Rainsford, raises some interesting and unusual issues about what interests exist and are available for division or alteration by Court order.  As these Reasons demonstrate, some of those issues arise from the somewhat unique employment of the husband overseas, and some are from the fact that although the parties separated, I find, around December 2016, evidentially since the wife and the children returned to Australian in January…

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Details
Case
[2021] FamCA 551
Decision Date

CaseChat Overview and Summary

In *Rabino & Rainsford (No. 2)*, Baumann J of the Family Court of Australia considered a dispute between Ms Rabino (the applicant wife) and Mr Rainsford (the respondent husband) concerning the division of their property. The primary issues before the court were whether a non-vested severance pay entitlement should be included in the asset pool, and whether to "add back" certain post-separation expenditures made by the husband.

The court was required to determine the legal characterisation of the husband's prospective severance pay. Specifically, it had to decide whether this entitlement, which had not yet vested, should be treated as property to be included in the asset pool for division, or as a financial resource to be considered under section 75(2) of the *Family Law Act 1975* (Cth). Additionally, the court needed to assess whether the husband's post-separation expenditure of his income warranted an "add back" to the asset pool, thereby reducing his share.

Baumann J reasoned that the husband's severance pay entitlement, while not yet vested, was a certain future event contingent upon the cessation of his employment. Distinguishing the facts from *Sand & Sand* [2012] FamCAFC 179, the court found that the entitlement, based in part on years of service accumulated both before and after separation, should not be ignored. Consequently, the court determined that the gross severance payment of approximately $547,635 should be included in the property pool. Regarding the "add back" of post-separation expenditure, the court noted the wife's contentions regarding the husband's income and withdrawals, but ultimately concluded that the husband had not engaged in conduct that would justify an add-back, particularly given his ongoing support of the family unit and the wife's own income.

The proceedings were adjourned for the pronouncement of final property orders, with directions for the wife to provide draft minutes of order consistent with the court's reasons.

Orders

Orders of the court

BRC 4468 of 2019

BETWEEN:

MS RABINO

Applicant

AND:

MR RAINSFORD

Respondent

ORDER MADE BY:

BAUMANN J

DATE OF ORDER:

29 JULY 2021

THE COURT ORDERS:

1. That these proceedings be adjourned for pronouncement of final property orders at 10.00am on 18 August 2021, for further submissions and if possible the pronouncement of orders, in the Family Court of Australia at Brisbane.

2. That within seven (7) days of the date of this Order, the wife provide to the husband’s solicitors a draft minute of order consistent with the Reasons for Judgment delivered 29 July 2021.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I note that the case summary was prepared before the evidence at the hearing had been tested and by final oral positions, the husband’s position was that although the husband agrees he will get a severance payment at some time in the future, it will come from H Company and it should not be arbitrarily included in the balance sheet (as the wife contends) but should be regarded as a ‘financial resource’ within the matrix of s 75(2) factors of the Act. CONCLUSION ON THE SEVERANCE PAY At the time of the trial, although the husband commenced by saying he was employed at that time by H Company UK, other documentary evidence suggests his employment with H Company was still intact (see Exhibit 8) – although it is intended he “transfer” to the UK entity and work under Mr J in the longer term. The significance of his employment with H Company ceasing is that, as conceded by Mr Maurice, the condition for payment of the severance pay is then satisfied. I am satisfied, by the delays and initial failure of the husband to make timely and full disclosure of his changing contractual arrangements, that the Court must be cautious in accepting the husband’s evidence about not if, but when, the severance payment is payable. The lump sum payment, for both the husband and wife, represents a sizeable sum in the context of the remaining pool. As earlier noted, I am satisfied that the entitlement, based in part on the years of service, accumulated both to the time of separation and thereafter, that it would not be just and equitable for the gross payment of around $547,635 to be ignored. Mr Maurice for the husband says the future entitlement, not having vested, should be treated as a financial resource to be considered within the matrix of the s 75(2) factors. Mr Hackett for the wife says it should be treated as property and included in the pool. Although Mr Maurice relied upon the decision of Coleman J (sitting as the Full Court) in Sand & Sand [2012] FamCAFC 179, for the proposition that “the expectation of a severance payment is not property within the meaning of the Act”, in my view, the facts of Sand & Sand are distinguishable. In Sand & Sand, the trial Federal Magistrate had quantified the property pool at $7,855 but because of the inclusion of a sum of US$171,894.56 as “notional” property, which had once existed, and should have remained in existence, the Federal Magistrate made an order in favour of the Respondent of $120,000. In this case, the husband’s entitlement will vest upon the cessation of his employment with H Company – a certain event as a result of his (at the time of the hearing) pending employment with H Company UK. Accordingly, I find the right or entitlement to the severance payment does exist, although the actual date of vesting (and the possible end quantification) is not certain (see Sand & Sand at [53]). Furthermore, the circumstances of the husband’s decision – essentially forced upon him – to take up the offer of employment with H Company UK because of his inability to fly, means the payment to the husband is available in the foreseeable future. As I discuss below, this may be one of those unusual cases, where the power to adjourn the pronouncement of final orders pursuant to s 79(5) of the Act, is enlivened.

Ratio Decidendi

Legal Principle Established

As a result, no LOJA payment will be included in the pool of assets.ADDBACK FROM HUSBAND’S POST SEPARATION INCOME The husband’s evidence as to post separation income available to him is:(a)his income during the period from separation (taken to be December 2016) was $1,326,400;(b)after identifying what he had paid towards the maintenance of the wife and expenses for the family home (including the mortgage), he estimated that he had paid a total for the period of $517,578 for the wife’s benefit; and(c)he paid school fees for Mr P of $76,508 and for Ms O of $62,098. At paragraph 227, the husband calculated that he therefore “had income of $670,276 since December 2016 to use for my own expenses, including the support of my wife and adult daughter”. As a matter of law, the husband has no legal duty to support Ms O who, at the time of the hearing was an adult and was living in the United Kingdom. She was estranged from her mother at the time. The husband has a duty to support his new wife who lives in the United Kingdom. Mr Hackett submits that the husband has not made full disclosure about the circumstances of their cohabitation. The husband, for example, did not complete Part E or Part F of his Financial Statement affirmed 24 April 2020. He denied his new wife was “wealthy”. Although he had significant credit card liabilities, (totalling approximately $100,000 – see Item 51) at Item 30, his payments of $1,835 per week are higher than the minimum payment required. This is not a case where it can be asserted the husband, whilst generating a steady and good income, did not continue post separation to support the family unit. Furthermore, the wife had, at her disposal, the use of her income of approximately $1,247 per week nett (see her Financial Statement filed 7 May 2020). Over the period since separation to trial, I estimate the wife’s income would have been approximately $200,000 over that period. In final submissions, Counsel for the wife contends that:(a)as revealed in Exhibit 7, the husband’s solicitor by letter dated 29 May 2018 (two years before the hearing), on instructions, informed the wife’s solicitors, summarised at paragraph 7(b)(vi) the following distributions on a monthly basis from the husband’s income:Typically that gives the following:1.Typical pay – 95,700 [LCY]2.Paid to Australia – 82,718 [LCY] (Average)3.Expenses per month – 4,500 [LCY] (Average)4.Remainder = 9,022 [LCY] or $3,176 for travel and other recreational expenses.(b)the husband withdrew cash during the period, often at ATMs at work, totalling $216,654.43 (see Exhibit 6);(c)on the basis of these figures, the wife submits that approximately $370,000 of post separation income available to the husband has been used by the husband without any reasonable explanation, being: On the basis of the husband’s most recent Financial Statement, he has accumulated $100,000 in credit card liabilities with no discernible increase in liquid funds. The total personal expenditure above ($82,280 + $216,654) amounts to approximately $300,000 over 40 months or about 172 weeks, equating to a weekly spend (additional to payments to Australia as allowed) of $1,744 per week. The husband (at Item 32) estimated, without any details, his “other expenditure” of $4,459 per week which is much higher than the allowance the wife is prepared to concede of $1,744 per week.