RAINFORD & RAINFORD
[2020] FamCA 945
•13 November 2020
FAMILY COURT OF AUSTRALIA
| RAINFORD & RAINFORD | [2020] FamCA 945 |
| FAMILY LAW – PROPERTY – Property Adjustment – Where discussion of applicable principles – Relevance of wife’s prospective inheritance – Where parties concede it appropriate to make adjusting orders – Where appropriate to consider a final adjusted pool for division – Where s 75(2) factors considered – Where husband will retain prospective CGT property liabilities – Where not appropriate to further adjust contribution based findings – Where orders made that pool be divided as to 52.5 per cent to the wife and 47.5 per cent to the husband. |
| Family Law Act 1975 (Cth) ss 75, 79 |
| Bevan & Bevan (2014) FLC 93-572 Chapman & Chapman (2014) FLC 93-592 Dickons & Dickons (2012) 50 Fam LR 244 Eufrosin & Eufrosin [2014] FamCAFC 191 L & L [2004] FamCA 1010 Russell & Russell (1999) FLC 92-877 Scott & Danton [2014] FamCAFC 203 Stanford v Stanford [2012] HCA 52 Teal & Teal [2010] FamCAFC 120 White & Tullochv White (1995) FLC 92-640 |
| APPLICANT: | Ms Rainford |
| RESPONDENT: | Mr Rainford |
| FILE NUMBER: | PAC | 2577 | of | 2018 |
| DATE DELIVERED: | 13 November 2020 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 28, 29 and 30 September 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Macpherson |
| SOLICITOR FOR THE APPLICANT: | Lewarne & Goldsmith |
| COUNSEL FOR THE RESPONDENT: | Mr Campton SC |
| SOLICITOR FOR THE RESPONDENT: | Consort Family Law |
Orders
The respondent husband within a period of 90 days to do all acts and things necessary to transfer to the applicant wife all of his right, title and interest in and to property situate and known as B Street, Suburb C in the State of New South Wales being the whole of the land contained in Certificate of Title Folio Identifier … and concurrently with such transfer the wife do all things necessary to refinance or discharge the present mortgage encumbrance secured over the said property so as to release the husband from any liability therefore.
Simultaneously with Order 1 above, the applicant wife do all things necessary to transfer all of her right, title and interest in and to property situate and known as Unit D Street, Suburb E in the State of Victoria and concurrently with the said transfer the respondent husband shall do all acts and things necessary to refinance any the Suburb E mortgage encumbrance secured over or relating to the said property so as to release the wife from any liability therefore.
Simultaneously with compliance with Order 1, the respondent husband pay to the applicant wife the sum of $123,330.
The wife transfer to the husband her interest in the joint Westpac Equity Access Acct #...30.
Superannuation Split
That in accordance with s 90XT(1)(a) of the Family Law Act 1975 whenever a splittable payment becomes payable from the husband's interest in the Super Fund 1 Policy Number …12, the trustee shall pay to the wife or her legal/personal representation an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount of $124,185 and that there be a corresponding reduction in the entitlement that the husband's share would have in the superannuation fund but for these orders.
That the Trustee of the Super Fund 1 (the trustee) shall do all acts and things and sign all documents as may be necessary to:
(a)Calculate in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement of the wife created by Order 4 of this Order; and
(b)Pay the entitlement whenever the Trustee makes a splittable payment out of the Husband's interest in the Super Fund 1 Fund
That order 4 has effect from the operative time and the operative time is four (4) business days after service of the Orders on the Trustee.
That after service of the payment split notice required pursuant to regulation 7A.03 of the Superannuation Industry (Supervision) Regulations 1994, the wife shall do all acts and things and sign all documents as may be necessary, including but not limited to, exercising her request pursuant to Regulation 7A.06 (1) of the Superannuation Industry (Supervision) Regulations 1994 for the rollover or transfer of the transferable benefits out of the husband's interest in Super Fund 1 to a fund of the wife's choosing in accordance with Regulation 7A.12 Superannuation Industry (Supervision) Regulations 1994.
The Court notes that:
(a)The value of the transferable benefit from the husband's interest into the wife's interest is calculated in accordance with Regulation 7A.12 of the Superannuation Industry (Supervision) Regulations 1994;
(b)Pursuant to Regulation 14F of the Family Law (Superannuation) Regulations 2001, any payments from the wife's superannuation interest in the Super Fund 1 made after the trustee has created a new interest in the wife's name in the Super Fund 1 as contemplated by Clause 4 of this Order are not splittable payments; and
(c)The Trustee will be relieved of its obligations to calculate and split payment under Clause 4 of this Order in the event that the transferable benefit are transferred to a fund of the wife's choosing in accordance with the requirements under Superannuation Industry (Supervision) Regulations 1994.
That the applicant wife shall, otherwise, retain to the exclusion of the respondent husband all assets in the applicant wife's name and possession or in trust for the child (Westpac Bank #...98 and Westpac Equities Account #...26) including her Bank Accounts, Motor Vehicle 1, Superannuation and Shares and the Applicant Wife shall be, otherwise, responsible for any liability solely in her name.
Except as otherwise provided for herein these Orders, the respondent husband shall otherwise retain to the exclusion of the applicant wife all Bank Accounts in the husband's name, his shares, Motor Vehicle 2 Registration …, interest in F Pty Ltd, the properties situate at and known as G Street, Suburb H and J Street, Suburb H and the respondent husband shall, otherwise, be responsible for any liability in his name including registered mortgages secured over the properties at Suburb H.
In the event either party refuses to sign any document necessary to give effect to these Orders, then the Registrar of the Family Court of Australia shall sign any document required to give effect to these Orders pursuant to Section 106A of the Family Law Act 1975.
Liberty to apply as to implementation or enforcement of these orders.
All outstanding applications be dismissed.
The matter be removed from the active pending cases list.
All subpoenaed documents produced and all exhibits tendered in these proceedings, be returned at the expiration of one calendar month unless an appeal is lodged.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rainford & Rainford has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 2577 of 2018
| Ms Rainford |
Applicant
And
| Mr Rainford |
Respondent
REASONS FOR JUDGMENT
These are proceedings for final property adjustment as between the applicant wife and the respondent husband.
The parties married and commenced cohabitation in December 1990 and separated in February 2018 under the one roof with final separation in late May 2019.
On final separation the husband moved to occupy the parties’ investment property at J Street, Suburb H (“the J Street property”).
The wife is presently aged 51 and the husband 53.
There are two children of the parties’ relationship, the eldest child now aged 26 and the youngest child now aged 18.
In her Amended Initiating Application filed in July 2019 the wife, in summary, sought property orders to the following effect:
a)that the husband transfer to her his interest in the property situate at B Street, Suburb C (“the former matrimonial home”) and concurrently with that transfer pay all moneys necessary to discharge the Westpac Bank mortgage encumbrance secured over the said property;
b)that concurrently with the husband complying with the previous order the wife transfer to him her interest in the property situate at D Street, Suburb E, Victoria (“the D Street property”) and that the husband do all things necessary concurrently with that transfer to refinance the mortgage secured over that property;
c)that concurrently with compliance with the previous orders, the husband pay to the wife the sum of $150,000;
d)that there be a superannuation split in the sum of $112,000 in favour of the wife from the husband’s interest in the Super Fund 1 superannuation policy and that the wife thereafter rollover or transfer that superannuation split to a fund of her own choice; and
e)that, otherwise, the parties retain such other items of property or personalty in their present ownership, possession or entitlement.
The wife at trial sought orders, in summary, as follows:
a)that the husband transfer to the wife his interest in the former matrimonial home and concurrently with such transfer the husband do all things necessary to discharge the present mortgage encumbrance secured against the said property;
b)that concurrently with compliance with the previous order the wife transfer to the husband her interest in the home unit property (the D Street property) and that the husband refinance the mortgage secured over the said property into his name alone;
c)that the husband pay to the wife by way of further adjustment the sum of $400,000; and
d)that there be a splitting order in favour of the wife in the sum of $125,575 from the husband’s interest in the Super Fund 1 Policy Number …12.
When pressed in oral evidence, the wife confirmed that she wished to retain the former matrimonial home and did not seek any orders that she retain the investment properties in the name of the husband or the home unit property in Melbourne. In the event that the wife was required to pay to the husband an adjusting sum, she had made no enquiries as to where she would be able to source those funds over and above refinancing the present mortgage encumbrance on the home.
The husband, for his part, in his Amended Response filed 14 August 2020, in summary, sought adjusting property orders as follows:
a)that the wife do all things necessary to transfer to him her interest in the former matrimonial home and that concurrently with such transfer the husband refinance the present Westpac Bank mortgage encumbrance into his name alone;
b)that the husband pay to the wife the sum of $556,368;
c)that the husband and wife do all things necessary to list the real estate properties at G Street, Suburb H (“the G Street property”) and the J Street property for sale and that the proceeds of sale after discharge of mortgage and an allowance for the husband’s capital gains tax liability arising from the said sales be paid to the wife.
The husband, otherwise, in the alternative, in summary, sought the following orders:
a)that the husband do all things necessary to transfer to the wife his interest in the former matrimonial home and that concurrently with the transfer the Westpac Bank mortgage encumbrance secured thereon be refinanced into the wife’s sole name;
b)that the wife pay to the husband the sum of $551,483;
c)that the husband and wife do all things necessary to list the G Street property and the J Street property for sale and that the proceeds of sale after discharge of mortgage and an allowance for the husband’s capital gains tax liability arising from the said sales be paid to the husband;
d)that by no later than 30 January 2022 either party nominate should they wish to retain the D Street property and that the party wishing to retain the property pay to the other party half the sum ascertained by way of agreed valuation less the then outstanding mortgage encumbrance and concurrently with such payment the other party transferred his or her interest in the said property to the nominating party;
e)that in the event that neither party elects to retain the D Street property the said property be sold and the net proceeds of sale be paid equally to the husband and wife;
f)that there be a superannuation split in the sum of $100,000 in favour of the wife from the husband’s interest in the Super Fund 1 Company N Plan Super Fund and that the wife thereafter rollover or transfer that superannuation split to a fund of her own choice; and
g)that, otherwise, the parties retain such other items of property or personalty in their present ownership, possession or entitlement.
At trial the husband sought property orders, in summary, as follows:
a)That on or before 1 March 2021 he sell the J Street property and after selling, discharge of mortgage, payment of any CGT liability the net proceeds be paid as to 52.5 per cent to the husband and 47.5 per cent to the wife and that pending sale the husband pay all property outgoings including the mortgage. In oral evidence he indicated that he seeks to sell in late 2021 or 2022;
b)That the wife transfer to the husband her interest in the D Street property that he will retain in the foreseeable future;
c)That the wife pay to the husband $880,000 within 42 days and that concurrently with that payment the wife refinance the mortgage secured over the former matrimonial home and the husband transfer his interest in the said property to the wife;
d)That in the event that the wife does not comply with the previous order, the former matrimonial home be sold and the net proceeds of sale be paid as to 52.5 per cent to the husband and 47.5 per cent to the wife and that pending sale the wife pay all property outgoings including the mortgage;
e)That the Westpac Equity Access account be divided equally between the parties; and
f)That there be a superannuation split in favour of the wife from the husband’s BT Super Fund in the sum of $119,185.
At trial the wife relied on:
a)Her trial affidavit sworn 29 August 2019;
b)Her Financial Statement sworn 30 July 2019; and
c)The affidavit of Mr K sworn 17 September 2019.
At trial the husband relied on:
a)His trial affidavit sworn 21 September 2019;
b)His Financial Statement sworn 31 July 2019; and
c)The affidavit of Mr L Rainford sworn 7 November 2019.
Context
At the commencement of the parties’ cohabitation in 1990 the wife was in full‑time employment as a private secretary. She presently earns a salary of about $100,000 and had sacrificed some pre-tax income into her superannuation until March 2020.
The wife had a car and savings at the time of marriage. She proffers no evidence of her superannuation, if any, at the time of marriage.
At the time of the birth of the parties’ first child in July 1994 the wife stopped work for a period. She worked part-time for six months in 1996 and later obtained full‑time employment in July 1997 with McDonald’s Australia Ltd for a period until made redundant receiving a small capital payment. The wife then worked part-time until she obtain full‑time employment as an executive assistant in January 2010 until March 2014 when she was again made redundant receiving a capital payment. Thereafter, the wife has worked in various temporary and contracting positions until she obtained employment part-time three days per week as an executive assistant in January 2016 and commenced full‑time employment in that position in February 2020.
The husband at marriage had savings of $51,000, a car and superannuation of about $31,400.
The husband at this time was working full time with Company N. The husband remained in employment with Company N until made redundant in May 2014, receiving a redundancy payout of $165,000. He has retained these funds separately since that time. Whilst at Company N the only director and shareholder of this entity having unilaterally removed the wife as shareholder and director in March 2018. The husband undertakes consulting work through this entity that pays him a PAYE salary from year to year.
The parties’ eldest child has excelled academically and at the time of trial was studying medicine interstate. The parties’ youngest child in 2020 attended a local college and at the time of trial was completing his final high school examinations. The parties’ youngest child was shortly after birth diagnosed with a medical condition.
Subsequent to the birth of the parties’ youngest child in 2002 the wife did not return to employment so as to be available more particularly to the youngest child and to the household generally.
The youngest child, now 18, has ongoing treatment for his condition including daily physiotherapy, medications and a regime of physical activity including basketball and gym work. It appears that his lung function is regularly monitored and there is prospect that as he gets older his condition will worsen. The child has quarterly check-ups at hospital. At the time of trial the child was working in casual employment at a local supermarket. Otherwise, the wife provides for the child’s support including food, medical expenses, tutoring, household and living expenses and clothing. Regrettably, by reason of circumstances following separation, this child has no relationship with his father.
The wife received a government funded carer’s allowance for the youngest child until the child was 16. This payment was deposited by her into a Westpac bank account held by her in trust for the child together with other funds that he has received for birthdays and Christmas. When the child commenced part-time employment the mother transferred these funds into a new account in the child’s name alone.
At the commencement of cohabitation the parties had each accumulated savings during their courtship which commenced in about 1987. The wife applied her savings to the cost of the parties’ wedding, their honeymoon and setting up the new home together. The respondent used his savings and the proceeds of sale of his then car as a contribution to the purchase by the parties’ townhouse being O Street, Suburb P in 1990.
The Suburb P property
The property at O Street, Suburb P (“the Suburb P property”) was a townhouse development carried out by the wife’s father in 1988/1989. The wife’s father transferred the Suburb P property to the parties for a consideration of $70,000. The purchase price comprised a mortgage over the property for $25,000 and funds available to the parties from savings and the sale of the husband’s car at that time. The inference is that the savings mostly comprised those of the husband at the commencement of the relationship. The wife asserts that the townhouse property was acquired at an undervalue, that assertion supported by the sale at the same time of an identical property in O Street, Suburb P for the sum of $168,500. The husband for his part acknowledges that the transfer to the parties was at an undervalue of about $60,000, effectively equalising the parties’ initial contributions save for superannuation.
The wife’s father, Mr K, gave evidence and was orally examined. His evidence was clear, cogent and he demonstrated good recall in oral evidence. He had been in the business of self-employed builder since the early 1960s and at the time of giving evidence was 88 years of age. He impressed as truthful and having a good recollection of the circumstances of his engagement in the parties’ property affairs. His evidence is accepted without reservation. He says that he transferred the Suburb P property to the husband and wife “at cost price”. He confirms that he sold the neighbouring property in O Street at about the same time for $168,500 being a villa identical to the property transferred to the parties.
The parties moved into the Suburb P property after purchase. The Suburb P property was subsequently sold in 1993 for $173,000.
The Suburb R Development: Q Street, Suburb R
In 1991/1992 the parties entered into a joint venture with the wife’s father in the construction of a townhouse development of six villas at Q Street, Suburb R. Again, the wife’s father gave evidence of this enterprise.
The wife’s two siblings were also part of the development arrangement.
The wife’s father invited the parties and the wife’s two siblings to be engaged in the enterprise. His proposal was that there be a development application for six villas to be constructed on the site with the parties and the wife’s siblings to contribute to the cost price of the purchase and later construction, but make no contribution to the wife’s father’s labour costs in the construction of the development. In consideration of that arrangement, the parties and each of the wife’s siblings were to receive one of the villas each and as such were included on the contract for purchase as to one sixth each.
The prospective development property was purchased for $290,000 in August 1992. The husband and wife contributed one sixth of the purchase price and one sixth of the stamp duty on purchase. The wife’s father was the builder on site who purchased all materials and subcontracted out labour and trades to work on the site. Invoices for these outgoings were paid as to 1/6 by the parties. The parties drew down against the mortgage security on the Suburb P property to fund this investment.
The wife’s father and mother were on-site during the week and the husband would attend on site on Saturdays and some Sundays to do unskilled clean-up work. During this time he was in full‑time employment with Company S.
Subsequent to completion of the development, the property at Q Street, Suburb R was transferred to the husband and wife following registration of subdivision in June 1993. The wife’s father soon after registration of subdivision sold two of the villas for $165,000 each.
During the course of the development the husband and wife paid a total of about $110,000 for the site cost and cost of materials for the construction and subcontractors fees. They were charged nothing by the wife’s father for his labour. The parties moved into their Q Street, Suburb R property on completion and it was later sold in 1994 for $174,000.
Thereafter: The matrimonial home
In the period 1991 to 1994 the parties bought and sold other properties ultimately resulting in the purchase of a block of land at B Street, Suburb C in 1994 for $200,000 upon which the present matrimonial home was constructed in the 1996/1997 period. Subsequent to the completion of construction, there was a mortgage of about $100,000 secured over the home.
The husband’s employment was transferred to City T in regional New South Wales in July 1995. The wife obtain some part-time work in City T. The family, then comprising the parties and their eldest child then about 12 months of age, resided in City T for six months with the wife and the child then relocating to Sydney to reside with her parents whilst the husband remained in City T for a further 18 months until June 1997. The husband travelled to Sydney on weekends during this latter period. In July 1997 the husband obtained full‑time employment in Sydney as a Manager for Company S and relocated back to Sydney.
The construction of the home was notionally by the parties as owner builders.
The husband dealt with the local council in relation to obtaining development approval.
During the construction of the matrimonial home the parties were assisted by being able to reside rent free with the wife’s parents without contribution for about 12 months. The wife’s father supervised construction of the home and undertook significant work on the home for the parties at no charge. The wife acknowledges that the husband’s father assisted as a labourer on site. For much of the period of construction the husband was in employment in City T returning to Sydney on weekends. After his return to Sydney the wife’s father acknowledges that the husband had ongoing engagement in and about the construction of the home. The husband was on site on Saturdays and took some annual leave to assist. He attended to the administration of the project. The wife was left with the care of the parties’ young child.
Again the wife’s father, an experienced builder, gave evidence in relation to his engagement in relation to the construction of the matrimonial home. The wife’s father took out builders insurance for the project as he was the licenced builder on site. It was about half complete when the husband relocated back to Sydney from City T in early 1997. The wife’s father undertook significant works in and about the construction of the property clearly providing to the parties a significant benefit in that he was not paid for his time and labour.
Otherwise, the husband’s father provided assistance on-site most days generally as a labourer, assisting tradesmen, site cleaning and opening and closing the site as necessary.
In 1999 the parties purchased a block of vacant land at Suburb C. They later constructed a home on the property and sold the developed property for a profit with those funds going into matrimonial finances.
The G Street Development
In 2002 the parties purchased in the name of the respondent the G Street property for $728,000. The parties used the matrimonial home as part collateral for the mortgage borrowing for the purchase with the balance of the purchase monies being secured by way of mortgage over the G Street property.
After purchase the property was tenanted for a period whilst the parties sought development approval for the construction of three strata title homes on the property. The wife’s father again assisted in and about the work in construction with the parties using his builders licence number for the project and for the purposes of their application for finance for construction. He did so on the basis that he committed to oversee the project and the trades to ensure the quality of the build that was to be undertaken in his name. The wife’s father provided a quotation for the construction to facilitate construction finance being obtained and was required to sign invoices for progress payments in order that they could be drawn from the construction loan.
Once again the wife’s father had a significant engagement in and about the construction of the development over a period of more than six months. He says it was a difficult project because of on-site water retention and other complications relating to the location of the project. He did not receive any income or payments for his engagement in the project although the parties did provide to him and his wife a seven day holiday as an expression of their thanks.
The wife’s father expressed some surprise when it became known to him that the proposed development site was registered in the name of the husband alone.
At the time of this development the husband was working three days per week and was on site three days per week.
The wife’s father estimates that construction costs as provided to the financing bank were in the order of $600,000 and site costs of $728,000 (totalling $1.328 million) with the completed project having a value of about $1,710 million having regard to the sale of one of the properties on completion.
Upon completion of the development, the parties sold one of the strata homes for about $570,000 with those funds applied in reduction of the secured mortgage debt. At trial the parties retained the remaining two properties: the G Street property and the J Street property. These remaining properties were tenanted and rent received applied to payment of the mortgage and other outgoings with any surplus rent being used for general household expenses including school fees.
The D Street property
To assist their eldest son who was accepted for medical studies interstate, the parties purchased a home unit property (the D Street property) in January 2018 for $444,000. The purchase price was funded by redrawing against the mortgage security over the Suburb H investment properties. The husband charges the child in occupation of the property rent for taxation purposes and then gifts those funds back to the child.
The husband meets mortgage and outgoing payments in relation to the D Street property and since separation in 2018 has had complete control over the disposition of the rental income relating to the Suburb H properties.
The husband’s inheritance?
In 2006 the husband’s father Mr U Rainford passed away. His last will and testament was dated 23 April 1998. A property at V Street, Suburb W, New South Wales passed to the husband’s mother as surviving joint tenant and was transferred to her as such on 27 July 2007. The rest and residue of the estate passed to the husband’s mother pursuant to the terms of the will.
Subsequent to the death of the husband’s father, the property at Suburb W was sold for the gross sum of $267,000. The disposition of the sale funds is not clear. The distribution of the balance of sale funds after allowing for the deposit paid reveals a payment to the husband’s mother of $119,639, a payment to the husband of $59,819 and a payment to the husband’s brother Mr L Rainford of $59,819. The balance of deposit after agent’s commission was $14,591 with these funds being paid to the husband’s mother. The husband asserts that overall he received 25 per cent of the net proceeds of sale, presumably with the agreement of his mother in the total sum of $67,876.
At the time of sale there was the registration of a discharge of mortgage securing the sum of $25,000 in favour of the husband and his brother. The wife asserts that this mortgage represented an advance provided to the husband’s parents in September 1990. She has no knowledge as to the source of the funds advanced.
As at March 2008 the husband and his brother held about $70,000 in the joint account in their names with the Commonwealth Bank. These funds, the husband asserts, are held in trust and/or for the benefit of his mother. The inference is that these funds represent a portion of the proceeds of sale of the home or other cash funds available from his late father’s estate to which his mother would have been entitled.
The husband deposited his $59,819 to the parties’ Suburb H investment property mortgage on 21 August 2007 described as “Deposit X Street” with the funds thereafter withdrawn in the sum of $35,000 on 11 September 2007 marked as “tfr building costs”. The husband proffers no evidence as to where these funds were remitted.
Otherwise, the husband asserts a deposit of $8,056 into the parties’ joint Westpac account on 18 August 2007. Funds were then withdrawn to pay American Express $8,272 a few days later.
The husband asserts a further deposit of $4,452 described as “Deposit X Street” into the parties’ joint Westpac account on 20 July 2007.
The husband asserts that he inherited public shareholding from his late father. The assertion is not supported by any evidence but simply a dividend statement as at September 2006 in the name of his late father.
The husband further asserts that he received, notwithstanding the terms of his father’s will, funds from his father’s superannuation/investment funds. Regrettably, the husband fails to provide to the Court a copy of the Grant of Probate in relation to his father’s estate that would provide to the Court clear evidence of his assertions as to entitlement and the assets and liabilities of the estate as at the date of death.
The husband asserts that he and his brother opened a CBA bank account (…66) representing funds received by him and his brother from his late father’s estate. There is no clear evidence as to the source of these funds or indeed ultimately as to the application of these funds save for the husband’s bare assertion that they were drawn down to pay for various family needs. Notwithstanding this assertion he fails to provide copies of bank statements other than providing a balance of that account as at 18 September 2008 in the sum of about $67,000.
Post separation
Husband’s Mortgage Redraw
At the time of the parties’ separation under one roof in February 2018 the outstanding Westpac Bank mortgage balance on the matrimonial home was about $75,000. On 23 March 2018 the husband procured a redraw from the mortgage account of $50,000 with those funds being transferred by him to the account of his company F Pty Ltd. The husband asserts that the funds were paid to the company to repay funds withdrawn by him from the company to facilitate the purchase by him of a motor vehicle 2 in August 2016.
In February 2018 the husband withdrew from the mortgage account $18,500 to pay off his mother’s credit card debt. Then in June 2018 withdrew a further $8,000 for “various expenses”.
As a consequence in July 2018 the wife placed a freeze on all joint mortgage facilities preventing the husband from any further mortgage redraw.
The husband ceased making mortgage payments on the Westpac Bank home loan in late January 2018. As at August 2019 the mortgage balance had accrued to $132,223.
The husband’s “redundancy” funds transfers
Shortly prior to separation and then thereafter the husband made or procured various banking transactions:
a)In late January 2018 the husband withdrew $163,380 (comprising, he asserts, funds from his 2014 Company N redundancy) from his Westpac E Saver account and on the same day deposited those funds to the parties’ joint Westpac Choice account.
b)The husband then withdrew those funds from the parties’ joint Westpac Choice account depositing them to his Y Bank account (…39).
c)On 14 February 2018 the husband withdrew from the parties’ joint Westpac Choice account $18,655 and deposited those funds to his Y Bank account (…39).
d)On 20 February 2018 the husband withdrew from his Y Bank account (…39) $180,000 and deposited those funds to a Y Bank Everyday Basics account in the name of his brother Mr L Rainford.
e)On 15 May 2018 $180,000 was transferred from the brother’s Y Bank Everyday account to a Y Bank E Options account (…79) in the name of the husband’s brother at a better interest rate.
f)The husband’s Y Bank account (…39) was closed by him on 5 June 2018 following the transfer of funds to his brother’s account.
The husband asserts that the purpose of the transfer of funds to his brother’s account on 20 February 2018 was to “guarantee the repayment of various expenses and debts incurred as a result of the pool building and landscaping works and preserve the residual amount of funds remaining from my redundancy payment in case of future unemployment”. All this at a time when the husband had in his bank account his redundancy and other funds that had accrued to a balance of about $222,626 as at December 2016 and later a balance of $203,626 as at December 2017. In the same period he had earned $128,000 from consulting fees. He conceded that at the time of the asserted loan he was “liquid and had income”.
The asserted “pool renovation” loan from his brother
None of the above transactions were made known to the wife at the time. The husband conceded in oral evidence that he did not tell his brother that any of the transfers were in repayment of any “loan”.
The husband asserts that the “loan” advances were to him by his brother totalling $80,000, paid in three tranches all in cash in envelopes, following a request by him to his brother for funds to cover part of the pool renovation expenses at the home.
None of this money was banked. His asserted Excel spreadsheet relating to the loans was not produced at trial notwithstanding he knew that it was to be an issue at trial.
The husband’s brother gives evidence that funds were held by him in cash following the sale of cars and boats bought and sold by him that resulted in him holding about $250,000 in cash at his home. Not one document was produced to corroborate that assertion. The brother had made no demand for repayment as he was not in need of the money. He asserts that the repayment funds were transferred to his account and then transferred back in the sum of $63,000 to the husband with other funds expended by him on overseas travel and reimbursement of $16,400 paid by the husband for their mother such funds totalling $83,500 in December 2018. No bank statements were produced by the brother for the period from May 2018 to early 2019 to support his contentions.
In his affidavit evidence the husband asserts that the funds in his brother’s account were used to pay various asserted debts and expenses including “my residual debt to my brother … $78,188”, repayment of his mother’s debts $10,094, repairs and expenses to his mother’s home $6,367, the costs of his travel to Europe of $4,018, the purchase of a motor vehicle 3 of $20,000 and some modest living expenses leaving a balance of $63,500 which was deposited into his Y Bank account (…66) in January 2019. As at September 2019 the balance of this account had been reduced to about $20,000.
Yet the objective bank evidence is that on 19 September 2018 sums totalling $185,550 were withdrawn from the brother’s Y Bank E Options account (…79) and deposited into the husband’s Y Bank account (…28). On the same day the husband drew three bank cheques totalling $185,500 payable to himself in the sums of $63,500 and $20,000 and the husband’s mother Ms AA Rainford in the sum of $102,050 reducing the balance of that account to nil. There is no evidence as to the disposition of those cheques.
Curiously the husband’s brother asserts that he paid funds to the husband in December 2018 in two payments, $63,500 and $20,000 being the same sums as cheques drawn by the husband payable to himself only three months before. The husband’s brother produced not one document to support his contention as these transactions in his own accounts.
The sum of $63,500 was deposited to Y Bank Account (…66) in the name of the husband on 3 January 2019. The husband asserts he applied funds in this account to various living expenses, credit card debts and property outgoings without the deposit to that account of any income earned by him such that the capital of the account was depleted to about $23,700 over a period of five months. This expenditure of funds when the husband was in gainful employment is not properly explained.
The wife, on her part, asserts that there was no need to borrow such funds for the pool and associated works as there were sufficient funds available to the parties arising from savings, available mortgage redraw and the husband’s redundancy payout. The parties entered into a building contract with BB Business in October 2016 for the pool refurbishment at a contract price of $59,000. The 10 per cent deposit on the contract was paid by cheque being a redraw from the parties’ Westpac home loan on 16 November 2016. The wife says that the pool was completed by June 2017 with other works undertaken by BB Business being landscaping construction of a deck, paving, laying of a path and construction of a pool filter enclosure. The wife says that funds were drawn from the home loan, the parties’ joint Westpac account, the husband’s Westpac E Saver account and the parties’ joint Westpac E Saver account relating to the pool renovation work.
The husband asserts that the additional costs of landscaping works were in the order of about $105,000 asserting that he borrowed the sum of $80,000 from his brother Mr L Rainford to meet the additional costs. The wife asserts that she had no knowledge of the alleged borrowing.
The husband further asserts that there was a modest depletion of funds in his various bank accounts over the relevant period of about $19,300 and that during the period of construction his net earnings were in the order of about $128,600 that were paid into the parties’ joint account.
On balance, by reason of the discussion above, the Court is not satisfied as to the asserted debt to the husband’s brother. The evidence is unsatisfactory and conflicting.
The sale of shares
In June 2019 the husband sold two parcels of public company shares for a total of about $165,500 and applied those funds to the purchase of various new shareholdings at a cost of $165,652. He generally asserts that the sale of shares will incur an additional CGT income tax liability for the year ended 30 June 2019 of about $30,000-$40,000. He proffers no calculations for that assertion nor does he produce his taxation return for the relevant year or any assessment arising therefrom.
The wife’s accounts
As at February 2018 the wife in her Westpac savings account (…55) had a balance of $95,840. The husband complains that by May 2019 the balance had reduced to about $40,000 by reason of transfers of funds by the wife to a Westpac Equity account (…98) operated by her in the name of the youngest child and payments made by her in relation to living expenses including a holiday and legal fees.
In August 2018 the wife transferred $60,000 from her Westpac account (…40) to the account (…98) operated by her in the name of the child (“the child’s account”). This account was not referred to by the wife in her Financial Statements filed in the proceedings nor were public shareholdings held for the child in her name. In May 2020 the wife ultimately transferred $30,000 from the child’s account back to her account.
The shares held by the wife as at mid-2018 had a value, she asserted, of about $30,500 with dividends being paid historically into the child’s account. Otherwise, the carers allowance paid to the wife for the child was paid into the child’s account so as to accumulate for exigencies in relation to his care.
In May 2019 the wife transferred from the Westpac savings account (…55) the sum of $10,000 to the child’s account. It appears that these funds matched similar funds deposited by the husband to the child’s account from the sale of a motor vehicle with the sum of $20,000 then drawn from the child’s account to purchase a motor vehicle for him in the name of the wife.
At trial the child’s account had a balance of $66,181 with some $30,000 of those funds clearly those of the wife from her own account in August 2018. At trial the wife’s Westpac account had a balance of about $22,000.
The wife conceded in oral evidence that the husband had up to the current school year paid the youngest child’s school fees for 2018 and 2019, had paid the local council rates on the former matrimonial home, attended to payment of mortgage shortfall on the Suburb H investment properties and D Street property (although he is in occupation of one of them) and was paying child support of about $1,100 per month until the child attained the age of 18 years.
F Pty Ltd
Following the parties’ separation the husband caused the company that trades as F Services to make a series of payments to the Australian Taxation Office:
a)On 22 May 2018 $16,213 was paid with this sum subsequently mostly offset against the company’s provisional tax obligations for the 2018 financial year.
b)On 13 June 2018 $26,081 was paid leaving the company’s account with the Australian Taxation Office in credit in the sum of $32,129.
Other aspects as to the company are discussed below.
The wife’s prospective inheritance
The wife’s parents produced their present Last Will and Testaments at trial. The Wills were not introduced into evidence nor was any evidence as to the significance of the wife’s expectancy.
There was no evidence as to any likely date as to when any expectancy on the death of her parents might arise.
The wife’s father Mr K is aged 90 and his wife aged 78. In oral evidence he asserted he had left his interest in “my home” to his wife and that he had a shareholding with his wife in a factory at Suburb EE.
The relevant principles arise from White & Tulloch v White (1995) FLC 92-640, where the Full Court dealt with the issue of a subpoena against the mother of a party to proceedings that sought to require the mother to produce all wills in which the wife was named as a beneficiary, the court said:
45.We do not consider there is any absolute rule. The ultimate criterion is whether the evidence is, or may be, relevant to the just and equitable process under s.79. An expectancy of inheritance will not be relevant in many s.79 proceedings. In the end, relevance must depend upon the nature of the claims being put forward and the facts of the particular case. For example, if the claims were based entirely upon contributions, it could not be suggested that an issue of expectancy could be relevant because no s.75(2) factors would be involved. Where the claim includes s.75(2) factors, the nature or degree of suggested relevance between those specific claims and the expectancy in question would need to be analysed. That is to say, there must be a worthwhile connection between a specific element of the party's case and the suggested expectancy.
46.This accords with what we understand to be the general practice at trials in this Court. That is, the initial relevance in the particular case needs to be established; once it is it becomes a question of weight and degree. The issue is then approached by considering it in a broad, general way, by taking into account the age of the relative or other relevant testator, state of health, some general assessment of his or her financial position and some general assessment of the suggested inheritance expectancy. Detailed evidence of these matters is rarely allowed. Although that approach has a deal of imperfection about it and is a process where the weight, if any, to be attached to it may be difficult to identify, it is, we think, a process which is much to be preferred to that which is potentially anticipated in this case.
47.The central point of proceedings under s.79 remains the division of the property of the parties to the marriage and thus the essential concentration should be upon the financial circumstances of those parties. This is emphasised by the circumstance that the thrust of almost all of the matters in ss.79 and 75(2) is to direct the Court to consider various aspects relating to the parties themselves (or their children). As a matter of principle and day to day management of trials, it would not ordinarily be appropriate to perform that exercise largely by detailed reference to the property of a third party or to require a third party to make a detailed disclosure of his or her testamentary intentions and financial circumstances. It would be highly undesirable that in a property proceeding between husband and wife significant amounts of time should be devoted to a detailed examination of such matters.
48.In this case the mother was required not only to produce a copy of her current will, if any, but also of any revoked will in which there was to be any benefit to the wife. It would ordinarily be very difficult to understand the relevance of a revoked will but the suggestion here was that the mother may have changed her will in light of these proceedings and that may need to be investigated. It is hardly necessary to emphasise the undesirability of the parameters of a property case being expanded in that way.”
51. It is ultimately a question of fact and degree. During the course of argument a number of obvious examples at each end of the spectrum were referred to. In a case where the testator had already made a will favourable to the party but no longer had testamentary capacity and there was evidence of his or her likely impending death in circumstances where there may be a significant estate, and where there was a connection to s.75(2) factors, it would be shutting one's eyes to realities to treat that as irrelevant. On the other hand, the bald assertion that one of the parties has an elderly relative who has property and is or is likely to benefit that party is so speculative that it would be inappropriate to contemplate it as relevant in a s.79 determination, it being too remote to affect the justice and equity of the case in any worthwhile way.”
In L & L [2004] FamCA 1010 the Full Court (at [45-46] referred to the principles and observations in White and Tulloch v White and said at [47]:
47.It seems to us that generally the issue of a future inheritance may be more relevant to the defence of claim for an adjustment under s 75(2) than in support of such a claim. It is not appropriate for this Court to be effectively re-writing the will of the intended testator so as to give a benefit to a person he or she does not wish to benefit. If the wife’s parents wish to provide a bequest or a legacy for the husband they are free to do so. But if they equally do not wish to provide him with any bequest of legacy it should only be in unusual circumstances that the Court would effectively make an order which would have the indirect effect of creating such a testamentary disposition.
Then, the Full Court said at [48]:
48.As indicated one might readily rely on an anticipated disposition to defeat a claim for an increased share based on capital or income disparity, both present and into the predictable future. However it is more difficult to justify an adjustment in favour of the party who would not otherwise be receiving that adjustment unless there were pressing circumstances which would indicate that the reasonable requirements of the party would not be met from a contributions based assessment.
The wife’s “expectancy” as asserted by the husband is ephemeral in terms of time, its monetary significance and importantly the issues for determination between the parties in this matter. It is not a relevant consideration.
The CGT Issue
The husband initially seeks to retain the parties’ investment properties at Suburb H and the D Street property. He seeks delayed sales of two of those properties.
He, at trial, resided in the G Street property as his primary residence since May 2019.
He conceded in oral evidence there would be an adjustment in relation to the CGT assessable as a consequence of his residence in that property for as yet an indeterminate period.
The Single Expert (Exh “J” and Exh “K”) opined as to the incidence of CGT in relation to the properties. The Expert relevantly:
a)Makes no allowance for any capital works that may have been undertaken to the properties in the holding period after primary completion;
b)Assumes that none of the properties are used as a primary residence by the parties or either of them, yet the husband has occupied the G Street property as his residence since May 2019;
c)That the CGT liability will arise in relation to the three properties in the same financial year; that appears to be inconsistent with the husband’s evidence;
d)The D Street property (to be transferred to the husband) carries a present total capital loss in total of about $55,000 that can be offset against subsequent capital gain. The Expert makes no allowance for this;
e)The husband’s marginal tax rate is assessed on the present average over the last three years not on his actual marginal tax rate at some indeterminate date in the future; and
f)Proffers no opinion as to proper tax planning so as to minimise the incidence of CGT liability.
The husband seeks no orders as to the sale of the G Street property and the likely incidence of CGT at some indeterminate future time, at some indeterminate value and after an unknown period of occupation as his primary residence is simply not possible. Any adjustment for the additional personal income tax payable on sale would require orders that may not be operative for years.
The putative CGT additional income tax liability is assessed by the Expert at about $213,000. That sum is subject to the exigencies and uncertainties referred to above. Doing the best that can be done on the evidence there will be an allowance under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) for this imprecise liability of the husband.
The Asset pool
At trial the parties introduced into evidence (Exh “N”) a working draft balance sheet as set out hereunder:
| Ownership | Description | Applicant Wife’s value | Respondent Husband’s value | |
| ASSETS | ||||
| 1. | H | G Street, Suburb H (as per single expert report dated 19 August 2020) | $ 1,000,000 | $ 1,000,000 |
| 2. | H | J Street, Suburb H (as per single expert report dated 26 August 2020) | $ 980,000 | $ 980,000 |
| 3. | J | B Street, Suburb C (as per single expert report dated 19 August 2020) | $ 2,200,000 | $ 2,200,000 |
| 4. | J | D Street, Suburb E VIC | $ 420,000 | $ 420,000 |
| 5. | H | Motor vehicle 2 | $ 16,050 | $ 16,050 |
| 6. | H | Motor vehicle 3 … | $ 15,000 | $ NIL |
| 7. | W | Motor vehicle 1 (…) | $ 11,000 | $ 11,000 |
| 8. | W | Motor vehicle 4 (Mr Z’s car paid for from Mr Z’s account and written off) | $ NIL | $ NIL |
| 9. | W | Motor vehicle 5 | $ NIL | $ NIL |
| 10. | J | Westpac Equity Access Loan #...30 | $ 5,176 | $ 5,176 |
| 11. | J | Westpac Choice #...66 | $ 0 | $ 0 |
| 12. | J | Westpac Cheque #...44 | $ 3 | $ 3 |
| 13. | H | Westpac Choice #…91 | $ 5 | $ 5 |
| 14. | H | Westpac #...15 | $ 0 | $ 0 |
| 15. | H | CBA #...31 | $ 3,268 | $ 3,268 |
| 16. | H | CBA #...77 | $ 0 | $ 0 |
| 17. | H | CBA #...66 | $ 35 | $ 35 |
| 18. | H | Y Bank #...06 | $ 11 | $ 11 |
| 19. | H | Y Bank eOptions #...66 | $ 1 | $ 1 |
| 20. | H | Y Bank eOptions #...19 | $ 0 | $ 0 |
| 21. | W | Westpac Bank #...55 | $ 5,248 | $ 5,248 |
| 22. | W | Westpac Bank #...39 | $ 2,075 | $ 2,075 |
| 23. | W | Westpac Bank #...40 | $ NIL | $ 87 |
| 24. | W | Westpac Bank #...98 – W says Mr Z’s | $ NIL | $ 67,181 |
| 25. | W | Westpac Bank #...70 | $ 39 | $ 39 |
| 26. | W | Westpac Equities #...26 - W says Mr Z’s | $ NIL | $ 22,011 |
| 27. | W | Company CC shares (10) – W says Mr Z’s | $ NIL | $ 2,000 |
| 28. | W | Company CC shares | $ 2,000 | $ 2,000 |
| 29. | H | F Pty Ltd - Westpac #...49 | $ 160,804 | $ NIL |
| 30. | H | Funds held with ATO (GST) account F Pty Ltd | $ 88,222 | $ NIL |
| 31. | H | Funds held with ATO Tax Account F Pty Ltd | $ 75,004 | $ NIL |
| 32. | H | Share portfolio | $ 279,754 | $ 279,754 |
| 33. | W | Household Contents | $ 20,000 | $ 40,000 |
| 34. | W | Jewellery | $ 38,830 | $ 38,830 |
| 35. | H | Jewellery | $ 580 | $ 580 |
| Total | $ 5,323,105 | $ 5,095,354 |
| ADDBACKS | ||||
| 36. | W | Legal fees paid from capital in Family Law proceedings | $ $77,741 | $ 77,741 |
| 37. | W | Legal fees paid from capital in Criminal Law Proceedings | $ NIL | $ 9,023 |
| 38. | H | Legal fees paid in Family Law Proceedings Blanchfield Nichols - $13,687.80. Consort Lawyers trust account $145,268.45 (less $23,000 returned from trust) – bal: $ 122,268.45 | $ 131,382 | $ NIL |
| 39. | H | Funds transferred to Y Bank at or around the time of separation | $ 196,142 | $ NIL |
| 40. | H | Funds withdrawn from Mortgage Equity Access Home Loan account post separation | $ 50,000 | $ NIL |
| 41. | H | Funds withdrawn and paid to Ms AA Rainford for various debts/repairs | $ 16,461 | $ NIL |
| Total | $ 471,726 | $ 86,764 |
| LIABILITIES | ||||
| 42. | H | DD Bank Investment Loan #...84 (G Street mortgage) | $ 462,710 | $ 462,710 |
| 43. | H | Y Bank Home Loan #...80 (J Street mortgage) | $ 344,874 | $ 344,874 |
| 44. | H | Y Bank Home Loan #...16 | $ 0 | $ 0 |
| 45. | J | Westpac Premium Option Home Loan #...63 (Suburb C Mortgage) | $ 121,343 | $ 121,343 |
| 46. | W | Westpac Altitude Platinum #...90 | $ N/A | $ NIL |
| 47. | H | Altitude Black MasterCard | $ N/A | $ NIL |
| 48. | H | Liabilities of F Pty Ltd (ATO, Insurance etc…) | $ NIL | $ NIL |
| 49. | H | Capital gains liability on sale of G Street, Suburb H Property | $ N/A | $ 113,635 |
| 50. | H | Capital gains liability on sale of J Street, Suburb H Property | $ N/A | $ 109,053 |
| 51. | H | Costs of sale of G Street, Suburb H Property | $ N/A | $ 26,000 |
| 52. | H | Costs of sale of J Street, Suburb H Property | $ N/A | $ 25,500 |
| 53. | J | Costs of sale of D Street, Suburb E, Victoria Property | $ N/A | $ 11,500 |
| Total | $ 928,927 | $ 1,214,615 |
| SUPERANNUATION | |||||
| Member | Name of Fund | Type of Interest | Applicants value | Respondents value | |
| 54. | H | Super Fund 1 – Company N Group Plan | $ 492,849 | $ 492,849 | |
| 55. | W | Super Fund 2 | $ 244,479 | $ 244,479 | |
| Total | $ 737,328 | $ 737,328 |
There were significant issues as to the balance sheet.
Item 6 Motor vehicle 3: this was, the husband asserts, purchased by him for his mother from funds transferred from his “redundancy” account as discussed above. The question of the “redundancy” funds is discussed below. The Item will not be included in the pool.
Item 24 Westpac Bank #...98: The wife asserts that these funds are held in trust for the youngest child representing Centrelink carers benefits paid over a period of years and other funds gifted to the child. The wife did deposit her funds to the account and they were subsequently withdrawn. The husband does not dispute the source of funds deposited but asserts that the funds should be available for division between the parties. It is appropriate that the funds remain in the entitlement of the child who is now of age and there will be a declaration that the wife holds those funds in trust for the child. The account will be excluded from the pool.
Item 26 Westpac Equities Account #...26: The husband has acknowledged that this share trading account holds shares held in trust for the youngest child: Exh “T”. The account will be excluded.
Item 27 Company CC shares (10): The wife’s evidence is that she from funds in the child’s account subscribed to a share issue and was allocated 10 shares. The oversubscription refund was paid back into the child’s account. The wife declares that she holds the shares on trust for the child. The shares will be excluded.
Item 29 F Pty Ltd – Westpac Account #...49: As at 30 June 2020 the husband’s company account held funds in the sum of $160,804 after payment of the husband’s counsel’s fees of $49,500. For the financial year ended 30 June 2020 the company had received total employment income of $363,022. There are no financial accounts for the company for that period such as to permit a finding that the balance represents funds available to the husband. Yet the husband’s evidence is that the company has funded part of his legal fees in the sum of about $138,000. The Item will be excluded but the financial resource of the company will be a s 75(2) consideration.
Item 30 Funds held with ATO (GST) account F Pty Ltd: the company has a present credit with the ATO as against future GST obligations. This will be considered in the same context as Item 29 and will be excluded.
Item 31 Funds held with ATO Tax Account F Pty Ltd: the company has a present credit with the ATO as against future PAYE and company tax obligations. This will be considered in the same context as Item 29 and will be excluded.
Item 33 W Household Contents: There is no valuation the item will be included at the value asserts by the wife as an admission against interest.
Item 37 W Legal fees paid from capital for Criminal Law Proceedings: It was agreed that the Item be excluded.
Item 38 H Legal fees paid in Family Law Proceedings: It was contended by the wife that the husband’s paid legal fees of $168,000 should be included in the pool. There is clearly a financial disparity between the parties with the husband being able to draw significant fees from his company totalling $138,000. Otherwise he has funded the balance from income. The funds drawn from the company for private legal fees would, otherwise, have remained as capital in the company accounts. The wife will have outstanding legal fees of about $44,750: Exh “D”. In all the circumstances, it is appropriate to include the sum of $138,000 in the pool as part of the husband’s paid legal fees.
Item 39 H Funds transferred to Y Bank at or around the time of separation: the totality of funds transferred out is, as discussed, above in the sum of $182,035. His explanation as to the use and disposition of those funds is conflicting and ultimately unclear. The basic tenet is that he has had the funds to use as he saw fit for his own benefit of the benefit of his mother in circumstances where he was gainfully employed through his company that had accumulated significant funds at bank and with the ATO. It is proper in the circumstances that the sum of $182,035 be included in the pool of assets for division and his present bank balances be excluded to avoid double counting.
Item 41 H Funds withdrawn and paid to Ms AA Rainford for various debts/repairs: It was agreed that this item be deleted.
Items 49 and 50 H CGT: By reason of the discussion above this issue will be considered in the context of s 75(2).
Items 51, 52, 53 H Costs of property sales: It was agreed that these items be deleted.
Otherwise, where the parties separated more than two years ago the inclusion of present bank balances save as discussed above is of little utility. They will be excluded as will Items with no value.
The final pool for consideration is set out below:
| Ownership | Description | ||
| 1. | H | G Street, Suburb H (as per single expert report dated 19 August 2020) | $ 1,000,000 |
| 2. | H | 24 J Street, Suburb H (as per single expert report dated 26 August 2020) | $ 980,000 |
| 3. | J | B Street Suburb C (as per single expert report dated 19 August 2020) | $ 2,200,000 |
| 4. | J | D Street, Suburb E VIC | $ 420,000 |
| 5. | H | Motor vehicle 2 | $ 16,050 |
| 6. | W | Motor vehicle 1 (…) | $ 11,000 |
| 7. | J | Westpac Equity Access Acct #...30 | $ 5,176 |
| 8. | H | Share portfolio | $ 279,754 |
| 9. | W | Household Contents | $ 20,000 |
| 10. | W | Jewellery | $ 38,830 |
| 11. | H | Jewellery | $ 580 |
| Total | $ 4,971,390 |
| 12. | W | Legal fees paid from capital in Family Law proceedings | $ 77,741 |
| 13. | H | Part legal fees paid in Family Law Proceedings | $ 138,000 |
| 14. | H | Funds transferred to Y Bank at or around the time of separation | $ 182,035 |
| Total | $ 397,776 |
| 15. | H | DD Bank Investment Loan #...84 (G Street mortgage) | $ -462,710 |
| 16. | H | Y Bank Home Loan #...80 (J Street mortgage) | $ -344,874 |
| 17. | J | Westpac Premium Option Home Loan #...63 (Suburb C Mortgage) | $ -121,343 |
| Total | $ -928,927 |
| Member | Name of Fund | Type of Interest | Applicants value | |
| 18. | H | Super Fund 1 – Company N Group Plan | $ 492,849 | |
| 19. | W | Super Fund 2 | $ 244,479 | |
| Total | $ 737,328 |
The pool has a notional gross value including superannuation of $6,106,494. The net pool after secured liabilities is $5,177,567.
Property Adjustment
The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan (2014) FLC 93-572, Chapman & Chapman (2014) FLC 93-592 and Scott & Danton [2014] FamCAFC 203.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4).
The Court in the application of s 79(2) of the Act needs to conclude that it would be unjust or unfair to leave the parties’ property rights intact.
In many cases, this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship. Such is the case in this matter.
It would, in some circumstances, be unjust or unfair to leave property rights intact where there is common ownership and discrete assets are sought by each. Such is the case in this matter.
The parties both agree that adjustive orders are to be made so as to reflect their respective contentions as to entitlement.
In particular, both parties seek property adjustment orders but are unable to agree as to same. Here the wife seeks an order for adjustment of property as does the husband.
It is appropriate that property adjustment orders be made.
Otherwise, a consideration of s 79(4) factors as discussed reveals it would be unjust or unfair to leave the parties’ property rights as they are.
Section 79(4) requires a consideration of the contributions made by the parties as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g), in particular, the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant: (s 79(4)(e)).
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
At Trial
It was an agreed position at the commencement of the trial that the parties’ respective superannuation entitlements should be equalised by appropriate splitting orders.
Otherwise, it was contended by counsel for the wife that overall contributions in the myriad forms that they took during the relationship save for the contribution on behalf of the wife by her father should be regarded as equal. Considering the wife’s father’s contributions as discussed above, the wife contends that ultimately contributions should favour the wife overall 55 per cent to the husband’s 45 per cent thus creating a 10 per cent disparity between the parties.
Counsel for the husband contended that overall contributions to trial should be regarded as favouring the husband 52.5 per cent to the wife’s 47.5 per cent. Thus creating a disparity between the parties of five per cent of the pool.
In Dickons & Dickons (2012) 50 Fam LR 244 the Full Court said:
We wish also to refer to the approach of the federal magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “...giving over-zealous attention to the ascertainment of the parties’ contributions...” (Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
The desirability of adopting a holistic approach to the assessment of the parties’ contributions was recently again confirmed in Eufrosin & Eufrosin [2014] FamCAFC 191.
The parties in this matter have descended into evidence in some respects as to the minutiae of their relationship with little regard to the task of “holistic assessment”. It appears that as a consequence they have expended significant sums on legal fees.
Whist it appears that some funds benefited the parties from the sale of the husband’s mother’s home, the contribution by the wife’s father as discussed above, notwithstanding assistance in part from others, is deserving of recognition.
Overall, by reason of the discussion above, it is considered just and equitable that contributions should favour the wife as to 52.5 per cent and as to the husband 47.5 per cent.
Section 75(2) Considerations
It was contended on behalf of the husband that there should be no adjustment to contribution entitlements by reason of s 75(2) considerations.
Counsel for the wife contended that there should be a further adjustment in favour of the wife.
The wife is presently aged 51 and the husband 53. Neither asserts ill health.
The wife is in full‑time salaried employment with an income of about $102,000 plus superannuation.
The husband is self-employed through his corporate entity. The company had in 2019 gross revenue of about $224, 000: Exh “Q”. After paying the husband a salary of $94,600 and his superannuation of $18,189 at a contribution rate of 19.22 per cent and other operating costs, it made a profit from activities of $70,326 with an after tax profit of $50,921 that was accumulated to retained profits of $127,371 held by the company that were substantially reflected in funds at bank of about $144,000.
The 2020 figures from the BAS returns see the income of the company significantly increase. The company’s gross revenue referred to above in the 2020 year was about $363,000, a 50 per cent increase on the year before. The company appears to have funded over $100,000 of the husband’s legal fees and still paid him a salary of $94,600 and superannuation of $21,160 being a contribution rate of 22.36 per cent. Assuming that company expenses are similar to the previous year, the inference is that the company will have an operating profit of about $175,000 before tax. The husband is in a superior position to that of the wife particularly as to the accrual of future superannuation that he presently pays at a significant rate.
The property and financial resources of the parties are set out above. They propose to equalise their superannuation.
The youngest child, although 18 years of age, it is agreed will remain into the foreseeable future residing with the wife.
The parties provide for their respective needs from earned income.
The wife during the cohabitation of 27 years had periods out of employment and then part time before only returning to the full‑time work force this year.
A consideration of the factors referred to above would result in an adjustment in favour of the wife of 2.5 per cent resulting in a disparity of five per cent between the parties.
Otherwise, as discussed above, the husband will carry forward some future CGT obligations. They are not insignificant but he has the opportunity to deal with his properties so as to minimise the impact of CGT to some extent. Overall, it is considered that the prospective CGT liabilities offset what would otherwise be an adjustment in favour of the wife with the result that there will be no adjustment to the contribution based finding.
It is not contended by the parties that there are any other relevant s 75(2) considerations.
Otherwise, orders proposed have no impact on the earning capacity of either party.
Overall
Overall, the pool identified above will be divided as to 52.5 per cent to the wife and 47.5 per cent to the husband. This would create a disparity between the parties of about $258,000.
The wife would thus be entitled to the sum of $2,718,222 ($5,177,567 x 52.5%)
Should the wife retain the former matrimonial home and assets in her possession or entitlement after the superannuation split she would have the following:
The former matrimonial home $2,200,000
Motor vehicle 1 $ 11,000
Household contents $ 20,000
Jewellery $ 38,830
Paid legal fees $ 77,741
Adjusted Superannuation $ 368,664
Total:$2,716,235
Westpac mortgage $ 121,343
Net: $2,594,892
The husband would be required to pay to the wife an adjusting payment of $123,330 making a total entitlement of $2,718,222.
The husband would, otherwise, retain:
The G Street property $1,000,000
The J Street property $ 980,000
The D Street property $ 420,000
Westpac Equity Access Acct #...30 $ 5,176
Y Bank Funds $ 182,035
Paid legal fees $ 138,000
Adjusted Superannuation $ 368,663
Motor vehicle 2 $ 16,050
Share portfolio $ 279,754
Jewellery $ 580
Total $3,390,258
G Street mortgage $ 462,710
J Street mortgage $ 344,874
$ 807,584
Net $2,582,674
Less adjustment payment to wife: $ 123,330
Bal: $2,459,344
Such sum representing 47.5 per cent of the above pool for division.
In the circumstances of this matter this result is just and equitable
Orders will be made accordingly to give effect to the above outcome.
I certify that the preceding one hundred and sixty one (161) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 13 November 2020.
Associate:
Date: 13 November 2020
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