RALEIGH & PAULEY
[2020] FCCA 195
•13 March 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RALEIGH & PAULEY | [2020] FCCA 195 |
| Catchwords: FAMILY LAW – Property and spousal maintenance – contributions – s.75(2) factors – one or two pool approach – onus of proof in spousal maintenance application where applicant has made no reasonable effort to contribute to her own support. |
| Legislation: Family Law Act 1975 (Cth), ss.74, 75, 79 |
| Cases cited: Stanford v Stanford [2012] HCA 52 |
| Applicant: | MR RALEIGH |
| Respondent: | MS PAULEY |
| File Number: | LNC 340 of 2018 |
| Judgment of: | Judge McGuire |
| Hearing dates: | 10 & 11 December 2019 |
| Date of Last Submission: | 11 December 2019 |
| Delivered at: | Burnie |
| Delivered on: | 13 March 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms A Trezise |
| Solicitors for the Applicant: | Andrea Trezise |
| Counsel for the Respondent: | Ms M Ryan |
| Solicitors for the Respondent: | Cominos Family Lawyers |
ORDERS
That within sixty (60) days of the date of these Orders the husband shall:
(a)Make a lump sum cash payment on the wife of $117,447;
(b)Transfer and/or vest all his right, title and interest in the following to the wife absolutely:
(i)Property situate at A Street, Town B, New South Wales;
(ii)Property situate at C Street, Town D, Queensland;
(iii)The balances of any bank accounts or like investments in the name of or to the benefit of the wife as at the date of these Orders;
(iv)The wife’s Motor Vehicle 1;
(v)The wife’s Motorcycle 2;
(vi)The custom box trailer and boat trailer;
(vii)All personalty and chattels in the possession of or under the control of the wife as at the date of these Orders; and
(viii)The wife’s superannuation policy and entitlement with Super Fund E.
That within sixty (60) days of the date of this Order and at the same time as the transfer referred to in Order 1 the husband register a Discharge of Mortgage … executed by an authorised officer of the Commonwealth Bank of Australia such as to release the wife from all liability pursuant to the mortgage loan as secured against the title of the A Street, Town B property and such to release the title of the A Street, Town B property as security for the borrowing.
That contemporaneously with the cash adjustment and transfers referred to above, the wife transfer and/or vest all her right, title and interest in the following to the husband absolutely:
(a)The husband’s interest in F Pty Ltd including the Raleigh Family Trust and the F Pty Ltd Trust including the following entities:
(b)The husband’s interest in the group of companies and trust identified in the letter of instructions to G Chartered Accountants dated the 29th of October 2018 as follows:
·H Pty Ltd
·J Pty Ltd
·K Pty Ltd
·Raleigh Family Trust
·L Unit Trust
·M Pty Ltd
·N Pty Ltd
·O Pty Ltd
·P Pty Ltd
(c)Q Pty Ltd – R Street, Town S, Tasmania;
(d)Q Pty Ltd – T Street, Town S, Tasmania;
(e)The balances of any bank accounts or like investments in the name or to the benefit of the husband as at the date of these Orders but subject to these Orders;
(f)The Motor Vehicle 3;
(g)The husband’s electric guitar and amp;
(h)All personalty and chattels in the possession of or under the control of the husband as at the date of these Orders (including piano);
(i)Antique restored telephone box;
(j)Vintage vending machine;
(k)Husband’s shareholdings; and
(l)The husband’s superannuation policies and entitlements with Super Fund U and Super Fund E.
That the husband be solely responsible for and indemnify the wife in respect of the following liabilities:
(a)Any and all liabilities attaching to any of the assets retained by the husband pursuant to these Orders;
(b)The husband’s CBA Visa credit card (…9);
(c)Capital Gains Tax on previous sales of properties ($28,628E); and
(d)Any and all liabilities incurred by the husband since separation in either joint names or his name alone;
That the wife be solely responsible for and indemnify the husband in the respect of the following liabilities:
(a)The Westpac-Flexi Home Loan – C Street, Town D, Queensland;
(b)Any and all liabilities attaching to any of the assets to be retained by the wife pursuant to these Orders; and
(c)Any and all liabilities incurred by the wife since separation in either joint names or her name alone.
That for a period of twelve (12) calendar months from the date of these Orders the husband pay to the wife spousal maintenance in a quantum of $710 per week with the first such payment to be due and owing as from the expiration of seven (7) days from the date of these Orders and payable in arrears weekly thereafter or on such other terms as the parties may agree from time to time in writing and by a method as agreed between the parties in writing but failing any such agreement then by direct credit into a bank account in the wife’s name and the details of which the wife shall provide to the husband.
That pursuant to section 81 of the Family Law Act 1975 the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
IT IS NOTED that publication of this judgment under the pseudonym Raleigh & Pauley is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT LAUNCESTON |
LNC 340 of 2018
| MR RALEIGH |
Applicant
And
| MS PAULEY |
Respondent
REASONS FOR JUDGMENT
Applications
The applications involved parenting and financial issues. To their credit, the parties have settled the issues in respect of their two children being X (aged 7 years) and Y (aged 5 years). Financial matters in respect of property settlement and the wife's application for spousal maintenance remain for determination.
The applicant husband seeks property orders for a distribution of 60% of the net total property to him and 40% to the wife being on a 'one pool' approach inclusive of superannuation. Specifically, he argues for a loading of 20% to him on account of contributions with a 10% adjustment back to the wife for consideration of the factors under s.75(2) of the Family Law Act 1975 ('the Act').
Whilst vigorously arguing against the wife's entitlement to any spousal maintenance and, by the end of the evidence, arguing that the wife had not, in fact, made out a case for spousal maintenance, the husband's Counsel in her final address conceded that he would contribute $576 per week to the wife for a period of 12 months by way of spousal maintenance.
The wife asks for orders which would distribute the net property, inclusive of superannuation, on a 50/50 basis between the parties. The specific orders that she asks for would not involve a splitting of the husband's superannuation but she prefers, in her financial circumstances, to take her entitlement by way of tangible assets. In its most simplistic form, the wife argues that the husband should receive a loading of 10% by reason of his superior contributions but that she in turn receives a 10% adjustment on account of the relevant s.75(2) factors. As such, the issue between the parties at this point seems to be in respect of the percentage loading to the husband by reason of his conceded superior contributions.
The wife asks for spousal maintenance in a sum of $710 per week for a period of five years from the date of these orders together with lump sum spousal maintenance of $46,600.
The Issues
By the end of the evidence it seems that the issues between the parties can be isolated as follows:
a)The percentage distribution of the property pool to the husband by reason of his superior contributions;
b)Whether the wife's entitlement includes a portion of the husband's superannuation;
c)The quantum and duration of the husband paying spousal maintenance to the wife;
d)Whether a sum of $200,000 be ‘added back’ to the pool as sought by the wife in respect of a series of transactions between the husband's company and the parties' personal accounts;
e)The treatment of paid legal costs and, in particular, where interim orders have provided that the husband meet the wife's ongoing legal costs and the status of those orders; and
f)The status of other interim payments made by the husband to or on behalf of the wife/the parties during the interim and interlocutory stage of these proceedings and whether or not some or all of those payments be 'added back' to the property pool.
Background
The husband is 48 years of age and the wife is 42 years.
The parties commenced cohabitation in 2010 and were married in 2011.
There are two children of the marriage, namely X born in 2012 (aged seven years) and Y born in 2015 (aged five years).
Whilst the parties moved from New South Wales to Tasmania in or about 2010, the husband worked in Country Z between April and October 2011.
The husband's father passed away in 2012 and the husband and his brother took over management of the family business.
In March 2014 a determination of the Family Court judgment was made in favour of the applicant father's second wife resulting in payments to that person. Probate of the husbands’ father's estate was granted in 2014.
In 2017 the husband bought out to his brother’s half share in the F Pty Ltd Family Trust.
The parties separated under the one roof in either August or October 2017. The husband moved out of the family home in March 2018 and took up residence in Town AA, New South Wales.
The husband commenced financial proceedings in this Court in an application filed 8 June 2018.
In April 2019 interim orders were made for partial property settlement payment of $100,000 to the respondent wife together with orders for the payment by the husband of the wife's legal costs and other outstanding obligations.
The husband is employed as a company director/business proprietor of H Pty Ltd. That is a Tasmanian based business. The husband, however, lives fortnight-about between City BB and Town AA. The husband spends time with X and Y in New South Wales on two weekends per month during school terms from Thursday afternoon until Sunday afternoon and for 'up to half' of each term school holidays and two periods of up to 7 nights in the summer school holidays.
The children and the mother otherwise live at A Street, Town B in New South Wales. The wife is engaged full-time as a parent and has not been in paid employment since Y's birth in 2015. The wife holds a Bachelor qualification but has not worked in New South Wales since 2007. She also holds a degree together with a Graduate Diploma in health care.
Relevant Law – Property
Matters of property settlement are provided for in section 79 of the Family Law Act 1975 (“the Act”) where a broad discretion within the statutory requirements is afforded trial judges in making orders which alter or distribute the property of the parties or either of them.
‘Property’ includes assets, liabilities and financial resources. Amendments to the Act provide that superannuation is to be 'treated as property' although, strictly speaking, it is not an asset in the usual form in that it is usually not crystallised as at the time of the hearing.
The important decision of the High Court in Stanford v Stanford[1] emphasised a specific consideration by trial judges on the requirement at s.79(2) of the Act that a Court must first find that it is 'just and equitable' to enter into any consideration of the altering or distributing of the parties’ property. That consideration is one based on the particular circumstances of those parties and should not be simply conflated with the consideration of contributions set out in s.79(4) although such contributions may, in part, inform the decision under s.79(2).
[1] [2012] HCA 52
In the matter now before me, it is clear that this marriage has irretrievably broken down. It is a relationship which commenced as long ago as 2010. There are two children of the marriage. The parties’ property is intertwined, jointly owned and somewhat complex in its arrangements. The parties’ personal circumstances have changed substantially during the course of their relationship and due to the circumstances of that relationship. As such, I am comfortably satisfied it is just and equitable to consider the alteration and distribution of the parties’ property interests.
The process for the Court is then to determine the property pool and the elements that comprise the pool together with attributing valuation to each of those elements.
The Court next considers pursuant to s.79(4) of the Act the contributions by on behalf of the parties to the attaining, improvement and maintenance of the those assets which make up the property pool. Contributions may be of a direct or indirect financial type or they may be of a non-financial type including as homemaker and parent.
After consideration and assessment of the various contributions, the Court then considers whether it is proper, just and equitable to make any further adjustments to either of the parties on account of the matters set out in s.70(4)(d)-(g) including any of the relevant considerations in s.75(2) of the Act.
It is commonly accepted that as a final 'step' the Court is to 'stand back' and consider whether the actual orders anticipated to be made are 'just and equitable' in the circumstances of these parties as opposed to the simple percentage distribution.[2]
[2] Russell v Russell (1999) FLC 92-877
Property pool
To their credit, by the end of their evidence, the parties are substantially in agreement as to the property pool as it now sits given some concessions by the husband through his Counsel in her final address. There do, however, remains some issues as to claimed ‘add-backs’ by both parties.
The remaining issues in respect of the property pool are the following:
i)The husband holds on Trust for his daughters Super Fund E Growth Bonds with a value of $6,335 in respect of X and $3,535 in respect of Y.
ii)He also holds a CBA account in Trust for X with a balance of $264.00. My understanding is that the wife seeks that these amounts be brought into the pool and placed on the husband’s side of the ledger. In her orders sought, she asks for an order that she ‘relinquish in favour of … or transfer any claim the respondent may otherwise have to these accounts.’
The best evidence before me is the uncontradicted evidence of the husband that he holds the monies in ‘Trust’ for his daughters. I do not, therefore, consider these monies to be the property of the husband or the parties and particularly so where unchallenged as to those intentions by the wife’s Counsel. I do not intend to include them in the property pool and consider them to be the property of the children as beneficiaries.
iii)The wife says that in February 2018 the husband drew down on the parties’, CBA Home Loan a sum of $200,000 and deposited it into the CC Trade Account labelling the transaction as ‘Loan to CC’. The wife argues, and the husband was cross examined extensively, that this was a sham transaction by the husband to decrease the property pool by $200,000 and hence that sum should be ‘added-back’ to the pool. The wife says that, when challenged by her as to this transaction, the husband advised that he would ‘…give me my half of the $200,000 that he took from the home loan once we sold our previous home in Town S…the payment was only made because Orders were negotiated on 4 April 2019 providing that he do so.’
(a)The Orders of 4 April 2019 provide inter alia:
That within seven (7) days of the date of Order, the Husband pay to the Wife as and by way of partial property settlement payment the sum of $100,000.
(b)The said Orders of 4 April 2019 do not reference the background of the making of the Order for a partial property settlement to the wife in the sum of $100,000. There are no notations as to the said transactions set out above. Significantly, the Orders do not similarly make reference to any ‘partial property settlement’ in favour of the husband for the remaining $100.000.
(c)In cross-examination, the husband stated that he and his business partner had the ability to borrow funds from the company account to place in home mortgage accounts against mortgage liabilities and presumably to reduce the interest payable. He insisted that the monies were ‘borrowed’ and the husband conceded that he had not informed the wife of the details of the series of transactions but said in his evidence, perhaps consistent with the tenor of the wife’s evidence, that it was he who was responsible for financial matters during the course of their relationship. He insisted that the $200,000 was always a debt to the company until repayment.
(d)In re-examination the husband was able to produce a number of documents which give credence to his claims including receipts and ledgers evidencing the transactions and the timings of those transactions.
(e)Given that the Orders of 4 April 2019 do not reference any retention by the husband of the one half of the $200,000, together with the documentary evidence in support of the husband’s claims in respect of the monies being a temporary loan for the business and the fact that the parties were generally in agreement that the husband was primarily responsible for financial matters without necessarily engaging the wife, on the balance of probabilities, I accept the evidence of the husband in respect of this matter that the $200,000 was initially borrowed from the company funds in order to benefit the home mortgage but was at all times a debt to the company such having been repaid by the husband. Consequently, the amount of $200,000 will not be added-back into the property pool. It follows that I consider the payment to the wife of $100,000 by Orders of 4 April 2019 to be, as they explicitly state, a ‘partial property settlement’ to her in the sum of $100,000 and hence a completely separate transaction.
(iv)The further payments made by the applicant husband to or on behalf of the respondent wife pursuant to Court orders made the 4 April 2019 and 1 August 2018.
(a)Pursuant to orders of 4 April 2019 the husband has paid the wife's ongoing legal costs now agreed in a quantum of $74,622.90. The relevant order states:
(3) That the following sums paid by or on behalf of the husband to or for the benefit of the wife be deemed as partial property settlement payments by the husband to the wife:
(a) Past legal costs paid to Cominos Family Lawyers or the wife in the sum of $27,127.40 to 12 October 2018;
b) Legal costs paid pursuant to order 1 of these orders for past or future legal costs incurred by the wife with Cominos Family Lawyers since 12 October 2018;
(b) In her final address, Counsel for the wife argued correctly that the Court has a discretion in respect of dealing with paid legal costs of parties. Counsel argued that the husband has also paid his ongoing legal costs and in a similar quantum to that he has paid for the wife and hence the Court should not differentiate between the parties in respect of 'paid legal costs'. I reject that submission. It would be disingenuous, in my view, for the wife to enter into consent orders, as she did, on 4 April 2019 providing that her legal costs be paid by the husband and be designated as ‘partial property settlement' and then to retreat from that position at the trial relying on the Court’s discretion. It was open for the wife to argue in April 2019 that the husband pay the legal costs and that such costs be 'categorised' at the trial. She did not take this course. She received a benefit by way of an interim order in the husband paying her ongoing legal costs. She agreed then to take that benefit as a ‘partial property settlement'. Further, there is no evidence that the husband has met his own ongoing legal costs other than through his own income or, more properly, there is no evidence that he has crystallised any asset in order to meet his legal costs to date. In all of those circumstances, I propose to maintain the fact of the order made in April 2019 and designate the wife's legal costs paid by the husband as a 'partial property settlement' and hence ‘add-back’ the sum of $74,622.90 to the pool.
(v)Further to order 3 of the orders of 4 April 2019 the husband was to meet the following:
c) The sum of $10,000 paid to the wife in 2018;
d) The sum of $15,000 drawn by the wife from CBA mortgage account in March 2018;
e) $6,364.62 cents paid to DD for installation of interior blinds - following valuation of the A Street, Town B property;
f) $3,654.06 transferred to the wife's bank account on 16 November 2018.
Similar to the above, and despite some argument by the wife's Counsel, it is clear that the wife entered into consent orders for the payment of the above on agreement that such be a 'partial property settlement'. After cross-examination as to one issue of ‘doubling up' on the sum of $10,000, there is general agreement and I am satisfied that the husband has met his obligations pursuant to the consent orders of 4 April 2019 in a further quantum of $25,018.68.
(vi)Pursuant to the orders of 1 August 2018 the husband was to do the following:
4) That within 7 days of the date of these Orders the husband's solicitors nominate three forensic accountants to value the husband's interests in any business as to the wife's solicitors, and within a further 7 days the wife's solicitors to nominate her selection of a forensic accountant, and that the husband be responsible for the payment of the forensic accountants costs in the first instance and the wife to reimburse the husband for one half of such costs from her award under any final property orders as to property settlement.
5) That the husband pay the costs of the mediation in the first instance, but to be reimbursed one half of such costs by the wife from her award under any final property settlement orders. (My emphasis)
Similarly, the interim orders categorise and define the nature of the payments made by the husband and the requirements of the wife. I accept the submissions of Counsel for the husband that it is proper, therefore, mathematically to 'add-back' such payments to the pool of property on the wife's side of the ledger.
There is one further discrepancy between the parties’ views of the property pool. The parties generally agree that the mortgage liability on the Town W property sat variously between $131,026 and $125,065 where it seems that the wife had made some minor drawdowns in order to pay credit cards and relatively small debts that I am comfortable fit into the category of ‘general day to day living expenses’ and would not attract any ‘add-back’. However, despite the wife’s own case summary document filed just the day before the start of this trial giving a mortgage balance of $131,026 she apparently now claims a balance of $161,000 on an extra and further drawdown of $30,000. No explanation of any particularity was led in evidence. As such I cannot be satisfied that this relatively substantial sum was reasonably spent on day to day necessities and I intend to include the mortgage liability at the figure of $131,026.
Consequently, and in summary, I intend to 'add-back' the following to the property pool of assets and liabilities set out above:
·the wife's paid legal costs - $74,622.90
·partial property settlement to wife - $100,000.00
·payments pursuant to order 3 of the orders
of 4 April 2018 of - $25,018.68
·payment of one half of property valuations
pursuant to order 3 of the orders of 1 August 2018 - $4,400.00
·payment of one half of G chartered
accountants business valuation pursuant to order
4 of the orders of 1 August 2018 - $17,447.40
·payment of one half of private property
mediation costs pursuant to order 5 of the
orders of 1 August 2018 - $1,375.00
TOTAL $222,863.98
I, therefore, find the property pool to comprise of:
Assets
Value
A Street, Town B, NSW
$630,000
C Street, Town D, QLD
$250,000
Husband’s interest in F Pty Ltd Pty Ltd
$877,085
F Pty Ltd – R Street, Town S, TAS
$95,000
F Pty Ltd – T Street, Town S, TAS
$450,000
Husband - Bank savings
$412,164
Wife – Bank savings
$400
Husband – Motor Vehicle 3
$3,100E
Husband – Electric guitar and AMP
$1,000
Husband – Furniture and chattels
(including piano) EE valuations$39,118
Husband – Antique restored telephone box
$6,000
Husband- Vintage vending machine
$3,000
Wife – Motor Vehicle 1
$7,400
Wife – Motor cycle
$1,300
Wife –Custom box trailer and a boat trailer
$1,300
Wife - Furniture and chattels
$2,000
Husband – shareholdings
$128,136
Wife – add-backs pursuant to interim orders
$222,864
Total of assets
$3,129,867
Liabilities
CBA mortgage –A Street, Town B, NSW
-$384,164
Wife – Westpac-Flexi Home Loan – C Street, Town D , QLD
-$131.026
Husband – CBA Visa Credit Card (…9)
-$14,799
Wife – Westpac Ignite Credit Card
-$294
Capital Gains Tax on sales of properties (estimated)
-$28,628
Total of liabilities
-$558,911
Net Tangible Assets
$2,570,956
Superannuation
Husband – Super Fund U Member
$20,992
Husband – Super Fund E
$202,735
Wife – Super Fund FF
$77,609
Total Superannuation
$301,336
Total Net Tangible Assets and Superannuation
$2,872,292
Contributions
This was a relationship of just some 7 years duration but one in which I am satisfied that the parties took on distinct roles with the husband being the primary financial provider and the wife being engaged as a parent and homemaker. Indeed, each party described the arrangement being of the husband being ‘responsible for wealth’ and the wife ‘responsible for health’.
The wife argues and concedes that there should be a 10% adjustment to the husband on account of his superior initial contributions. It is not contested on the evidence that the husband provided a greater financial contribution than the wife at the commencement of this relationship by reason of equity in a number of properties and his interest in the family business. The husband's trial affidavit at [32], which is essentially unchallenged, suggests that at this time he was the registered owner of no less than six pieces of real property with total equity of around $400,000 together with interests in the family business which he valued then at $330,000. He says that he had savings of $100,000, shareholdings of $75,557 and accrued superannuation of approximately $62,000.
The wife says that she owned a property at C Street, Town D in Queensland but with an equity of just $10,000 together with a car, trailer and personalty.
The wife has remained in residence in the A Street, Town B property since separation and the husband has contributed to the outgoings on that property. During that time the children have continued to live primarily with the wife.
Significantly, during the course of this marriage the husband received an inheritance following the death of his father in 2014. The husband was an equal beneficiary of his father's estate together with his brother. The husband's late father's estranged wife pursued a pending entitlement in the Family Court such being settled by the husband and his brother as executors of the father’s estate. Perhaps, the value of the husband's entitlement might be best gauged by his brother, Mr GG, being paid out his interest in the F Pty Ltd Family Trust in 2017 in a sum of $1,755,466.95 albeit over a generous ten year and interest arrangement.
I am satisfied that the husband's direct financial contributions, both initially and through inheritance, have been considerable. The parties cohabited for just seven years. There were, however, a myriad of other contributions during that period as set out above and the Court must be careful not to 'extract' the husband’s more obvious direct financial contributions to the exclusion of consideration of the totality of contributions of both of these parties.[3] Consequently, and taking into account all of those contributions, direct and indirect and including as homemaker and parent, it remains that the above identifiable financial contributions by the husband sit obviously and influentially in the wealth of the parties as it currently exists. Whilst the authorities make it clear that the Courts must give due weight to all of the contributions of the parties, it is also clear that contributions, such as those of the husband in this relatively short relationship, should also be given due weight. In all of the circumstances of this particular relationship and considering all of the contributions of the parties, I am satisfied that a loading of 20% to husband on account of contributions is just and equitable.
[3] Jabour & Jabour [2019] FAMCAFC 78
Section 75(2) factors
Counsel for both parties argue that there should be a 10% adjustment from the property pool to the wife on account of the relevant s.75(2) factors. I agree. The wife will remain the primary carer of the children. The husband’s financial position moving forward from this relationship is obviously superior to that of the wife although she will benefit to a degree financially due to these very orders. It has not escaped my attention that the wife effectively put her career ‘on hold’ due to the distinct roles taken on by these parties during their marriage. I agree, therefore, with each of the parties that an adjustment of 10% to the wife is just and equitable.
Conclusion – property settlement
Following a consideration of contributions and the relevant s.75(2) factors, therefore, I intend to distribute the property pool of net tangible assets between these parties as to 60% to the husband and 40% to the wife.
Superannuation
The wife's position, as I understand it, is that she urges me to consider the above on a 'one pool' basis but asks for orders whereby there be no superannuation split from the husband to the wife and that the wife therefore take her entitlement by way of tangible assets.
The husband argues for me to proceed on a 'two-pool' basis with a superannuation split resulting in 40% of joint superannuation to the wife and 60% of joint superannuation to husband. The evidence discloses that the total superannuation of the parties is $301,336 with the wife's current accumulation policy being valued at just $77,609 of this amount. I calculate, therefore, that the husband proposes a split of around $43,000 from his superannuation to the wife.
I assume that the wife's accumulation policy was achieved primarily prior to the commencement of cohabitation of the parties given her assumed role as homemaker and parent. The husband deposes to having superannuation entitlements of around $62,000 at the commencement of cohabitation. Consequently, it seems that the husband’s current entitlement has primarily accrued during the relationship. The value of superannuation generally is not significant against the value of the tangible asset pool. I am comfortably satisfied, therefore, that I should proceed on a ‘two-pool' basis but that the superannuation entitlements of the parties should be divided equally. I calculate that this would give the wife an entitlement of $150,668. She currently has a policy valued at $77,609. She has a further entitlement, therefore, of $73,059.
The question now is whether the wife’s entitlement from the husband’s superannuation should be achieved by way of a ‘split’ from his policy/entitlement or by way of a ‘set-off’ in the sense of her retaining assets of the same value. Superficially, there appear to be good reasons for a ‘splitting order’. Neither party is near retirement age where their entitlements will crystallise. The superannuation values are relatively small in the context of the total property pool. Nevertheless, there are special features of the matter which argue otherwise. The husband will undoubtedly continue to have a superior earning capacity than the wife whose own capacity will not be reached until after a period of re-training. The wife will remain the primary carer for the two children who are still young. The wife wishes to retain real properties which will both accommodate her and the children and perhaps give a source of income. She will retain a mortgage liability. In all of those circumstances I am of the view that the wife should retain ‘hard assets’ rather than a superannuation split. I am mindful that this will require a larger cash adjustment on her from the husband but then he has liquid cash in bank accounts, income and assets to easy accommodate this occurring.
Consequence of Property Orders
I calculate the net value of the tangible assets of the parties to be $2,570,956. The husband is entitled to 60% and the wife to 40% of that net pool at value. I calculate, therefore, the wife's entitlement in dollar terms to be $1,028,382.
Both parties ask for me to structure orders whereby the wife retain the A Street, Town B property but with the husband to be responsible for indemnifying the wife and obtain a discharge for the wife in respect of the mortgage secured by their property ($284,164) thereby leaving the wife with that property unencumbered.
The wife retains:
A Street, Town B property
$ 630,000
C Street, Town D property
$ 250,000
Savings
$ 400
Motor vehicle
$ 7,500
Motorbike
$ 1,300
Trailers
$ 1,300
Chattels
$ 2,000
Add-backs
$ 222,864
C Street, Town D mortgage
$131,026
Credit card
$ 294
Total
$ 131,320
$ 1,115,314
Net assets retained by wife
$ 983,994
Consequently, I calculate that the wife is entitled to a cash adjustment from the husband of $44,388 plus a further $73,059 being a total of $117,447.
Spousal Maintenance
The wife asks for an order for spousal maintenance of $710 per week for a period of five years together with a lump sum of $46,600.
The husband, perhaps without conceding that the wife has proven her case, says that he will pay spousal maintenance for a period of
12 months at $576 per week.
Section 72 of the Act provides:
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
a) by reason of having the care and control of the child of the marriage who has not attained the age of 18 years;
b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Section 74, states:
In proceedings with respect to the maintenance of a party to a marriage, the Court may make such order as it considers proper for the provision of maintenance in accordance with this Part.
It is clear that the fundamental philosophy of a consideration of spousal maintenance is to address any disparity between the incomes, earning capacities, or financial situations of the parties following their separation. It is proper, in my view, to consider also the positions of the parties after a property settlement including a relative consideration as to whether or not a party should be required to deplete his or her own capital in order to contribute to his/her own maintenance.
The wide discretion in s.74 allows Courts to make either periodic or lump sum orders for maintenance. Experience suggests that the former is more common. In the matter before me the wife seeks orders in terms of both periodic and lump-sum maintenance and the Act would appear to permit such a course under that wide discretion.
Prima facie, there are obvious discrepancies in the financial positions of these parties actually and following the distribution of property pursuant s.79. Put bluntly, the husband is in a far superior position both in the sense of his capital and income earning potential Indeed, his Counsel does not argue otherwise.
The wife has her tertiary degrees in health care. I accept, however, that those qualifications are stale. She has not been employed in those capacities or at all for some years. I generally accept, as mentioned above, that there was a delegation of roles during the marriage which saw the wife concentrating on homemaker and parent duties whilst the husband pursued his career and business interests. The wife says that she wishes to retrain and I understand it is in this context that she seeks both an order for five years of periodic maintenance and an initial lump sum order. In her affidavit at [76] she deposes to eight month period for re-education followed by 260 hours of work experience to bring her current qualifications up-to-date. Alternatively at [77] she suggests a different pathway to obtaining re-accreditation by undertaking a Masters Degree part-time over three years involving course fees and other costs of around $41,000.
The wife in her affidavit deposes to a relatively comfortable lifestyle during the marriage including the advantage of gardeners, house cleaners and the like. Nevertheless, the term 'proper' in s.74 of the Act was considered in Robinson & Willis[4] where Elliott J noted that a 'proper' order was one which the Court considered to be proper in all of the circumstances and not one which ‘the parties think fit'. It is often colloquially stated that spousal maintenance is not for the purposes of returning a party 'to the lifestyle to which they have become accustomed'.
[4] (1982) FLC 91-215
It is well established that the wording of s.72 creates a threshold over which an applicant for spousal maintenance has an onus to hurdle. Put simply, an applicant must prove that he/she has 'needs'. Secondly, that applicant must then prove an inability to meet those needs himself/herself. It is then, and only then, that the threshold is crossed and the Court will consider the ability of the other party to contribute to the first party's needs.
In the matter now before me the wife relies on her sworn financial statement which, after some cross-examination, sets out in detail her financial needs and expenses.
The second step is that the applicant must show that she is unable to meet her own needs or to support herself adequately in order to be eligible for spousal maintenance. It is here that the wife's application becomes problematic. Whilst she sets out her proposals to support herself by way of re-training or re-accreditation of her former qualifications, the wife's affidavit material does not otherwise depose to any attempts made by her to support herself. Rather, she arguably rests on the laurels of her existing situation, influenced as it was by her marriage, and her ambition to support herself through her former qualifications being updated. Counsel for the husband argues that such does not discharge the wife's onus to show that she cannot currently and adequately support herself or contribute substantially to her needs. It was put to the wife that she might obtain employment in fields other than her chosen profession and thereby give more immediate effect to her self-support. My observations of the wife in the witness box was that she was incredulous at such a suggestion, for example that she might undertake work, full-time or part-time, such as in a local business. Quite clearly, she had not contemplated any such exposure to the broader job-market and readily agreed that she had not actually or contemplated making applications for employment of any type. When it was further put to her in cross-examination that the children would this year be attending full-time in school so as to allow such broader employment ambitions, the wife maintained that her ambitions lay only in re-accreditation of her tertiary qualifications.
On consideration, therefore, I accept the submissions of Counsel for the husband that the wife's proposals as to her self-support are ‘aspirational' rather than practical and hence do not serve to discharge her onus under the threshold. In Taguchi & Taguchi[5] the wife unsuccessfully appealed against the trial judge dismissing an application for spousal maintenance where it was found that the wife was capable of finding employment but, rather, sought employment only in her chosen field as an artist. I am of the view that the circumstances here are analogous.
[5] (1987) FLC 91-836
Consequently, I am of the opinion that s.72 creates an onus on an applicant to contribute or attempt to contribute or meet his or her own support in a realistic fashion rather than simply aspirationally. It follows that I am satisfied that the wife should have made some effort to at least contribute, if not meet fully, her own needs. She gives or adduces no evidence that she has attempted to do so. She has not considered applying for any positions other than re-training of her qualifications.
Nevertheless, I must also take this matter in a realistic sense. I note again the circumstances and arrangements of the marriage which resulted in this wife taking on a role as homemaker and she has been out of the workforce effectively for the duration of the marriage.
I accept that her qualifications are stale and would require re-training. I accept that she has the responsibility for the primary care of the two young children albeit with some frequent assistance by the husband and where the children are now of school age. I accept generally the needs that she sets out in her financial statement. Whilst I am not satisfied that the wife has discharged her onus to prove that she cannot meet her needs until she has re-trained, I accept on the balance of probabilities that she has current needs that would require a contribution by the husband. I accept, however, that those needs and the wife's inability can only extend for the duration of the offer made by the husband that he meet her maintenance for a period of 12 months and where this would allow, on the wife's own evidence, her to undertake one of the options to re-train.
I am satisfied that the husband has the capacity to meet a spousal maintenance order.
As to the quantum of that order for the period of 12 months, I am comfortably satisfied that the wife has a deficit of expenses over income of $710 per week being the amount sought by her. The order will be, therefore, in that quantum and for a period of 12 months.
I certify that the preceding sixty four (64) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Date: 13 March 2020
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Fiduciary Duty
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Constructive Trust
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