Reaves and Baier - [2011] FMCAfam 366

FEDERAL MAGISTRATES COURT OF AUSTRALIA

REAVES & BAIER

[2011] FMCAfam 366

FAMILY LAW – Alteration of property interests under s.79 – add backs – assessment of contribution and future needs – husband has [occupation omitted] pension – wife has lump sum compensation payment.

Family Law Act 1975, ss.75(2)(o), 79(4)(d)-(g), 117

Browne and Green (1999) FLC 92-873
DJM and JLM (1998) FLC 92-816
Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Kowaliw and Kowaliw (1981) FLC 91-092
Norbis v Norbis (1986) 161 CLR 513
AJO v GRO (2005) FLC 93-218
T and T [Pension Splitting] (2006) FamCA 207
Townsend and Townsend (1995) FLC 92-569

Applicant:

MS REAVES

Respondent:

MR BAIER

File Number:

WOC 533 of 2008

Judgment of:

Altobelli FM

Hearing dates:

6 & 7 May 2010, 9 September 2010, 28 January 2011, 25 May 2011

Date of Last Submission:

25 May 2011

Delivered at:

Sydney

Delivered on:

28 June 2011

REPRESENTATION

Counsel for the Applicant:

Mr Batey

Solicitors for the Applicant:

Rossi Simicic Lawyers

Counsel for the Respondent:

Ms Gillies

Solicitors for the Respondent:

Hansons Lawyers

ORDERS

THE COURT ORDERS THAT:

The parties are to do all things necessary to cause the sale proceeds of Property F to be divided between them as follows:
(a)$394,767 to the wife;
(b)$217,400 to the husband;
(c)The balance remaining, if any, as to 55% to the wife, remainder to the husband.
The husband is within 7 days to do all things necessary to transfer to the wife ownership and possession of the Yamaha Jet Ski.
The husband is to indemnify the wife in relation to any loan by [X] to the husband.
The husband is otherwise declared to be the sole owner at law and in equity of his [omitted] pension and all other property in his possession and control.
The wife is otherwise declared to be the sole owner at law and in equity of her [F] Superannuation and all other property in her possession and control.
In the event that either party refuses or neglects to execute any documents necessary to give effect to these Orders, a Registrar of the Court be appointed under s.106A to execute such document in the name of such party and to do all acts and things necessary to give validity to their operation of that document.
Leave be granted to relist the matter before Federal Magistrate Altobelli on 7 days notice in relation to the interpretation, implementation or enforcement of these Orders.

IT IS NOTED that publication of this judgment under the pseudonym Reaves & Baier is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

WOC 533 of 2008

MS REAVES

Applicant

And

MR BAIER

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application under section 79 of the Family Law Act for alteration of property interests, commonly known as an application for a property settlement. The wife is the applicant. She is 50 years old. The respondent is the husband and he too is 50 years old. They commenced cohabitation on [date omitted] 1984 when they married, and separated on 13 November 2007. They thus cohabited for a period of about 23 years. They have two children, [X] who is now 20 years old, and [Y] 18 years old. There is clearly a high level of conflict between the husband and the wife even though separation took place over three years ago.

Background

When the parties married in 1984 the husband was a [occupation omitted], and the wife a [occupation omitted]. At some time early in the marriage, or shortly beforehand, the husband had purchased in his name land at [S], south of Sydney. It is common ground that by the time of the marriage his equity in the property was no more than about $10,000. In any event by 1987 the parties had constructed a dwelling on the land, which considerably increased its value. The [S] property was sold for $195,000 in 1989 and this enabled them to purchase the former matrimonial home at Property F in the [omitted] region of New South Wales for $134,000.
This also meant that they did not need a mortgage to purchase that property. Over subsequent years the parties renovated and extended the former matrimonial home. In 1995 the wife received an inheritance from her grandfather, which was put towards the cost of renovations.
The two children were born in 1989 and 1981 and there were periods when the wife ceased working, but then returned to work either part time, and later full time basis.
In 2000 and 2004 the husband was injured at work, [occupation details omitted]. In 2004 the wife suffered a spinal injury during the course of her work as a [omitted]. Both received medical treatment following on these injuries, including surgery. The husband retired from [omitted] in 2005. In February 2007 he received a “[omitted]” pension. He also received a number of other financial benefits arising out of his retirement from [omitted].
The wife also received a number of benefits arising from her injury, and in the fullness of time she too was medically retired. I will provide more details about this in my reasons below.
The parties separated in November 2007. At the moment the husband lives with his parents and the wife lives in rented accommodation. The former matrimonial home was sold in 2008 and there is an amount representing sale proceeds kept in a controlled moneys bank account. As at 28 January 2011 the balance of this account was $612,167.
The evidence in the wife’s case consisted of her affidavits, and a substantial number of affidavits of supporting witnesses, including medical witnesses. As it turned out, not all of these witnesses were required for cross-examination and, I record, I doubt whether the evidence of these witnesses would have been necessary, in any event. The evidence in the husband’s case consisted of his affidavits and affidavits from his parents and Dr G. Both parties relied on documents produced on subpoena.
The orders sought by the wife are contained in her outline of case document prepared by her Counsel Mr Batey, dated 5 May 2010. She seeks an equal division of the moneys held in the controlled moneys account, but that the husband pay to her $9000 from his share of the same. She also seeks a splitting order in relation to the husband’s superannuation which would give her an amount being approximately half of his entitlement. There was an issue in the proceedings as to what the wife can do with the post-split [omitted] pension if such an order were made. The wife otherwise proposes that each of them retain what they presently have in their possession or control.
The orders sought by the husband are contained in a document entitled “Short minutes of order sought by the husband”, dated 6 May 2010. He proposes that the moneys in the controlled moneys account be divided equally and that the parties otherwise retain everything in their possession or control.

Issues

Notwithstanding the intensity with which this litigation was conducted the issues may be clustered under three headings. Both parties raise what I will describe as balance sheet issues to which I will need to refer individually. Through their Counsel the parties they were able to reach agreement about a single balance sheet which reflected a number of discrete differences. I will adjudicate in relation to these discrete differences.
The second major issue relates to the assessment of contribution. As will be seen this assessment exercise is rendered more complex by the prevalence of personal injuries compensation claims received by each of the husband and wife, one of which is received in the form of pension, and the relatively high proportion that these bear to the asset pool. There is also an issue about assessing contribution to superannuation. Both parties, through their Counsel, advocated different approaches to the assessment of contribution, and in particular as regards the creation of separate pools of assets.
The third major issue is the assessment of section 75(2) considerations. In this regard there was what I can only describe as an unholy, undignified scramble by both parties to assert the superiority of their own 75(2) factors and the inferiority of the others. The fact is that both husband and wife suffer from current medical conditions which will have an impact on their respective futures, though not necessarily to the same degree.
After having considered all of the issues referred to above, I will also need to decide what a just and equitable order to make is, in the circumstance of this case.

Applicable law

The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
In relation to add-backs, the applicable law can be found in decisions such as the Full Court's decision in AJO v GRO (2005) FLC 93-218 and again I will incorporate into these my ex tempore reasons, relevant passages from that Full Court decision that describes the situations in which add-backs are appropriate.
30.    To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a)    Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
“11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b)    Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c)     In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)     where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)     where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec.75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.”
31.    As the Full Court said in Browne and Green (1999) FLC 92-873 at 86,360:
“44. We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction – a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.”

Balance sheet issues

I reproduce below the joint balance sheet submitted by Counsel for both parties.

Name:	REAVES & BAIER
DRAFT JOINT
BALANCE SHEET		File No:	WOC 533 of 2008
Date:	28.01.11
Before:	ALTOBELLI F.M.
No.	Ownership	Description	Husband's	Wife's	Wife's Comments
value	value				Wife's Comments
ASSETS
1	Joint	Sale proceeds of Property F		$612,167	$612,167	As at 28.01.11
2	Husband	[omitted] Credit Union Account		$1,200	$1,200	As at 28.01.11
3	Husband	[Z] Account		$700	$700	As at 28.01.11
4	Husband	Yamaha Jet Ski		$500	$6,000	Wife's estimate from Dealer
5	Husband	Honda Motor cycle		$5,250	$5,250	Agreed
6	Husband	2004 Holden Rodeo car		$13,150	$13,150	Agreed
7	Husband	Furniture retained by Husband at separation		$5,000	$5,000	Agreed
8	Wife	Bank of Qld (Compo money term deposit)		$304,196	$304,196	As at 28.01.11
9	Wife	Bank of Qld (Compo Money - savings a/c)		$60,484	$60,484	As at 28.01.11
10	Wife	[G] credit Union		$3,049	$3,049	As at 28.01.11
11	Wife	[Z] Account	NK	Closed	As at 28.01.11
12	Wife	CBA Account		$932	$932	As at 28.01.11
13	Wife	2007 Toyota Corolla		$16,750	$0	Mean value of Red book. Wife asserts both parties agreed to give to [X]
14	Wife	2007 Toyota RAV 4		$24,300	$24,300	Agreed
15	Wife	Household contents		$5,000	$5,000
16	Husband	Additional furniture bought by husband		NK	NK
TOTAL GROSS ASSETS			$1,052,678	$1,041,428
ADD BACKS OF MONEY SPENT SINCE SEPARATION
17	Husband	50% of Husband's net pension received from date of separation		NIL	$72,000	Wife claims a 50% entitlement as pension is a matrimonial asset
18	Husband	Bike trailer sold	NK	$8,000	Wife's assertion of average internet values
19	Husband	Holden Nova sold		$5,000	Value ascribed by husband in bank documents
TOTAL ADD BACKS				$0	$85,000
TOTAL GROSS ASSETS		$1,052,678	$1,126,428
LIABILITIES
Husband's	Wife's
Ownership	Description	value	value
20	Husband	[omitted] Credit Union	$1,000	NIL	No debt as at date of separation
21	Husband	Loan from parents		$7,000	NIL
22	Husband	Loan from [X]		$3,000	$3,868	Difference is outstanding interest agreed by the parties at 4%
23	Wife	City Bank Mastercard		$2,259	$2,259	As at separation
24	Wife	St George Visa credit card		$3,824	$3,824	As at separation
25	Joint	Tax on interest on sale proceeds		NK	NK	Not a Joint liability
TOTAL LIABILITIES				$17,083	$9,951
NET TANGIBLE ASSETS				$1,035,595	$1,116,477
SUPERANNUATION
No.	Ownership	Description	Husband's	Wife's
value	value
26	Wife	First State Super		$166,052	$166,052	As at 28.01.11
27	Husband	Husband's super in payment phase		$1,150,645	$1,150,645	As at September 2010
TOTAL SUPERANNUATION ENTITLEMENTS			$1,316,697	$1,316,697
GRAND TOTAL OF NET ASSETS & SUPERANNUATION			$2,352,292	$2,433,174

The first issue in the balance sheet relates to item 4, the Yamaha Jet Ski. This is in the husband’s possession, but both parties want it. The husband says it is worth $500, but the wife says it is $6000. Neither party advanced expert evidence as to the real value of this item. Both the husband and the wife made arguments as to why they should retain the Jet Ski, and I do not intend to set out those arguments here. I find that I am unable to distinguish between the merits of their respective claims to the Jet Ski, but in the circumstances where giving the Jet Ski to the wife adds $5,500 to the joint balance sheet, I propose to accept the wife’s valuation at $6,000 and to award that item to her. By so doing, both the husband and the wife get mutual benefit in that the wife gets the item she wants, and the husband has a significant value attributed to it.
An issue arises between the parties as to items 8, 9, 10 and 11 being various bank accounts in the wife’s name. These accounts purport to represent the proceeds of the wife’s compensation claims, but are based on current values i.e. the amount held in these accounts as at

28 January 2011. The husband asserts, however, that the amount that should be included in the balance sheet is the amount that was actually received by the wife and that, therefore, there should be added back and treated as notional property the difference between the current balances, and the amounts that she received. The total amounts in the bank accounts at items 8-11 is $367,729. The wife received the first tranche of her compensation in October 2007 when she was paid $117,000. In November 2007 the parties separated. In April 2008 the wife received the second tranche, $501,943. Thus, the total she received is $618,943. This total amount received was depleted by $251,214.
The wife’s argument is that none of this should be added back because all of these moneys are rightfully hers and are funds in respect of which the husband has made no contribution. In any event the assertion is that the moneys were used for reasonable purposes as outlined in her affidavit, including for her self support, and the provision of motor vehicles for both her children, the cost of the proceedings as well as relocation cost for her personally. On behalf of the husband it is submitted that the expenditure of this money is a premature distribution of assets and thus should be added back.

I am not prepared to add back any money that was spent by the wife on her self support and relocation expenses in what is a lengthy post separation period. Such expenditure is, in my opinion, entirely reasonable, on the evidence before me. It was conceded on the wife’s behalf that about $90,000 of this amount was spent on legal fees and whilst in other cases this amount might be added back in this case I decline to do so because what little evidence I have on the question of legal fees paid by the parties, and sources thereof, tend to indicate that both paid their legal fees out of funds available to them.
I thus decline to add back any part of the amount by which the wife’s compensation moneys were depleted.
There is an issue between the parties as to item 13, a 2007 Toyota Corolla motor vehicle which the wife gave to her daughter [X], funded from the proceeds of the compensation payments discussed above. There is no admissible evidence before me as to the value of this car. I decline to add it back for the same reasons articulated in relation to items 8 to 11 above. In the circumstances of this case it is reasonable for the wife to have spent the money as she did. Surely, on any reasonable basis, there is benefit to the husband in having his own daughter provided with a suitable motor vehicle? It is a measure of the bitterness with which these proceedings were conducted that he would advance propositions that could well see his own daughter disadvantaged by his approach to the property settlement, in this regard. As will be seen, however, the wife similarly adopts an unreasonable approach in relation to other items.
There is a dispute in relation to item 17, representing half of the husband’s net pension received from the date of the separation. The wife says that whilst this is the husband’s pension earned after separation, it is a pension to which she contributed during the course of the marriage, and therefore it should be added back. The capital value of the pension is quantified at item 27 of the balance sheet, and contribution will need to be assessed in this regard separately. There was no evidence before me to indicate that the husband’s expenditure was in any way unreasonable, or was for anything other than the living expenses, and legal fees in the post separation period. Indeed, my reasons for not adding back item 17 are basically the same reasons for not making the add backs at items 8-11.
There is a dispute about items 18 and 19 being a bike trailer and Holden motor vehicle sold by the husband. The evidence indicates that he sold these items for $2,000 and $4,000 respectively, but I have no evidence whatsoever as to market value and the wife’s assertion of value is based on inadmissible sources. The husband says that his son [Y] received the benefit of these moneys in the sense that they were paid into his own bank account. The wife did not challenge this. The disposal of the vehicles, and the payment to the son [Y], all occurred in the post separation period. I decline to add these moneys back, in the exercise of my discretion. There can be no issue that [Y] benefited from receiving these moneys. Even if it is, technically, a premature distribution of assets, it is no different from item 13, being the Toyota Corolla purchased for the other child of the marriage, [X]. The effect of the wife’s submission that there should be an add back may well have had the impact of reducing or depriving a benefit available to her own son. Again, this reflects the bitterness with which these proceedings were conducted. I decline to make the add back.
The wife disputes item 20, the husband’s [omitted] credit union debt at the date of separation. She asserts it is a post separation debt. The husband’s Counsel conceded that there was no specific evidence to establish the existence of this debt at the date of separation. I decline to add it back.
Item 21 was the hotly disputed loan to the husband from his parents. The wife asserts that that should not be on the balance sheet at all. However, in closing submissions on her behalf, it was accepted that in fact $7000 was advanced by the husband’s parents, and that it should be characterised as a gift. In the wife’s case she pointed, quite properly, to inconsistencies in the husband’s evidence about his assertion of funds being a loan advanced, especially the absence of reference to this in the husband’s financial statements. The husband asserts that, having regard to annexure A to the husband’s affidavit of 21 April 2009, being a document that the wife (I find) prepared, this represents an admission against the wife that $7000 was a debt. I find that even if it is a debt, it is characterised by the all too common uncertainty surrounding such inter family transactions, including the lack of demand for payment, or any specificity as to when it is due and payable. In the circumstances, as the wife has conceded it should be treated as a gift, and as the logical inference to be drawn from this is that it was a gift that came to them because of the husband’s relationship with the parents, I will not treat it as a debt on the balance sheet, but rather as a contribution made through the husband.
There is a dispute about item 22, being a loan from [X] to the husband. The parties concur that it should appear on the balance sheet as a joint liability. The issue is whether it should be quantified as the principal only ($3,000) or the principal and interest ($3,860). I have little or no evidence on this issue so it amazes me that the parties would ask the Court to adjudicate on this. The husband does not dispute that the interest calculation is correct, but certainly does not concede that any interest is payable. Given that they are both likely to be disadvantaged by the imposition of interest, and as this benefits their daughter, I am prepared to accept that item 22 should be $3,868.
There is a dispute about items 23 and 24, being credit card debts owed by the wife, purportedly at separation. She says that these were debts at the date of separation and that the card had been used for joint purposes. I do not accept the wife’s evidence in this regard. Indeed, there is evidence to the effect that she used one of these credit cards to pay for a private investigator to conduct surveillance of the husband. This could hardly be classified as expenditure for joint benefit. The overall evidence in this case indicates that the wife had access to substantial funds as at the date of separation in the form of, at the very least, the first tranche of her compensation payment of $117,000. It is unlikely, in these circumstances, that this was money owed at the date of the separation and used for joint purposes. I will not allow the add back.
Having regard to my findings above, I therefore find the final balance sheet between the parties to be as follows: -

BALANCE SHEET
No.		Ownership	Description	Value
ASSETS
1		Joint	Sale proceeds of Property F		$612,167
2		Husband	[omitted] Credit Union Account		$1,200
3		Husband	[Z] Account		$700
4		Wife	Yamaha Jet Ski		$6,000
5		Husband	Honda Motor cycle		$5,250
6		Husband	2004 Holden Rodeo car		$13,150
7		Husband	Furniture retained by Husband at separation		$5,000
8		Wife	Bank of Qld (Compo money term deposit)		$304,196
9		Wife	Bank of Qld (Compo Money - savings a/c)		$60,484
10		Wife	[G] credit Union		$3,049
11		Wife	[Z] Account	Nil
12		Wife	CBA Account		$932
13		Wife	2007 Toyota Corolla		$0
14		Wife	2007 Toyota RAV 4		$24,300
15		Wife	Household contents		$5,000
16		Husband	Additional furniture bought by husband		NK
TOTAL GROSS ASSETS			$1,041,428
ADD BACKS OF MONEY SPENT SINCE SEPARATION
17		Husband	50% of Husband's net pension received from date of separation		NIL
18		Husband	Bike trailer sold	Nil
19		Husband	Holden Nova sold		Nil
TOTAL ADD BACKS					$0
TOTAL GROSS ASSETS		$1,041,428
LIABILITIES
Husband's
Ownership	Description	value
20		Husband	[omitted] Credit Union	$0
21		Husband	Loan from parents		$0
22		Husband	Loan from [X]		$3,868
23		Wife	City Bank Mastercard		$0
24		Wife	St George Visa credit card		$0
25		Joint	Tax on interest on sale proceeds		NK
TOTAL LIABILITIES					$3,868
NET TANGIBLE ASSETS					$1,037,560
SUPERANNUATION
No.		Ownership	Description	Husband's
value
26		Wife	First State Super		$166,052
27		Husband	Husband's super in payment phase		$1,150,645
TOTAL SUPERANNUATION ENTITLEMENTS			$1,316,697
GRAND TOTAL OF NET ASSETS & SUPERANNUATION			$2,354,257

Contribution

The parties, through their Counsel, conceded in opening submissions that, apart from issues of characterisation and assessment of injury related compensation payments, contribution at the date of the separation should be assessed as being equal. I believe this concession was entirely appropriate, and reflects the reality of the evidence before me. The focus, therefore, now shifts to assessing contribution as a result of the impact of receiving three payments:-
1) a lump sum of $94,466 received by the husband in February 2007.
2) a lump sum of $117,000 received by the wife shortly before separation, in October 2007
3) a lump sum of $501,943 received by the wife in April 2008
The 4^th major issue is how contribution is to be assessed as regards the husband’s [omitted] pension.
I consider the first payment referred to above. The husband joined [occupation omitted] in the same year as he married. He was injured at work in 2000 and 2004 and was medically discharged in 2007. He received a number of payments that are specified at paragraph 71 of his affidavit, totalling $94,464. It comprises long service leave and holiday pay, superannuation benefits and a whole person impairment payment. He asserts, and there was no real dispute, that $89,041 went to pay off the family mortgage. In assessing the weight to be given to this contribution it needs to be recognised that, with the possible exception of the whole person impairment payment of $17,375 (or about 18 per cent of the total payment) the benefits were received or accumulated during the marriage, and therefore the wife has contributed to the same.
Turning to the wife’s payment, $117,000 was received before separation, and $502,000 received after separation (with rounding off). The wife’s work related injury was in 2004, she underwent surgery in 2005, and then in October 2007 received a $117,000 for the pain and suffering under sections 66 and 67 of the Workers Compensation Legislation in New South Wales. Then, in April 2008, she settled her claim for future economic loss at $501,943, which I will simply round off to $502,000.
The wife’s case is that she made 100 per cent contribution to these payments. The husband’s case is that as the injury predated the date of separation, he undertook additional tasks in caring for the wife, and in making contributions for her benefit, and for the benefit of the family. The husband therefore asserts that he has contributed to that compensation payment.
The wife says that the compensation payment should form part of a separate pool, but the husband says that given its size in proportion to the total asset pool, this would not be just and equitable to him.
The husband was unable to quantify in percentage terms what his claim to this compensation payment is. His Counsel submitted that the compensation payment cannot be looked at in isolation. It was conceded that the pain and suffering component of $117,000 should be treated differently. I certainly accept this last point, but I am attracted to the proposition of treating this asset distinctly from the others. Indeed, it is far easier (and I believe fairer to the husband) to assess the husband’s contribution if it is treated as a separate pool for assessment purposes, and I find that it is appropriate to treat it in this fashion. This is particularly the case given that it was received so late in the relationship of the parties. Nonetheless, it is of course important to assess the husband’s contribution and to critically assess the wife’s assertion that her contribution should be assessed as 100 per cent.
The relevant period is 2004 to the date of separation in 2007. This was a period when the husband was himself off work for part of the time, as well as recovering from injury. The husband’s evidence about assisting the wife during this period is set out at paragraphs 63-67 of this affidavit. He gives extensive evidence about the nature of the disabilities that she suffered at paragraph 75 onwards, but these are more relevant to the assessment of section 75(2) considerations and do not greatly support the husband’s case for contribution. It is necessary, nonetheless, to explore the issue of the extent of the wife’s disabilities, and thus the extent to which she would have needed assistance from the husband. The wife’s evidence about her disabilities is characterised by a number of things. Firstly, as a general preposition, I find that wherever possible the wife sought to minimise the husband’s contribution both financial and non-financial, direct and indirect. This was plainly evident in her cross-examination. An example of this is the transformation in her case about the characterisation of the parents’ loan which went initially from knowing absolutely nothing about this money, to a concession in closing submissions that it was in fact a gift. It was disingenuous of the wife to do so. Secondly, I have doubts about some of the wife’s evidence generally. For example, I am satisfied she knew far more about the husband’s financial situation than she stated in her affidavit evidence. This became apparent during her cross-examination. Thirdly, I find that the wife has exaggerated, at times, the nature of her disabilities and their impact on her life. I will explore this in more detail in the context of assessing section 75(2) considerations. Because of all of these matters, I prefer the husband’s evidence to that of the wife in terms of his assistance towards her, during the relevant period.
Even though I make this finding, assessing his contribution to the compensation payments is quite another issue. Given the relatively short period during which the contribution was made, and the fact that the compensation is designed to cover the wife for the rest of her life, I would not be prepared to assess the husband’s contribution at anything above 5 per cent of $502,000, i.e. excluding the pain and suffering component. In the circumstances of this case, I consider this to be just and equitable. This is based on his own evidence about what he did, as well as the evidence of the wife’s disabilities. In so finding, I acknowledge that I have not accepted Mr Batey’s submissions to the effect that any additional contribution by the husband during the relevant period could not be translated into a vicarious contribution to the wife’s lump sum. With respect, in circumstances where he urged me to treat this asset as a separate pool, how else could the husband’s contribution be recognised? At the end of the day the husband’s contribution needs to be recognised in some way and it is far more transparent to express it as a percentage of the lump sum.
Accordingly, I find that the husband contributed 5 per cent towards the wife’s compensation payments excluding pain and suffering. I intend to round down the husband’s contribution to $25,000.
I turn now to consider superannuation. The wife’s [F] super was accumulated during the marriage, and in the circumstances I can see no reason why the husband should not be assessed as having contributed one half of this.
The husband’s superannuation is somewhat more complex to characterise. His is a deferred benefit fund and is in the payment phase. The agreed capital value is $1,150,645, but of course the benefit he currently receives is in the form of a pension at $1,210 per week. The evidence before me indicates that the husband could commute his pension at ages 55 and 60, and that if he commuted 100 per cent of his pension he would receive $736,967.76 on 15 May 2015 at age 55, or $680,853.47 on 15 May 2020, at age 60. He also has the option of commuting part of his pension, thus reducing the size of the lump sum, but increasing the amount he would retain as a pension.
I understood the wife’s case to be that she simply sought a splitting order of the base amount so that she would receive 50 per cent. The wife believes that she would then have certain options about taking this as a pension or commuting the same. The evidence about this was unclear. As at the date of publishing these reasons the parties still had not been able to elicit a response from the trustee of the husband’s superannuation fund about this. As it turns out, for reasons to be explained below, I have decided not to split the husband’s pension on the basis that any contribution the wife has made to it can be recognised in another way. I was not prepared, in any event, to further delay the conclusion of this long-running case.
The husband submits that the wife made no contribution to the lump sum which is the capitalised value of his pension. He submits there is no evidence to indicate that the wife made any additional contributions arising out of his injuries
The wife contends that the whole of the husband’s pension entitlement from [omitted] was accumulated during the marriage, and thus she has contributed to it.
The evidence about the husband’s pension is annexed to his affidavit of 21 April 2009 and is, for the most part, uncontentious. It is commutable in part at age 55 and 60. It is possible for the husband to apply for increased pension benefits if his incapacity to work increases. Indeed this appears to have in fact happened (see Exhibit R5). The possibility that this may happen again is a s 75(2) consideration.
In his submissions Mr Batey, Counsel for the wife, sought to draw the distinction between what he asserted was the 2 components of the husband’s entitlements: the “[omitted] pension” component, and the “superannuation allowance”. Regrettably, there is no evidence before the court that would enable it to make this distinction, as helpful as that might have been. This is somewhat surprising given that I relisted the matter before me on 25 May 2011 specifically to deal with further submissions in relation to the husband’s pension and the wife’s compensation payments. Thus, unlike T and T [Pension Splitting] (2006) FamCA 207 where Watts J had evidence about what he described as the 2 categories or elements of the husband’s superannuation, I have very little evidence to proceed on. I do know, however, that the husband received his pension benefit in April 2007 and that his withdrawal benefit as at 30 June 2006 was $316,070. That provides at least a possible benchmark for assessing contribution.
Whilst, for all practical purposes, all of the husband’s entitlement was accumulated during the marriage, the comparison between his deferred benefit of $316,070 in 2006, and the agreed value of his entitlement today, $1,150,645, is plainly attributable to the fact that he was hurt [at occupation omitted]. The wife gives no evidence of nursing the husband whilst he was injured, or any additional responsibilities she assumed. This is probably because her evidence was so focussed on minimising the husband’s injury, and the extent to which it incapacitated him. In addition, of course, the wife was herself injured, and as I find in my discussion about s.75(2) considerations, her incapacity was greater than that of the husband’s. There is no evidence of the wife’s greater role as homemaker and parent in this period. It thus becomes very difficult to discern how the wife made any contribution to the [omitted] component of the husband’s entitlement. By contrast, of course, the opposite is true in relation to his superannuation component. The wife’s contribution to this is irrefutable.

Doing the best I can on the facts of this case, and using the benchmark of the husband’s 2006 deferral benefit, I will notionally allocate 30% of the husband’s entitlement to superannuation (i.e. $345,193) and assess the wife’s contribution to this as one half. In notional terms the value of this to the wife is $172,500, though I will need to consider in due course whether this is paid to the wife by way of adjustment out of the non-superannuation assets, or whether she receives a split in her favour.

Post separation contribution

Whilst it was not entirely clear to me, I believe there was a hint of a claim for post separation contribution on behalf of the wife. Over three years has lapsed since the date of separation. The claim for post separation contribution is so poorly articulated that I cannot make any finding in this regard, and in any event I doubt very much whether on the available evidence such a claim could be sustained. I can only assume that if there was to be a claim for post separation contribution, it would relate to the pool of assets excluding the wife’s compensation. If the wife’s argument is that she has contributed to the husband’s income derived from his [occupation omitted] pension, then that hardly forms the basis of a claim for post separation contribution. The argument could be reversed in the husband’s favour in relation to the income the wife earned in the post separation period. I see nothing in the financial circumstances of the husband and the wife in relation to the post separation period that would justify an adjustment in favour of either party.

Section 75(2) considerations.

In short, the husband’s case was that there should be no section 75(2) adjustment in favour of either party, as all the relevant considerations balance each other out.
By contrast, the wife contends that there should be an adjustment in her favour between 5 and 7.5 per cent, based on the evidence before the Court.
The focal point of any potential difference in section 75(2) considerations arises out of their state of health, and the extent to which that effects their capacity for appropriate gainful employment, all of which needs to be considered in the context of what each of them will receive in the course of the section 79 property adjustment. There are other relevant section 75(2) considerations pertaining to each party, but they are inconsequential in the overall scheme of things.
The parties’ current income is as follows. The husband continues to receive his [omitted] pension which is about $1,210 per week. His own evidence is that he manages to supplement this income with some part time employment. He says that his capacity to work further is limited by his medical condition.
The evidence in relation to the wife indicates that since September 2010 her employment was terminated by her employer based on her incapacity. She was, in effect, retired on medical grounds. On 9 September 2010 she received final termination related payments totalling $22,104.55. She has retained these moneys. The evidence indicates the wife is entitled to some form of disability benefit, derived from her superannuation entitlement. The evidence about this, however, was poorly articulated. In her Counsel’s written submissions there is reference to the value of the disability component being $93,000, but in exhibit A17, some documents from [F] super, her total and permanent disablement benefits appear to be as high as $237,085. What is unclear is whether she has applied for this benefit and what progress she has made in becoming entitled to the same. In any event, this leaves the wife in a parlous situation with little or no income other than from the invested compensation funds, and in a situation where because of her compensation settlements she is unable to receive any Centrelink benefit until 2016. Nonetheless, the wife’s potential section 75(2) entitlement cannot ignore the fact that she makes a claim to part of the husband’s [omitted] pension.
Both parties advanced quite extensive medical evidence in support of their claims. I was left with a deep scepticism about all of this evidence. I was left wondering whether partisanship prevailed over independence in much of the evidence advanced on behalf of both the husband and the wife. The most significant undermining factors in the evidence advanced by the medical experts on behalf of their patient is the inconsistency between what each party represented to their doctors to be their disabilities, and the evidence before me about the true level of their disability. I am not asserting that neither of these parties do not have health problems. Indeed they have quite serious health problems resulting in disabilities. What the evidence does lead me to conclude, however, is that these disabilities have been conveniently exaggerated for the specific purpose and context in which that evidence was sought. I heard evidence about the physical activities of both parties since their respective injuries, which is plainly inconsistent with what they told their doctors. I would be very surprised indeed if the doctors who saw both the husband and wife would have produced the reports that they did, if they had the evidence before them that I did, about the level of activities both the husband and the wife engaged in. As Counsel for one party stated in closing submissions, the medical evidence was very much dependent upon the history provided by the patient. Of course, that cuts both ways, hence my deep scepticism about all the medical evidence.
If the wife had been able to convince me that, as her specialist Dr F states, she has no capacity for employment, then she would be entitled to a significant section 75(2) adjustment in her favour. However, I agree with submissions of Counsel for the husband in this regard that Dr F’s report, and the wife’s other medical evidence, does not deal with the wife’s capacity for future employment generally, it merely focuses on her capacity for her present employment as a [omitted]. I accept that the evidence indicates she does not have the capacity for full time employment, and indeed part time employment as a [omitted] may be problematic. But that does not mean that she could not work part time in other employment contexts. The wife is clearly an intelligent, articulate and resourceful woman and I have no doubt that on the completion of these proceeding she will be able to find some form of employment on a part time basis that enables her to use her skill, but which is nonetheless within her medical capacity. Indeed, it is quite possible that her legal skills are far more marketable than the husband’s skills.
Despite these comments, when the wife’s incapacity is compared to that of the husband’s, there remains a disparity. His percentage impairment is significantly less than the wife. He has available to him, should the need ever arise, the opportunity to apply for an increase in his pension. His ongoing medical expenses are not met by him, whereas the wife must meet her own. Even allowing for any disability benefit the wife may be able to assess, she is still in a more vulnerable position compared to the husband, so far as the future is concerned. In these circumstances I make a 5% adjustment in favour of the wife, conscious of the 10% discrepancy this produces, in the context to which I will apply it.

A just and equitable order?

On the facts of this case I believe that it is just and equitable to in fact have 4 pools of assets:
a)The first pool of assets consists of the wife’s compensation payment. The husband is to receive $25,000. This means that out of the cash represented in items 8-11 of the schedule i.e. $367,729 the wife gets $342,729 and the husband gets $25,000.
b)The second pool of assets consists of the husband’s pension entitlement having a notional value of $1,150,645, in respect of which the wife should receive $172,500.
c)The third pool of assets is the wife’s [F] Superannuation of $166,052, of which the husband should receive $83,036.
d)The Fourth pool consists of all remaining assets, the most significant of which is the monies from the sale of the home. It is in respect of this pool that the wife’s s.75(2) adjustment should be levied, thus giving her 55%. I do not propose to make the s.75(2) adjustment to the second pool of assets due to the artificiality of doing so.
Implementing this decision raises a number of issues. I decline to split the husband’s pension. It is his income stream. In any event whatever the wife’s entitlement might be, it is not likely to be a high weekly payment. My preference is to give her cash out of the sale proceeds, which I suspect will be more useful to her. I also prefer not to split the wife’s superannuation, meaning that this adjustment should also be made out of non-superannuation. She needs her superannuation, and he does not have this need. If the husband’s entitlement to $25,000 out of the wife’s compensation, and $83,036 out of the wife’s superannuation is set off against the wife’s entitlement out of the husband’s pension of $172,000, this results in a net adjustment to the wife of:
$172,000 – ($25,000 + $83,036) = $63,964
This should be paid out of the fourth pool of assets. The fourth pool of assets therefore consists of:

Asset Ownership Value

Sale Proceeds Home Joint $612,167.00

[omitted] Credit Union Account H $1,200.00

[Z] Account H $700.00

Yamaha Jet Ski W $6,000.00

Honda Motorcycle H $5,250.00

Holden Rodeo H $13,150.00

Furniture H $5,000.00

[G] Credit Union W $3,049.00

CBA Account W $932.00

Toyota Corolla W Nil

Toyota RAV4 W $24,300.00

Household Contents W $5,000.00

Liabilities

[X] Loan H -$3,868.00

Net $672,880.00

The wife is to receive 55% of this part, together with a further $63,964. On the figures available this means the wife would receive $434,048 less the value of the items she already possesses ($6,000 + $3,049 + $932 + $24,300 + $5,000 = $39,281) leaving a net payment to her of $394,767.
The husband is to receive 45% of this pool, less $63,964. This means his entitlement is $238,832 less the value of the items he already possesses ($1,200 + $700 + $5,250 + $13,150 + $5,000 less $8,868 = $21,432) leaving him with a net payment of $217,400.
In circumstances where the wife also retains her superannuation and the monies remaining from her compensation claim, I am satisfied that this is just and equitable. Moreover, in circumstances where the husband retains his [omitted] pension, I am satisfied that this is as just and equitable as the circumstances of this case will allow. In real terms he is asset poor but has a guaranteed income, whereas she may be comparatively cashed up with little income. Both will face challenges re-accommodating themselves. It must be remembered that this is a case where both have s.75(2) factors operating in their favour, but where there is a differential operating in the wife’s favour.

I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Date: 28 June 2011

Asset	Ownership	Value
Sale Proceeds Home	Joint	$612,167.00
[omitted] Credit Union Account	H	$1,200.00
[Z] Account	H	$700.00
Yamaha Jet Ski	W	$6,000.00
Honda Motorcycle	H	$5,250.00
Holden Rodeo	H	$13,150.00
Furniture	H	$5,000.00
[G] Credit Union	W	$3,049.00
CBA Account	W	$932.00
Toyota Corolla	W	Nil
Toyota RAV4	W	$24,300.00
Household Contents	W	$5,000.00
Liabilities
[X] Loan	H	-$3,868.00
Net	$672,880.00