REDDEN & PENNINGTON
[2013] FamCA 123
•1 March 2013
FAMILY COURT OF AUSTRALIA
| REDDEN & PENNINGTON | [2013] FamCA 123 |
| FAMILY LAW – PROPERTY SETTLEMENT – final orders – adjustment of property interests – consideration of whether the Court should add back post-separation expenditure into the matrimonial asset pool – where pecuniary gifts given by the wife after separation to her new partner were added back to the matrimonial asset pool – where the contributions were assessed at 55:45 in favour of the wife – no adjustment made upon consideration of s 75(2) factors. FAMILY LAW – PROPERTY SETTLEMENT – superannuation – where it was not just and equitable to bring the superannuation expectations into account as an asset of the matrimonial property – superannuation splitting order made to achieve 50:50 split of the superannuation accounts of the parties. |
| Family Law Act 1975 (Cth) 75, 79, 90MT Family Law Act (Superannuation) Regulations 2001 (Cth) |
| Cerini and Cerini [1998] FamCA 143 Chorn and Hopkins (2004) FLC 93-204 Ferraro and Ferraro (1993) FLC 92-335 Omacini and Omacini (2005) FLC 93-218 Shimizu & Tanner [2011] FamCA 271 Stanford & Stanford [2012] HCA 52 Kouper & Kouper (No 3) [2009] FamCA 1080 |
| APPLICANT: | Ms Redden |
| RESPONDENT: | Mr Pennington |
| FILE NUMBER: | ADC | 1511 | of | 2011 |
| DATE DELIVERED: | 1 March 2013 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Dawe J |
| HEARING DATE: | 18-22 June & 15-16 August 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Dickson |
| SOLICITOR FOR THE APPLICANT: | David Burrell & Co (Formerly Robinson & Mason) |
| COUNSEL FOR THE RESPONDENT: | Mr McQuade |
| SOLICITOR FOR THE RESPONDENT: | Adey Lawyers |
Orders
That in full and final settlement of all claims between the parties for settlement of property under Part VIII of the Family Law Act 1975 as amended that:
(a)Within thirty (30) days of this date the wife do transfer to the husband all her right, title and interest both at law and in equity in the house property situated B Street, Suburb A in the State of South Australia.
(b)Contemporaneously with the transfer set out in paragraph 1(a) herein, the husband shall discharge the mortgage in the joint names of the parties and he shall refinance the said mortgage into his sole name and indemnify and keep indemnified forever the wife in respect of the same.
(c)As and from the date of this Order the husband shall indemnify and keep forever indemnified the wife with respect to any and all liabilities that have accrued or which shall accrue, from time to time, with respect to the former matrimonial home including but not limited to the mortgage commitments secured by the former matrimonial home or other property, rates, taxes, utilities and all other outgoings.
(d)Contemporaneously with the transfer as set out in paragraph 1(a) herein, the husband shall pay the wife’s solicitors trust Account on behalf of the wife the sum of FIVE HUNDRED AND EIGHT THOUSAND SEVEN HUNDRED AND THIRTY FOUR DOLLARS AND NINETY-THREE CENTS [$508,734.93].
(e)As and from the date of this Order the wife is to retain all assets which she now has in her possession whensoever and howsoever acquired and the wife shall retain for her sole use and benefit absolutely free from any further claim or demand of the husband the following:
(i)The furniture, furnishings and other articles of domestic use normally in her possession, power or control;
(ii)The savings and investments in her sole name;
(iii)Her superannuation (save and except as provided for herein) long service leave, annual leave and any other work related benefit;
(iv)Her personal effects, including but not limited to jewellery;
(v)Any other real and/or personal property and/or financial resources of the wife in the wife’s name and/or possession not otherwise specified herein.
(f)Save and except as provided for herein as and from the date of this Order the husband is to retain all assets which he now has in his possession whensoever and howsoever acquired and the husband shall retain for his sole use and benefit absolutely free from any further claim or demand of the wife the following:
(i)The furniture, furnishings and other articles of domestic use normally in his possession, power or control;
(ii)The motor vehicle in his possession;
(iii)The savings and investments in his sole name;
(iv)His superannuation, long service leave, annual leave and any other work related benefit;
(v)His personal effects;
(vi)Any other real and/or personal property and/or financial resources of the husband in the husband’s name and/or possession not otherwise specified herein.
(g)If the husband shall fail to pay the sum referred to in paragraph 1(d) herein, then interest shall run on the outstanding amount of such payment from the date of default to the date of payment at the rate of ten point seven five percent (10.75%) per annum and if such default shall continue for more than one calendar month, the former matrimonial home shall be placed on the market for sale with such agents and upon such terms as may be agreed between the parties and failing agreement as determined by this Honourable Court and the proceeds of sale shall be applied as follows:-
(i)Firstly, in payment of all costs and disbursements incurred in relation to such sale;
(ii)Secondly, to discharge the mortgage and any other encumbrances affecting or registered against the former matrimonial home;
(iii)Thirdly, to the wife the sum of FIVE HUNDRED AND EIGHT THOUSAND SEVEN HUNDRED AND THIRTY FOUR DOLLARS AND NINETY-THREE CENTS [$508,734.93] (or so much thereof as is then outstanding) plus any interest accrued and owing as set out herein;
(iii)Fourthly, in payment of any and all legal, accounting or other professional costs and expenses incurred by the wife in enforcing or giving effect to this Order;
(iv)Finally, to the husband the remaining balance (if any).
(h)As required by Section 90MT (4) of the Family Law Act 1975 the Court allocates a base amount of FIFTY SEVEN THOUSAND TWO HUNDRED AND FIVE DOLLARS AND NINETY-ONE CENTS [$57,205.91] to the husband out of the wife’s interest in the Q Superannuation Fund (“the fund”).
(i)Pursuant to Section 90MT (1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable from the wife’s interest in the fund, the trustee shall pay to the husband or his administrators, executors, beneficiaries, heirs or assigns the entitlements calculated in accordance with Part VII of the Family Law (Superannuation) Regulations 2001 using a base amount of FIFTY SEVEN THOUSAND TWO HUNDRED AND FIVE DOLLARS AND NINETY-ONE CENTS [$57,205.91] and there shall be a corresponding reduction to the entitlement the wife would have received from the fund but for these Orders.
(j)Within fourteen [14] days of the date of this Order the husband is to serve upon the trustee of the wife’s Q Superannuation fund a sealed copy of these orders.
(k)These Orders bind the trustees of the fund to observe the trustee’s obligation set out in the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, noting that such trustees have been accorded procedural fairness.
(l)The trustees of the fund in accordance with the Family Law Act 1975 shall do all such acts and things and sign the necessary documents as may be necessary to make payment to the husband in accordance with the terms herein.
(m)The Order for splitting has effect from the operative time, being the fourth (4th) business day after which a copy of such Orders are served upon the Trustee.
(n)Each party do all such acts and things and sign all such necessary documents to give effect to the terms of this Order.
(o)Hereafter each party shall discharge without calling upon the other to contribute to their several debts contracted by or for them.
(p)Hereafter each party is restrained and an injunction is hereby granted restraining each of them from pledging the credit of the other.
(q)The transferee shall pay the costs and disbursements of and incidental to the transfer necessary to give effect to the terms of this Order.
(r)If either party shall refuse, neglect or fail to execute any documents necessary to give effect to the terms hereof, then, upon proof by Affidavit of such refusal or failure to sign, after providing such documents to the other party for a period of not less than seven (7) days:
(i)A Registrar of this Honourable Court is hereby appointed to execute on behalf of the defaulting party and the Registrar shall do all such further act, matters, deeds or things required to execute such documents that shall be necessary to give full force and effect to the Orders;
(ii)The party in default shall pay the other parties costs as agreed between the parties or as taxed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Redden & Pennington has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
.
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 1511 of 2011
| Ms Redden |
Applicant
And
| Mr Pennington |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter originally came before the Court to determine the parties’ competing applications for orders in relation to both children’s and property issues.
The trial of the matter was listed for a five day trial commencing on 18 June 2012. On 21 June 2012 the children’s issues were resolved and consent orders were made for the children to live with the mother and spend five nights per fortnight with the father. Orders were made for the parties to have equal shared parental responsibility.
The Hearing
At trial Ms Dickson of counsel appeared for the applicant wife and Mr McQuade of counsel appeared for the respondent husband.
The trial of the matter commenced on 18 June 2012 and continued until 22 June 2012 where it was adjourned part-heard to 15 August 2012. It concluded on 16 August 2012 when judgment was reserved.
By the conclusion of the trial a total of 26 exhibits had been received by the Court.
The Applications
At trial the wife sought orders in terms of those set out in her Amended Outline of Case Document received by the Court on 15 June 2012 (Doc 51). They are:-
1.That in full and final and final settlement of all claims between the parties for settlement of property under Part VII of the Family Law Act 1975 as amended:
1.1 That the net non superannuation assets of the parties be divided on a 60/40 basis in favour of the wife as follows:-
1.1.1That within thirty (30) days of the date of an Order being made, the wife do transfer to the husband all her right, title and interest both at law and in equity in the house situated at [B Street, Suburb A] in the State of South Australia.
1.1.2That contemporaneously with the transfer set out in paragraph 1.1.11.1.1 herein, the husband shall discharge the mortgage in the joint names of the parties and he shall refinance the said mortgage into his sole name and indemnify and keep indemnified forever the wife in respect of the same,
1.1.3That as and from the date of an Order being made, the husband shall indemnity and keep forever indemnified the wife with respect to any and all liabilities that have accrued or which shall accrue due, from time to time, with respect to the former matrimonial home including but not limited to the mortgage commitments secured by the former matrimonial home/other property, rates, taxes, utilities and all other outgoings.
1.1.4That contemporaneously with the transfer as set out in paragraph 1.1.1 herein, the husband shall pay the Robinson & Mason trust Account on behalf of the wife, sum of $595,095.00. (Five Hundred And Ninety Five Thousand And Ninety Five Dollars And Zero Cents).
1.2 As and from the date of this Order the wife is to retain all assets which she now has in her possession whensoever and howsoever acquired and the wife shall retain for her sole use and benefit absolutely free from any further claim or demand of the husband the following:
1.2.1The furniture, furnishings and other articles of domestic use normally in her possession, power or control;
1.2.2The savings and investments in her sole name;
1.2.3Her O Superannuation (save and except as provided for herein) long service leave, annual leave and any other work related benefit;
1.2.4Her personal effects, including but not limited to jewellery
1.2.5Any other real and/or personal property and/or financial resources of the wife in the wife’s name and/or possession not otherwise specified herein.
1.3 As and from the date of this Order the husband is to retain all assets which he now has in his possession whensoever and howsoever acquired and the husband shall retain for his sole use and benefit absolutely free from any further claim or demand of the wife the following:
1.3.1The furniture, furnishings and other articles of domestic use normally in his possession, power or control;
1.3.2The motor vehicle in his possession;
1.3.3The savings and investments in his sole name;
1.3.4His superannuation, long service leave, annual leave and any other work related benefit;
1.3.5His personal effects;
1.3.6Any other real and/or personal property and/or financial resources of the husband in the husband’s name and/or possession not otherwise specified herein.
1.4 If the husband shall fail to pay the sum referred to in paragraph 1.1.4 herein, then interest shall run on the outstanding amount of such payment from the date of default to the date of payment at the rate of ten point seven five percent (10.75%) per annum and if such default shall continue for more than one calendar month, the former matrimonial home shall be placed on the market for sale with such agents and upon such terms as may be agreed between the parties and failing agreement as determined by this Honourable Court and the proceeds of sale shall be applied as follows:-
1.4.1Firstly, in payment of all costs and disbursements incurred in relation to such sale;
1.4.2Secondly, to discharge the mortgage and any other encumbrances affecting or registered against the former matrimonial home;
1.4.3Thirdly, to the wife the sum of * (or so much thereof as is then outstanding) plus any interest accrued and owing as set out herein;
1.4.4Fourthly, in payment of any and all legal, accounting or other professional costs and expenses incurred by the wife in enforcing or giving effect to this Order;
1.5 That the Court allocate as required by Section 90MT(4) of the Family Law Act 1975, a base amount of $58,640 to the husband out of the wife’s interest in the O Superannuation Fund (“the fund”).
1.6 That pursuant to Section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable from the wife’s interest in the fund, the trustee shall pay to the husband or his administrators, executors, beneficiaries, heirs or assigns the entitlements calculated in accordance with Part VII of the Family Law (Superannuation) Regulations 2001 using a base amount of $58,640 and there shall be a corresponding reduction to the entitlement of the wife would have received from the fund but for these Orders.
1.7 That these Orders bind the trustees of the fund to observe the trustee’s obligation set out in the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, noting that such trustees have been accorded procedural fairness.
1.8 That the trustees of the fund in accordance with the Family Law Act 1975 shall do all such acts and things and sign the necessary documents as may be necessary to make payment to the husband in accordance with the terms herein.
1.9 The Order for splitting has effect from the operative time, being the fourth (4th) business day after which a copy of such Orders are served upon the Trustee.
1.10 That each party do all such acts and things and sign all such necessary documents to give effect to the terms of this Order.
1.11 That hereafter each party shall discharge without calling upon the other to contribute to their several debts contracted by or for them.
1.12 Hereafter each party is restrained and an injunction is hereby granted restraining each of them from pledging the credit of the other.
1.13 That the transferee shall pay the costs and disbursements of and incidental to the transfer necessary to give effect to the terms of this Order.
1.14 If either party shall refuse, neglect or fail to execute any documents necessary to give effect to the terms hereof, then, upon proof by Affidavit of such refusal or failure to sign, after providing such documents to the other party for a period of not less than seven (7) days:
1.14.1A registrar or deputy registrar of this Honourable Court is hereby appointed to execute on behalf of the defaulting party and the Registrar or Deputy Registrar shall do all such further act, matters, deeds or things required to execute such documents that shall be necessary to give full force and effect to the Orders.
1.14.2The party in default shall pay the other parties costs as agreed between the parties or as taxed.
The husband sought orders as set out in his Response to Initiating Application filed 27 May 2011 (Doc 6) which are:-
8.That in full and final settlement of any claim that either party may have against the other now or at any time in the future for settlement of property:-
(a) that the net assets of the husband and the wife be apportioned between in proportion to the value of same;
(b) that notwithstanding the terms of sub-paragraph 8(a) hereof, the husband do otherwise have as his sole property free from any claim, right or entitlement of the wife the following:-
(i)any motor vehicle presently in his possession;
(ii)any monies standing to this credit in any financial institutions;
(iii)all items of furniture and articles of domestic use of ornament presently in his possession;
(iv)all his estate and interest both at law and in equity which he now has or may hereafter have in any superannuation scheme, retirement benefit, early retirement redundancy benefit or rollover fund;
(v)all his estate and interest both at law and in equity which he has now or may hereafter have in any life assurance, insurance or endowment insurance policy;
(vi)all other items of property presently in his possession of whatsoever nature and from whatsoever source;
(c) that notwithstanding sub-paragraph 8(a) hereof, the wife do otherwise have as her sole property free from any claim, right or entitlement of the husband the following:-
(i)any motor vehicle presently in her possession;
(ii)any monies standing to her credit in any financial institutions;
(iii)all items of furniture and articles of domestic use or ornament presently in her possession;
(iv)all her estate and interest both at law and in equity which she has now or may hereafter have in any superannuation scheme, retirement benefit, early retirement redundancy benefit or rollover fund;
(v)all her estate and interest both at law and in equity which she has now or may hereafter have in any life assurance, insurance or endowment insurance policy;
(vi)all other items of property presently in her possession of whatsoever nature and from whatsoever source;
(d) the wife do all such acts and things as shall be necessary so as to invest in the joint names of the husband and the wife all bank accounts, shares and other assets standing to the credit of the said children of the parties and that each party from dealing with the bank accounts, shares or other assets of the said children without the written consent of the other party;
(e) the husband do indemnify the wife and keep her forever indemnified with respect to:-
(i)all mortgage payments, rates, taxes, levies and other outgoings with respect to the former matrimonial home situated at [B Street, Suburb A] in the State of South Australia
;
(ii)all debts and liabilities of the husband including personal loan, credit card and store account debts in the sole name of the husband or severally with others;
(f) the wife do indemnify the husband and keep him forever indemnified with respect to all debts and liabilities of the wife including personal loan, credit card and store account debts in the sold name of the wife or severally with others;
(g) that each party do all such acts and sign all such documents as shall be necessary to give full effect to the terms of this order;
(h) that should either party neglect to execute any transfer or other document in respect of real or personal property pursuant to the terms of this order within fourteen (14) days after the same shall have been tendered to either of them or their respective solicitors for that purpose then and in such case a Federal Magistrate of the Federal Magistrates Court at Adelaide in the said State upon proof by Affidavit of such refusal or neglect is hereby appointed and if in his or her opinion it shall be necessary so to do, to settle and to do all such other acts and things and to execute such other documents as shall be necessary to give full force and effect thereto and shall execute and do the same accordingly and the party who neglects to execute the transfer shall pay the other party’s costs of and incidental to such appointment on such solicitor and client basis;
(i) that if either party shall make default in the due compliance with any of the terms of this order the party in default shall pay the costs of the other party reasonably incurred in relation to such default.
9.Such further or other order as this Honourable Court deems just and equitable in the circumstances.
10.That the wife do pay the husband’s costs of and incidental to the within proceedings.
Main Issues and Outline of Submissions
The main issue at trial related to the issue of add-backs and more specifically, what post-separation expenditure of the parties the Court should add back into the matrimonial asset pool when making orders for property settlement.
There was significant dispute between the parties as to the source of funds which each party had at separation and how those funds had been expended by the parties.
Ms Dickson for the wife argued that the contributions of the parties should be considered equal as the marriage was of a long duration. This is despite there being some dispute as to the contributions of the parties both initially and during the marriage. In considering the factors in section 75(2), Counsel’s position was that there would be a 10 per cent adjustment in favour of the wife having particular regard to the fact that the wife has the majority care of the children.
The Court was told that the husband has failed to meet his child support obligations in a timely manner and urged that the Court take this into consideration when fashioning orders for property settlement.
It was Counsel’s position that it was appropriate in these circumstances for the Court to deal with the superannuation of the parties separately. The husband remained in the former matrimonial home. The wife referred to her need to purchase a property for her and the children in the near future. Counsel argued that if the superannuation entitlements of the parties were considered as part of the matrimonial asset pool the wife would end up with significant funds by way of superannuation entitlements but insufficient funds or resources for the purchase of a new house. Furthermore, the wife’s entitlement to her superannuation would not be accessible for over 20 years having regard to her age.
Counsel for the husband sought orders that the net matrimonial property pool (including superannuation) should be divided 57.5 / 42.5 in favour of the husband. Mr McQuade argued that it was appropriate for the Court to include the superannuation entitlements of the parties in to the pool of assets to be divided.
Relevant Background and Chronology
The wife, MS REDDEN (“the wife”) was born in 1969 (43 years old).
The husband, MR PENNINGTON (“the husband”) was born in 1962 (50 years old).
In November 1992, prior to the parties meeting, the husband purchased a property at C Street, Suburb D for the sum of $115,000. The husband used his savings of approximately $90,000 and the balance of the funds he borrowed from a bank.
The parties commenced cohabitation at the Suburb D property in April 1993 and were married later that year.
At the date of their marriage the wife had little assets of significance.
From April 1993 the parties undertook extensive renovations on the Suburb D property at a total cost of approximately $50,000. The wife says that the parties financed the renovations jointly from their incomes whereas the husband says he provided the funds solely from his income.
The mortgage repayments in relation to this property are the subject of dispute with each of the parties asserting that they met repayments without the assistance of the other. The actual source of payments during the cohabitation is not a significant matter.
During the marriage the wife was employed as a healthcare representative at I Ltd. The husband has been employed in various positions both in the government sector and in the healthcare industry. In more recent years the husband was working as a representative for E Pty Ltd.
In June 1999 the parties jointly purchased an investment property at F Street, Suburb G for the sum of $189,000. The property was tenanted and the rental income used to meet mortgage repayments and outgoings of the property.
The first child of the marriage K was born in September 2002 and is currently 10 years of age.
On 5 August 2005 the parties’ twins H and J were born. They are currently 7 years of age.
The wife returned to work in October 2006 on a part-time basis.
The wife says that she enjoyed flexible working arrangements which enabled her to have an active role in the parenting of the children and the running of the household. She maintains that she was primarily responsible for taking the children to and from school and also to their extra-curricular activities.
The wife alleges that the husband suffered from ongoing mental health issues during the marriage and attributes his lack of interest and motivation in relation to the parenting of the children to his depression.
The husband denies that he has ever suffered from mental health issues. He says that the parties’ marriage was an unhappy one and the wife had expressed her intention to separate from him numerous times but did not act on those intentions.
In November 2006 the parties purchased the former matrimonial home situated at B Street, Suburb A for the sum of $780,500.
The property at Suburb D was sold in early January 2007 and the proceeds of sale were paid to reduce the mortgage over the Suburb A property.
In December 2007 the wife’s parents sold their land in Greece and provided to the wife various sums of money totalling nearly $80,000. The wife says that $45,000 was considered to be a loan to the wife and the remainder of $35,000 was considered to be a gift.
From the latter sum the wife says that she applied $9,000 towards the mortgage over the property at Suburb A which the husband disputes. The balance was used to meet the daily living expenses of the parties.
In addition to these sums the wife claims to have received smaller sums of money from her parents on a regular basis. The husband agrees that this was the case.
In relation to the parties’ financial situation the husband alleges that the wife’s excessive expenditure during the marriage was a constant area of conflict between the parties.
The Suburb G property was sold in April 2009 for the sum of $528,500 from which the parties enjoyed significant profit. The husband alleges that the sale was required in order to meet the credit card liabilities of the wife whereas the wife says that the proceeds were applied towards the mortgage over the property at Suburb A.
On 23 December 2010 the child K was diagnosed with a form of epilepsy known as Absence Seizures.
On 14 January 2011 the wife sold 50 per cent of the Commonwealth Bank shares which she held jointly with the husband. She received the sum of $22,576.29 from the sale. The wife says that these funds were used to assist her in securing and establishing a rental property in Suburb L in preparation for her separation from the husband.
Just prior to separation the wife says that she withdrew approximately $1,500 from the children’s bank accounts to assist her in furnishing the rental property.
The parties separated on 4 February 2011 when the wife left the matrimonial home with the children. She moved into rental accommodation which she had organised.
Following separation further sums were withdrawn to assist the wife in meeting her and the children’s living expenses. It is the wife’s intention that these funds be repaid to the children’s bank accounts upon the finalisation of the property settlement proceedings.
By Initiating Application filed in the Federal Magistrates Court on 21 April 2011 the wife sought orders relating to children’s issues and property settlement.
The wife applied for Child Support Assessment in May 2011. The husband was assessed as liable to pay the sum of $432.23 per month. The wife says that the husband is currently in arrears of $2,722.58.
The husband resigned from his position with E Pty Ltd in July 2011 which took effect on 29 July 2011. He received numerous termination payouts totalling $11,719.28.
Since separation the wife has formed a relationship with Mr M.
The wife relied upon her affidavits of evidence-in-chief and Financial Statement as did the husband.
During the trial the husband and the wife gave oral evidence and were cross-examined at length about their financial circumstances but in particular, the details surrounding the use of funds following separation.
The Law
The Family Law Act 1975 (Cth) (‘the Act’) sets out specific provisions in relation to property settlement proceedings. The most relevant in this matter are:
Section 79
Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Section 75(2)
(2) The matters to be taken into account are:
(a) the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person -- the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of the person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
Section 90MT(4) provides:-
Splitting order
(1)A court, in accordance with section 90MS, may make the following orders in relation to a superannuation interest (other than an unsplittable interest):
(a)if the interest is not a percentage-only interest -- an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:
(i) the non-member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations; and
(ii) there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;
(b)an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:
(i) the non-member spouse is entitled to be paid a specified percentage of the splittable payment;
(ii) there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;
(c)if the interest is a percentage-only interest--an order to the effect that, whenever a splittable payment becomes payable in respect of the interest:
(i) the non-member spouse is entitled to be paid the amount (if any) calculated in accordance with the regulations by reference to the percentage specified in the order;
(ii) there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for the order;
(d)such other orders as the court thinks necessary for the enforcement of an order under paragraph (a),(b) or (c).
(2)Before making an order referred to in subsection (1), the court must make a determination under paragraph (a) or (b) as follows:
(a)if the regulations provide for the determination of an amount in relation to the interest, the court must determine the amount in accordance with the regulations;
(b)otherwise, the court must determine the value of the interest by such method as the court considers appropriate.
(2A)The amount determined under paragraph (2)(a) is taken to be the value of the interest.
(3)Regulations for the purposes of paragraph (2)(a) may provide for the amount to be determined wholly or partly by reference to methods or factors that are approved in writing by the Minister for the purposes of the regulations.
(4)Before making an order referred to in paragraph (1)(a), the court must allocate a base amount to the non-member spouse, not exceeding the value determined under subsection (2).
Note: The base amount is used to calculate the entitlement of the non-member spouse under the regulations.
The Full Court of the Family Court has repeatedly stated in its judgments that a four-step process should be followed in property settlement proceedings. The often cited decision on the matter is that of Omacini and Omacini (2005) FLC 93-218 in which the Full Court said (at 79,619):-
46.The four important steps to be taken in determining a property dispute are well defined (see for example Ferraro and Ferraro (1993) FLC 92-335 at 79,560) and they are:
(a)To identify and value the net property of the parties (usually as at the date of trial);
(b)to consider the contributions of the parties within paragraphs (a)-(c) of s 79(4);
(c)to consider the s 75(2) factors; and
(d)to consider whether the order proposed is just and equitable.
There was some discussion during the trial about amounts which the parties claim should be “added back” in calculating the assets to be taken into account. The Full Court decision of Chorn and Hopkins (2004) FLC 93-204 referred to the use of funds which existed at separation to pay for a party’s legal fees which were being incurred post separation. Subsequently judgments of the Full Court and Judges at first instance have indicated that the discretion has to be exercised to take into account “the reasonable conduct of their affairs post separation” (Cerini and Cerini [1998] FamCA 143 (unreported)) taking into account the reasonableness of the expenditures without expecting their to be an audit of the monies spent by each of the parties since separation.
In Shimizu & Tanner [2011] FamCA 271 Chief Justice Bryant referred to and adopted comments by Justice Murphy in Kouper & Kouper (No 3) [2009] FamCA 1080. In the criteria to which his Honour referred the question of reasonable living expenses was to be considered before adding back assets which existed at separation.
The more recent decision of Stanford & Stanford [2012] HCA 52 clearly emphasises the Court’s duty to take into account the actual property of the parties as it existed at the time of the trial and therefore to apply the judicial discretion to determine what is a just and equitable order, taking into account all of the circumstances referred to in s 79.
Discussion
The wife gave evidence first. It was only during her oral evidence that her relationship with and payments to and on behalf of Mr M was disclosed. During her oral evidence she admitted that on occasions Mr M had contributed to her rent and purchased groceries for the household. She admitted that he had been residing at her home for approximately six nights a fortnight from March or April 2012. During her oral evidence the wife admitted to using some of the $40,000 from the term deposit, which had been in her name, to pay a debt in relation to Mr M’s motor vehicle. She also referred to putting shares in his name, paying his credit card debts and tuition fees for his son “once or twice”.
During her oral evidence the wife said that Mr M had also used one of her credit cards.
The wife conceded under cross-examination that $20,000 had been paid to Mr M in October 2010 (before separation).
The oral evidence of the wife, particularly under cross-examination concerning the monies provided by her to Mr M, contradicted the evidence in her trial affidavit filed on 3 February 2012. Other aspects of the evidence given in her trial affidavit were not challenged. The omission of any information about the living arrangements and the financial arrangements with Mr M, was however, a significant omission which must be taken into account when assessing the overall evidence of the parties.
The husband gave brief evidence-in-chief and was then cross-examined at length by counsel for the wife. His evidence was that he was unemployed at that time. When questioned about an affidavit which he had sworn on 8 December 2011 he admitted that he had signed the affidavit but that paragraph 3 was not correct. Paragraph 3 of that affidavit said:
I am not otherwise working during the Christmas school holiday period. I have since the initial hearing of the matter changed my employment and I am now employed [in a contract position with a government department] …
In his cross-examination the husband admitted that he “had no job then and had no job now”. The husband conceded that he had not made any payments on the mortgage on the former matrimonial home in which he had been residing since separation.
During his cross-examination the husband admitted that he had received payment in excess of $9,000 when he ceased his employment. This has been categorised as a payment made on resignation. However, he insisted that he “didn’t resign. I was pushed”.
Under cross-examination the husband admitted that he had made some payments to his solicitor’s office in cash. He also admitted that at one time there had been a “small amount” of cash in a cupboard at the former matrimonial home amounting to approximately $30,000.
During cross-examination he also conceded that at the time of separation there was “four or five thousand” in cash in a cupboard which he retained.
Both parties provided evidence that they had spent in excess of $100,000 each in relation to lawyer’s fees for these proceedings. Neither counsel, however, sought those amounts for legal fees paid to be added back in the overall calculation of the assets and liabilities of the parties.
The husband conceded that the wife’s parents had provided amounts of money to the wife over the years, totalling in excess of $79,000. It was not conceded however, that any part of this was a loan payable by the wife to her parents.
Although the wife was not specifically seeking an add-back of amounts the husband had paid by way of legal fees, her counsel was seeking to bring into account as an asset the husband’s savings at the time of separation of $41,102.54. Annexed to the wife’s affidavit are the bank statements showing this amount in credit to the husband at February 2011.
The husband concedes that some of this money was spent on legal fees and some on living expenses. During final submissions counsel conceded that there may be some amount “added-back” representing legal fees which had been paid from the husband’s savings account of approximately $20,000.
Counsel for the wife provided a summary of the assets, liabilities and calculations upon which the wife based her claims. This was as follows:
| ASSETS | Amount | Notes |
| FMH | $925,000.00 | |
| Sale of CBA Shares (retained by H) | $12,904.71 | |
| Sale of CBA Shares (retained by W) | $12,904.71 | |
| Furniture and Effects (retained by W) | $8,043.00 | [N Valuers] Valuation |
| Furniture and Effects (retained by H) | $6,215.00 | [N Valuers] Valuation |
| Telstra Dividends (retained by H) | $280.00 | |
| Sale of Telstra Shares (retained by H) | $7,179.56 | |
| Savings as at separation (H) | $48,102.54 | |
| Husband’s motor vehicle | $13,000.00 | |
| Wife’s motor vehicle | NIL | See Exhibit 3 |
| Wife’s jewellery | $5,000.00 | |
| Husband’s Termination payout [E Pty Ltd] | $9,937.18 | 14/07/2011 |
| Husband’s Termination payout [E Pty Ltd] | $1,508.00 | 01/08/2011 |
| Husband’s Cash in House | $5,000.00 | ($4,000 - $5,000) |
Total: | $1,055,074.70 | |
LIABILITIES | ||
Mortgage | $3,285.00 | |
Credit Card (as at separation) | $8,296.00 | |
Total | $11,580.00 | |
Net Total | $1,043,494.70 | |
| To effect a 60/40 split in wife’s favour | ||
| Wife to retain/receive assets to the value of Husband to retain/receive assets to the value of | $626,096.82 $417,397.88 | |
Assets the wife currently retains:- | ||
Sale of CBA Shares | $12,904.00 | |
Furniture and Effects | $8,043.00 | |
Jewellery | $5,000.00 | |
Wife’s motor vehicle | NIL | |
Credit Card (as at separation) | $8,296.00 | |
Total | $17,651.00 | |
Wife’s Entitlement (60%) | 626,096.82 | |
| Less assets the wife currently retains | $17,651.00 | |
Payments due to wife | $608,445.82 |
Counsel for the husband provided a similar document on 16 August 2012 at the conclusion of the trial:
| Assets | |
| 1. Property situate at [B Street, Suburb A] | V$925,000.00 |
| 2. Proceeds of sale of Commonwealth Bank shares retained by: - Husband - Wife | $12,904.71 $35,480.71 |
| 3. Wife’s furniture and effects | V$8,043.00 |
| 4. Husband’s furniture and effects | $V$6,215.00 |
| 5. Telstra dividend paid to husband on 25.03.2011 | $280.00 |
| 6. Net proceeds of sale of Telstra shares retained by husband | $7,179.56 |
| 7. Husband’s motor vehicle | $13,000.00 |
| 8. Wife’s Term Deposit as at 10.02.2011 | $45,874.85 |
| 9. Monies paid to [Mr M] 29.07.2010 | $6,000.00 |
| 10. Monies paid to [Mr M] 30.08.2010 | $5,000.00 |
| 11. |
|
| 12. Monies paid to [Mr M] 19.10.2010 | $20,000.00 |
| 13. Wife’s jewellery | $7,500.00 |
| 14. Husband’s cash | $1,000.00 |
| 15. Husband’s P Superannuation (31.12.2011) | $75,950.00 |
| 16. Husband’s O Superannuation (03.02.2012) | $45,282.00 |
| 17. Wife’s Q Superannuation (06.2011) | $268,041.30 |
| $1,488,328.10 | |
| Liabilities | |
| 19. Mortgage to Heritage Building Society | $3,284.00 |
| 20. Wife’s credit card | $8,296.00 |
| Net Assets | $1,476,748.10 -$5,000.00 $1,471,748.10 |
** Deleted by agreement
The husband proposed that the wife receive $239,974.10 representing 42.5 per cent.
The dispute between the parties did not relate to any valuation of any significant item, but rather which amounts should be included or how they should be treated. The value of the former matrimonial home at $925,000 was agreed. It was agreed that the parties have both received $12,904.71 from the sale of CBA shares. It was also conceded that the wife had previously sold shares shortly before separation without the knowledge of the husband, which if included would bring the amount received by the wife from the sale of shares to $35, 480.71 included in the husband’s calculations.
The value of the husband’s furniture and effects were agreed. The value of the wife’s furniture and effects of $8,043 was also agreed but the wife sought to bring into account the substantial portion of this furniture being acquired by her following the separation using funds which she had at the time of separation.
The $280 received from the Telstra dividend by the husband was agreed.
It was also agreed that the sum of $7,179.56 (being the proceeds of sale of Telstra shares received by the husband) should be brought into account. The value of the husband’s motor vehicle at $13,000 was also agreed.
At the conclusion of trial the husband did not seek to bring into account any amount for the motor vehicle driven by the wife which was therefore conceded to be an asset provided by her employers and not an asset of hers.
The wife sought to bring into account her jewellery of $5,000 which the husband’s counsel’s summary referred to as $7,500. The husband’s counsel referred to $1,000 cash, whereas the wife’s counsel referred to the husband’s evidence of $4,000 to $5,000 of cash in the house at time of separation and brought into account $5,000.
There was no disagreement about the amounts of superannuation, save and except that the wife sought to bring into account her superannuation at the date of trial, whilst the husband sought to bring into account the value of the wife’s superannuation in June 2011, which did not take into account the amount withdrawn by the wife ($16,000 net after tax) which she claimed to have spent on living expenses.
The wife sought to bring into account $48,102.54 which is the amount in the husband’s bank account at separation. The husband maintained that this had all been spent on living expenses, but conceded some had been spent on legal fees.
The wife sought to bring into account the amounts received by the husband on the termination of his employment with E Pty Ltd, being $9,937.18 received in July 2011 and $1,508 received in August 2011.
The husband sought to bring into account as assets monies which the wife admitted that she had provided to Mr M, both before separation and since. These were items, 9, 10 and 12 on the schedule provided by the husband’s counsel being, “9. Monies paid to [Mr M] 27.07.2010 - $6,000.00; 10. Monies paid to [Mr M] 30.08.2010 - $5,000.00 and 12. Monies paid to [Mr M] 19.10.2010 - $20,000.00.”
The parties were agreed that the liabilities of mortgage $3,284 and wife’s credit card at separation $8,296 should be brought into account as liabilities.
The submissions on behalf of the husband were that the parties’ superannuation should be included in the asset pool and not treated separately.
On behalf of the wife it was submitted that the superannuation should be treated separately and not included in the asset pool.
Neither of the parties were impressive witnesses. Each of them had corrections or changes to their evidence in cross-examination.
The documents produced by the parties form the significant basis for the conclusions drawn and the basis upon which the assets and liabilities of the parties are brought into account.
It was conceded that the sum of money paid by the husband from the savings at separation to his lawyers on account of legal fees in relation to these proceedings, should be brought back and treated as an asset to be brought into account (otherwise known as an “add-back”). The sum of $20,000 is therefore appropriate to be added back to the assets of the parties in final consideration. The remainder of the monies spent by the husband from his savings at separation does not establish a spending which was so wasteful or wanton in the overall circumstances in this case to require those monies to be added back save and except for the “$4,000 or $5,000” in cash held by the husband at separation for which no explanation was given.
The wife conceded that shortly prior to separation she had paid $20,000 for the benefit of Mr M and has since made further payments of $6,000 and $5,000. It is appropriate in the circumstances of these proceedings to consider that the total amount of $31,000 should be added back. The balance of the funds retained by the wife has clearly been spent on re-establishing a home for her and the children. Part of this is now attributed to the furniture which has a current value of $8,043, some of which was purchased from funds used by the wife from the sale of shares prior to separation.
The wife’s evidence about the monies provided by her parents was that $45,000 was to be repaid to her parents and was a loan, not a gift. The manner in which, however, the wife has used these funds and the lack of any confirming evidence from her parents, calls into question this evidence. Taking into account the doubts which arose in relation to the wife’s evidence, it is more appropriate to treat the monies provided by her parents (totalling approximately $79,000) as a contribution by the wife which offsets the substantial contribution of the husband (being the equity in the property which he owned at the time the parties commenced cohabitation).
The husband admitted that since separation he had received termination payments from E Pty Ltd in July and August 2011 being $9,937 and $1,508. The wife sought to bring these amounts into account as an asset. However, it was not clear that these were still assets at the time of the hearing. It is therefore inappropriate to conclude that they are an asset to be brought into account in these proceedings. Rather it is a factor which will be taken into account in the overall consideration of any adjustment to be made.
Findings on assets and liabilities of the parties to be brought into account
Property situate at B Street, Suburb A $925,000.00
Proceeds of sale of Commonwealth Bank shares:
Retained by husband $12,904.71
Retained by wife $35,480.71
Wife’s furniture and effects $8,043.00
Husband’s furniture and effects $6,215.00
Telstra dividend paid to husband on 25 March 2011 $280.00
Net proceeds of sale of Telstra shares retained by husband $7,179.56
Husband’s motor vehicle $13,000.00
Monies paid to Mr M $6,000.00
Monies paid to Mr M 30.08.2010 $5,000.00
Monies paid to Mr M 19.10.2010 $20,000.00
Wife’s jewellery $7,500.00
Husband’s cash at separation $4,000.00
Savings of husband at separation used to pay legal fees $20,000.00
Total: $1,070,602.98
Less liabilities:
Mortgage ($3,284.00)
Wife’s credit card at separation ($8,296.00)
Net Total: $1,059,022.98
Superannuation
The superannuation to be considered is as follows:
·Husband’s P Superannuation (31/12/2011) $75,950.00
·Husband’s O Superannuation (3/2/2012) $45,282.00
·Husband’s R Super (31/12/2011) $4,577.00
·Wife’s Q Superannuation (Dec 2011) $240,220.81
This last figure represents the wife’s superannuation after she withdrew monies (approximately $16,000 after tax) which she spent on living expenses.
Contributions
The husband made a significant contribution by the equity in the property he owned at the time of cohabitation. The wife has also made a significant contribution by way of the funds provided by her parents.
Both parties have been employed and participated in homemaking and childcare activities. Whilst the wife maintains that the husband did not make a significant contribution to the care of the children, the evidence of each party’s employment and the assistance provided to the family as a whole, supports a finding that the contributions of the parties, both financially and in other methods during the period of the cohabitation, should be considered equal.
Since the separation the husband has continued to reside in the former matrimonial home, but has not made any payment towards the mortgage on the matrimonial home. The husband has not met his child support which has been assessed for that period.
Although the husband claimed in his affidavit to be employed, his oral evidence concerning the steps he had taken to find employment was not convincing. There is therefore considerable doubt as to the ongoing future assistance the wife is likely to receive by way of child support.
Since the separation the wife has played the most significant role in providing for the children by way of financial support and day to day care.
The Consent Order provides for the future care arrangements to be almost equal.
Taking into account the contributions made by the wife towards the financial and day to day care of the children since separation, and the minor contribution by the husband and his occupation of the home without paying the mortgage, it is considered that an overall adjustment of 55 per cent to the wife and 45 per cent to the husband would be just and equitable in relation to contributions.
The most significant factors under s 75(2) are the ongoing responsibilities both parties will have for the care of the children. The wife is currently employed. It is not clear when the husband will obtain employment and thus be able to contribute significantly to the financial aspects of the care of the children (other than the day to day care which he will now undertake).
Taking into account all of the s 75(2) factors no further adjustment is just and equitable.
Fifty-five per cent (55%) of the overall net assets and liabilities is $582,462.64. The wife will retain:
the proceeds of sale of the Commonwealth Bank Shares $35,480.71
furniture and effects $8,043.00
Monies paid to Mr M $31,000.00
Jewellery $7,500.00
Total: $82,023.71
Less wife’s credit card at separation ($8,296.00)
Net Total: $73,727.71
This would therefore require payment by the husband to the wife the sum of $508,734.93.
The husband sought that the superannuation should be brought in as part of the asset pool. The wife’s expectation of receiving superannuation in due course could in some circumstances be considered as an asset to be brought into account, however, in these circumstances the age of the wife and the time which will need to pass before such funds can be appropriately accessed is significant. It is therefore not just and equitable to bring the superannuation expectations into account as an asset and forming part of the pool. It is therefore appropriate for an adjustment to be made, taking into account the current value of the superannuation, such that there is a 50 / 50 split.
The evidence indicates a risk that the wife may bear a greater responsibility for the financial support of the children in the future.
The wife has had the benefit of assets which existed at separation but have been spent on living expenses for her and the family.
Considering the separation of the parties, the way in which they have dealt with their assets, both before and since separation, it is definitely just and equitable to make an order for property settlement. It is necessary however to consider whether the particular order for property settlement between the parties is just and equitable.
Notwithstanding the difficulties created by the lack of reliability of the evidence of both of the parties, but taking into account the significant period of cohabitation, the contributions made both financially and non-financially and the parties future responsibilities and needs, I am satisfied that the overall settlement both in relation to the assets and liabilities and the superannuation expectations are orders which are just and equitable in all the circumstances.
I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 1 March 2013.
Associate:
Date: 1 March 2013
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