Ritter and Ritter

FEDERAL CIRCUIT COURT OF AUSTRALIA

RITTER & RITTER

[2014] FCCA 2640

Catchwords:
FAMILY LAW – Property settlement – marital relationship – substantial financial contributions by husband both initially and during the relationship – superannuation interests – husband’s superannuation partially in the payment phase – long relationship – wife worked outside the home and also fulfilled almost all of the homemaker and parent roles.

Legislation:
Family Law Act 1975, ss.72(1), 75(2), 79(2), 79(4), 90MZA
Family Law (Superannuation) Regulations 2001, regs.12 and 13, pt.6

Cases cited:
Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Stanford v Stanford (2012) 247 CLR 108; (2012) 293 ALR 70; (2012) 47 Fam LR 481; [2012] HCA 52

Applicant:

MS RITTER

Respondent:

MR RITTER

File Number:

CAC 1347 of 2011

Judgment of:

Judge Riley

Hearing date:

26 March 2014

Date of last submission:

22 October 2014

Delivered at:

Melbourne

Delivered on:

20 November 2014

REPRESENTATION

Counsel for the Applicant:

Mr Stenhouse

Solicitors for the Applicant:

Alliance Family Law

Counsel for the Respondent:

Mr Farrar

Solicitors for the Respondent:

Farrar Gesini Dunn

ORDERS

Subject to procedural fairness being afforded to the trustee of the husband’s (omitted) Retirement Plan:

The parties do all acts and things and sign all documents to transfer to each of them equally or as they direct the balance standing to the credit of the parties in (omitted) Bank Account Number (omitted).
The husband pay to the wife $30,000 within 60 days.
For the purposes of these orders:
(a)the husband is the member spouse;
(b)the wife is the non-member spouse;
(c)the superannuation fund is the (omitted) Plan (“the fund”).
Orders 5 to 8 of these orders are binding on the trustee of the fund.
The wife is to be allocated out of the interest of the husband in the fund the base amount of $311,500.
Whenever the trustee of the fund makes a splittable payment from the interest held by the husband in the fund, the trustee is to pay to the wife the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there is to be a corresponding reduction in the entitlement that the husband would have had but for these orders.
Order 6 is to have effect from the operative time.
The operative time for the purposes of these orders is four business days after the day of service of these orders upon the trustee of the fund.
Until the happening of any of:
(a)the establishing of a separate account in the name of the wife; or
(b)the transfer or rolling over into another superannuation fund of the payment split created by order 6; or
(c)the wife executing a waiver of rights within the meaning of s.90MZA of the Family Law Act1975 in relation to the payment split created by order 6; or
(d)the wife satisfying a condition of release and being paid the payment split which was created by order 6 hereof,
the husband be and is restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of his interest in the fund a non-splittable payment within the meaning of regs.12 or 13 of the Family Law (Superannuation) Regulations 2001.
Each party and the trustee of the fund have liberty to apply in relation to the implementation of orders 5 to 8 inclusive.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders;
(b)insurance policies remain the sole property of the owner/beneficiary named therein;
(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

CAC 1347 of 2011

MS RITTER

Applicant

And

MR RITTER

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application for property adjustment under s.79 of the Family Law Act 1975 (“the Act”). The parties started living together in (omitted) 1987, married on (omitted) 1988 and separated in (omitted) 2006. They were divorced on 22 November 2011. The parties have one child, X, who was born in 1990. He was 15 years old at the time of separation and is now 24 years old. The husband is now 63 years old and the wife is now 51 years old.
The principal issues in this proceeding concern the parties' superannuation. There was a considerable delay between the hearing of the oral evidence and the filing of written submissions. This was because further enquiries needed to be made about superannuation entitlements and further expert evidence needed to be obtained.

The legislation

Section 79 of the Family Law Act 1975 (“the Act”) gives the court power to alter the interests of the parties to a marriage in the property of the parties to that marriage. Sub-section 79(2) of the Act provides that:
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.
Section 79(4) of the Act sets out the matters the court must take into account when considering what orders, if any, should be made for the alteration of the interests of the parties in property. Those matters are:
(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.
The matters to be taken into account under s.75(2) of the Act are as follows:
(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 a 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.

The approach to applications under s.79

In Stanford v Stanford (2012) 247 CLR 108; (2012) 87 ALJR 74; (2012) 47 Fam LR 481; (2012) FLC 93-518; (2012) 293 ALR 70; [2012] HCA 52, the High Court explained the proper approach to an application under s.79 of the Act as follows:
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. … The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order. (emphasis added)
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. …(footnotes omitted)
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered. (emphasis added)(footnotes omitted)
40.Third, whether making a property settlement order is “just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act. (emphasis added)(footnotes omitted)
…
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4). (emphases added)(footnotes omitted)
In Stanford, the critical fact was that the parties had not separated.

The wife had suffered a stroke and had moved into a nursing home, but the parties’ marriage was intact. It was the wife’s case guardian, a daughter from an earlier marriage, who sought the alteration of property interests.
The wife died while the judgment of the Full Court of the Family Court was reserved. Consequently, when the Full Court of the Family Court came to re-exercise the discretion, the wife had no future needs, but the husband did. The High Court noted at [47] that the courts below had not adequately considered the consequences for the husband of the orders made, namely, that his home would have to be sold.
Against that backdrop, the High Court emphasised that the just and equitable requirement of s.79(2) of the Act is not necessarily satisfied merely by a consideration of the contributions of the parties as described in s.79(4) of the Act. However, in the usual case before this court, where the parties have separated, the High Court acknowledged at [42] that the just and equitable requirement would be “readily satisfied”.
Following Stanford, it is no longer appropriate to think of “contribution based entitlements” or the “adjustment” based on future factors. Rather, the court is required to take into account all the relevant matters and then determine what order, if any, is just and equitable. It is also no longer appropriate to think of a pool of assets.[1]
[1] Parkinson, Patrick Family Property Law and the Three Fundamental Propositions in Stanford v Stanford (2013) 3 Fam L Rev 80 at 88.
Additionally, the High Court emphasised that marriage, at common law, does not create a community of ownership: [39]. The rights a person might have in his or her partner’s property and income arise from the Act, notably s.79(4) and s.72(1) respectively.
In relation to income, s.72(1) of the Act provides that:
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
In other words, there is not an absolute right to share equally in the income of a partner. Rather, such a right only arises where a person is not able to adequately support himself or herself and the other party is reasonably able to support the first-mentioned party. Consequently, there is no obligation to contribute all of one’s earnings to the matrimonial endeavour. However, if one party to a marriage spends a substantial part of his or her income on extraneous pursuits, it will obviously have an effect on that person’s contributions to the parties’ assets.
Stanford requires the following matters to be determined in applications brought under s.79 of the Act:
a)whether the parties have separated;
b)the assets and liabilities of each party;
c)the contributions of each party;
d)the future needs of each party;
e)bearing in mind all of the foregoing matters, whether it is just and equitable to make any orders altering the interests of the parties in their property; and
f)what orders, if any, are just and equitable in all the circumstances of the case.
Stanford does not require these matters to be addressed in any particular order, except that the enquiry must begin with the ascertainment of the parties’ existing assets and liabilities. In most cases, it would seem rational to consider the relevant matters in the order set out above. It does not seem to me to be possible to determine whether it is just and equitable to make an order altering the parties’ interests in their property without the other matters mentioned above having been previously determined. That seems to be clear from the opening words of s.79(4) of the Act, which are that:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account [the various matters set out in s.79(4)] … .

The approach outlined above is consistent with the decision of the Full Court of the Family Court in Bevan & Bevan (2013) 279 FLR 1;

(2013) 49 Fam LR 387; [2013] FamCAFC 116. I note that, in that case, the Full Court said at [89]:
In our view, it will be less likely that the separate issues arising under s 79(2) and (4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order.
In other words, it is no longer considered appropriate to make a percentage adjustment based on contributions, and then a further percentage adjustment based on future factors. I also note that, in Bevan, at [79] the Full Court said, in relation to addbacks:
We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amendable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.

Whether the parties have separated

The parties agreed that they had separated.

The assets and liabilities

The parties agreed that their assets and liabilities at the time of trial consisted of the following:

Joint assets	Value
(omitted) bank account – balance of Property Y sale proceeds	$61,244
Total joint assets	$61,244
Joint liabilities	None
Total joint assets less liabilities	$61,244
Wife’s individual assets
(Property G) property	$380,000
Mazda	$12,000
Savings	$14,872
Proceeds of sale of wife’s two motorbikes	$375
Household contents	$2,200
Wife’s total individual assets	$409,447
Wife’s individual liabilities
(omitted) Bank home loan (omitted) and (omitted)	$317,266
(omitted) Mastercard	$7,000
(omitted) Mastercard	$4,000
Interest owed to Mr P	$10,000
Wife’s total individual liabilities	$338,266
Wife’s total individual assets less liabilities	$71,181
Husband’s individual assets
Savings – balance of Property Y proceeds of sale		$95,400
Savings – post-separation	$20,152
Holden car	$6,700
Peugeot car	$26,600
Trailer	$5,500
Husband’s total individual assets	$154,352
Husband’s individual liabilities
(omitted) Bank (Peugeot loan)	$26,600
Husband’s total individual liabilities	$26,600
Husband’s total individual assets less liabilities	$127,752
Total combined assets less liabilities	$260,177
Wife’s superannuation: (omitted) superannuation (omitted)	$443,829 $13,754
Husband’s superannuation: (omitted) Super superannuation	$380,342
(omitted) superannuation (omitted) pension	$265,680 $827,252
Total combined assets less liabilities plus superannuation	$2,191,034

Contributions

a. Initial contributions

At the commencement of cohabitation, in (omitted) 1987, the wife had a car and some personal chattels as well as three years of contributions to a superannuation scheme. She acknowledged that her superannuation at that time was of negligible value.
At the commencement of cohabitation, the husband had a car, some personal chattels and some equity in a property at Property R. There was no clear evidence about how much equity the husband had in the Property R property. He bought it in May 1980 for $36,250. He had borrowed the deposit (probably $3,625) from his brother and the balance of the purchase price from the bank. That is, the husband had no equity in the Property R property at the time he bought it.
In 1986, the husband’s mother died. In about 1988, the husband agreed with his brother that the husband would transfer the husband’s half share of his mother’s house to his brother in exchange for forgiveness of the debt (of $3,625) and $28,000. The Property R property was sold in 1991, about four years into the relationship, for about $100,000. Assuming that the husband had put the $28,000 into the mortgage and otherwise paid the minimum mortgage repayments, at the time of sale, he would have had about $70,000 equity in the Property R property. At a rough guess, four years earlier, at the commencement of cohabitation, he would have had about $40,000 equity in the Property R property.

A rough guess is probably sufficient for present purposes, as initial contributions diminish in significance with the passage of time.
The husband at the commencement of cohabitation also had 14 years worth of contributions to the (omitted) superannuation scheme, or its precursor. Those contributions were valued by the wife’s expert, without challenge, at about $122,000, at the commencement of cohabitation.

b. Contributions during the marriage

At the commencement of cohabitation, in 1987, the parties lived in the Property R property. They remained there for about two years, until 1989, at which time they jointly bought a property in Property C. The husband continued to rent out the Property R property until 1991. It was then sold for about $100,000. The proceeds of sale were about $70,000. There was some dispute about whether that sum was used to reduce the mortgage over the Property C property or pay other debts. However, one way or another, there is no reason to doubt that the $70,000 approximately was used for the joint matrimonial endeavour.
In addition to the $28,000 from his mother’s estate mentioned above, the husband also received during the relationship from his mother’s estate $6,500, some furniture and the forgiveness of the debt of $3,625 owed to his brother. I assume that the husband contributed all of those amounts and things to the matrimonial endeavour.
In December 1999, the parties bought 100 acres at Property Y for $260,000. In January 2000, the Property C property was sold. The proceeds of sale of the Property C property were applied to the purchase of the Property Y property.
At the commencement of cohabitation, the wife was working in (employer omitted) at the (omitted) level. She continued in that position until the birth of X, in 1990. At around that time, the wife cashed in her superannuation for about $5,000 and also received $1,000 for unused annual leave. In 1991, the wife received an inheritance of $15,320. Those sums were all applied to the benefit of the family.
While the wife was not in the full-time paid work force, she worked (occupation omitted) and (occupation omitted). The wife returned to (employer omitted) full time at the (omitted) level in 1993, when X was about 2½ years old. She was gradually promoted to (omitted) level in 2001 and has remained at that level until the present. Since 1993, the wife has been in the (omitted) superannuation scheme.
In addition to working full-time for all but 2½ years of the relationship, the wife said that she was the principal homemaker and primary carer of X. The wife said that the husband was not a “hands on father” and she did virtually all of the day to day care of X. She said that, on weekends and on his annual leave, the husband would play golf and otherwise relax. She said that she did:
a)95% of the clothes washing;
b)90% of the cooking;
c)95% of the ironing;
d)95% of meal planning;
e)100% of X’s school lunches until he was 12 years old, and then about 95% of them;
f)95% of clearing up after meals;
g)95% of washing up;
h)100% of cleaning;
i)90% of outside chores; and
j)after the parties acquired the Property Y property, 90% of the farm tasks, including handling animals, preparing animals for show, dealing with the vet, euthanising animals and running the accounts.
The wife said that the family shopped together, but she did 95% of the preparation of the shopping list. She conceded that, very occasionally and only when asked, the husband would pick up items on the way home. The wife said that she had no family or outside help.

The wife’s evidence about her work within the family was not challenged and I accept it.
In the meantime, the husband worked full time in (employer omitted). He is now at the (omitted) level.
The superannuation entitlements of both parties grew during the relationship.

c. Contributions post separation

The parties separated in 2006. Both parties have continued to work full time.
X was 15 years old at the time of separation. He was cared for more or less equally by both parents after separation until he reached adulthood.
The Property Y property was sold for $500,000 at about the time of separation. It yielded proceeds of sale of about $271,000. By agreement, the parties each received $16,768 and then $118,000 from the proceeds of sale. Of those sums, $16,768 represented an allowance for capital gains tax. The balance of the proceeds of sale was put into trust, and now stands at about $61,000. Each party put their $16,768 into superannuation, apparently for tax reasons.
With her $118,769 from the proceeds of sale, the wife bought a property in Property G where she now lives. She presently has about $62,000 equity in that property.
The wife put her $16,768 into her (omitted) superannuation fund.

No other monies have been contributed to that fund. It presently has a family law valuation of $13,754. The wife’s interest in her (omitted) superannuation scheme has continued to grow since separation, through employer contributions and the activity of the fund manager.
The husband has retained about $95,000 from his $118,769. He is presently renting a property where he lives with his new partner.
It emerged during cross examination that that the husband resigned from his employment in 2006, shortly after separation, under the (omitted) scheme. This had certain advantages for his superannuation benefits. After resigning, the husband continued working in substantially the same position under a contract until 2009. The husband then, in 2009, rejoined the (employer omitted) as an employee.
When he resigned, the husband rolled the employee component of his (omitted) benefit into the (omitted) Superannuation Fund. The husband’s present balance in that fund is $380,342. It seems that the husband has not added to that fund since his resignation, but it has grown due to the activity of the fund manager.
While working under contract, the husband joined the (omitted) Superannuation Plan. The husband’s present balance in (omitted) Superannuation is $265,680. That sum has accrued entirely post separation, and includes the $16,768 for capital gains tax on the sale of the Property Y property.
In 2009, when the husband returned to the (employer omitted) as an employee, he took the balance of his (omitted) superannuation as a pension benefit. It has a family law capital value of $827,252. It pays the husband about $55,000 per year for life. It cannot be converted to a lump sum.

The s.79(4)(d), (e), (f) and (g) and the s.75(2) factors

The wife is 51 years old and the husband is 63 years old. The wife earns $86,528 per year plus superannuation. The husband earns about $100,000 per year plus superannuation. He is also in receipt of his $55,000 per year pension.
The wife initially claimed that her present and future earning capacity was adversely affected by certain health conditions. However, she provided no medical evidence in support of that claim and eventually did not press the point. As the matter stands, neither party submitted that his or her health has any bearing on his or her earning capacity.
The wife said that she wishes to retire at age 55. However, under the current rules, she would not be eligible for the age pension until she is 67 years old. She could choose to access her superannuation earlier than that. It appears that 65 remains the normal retirement age in the (employer omitted). It seems to me that 65 to 67 could be regarded as the normal retirement age for a person born when the wife was born. It also seems to me that the wife can be assumed to have her present earning capacity until she reaches the age of 65 to 67, in about 14 to 16 years’ time.
The husband, having been born earlier that the wife, would be eligible for the age pension when he turns 65. The husband said that he intends to retire at that time. He can be assumed to have his present earning capacity until then, which will be in less than two year’s time.
The wife owns the Property G property, subject to a substantial mortgage. The husband does not own any real estate. He is renting a property. He lives there with his new partner, who, apparently, does not pay any rent.
Both parties have their superannuation entitlements.
The husband has been with his new partner for four years. To the extent that she might constitute a financial resource, it is noted that she:
a)is 58 years old;
b)earns $100,000 per year;
c)has an unencumbered property in (omitted) which she estimates to be worth $400,000 (it is occupied by a family member who does not pay rent);
d)has a vacant block in (omitted) which she bought about 12 years ago for $98,000 and which now has a $50,000 mortgage on it;
e)has $20,000 worth of shares;
f)has $10,000 to $12,000 in savings;
g)has a car which is driven by her son in (omitted); and
h)has between $200,000 and $250,000 worth of superannuation in (omitted) Superannuation and four years of entitlements in (omitted) Superannuation (value unknown).
The husband initially claimed that he and his new partner maintained separate finances. The new partner confirmed that they do not have joint bank accounts. However, it emerged during cross examination of the husband, and he eventually conceded, that there was some intermingling of finances. The husband said that he paid the rent, electricity “and things like that” and his partner paid for food. That is quite different to splitting costs equally so as to maintain separate finances. The new partner did not suggest that she made any contribution for rent. She said that they do not have a set structure for meeting household expenses and each just buys what is needed.
The husband conceded that he lent one of his new partner’s sons $10,000 to buy a house, and paid both of her sons $1,000, in December 2012 in one case and in January 2013 in the other. The husband conceded that his new partner put $400 per fortnight into his bank account as a savings mechanism. He said he and his new partner used the savings for a holiday to (country omitted).
The new partner was not cross examined. I accept her evidence, and the husband’s evidence in cross examination as set out above.
It is clear that there is an intermingling of finances between the husband and his new partner. In these circumstances, it seems to me to be fair to regard the husband’s new partner as at least a potential financial resource. They share living expenses (rent, electricity, food) and share holiday expenses. The husband has assisted his partner’s children financially. It may be supposed that the new partner would reciprocate if necessary.
Neither party has the care or control of a child of the marriage who is under 18 years of age.
Each party has the usual commitments to enable them to support themselves. The husband does not appear to have a present duty or responsibility to maintain his new partner, as she appears to be financially independent, notwithstanding the partial intermingling of finances. Otherwise, neither party appears to have a duty or responsibility to support anyone else. X is now an adult. The wife has not repartnered.
As mentioned, the husband is in receipt of a superannuation pension of about $55,000 per year. Otherwise, neither party has a present entitlement to a pension.
A modest but comfortable standard of living would be reasonable in all the circumstances of this case.
Neither party is seeking maintenance in this proceeding.
The wife has some debts. However, it would seem that, regardless of the orders made in this proceeding, the wife will be able to discharge them in time. Obviously, she would be able to do so more quickly if the husband was required to pay her a sum of money.
It would appear that the wife has contributed to the husband’s financial position by shouldering the vast majority of the household tasks. If the husband had done an equal share of all the cleaning, cooking, ironing, child care and so on that the wife has done over the years, he may not have been able to progress so far in his career. Alternatively, if the parties had been required to pay an outside person to do all of those chores, the cost would have eaten into their present combined assets.

If one allows $20 per hour, and conservatively estimates three hours of domestic tasks per day for 19 years, the total cost would be $416,000.
The cohabitation lasted 19 years. It may be supposed that, if the wife had not been almost solely responsible for all of the household tasks, she may have a higher earning capacity than she has now.
The financial circumstances of the husband’s cohabitation with his new partner are discussed elsewhere.
Child support is not relevant, as X is now an adult and previously, neither party applied for child support.
There is no relevant binding financial agreement.
There are no other relevant facts or circumstances.

Credibility issues

The wife made a strenuous attack on the husband’s credibility. However, in view of the fact that the relevant matters were agreed, unchallenged or beyond precise recall, it has not been necessary to make any credit findings.

Whether it is just and equitable to alter the parties’ property interests

The wife sought orders that she receive from the husband, in addition to the things she presently holds:
a)the entirety of the $61,244 in the parties’ joint account;
b)$120,000; and
c)100% of the husband’s (omitted) Superannuation, namely, $380,342.
The husband sought orders that the parties share equally in the $61,244 in their joint account, and otherwise each retain the things they presently hold.
Although half of the funds in the joint account notionally belong to each party, technically, there would need to be an order (or agreement) to produce that result. In effect, the parties agreed that it would be just and equitable to alter their property interests in this case, although they disagreed dramatically on the extent of that alteration. In view of paragraph 42 of Stanford, the fact that the parties are no longer living in a marital relationship and the various findings made above in relation to contributions and future needs, I also consider that it would be just and equitable to alter the parties’ property interests in this case.

What order is just and equitable

Without rehearsing the various authorities on how to deal with superannuation entitlements, it is obvious that the husband’s (omitted) pension is not actually an asset worth $827,252. That is its notional family law value calculated according to the regulations. For that reason, presumably, the parties agreed that it should be included in the list of assets and liabilities. However, the husband’s (omitted) pension cannot be converted to a lump sum or sold. It can only be a pension of about $55,000 per year.
As such, the (omitted) pension is not like a share portfolio or investment property that produces an income stream in the form of dividends or rent, but is also a capital asset that can be sold.

It may be that, if a person in the husband’s position wanted to buy an annuity of $55,000 per year, it would cost $827,252 to do so. However, that does not mean that the $55,000 per year pension is simultaneously an asset worth $827,252. As a matter of reality, the pension cannot be converted to a capital sum. It is and will always remain a pension. However, that is not to say that the wife has not indirectly contributed to it.
This matter is complicated by the fact that about eight years have passed since separation and, in that time, many things have changed. The wife’s (omitted) superannuation has grown substantially, from $185,370.38 to $443,829. Some of that growth is no doubt the result of further superannuation contributions made by or on behalf of the wife and the return thereon. However, some of the growth is also presumably due to the return on the amount that existed at separation, and to which the husband indirectly contributed during the relationship.
The husband’s (omitted) superannuation was in the growth phase and was worth $990,235.35 at the time of separation. Post separation, the husband decided to retire on the (omitted) scheme. That decision had positive benefits for his superannuation entitlements. The husband in 2006 put part of his (omitted) superannuation into his (omitted) Superannuation, which is now worth $380,342. In 2009, the husband converted the remainder of his (omitted) superannuation into his pension of $55,000 per year. In addition, post separation, the husband started a new superannuation fund, being the (omitted). The wife has not contributed in any way to the husband’s (omitted) superannuation, but she has contributed indirectly to the husband’s (omitted) superannuation benefits, whatever their current form, during the 19 years of the relationship.
As stated above, the husband made superannuation contributions to his (omitted) superannuation for 14 years before cohabitation began. In some cases, it might be necessary to take account of matters such as the fact that superannuation contributions are generally less in the early years of a career than in the later years, because of increases in salary as a career progresses. However, in the present case, there was unchallenged expert evidence, which I accept, that the husband’s (omitted) pension was worth $122,000 at the commencement of cohabitation.
Consequently, the amount of the (omitted) pension to which the wife indirectly contributed was roughly $990,235 less $122,000, which equals $868,235. I say roughly because there would presumably have been some growth in the husband’s (omitted) superannuation that could be referable to the amount that existed at the commencement of cohabitation. Equally, some of the growth that has occurred since separation would be referable to the amount that existed at separation. It seems that the husband has not made additional superannuation contributions to his (omitted) Superannuation fund since rolling part of his (omitted) benefit into it shortly after separation. Consequently, any growth in the (omitted) Superannuation fund would be entirely through the efforts of the fund manager, as opposed to additional superannuation contributions. Therefore, the wife contributed indirectly to the post separation growth in the (omitted) Superannuation fund.
Presumably, there was also growth in the part of the husband’s (omitted) superannuation that he converted in 2009 to a pension. Part of that growth would have been due to the further superannuation contributions being made by or on behalf of the husband and the return thereon. Part of the growth would have been the return on the amount existing at separation. Consequently, the wife would have contributed indirectly post separation to the growth of the (omitted) superannuation that was converted to a pension.
It is not possible to assess with any precision the amount of growth post separation in the wife’s (omitted) superannuation or the husband’s (omitted) superannuation that is attributable to superannuation contributions made by them or on their behalves post separation and the amount of growth post separation that is attributable to the amounts existing at separation. Possibly, the latter amounts would more or less cancel each other out.
In any event, it is not necessary or desirable to undertake a precise audit of these matters. The court is able to take a broad brush approach. While the court must consider all of the matters stipulated by the legislation and identify the parties’ assets and liabilities at the time of trial, it is not compulsory to express any conclusion as a percentage of the parties’ combined assets and liabilities at trial.

The court must consider the matter holistically, and any orders that it makes must be just and equitable.
It is particularly noteworthy in this case that the wife worked full time for all but 2½ years of the relationship but still did almost all of the housework and child care. It is not uncommon for a woman who does not work outside the home to have her contribution as homemaker and parent assessed as equal to the breadwinner’s. It is also not uncommon these days for both parties to work outside the home and both to share more or less equally in the homemaker and parent roles. The present case is quite different to both of those scenarios. In the present case, the wife worked full time outside the home for almost the entirety of the relationship and also did virtually all of the housework, gardening, farm work and child care. Justice and equity demands an adjustment for that.
Taking into account all of the matters mentioned above, including particularly:
a)the husband’s greater initial financial contribution;
b)the husband’s somewhat greater financial contribution throughout the relationship;
c)the wife’s vastly greater contributions in terms of the homemaker and parent roles;
d)the wife having potentially many more years of earning ahead of her than the husband;
e)the husband having repartnered with a woman who is financially secure; and
f)the nature and characteristics of the parties’ assets, liabilities and superannuation entitlements,
I consider, in the exercise of my very broad discretion, that it is just and equitable that each party retain their present assets and liabilities save that:
g)each party receive 50% of the bank account in their joint names;
h)the wife receive from the husband the equivalent of 50% of the $868,235 that was added to the husband’s (omitted) superannuation during the relationship; and
i)the husband receive from the wife 50% of the $185,370.38 that was added to the wife’s (omitted) superannuation during the relationship.
The calculations are as follows:
a)50% of $868,235 is $434,117.50;
b)50% of $185,235 is $92,617.50;
c)$434,117.50 less $92,617.50 equals $341,500.
The husband will have to pay the wife $341,500. There remains the question of how that should be done. In all the circumstances of the parties, including the nature and characteristics of their present assets, liabilities and superannuation entitlements, it seems to me to be just and equitable that the husband pay the wife $30,000 in cash, and the rest be by way of a super split from the husband’s (omitted) Superannuation account.
The wife’s proposed super splitting orders were not in the usual form. Consequently, procedural fairness in respect of the orders that I would make has not been afforded to the superannuation trustee. Subject to procedural fairness being afforded to the superannuation trustee, there will be orders in accordance with these reasons.

I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of Judge Riley

Associate:

Date: 20 November 2014

[2014] FCCA 2640

20 November 2014

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Procedural Fairness

Remedies

Injunction

Fiduciary Duty

Statutory Construction