Sabine and Sabine
[2010] FMCAfam 285
•29 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SABINE & SABINE | [2010] FMCAfam 285 |
| FAMILY LAW – Property adjustment – consideration as to weight to be given to the significant initial contributions by one party. |
| Family Law Act 1975, ss.4(1), 75(2), 79 (2), 79(4) |
| In the Marriage of Lee Steere (1985) 10 Fam LR 431; (1985) FLC 91-626 Russell & Russell (1999) 25 Fam LR 629; (1999) FLC 92-877 |
| Applicant: | MS SABINE |
| Respondent: | MR SABINE |
| File Number: | NCC 2119 of 2008 |
| Judgment of: | Lapthorn FM |
| Hearing date: | 17 November 2009 |
| Date of Last Submission: | 18 November 2009 |
| Delivered at: | Newcastle |
| Delivered on: | 29 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Duane |
| Solicitors for the Applicant: | Rankin Nathan Lawyers |
| Counsel for the Respondent: | Mr Cummings |
| Solicitors for the Respondent: | Thomas Mitchell Solicitors |
ORDERS
Within sixty (60) days of the date of these Orders the Husband pay to the Wife the sum of one hundred and three thousand one hundred dollars ($103,100).
Contemporaneously with the payment in Order 1 the Wife will do all acts and things and sign all necessary documents so as to cause any mortgage secured on the title to the properties located at:
(a)Property C, [L] being the whole of the property referred to in Certificate of Title Folio Identifier [omitted] (“Property C”).
(b)Property G, [L] being the whole of the property referred to in Certificate of Title Folio Identifier [omitted] (“Property G”).
to be paid and discharged and thereafter do all acts and things necessary to indemnify the Husband against all actions, suits, claims or demands made on the Husband by the mortgagee pursuant to the mortgage secured on the property.
As from the date of these Orders the Wife is to indemnify and keep indemnified the Husband in respect of all outgoings associated with Property C and Property G including but not limited to mortgage repayments, land rates, water rates and insurance.
In the event that the Husband fails to comply with Order 1, the parties will immediately do all acts and things and execute all documents necessary to effect the sale of the property known as and situate at Property W, being the whole of the property contained in Certificate of Title Folio Identifier [omitted] (“Property W”) for the best price reasonably obtainable.
In the event that Property W is required to be sold the parties will:
(a)Immediately list Property W for sale by private treaty with such agent as the parties agree to appoint and in default of agreement, for a period exceeding 14 days, as to the agent with such agent as the President of the Real Estate Institute of New South Wales appoints, the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due.
(b)List Property W for sale at a price as agreed between the parties and failing agreement at a price determined by a licensed valuer appointed by the President of the Australian Property Institute with the costs of and incidental to such appointment to be borne equally by the parties as and when the same fall due.
(c)Each co-operate in every way with the agent including by not limited to making a key available to the agent; allowing inspection of Property W at all reasonable times requested by the agent; doing or saying nothing to hinder or prevent a sale being effected; ensuring that Property W including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and signing all documents requested by the agent in relation to the listing for sale of Property W, except a contract or agreement for sale which has not been authorised by the solicitors having conduct of the sale.
(d)Each execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at a price agreed upon between the parties or, in the absence of any agreement at or above the price nominated by the valuer in accordance with 5(b).
(e)In the absence of agreement between the parties as to a solicitor to have conduct of the sale on their behalf, by such solicitor as nominated by the Wife, and the costs and expenses of engaging that solicitor will form part of the legal costs of sale and be deducted from the proceeds of sale.
(f)Neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of Property W or to any commission.
(g)
In the event that Property W remains unsold for a period of
6 months from the date upon which it was first listed for sale, the parties will list Property W for sale by public auction with such agent as the parties agree to appoint and in default of agreement as to the agent, with such agent as the President of the Real Estate Institute of New South Wales appoints, the costs of and incidental to such appointment to be borne equally by the parties and the following provisions will apply:
(i)The reserve price for the purpose of such auction will be such as the parties agree upon and failing agreement will be the price nominated as a fair market value by a licensed valuer appointed by the President of the Australian Property Institute with the costs of such valuation to be borne equally by the parties;
(ii)In the even that the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the property at a price which is not more that 10% below the reserve price;
(iii)If the property remains unsold, the parties will do all acts and things and sign all documents necessary to immediately re-list the property for sale by public auction again, on a date nominated by the agent, and at such auction there will be no reserve price.
(h)On settlement of the sale of Property W the parties authorise the proceeds of sale be paid in the following manner and priority:
(i)All costs and expenses of sale including legal costs and disbursements, agent’s commission, valuer’s fees and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties);
(ii)The amounts required to discharge any mortgage(s) secured over Property W;
(iii)The amounts required to pay all municipal and water rates outstanding with respect to the property (except any amounts otherwise payable by one of the parties pursuant to these Orders);
(iv)The balance payable to the Wife pursuant to Order 1 plus interest calculated in accordance with the Family Law Rules from the date due for payment until the date payment is made;
(v)The balance then remaining to the Husband.
Contemporaneous with compliance by the Husband with Order 1, the Wife must do all acts and sign all documents necessary to transfer to the Husband the whole of her right, title and interest in
(a)Property W;
(b)The property known as and situate at Property B, being the whole of the property referred to in Certificate of title Folio Identifier [omitted].
Contemporaneous with compliance by the Wife with Order 6, the Husband must do all acts and sign all documents necessary to cause any mortgage secured over Property B Court to be paid and discharged and thereafter do all acts and things necessary to indemnify the Wife against all actions, suits, claims or demands made on the Husband by the mortgagee pursuant to the mortgage secured on Property B.
As and from the date of these Orders the Husband is to indemnify and keep indemnified the Wife in respect of all outgoings associated with Property B and Property W including but not limited to mortgage repayments, land rates, water rates and insurance.
In the event that the Husband fails to comply with Order 7 within three (3) months of the date of these Orders, the parties will immediately do all acts and things and execute all documents necessary to effect the sale of the Property B for the best price reasonably obtainable and the provisions of Order 5(a) and 5(g) will apply with respect to that sale.
In the event that Property B must be sold pursuant to Order 9, on settlement of the sale of Property B the parties authorise the proceeds of sale be paid in the following manner and priority:
(a)All costs and expenses of sale including legal costs and disbursements, agent’s commission, valuer’s fees and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties);
(b)The amounts required to discharge any mortgage(s) secured over Property B;
(c)The amounts required to pay all municipal and water rates outstanding with respect to the property (except any amounts otherwise payable by one of the parties pursuant to these Orders);
(d)The balance then remaining to the Husband.
Within forty-two (42) days of the date of these Orders the Husband in his capacity as Director of [H] Services do all acts and sign all documents necessary to cause the transfer to the Wife’s son, [X], the whole of his right, title and interest of [H] Services in the Subaru Liberty motor vehicle, currently in the possession of [X].
Within sixty (60) days of the date of these Orders the Wife must do all acts and sign all documents necessary to transfer to the Husband the whole of her shareholding in [H] Services Pty Ltd.
Contemporaneous with compliance by the Wife with Order 12, the Wife is to assign to the Husband all her right, title and interest to and in all monies loaned by the Wife to [H] Services Pty Ltd.
Within sixty (60) days of the date of these Orders the Wife must do all acts and sign all documents necessary to transfer to the Husband and otherwise forgo the whole of her interest in the [L] Trust.
Upon compliance by the Wife with Order 13 and 14 the Husband must indemnify the Wife with respect to any liability whatsoever of [H] Services Pty Ltd the [L] Trust.
Within sixty (60) days of the date of these Orders the Husband and Wife shall do all acts and things and sign all necessary documents so as to cause all of the shares held by them in their joint names with [A] to be transferred to the Husband.
Except as otherwise provided in these Orders the Husband and Wife shall each retain and be declared the sole legal and beneficial owner of all other items presently in their respective possession or control including but not limited to real property, household furniture, furnishings and effects, motor vehicles, liquid funds in bank accounts, life insurance or funds invested by either party in a bank or like institution, shares and superannuation interests.
Except as otherwise provided in these Orders the Husband will indemnify the Wife against all debts, actions, suits, claims or demands in the name of the Husband or in relation to any real or personal property held in the sole name of the Husband.
Except as otherwise provided in these Orders the Wife will indemnify the Husband against all debts, actions, suits, claims or demands in the name of the Wife or in relation to any real or personal property held in the sole name of the Wife.
Pursuant to section 106A of the Family Law Act, in the event that either party fails, neglects of refuses to sign any document required to give effect to these Orders, within 7 days of being requested in writing by another party who has an interest in the execution of such document, then upon the filing of an affidavit evidencing such failure, neglect or refusal, a Registrar of the Newcastle Registry of the Federal Magistrates Court of Australia is appointed to execute such document in lieu of the defaulting party.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of Federal Magistrate Lapthorn delivered this day will for all publication and reporting purposes be referred to as Sabine & Sabine.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT NEWCASTLE |
NCC 2119 of 2008
| MS SABINE |
Applicant
And
| MR SABINE |
Respondent
REASONS FOR JUDGMENT
Applications
Ms and Mr Sabine have been unable to reach agreement as to their financial settlement following the breakdown of their 9 year marriage. Consequently they have asked the Court to make orders for property adjustment.
Background
The husband is 51 years of age, lives in the former matrimonial home at Property W and runs an [insurance industry] business.
The wife is 46 years of age and lives in [suburb omitted] in Victoria where she also works in the insurance industry as a [omitted].
They do not have any children from their relationship but the wife’s son, [X], lived with them during the marriage. [X] is 19 years old and lives independently of the parties. He maintains a close relationship with both of them. There is no dispute between the parties that
Mr Sabine treated [X] as if he was his own son and intends to continue to do so.
The parties commenced a relationship in 1998 and began living together and married in March 1999. They separated on 27 February 2008.
Throughout their marriage they worked in the insurance industry and also purchased, improved and sold a number of real estate properties.
Although the parties agreed that the husband had a significantly greater financial position than the wife at the commencement of the relationship they disagree as to what weight that difference should now carry in determining the final distribution. They also disagree as to the extent of the contributions that they have each made throughout their relationship.
Evidence
Although the wife filed her initial application on 19 August 2008 she relied on her amended application filed 30 October 2009. In support of that application she relied on her affidavit and financial statement also filed 30 October 2009.
The husband relied on his response filed 3 October 2008 and his affidavit and financial statement filed 30 October 2009.
Ms D, chartered accountant, was appointed by the parties as a single expert to prepare a valuation of the husband’s interest in [H] Services Pty Limited as trustee for the [L] Trust. An affidavit by Ms D was filed on 12 November 2009 annexing her valuation report. The conclusions drawn by Ms D were not controversial but by consent the parties agreed to an adjusted business value to take into account 2 motor vehicles.
Also tendered was an agreed list of assets (excluding the disputed add backs)[1]; a document purporting to be the effect of the orders sought by the wife[2] and a letter dated 11 November 2009 from Mercelegal who act for the trustee of the husband’s superannuation fund: [I] Trustee Services Pty Limited.[3]
[1] C2
[2] W1
[3] W2
Both parties gave evidence and were cross examined. I found both parties gave their evidence in an honest and forthright way. Differences in their evidence appear to have arisen out of perception rather than one party attempting to mislead the court. One example of this was the wife’s assertion that the husband deprived her of following employment opportunities that would have enabled her to improve her career prospects and income. When the wife was cross-examined it became clear that that was her perception but I was left with the impression after hearing her evidence that when opportunities arose the wife and husband discussed them and whilst the husband may not have been supportive of change, any decision made was made by the wife after talking to the husband.
When the parties commenced to live together the husband had cash savings and a number of pieces of real estate at Property E, Property R, Property A and Property N. The parties lived together initially at the husband’s residence in Property E. This property was unencumbered. The husband was not certain of exactly how much cash savings he had but was certain there was a term deposit in the sum of $147,000. The wife accepted this figure. Although the husband thought he had at least a further $10,000 in savings I find on the evidence he had the sum of $147,000. The net value of the real estate was $590,000.
Prior to their marriage the wife assisted the husband with the renovation and landscaping of the Property N property. The wife also helped the husband organise the purchase and tenanting of the
Property R property in October 1998.
In June 1999 the wife ceased work at [V] and commenced working at [I].
In 1999/2000 the parties purchased in joint names a property in Property K for $105,000 and used a mortgage in the sum of $70,000 to assist with the finance. This property was renovated and subsequently tenanted.
In May 2000 the Property N property was sold netting, according to the wife, $62,000 and according to the husband $80,952. These funds were deposited into the parties’ joint account.
In 2001/2002 the parties undertook a number of renovations on the Property E property which were funded from the joint savings on the parties.
In 2001 the parties also undertook substantial renovations of the Property A property which involved the demolition and building of two houses on the land. The wife says that the building works cost around $265,000 and they were financed from joint savings. In December 2001 the two homes at Property A were sold for $490,000. The wife alleges that the profit after mortgage and capital gains tax amounted to around $100,000. The husband says the profit was $162,797 but his evidence does not appear to show provision for capital gains tax.
In 2002 the property at Property K was sold netting around $110,000.
In 2003 the Property R property was sold for $195,000 which was $87,000 greater than the purchase price.
In November 2003 the former matrimonial home at Property E was sold for $850,000. At the same time they purchased in joint names a property at Property T for $825,000. They lived there until June 2006. During their time there they conducted significant renovations including the bagging and painting of the exterior of the house, replacing two bathrooms, landscaping and the building of a pergola. The wife says that she did all of the mowing of this two and a half acre block and cleaned the home with the assistance of a cleaning lady.
In 2004 the parties purchased a home at [L] in the sole name of the wife. The purchase price was $315,000 and the parties provided a deposit of $126,000 from the joint savings account. A mortgage was taken out in the wife’s sole name for $200,000. The property was rented out until 20 March 2009. The wife says that she managed the tenancy and did the cleaning after each tenant.
In 2005 the parties’ purchased in joint names a property in Property B for around $290,000. They used $90,000 from their joint savings and a mortgage in joint names from the Greater Building Society in the sum of $200,000. This property was renovated and rented out.
In September 2005 the parties purchased in joint names a property at Property W. The purchase price was $750,000 and they used bridging finance of $600,000 to overcome a delayed settlement on the
Property T property. The parties performed extensive renovations including the removing and replacing of the kitchen, putting down new carpet, adding a new front door, installing a pool and landscaping as well as painting.
In March 2006 the sale of the Property T property settled and the parties received a sale price of $1,000,075.
At around the same time as the settlement of the Property T property the parties sold the property in Property W for around $829,000 which was an increase of $79,000 on the purchase price. At the same time the parties purchased the property next door in Property W for $945,000. This property was the last former matrimonial home of the parties. Again renovations were done to this property including the removing of concrete, installing structural beams in the downstairs garage, removing peers and installing gyprock walls, improving the swimming pool and the addition of landscaping. Ducted air conditioning was also installed.
In 2006 the parties sub-divided the [L] property and they built a new house with a construction cost of $300,000. This was funded by increasing the mortgage.
In 2007/2008 the parties and [X] undertook significant renovation work to the original property at [L]. They laid a new slab, a rain water tank and did landscaping as well as the erection of a deck and veranda.
In late 2007/early 2008 the parties created the [L] Trust as trustee for [H] Services Pty Ltd. Both the husband and wife are the beneficiaries of that trust.
The business purchased an “insurance book”, which is a portfolio of clients, for $30,000 funded from the joint savings of the parties using a line of credit from the Greater Building Society. The wife assisted the husband in the setting up of the business including being involved in the establishment of the computer system and training as well as doing some of the book keeping such as the preparation of the BAS statements. The wife gave evidence of referring clients to the husband. I accept this evidence.
On 1 July 2008 the company purchased a further portfolio of clients for $15,000.
When the parties separated on 27 February 2008 the wife left the former matrimonial home and [X] remained living with the husband initially. The wife moved into one of the [L] homes on 20 March 2009 but then moved to Melbourne for work in May of that year. [X] lives in that property along with a flat mate who pays $80 per week rent.
The law
In determining property proceedings the court is required to conduct a four staged process. The first task is to identify the assets, liabilities and financial resources of the parties at the time of the hearing. The court then considers the contributions made by the parties before looking at their future needs. Finally the court needs to be satisfied that the orders are just and equitable.[4]
[4] In the Marriage of Lee Steere (1985) 10 Fam LR 431; (1985) FLC 91-626; In the Marriage of Ferraro (1992) 16 Fam LR 1; (1993) FLC 92-335; In the Marriage of Hickey (2003) 30 Fam LR 355; (2003) FLC 93-143; s 79 Family Law Act 1975.
It is the justice and equity of the actual orders that the court must consider.[5]
[5] Russell & Russell (1999) 25 Fam LR 629; (1999) FLC 92-877.
The property of the parties
At the date of the hearing the parties reached substantial agreement as to what items should be included as assets and liabilities in the pool. I will address those items that remain in dispute.
The wife contended that the sum of $16,200 being the proceeds of the sale of a valiant should be added back as the husband had access to these funds. The husband conceded this point.
The husband used the proceeds of sale of some IAG shares to purchase one of the ‘books’ for his business. The proceeds amounted to $9,000. Although the wife argued that these proceeds should be added back
Mr Duane conceded that there was much merit in the argument that there was potential to double dip given the value of the business is included in the pool of assets and the sale proceeds were used to purchase the ‘book’. I am not satisfied it is appropriate to add this sum back into the pool as it is in effect already there.
The wife’s evidence[6] was that she was upset that the husband had withdrawn this sum of $9,000 without first obtaining her consent. In June 2008 she also withdrew $9,000 from their joint account. She said this was to ensure that they each received the same amount of money. Her evidence was that this money was used towards the costs of [X]’s school fees and legal fees. The husband sought to have this sum added back into the pool arguing to do so would be consistent with the approach adopted in relation to the proceeds of sale of the husband’s valiant.
[6] Paragraph 240 Affidavit of wife filed 30 October 2009.
This was not conceded by the wife because she says that the husband had greater access to joint funds post separation. Mr Duane argued that the parties had pooled their financial arrangements during the marriage and for a time afterwards such that such sum in the context of the total withdrawn by them both did not warrant an add back. I accept that submission.
The wife sought the inclusion as a liability the sum of $16,000 which she borrowed from [I] to pay legal fees. There was no evidence of the extent of legal fees paid by either party. Both will have the responsibility to pay their lawyers. There is no evidence that the husband used joint funds to pay any of his legal fees. Without that evidence I am not persuaded that I should exercise my discretion to include the wife’s liability in the list of liabilities.
The husband argued that in the event that I did not make a splitting order in relation to the superannuation his credit card debt should not be included in the list of liabilities. For reasons I will discuss later in this judgment I have exercised my discretion and not ordered a superannuation split and therefore I will exclude the debts from the list.
I find from the evidence that the assets of the parties are as follows:
| ASSETS | POSSESSION | VALUE |
| Former matrimonial home –Property W | Joint | $950,000 |
| Property B | Joint | $300,000 |
| Property C, [L] | Wife | $302,500 |
| Property G, [L] | Wife | $302,500 |
| Savings | Wife | $2,000 |
| [A] Shares | Joint | $3,864 |
| Mercedes | Wife | $18,000 |
| Contents | Wife | $3,000 |
| Jewellery | Wife | $5,000 |
| Contents | Husband | $6,000 |
| [L] Trust | Husband | $98,658 |
| Valiant Charger | Husband | $12,000 |
| Proceeds of sale of Valiant Charger | Husband | $16,250 |
| TOTAL ASSETS | $2,019,772 |
| LIABILITES | |
| Mortgage over Property B | $187,884 |
| Mortgage over [L] | $264,476 |
| Credit Cards Wife | $2,000 |
| TOTAL LIABILITIES | $454,360 |
| TOTAL NET VALUE | $1,565,412 |
| SUPERANNUATION INTEREST OF THE PARTIES | VALUE |
| Husband | $137,194 |
| Wife | $43,500 |
Contributions
I now turn to the second step in the exercise namely an assessment of the parties’ contributions. I will address the contributions to the property of the parties and their superannuation separately consistent with the request of both parties and the approach preferred by the majority (Bryant CJ, Finn and Coleman JJ) in C & C[7]. In that case the majority held:
[63] ……[W]e consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise). This of course is the approach which the trial Judge adopted in this case.
[64] Then for the reason we earlier gave, whether or not a splitting order is sought on either party’s application, the parties’ contributions to both the property (as defined in s4(1)) and also to the superannuation interests should be assessed. The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered. Specifically in the context of s79(4)(e), that is the s75(2) factors, any division of the property (as defined in s4(1)) and any “division” of any superannuation interest (in the sense of an allocation of the base amount) based respectively on the assessments of the parties’ contributions to the property and to any superannuation interest, would then be considered. Similarly, the parties’ future superannuation prospects (be they in capital or income form) would also need to be considered. The overall justice and equity of the ultimate award (including any proposed splitting order or the need for such an order) would then be considered.
[7] (2005) 33 Fam LR 414; (2005) FLC 93-220.
At the commencement of the relationship the husband had real estate and cash deposits to the approximate value of $740,000 whereas the wife’s initial contribution was around $7,000. The parties disagree as to what weight should be given to this significant difference in initial contributions.
When determining what weight should be given to the initial contributions the authorities indicate that adopting a purely mathematic approach should be avoided and consideration needs to be given to how the initial contributions were utilised during the relationship.[8]
[8] Clives & Clives (2008) 40 Fam LR 273.
The Full Court of the Family Court in Pierce and Pierce[9] held:
[28] In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution………… regard must be had to the use made by the parties of that contribution.
[9] Pierce & Pierce (1999) 24 Fam LR 377 at 385 para [28]; (1999) FLC 92-844.
In that case the husband made a substantial contribution to the purchase price of the matrimonial home. In this case the husband’s primary home at Property E was unencumbered at the commencement of the relationship and became the first matrimonial home for the couple. The home also became the stepping stone as it were for the purchase of the other homes the parties lived in while they were married.
Four investment properties owned by the husband at the commencement of the marriage were turned over during the first year of the marriage for profit. Other investment properties were purchased. The current investment position of the parties can be attributed in part to the initial holdings of the husband including the unencumbered initial matrimonial home.
The financial position of the parties is significantly greater now than at the commencement of their relationship. This increase in value can be said to have arisen by the increase in market values in relation to the real estate and by their joint efforts to acquire, maintain and renovate the properties. The extent of the increase attributable to the different reasons for the increase however can not be determined as the evidence on that was silent. I accept the submission however that if it were not for the strong financial position of the husband at the commencement of the relationship the parties would not be in the good financial position they find themselves today. For this reason I propose to give significant weight to the husband’s initial contribution.
I am satisfied that although the 9 year marriage can not be said to be a long marriage during those 9 years the parties pooled their income resources and made a joint effort to their enterprise of acquiring, renovating, letting out and selling the numerous investment properties and their matrimonial homes.
I am satisfied that both parties carried out physical work towards the renovation and improvements of the properties but I find the husband was the driving force behind the property investments. That is not to say the wife did not have any input but her evidence in cross-examination was that the husband made the decisions and “I went along with it.” The husband’s contributions outweigh the wife’s in this regard.
Both parties carried out domestic duties with the assistance of a cleaner. After the husband sustained a back injury the wife did the mowing. The wife also assisted the husband with the start up of his business and attended to some of the book keeping for tax purposes.
When I weigh up the medium term of the marriage and the joint enterprise during that time along with the significant contribution made by the husband at the commencement of the relationship and his greater efforts towards the investment in real estate I find that an appropriate assessment of the contributions of the non-superannuation assets to be 80% to the husband and 20% to the wife.
Superannuation
The husband has significantly greater superannuation than the wife. At the hearing the husband’s fund was agreed to be worth $137,194 and the wife’s at $43,500. At the commencement of the relationship he had funds of about of $28,000 and the wife had $9,000. They both contributed to their respective superannuation funds during the marriage presumably commensurate with their respective incomes. After separation the husband borrowed $40,000 using his credit cards to increase his superannuation. He has since reduced this debt to $12,177.
Clearly there has been a greater contribution made by the husband than the wife to his superannuation both before and after their cohabitation. The contributions made by the parties during their marriage would also slightly favour the husband given his greater income. The wife assisted the husband in the set up of his business through the use of joint funds and her personal efforts and although this was not a major contribution it is relevant and I will take that into account. Overall I assess their contributions to superannuation to be 70% to the husband and 30% to the wife.
I have also taken into account the s.75(2) factors set out below.
Although the wife sought a splitting order the husband argued against the court adopting that approach. Mr Cummings argued that justice and equity would not warrant that approach as most of the contributions made during the marriage were by the parties as employees with each making the usual compulsory contributions through their employer with the substantial difference in their superannuation balances arising as a result of the greater balance in the husband’s fund at the commencement of the relationship and the significant post separation contribution to his fund. He likened their contributions to two trains travelling on parallel tracks. This was not the type of case where one party remained at home to fulfil the primary homemaker role while the other was the primary income earner. He argued that in these circumstances the calculation of an appropriate splitting figure would be as difficult as unscrambling an egg. There is much to be said for that argument.
Mr Cummings also argued that if the court adopted the husband’s preferred approach his credit card debt of $12,177 should not be included in the list of liabilities. This is the amount remaining to be paid from the $40,000 the husband borrowed to fund his post separation contributions. It was argued that it would not be just and equitable to ignore it if a splitting order was made making the calculation of an appropriate splitting amount even more difficult. I am satisfied though that if a splitting order was made such borrowings could be factored into the determination as a s.75(2)(o) consideration.
Although both arguments are valid I am persuaded that because the husband’s contribution to the superannuation is significantly greater than the wife’s and other assets are available to enable an appropriate adjustment in the wife’s favour under s.75(2) it would be just and equitable to not make a splitting order.
Section 75(2) factors
Having determined the contribution elements the court is required to have regard to the provisions of section 75(2).
The husband is 51 years of age and the wife is 46. They are both in good health. Given their ages and state of health I am satisfied they are able to continue in their current employment. Neither party gave evidence as to how long they intended to work. Given the husband is older than the wife he has less time to contribute to superannuation than the wife.
The wife currently earns $1267 a week from wages and $405 per week rent on the [L] investment properties as well $105 per week being a share of the rent on the Property B property. Should the husband retain the Property B property the wife will no longer receive this part of the rental income.
The income the husband derives from his business is greater than the wife’s wages. He earns around $1,538 per week income from the business and has rental income of $153 per week along with dividends of $31. In taking sole ownership of the Property B property the husband would have greater rental income.
I am satisfied that the husband has the greater earning capacity than the wife and also will retain his interest in the business which along with his source of income will be a long term financial resource for him which he will be able to sell in the future. Whilst I accept the argument of the husband that he would be out of work if the business was sold it is in the context of a long term financial resource that the business is relevant.
I am satisfied that an adjustment should be made in the wife’s favour given the difference in income earning capacity and the financial resource of the business.
A further adjustment is warranted in the wife’s favour given the husband will have greater superannuation resources than the wife because of my decision not to make a splitting order.
Neither party has the responsibility to support a child under 18 nor any other person. Neither party is entitled to social security.
The husband throughout the marriage treated [X] as if he was his own son. He provided for him financially and emotionally in direct and indirect ways. Although the wife received child support from [X]’s father the husband paid for his private school fees and the extras that go with raising a teenager. This contribution to [X] is a significant factor warranting an adjustment in the husband’s favour[10].
[10] s.75(2)(o), In the marriage of Robb (1994) 18 Fam LR 489; (1995) FLC 92-555
Neither party made submissions as to the effect of Capital Gains Tax on the investment properties. Such a tax will be payable eventually on the three remaining investment properties. Although not quantifiable this fact can not be ignored, however given no evidence was provided by either party I presume they held the view that the issue would not significantly effect my determination.
When I weigh the disparity of income, financial resources and superannuation along with the significant contribution made by the husband to the support of [X] and the decision I have made not to make a splitting order in relation to the superannuation as well as taking into account both parties will have capital gains tax liabilities in relation to the real estate I come to the conclusion that there should be an overall adjustment in the wife’s favour of 10%.
Section 79(2) – just and equitable
The fourth stage of the process is to step back and assess whether in all of the circumstances it is just and equitable to make the orders to be proposed.
Having made findings as to contributions to both the superannuation and non-superannuation assets as well as the adjustment for s.75(2) factors I conclude that an overall distribution should be 70% to the husband and 30% to the wife of the non-superannuation assets and that the superannuation assets should remain as they are.
The husband would prefer to make a cash adjustment to the wife and for him to retain all the real estate. The two homes in [L] are in the wife’s sole name. There was no good reason proffered as to why the husband should retain all the real estate. I propose to make orders that would provide both parties with real estate which have the potential for long term capital growth and be income producing.
For those reasons I am satisfied that the wife should receive the [L] properties, her motor vehicle, savings, jewellery, personal effects and furniture whilst retaining the mortgage over those properties and her credit card debt. To ensure she receives 30% of the pool of assets I find the husband should pay her the sum of $103,100.
Counsel for the husband submitted the court would have confidence given the strong financial position of the husband he would be able to re-finance his current commitments to make such a payment. I will allow him 60 days to make those arrangements.
The husband will retain the Property W and Property B properties, his business, the [A] shares, his motor vehicle, his furniture and personal effects along with the notional add back of the proceeds of sale of the valiant. He would retain the mortgage over the Property B property and make the payment referred to above to the wife.
For the above reasons I will make the orders set out in the beginning of this judgment.
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Lapthorn FM
Deputy Associate: Justine Conaty
Date: 29 March 2010
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