Sacco and Bagala
[2013] FCCA 972
•28 June 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SACCO & BAGALA | [2013] FCCA 972 |
| Catchwords: FAMILY LAW – Property – assets and liabilities – “add-backs” – partial property settlement – whether premature distributions of property should be added back to the asset pool – contributions of the parties – whether adjustment under Family Law Act 1975 (Cth) warranted – whether just and equitable. |
| Legislation: Child Support (Assessment) Act 1989 |
| Cases cited: Hickey & Hickey [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143 NHC & RCH [2004] FamCA 633; (2004) 32 Fam LR 518; FLC 93-204 AJO & GRO [2005] FamCA 195; (2005) 33 Fam LR 134; FLC 93-218 Sacco & Bagala & Anor [2011] FMCAfam 834 Stanford v Stanford [2012] HCA 52 |
| Applicant: | MR SACCO |
| Respondent: | MS BAGALA |
| File Number: | SYC 6603 of 2008 |
| Judgment of: | Judge Scarlett |
| Hearing dates: | 20-22 July 2011, 27 July, 1-2 November 2012 |
| Date of Last Submission: | 2 November 2012 |
| Delivered at: | Sydney |
| Delivered on: | 28 June 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Schonell SC |
| Solicitors for the Applicant: | Broun Abrahams Burreket |
| Counsel for the Respondent: | Mr Maiden SC (until 22 July 2011) Mr Tregilgas (from 27 July to 2 November 2012) |
| Solicitors for the Respondent: | Byrnes & Cox Lawyers |
NOTATIONS
THE COURT NOTES that as provided by Order 6 of the Orders made on 27 July 2012 the Respondent Wife is to pay to the Applicant Husband the sum of $300,000.00 and the Wife acknowledges to the Court that she has obtained approval from the National Australia Bank to enable compliance with that Order.
THE COURT ALSO NOTES that the following Orders are made in addition to the Orders already made on 27 July 2012.
ORDERS
The Wife must forthwith pay all monies required to discharge the existing mortgage to the Bank of Queensland secured over the property at Property P in the State of New South Wales.
Pending discharge of the existing mortgage over the said property the Wife must pay as and when they fall due all of the statutory and consumable outgoings in respect of the said property as well as all repayments on the mortgage secured over the said property.
The Wife is to indemnify the Husband and keep the Husband indemnified in respect of any actions, claims, demands and liabilities in respect of the said property and any mortgage secured over that property.
In the event that the Wife has not paid to the Husband the sum of $300,000.00 in accordance with Order 6 of the orders made on 27 July 2012 by 31 July 2013 interest will accrue on that sum or the remaining balance at the rate prescribed under Rule 22.01 from time to time.
The Wife is to take all steps and sign all documents necessary to effect the assignment of the lease for the premises [address omitted] to herself as sole lessee and the Wife is to indemnify the Husband in respect of any obligations, claims or demands made in respect of the lease from [L] Pty Limited to the Husband and the Wife registered number [omitted] of those premises.
Within three (3) months of the date of these Orders the Wife will pay to the Husband the sum of $525,712.00.
In the event that the Wife has not paid to the Husband the sum of $525,712.00 within three (3) months of the date of these Orders interest will accrue on that sum or the remaining balance at the rate prescribed under Rule 22.01 from time to time.
In the event that the Wife has not paid to the Husband the monies due to him under Order (6) within three (3) months of the date of these Orders then:
(a)The Wife will take all steps and sign all documents necessary to sell the [omitted] business trading as [M] and upon the settlement of the sale of the [omitted] business the Wife will pay to the balance of the monies due to him together with any accrued interest.
(b)The Wife will keep the Husband informed of all steps in relation to the sale of the [omitted] business and will respond to all enquiries made by the Husband or his solicitors as to the sale.
(c)The Wife will do all things necessary and sign all documents necessary to market for sale and sell the said property at Property P and in particular will:
(i)Appoint an agent to market the said property for sale and failing appointment of an agent within seven (7) days the Husband will nominate in writing three (3) agents from which the Wife will select one who shall be the agent appointed and the Wife will sign all documents necessary to appoint the agent;
(ii)Market the said property for sale by public auction on a date within eight (8) weeks of the selection of the agent;
(iii)Execute all documents requested by the real estate agent for the sale of the said property by public auction;
(iv)Give such instructions as are necessary to a solicitor within seven (7) days;
(v)The reserve price will be $1,100,000.00;
(vi)Attend at the auction sale and negotiate with the highest bidder in the event that the reserve price is not reached and accept any offer which is made and is the highest not below 5% of the reserve price.
(vii)Execute the Contract for sale;
(viii)Co-operate in every way with the real estate agent in relation to the sale of the said property including making keys available, allowing inspection of the said property at all times requested by the agent and ensuring that the said property is in a neat and clean condition at the time of inspection by the prospective purchasers;
(ix)Execute all other documents necessary to complete the sale within the time required by the Contract to ensure that the purchasers do not have a right to terminate or rescind due to failure to do so;
(x)Keep the Husband informed of all steps in relation to the sale of the said property and respond to all enquiries made by the Husband or his solicitors as to the sale;
(xi)In the event that the said property is not sold at the first auction then the Wife must do all acts and things necessary to place the said property on the market for sale by private treaty for a period of two (2) months and in particular will:
A.request the agent to place the said property on the market for sale by private treaty for a period of two (2) months;
B.execute all documents requested by the agent for the sale of the said property by private treaty;
C.accept any offer to purchase the said property made in an amount within 10% of the reserve price set for the first auction;
D.execute the Contract for Sale;
E.co-operate in every way with the agent in relation to the sale of the said property including making keys available, allowing inspection of the said property at all times requested by the agent and ensuring that the said property is in a neat and clean condition at the time of inspection by the prospective purchasers;
F.execute all other documents necessary to complete the sale within the times required by the contract for Sale to ensure that the purchasers do not have a right to terminate or rescind due to failure to do so;
(xii)In the event that the said property is not sold at the first auction and is not sold by private treaty within the period of two (2) months following that time then the Wife must do all acts and things necessary to place the said property on the market for sale and sell the said property by public auction on the same terms as provided for in Order (8) above SAVE AND EXCEPT that the said property will be sold to the highest bidder at such auction and that there will be no reserve price to apply to such auction.
(d)On settlement of any sale of the said property the Wife is to sign all documents and do all things necessary to cause the proceeds of sale to be applied and distributed in the following manner and priority:
(i)In payment of all agent’s commission, advertising expenses and legal costs of the conveyancing;
(ii)In discharge of the mortgage secured over the said property;
(iii)In payment to the husband of any balance due to him from the proceeds of sale.
Pending the payment to the Husband of all monies due to him under these Orders the Wife is restrained from increasing the borrowings secured over the said property and/or the [omitted] business other than for the purposes of payment of monies to the Husband under these Orders.
In accordance with section 90MT(1)(b) of the Family Law Act 1975 (Cth):
(a)Whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to the Wife from her interest in the Sacco Superannuation fund the husband is entitled to a specified percentage being 100% of the Wife’s entitlement and there is a corresponding reduction in the entitlement that the Wife would be entitled to receive but for this Order.
(b)Order (10)(a) above binds the Trustee of the Sacco Superannuation Fund and these Orders take effect from the operative time and the operative time for the Order is the fourth business day from the date of these Orders.
Within fourteen (14) days of the date of these orders the Husband and the Wife in their capacity as directors of the Trustee company of the Sacco Superannuation Fund sign all documents and take all steps necessary to remove the wife as a signatory of any bank account operated by the Sacco Superannuation Fund.
Upon compliance with Order (10)(a) the Husband and Wife must do all acts and things and sign all documents necessary to remove [M] Pty Limited as a trustee of the Sacco Superannuation Fund and appoint in its place a suitably qualified person or entity nominated by the Husband and the Wife will resign her membership of the Sacco Superannuation Fund.
Within fourteen (14) days of the date of these Orders the Wife must do all acts and things to serve [omitted] Accountants with an authority to release all records relating to the Sacco Superannuation Fund to the Husband.
The Wife must forthwith indemnify the Husband and keep the Husband indemnified from and against all actions, suits, claims, demands and liabilities in respect of his having been a member of the [Mr & Mrs Sacco] Partnership trading as [M] including any liability for tax in respect of any income allocated to the Husband from the said Partnership or any tax liability referable in any way to the dissolution of the Partnership.
On or before 5 July 2013 the Wife is to pay to the Australian Taxation Office the sum of $13,636.20 for the Husband’s estimated income tax liability in respect of the income allocated to him from the said Partnership for the year ended 30 June 2012 and pay to the Husband the sum of $1,042.00 in reimbursement of income tax paid by him for the 2012 financial year referable to the income of the said Partnership.
Subject to the provisions of Order (10) above the Husband being effected the Husband will sign all documents necessary as provided by the Wife to:
(a)Resign as a director of [M] Pty Limited and [C] Pty Limited; and
(b)Transfer his shareholding in [M] Pty Limited and [C] Pty Limited to the wife.
The Wife will indemnify and keep the Husband indemnified in respect of all actions, suits, claims, demands and liabilities in respect of [M] Pty Limited, [C] Pty Limited and The Sacco Family Trust including any income tax liability the Husband has incurred or may incur regarding income received from [M] Pty Limited, [C] Pty Limited and/or The Sacco Family Trust.
Within fourteen (14) days the Wife will take all steps and sign all documents necessary to procure the transfer to the Husband of the VW Polo motor vehicle registration number [omitted] in the Husband’s possession and in the event that the transfer gives rise to the payment of any tax or charge by the Husband the Wife shall forthwith pay any such tax or charge.
Save as provided above the Husband and the Wife shall be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession, ownership or control of each party as at the date of these Orders.
In the event that either party refuses or neglects to comply with a direction to execute any deed, document or instrument necessary to give effect to these Orders a Registrar of the Court is appointed under the provisions of section 106A of the Family Law Act 1975 to execute the deed, document or instrument in the name of the person to whom the direction was given and to do all acts and things necessary to give validity and operation to the deed, document or instrument.
Written submissions in support of any Application for costs are to be filed and served within twenty-eight (28) days of the date of these Orders and written submissions in opposition to any such application are to be filed and served within a further period of fourteen (14) days.
IT IS NOTED that publication of this judgment under the pseudonym Sacco & Bagala is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6603 of 2008
| MR SACCO |
Applicant
And
| MS BAGALA |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application by the Husband for settlement of property. The proceedings were commenced in the Family Court by an Application for property orders filed on 10th November 2008. On 21st January 2009 the Husband filed an Amended Application seeking parenting orders in respect of the parties’ four children.
The parties were divorced by Order of this Court on 22nd October 2009.
On 27th October 2009 the parties entered into Consent Orders before Judicial Registrar Loughnan[1], the first of which provided:
1.That the wife pay to the husband by way of partial property settlement the sum of $120,000.00 by monthly instalments of $30,000, the first instalment to be paid by 1 November 2009 and monthly thereafter.
[1] As his Honour then was
On 13th May 2010 Watts J transferred the parenting and property proceedings to this Court.
The proceedings were initially heard over a period of three days, from 20th to 22nd July 2011. The property proceedings were not able to be completed within that time. It is not in issue that the proceedings had to be adjourned because of the late receipt of a draft balance sheet and a profit and loss statement.
The parenting proceedings were resolved partly by Consent Orders made on 22nd July 2011 and partly by a decision delivered on 17th August 2011 (Sacco & Bagala & Anor[2]). Those Orders related to the parties’ younger son and younger daughter, as their elder son and elder daughter had become adults by that time.
[2] [2011] FMCAfam 834
The Consent Orders of 22nd July 2011 provided that the two younger children were to live with their mother and the Father was at liberty to communicate with the son by letter or card on his birthday and at Christmas.
The decision of 17th August 2011, made after submissions by Counsel for the parties and the Independent Children’s Lawyer, related solely to arrangements for the Father to spend time with the parties’ younger daughter.
The hearing of the property proceedings resumed on 27th July 2012. Whilst it appeared at that hearing that the parties had agreed on the value of their [business] there was a disagreement about the income that the Wife had received from the business for the financial year ending 30th June 2011.
The following interim Orders were made by consent:
1.That the proceedings before the Court today be adjourned to 1 and 2 November 2012.
2.That the wife pay the husband’s costs of the adjournment in the sum of $10,000 within 28 days.
3.That the husband transfer to the wife his interest in the home at Property P, being land in Folio identifier [omitted] subject to the Line of Credit and his interest in the [Mr & Mrs Sacco] Partnership trading as “ [M]” within 14 days.
4.That upon the said transfer the wife shall refinance the existing line of Credit into her name and cause the husband to be released as a borrower and guarantor in relation to any debts secured against the [P] property and any indebtedness as the consequence of having been a partner in [M].
5.That within 7 days the parties instruct the accountants of the Partnership as at 30 June 2012 for the purposes of dissolving the Partnership and transferring the assets and liabilities of the Partnership to the wife.
6.That within 2 months the wife shall pay to the husband by way of partial property order the sum of $300,000.
7.That for the purposes of complying with Order 6 hereof the wife be permitted to extend the borrowing secured against the home and the Partnership assets to a maximum of $1,250,000.
8.That the difference between the amount provided for in Order 7 and the total of the amounts referred to in Notation B and Order 6 be a partial property settlement in favour of the wife.
9.That the wife file and serve any further evidence in relation to Notations A, B, C, D & G and as to the value of the [business] and in relation to her income and/or drawings from the Partnership as at 30 June 2011 and thereafter, and the husband’s earning capacity within 6 weeks of today.
10.That the wife shall pay to the ATO as and when called upon to do so any income tax the husband is liable to pay as a consequence of the distribution of partnership income up to 30 June 2102.
11.That the wife be restrained from selling the home at Property P and the [business] without giving the husband 28 days prior written notice.
12.That the husband file and serve any further evidence as to value of the [business] and in relation to her income and/or drawing from the Partnership as at 30 June 2011 and thereafter within 6 weeks of the wife’s compliance with Order 9.
NOTATIONS
A.The parties agree for the purposes of the trial that the liability under the line of credit to BOQ as at 22 July 2011 were $623,824 for account [1] and $201,233 for account [2].
B.As at the 30 June 2011 the liability under line of credit [1] is $694,803.02 and $201,954 for account [2].
C.The husband contends that the wife was not permitted to draw funds on the line of credit in breach of Order 9 made 27 October 2009. The wife contends that she was.
D.The husband will contend that the increase under the line of credit [1] is an add back against the wife.
E. The wife contends that it should not be so construed.
F. That the Partnership is to be dissolved on 30 June 2012.
G.That the parties are not bound by any prior agreement as to the value of the Partnership or the wife’s income as at 30 June 2011, or the value of the former matrimonial home.
The hearing resumed on 1st November 2012. The Wife was cross-examined by Senior Counsel for the Husband.
Counsel for each party had prepared written submissions and spoke to those submissions on 2nd November.
Background
The Husband was born [in] 1962. The Wife was born [in] 1964.
The parties were married [in] 1987. They separated on 10th August 2008. They were divorced by an Order of this Court made on 22nd October 2009 which became final on 23rd November 2009.
There are four children of the marriage, two of whom are now adults attending university. The two younger children, a boy and a girl, are still at school. They live with their mother.
The children are:
a)a son born [in] 1991, now aged 22;
b)a daughter born [in] 1993, now aged 20;
c)a son born [in] 1996, now aged 16 years and 10 months; and
d)a daughter born [in] 2000, now aged 13.
Both parties are [omitted] by profession and they operated a [business] in [P] called [M] until the date of separation.
The Wife has reverted to the use of her former surname.
The proper approach to determination of a property application
The way a court approaches the determination of property matters under s.79 of the Family Law Act 1975 (Cth) has been set out by the Full Court of the Family Court in Hickey & Hickey[3]. In that decision the Full Court held at [39] that the approach involved four inter-related steps:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties…and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and asses the relevant matters…including…the matters referred to in s.75(2) so far as they are relevant…Fourthly, the Court should…resolve what order is just and equitable in all the circumstances of the case.[4]
[3] [2003] FamCA 395; (2003) 30 Fam LR 35; FLC 93-143
[4] Ibid at [39] per Nicholson CJ, Ellis & O’Ryan JJ
The Court should also have regard to the decision of the High Court of Australia in Stanford v Stanford[5], where the majority (French CJ, Hayne, Kiefel and Bell JJ) set out the way a court hearing a property application should deal with the requirement in subsection 79(2) of the Act that prescribes:
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.
[5] [2012] HCA 52
Their Honours held that there are three fundamental propositions:
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. So much follows from the text of s. 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property (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…
…
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).[6]
[6] Stanford v Stanford [2012] HCA 52 at [37]-[38] & [40]
Clearly, the decision in Stanford means that the Court must consider the requirements of s.79(2) before embarking on the four-step process set out in Hickey[7], or at least before taking the second step, identifying and assessing the contributions of the parties. In other words, satisfaction that it is “just and equitable” to make an order is a condition precedent to considering the matters referred to in s.79(4). First, the Court must be satisfied that it is just and equitable to make an order at all.
[7] supra
It would follow that the Court must consider whether it is just and equitable to make a particular order when the Court is considering “what order (if any) should be made” under s.79. Thus, the requirements of s.79(2) must again be borne in mind , in my view, after the Court has undertaken the third step in the process, as the Full
Court held in Hickey.
Orders Sought
The Applicant husband seeks Orders that:
a)The Wife pay all monies required to discharge the existing mortgage secured over the property at Property P;
b)The Wife should pay all outgoings in respect of the mortgage until it is discharged;
c)The Wife should indemnify the Husband in respect of the property at Property P and any mortgage secured over it;
d)If the Wife has not paid the sum of $300,000.00 under Order 6 of the orders made on 27th July 2012 by 30th November 2012, then interest would accrue at the rate prescribed under the Family Law Rules 2004;
e)That the Wife should take all steps and sign all documents necessary to assign the lease for the premises where the [business] was situated to herself and indemnify the Husband in respect of any claims made under the lease;
f)That the Wife should pay to the Husband the sum of $525,712.00 within three months;
g)If the Wife does not pay the sum of $525,712.00 within 3 months interest would accrue;
h)If the Wife has not paid the monies due to the Husband within 3 months she should take all steps and sign all documents necessary to sell the [omitted] business and pay to the Husband the balance owing together with interest; and
i)If the Wife has not paid the monies due to the Husband within 3 months she should submit the property at Property P for sale by auction at a reserve price of $1,100,000.00 and pay any balance due to the Husband out of the net proceeds of the sale;
j)In accordance with s.90MT(1)(b) of the Family Law Act 1975 there should be an order that the Husband is entitled to 100% of the Wife’s interest in the Sacco Superannuation Fund;
k)The Wife should pay to the Australian Taxation Office the sum of $13,636.20 in respect of the Husband’s estimated tax liability in respect of the income allocated to him from the Partnership for the year ended 30th June 2012 and further pay to the Husband the sum of $1,042.00 in reimbursement of income tax already paid by him for the 2012 financial year referable to the Partnership income;
l)The Husband should resign as a director of [M] Pty Limited and [C] Pty Limited and transfer his shareholding to the Wife;
m)The Wife should indemnify the Husband in respect of all actions, demands and liabilities in respect of [M] Pty Limited, [C] Pty Limited and the Sacco Family Trust;
n)The Wife should transfer to the Husband the VW Polo motor vehicle registration number [omitted]; and
o)Costs.
The Respondent Wife seeks orders that:
1.Order 6 of the Orders made on 27 July 2012 be varied by substituting the amount of $274,244 for the figure of $300,000;
2.The time for the wife to comply with Order 4 of the Order made on 27 July 2012 be extended to the date which is two calendar months from the date of making these Orders.
3.The time for the wife to comply with Order 6 of the Orders made on 27 July 2012 be extended to the date which is two calendar months from the date of making these Orders.
4.Within 28 days the husband shall do all acts and things and sign all documents necessary to resign as a Director of [M] Pty Limited and transfer his shareholding in that company to the wife.
5.On the husband complying with Order 4 the wife shall indemnify and keep indemnified the husband with respect to any liability he may have as a result of being a Director and/or shareholder of [M] Pty Limited.
6.Within 28 days the husband shall do all acts and sign all documents necessary to resign as a Director of [C] Pty Limited and transfer his shareholding in that company to the wife.
7.On the husband complying with Order 6 the wife shall indemnify and keep indemnified the husband with respect to any liability he may have regarding [C] Pty Limited.
8.Within 28 days each of the parties shall do all acts and sign all documents necessary to transfer from the Sacco Self managed Super Fund the husband’s member entitlements to another fund nominated by the husband.
9.Contemporaneously with the transfer of the husband’s member entitlements in the parties’ self managed super fund the husband shall resign as a trustee of that fund.
10.Within 28 days the parties do all acts and sign all documents necessary to close the ANZ E Trade account in joint names and pay the proceeds of same to the wife.
11.Within 28 days the wife pay the husband’s tax liability in the sum of $13,636.20.
12.On payment by the wife of the sum set out in Order 11 above the wife’s liability to pay the husband’s taxation liability for income from the partnership previously known as [Mr & Mrs Sacco] trading as “ [M]” be extinguished.
13. As between the parties the wife is the sole owner of and the husband relinquishes any claim on the following:
13.1The property situated at and known as Property P.
13.2The stock, plant and equipment and good will of the business [Mr Sacco] trading as “ [M]” [business] (being the [omitted] business previously operated by the husband and wife).
13.3All items of personalty in the wife’s possession as at the date of these Orders.
13.4All monies standing to the credit of the wife in any bank, building society, credit union or other financial institution accounts.
13.5The wife’s superannuation entitlements.
14.As between the parties the husband is the sole owner of and the wife relinquishes any claim on the following:
14.1All items of personalty in the husband’s possession as at the date of these Orders.
14.2All monies standing to the credit of the husband in any bank, building society, credit union or other financial institution accounts.
14.3The VW motor vehicle.
14.4The husband’s superannuation entitlements.
15.An Order that either party refuses or neglects to execute any document necessary to give effect to all or any of the Orders herein within 7 days of submission of such document to them or their respective solicitors the Registrar or a Deputy Registrar of the Federal Magistrates Court of Australia in Sydney be appointed pursuant to Section 106A of the Family Law Act 1975 to execute any such document in the name of the defaulting party and do all other acts and things necessary to give validity and operation to the said document or documents without further notice.
16.In the event that prior to making these Orders the wife pays to the husband, pursuant to the Orders of 27 July 2012, an amount greater than the amount set out in Order 1 above the husband shall immediately repay to the wife any monies greater than the sum of $274,244 and Order 1 is taken to have been complied with by the wife.
17.Within 14 days the wife pay to the husband the sum of $1,041 (being the amount the husband overpaid for his tax).
Submissions
Senior Counsel for the Husband, Mr Schonell SC, in a written submission, put to the Court that the Wife had failed to comply with Order 2 made by consent on 27th July 2012 by paying the sum of $10,000.00 for costs on time and had not complied with Orders 4 and 6 at all. That is, the wife had been late in paying the costs of $10,000.00 within 28 days, as she was required to do.
Order 4 required the Wife, on the transfer to her of the Husband’s interest in the property at [P], to refinance the existing Line of Credit into her name and cause the Husband to be released as a borrower and guarantor. However, it was submitted that the Wife had failed to do so.
Order 6 required the Wife to pay to the Husband by way of partial property order the sum of $300,000.00. Again, it was submitted that the Wife had failed to do so.
However, Mr Tregilgas of Counsel, who appeared for the Wife from 22nd July 2012 after her previous counsel, Mr Maiden SC, had been appointed to the District Court of New South Wales, submitted that the fault lay with the Husband.
On the Wife’s version of events, the matter was not finalised on 22nd July 2011 because of the very recent receipt of the financial figures for the parties’ [omitted] business for the financial year ended 30th June 2011. Those figures indicated a significant downturn in the profitability of the business.
Mr Tregilgas submitted that over the period of the adjournment the Wife had understood that the parties had reached agreement about the value of the business and, for the purposes of s.75(2) of the Act, the income that she would be likely to receive from her ongoing operation of the business.
However, when the matter came back to Court on 27th July 2012, it was apparent that the parties had reached agreement about the value of the [omitted] business but not about the income the Wife had received from the business for the period ending on 30th June 2011.
The Husband’s assertion was that the parties had agreed that the Wife had received an income of $233,261.00 for the financial year ended 30th June 2011.
The Wife asserted, however, that the parties had reached agreement that, based on the agreed value of the business, a future annual income could be adopted for her ongoing income earning capacity. Her assertion was that the Financial Statements for the business showed that her income for the year ended 30th June 2011 was $97,0676.00.
The difference between the parties’ views of their agreement came to became apparent on 27th July 2012.
The hearing was adjourned on the application of the Wife, to which the Husband consented on the basis that she pay his costs of $10,000.00 thrown away. There were also other orders referred to at paragraph [9] above.
Mr Tregilgas submitted that the Husband had been dilatory in complying with his obligations under Order 3 to transfer his interest in the property at Property P and his interest in the [Mr & Mrs Sacco] Partnership within 14 days. It was submitted that the Husband did not provide a signed transfer of his interest in the Property P property until 26th September 2012. Further, the Husband did not supply all the documentation required to transfer his interest in the partnership until 23rd October 2012.
As a result, it was submitted, the Wife had not been able to meet her obligation to make the payment of $300,000.00 required under Order 6.
Mr Schonell submitted that the parties were largely in agreement in relation to the value of the assets except for two areas:
a)The value of the [business]; and
b)How the Court should treat three amounts set out in items 15 to 17 of the balance sheet, which he submitted should be added back to the pool of assets.
It was submitted that the amounts in items 15 to 17 of the balance sheet all fall into sub-category (b) referred to by the Full Court of the Family Court in AJO & GRO[8] at [30]:
(b)Where there has been a premature distribution of matrimonial assets.[9][10]
[8] [2005] FamCA 195; (2005) 33 Fam LR 134; FLC 93-218
[9] Per Holden, Warnick & Le Poer Trench JJ at [30]
The amount claimed in item 15 is a payment of $30,000.00 made to the wife by the Husband on 27th November 2009 in compliance with Order 1 made by consent on 27th October 2009, being the first instalment. The submission is that the only source of funds from which to make this partial property order was the proceeds of sale of the parties’ property at Property S.
There was an initial advance of $30,000.00 made to each party and then the sum of $120,000.00 was paid to the Husband by monthly instalments of $30,000.00.
Thus, it is submitted, those items should, in fairness, be added back. As Mr Schonell submitted about the sum of $30,000.00:
The husband likewise concedes that it is appropriate that there be added back to the pool of assets the sum of $30,000 being the initial advance to him from the proceeds of sale of Property S upon the basis that there is a similar recognition of the moneys retained exclusively by the wife. Thus the husband’s approach in relation to 15 and 16 sits comfortably with the approach advanced by Their Honours in AJO & GRO.[11]
[11] Written Submissions of the Applicant Husband page 3 paragraph [9]
Further, the Husband submits that the balance of the proceeds of sale of the property at Property S should be added back to the asset pool.
However, it is submitted by Mr Tregilgas on behalf of the Wife that the balance of proceeds was spent by the Wife on necessary and reasonable living expenses, and so there is “no appropriate basis for notionally adding back” those moneys.[12]
[12] NHC & RCH [2004] FamCA 633; (2004) 32 Fam LR 518; FLC 93-204 per Finn, Kay & May JJ at [24]
The Husband submits that the parties’ contributions should be assessed equally to the date of separation. The Husband was the primary financial contributor although the Wife did work in the [business]. The Wife was the primary carer of the children, but the Husband contends that he also made a contribution.
It is conceded that the circumstances of the separation were dramatic and had “dire consequences” for the parties and the children. The Husband conceded that, after the separation, the Wife undertook almost the entirety of the parenting of the children, but it was not the case that the Husband should be regarded as having abandoned the children. It was submitted that it was clear that:
…the husband acknowledged, recognized and paid respect to the wife’s desire that he not return to the home, that he not contact her and that he not return to the [business].[13]
[13] Written Submissions of the Applicant Husband page 5 paragraph [18]
Against this, it was submitted on behalf of the Wife that her contributions in post separation period were greater than that of the Husband, as all four children were still at school and the Wife effectively ran the [omitted] business from 2009 on. The Husband had little or no contact with any of the children, except his younger daughter, in the period after separation and even that contact was “fairly minimal”.[14]
[14] Submissions on behalf of the Respondent Wife paragraph [161]
Further, it was submitted that:
The husband has not, therefore, played any role in the day to day care of any of the children post separation.[15]
[15] Ibid at [162]
The Wife submitted that she made a significant contribution in meeting the children’s emotional and other needs in the post separation period.
Mr Tregilgas submitted on behalf of the Wife that there should be an adjustment in the Wife’s favour of 10% because of her significantly greater contributions in the four years since separation.
As to the s.75(2) factors, Mr Schonell submitted that, but for the disparity as to the parties’ income:
there may well be a call for an adjustment in favour of the wife. However, because of that disparity of income, the husband contends that it is appropriate at the end of the day to make no adjustment under s. 75(2).[16]
[16] Written Submissions of the Applicant Husband page 9 paragraph 8
However, Mr Tregilgas submitted on behalf of the Wife that the Husband is an experienced and qualified [occupation omitted] with similar experience and qualifications to the Wife. Thus, the parties’ income earning capacities should be regarded as approximately equal.
Further, he submitted that:
208.The most telling of the section 75(2) factors is that the husband has little or no relationship with the children.
209.Their ongoing emotional and physical needs will continue to be catered for by the wife.
210.The husband has not paid any child support since separation.
211.Whilst he may be assessed to pay child support in the future, the monies paid by him will only meet a small portion of the wife’s actual costs in caring for the children.
212.Furthermore, the husband will not be assessed to pay child support in respect of the elder two children.[17]
[17] Submissions on behalf of the Respondent Wife paragraphs [208]-[212]
Thus, it is submitted that there should be an adjustment of 10% in favour of the Wife.
Senior Counsel for the Husband submitted that it would be just and equitable in all the circumstances that there should be an equal division of the parties’ assets. However, Counsel for the Wife submitted that a division of the matrimonial asset pool of 70% in her favour and 30% to the husband would be just and equitable under s.79(2) of the Family Law Act 1975.
Just and Equitable
Applying the decision of the High Court in Stanford v Stanford, the first matter to be considered is whether it is just and equitable to make an order under s.79 at all. In my view it is just and equitable to do so, as the parties have been separated for nearly five years and have been divorced for over three years.
There is a need to make such orders as will finally determine the financial relationship between the parties and avoid further proceedings between them (see Family Law Act 1975, s.81).
The Parties’ Property and Liabilities
I am satisfied that the monies from the proceeds of sale of the property at Property S should be added back to the asset pool as a premature distribution of property (AJO & GRO[18]). I am not persuaded as to the wife’s contention that those monies should not be added back as having been spent on reasonably incurred necessary living expenses.
[18] supra
I have had regard to the amended balance sheet filed in court on 2nd November 2012, the last day of the hearing.
Non-Superannuation Asset Pool
I find the value of the non-superannuation asset pool to be:
a)Property P $1,100,000.00
b)The [M] business $1,418,000.00
c)VW Polo motor car (husband) $ 10,000.00
d)The [C] business (Shares) $ 17,639.00
e)Wife’s household furniture $ 5,000.00
f)ANZ e-trade Account $ 15,916.00
g)Wife’s [business] No. 2 A/c (see liabilities)
h)Web Savings Account (see liabilities below)
i)Wife’s NAB Super Account +- $ 5,000.00
j)Husband’s NAB Visa Account $ 32.00
k)Husband’s CBA Account $ 2.00
l)Husband’s HSBC Account [omitted] $ 10.00
m)Husband’s HSBC Account [omitted] $ 3.00
Total $2,571,603.00
Add-backs
I find the add-backs to the matrimonial asset pool to be:
a)Husband – partial property settlement $120,000.00
b)Husband – money from Property S $ 30,000.00
c)Balance of proceeds Property S (wife) $360,679.00
d)Wife’s increase under BOQ Line of Credit $ 85,885.00
Total $596,564.00
Liabilities
I find the parties’ liabilities to be:
a)BOQ Line of Credit [1] $705,885.00
b)BOQ Line of Credit [2] $200,000.00
c)Husband’s 2012 Income Tax liability $ 13,636.00
d)Wife’s 2012 Income Tax liability $ 2,535.00
e)Wife’s Visa Card $ 4,603.00
f)Business liabilities (net) $ 68,064.00
g)Reimbursement to husband for 2012 tax $ 1,041.00
Total liabilities $1,101,413.00
The net total of the non-superannuation assets, therefore, is derived by adding the non-superannuation asset pool to the amounts added back, making a sub-total of $3,168,167.00, and then deducting the total of the liabilities. I find the net total to be $2,066,754.00.
Superannuation
I find the parties’ superannuation assets to be:
a)Wife’s Sacco Superannuation Fund at 30.6.2012 $239,728.00
b)Husband’s Sacco Superannuation Fund 30.6.2012 $251,969.00
Total superannuation $491,697.00
By adding the value of the superannuation to the net total, the net value of the assets comes to $2,558,421.00.
The Parties’ Contributions
After some consideration, I am prepared to accede to the argument that, overall, the parties’ contributions should be assessed as equal. The Husband had been the primary income earner although the Wife had certainly worked in the [business], which she continues to do. The Wife had the primary responsibility for the care of the children, although the Husband played a part, albeit a lesser one.
It is certainly the case that the Husband was separated from the children and the [business] with effect from the disastrous events at the time of the parties’ separation. He was unable to contribute to the children’s welfare because the Wife sought that he remain away. Similarly, he was unable to contribute to the running of the [business] at the same time.
As a result, the Husband was away from home, family and the [business] from August 2008 onwards. His income has dropped significantly.
In my view, the parties’ contributions should be assessed as equal.
Other Factors taken into account under subsection 79(4)(d) to (g)
Paragraph (d) of subsection 79(4) requires the Court to take into account the effect of any proposed order on the working capacity of each party. The parties are each qualified and experienced [omitted], each of whom retains a working capacity in their chosen profession.
The difference between them is that the Wife will retain the existing [business] in [P], where the Husband has had to start again virtually from scratch. The Wife, as has been submitted, has the capacity to earn a significant income whilst continuing to run the [omitted] business. It will conceivably take a number of years before the Husband is in a position similar to the wife, or similar to the position that he was in before the parties separated.
Paragraph (e) of subsection 79(4) requires the Court to take into account the matters referred to in subsection 75(2) of the Act so far as they are relevant.
The Husband was born [in] 1962. He is 50 years of age. Whilst there appear to be no concerns about his physical health, his mental health has been under a cloud for some time. He appears to be well enough to work as a [omitted].
The Wife was born [in] 1964. She is 48 years of age. She appears to be in good health.
There is and has been since separation a considerable disparity in income between the parties, greatly favouring the Wife. As Senior Counsel for the Husband has submitted:
3.There is a significant disparity between the income and earning capacity of each of the parties. In the period post the parties’ separation, the husband has earned limited sums of money.
4.In 2012 the profit from the partnership is $211,800. Whilst this is notionally distributed equally it is retained entirely by the wife. The husband’s income is approximately $23,000.00.[19]
[19] Written Submissions of the Applicant Husband page 8 paragraphs [3]-[4]
The Wife has the care and control of the two younger children of the marriage, the son who is aged 16 years and 10 months and the daughter who is now aged 13. The son appears to be completely estranged from his father.
The Husband does not have the care and control of any of the children of the marriage.
Both parties have the responsibility to support the two children, but it is the Wife who has the lion’s share of the income.
Each party has a superannuation entitlement.
The parties are separated and divorced. The Wife’s standard of living appears not to have changed but that of the Husband, with his greatly reduced, has deteriorated severely.
The Wife is living with the parties’ children, all the two older children, who are both adults, are away at university for much of the time. The parties’ older daughter appears to be completely estranged from her father.
There is no child support assessment in place in respect of the parties’ two younger children. The Husband is not paying child support.
Subsection 79(4)(g) also requires the Court to take into account any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provide, is to provide or might be liable to provide in the future for a child of the marriage. There is no child support assessment in place and the Husband is not making any payments of child support.
As has been submitted, were it not for the significant disparity in incomes between the parties, which greatly favours the Wife, there may well have been cause to make an adjustment in her favour because of the fact that the two children under the age of 18 years are living with her.
However, the very disparity between the parties’ incomes brings the matter back to the position where, weighing up the relevant factors, there should be no adjustment under s.75(2) of the Family Law Act 1975.
Just and Equitable
In all the circumstances, I am of the view that it would be just and equitable to order an equal division of the matrimonial assets between the parties. I propose to accede to the submission of Senior Counsel for the Husband and make orders as proposed.
I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 30 July 2013
[10] The paragraphs of the judgment in FLC 93-218 are printed out of order
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