Sachar and Sachar
[2011] FMCAfam 982
•21 September 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SACHAR & SACHAR | [2011] FMCAfam 982 |
| FAMILY LAW – Property – assessment of contributions – initial overwhelming contribution. |
| Family Law Act 1975, ss.75, 79 |
| Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC93-143, (2003) 30 FamLR 355 In the marriage of Lee Steere (1985) FLC91-626 In the marriage of Ferrarro (1993) FLC92-335 In the marriage of Clauson (1999) FLC92-877 Russell and Russell (1999) FLC92-877 Teal & Teal [2010] FamCAFC 120 Kessey and Kessey (1994) FLC92-495 (Full Court) Pierce and Pierce [1998] FamCA 74; (1999) FLC92-844 (Full Court) Figgins and Figgins [2002] FamCA 688; (2002) FLC 93-122 (Full Court) Farmer and Bramley [2000] FamCA 1615; (2000) FLC 93-060 |
| Applicant: | MS SACHAR |
| Respondent: | MR SACHAR |
| File Number: | SYC 1431 of 2009 |
| Judgment of: | Foster FM |
| Hearing date: | 27 July 2011 |
| Date of Last Submission: | 27 July 2011 |
| Delivered at: | Newcastle |
| Delivered on: | 21 September 2011 |
REPRESENTATION
| Counsel for the Applicant: | Ms Carr |
| Solicitors for the Applicant: | Antwan Lawyers |
| Counsel for the Respondent: | Mr Peter Batey |
| Solicitors for the Respondent: | Kacir Safi & Halligan Lawyers |
THE COURT ORDERS THAT:
The husband pay to the wife, or as she may direct the husband in writing, by way of property adjustment the sum of $320,882 as follows:
(a)as to the sum of $200,000 within 14 days from this date,
(b)as to the sum of $120,882 within three months from this date.
The parties are restrained from further drawing down any funds from the redraw facility attached to the home loan accounts secured over the properties Property K in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier [omitted], Property S in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier [omitted] and Property G in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier [omitted] save for a redraw to pay to the wife the sum of $200,000 provided for in Order 1.a above.
Concurrently with the payment to the wife of the sum of $120,882 provided for in Order 1.b the wife do all things necessary to transfer to the husband her interest in the properties Property K in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier 1119/850955, Unit 372/298–304 Property S in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier [omitted] and Property G in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier [omitted] and the husband refinance the mortgage liabilities secured thereon so as to release the wife from all liability in relation to such mortgages.
Pending the husband's compliance with the above orders the husband indemnify and keep indemnified the wife in respect of all mortgage payments, rates and other property outgoings and expenses related to the properties set out in order 3 above.
The parties sign all documents and do all things necessary to enable the wife within 28 days from this date to roll out her interest in the [Sachar] Provident Fund to another complying superannuation fund of her choice.
The husband indemnify and save harmless the wife from all or any personal liability arising from the trading affairs of [F] Australia Pty Ltd and [J] Pty Ltd howsoever arising, including any liability for loan accounts, personal income tax in respect to income or other payments allegedly made to the wife, prior to this date or hereafter.
The parties otherwise that is set out in these orders be declared the sole legal and equitable owner of all personal property in their respective name, possession or control, not limited to but including shares, jewellery and superannuation.
The parties be granted liberty to apply in respect to the implementation of these orders or enforcement thereof on 7 days notice.
IT IS NOTED that publication of this judgment under the pseudonym Sachar & Sachar is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 1431 of 2009
| MS SACHAR |
Applicant
And
| MR SACHAR |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter concerns competing applications for property settlement between the applicant wife and respondent husband.
The wife relied on the following documents:
a)Amended Application filed 15 December 2009
b)Financial Statement Sworn 25 July 2011
c)Affidavit of the wife filed 15 December 2009
d)Affidavit of the wife filed 08 February 2011
e)Affidavit of the wife sworn 25 July 2011
The husband relied on the following documents:
a)Amended Response filed 21 December 2009
b)Financial Statement Sworn 26 July 2011
c)Affidavit of the husband filed 21 December 2009
d)Affidavit of the husband filed 12 July 2011
e)Affidavit of Mr H filed 13 July 2011
The parties relied on the Single Expert Report of Mr P in relation to the husband’s shareholding and interests in his two companies. Although called for cross-examination ultimately his findings were adopted by both parties.
The wife's Amended Initiating Application that was filed on 15 December 2009. In that application and she seeks final orders as to property settlement. Those orders were not pressed at trial and the applicant wife sold orders at trial is set out in the applicant’s case summary. The orders sought by the wife were as follows:
7. That the parties forthwith sign all documents and do all things necessary to enable and insure that an amount of $200,000 is redrawn from the National Australia Bank (In a B) account number [omitted] and paid to the solicitors for the wife to be held in trust for the wife.
8. That within 28 days from the date of these orders the husband pay to the wife the further amount of $653,180.
9. That in the event that the husband does not pay the amount referred to in order to within 28 days then the wife be appointed Trustee for Sale of the following properties
(i) Property K, [K], in New South Wales;
(ii) Property S, Sydney:
(iii) Property G, Sydney.
10. Without limiting the Trustees powers under the terms of this Order, the Trustee is empowered to do all things, including signing all documents necessary to effect a sale of the same properties including but not limited to:
(a) determining whether the sales are to be by private treaty or option;
(b) determining the Real Estate Agent or Agents with whom to list the properties;
(c ) determining the listing price from time to time, or the reserve price in the event of sale by auction; and
(d) nominating the solicitors to act on the respective conveyances; and
(e) anything that is necessary or convenient for the purpose of administering these orders.
11. That the proceeds of the sales of the properties pursuant to these orders be paid out and dispersed as follows:
(i) payment of agents commissions and other associated costs of the sales of the respective properties;
(ii) payment of the costs of the solicitor acting on the respective conveyances;
(iii) in discharge of the National Australia Bank Home Loan [omitted] and [omitted];
(iv) payment of a wife and the amount of $653,180;
(v) the remainder to the husband.
That the parties are restrained from further drawing down any funds from the redraw facility attached to the home loan accounts referred to in orders 7 and 11 above.
12. That pending the husband's compliance with all the 7 and 8 above all the payment to the wife has set out in order 11 above, the husband indemnify and keep indemnified the wife in respect of all mortgage payments, rates and other property outgoings and expenses related to the properties set out in order 9 above.
13. That the wife be declared the owner of the superannuation interest in the [Sachar] Provident fund in the amount of not less than $65,000.
14. That the parties sign all documents and do all things necessary for the wife to enable the wife within 28 days to transfer the interest in the [Sachar] Provident Fund to another superannuation fund of her choice and the husband thereafter be declared the owner of the [Sachar] Provident Fund.
15. That the husband be declared the owner to the exclusion of the wife of his present interest in the following entities:
[F] Australia Pty Ltd;
[J] Pty Ltd;
[H] Pty Ltd;
Sachar Family Trust.
16. That the wife be declared the owner of the property located in [M] in the Philippines.
17. That the parties otherwise that is set out in these orders be declared the sole legal and equitable owner of all personal property in their respective name, possession or control, not limited to but including shares, jewellery and superannuation.
The respondent husband filed an amended response on 21 December 2009 seeking orders as to property. At the commencement of trial the respondent husband sought orders as set out in the outline of case document relied on. Those orders sought were as follows:
12. That within 30 days of these orders being made the Respondent Husband paid to the Applicant wife 25% of the net value of the real property noted below less the partial property settlements:
a. Property K in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier [omitted]
b. Property S in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier [omitted]
c. Property G in the State of New South Wales being the whole of the land comprised in the certificate of title folio identifier [omitted]
13. That simultaneously with the payment described in Order 4 (sic), the Applicant Wife transfer her right title and interest in the above properties to the Respondent Husband.
14. That the Respondent Husband indemnify and keep the Applicant Wife indemnified from all mortgage repayments, rates and all other property outgoings and expenses relating to the above property is until the payment set out in order 12 is made.
15. That of the Respondent Husband transferred his right title and any interest he may have to the Applicant Wife in the property located at [M] in the Philippines.
16. That the Husband be declared the sole owner of the shares, rights in any interests held in the following entities;
[F] Australia Pty Ltd;
[J] Pty Ltd;
[H] Pty Ltd;
Sachar Family Trust.
[Sachar] Provident Fund
17. The husband and wife shall otherwise be declared as the sole legal and beneficial owners of all shears, superannuation, jewellery or any other personal property in their respective control and/or in their names.
18. That of the wife pay the husband's costs of and incidental to these proceedings.
Background
The wife is presently 36 years of age and occupied with home duties. The husband is presently 57 years of age and is a [occupation omitted].
The wife asserts the commencement of cohabitation in 1995. The parties were married [in] 1996. The wife came to Australia in August 1996 on a spouse visa. The husband asserts that cohabitation commenced at this time. Nothing turns on this issue. The parties separated in August 2008.
There are 2 children of the marriage [X] born [in] 1999 and presently 12 years of age and [Y] born [in] 2001 and presently 10 years of age.
At the commencement of cohabitation the wife had minimal assets.
At the commencement of cohabitation the husband asserts that he had assets comprising his shareholding in [F] Australia Pty Ltd, his shareholding in [J] Pty Ltd, and the proceeds of sale in 1995 of his shareholding in [I] (“[I]”).
The husband asserts that the net proceeds of sale available to him in relation to [I] were in the sum of approximately $120,000 used to purchase [K] land, $300,000 used to construct the home thereon together with the sum of about $200,000 used in connection with his ongoing business interests in South East Asia.
In addition the husband asserts a superannuation interest of approximately $150,000 at cohabitation.
The husband had 3 children from his previous marriage. At the commencement of cohabitation those children were aged 18, 14 and 9 those children formed part of the household on some weekends and at various periods during school holidays.
In November 1996 the husband purchased vacant land at Property K, [K] for the sum of $121,000. At the time of purchase the property was acquired in the name of [H] Pty Ltd as trustee of the Sachar Family Trust. At some later date the title of the property was transferred from the company to the parties as joint tenants.
Subsequent to purchase of the [K] properly the husband contracted with a builder for the construction of a home on the property as a contract price of $341,995. Following variations to the contract price for the construction of the home the total cost of the contracted construction was $372,392.
The husband asserts that the sum of $300,600 was advanced by mortgage to the Commonwealth Bank of Australia with the balance of funds coming from sale monies from the [I] sale. The husband asserts that the total project cost was $628,059. However that calculation by him includes the initial purchase price of the vacant land. It is clear that the cost of construction and other works was in all about $500,000 at the time of completion in October 1997 that was funded as to $300,600 by mortgage and the balance from the husband of about $200,000. Whether the husband’s proportion came from capital from the sale of [I] or a mixture of those funds and income is not clear.
It is clear that at about the time of commencement of cohabitation the assets brought into the relationship by the husband were overwhelming. He had capital funds, some superannuation, although no documentary evidence of his alleged entitlement was available, and his continuing business interests in [F] Australia Pty Ltd and [J] Pty Ltd. Whilst there is no evidence of value of the husbands interests on the two companies at cohabitation it is clear that they provided a significant income source during the relationship.
Following the wife's arrival in Australia in August 1996 she obtained employment in May 1997, a few months before completion of the home, as a [omitted] working full-time Monday to Friday earning approximately $30,000 per annum. Her salary was deposited to the parties’ joint account.
In May 1999 and the wife ceased work, expecting the birth of the 1st child. Sometime after the birth of the 1st child the wife returned to employment as a [omitted]. Her salary was once again deposited to the party’s joint account.
Following the birth of the child [X] in June 1999 the wife's mother visited from overseas and assisted in the household for approximately 6 months. At this time the husband was working full-time 5 days per week and travelling extensively in relation to his business interests.
Prior to the birth of the 2nd child in 2001 the husband suffered an injury that resulted in a later payment of $56,000 in workers compensation. The husband asserted that the payment was paid in reduction of the mortgage. Regrettably there are no documents to enlighten the court as to the components of the award, so as to enable the court to give detailed weight to the payment as a factor in assessing contributions.
The 2nd child of the marriage [Y] was born in March 2001. The wife continued to devote her time to the care of the children whilst the husband pursued his business interests.
In November 2004 the wife ceased any employment at the husband's request and thereafter devoted her time to the children and the household.
During the period of cohabitation the husband continued to operate his business entities [F] Australia Pty Ltd and [J] Pty Ltd. Those entities provided significant income into the household and for the purposes of income splitting to gain taxation advantages the wife was paid a salary and other benefits through the companies.
During cohabitation the husband was able to acquire the investment property at Property G, Sydney and a second investment property at Property S, Sydney. The purchase price of those properties was funded by way of the collateral borrowing over the [K] home and the investment properties themselves. In addition the parties purchased in the wife’s name a property at [M], Philippines.
In August 2008 the parties separated under the one roof in circumstances of ongoing conflict. The husband asserts that from this time he had a greater role in the lives of the children, attending more to their needs, limiting his overseas travel and working more from home.
On 18 March 2009 the parties consented to partial property orders that provided for a payment to the wife of $100,000 together with a further sum of $30,000 for the purchase of a motor vehicle. Otherwise the husband was to have exclusive occupation of the [K] home from 5 June 2009.
In June 2009 there was a reconciliation of sorts. The parties and the children travelled to the Philippines for a holiday in July 2009. However in October 2009 the parties once again separated under the one roof. Thereafter the husband made application for sole use and occupation of the [K] home and on 21 December 2009 the husband was granted sole use and occupation of the home from 28 February 2010. The husband was to provide a bank guarantee to the landlord of premises rented by the wife in the sum of $25,000 or 12 months rental whichever is the lesser sum as partial property settlement. Further the husband was ordered to pay spouse maintenance to the wife in the sum of $200 per week upon her vacating the home.
From February 2010 the children have remained in the primary care of the husband and spent time with the mother. The mother obtained rental accommodation at [omitted] at a rental of $420 per week until 19 March 2011.
On 11 October 2010 the mother commenced employment at [omitted] on a three-month full-time contract as a salary of $33,000 per annum. However at the conclusion of that period the mother's employment was not renewed
On 2 May 2011 the mortgage balance secured over the [K] home was in the sum of $1,143,647 that balance leaving a significant redraw facility available. Thereafter on 19 July 2011 the wife redrew the sum of $11,640 as against the said loan in order to secure for herself rental accommodation at [omitted] as and from 22 July 2011.
At the conclusion of the trial as to property counsel for both parties and advised the court that the parties had reached agreement in relation to parenting issues and that in substance the agreement was that the parties would have equal shared parental responsibility for the children, that the children would live with the husband, that until September 2011 the children would spend alternate weekends during school term from after-school Friday to before school Monday and half school holidays with the wife. That after the September school holiday period the children would spend alternate weekends during school term from after school Thursday to before school Monday and half school holidays with the wife. The parties had also reached agreement in relation to special days such as birthdays, Father's Day, Mother's Day and the Christmas festive period.
The Law
The approach the court is required to adopt in determining an application under section 79 of the Family Law Act for adjustment of property interests is well established by authority (Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143, (2003) 30 FamLR 355. In the marriage of Lee Steere (1985) FLC91-626, In the marriage of Ferrarro (1993) FLC92-335, In the marriage of Clauson (1999) FLC92-877).
The process ordinarily involves a four-staged process. Firstly the court must identify the property, liabilities and financial resources of the parties at the time of the hearing. The court then considers the contributions made by the parties as defined in section 79 (4) (a) to (c). Thirdly the court must consider the future needs of the parties by having regard to the provisions of section 75(2) in so far as they are relevant. Finally in determining what order the court should make the court must be satisfied in all of the circumstances that it is just and equitable to make the order – S79(2). It is the justice and equity of the actual orders that the court must consider. (Russell and Russell (1999) FLC92-877, Teal & Teal [2010] FamCAFC 120 (25 June 2010)
The property of the parties
Having regard to the fact that the husband’s superannuation at cohabitation will be considered in the context of overall contribution findings the court proposes to adopt a single pool approach.
During the trial the parties provided to the court a joint balance sheet as an aide memoir that updated the earlier agreed Balance Sheet of the 2 May 2011 (Exh. 1). A summary of that balance sheet, reflecting the parties submissions is set out below:
The draft Balance Sheet:
| ASSETS | Husband’s Value | Wife’s Value | ||
| 1 | Jt | [K] home | 665,000 | 665,000 |
| 2 | Jt | Property G | 612,500 | 612,500 |
| 3. | Jt | Property S | 660,000 | 660,000 |
| 4. | H | [J] Pty Ltd. | 73,087 | 83,597 |
| 5 | H | [F] Australia Pty Ltd | 532,902 | 532,902 |
| 6 | W | [M], Philippines | 49,340 | 49,340 |
| 7 | Jt | Funds at separation | 5,925 | NK |
| 8 | H | Funds at separation | 5,162 | 5,162 |
| 9 | W | NAB account | 500 | 482 |
| 10 | W | Ford car | 23,000 | 23,000 |
| 11 | H | 1990 Corvette car | 15,000 | 15,000 |
| 12 | H | 2006 Corvette car | 60,000 | 60,000 |
| 13. | H | Crystal collection | 45,000 | 45,000 |
| 14. | W | Furniture/Contents | 2,000 | 2,000 |
| 15 | H | Furniture/Contents | 30,000 | 30,000 |
| 16 | W | Jewellery | 100,000 | 100,000 |
| 17 | W | Partial property settlement | 100,000 | 100,000 |
| 18 | W | Payment of wife’s rent | 21,480 | 21,480 |
| 19 | W | Mortgage redraw July 2011 | 11,640 | 0 |
| 20 | W | Dr W. half fee | 2,750 | 2,750 |
| 21 | W | Mr P half fee | 2,900 | 2,900 |
| Liabilities: | ||||
| 1 | H | NAB mortgage [omitted] | 357,424 | 357,424 |
| 2 | H | NAB mortgage [omitted] | 785,595 | 785,595 |
| 3 | H | Loan account [F] | 199,000 | 199,000 |
| 4 | W | Flexi rent | 0 | 3,000 |
| 5 | W | NAB Visa card | 0 | 2,672 |
| Superannuation | ||||
| 1 | H | [Sachar] Superannuation Fund | 295,000 | 295,000 |
| 2 | W | [Sachar] Superannuation Fund | 65,000 | 65,000 |
Issues in relation to the Pool:
Item 4. [J] Pty Ltd. The company has ceased trading, having disposed of surplus stock that represented the net asset backing valuation by the Single Expert. The husband’s evidence is that stock was disposed of in circumstances where the company made a loss. No final accounts were provided. The husband asserts that the valuation should include liquidation costs and reflect the lower figure. The wife asserts that the Single Expert valuation on a non-liquidation basis should be adopted. The court is satisfied that in circumstances where the company has ceased trading and it is proposed to liquidate same that the lower figure should be adopted.
Items 7, 8 and 9. It was conceded by the wife Counsel in submissions that these historic balances reflecting a position 3 years ago should be omitted. This was not opposed by the husband.
Item 19. It was contended by the wife’s counsel that this was a sum to be expended by the wife on rent in circumstances where the husband post separation controlled the income producing assets of the parties. The redraw is reflected in the outstanding mortgage balances. The court is of the view that the sum should not be added back and both parties will bear the burden of same in the percentages ultimately found by the court.
Items 4 and 5 (Liabilities) These represent the wife’s post separation debts and presumably portion of her living expenses. The court is not persuaded that the husband should bear any proportion of same and they will be excluded from the pool.
The adjusted final pool is as follows:
ASSETS
Value
1
Jt
[K] home
665,000
2
H
Property G
612,500
3.
H
Property S
660,000
4.
H
[J] Pty Ltd.
73,087
5
H
[F] Australia Pty Ltd
532,902
6
W
[M], Philippines
49,340
7
Jt
Funds at separation
0
8
H
Funds at separation
0
9
W
NAB account
0
10
W
Ford car
23,000
11
H
1990 Corvette car
15,000
12
H
2006 Corvette car
60,000
13.
H
Crystal collection
45,000
14.
W
Furniture/Contents
2,000
15
H
Furniture/Contents
30,000
16
W
Jewellery
100,000
17
W
Partial property settlement
100,000
18
W
Payment of wife’s rent
21,480
19
W
Mortgage redraw July 2011
0
20
W
Dr W. half fee
2,750
21
W
Mr P half fee
2,900
Total:
2,894,959
Liabilities:
1
H
NAB mortgage [omitted]
357,424
2
H
NAB mortgage [omitted]
785,595
3
H
Loan account [F]
199,000
4
W
Flexi rent
0
5
W
NAB Visa card
0
1,342,019
Net:
1,552,940
Superannuation
1
H
[Sachar] Superannuation Fund
295,000
2
W
[Sachar] Superannuation Fund
65,000
Total
360,000
TOTAL ASSETS
$1,912,940
Contributions
The court now considers the second step in the exercise under s.79, namely an assessment of the parties’ contributions within the context of s.79 (4)(a) to (c). These provision provide as follows:
Section 79(4) In considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(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;
(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.
In Kessey and Kessey (1994) FLC 92-495 (Full Court) at 89,151 the Full Court made clear that ultimately all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party:
“... In many – indeed probably in most – property settlement cases the Court has to evaluate and assess contributions to property in the absence of precise valuations of the contributions in question. Indeed, where the contributions to property are indirect or non-financial, precise valuation is impossible, and even where the contributions are direct or financial so that a valuation might be provided, other factors (not capable of precise mathematical statement) may well have eroded the initial value of such contributions. In a case such as the present, it is not necessary to arrive at precise mathematical valuations of the parties’ contributions - all that is necessary is to evaluate the weight that should be given to each party’s contributions relative to the contributions of the other party.”
In Pierce and Pierce [1998] FamCA 74; (1999) FLC 92-844 (Full Court) at 85,881 the Full Court said:
“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, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: ..”.
In Farmer and Bramley [2000] FamCA 1615; (2000) FLC 93-060, Kay J clearly stated two things, namely:
“68. The Court’s task is to evaluate all of the contributions from the time of the commencement of the parties’ relationship until the time of the hearing and to give such weight to such contributions as the Court thinks is appropriate in the circumstance.
69. There is nothing in the legislation that requires s 79(4)(a)(b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which the parties are presently possessed.
In Figgins and Figgins [2002] FamCA 688; (2002) FLC 93-122 (Full Court) Nicholson CJ and Buckley J observed:
“134 ... Marriage is and should be regarded as a genuine partnership to which each brings different gifts. ...”
At the commencement of the relationship the husband brought into the marriage significant assets and financial resources. On the other hand the wife brought into the marriage virtually nothing. It is clear that the husband's initial contribution has been the springboard for the parties’ present financial circumstances. Thus the husband’s initial contribution must be afforded significant weight in the context of the present value of the pool for division between the parties.
During the period of cohabitation the husband pursued his business interests; the wife worked for various short periods but otherwise devoted herself to the children and to her role as homemaker. The husband travelled in relation to his business, on many occasions leaving the children in the care of the wife. During the period of cohabitation the wife was the object of an income splitting scheme which assisted no doubt in the minimisation of personal income tax in relation to overall income coming into the household. This aspect of her contribution cannot be ignored. The husband during this period complains of the wife's spending habits. However the control of this the behaviour was in his own hands as he controlled the finances coming into the household and the availability of credit. The court makes no adverse finding in relation to the wife in respect to this issue. Overall the court considers that the contributions of the parties during this period should be regarded as equal.
Following separation the parties resided under the one roof for a considerable period. During this period the husband asserts that he became more involved in the household and the care of the children, yet during the same period he continued to travel overseas leaving the children on occasions in the wife's care during his absence. Subsequent to final separation the wife has had to rent accommodation for herself and the children when they have been with her whilst the husband has remained in occupation of the matrimonial home to her exclusion. This circumstance has seen the wife reliance upon her partial property settlement distribution for living and other expenses whilst she has been out of employment. The court considers that these post separation circumstances even though the husband has had the primary care of the children call for no contribution-based adjustment.
Weighing up the various contributions of the parties the court finds that contributions favour the husband as to 70% and as to the wife 30%.
Section 75(2) factors
Having determined the contribution elements the court is required to have regard to the provisions of section 75(2).
The matters to be so taken into account are -
The age and state of health of each of the parties
The wife is presently aged 36 years. The husband is presently age 57 years. The wife and is in good health. The husband does not assert health circumstances that prevent him from continuing his present business pursuits, although he recently suffered a mild stroke. It is the courts view that this factor does not call for adjustment.
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
The property and financial resources of each of the parties are set out above in this judgement. The wife is presently in receipt of a Newstart allowance from Centrelink. She is through that program seeking gainful employment. The wife is not precluded by any health circumstances from seeking full-time employment. The husband's income circumstances as disclosed in his updated Financial Statement evidences a salary from his company of approximately $50,000 per annum together with funds made available to him through his loan account in that company. Otherwise the husband receives rental income from his 2 investment properties and that income is applied to mortgage payments and other outgoings in relation to the properties. His most recently completed tax return is for the 2009 tax year sentence on that return (Exh. 6) discloses a salary from his company of $53,327 per annum together with drawings by way of directors fees in the sum of $80,000 per annum. In that financial year the husband's investment properties produced losses of $27,654 that was offset against his other income. It is clear that the husband is in a far superior income position to that of the wife. This factor favours the wife.
Whether either party has the care or control of a child of the marriage who has not obtained the age of 18 years
The parties have agreed that the children will reside with the husband and that they will spend significant time with the wife as set out above. In this circumstance the husband will have the ongoing primary care obligations in relation to the children who are presently aged 12 and 10. This factor favours the husband.
Commitments of each of the parties that are necessary to enable the parties to support (i) himself or herself and (ii) a child or another person that the party has a duty to maintain
The wife will have the primary obligation providing for her own needs together with those of the children when they spend time with her she pursuant to the agreement reached between the parties. The husband will have the primary financial obligation of providing for the future needs of the children in his care. This factor favours the husband although he is in a much stronger financial position.
The responsibilities of either party to support any other person;
This factor is not applicable.
Subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under any law of the Commonwealth, of a State or Territory or of any other 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;
The wife is presently in receipt of and income tested Newstart allowance. Both parties have interests in the [Sachar] Superannuation Fund as referred to above.
Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable
This factor is not applicable.
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
This factor is not applicable, as the wife seeks no order for periodic spouse support.
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
This factor is not applicable.
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
During the period of cohabitation the wife's role within the home and her role as caregiver for the children facilitated the husband of continuing to pursue his business interests that now provide to him a significant financial resource. This factor favours the wife.
The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
At the time of cohabitation the wife was 21 years of age. At that time she had little skills except as a [omitted]. On arriving in Australia in 2006 she remained out of the workforce for a short period and thereafter obtained menial work as a [omitted] on a full-time basis. She returned to this work at various times during cohabitation. She has little formal training and the prospects of obtaining employment in other than manual, menial or basic clerical tasks appear to be limited. She is now 36 years of age and her skills are not much further advanced then when she arrived in this country 15 years ago. During the course of the evidence the wife was cross-examined as to a resume prepared with the assistance of the husband and used for the purpose of the wife seeking employment during the marriage. It was clearly apparent from an observation of the wife's English skills during her oral evidence and her responses in cross-examination as to her qualifications and experience that in the resume prepared on her behalf (Exh. 3) her skills are expressed in a most optimistic and generalised fashion, certainly not in accord with the reality of her true abilities. This factor significantly favours the wife.
The need to protect a party who wishes to continue that party’s role as a parent
This factor is not applicable.
If either party is cohabiting with another person – the financial circumstances relating to the cohabitation
This factor is not applicable.
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
This factor is not applicable.
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
In reality there is little prospect that the husband will receive anything but minimal child support from the wife in relation to the children of the marriage. This will be as a result of the significant disparity in the income earning capacities of the parties. Exhibit 4 comprised a child-support assessment for the period from 29 January 2012 to 14th of June 2012. That assessment purports to assess the wife's liability for child support in the sum of $1468 per month. It is clear that such assessment has issued as a consequence of the income splitting arrangements put in place by the husband for the purposes of tax minimisation. That circumstance is evident from the wife's 2009 draft personal income tax return prepared by the husband's accountant (Exh. 6). Such return evidences a salary of $26,663 paid to the wife by the husband's company together with an additional sum of $81,000 per annum paid to the wife by the husband's company as director’s fees. As against that income, losses in relation to the investment properties in the sum of $27,651 per annum were offset. None of the asserted income was ever paid to the wife. No doubt her prospective liability under any assessment for child support issued in such circumstances will be rectified by appropriate application to the Child Support Agency. This factor favours the husband.
Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
During the course of cross examination the husband conceded that he had paid family law legal costs in the sum of about $100,000 from his financial resources to date of trial. The wife met portion of her costs from the partial property settlement paid to her pursuant to interim orders, thus depleting her capital. The court takes this consideration into account. It favours the wife.
The terms of any financial agreement that is binding on the parties
This factor is not applicable.
Overall having regard to the relevant factors identified above the court considers that is appropriate that there be an further adjustment of the contribution-based finding in favour of the wife by a further 7.5% by reason of section 75(2).
Thus the court finds that the asset pool should be apportioned overall as to 62.5% to the husband and 37.5% to the wife. The wife’s entitlement is in the sum of $717,352.
The wife already has in her possession or has had the following:
Partial property distribution $130,000
Property M, Philippines $ 49,340
Ford car $ 23,000
Superannuation $ 65,000
Furniture/Contents $ 2,000
Jewellery $100,000
Payment of rent $ 21,480
Dr W half fee $ 2,750
Mr P $ 2,900
$396,470
This leaves a cash adjustment payable to the wife in the sum of $320,882.
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.
The husband seeks to retain the home at [K]. The wife seeks a cash payment. Under the circumstances the court will order adjustment by way of a cash payment to the wife.
Conclusion
The court will order that there be a cash payment on terms to the wife. Otherwise as she has an interest in the [Sachar] Superannuation Fund at an agreed figure that she may at her option roll out that entitlement to a fund of her own choice by giving to the Trustee of the fund appropriate notice.
For the above reasons I will make the orders set out in the beginning of this judgment.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of Foster FM
Date: 21 September 2011
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