Salinas and Salinas

[2014] FCCA 71

FEDERAL CIRCUIT COURT OF AUSTRALIA

SALINAS & SALINAS [2014] FCCA 71

Catchwords:
FAMILY LAW – Alteration of property interests – both parties had assets at cohabitation – inheritance – assessment of contribution – assessment of future needs – just and equitable order.

Legislation:

Family Law Act 1975, ss.75(2), 79

Bevan & Bevan [2013] FamCAFC 116
Stanford & Stanford [2012] HCA 52
Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FamCA395
Norbis & Norbis [1986] HCA 17

Applicant: MR SALINAS

Respondent: MS SALINAS

File Number: WOC 588 of 2010

Judgment of: Judge Altobelli

Hearing dates: 6 & 7 November 2013

Date of Last Submission: 7 November 2013

Delivered at: Wollongong

Delivered on: 30 January 2014

REPRESENTATION

Counsel for the Applicant: Mr Khan

Counsel for the Respondent: Mr Alexander

Solicitors for the Respondent: M Russoniello

ORDERS

1. That within 42 days from the date of these orders the husband do all such acts and things and sign all documents necessary so as to transfer to the wife all of his right title and interest in the property situate and known as Property B, [B], NSW being the whole of the land fully described in Certificate of Title folio identifier [omitted] (“the former matrimonial home”) subject to the wife paying to the husband $269,132.50 in accordance with these Orders.

2. That simultaneous with such transfer both parties do all such acts and things and sign all documents necessary to cause the mortgage secured by the former matrimonial home to be discharged and that loan be refinanced in the sole name of the wife and that the wife be solely responsible for repayment of that loan.

3. A declaration that the wife retain sole and absolute ownership of the following property, assets and/or resources free of any claim by the husband and that she be solely responsible for repayment of any loan or liability attached to such property, asset and/or resource to the exclusion of the husband from such liability:

   (a)the property situate and known as Property S, [S], NSW being the whole of the land fully described in Certificate of Title folio identifier [omitted];

   (b)Hyundai i45 motor vehicle registration number [omitted];

   (c)all shares in [B];

   (d)household contents and effects other than the items set out in Schedule 1 Part 1;

   (e)jewellery;

   (f)interest in [A] Super membership number [omitted];

   (g)interest in [U] Super membership number [omitted]; and

   (h)any other property in her possession or control.

4. That simultaneously with the transfer of the former matrimonial home to the wife the husband collect from the former matrimonial home the items set out in Schedule 1 hereof.

5. A declaration that the husband retain sole and absolute ownership of the following assets, property and or resources free of any claim by the wife and that he be solely responsible for repayment of any loan or liability attaching to such asset, property and or resource to the exclusion of the wife from any such liability:

   (a)the property situate and known as Property L, [L], NSW;

   (b)the property situate and known as Property C, [C], NSW;

   (c)any bank or credit union accounts in his name;

   (d)any motor vehicle registered in his name;

   (e)household contents and effects in his possession or control together with the items set out in Schedule 1;

   (f)coin collection and memorabilia in his possession;

   (g)interest in [X] Superannuation;

   (h)interest in  [S] Superannuation Scheme membership number [omitted]; and

   (i)any other property in his possession and control.

6. That the husband be solely responsible for and indemnify the wife against any debt allegedly owed to his sister, Ms W, and/or any other member of his family.

7. That the parties do all such acts and things and sign all documents necessary to cause the trustee of the Salinas Family Trust being the company known as Mr & Ms Salinas Pty Ltd for with to repay to the parties in equal proportions the loan account.

8. That the parties do all such acts and things and sign all documents necessary to cause the trustee of the trust to sell the property situate and known as Property W, [W] in accordance with the terms and conditions set out in Schedule 2.

9. That upon completion of the sale of the property the net proceeds of the sale (after the payment of such as shall  be required to discharge the mortgage encumbering the property, rate and rental adjustments, legal expenses and agents/auctioneers commission) be applied as follows:

   (a)in payment of all tax liability of the trust;

   (b)by way of distribution to the beneficiaries of the trust in accordance with the discretion of the trustee but such that in the exercise of discretion;

   (i)the wife or beneficiaries associated with the wife shall receive 50% of the distribution; and

   (ii)the husband or beneficiaries associated with the husband shall receive 50% of the distribution.

10. That both parties bear equally any costs and expenses including legal and accounting fees associated with the winding up of the trust to the extent that provision for meeting of such expenses has not been made out of the property of the trust prior to its winding up.

11. That both parties bear equally any personal taxation liability attaching to the trust to the extent that provision for meeting such liabilities is not made out of the property of the trust prior to its winding up.

12. The wife shall be entitled to defer payment to the husband pursuant to Order 1until settlement of the sale of the trust property pursuant to Orders 8 and 9 provided that if she has not paid the husband within 3 months, interest will accrue, calculated in accordance with the Family Law Act 1975 (Cth) and its Rules and Regulations.

13. Leave be granted to both parties to relist on 7 days’ notice to the Associate to Judge Altobelli, limited only to matters of interpretation and implementation of these Orders, provided such leave is sought within 3 months of these Orders.

SCHEDULE 1:

Part 1:

(a)Passport

(b)Clothes

(c)Wedding ring;

(d)Cake tins previously belonging to the husband’s mother;

(e)Books associated with [omitted] work;

(f)Books, letters, other items relating to the husband’s cousin [name omitted] who was killed in [omitted] including dictionary;

(g)Jump starter pack;

(h)Items from the rear garden shed as follows:

(i)2 x lockable double metal cabinets with assorted tools, sprays, poisons, fishing equipment etc,

(j)1 x lockable secured hand made metal and timber cabinet previously used to store sporting equipment;

(k)2 x 3 drawer cabinets (metal) containing tools and clothing;

(l)1 x tall single cabinet containing sporting goods;

(m)Old mower parts located on shelves.

(n)Items from beneath the house as follows:

(i)     1 x Greenfield ride on mower (previously belonging the husband’s mother);

(ii)    2 x victa brand lawn mowers;

(iii)     Numerous boxes containing assorted items from the husband’s mothers belongings;

(iv)   Manual metal acr welder;

(v)    Metal cut off saw;

(o)Timber and metal piping (located at side of the property); and

(p)All paperwork and associated certificates, awards, medals, trophies contained within drawers and boxes beneath the house relating to the husband.

SCHEDULE 2:

Part 2:

1. That the property remain listed for sale with [P] Real Estate under the terms and conditions currently existing for a further period of 3 months;

2. That on the expiration of the 3 month period the parties cause the property to be listed for sale either:

   (a)By private treaty for a further period of 3 months by agreement but   failing agreement within 2 weeks of the expiry of the initial 3 months;       

   (b)By public auction, such auction to be held as agreed but failing      agreement on or before but not later than 31 June 2014

3. If the property has not sold by 31 June 2014 and the parties are not able to   reach agreement with respect to its sale either as to

   (a)method of sale; or

   (b)price.

   Reserve to the parties leave to restore to the list for the purpose of further orders to enable the sale to be implemented and the trust to be wound up.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT WOLLONGONG

WOC 588 of 2010

MR SALINAS

Applicant

And

MS SALINAS

Respondent

REASONS FOR JUDGMENT

Introduction

1. The parties to this litigation ask the Court to determine what is commonly called their property settlement, more technically described as an alteration of property interests under s.79 of the Family Law Act 1975.

Background

1. The husband, who is the applicant, is a 47 year old [occupation omitted] living in the [omitted] region of NSW. The respondent wife is a 41 year old [occupation omitted], also living in [omitted]. They commenced cohabitation in marriage in [omitted] 2004, and separated in July 2009. They have two children, [name omitted] aged eight (8) and [name omitted] aged six (6). They each had assets at cohabitation, and one of the issues for the Court to determine is the extent to which this reflects on the contribution they made during the marriage. They acquired assets during their marriage. The lengthy period since separation raises potential issues about contribution in this period. There is a contest between the parties about the constitution of the pool of assets that is to be divided between them, and also about whether there should be an adjustment for future needs under s.75(2) of the Act.

Orders Sought and Summary of Contentions Made

1. The orders sought by both parties are reproduced in the first schedule to these reasons. The Court records its concerns that it struggled to understand some of the orders sought and, as it turns out, neither order reflected the complexity inherent in implementing the orders to be made. In short, the husband contends that he made a greater contribution to the marriage primarily due to assets he brought into the relationship, and an inheritance received during the same. He contends that there should be no adjustment under s.75(2) of the Act. The wife conceded that the husband made a greater financial contribution but not to the extent that he contends for. Moreover she argues that the s.75(2) considerations favour her and would equate to as much as 10%. Both parties wish to receive the family home as part of their settlement.

2. It is clear from the position adopted by each party, and from their course of conduct since separation, that they consider it just and equitable for orders to be made altering their existing property interests.  The issue is: what is just and equitable in the facts of this case?

The Evidence

1. The husband relies on the following documents:

   a)Initiating Application filed 15 July 2011;

   b)Financial Statement filed 5 November 2013;

   c)Affidavit of Mr Salinas filed 25 October 2013; and

   d)Affidavit of Ms W.

2. The wife relies on the following documents:

   a)Response filed 19 August 2011;

   b)Financial Statement filed 28 October 2013; and

   c)Affidavit of Ms Salinas filed 28 October 2013.

3. The husband, wife, and Ms W the husband’s sister all gave oral evidence and were cross-examined.  The wife did so candidly but probably had lapses of memory about some issues that will be discussed below.  Nonetheless, the Court has no reason to doubt the truthfulness of her evidence.  Whilst there are some inconsistencies between the evidence of the husband and his sister, the Court has no reason to doubt the truthfulness of Ms W’s evidence.  In relation to the husband, however, he was often unresponsive and uncooperative in cross-examination, tended to embellish his evidence at times, only reluctantly made concessions that were plainly obvious to be made, and often allowed his subjective sense of self-entitlement to blur reality.  The husband’s evidence thus needs to be more closely scrutinised at times.

The Applicable Law

1. This is an application under s79 of the Family Law Act 1975 which relevantly provides:

   Alteration of property interests

   (1)  In property settlement proceedings, the court may make such order as it considers appropriate:

   (a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or

   (b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;

   including:

   (c)an order for a settlement of property in substitution for any interest in the property; and

   (d)an order requiring:

   (i)either or both of the parties to the marriage; or

   (ii)the relevant bankruptcy trustee (if any);

   to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.

   (2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

   (4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:

   (a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and

   (d)the effect of any proposed order upon the earning capacity of either party to the marriage; and

   (e)the matters referred to in subsection 75(2) so far as they are relevant; and

   (f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and

   (g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

2. Section 79(4) incorporates the provisions contained in s.75(2) of the Act, which states:

   (2)The matters to be so taken into account are:

   (a)the age and state of health of each of the parties; and

   (b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and

   (c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and

   (d)commitments of each of the parties that are necessary to enable the party to support:

   (i)himself or herself; and

   (ii)a child or another person that the party has a duty to maintain; and

   (e)the responsibilities of either party to support any other person; and

   (f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:

   (i)any law of the Commonwealth, of a State or Territory or of another country; or

   (ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;

   and the rate of any such pension, allowance or benefit being paid to either party; and

   (g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and

   (h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and

   (ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and

   (j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and

   (k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and

   (l)the need to protect a party who wishes to continue that party's role as a parent; and

   (m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and

   (n)the terms of any order made or proposed to be made under section 79 in relation to:

   (i)the property of the parties; or

   (ii)vested bankruptcy property in relation to a bankrupt party; and

   (naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:

   (i)a party to the marriage; or

   (ii)a person who is a party to a de facto relationship with a party to the marriage; or

   (iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or

   (iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and

   (na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and

   (o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and

   (p)the terms of any financial agreement that is binding on the parties to the marriage; and

   (q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.

3. In Bevan & Bevan [2013] FamCAFC 116 the Full Court of the Family Court of Australia considered the High Court’s decision in Stanford & Stanford [2012] HCA 52 which provided guidance on how s.79 was to be interpreted and implemented. Bevan endorsed the continuing application of the four-step approach articulated by the Full Court in Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FamCA 395, but on the basis that it is a shorthand distillation of the words of s.79, as opposed to being a statutory edict. The four steps articulated in Hickey at paragraph 39 are:

   a)Identify and value the property, liabilities and financial resources of the parties; and

   b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and

   c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and

   d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.

1. The decisions in Stanford and Bevan also emphasise the importance of making findings that any order is just and equitable for the purposes of s.79(2), independent of the s.79(4) process. In most cases, such as the present one, it makes no difference to the outcome of the alteration of property interests exercise. Even if the just and equitable consideration were treated as a threshold issue in this case the parties have, by their actions (separation, and re-ordering of their financial lives since then), and claims (divergent claims about their property under s.79 of the Act), indicated that they themselves consider it just and equitable that some order be made under s.79 adjusting their property interests as presently held. It is clearly just and equitable in this case to make an order.

2. Both decisions also emphasise the importance of identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. This is not inconsistent with step one in Hickey. A problem that commonly arises, and indeed does arise in this case, relates to property that once existed but no longer does. It is no longer appropriate to notionally “add-back” this property. This “disposed of property” may still be significant, however, and needs to be considered as part of the history of the marriage, as well as a s.75(2)(o) consideration. As the Full Court said in Bevan, such disposals must be dealt with carefully.  In practical terms this means carefully assessing the evidence about the disposal, attempting to quantify it if this is at all possible, and then assessing weight whilst neither placing too much, or too little, weight on it.  Maintaining jurisprudential rigour, transparency and accountability may well be challenging in the era after the demise of the traditional add-back.

Balance Sheet Issues

1. At the commencement of the hearing the Court was provided with a document in these terms:

DRAFT MUTUAL BALANCE SHEET

Asset	Wife’s Value	Husband’s Value	Agreed/Disputed
Real Estate:
1.	Property at Property B, [B] (joint names)	$730, 000.00	$780, 000.00	Disputed
2.	Property at [S] (in wife’s name)	$342, 500.00	$342, 500.00	Agreed
3.	Property at Property C (in husband’s name)	$341, 250.00	$341, 250.00	Agreed
4.	Property at [L] (in husband’s name)	$197, 500.00	$197, 500.00	Agreed
5.	Property at Property W (owned by trust)	$720, 000.00	$720, 000.00	Agreed
Off- set	Savings:
6.	ANZ cheque account – [omitted] (in wife’s name)	$25,000.00	Not Known	Disputed
Motor Vehicles
7.	Hyundai i45 (in wife’s name)	$15, 000.00	$15, 000.00	Agreed
8.	Holden (in husband’s name)	$5, 000.00	$5, 000.00	Agreed
Shares
9.	177 [B] Shares (in Wife’s name)	$6, 611.00	$6, 611.00	Agreed
10.	(In husband’s name)	Not known/Not disclosed	Disputed
11.	Tractor (in husband’s possession)	$3, 000.00	Sold Sept 2012 for $2, 800.00	Agreed
12.	Shipping Container (in Husband’s possession)	$1, 500.00	Sold Sept 2012 for $800.00	Agreed
Household Contents & Possessions
13.	In wife’s possession	$5, 000.00	$5, 000.00	Agreed
14.	In husband’s possession	$5, 000.00	$5, 000.00	Agreed
Jewellery
15.	In wife’s possession	$6, 500.00	$6, 500.00	Agreed
16.	In husband’s possession	Not known
Coin Collection & Medals
17.	In wife’s possession	NIL
18.	In husband’s possession	$5, 000.00	$1,500.00 ($2,000 on cross-examination)	Disputed
Artwork and Memorabilia
19.	In wife’s possession	NSCV	Agreed
Superannuation Assets
20.	[A] Super (in wife’s name)	$118, 722.00	$118, 722.00	Agreed
21.	[U] Super (in wife’s name)	$67, 090.00	$67, 090.00	Agreed
22.	[S] Superannuation Scheme (in husband’s name)	$315, 375.00	$315, 375.00	Agreed
23.	[S] Superannuation Scheme (in husband’s name)	$46, 762.75	$46, 762.75	Agreed
24.	[X] Superannuation (in husband’s name)	$35, 442.00	$35, 442.00	Agreed

Liability	Wife’s Value	Husband’s Value	Agreed/Disputed
25.	Mortgage over former matrimonial home	$E161, 479.00	$E161, 479.00	Agreed
26.	Mortgage over property at [S]	$E248, 467.00	$198, 713.00 (As per heads of agreement)	Disputed
27.	Mortgage over Property C	Not known	$E160, 000.00	Agreed
28.	ANZ loan (trust properties)	$E164,  551.00	$E164,  551.00	Agreed
29.	Tax Liability	Not known	Not known	Agreed
30.	Liability for legal expenses incurred by these proceedings (wife’s liability)	To be advised	To be advised	Agreed
31.	Loan to Ms W	Denied by wife	$164, 000.00	Disputed

TOTAL NET VALUE OF ALL PROPERTY	$2, 414, 082.75	$2, 169, 309.70	DISPUTED
TOTAL NET VALUE OF ALL PROPERTY EXCLUDING SUPERANNUATION	$1, 830, 691.00	$1, 585, 918.00	DISPUTED

1. There is a dispute about item 1, the value of the jointly owned home at [B].  The husband could advance no evidence, other than his own opinion, to support his contention.  The valuation evidence establishes the home’s value at $730,000.  The Court so finds.  Item 5 is trust property but the parties were content to conduct the proceedings as if it were jointly owned property.

2. There was no evidence led about item 6, so the value will be as the wife asserts.  The wife was unable to lead evidence, which the Court accepts, to indicate why the values for items 11 and 12 should be as she contends, as opposed to the husband’s contention that the items were sold for the amount he concedes.  Items 11 and 12 will be attributed the values proposed by him.

3. In relation to item 18, the husband conceded that the value of the coins in his possession could be $2,000.  There is no evidence to support the wife’s contention of a higher value.  Item 18 will be valued at $2,000.

4. The husband’s cross-examination of the wife sought to establish that she had improperly used joint funds for personal purposes before, at, and after separation. Inferentially he sought that an amount representing this be added-back, or otherwise be taken into account in the s.79 process. The evidence did not support his contention. Indeed the evidence clearly supports the wife’s contention that her access to joint funds was used exclusively for the benefit of the family, and was entirely consistent with how the parties managed family finances during cohabitation. As these were matters well within the husband’s personal knowledge, he wasted the court’s time, and increased the costs of this litigation, by pursuing this claim.

5. There is a dispute about the liability at item 26.  The differences between the figures contended is the $60,000 that the wife borrowed, pursuant to what she thought was a binding agreement with the husband, to effect improvements on the family home at [B] (item 1 on the balance sheet).  She deposes in her affidavit, and there was no real challenge to this in cross-examination, that $23,500 was expended for the stated purpose, and the balance is represented in her ANZ cheque account (item 6 balance sheet).  The evidence is not crystal clear about this, and the figures contended for by the wife do not add up to $60,000.  Nonetheless any improvement to the property in question must be reflected in its current market value, which is agreed.  In the absence of evidence establishing some personal or improper use of the borrowed funds, the full amount of the liability must be used on the balance sheet.

6. Finally there is a dispute about whether the husband owes $164,000 to his sister.  Neither the husband nor his sister could be shaken about this issue.  Ms W was an impressive witness on this issue.  In relation to this issue the wife’s recollection was perhaps defective, though one can understand her scepticism about the manner in which the husband sought to introduce this evidence.

7. Having regard to those findings the pool of assets and liabilities available for distribution will be as follows:

Asset	Value
Real Estate:
1.	Property at Property B, [B] (joint names)	$730, 000.00
2.	Property at [S] (in wife’s name)	$342, 500.00
3.	Property at Property C (in husband’s name)	$341, 250.00
4.	Property at [L] (in husband’s name)	$197, 500.00
5.	Property at Property W (owned by trust)	$720, 000.00
S	Savings:
6.	ANZ cheque account – [omitted] (in wife’s name)	$25,000.00
Motor Vehicles
7.	Hyundai i45 (in wife’s name)	$15, 000.00
8.	Holden (in husband’s name)	$5, 000.00
Shares
9.	177 [B] Shares (in Wife’s name)	$6, 611.00
10.	(In husband’s name)	Not known/Not disclosed
11.	Tractor (in husband’s possession)	$2, 800.00
12.	Shipping Container (in Husband’s possession)	$800.00
Household Contents & Possessions
13.	In wife’s possession	$5, 000.00
14.	In husband’s possession	$5, 000.00
Jewellery
15.	In wife’s possession	$6, 500.00
16.	In husband’s possession	Not known
Coin Collection & Medals
17.	In wife’s possession	NIL
18.	In husband’s possession	$2,000
Artwork and Memorabilia
19.	In wife’s possession	NSCV
Superannuation Assets
20.	[A] Super (in wife’s name)	$118, 722.00
21.	[U] Super (in wife’s name)	$67, 090.00
22.	[S] Superannuation Scheme (in husband’s name)	$315, 375.00
23.	[S] Superannuation Scheme  (in husband’s name)	$46, 762.75
24.	[X] Superannuation (in husband’s name)	$35, 442.00
Total		$2,988,352.75

Liability	Value
25.	Mortgage over former matrimonial home	$E161, 479.00
26.	Mortgage over property at [S]	$E248, 467.00
27.	Mortgage over Property C	$E160, 000.00
28.	ANZ loan (trust properties)	$E164,  551.00
29.	Tax Liability	Not known
30.	Liability for legal expenses incurred by these proceedings (wife’s liability)	To be advised
31.	Loan to Ms W	$164, 000.00
Total		$898,497

Contribution

1. The submissions made differed as regards the approach the Court should take to assessing contribution.  For the husband an asset by asset approach was contended for.  The wife suggested a global approach was more appropriate.  Either approach is open to the Court: Norbis & Norbis [1986] HCA 17. The Court will adopt an asset by asset approach as each party had assets at cohabitation that were, for the most part and in practical terms, kept separate and distinct from their joint matrimonial finances. This is not to accept, however, that the husband’s approach to asset by asset assessment of contribution is the correct one to adopt.

2. There are a number of less contentious matters about contribution.  There is no dispute that the husband received an inheritance from his mother’s estate in early 2002 in the sum of $45,972.88 that was deposited into the joint home loan account.  There is no dispute that when the property at [omitted] was sold late in 2003 for $328,000 the funds were used to offset the loan used to buy the former matrimonial home at [B].  As it turns out, of course, this is the property jointly owned by the husband and his sister, and the Court accepts she allowed him to use the funds for the purpose he did.  In assessing the contribution the husband made, therefore, the amount owed to his sister, $164,000, needs to be deducted.  His contribution, therefore, should be assessed at $164,000. 

3. There is no dispute that the wife received $60,000 when she was made redundant from her employer in 2006, a substantial part of which was attributable to employment pre-separation.  The Court is satisfied this money was used to benefit the family in the sense of discharging a debt in relation to a motor vehicle.

4. There is no dispute that at cohabitation the wife owned the property at [S], subject to a mortgage which was later increased to fund improvements to the family home at [B].

5. The wife contends she had savings of $78,000 and shares worth about $19,000 at cohabitation.  Whilst the husband agrees she had both shares and savings he does not know the amount.  The wife was not cross-examined about this.  In the circumstances the Court accepts the wife’s evidence.

6. The wife contends that in 2003, the same year the husband received his inheritance, she refinanced the mortgage she had over her property at [S] by increasing the loan by $40,000 and applying that towards the purchase of the jointly owned home at [B].  She was not cross-examined about this.  The husband contends that the [B] property was purchased for $650,000 using a loan for $575,000, thus leaving a shortfall of about $75,000 excluding stamp duty and legals.  It is conceivable, therefore, that the wife’s money was used for the purpose she asserts.

7. Having regard to the relative complexity of the above, the Court proposes to create a number of separate pools of assets in order to facilitate the alteration of property interests process.

8. Pool A will consist of property in respect of which the evidence suggests both parties made contribution; and which largely came into existence once the relationship commenced.  Pool B will consist of property the husband brought into the marriage and which is still intact.  Pool C will be the same category of property as B except that it is referable to the wife.  This is an imprecise exercise because the evidence led was unclear.  For example, are the shares at item 9 the same shares the wife brought into the marriage?  The evidence does not permit findings to be made about this.

9. Pool A consists of:

Asset	Value
Real Estate:
1.	Property at Property B, [B] (joint names)	$730, 000.00
5.	Property at Property W (owned by trust)	$720, 000.00
Motor Vehicles
7.	Hyundai i45 (in wife’s name)	$15, 000.00
8.	Holden (in husband’s name)	$5, 000.00
Shares
9.	177 [B] Shares (in Wife’s name)	$6, 611.00
11.	Tractor (in husband’s possession)	$2, 800.00
12.	Shipping Container (in Husband’s possession)	$800.00
Household Contents & Possessions
13.	In wife’s possession	$5, 000.00
14.	In husband’s possession	$5, 000.00
Jewellery
15.	In wife’s possession	$6, 500.00
Coin Collection & Medals
18.	In husband’s possession	$2,000
Superannuation Assets
20.	[A] Super (in wife’s name)	$118, 722.00
21.	[U] Super (in wife’s name)	$67, 090.00
22.	[S] Superannuation Scheme (in husband’s name)	$315, 375.00
23.	[S] Superannuation Scheme  (in husband’s name)	$46, 762.75
24.	[X] Superannuation (in husband’s name)	$35, 442.00
Total		$2,082,102.75
Liability	Value
25.	Mortgage over former matrimonial home	$E161, 479.00
28.	ANZ loan (trust properties)	$E164,  551.00
31.	Loan to Ms W	$164, 000.00
Total		$490,030.00
Net Value of Pool A		$1,592,072.70

1. Pool B consists of:

Asset	Value
Real Estate:
3.	Property at Property C (in husband’s name)	$341, 250.00
4.	Property at [L] (in husband’s name)	$197, 500.00
Total		$538,750.00
Liability	Value
27.	Mortgage over Property C	$E160, 000.00
Total		$160,000.00
Net Value of Pool B		$378,750.00

1. Pool C consists of:

Asset	Value
Real Estate:
2.	Property at [S] (in wife’s name)	$342, 500.00
S	Savings:
6.	ANZ cheque account – [omitted] (in wife’s name)	$25,000.00
Total		$367,500.00
Liability	Value
26.	Mortgage over property at [S]	$E248, 467.00
Total		$248,467.00
Net Value of Pool C		$119,033.00

1. In relation to Pool B, the husband’s assets, the Court did not understand the wife’s case to seriously contend that she made a contribution to these assets that would result in an adjustment in her favour.

2. In relation to Pool C, the wife’s assets, the Court did not understand the husband’s case to seriously contend that he made a contribution to these assets that would result in an adjustment in his favour.

3. The focus turns to Pool A. The various contributions asserted by each party have been described earlier in this discussion about contribution. There are some further complicating factors relating to superannuation. The wife says she had superannuation at the date of cohabitation in the sum of $34,390. The husband says he had superannuation at the date of cohabitation in the sum totally $148,970. There was no cross-examination about this issue. The Court accepts each party’s contention. Tempting as it is to create yet another pool to include superannuation, the Court declines to do so. For one thing neither party submitted this was the correct approach. In any event, the Court’s real concern is that increasing the number of pools of assets may lead to fragmentation of the core section 79 function which is to just and equitably alter property interests by reference to the matters prescribed in section 79(4). Assessment of contribution is often a holistic exercise, even in the context of a discrete but diverse pool of assets such as this case.

4. To further complicate the assessment of contribution, the parties separated in 2009, over 4 years ago.  For a period their finances continued to be pooled.

5. The husband contends, unchallenged by the wife, that his superannuation entitlements had grown to a total of $254,027.  She contends hers had increased to $112,009, which he does not challenge.  What becomes clear is that since separation and to the time of the trial, hers had increased in value by $73,803, and his by $143,552.  It is not possible to discern how an argument could be framed, on the facts of this case, that the other contributed to this increase except in the notional sense that the increase during the period of cohabitation was part of the capital base from which the post-separation superannuation increased in value.  Neither party led any evidence that enables this interesting argument to be explored in any scientific way.

6. It is part of the wife’s case that she made a greater contribution in the post-separation period.  The husband refutes this.  The Court does not accept the wife’s case.  True it is that she had the major responsibility for parenting, but the husband paid child support as assessed and, in any event, the wife and the children have occupied the family home to the exclusion of the husband for several years.  She has paid the mortgage on the home, and she deposes that this is currently $278 per week which is not an unreasonable, let alone onerous, cost to pay for accommodation.  The Court notes that the husband deposes to paying rental on a home unit of $280 per week.

7. How is contribution to be assessed in these circumstances?  The wife’s counsel submitted that, if his argument about post-separation contribution was accepted (which it is not) the husband “is still probably slightly ahead”.  The Court struggled to understand exactly what the husband’s contention in relation to contributions really was.  Counsel’s case outline seemed to contend for 55:45 in his favour on the family home at [B], but that each should retain their own superannuation except that he proposed, as part of the final orders, that she have one of his superannuation funds (item 24, [X] fund).  The effect of this in percentage terms is by no means clear, and in any event the submission does not reflect the three pool approach adopted in these reasons.

8. Assessing contribution to Pool A is both a complex and imprecise exercise.  In these reasons the Court has attempted to identify the various factual matters that might inform findings of contribution both in favour of the husband and the wife.  The contributions are not of the same kind except in the metaphorical sense.  His could be described as apples, hers as oranges, but at the end of the day both are fruit.  He clearly made the greater contribution, so he is entitled to a larger share of the fruit.  The net value of Pool A is $1,592,072.00. By awarding him 60% of this pool he would receive $955,244.00 and the wife would receive $636,828.00, meaning he has $318,415.00 more than her.  The Court is satisfied that this reflects the greater contribution he has made in a holistic sense.

Section 75(2) Considerations

1. While the husband concedes the wife will continue to be the primary carer for the children, a matter otherwise calling for an adjustment in her favour under s.75(2), he submits that her earning capacity is significantly greater than his, such that no adjustment is called for. He also contends that with the assets that she receives from the present settlement, she will not be in a position of need.

2. The wife contends for a 10% adjustment in her favour, an adjustment that already reflects earning capacity considerations.  In this regard there is certainly no concession that her future earning capacity is greater than his.  Indeed the Court accepts there is no evidence to suggest that there is any realistic prospect of the wife returning to the income she enjoyed before having children.  Indeed the more likely prospect is that, at least in the short to medium term, her income is likely to decline when her current temporary position at [workplace omitted] concludes.

3. The most significant factor calling for adjustment in her favour is the care of two young children, followed closely by the impact of the marriage on her earning capacity.  The Court accepts her counsel’s contention that this requires an adjustment in her favour of 10%.

Just and Equitable Order

1. The outcome of the above assessment is that each party retains their respective pools, and Pool A is divided equally between them.  This means they leave the marriage with assets totally $796,036.00 for the husband, and $796,036.00 for the wife out of Pool A.  The husband keeps Pool B, the wife Pool C.

2. They each want to keep the home – the husband for sentimental reasons, the wife for practical reasons associated with stability and continuity for the children.  There is much sense in the wife’s reasons, and no apparent rationale to the husband’s. The husband contended that, as part of the settlement, she receive one of his superannuation funds.  There is no cogent reason for doing so.   

3. The Orders will reflect the Court’s findings above. There will necessarily be some complexity in implementing these Orders, particularly as the Salinas Family Trust will need to be wound up, and Capital Gains Tax be paid in due course. The Orders proposed by the wife seems to be a workable basis for a s.79 Order reflecting the Court’s findings, modified as noted in these Orders. Leave will be granted to relist as regards implementation issues.

4. If the wife retains the jointly owned [B] property, this means she will receive the Pool A assets and liabilities set out below, but on the basis of the exclusion of the Property W property (item 5) and it’s corresponding liability (item 28):

Asset	Value
Real Estate:
1.	Property at Property B, [B] (joint names)	$730, 000.00
Motor Vehicles
7.	Hyundai i45 (in wife’s name)	$15, 000.00
Shares
9.	177 [B] Shares (in Wife’s name)	$6, 611.00
Household Contents & Possessions
13.	In wife’s possession	$5, 000.00
Jewellery
15.	In wife’s possession	$6, 500.00
Superannuation Assets
20.	[A] Super (in wife’s name)	$118, 722.00
21.	[U] Super (in wife’s name)	$67, 090.00
Total Assets		$948,923.00
Liability	Value
25.	Mortgage over former matrimonial home	$E161, 479.00
Total Liabilities		$161,479.00
Net Pool		$787,444.00

1. The wife’s entitlement to this pool was originally assessed to be one half of the net value of Pool A (1/2 x $1,592,072), that is, $796,036 but of course this needs to be modified to reflect the exclusion from Pool A, for present purposes, of the Property W property and it’s corresponding loan.  On that adjusted basis, therefore, Pool A becomes $1,036,623 net and each party should receive $518,311.50.  On this basis the wife will need to pay to the husband the difference between the value of the assets in Part A she retains ($787,444) and what she is entitled to ($518,311), that is, $269,132.  This, however, may well be less than her half hare of the equity in the Property W property, so there are other options available to the parties to implement these orders, if they so desire. 

2. It would be inequitable, however, to compel the wife to pay the husband $269,132.50 before her entitlement on the Property W property is crystallised.  Thus, in the absence of agreement, she will have 3 months to pay him, an adequate time to realise the Property W property, after which interest will accrue in the usual manner.

3. The Court has already foreshadowed its concerns about the orders sought by the parties, and the complexity in implementing those orders.  For example, the husband’s orders are descriptive of the desired outcome in parts, rather than prescriptive of what had to be done (for example orders 2, 5, 6, 8 and 12).  One of the wife’s orders simply makes no sense (for example order 3.7, but Part 2 of Schedule 1 is blank).  The description of property in the order proposed do not always coincide with the description of the property in the balance sheet.  Moreover both parties seek orders in relation to personal property, but the evidence they adduce about this, and the cross-examination relating thereto, does not allow findings to be made about these items.  In the circumstances the best the Court can do is to adopt the wife’s proposal on the basis that the items in question are in her control and possession and she proposes that certain items be made available to the husband.  The Court will grant leave to the parties to relist this matter limited to the issue of interpretation and implementation of these orders, and provided such leave is sought within 3 months of the date of these reasons.  The Court urges the parties to immediately give serious consideration as to how, precisely, they intend to implement the outcome the Court has described in these reasons.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Altobelli

Associate: 

Date:  30 January 2014

Schedule One

Applicant Husband’s Orders Sought:

1. That within 28 days of the date of the Orders, the parties do all acts and sign all documents so as to transfer the Wife’s interest in the property at Property B, [B], New South Wales, to the Husband and that simultaneously with the transfer, the Husband do all things necessary to refinance the current loan secured by way of mortgage against the property into his sole name and thereafter indemnify the Wife in relation to the same.

2. That simultaneously with the transfer referred to in Order 1 above, that the Husband pay to the Wife such sum equal to 45% of the net equity available in the property at Property B, [B], New South Wales.

3. That the Wife retain all right title and interest in the property at Property S, [S], New South Wales, subject to the current mortgage encumbering the same.

4. That the Husband retain all right title and interest in the property at Property C, [C], New South Wales, subject to the current mortgage encumbering on the same.

5. That the parties do all acts and sign all documents as may be necessary to immediately cause the Salinas Family Trust to place on the market for sale by private treaty, the following property:

   Property W, [W], South Australia.

6. That the parties do all acts and sign all documents as may be necessary to immediately cause the property at Property L, [L], New South Wales to be placed on the market for sale by private treaty.

7. That upon the sale of each of the properties referred to at Orders 5 and 6 above the proceeds of sale be apportioned as follows:

   7.1Pay the amount required to discharge the mortgage including any legal costs referrable to the discharge of mortgage;

   7.2Pay any selling costs including advertising expenses, agent’s commission and legal costs;

   7.3Pay the usual conveyancing adjustments in respect of rates;

   7.4Pay Ms W the sum of $164,000.00;

   7.5Pay any amount payable for tax liabilities triggered by the sale of the properties;

   7.6The balance be invested in a trust account and upon the sale of the last property referred to in Orders 5 and 6 above the remaining balance be divided equally 50/50 between the parties.

8. That the Salinas Family Trust be dissolved upon completion of the sale of the last property referred to in Order 5 above.

9. That the Husband retain all of his right title and interest in the Holden Berlina motor vehicle.

10. That the Wife retain all her right title and interest in the Hyundai i45 motor vehicle, subject to any encumbrance attaching to that motor vehicle.

11. That the Wife pay to the Husband the sum of $14,000, such sum to equate to the husband receiving approximately 55% of the joint ANZ offset account as at the date of separation.

12. That the Wife be entitled to 100% of the husband’s [X] Superannuation fund valued at approximately $35,400.

13. That each party retain their own (remaining) superannuation entitlements.

14. That the Wife retain the furniture, furnishings and contents situated at Property B, [B], New South Wales excluding the following items that the Husband will retain all interest and entitlement to:

    14.1  His passport;

    14.2  His clothes;

    14.3  Cake Tins (previously belonging to the Husband’s Mother);

    14.4  All books associated with [omitted];

    14.5All books, letters and items relating to the Husband’s cousin [name omitted] who was killed in [omitted];

    14.6  Jump starter pack;

    14.7  Items from the rear garden shed as follows:

    14.7.12 x lockable double metal cabinets with assorted tools, sprays, poisons, finishing equipment etc;

    14.7.21 x lockable secure hand made metal and timber cabinet previously used to store sporting equipment;

    14.7.31 x mountain bicycle;

    14.7.42 x 3 drawer cabinets (metal) containing tools and clothing;

    14.7.51 x tall single cabinet containing sporting goods; and

    14.7.6Old mower parts located on shelving

    14.8  Items from beneath the house as follows:

    14.8.11 x Greenfield ride on mower (previously belonging to the Husband’s Mother);

    14.8.22 x Victa brand 1954 lawn mowers;

    14.8.3Numerous boxes containing assorted items from the Husband’s Mother’s belongings;

    14.8.4Manual metal arc welder;

    14.8.5Metal cut off saw;

    14.8.6Timber and metal piping (located at side of the property); and

    14.8.7All paperwork and associated certificates, awards, medals, trophies contained within drawers and boxes beneath the house relating to the Husband.

15. That the Wife pay the Husband’s costs.

Respondent Wife’s Orders Sought:

1. That within 42 days from the date of these orders the husband do all such acts and things and sign all documents necessary so as to transfer to the wife all of his right title and interest in the property situate and known as Property B, [B], NSW being the whole of the land fully described in Certificate of Title folio identifier [omitted] (“the former matrimonial home”).

2. That simultaneous with such transfer both parties do all such acts and things and sign all documents necessary to cause the mortgage secured by the former matrimonial home to be discharged and that loan be refinanced in the sole name of the wife and that the wife be solely responsible for repayment of that loan.

3. A declaration that the wife retain sole and absolute ownership of the following property, assets and/or resources free of any claim by the husband and that she be solely responsible for repayment of any loan or liability attached to such property, asset and/or resource to the exclusion of the husband from such liability:

   3.1The property situate and known as Property S, [S], NSW being the whole of the land fully described in Certificate of Title   folio identifier [omitted].

   3.2Proceeds of ANZ Cheque Account Number [omitted];

   3.3Proceeds of ANZ Savings Account Number [omitted];

   3.4Motor vehicle registration number [omitted];

   3.5All shares in [B];

   3.6Household contents and effects other than the items set out in Schedule 1 Part 1 of Schedule;

   3.7Jewellery other than items set out in Part 2 of Schedule 1;

   3.8Interest in [A] Super membership number [omitted];

   3.9Interest in [U] Super membership number [omitted];

4. That simultaneously with the transfer of the former matrimonial home to the wife the husband collect from the former matrimonial home the items set out in Schedule 1 hereof.

5. A declaration that the husband retain sole and absolute ownership of the following assets, property and or resources free of any claim by the wife and that he be solely responsible for repayment of any loan or liability attaching to such asset, property and or resource to the exclusion of the wife from any such liability:

   5.1The property situate and known as Property L, [L], NSW;

   5.2The property situate and known as Property C, [C], NSW;

   5.3Proceeds of [omitted] Credit Union account number [omitted]; and

   5.4Motor vehicle registration number [omitted];

   5.5Household contents and effects in his possession or control together with the items set out in Schedule 1;

   5.6Coin collection and memorabilia in his possession;

   5.7Interest in [X] Superannuation;

   5.8Interest in [S] Superannuation Scheme membership number [omitted];

6. That the husband be solely responsible for and indemnify the wife against any debt allegedly owed to his sister, Ms W, and/or any other member of his family.

Dissolution of Salinas Family Trust:

1. That the parties do all such acts and things and sign all documents necessary to cause the trustee of the Salinas Family Trust being the company known as Mr & Ms Salinas Pty Ltd forthwith to repay to the parties in equal proportions the loan account.

2. That the parties do all such acts and things and sign all documents necessary to cause the trustee of the trust to sell the property situate and known as Property W, [W] in accordance with the terms and conditions set out in schedule 2.

3. That upon completion of the sale of the property the net proceeds of the sale (after the payment of such as shall  be required to discharge the mortgage encumbering the property, rate and rental adjustments, legal expenses and agents/auctioneers commission, be applied as follows:

   9.1In payment of all tax liability of the trust;

   9.2By way of distribution to the beneficiaries of the trust in accordance with the discretion of the trustee but such that in the exercise of discretion;

   a) The wife or beneficiaries associated with the wife shall receive 55% of the distribution; and

   b) The husband or beneficiaries associated with the husband shall receive 45% of the distribution.

4. That both parties bear equally any costs and expenses including legal and accounting fees associated with the winding up of the trust to the extent that provision for meeting of such expenses has not been made out of the property of the trust prior to its winding up.

1. That both parties bear equally any taxation liability attaching to the trust to the extent that provision for meeting such liabilities is not made out of the property of the trust prior to its winding up.

SCHEDULE 1:

Part 1:

a)Passport;

b)Clothes;

c)Wedding ring;

d)Cake tins previously belonging to the husband’s mother;

e)Books associated with [omitted] work;

f)Books, letters, other items relating to the husband’s cousin [name omitted] who was killed in [omitted] including dictionary;

g)Jump starter pack;

h)Items from the rear garden shed as follows:

i)2 x lockable double metal cabinets with assorted tools, sprays, poisons, fishing equipment etc,

j)1 x lockable secured hand made metal and timber cabinet previously used to store sporting equipment;

k)2 x 3 drawer cabinets (metal) containing tools and clothing;

l)1 x tall single cabinet containing sporting goods;

m)Old mower parts located on shelves.

n)Items from beneath the house as follows:

o)1 x Greenfield ride on mower (previously belonging the husband’s mother);

p)2 x victa brand lawn mowers;

q)Numerous boxes containing assorted items from the husband’s mothers belongings;

r)Manual metal acr welder;

s)Metal cut off saw;

t)Timber and metal piping (located at side of the property); and

u)All paperwork and associated certificates, awards, medals, trophies contained within drawers and boxes beneath the house relating to the husband.

Part 2:

SCHEDULE 2:

1. That the property remain listed for sale with [P] Real Estate under the terms and conditions currently existing for a further period of 3 months;

2. That on the expiration of the 3 month period the parties cause the property to be listed for sale either:

   a)By private treaty for a further period of 3 months by agreement but failing agreement within 2 weeks of the expiry of the initial 3 months;    

   b)By public auction, such auction to be held as agreed but failing    agreement on or before but not later than 31 May 2014

3. If the property has not sold by 31 May 2014 and the parties are not able to   reach agreement with respect to its sale either as to

   a)Method of sale; or

   b)Price.

   Reserve to the parties leave to restore to the list for the purpose of further orders to enable the sale to be implemented and the trust to wound up.