SANDER & ABBEY (No.2)
[2019] FCCA 1792
•11 July 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SANDER & ABBEY (No.2) | [2019] FCCA 1792 |
| Catchwords: FAMILY LAW – Property – division of matrimonial property – marriage of 8 years in duration – pool of property potentially available to be distributed modest – assessment of contributions – treatment of add backs – superannuation – earning capacity – section 75(2) factors – just and equitable. |
| Legislation: Evidence Act 1995 (Cth), s.140 Family Law Act 1975 (Cth), ss.75, 79, 90XC, 90XE, 90XT |
| Cases cited: Bevan & Bevan [2013] FamCAFC 116 Biltoft & Biltoft (1995) FLC 92-614 Clauson v Clauson (1995) FLC 92-595 C & C (2005) FLC 93-220 D & D [2003] FamCA 473 Ferraro v Ferraro (1993) FLC 92-335 Fox v Percy (2003) 214 CLR 118 Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 In the Marriage of Browne & Green (1999) 25 Fam LR 482 In the Marriage of DJM & JLM (1998) 23 Fam LR 396 In the Marriage of Kowaliw (1981) FLC 91-092 In the Marriage of Marker [1998] FamCA 42 In the Marriage of Townsend (1994) 18 Fam LR 505 Lee Steere v Lee Steere (1998) FLC 91-626 Russell & Russell [1999] FamCA 1875 Stanford v Stanford [2012] HCA 52 Trevi & Trevi [2018] FamCAFC 173 Wardman & Hudson (1978) FLC 90-466 Waters & Jurek (1995) FLC 92-635 |
| Applicant: | MR SANDER |
| Respondent: | MS ABBEY |
| File Number: | ADC 2749 of 2016 |
| Judgment of: | Judge Brown |
| Hearing date: | 4 June 2019 |
| Date of Last Submission: | 4 June 2019 |
| Delivered at: | Adelaide |
| Delivered on: | 11 July 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Anderson |
| Solicitors for the Applicant: | Adelaide Family Law |
| Counsel for the Respondent: | Mr Dillon |
| Solicitors for the Respondent: | Andrew Hill & Co |
ORDERS
Within twenty eight days (28) of the making of this order the husband receive the amount of thirty nine thousand seven hundred and eighty eight dollars and fifty three cents ($39,788.53) from the proceeds of sale of the Suburb A property.
Within twenty eight days (28) of the making of this order the wife receive the amount of sixty nine thousand six hundred and thirty five dollars and eighteen cents ($69,635.18) from the proceeds of sale of the Suburb A property.
Pursuant to section 90XT(1)(a) of the Family Law Act 1975 (Cth) there be a splitting order, in the sum of fourteen thousand two hundred and seventy five dollars and ten cents ($14,275.10), made in the wife’s favour out of the funds currently standing in the husband’s name in his Employer C Super Fund.
The trustee of the chosen super fund do all things necessary to give effect to order (3) hereof and within twenty eight days (28) of the making of this order to rollover the sum to be split in the wife’s favour to the superannuation fund as nominated by the wife.
The wife will serve a copy of these orders on the trustee of the husband’s Employer C Super Fund within twenty eight days (28) of the date of these orders and thereafter the aforesaid trustee has liberty to relist the matter in the event that the trustee is unable to comply with order (3) hereof.
The trustee of the Employer C Super Fund and the wife in accordance with the Family Law (Superannuation) Regulations 2001 shall do such acts and things and sign all necessary documents as are required to calculate the payment entitlements of the wife in accordance with order (3) hereof.
As and from the date of this order the husband retain for his sole use and benefit, absolutely free from any further claim or demand of the wife:
(a)All furniture and effects in his possession, power and control, including the pool table that was included in the pool of assets;
(b)all motor vehicles in his possession;
(c)any savings and investments in his sole name;
(d)any superannuation entitlement, long service leave, annual leave or other work related benefits, subject to the provisions of order (3) hereof;
(e)his personal effects; and
(f)any other real and/or personal property and/or financial resources of the husband or in the husband’s name and/or possession not otherwise specified herein.
As and from the date of this order the wife retain for her sole use and benefit absolutely free from any further claim or demand of the husband:
(a)all furniture and furnishings in her possession, power and control;
(b)any motor vehicle in her possession;
(c)any savings, shares and investments in her name;
(d)any superannuation entitlement, long service leave, annual leave or other work related benefits;
(e)her personal effects; and
(f)any other real and/or personal property and/or financial resources of the wife or in the wife’s name and/or possession not otherwise specified herein.
All property applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Sander & Abbey (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 2749 of 2016
| MR SANDER |
Applicant
And
| MS ABBEY |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the settlement of matrimonial property proceedings. The parties to the proceedings are Mr Sander “the husband” and Ms Abbey “the wife”.
The parties are also the parents of [X] born … 2012 and [Y] born … 2014. Arrangements for the care of these two children have been controversial in the past and remain so.
The children’s aspects of the case proceeded to trial in May and July of 2018, with judgment being delivered on 17 August 2018.[1] As such, at this earlier stage, I had an opportunity to assess the respective personalities and motivations of each of the parties.
[1] See Sander & Abbey [2018] FCCA 2295
In the introductory section of the earlier reasons for judgment, I summarised the history of the party’s relationship, with one another, as follows:
“Mr Sander was born in 1980. Ms Abbey was born in 1982. They met in Town D in 2005. Mr Sander’s family live in New South Wales, whilst Ms Abbey’s family live in South Australia.
The parties married on … 2008. Initially, both had careers in the Employer C in Canberra. The mother did not like living in Canberra. In late 2014, the family relocated to Adelaide, so that Ms Abbey could be closer to her family.
It is Mr Sander’s case that the parties’ marriage became increasingly strained, whilst the parties lived in Canberra, because Ms Abbey appeared to him to be becoming mentally unstable. He hoped that if they moved to Adelaide, she would be happier and the marriage could mend itself.
Mr Sander deposed as follows:
‘From 2014 Ms Abbey’s behaviour changed in that she started accusing me of having affairs and being unfaithful to her. Ms Abbey’s behaviour was becoming so detrimental to her overall functioning that it was starting to affect her performance at work due to personality clashes with her manager’s in a couple of positions. As we were soon planning to move to Adelaide I thought that the cycle would soon break in that Ms Abbey would be happy in Adelaide with our own home and her family nearby.’[2]
However, Mr Sander’s hopes in this regard proved to be misplaced. He has deposed that, from his perception, Ms Abbey’s behaviour rapidly deteriorated, once the family moved to Adelaide and he found her to be increasingly erratic and aggressive towards him, to such a degree that he could no longer cope.
By this stage, the parties had acquired a family home located at Suburb A, in suburban Adelaide. The parties separated under the one roof, at these premises, in April 2016. Mr Sander vacated the home in July of 2016.
Mr Sander commenced these proceedings shortly thereafter. Later in August of 2017, he amended his application to institute proceedings for the settlement of matrimonial property. These proceedings have subsequently been settled consensually.
The pool of property involved was modest in value and neither party could afford to retain the Suburb A home, which has been sold. It appears probable that the circumstances surrounding the sale of the home and the resulting straitened financial circumstances of the parties was emotionally traumatic for all concerned.”
[2] See affidavit of Mr Sander filed 26 July 2016 at [9]
Regrettably, the expectation that the parties’ financial issues had resolved consensually proved to be misplaced. The parties, notwithstanding the readily ascertainable extent of their pool of marital assets and financial resources, in dollar terms, given the sale of their former family home, have been simply unable to sign off on an agreed set of orders. Accordingly, it falls to the court to make a decision.
In addition, issues relating to the care of [X] and [Y] continue to be in flux, notwithstanding the court’s attempt to make a comprehensive set of parenting orders. In this context, the father has commenced no less than three sets of contravention proceedings, since August of 2018, alleging that the wife has contravened these orders in numerous ways.
Accordingly, in my estimation, the conflict between the parties is corrosive, endemic and verging on the unmanageable. It has also been ruinously expensive for each of them. The possible emotional impact, of this endemic conflict upon [X] and [Y], cannot be overstated.
The wife estimates that her legal fees are approaching $32,000.00, the bulk of which remains unpaid. The husband has been billed an amount slightly in excess of $43,000.00. In my view, these are extraordinary sums of money, when considered against what is at stake in these proceedings. Axiomatically, they are liabilities which the parties can ill afford.
With the sale of the Suburb A property, the parties’ equity in that property has crystallised in an amount of $109,423.71. It remains held in a trust account and has done so for a reasonably significant period of time. The parties’ other major financial resource is their respective entitlements to superannuation.
Again, given these funds are held by external entities, there can be no dispute about their value. In the wife’s case, she has superannuation to a value of $140,903.76; and in the husband’s case, he has superannuation to a value of $169,453.95.
Against this background, the intractability of the conflict, particularly the capacity of each party to commit much of their limited financial resources to it, is both confronting and ostensibly inexplicable, given that it seems to be contrary to each parties’ long-term interests, both in a fiscal sense and as co-parents of [X] and [Y].
The parties are each intelligent, tertiary educated individuals, who have pursued high level careers in the Employer C. The wife has qualifications and hopes in due course to pursue further study. The husband has qualifications but has chosen not to pursue that employment.
It does not make rational sense that the parties have chosen to commit over half of their liquid assets, as represented by the sale proceeds of their former home, to fund the various legal disputes between them. In these circumstances, as I conjectured earlier, the only explanation for this counter-productive behaviour, is as a response to the emotional trauma triggered by their separation.
I can only sympathise with the predicament, in which the parties find themselves and ruefully remark that the system has done little, despite its best intentions, to protect the parties from themselves. Given the extent of the relevant asset pool and its inevitable erosion, as a consequence of legal fees, there can be no good news, arising from these proceedings, for either party.
Against this baleful background, the issues in dispute between the parties, can be easily stated. At present, the wife is responsible for providing the predominant care required for [X] and [Y], whilst the husband is in the full-time paid workforce. As a consequence, Mr Sander is assessed to pay child support to Ms Abbey for the children.
Ms Abbey does not anticipate being able to return to the full-time workforce until at least [Y] has safely transitioned to primary school. At this stage, she also anticipates that it is likely that she will be undertaking some form of study to re-equip herself with qualifications, most likely some form of diploma.
Mr Sander has remained in full-time employment, with both the Employer D and the Employer C, since separation. At present, he earns a salary of approximately $90,600.00 per annum. He has re-partnered and his current partner earns a similar level of salary to him. Given his salary and current care arrangements, Mr Sander has been assessed to pay an annual amount of child support, for [X] and [Y], of $11,336.00.
The parties agree that neither came into the marriage with a significant level of asset backing. They also appear to agree, in general terms, that their various contributions, during their marriage, although different in nature, should be assessed as essentially equal in nature.
It is the wife’s position that the payment to her of child support cannot be said to represent an equal contribution to the costs incurred by her in providing for [X] and [Y], particularly given her parental responsibilities prevent her engaging in the full-time paid workforce, at present and when she does, these responsibilities will continue to weigh down her employment prospects. In all these circumstances, she contends that the pool of marital assets, modest though it is, should be divided 70/30 percent in her favour.
On the other hand, whilst the husband accepts the obvious limitations currently pertaining to the wife’s capacity to engage in the paid workforce, he contends that such an adjustment is unwarranted on the basis of considerations of justice and equity. He contends that an adjustment of 55/45 percent, in the wife’s favour, is warranted.
The wife further seeks that the parties’ respective entitlements to superannuation should be equalised. On the other hand, the husband points to the fact that the current discrepancy between the parties’ respective holdings is modest in quantum and therefore does not justify any actual adjustment, particularly given the difference is attributable to his post separation contributions.
Other controversies arise in respect of the exact composition of the parties’ pool of marital assets, available to be divided between them after the identification of the major items, about which there can be no controversy, namely the proceeds of sale of their former home and their various superannuation holdings.
In this context, the wife seeks to add back various items of property, specifically a motor car which the husband asserts has little real value; what she believes is his long service entitlements, after ten years of service with various governments; and sums which she asserts the husband should have paid in respect of the parties’ mortgage and other outgoings, on their former home, which he did not actually pay, although in at least notional terms, he was occupying the property concerned, after the parties had separated.
For obvious reasons, it would be advantageous for the wife if the asset pool is as large as possible, if she is to receive the lion’s share of it. From the husband’s perspective, this would be deeply unfair, particularly if he is notionally attributed with items of little practical value or which do not exist in practical terms.
Underpinning his position is the submission that there is no proposition of law that parties are required to hold themselves in a state of suspended financial animation, between the date of separation and the settlement of their proprietary interests. Rather, he contends that parties are entitled to utilise marital resources in support of their necessary living expenses.
These reasons for judgment are directed to resolving various disputes and, as far as is possible, severing the parties’ financial relationship with one another other than in respect of child support issues.
In these reasons, which follow, findings of fact are made on the balance of probabilities, from my observation of the demeanour of each of the witnesses concerned.[3] I have tried to reach my conclusions on credibility and reliability on the basis of contemporary materials, objectively established facts and importantly, on the apparent logic of events.[4]
[3] See Evidence Act1995 (Cth) at section 140
[4] See Fox v Percy (2003) 214 CLR 118 at 129 [31] per Gleeson CJ, Gummow and Kirby JJ
The issues in dispute, in this case, fall within a very small compass. As such, when the evidence is boiled down, there are very few major factual controversies arising between the parties. In these circumstances, it is highly regrettable that the conflict between the parties has necessitated this hearing.
Each party presented him/herself as a victim of the other’s intransigence and unreasonableness. As I have already indicated, I find myself perplexed as to why this hearing was necessary, given the extent of the pool of property applicable. I am more perplexed given the absence of any real controversy arising from the broad sweep of the evidence available to the court.
For the vast majority of the parties’ relatively long marriage, they each behaved in an entirely conventional manner and contributed to it along orthodox lines. In the early years each worked, whilst they saved and planned for a family. When [X] was born, the wife withdrew from the workforce and became the family’s main homemaker, whilst Mr Sander remained the family’s main breadwinner. Each was a devoted parent.
In these circumstances, it is not necessary to make findings in regards to the respective credit of the parties. Each is an honest and truthful person. What differences arise in their evidence are easily attributable to the effects of the effluxion of time and the self-serving consequences of cognitive bias. Inevitably, in cases of this kind, each spouse is inclined to consider his/her contributions should, in the light of hindsight, be considered to be more valuable or significant.
The legal principles applicable
The process to be followed for the division of the parties’ property is well-established by law.[5] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975 (Cth). I am required to follow a number of specific steps.
[5] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
In the first step, I must ascertain what are the parties’ assets and liabilities available to be divided between them. The normal rule is that those assets are to be determined as at the date of trial.[6]
[6] See Wardman & Hudson (1978) FLC 90-466; and Biltoft & Biltoft (1995) FLC 92-614
In the second step, I must ascertain the contributions, which each party has made towards the matrimonial pool of assets, as I have found them, following the first step. Contributions fall into two broad categories.
The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “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.”[7]
[7] See Family Law Act s 79(4)(c)
It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
At this second step stage, the task set for me requires the balance and comparison of a multiplicity of contributions, many of which are necessarily different in nature, within the framework of a marriage.
Many contributions in a marriage, such as being a homemaker, do not result in the direct acquisition of assets. They are also difficult to value in absolute dollar terms.
In contrast, the monies contributed by a wage earner are easier to quantify. However these difficulties do not absolve the court of its obligation to undertake the required assessment of contributions. The court’s discretion is a wide one but must be exercised judicially.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act. Pursuant to section 75(2)(o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[8]
[8] See Russell & Russell [1999] FamCA 1875 at [80]
Accordingly the fourth step is for the court to take a step back and examine whether the orders it proposes are just and equitable. These considerations must also inform each of the preceding steps. [9]
[9] See Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386 [39] and Bevan & Bevan [2013] FamCAFC 116 at [60]
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[10] or of equalisation of assets or financial resources.
[10] See Waters & Jurek (1995) FLC 92-635 at 82,376
It is clear that this orthodox stepped approach remains current, notwithstanding the High Court’s decision in Stanford v Stanford.[11] In Stanford the High Court placed significant emphasis on section 79(2), which actively prevents the court from making an order, in respect of property, unless it is satisfied that it is just and equitable to do so in all the circumstances prevailing. This follows from the use of the prohibitive words “shall not” in the relevant section.
[11] Stanford v Stanford [2012] HCA 52
In Stanford the High Court warned of the potential danger of a court conflating its responsibilities arising under section 79(2) & 79(4). The court’s fundamental responsibility is to make a just and equitable order. The High Court said as follows:
“The expression ‘just and equitable’ is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.” [12]
[12] Ibid at [35]–[36]
In this case, it is abundantly clear that the marriage between the parties has come to an end and, as such, there is no logical justification for them holding any joint community of property together. The monies represented by the sale of the Suburb A property need to be apportioned between them and all other aspects of their financial relationship, with one another, finalised. It is clearly just and equitable that this exercise be completed.
In the current matter, controversies arise between the parties regarding the first step, namely how the relevant asset pool is to be constructed. These controversies centre on the potential add back of assets into the pool.
Thereafter, it being agreed the parties’ contributions arising under the second step are largely equal, the major issues in dispute turn on the assessment of the various factors to be considered, at the third step, arising under section 75(2). It is the wife’s position that these factors greatly favour her.
In the context of potential add backs, it is important to emphasise what the High Court said in Stanford regarding the prohibition arising from making an order altering property interests, between separated spouses, unless it is just and equitable to do so.
The High Court emphasised as fundamental that any consideration of whether it is just and equitable to make a property settlement order begins by “identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.”[13] The High Court placed a particular level of emphasis on the word existing in relation to marital assets.
[13] Ibid at [37]
Accordingly, in the vast majority of property cases, the court’s focus is on what assets the parties have at the date of trial. Sums should be added back into the pool of assets, available to be divided, only in exceptional circumstances and only to ensure justice is done between the parties concerned. The court must take the property of a party to the marriage as it finds it at trial.
The Full Court has identified three areas in which it is appropriate for the court to consider the add back, into a pool of marital property, assets which do not exist or cannot be proved to be still existing. These circumstances are as follows:
·where matrimonial assets have been utilised to pay the parties’ legal fees, thus diminishing the pool of assets available to be distributed between them and so creating a situation where the normal rule whereby each party should bear his or her own costs is defeated;[14]
·where there has been a premature distribution of matrimonial assets;[15] and
·where one of the parties has embarked on a course of conduct, either recklessly or with the direct intent to reduce or minimise the effective value of some item of matrimonial property.[16]
[14] See In the Marriage of DJM & JLM (1998) 23 Fam LR 396 at 411 [11.6]
[15] See In the Marriage of Townsend (1994) 18 Fam LR 505 at 509–510
[16] See In the Marriage of Kowaliw (1981) FLC 91-092 at 76,644–76,645
In regards to the third of these categories, it has been pointed out by the Full Court that this principle represents a guideline for the court rather than a fixed code, bearing in mind the discretionary nature of the jurisdiction created by section 79 of the Family Law Act.[17]
[17] See In the Marriage of Browne & Green (1999) 25 Fam LR 482 at 496 [44]
Recently, in Trevi & Trevi[18] the Full Court has reiterated that the court’s authority to add back is both discretionary and exceptional in nature. The court said as follows:
“Two fundamental premises emerge from Omacini and the authorities preceding it. First, ‘adding back’ is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not ‘exceptional’ justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is ‘a course which is, perhaps, technically more correct’ than adding back to the list of existing interests in property.”
[18] Trevi & Trevi [2018] FamCAFC 173 at [30]
It must also be borne in mind that the task which I must undertake is not a simple accounting or arithmetical task. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretation. My responsibility is to exercise the discretion reposing in me according to considerations of justice and equity.
Marriage is by and large a joint enterprise. How much buffer spouses must give one another, when financial setbacks occur, must depend on the degree of consultation and acquiescence in their relationship, including in financial matters.[19]
[19] See D & D [2003] FamCA 473 at [49]
The first step – the pool of assets
In the current matter, after the parties separated, the husband remained responsible for the mortgage and other outgoing on the Suburb A property. He was in the workforce, whilst the wife was at home providing care for [X] and particularly [Y], who was an infant. The parties had fixed the mortgage rate to include some principal and a fixed rate of interest, prior to their separation, on the basis that it was fiscally prudent to do so.
After separation, the husband elected to move into accommodation, which he shared with his current partner. The wife later elected to move in with her family, no doubt as a matter of financial expediency. In these circumstances the husband utilised the premises from time to time, chiefly as a venue to spend time with [X] and [Y], but otherwise the property was largely vacant. After some necessary works were completed, the parties then placed the property on the market for sale. It took some time to sell. Settlement occurred on 27 April 2018.
As a consequence of fixing the mortgage, the parties were apparently in advance of the level of payment required by the mortgagee. From time to time, the husband found it difficult to meet the full amount due pursuant to the fixed rate. In these circumstances, after consultation with the mortgagee, he arranged to pay interest only on the loan. These difficulties coincided with other large outgoings on the property such as the rates.
The wife calculates that, if the husband had paid the full amount of mortgage payments pursuant to the fixed rate, the parties would have reduced their level of indebtedness to their lender in a sum of $5,208.24. She seeks that this sum be added back into the parties’ pool of assets and be notionally regarded as a sum which has benefitted the husband alone.
The husband does not agree. It is his position that the sum was utilised in respect of legitimate joint marital expenses. It is his evidence that he made significant efforts to make sure the parties did not default on the mortgage and the only way this could be achieved was for him to pay interest only from time to time, if he was to be able to satisfy the other outgoings on the property and support himself financially.
As the Full Court remarked in Marker[20] parties to a marriage, following separation, do not have to assume some form of financial suspended animation prior to the resolution of their competing applications. This is particularly so in the case of monies expended on legitimate living expenses, which do not fall obviously within the categories of add back, which I have identified above.
[20] In the Marriage of Marker [1998] FamCA 42
In all the circumstances of this case, I do not consider that it would be just and equitable for this sum ($5,208.24) to be added back into the parties’ pool of assets. The husband never actually had such a sum in his hand. Its existence is purely notional, being the difference between what could have potentially been allocated to the mortgage and what actually was.
As such, it cannot be said that the husband has wasted the sum or that it was an early and unfair distribution in his favour. Rather, I accept that he did the best he could to maintain the mortgage and the shortfall between the fixed amount and what he actually paid was utilised in satisfying his legitimate living expenses.
The wife concedes that, during an earlier round of proceedings relating to the care of the children, she was granted legal aid. As a result the Legal Services Commission of South Australia lodged a charge on the title of the Suburb A property to secure an advance of funds to the wife for her legal fees in an amount of $5,372.10.
On the sale of the property, this sum was reimbursed to the LSC. The wife accepts that this sum should be added back into the parties’ pool of assets and allocated as a distribution received by her when the court allocates the proceeds of sale of the Suburb A property between the parties.
Much time and effort was spent in examining issues surrounding a 2008 model Motor Vehicle B utility, which is in the husband’s possession. It has not been formally valued. From the husband’s perspective, the vehicle is in a poor state of repair as it requires new tyres, battery and an extensive service. It has been unregistered since early 2009. Given his major need for a motor vehicle is to transport [X] and [Y], it is the husband’s position that he has no great need for the vehicle and, as such, he views it more as a liability than an asset.
The wife relies on a Red Book valuation for the vehicle, which allocates a private price guide for the model in question of between $8,800.00 and $10,700.00, which she has averaged to arrive at a figure of $9,750.00. It is her contention that the vehicle should be included in the pool of the parties’ assets at this sum.
The husband submits that this value may be appropriate for a generic Motor Vehicle B in good condition but is not applicable to his vehicle. He contends that if the vehicle is included at this value he would be more than content to sign it over to the wife as he regards the car as a lemon.
In my view, this issue is emblematic of the self-defeating conflict between the parties and their inability to focus on sensible mechanisms to resolve their disputes in a cost efficient and fair manner. The court is not bound to accept the Red Book value, which does not represent an idiosyncratic valuation of the subject motor vehicle. In this context, I am not in a position to reject the husband’s evidence that the vehicle in question is in extremely poor condition.
I also accept that to put the vehicle up for auction, which would crystallise its value, may not be the fairest or most efficient way to realise its value. The wife’s evidence is that she has borrowed monies from her parents, in a sum of around $14,000.00 to purchase a motor vehicle suitable for her needs. The husband contends the sum was a gift to the wife, an assertion which Ms Abbey denies.
From my perspective, the evidence indicates each party has a vehicle. There is no concrete valuation of the disputed utility. I accept the husband’s evidence that the value sought to be assigned to it is inflated and he views the vehicle as a liability. It is not likely to be either just or feasible to sell the vehicle at a knock down price in order to allocate some value to it. The wife does not want the vehicle. In these circumstances, in my view, the fairest way to approach the vehicle is not to include it in the relevant pool.
Initially, the wife wished the court to allocate some sum of money, in the pool of assets, to represent the husband’s entitlement to long service leave after a period in excess of ten years’ service with Employer C. Regrettably for both parties, the evidence indicates that although the husband has indeed worked in the Employer C for over ten years, given his service has been with both Employer C and Employer D, he did not negotiate to carry over his entitlements from one to the other and back again; he has no accrued entitlement to long service leave.
The parties have been able to agree on how the contents of the former family home are to be divided between them. In these circumstances, the only item of value to be included in the pool of assets is a pool table, which the husband retains. Its agreed value is $600.00. In these circumstances, the pool of assets can be tabulated as follows:
Item
$
Proceeds of sale
109,423.71
… Charge (w)
5,372.10
Pool Table (h)
600.00
TOTAL
$115,395.81
There is no controversy regarding the parties’ respective superannuation holdings. The wife seeks that there should be a splitting order, in her favour, from one of the husband’s funds to bring about an equalisation of holdings. On the other hand, it is the husband’s position that the vast bulk of his Employer D superannuation was acquired post separation. On this basis, he proposes that each party retain his/her superannuation as is. The exact superannuation holdings are as follows:
Superannuation
$
Employer C (w)
140,903.76
Employer C (h)
133,621.26
Employer D (h)
35,832.69
TOTAL
$310,357.71
Pursuant to section 90XC of the Family Law Act, superannuation interests are to be treated as property. As such, they attract the provisions of section 79(4) of the Act. This is important given the status of superannuation as a different “species of asset” from other forms of property. [21]
[21] See C & C (2005) FLC 93-220 at 79,642 [43]
This is because superannuation, particularly in its accumulation phase, cannot be easily translated into cash, unlike other more “conventional” assets, such as land and personal property, the value of which can be accurately determined by sale on the open market. Superannuation cannot be sold.
Superannuation is a form of compulsory saving for retirement. As such, it must be preserved until its crystallisation on the occurrence of some specified event, usually permanent retirement from the workforce. In its early stages of acquisition, it has modest value. It relies on the combined forces of compound interest; preservation; and regular contributions; to grow in value. Given these factors, it is a long term investment.
In C & C, the majority of the Full Court of the Family Court held that a trial judge has a discretion as to how superannuation interests will be treated in each particular case. It remains, however, necessary to determine and consider the following matters in the exercise of that discretion:
·The value of the superannuation as determined by any regulatory process stipulated by Regulation or otherwise;
·The type of contributions made to the superannuation pursuant to section 79(4);
·Consider whether it is just and equitable to make a splitting or other order; and
·In terms of contribution issues, it is likely to be relevant to consider the length of the relationship concerned, particularly when considered in the context of when the person concerned joined the relevant fund and when the relationship ended.
The rationale behind the majority’s reasoning in C & C appears to be that, by reason of its special nature, it is often appropriate to assess contributions to superannuation interests separately to contributions made towards other more “conventional” assets.
This is so one or other of the parties’ contributions to that superannuation may be given “proper recognition”. In order to ensure this “proper recognition”, it is necessary for the court to consider what is the “real nature” of the relevant superannuation interest – namely whether it is likely to be received as a recurrent pension or a lump sum or in some other manner.
The second step – assessment of contributions
The parties began their relationship together in late 2005, when they were each aged in their early twenties and were in the course of completing their tertiary studies. Given their situation, at the time, there is no controversy that neither brought any assets of significant value into their relationship at its commencement.
What assets have been generated is solely attributable to their joint efforts and contributions. The parties married on … 2008. The date of their separation is agreed as being in the first half of 2016. Accordingly, the relevant period of the relationship is one approaching eleven years in duration, which produced two children.
It is clear that the parties approached their marriage as being one of equals, which would provide the foundation on which they would build a family together. Clearly, each party approached their marriage as a joint enterprise.
In the early years of their relationship both parties were employed under the Employer C Graduate Program and were based in Canberra. Their respective salaries were broadly similar and each enjoyed regular promotion. They saved part of their pooled salaries in order to be able to put together a deposit to purchase a home. The wife managed the parties’ financial affairs.
The wife took ten months maternity leave when [X] was born. The husband’s evidence was that he was a “hands-on-father” after [X] was born. The wife counters with she was “always a hands-on-mum performing multiple tasks”. I have no reason to consider anything other than each was a devoted parent.
Ms Abbey returned to work when [X] was around eight months of age. Mr Sander has deposed that he assisted with drop offs to day-care. I accept that Ms Abbey found the balance of work and parenting challenging. In 2012, the family decided to move from Canberra to Adelaide to be closer to Ms Abbey’s family and a wider range of support.
At the time, Mr Sander was at a senior level of the Employer C earning $107,260.00 per annum. Ms Abbey was also at a senior level earning around $104,000.00 per annum. Mr Sander took a cut in salary to $91,811.00, when he moved to work for the Employer D. Ms Abbey again took maternity leave, from Employer D prior to [Y]’s birth. She has not returned to the paid workforce as yet.
Clearly, this was a time of financial austerity for all concerned. Initially, the family lived with Ms Abbey’s family and then in rented accommodation. In anticipation of starting a family, the parties purchased a vacant block of land, at Suburb A, on which they planned to build their home. They saved further to enable them to begin the construction phase. The home was finally completed in mid-2014.
Ms Abbey has deposed that the parties each made considerable financial sacrifices in order to begin a family, although she has categorised her efforts as having been greater than those of Mr Sander. It is not useful for the court to attempt to make any such intricate differentiation other than to indicate its acceptance that the period before and after the acquisition of the home was challenging, particularly in the latter stages when only one income was coming in.
The home was a new one. There were things that needed to be done to settle the house into its location. The husband built a deck and did landscape work in the garden. I also accept that the wife too played her part, making curtains and adding touches inside. It is also her position that she did most of the housework, although she accepts the husband did the floors.
What is clear is that both parties contributed fully at this stage. The husband’s income was obviously central, as were the wife’s efforts in the home. Ms Abbey remains emotionally distraught that the marriage came to end when [Y] was a toddler and the parties’ home was still recently completed.
Again, it is Ms Abbey’s evidence that the period post separation was particularly financially difficult for her, given she was the primary carer of two young children. It is her case that the husband quarantined her access to his salary. However, it is the case that Mr Sander ensured the mortgage and other outgoings on the home were paid.
In addition, as previously indicated, the Suburb A property did not prove easy to sell. Mr Sander decided to leave the property vacant whilst it was on the market. He also paid for a number of improvements which were directed towards making the property more attractive to potential sellers.
In all these circumstances, I accept that the period post separation was one of financial austerity for both parties. It also marked the start of these extremely vitriolic and expensive legal proceedings, which initially centred on the husband’s application to assume primary care of the children on the basis of his assertion the wife was psychiatrically unwell.
It is not my function to attribute marital fault. In fact, the applicable case law prohibits me from doing so. In many ways, this is a very sad case. As a consequence, it is difficult not to feel sympathetic to each of the parties concerned, who found themselves in confronting circumstances at the end of their marriage. I accept that literally each found themselves at the centre of an emotional maelstrom. It is not easy to think and act logically when subject to powerful emotions.
However, putting aside my natural wish to commiserate with the parties for the invidious situation in which they each found themselves, it is my assessment that the parties’ various contributions, which fall to be assessed under the provisions contained in section 79(4)(a) – (c), although different in nature and quality, should be assessed as being equal in significance for the purpose of these proceedings.
The third step – section 75(2) factors – the prospective needs of the parties
I am now required to consider the various matters set out in section 75(2) and in particular to consider whether any further adjustment should be made in favour of either party. The section 75(2) factors are mainly, but not only, prospective in nature. They are as follows:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under -
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain 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.
I will address the section 75(2) factors, as relevant.
Paragraph (a) – the husband was born on … 1980. The wife was born on … 1982. Both enjoy good health. In general terms, there are no health considerations, relevant to these proceedings, which are likely to impact upon the parties’ respective financial positions.
Paragraph (b) – Each party enjoys a tertiary education. In particular, the wife has qualifications. Her last employer was Employer C. As previously indicated, Ms Abbey held a senior position with the Employer C . Her maternity leave concluded in 2017. Her final level of income was in excess of $100,000.00 per annum.
At present, Ms Abbey has elected to remain focussed on home duties. She earns a small amount of money from a catalogue delivery round, which she operates on the weekends when the children are in their father’s care. She was planning to enrol at TAFE to engage in a course, during the current year, but was unable to pursue this endeavour because [Y]’s kindergarten arrangements fell through.
At present, the wife is helping out at the children’s childcare centre on a voluntary basis. As a consequence of her experience, both at the centre and with her own children, Ms Abbey sees her future as being centred on something involving children. In the longer term, it is likely that Ms Abbey will return to tertiary studies to obtain a qualification. However, she does not wish to make this commitment until [Y] has fully transitioned to primary school.
In my assessment, the wife is an intelligent and well qualified person. In these circumstances, when [Y] is in the later stages of primary school, it is more probable than not that Ms Abbey will be able to return to the paid workforce and begin to earn a reasonable level of income. However, at the present time, I accept that she lives in extremely straitened financial circumstances.
Mr Sander has recently returned to Employer C. His annual salary is just over $90,000.00, which is less than he was earning when the family lived in Canberra. I would anticipate that Mr Abbey’s employment will remain secure and it is likely he will progress within Employer C. In the short to medium term, his financial situation is far more assured than that of the wife.
It has been said, by the Full Court, that the most valuable “asset” a party can take out of a marriage is “a substantial, reliable, income-earning capacity”.[22] In this regard, in my assessment, each party has a significant advantage, by dint of their tertiary education, in respect of being able to earn a reasonable level of income for the remainder of their working lives.
[22] See Clauson & Clauson (1995) FLC 92-595 at 81,911
However, in the short to medium term, the husband’s employment situation is markedly superior to that of the wife. He remains in the Employer C, whilst the wife has left it following the completion of her maternity leave. In addition, Ms Abbey is likely to elect to re-qualify, before she returns to the workforce in a capacity commensurate with her existing tertiary skills and experience.
As a consequence of pursuing similar career paths, the parties have broadly similar amounts of superannuation. I accept the husband’s evidence that the current disparity, approximately $28,500.00, is largely due to his employment in the post separation period.
However, in my assessment, the different employment prospects confronting the parties, over the next few years, justify a modest adjustment of the parties’ respective superannuation holdings.
However, in this context, the wife’s age (36 years) and likely return to the professional workforce in the foreseeable future indicate that she has sufficient years of paid employment before her to regroup financially and make any necessary preparation for her retirement.
In my assessment, each of the parties has the most valuable asset any person can have following the misfortune of being involved in divorce and property settlement. Both Ms Abbey and Mr Sander have university degrees, intelligence and many years of likely productive employment before them, in which to re-group financially.
Paragraph (c) – at the present time, Ms Abbey has the main responsibility for parenting [X] and [Y], both of whom must be regarded as children requiring a significant level of parenting input, given their tender years.
Ms Abbey has portrayed herself as a devoted and accomplished parent during these proceedings. I accept that she is so. For her, the care of the children will always come first. As a consequence, she is likely to delay her return to the workforce for as long as possible.
In addition, once she has returned to employment, unless she elects to return to employment, such as …, it is inevitable that her responsibilities for providing for [X] and [Y] will impact upon her career prospects.
Bearing in mind all these factors, I consider that the factors arising under this consideration favour the wife. Mr Sander will continue to have significant parenting responsibilities. However, to a large degree, these responsibilities will not impinge upon his working week to a significant degree.
Paragraph (d) – Neither party seems to enjoy a lavish lifestyle. Both are living in rented accommodation.
Paragraph (e) – Neither party has either a legal or moral obligation to support any other person, other than the children concerned.
Paragraph (f) – As previously indicated, the parties’ superannuation holdings are approximately equal, although Mr Sander has a slight advantage in this regard.
Each party is likely to have available to him or her, barring unforeseen events, to have at least twenty-five years, in the paid workforce, to prepare for retirement through the accumulation of superannuation.
If Ms Abbey does not return to full-time work or delays her return, she will not be able to accumulate as much superannuation as Mr Sander over the coming decades. However to some degree, this is likely to be her personal choice.
As I have found, she is an intelligent person, with tertiary qualifications, who is likely to be able to obtain some form of employment in the reasonably foreseeable future. As indicated, I will take into account the modest discrepancy in the parties’ superannuation holdings.
Paragraph (g) – this consideration recognises that one of the inevitable consequences of the end of the majority of marriages is a drop in living standards for the individuals concerned. This is particularly so if the marriage concerned has been a lengthy one and has involved one party either entirely or largely retiring from the workforce.
It is trite, but true nonetheless, that two households cannot live as economically efficiently as one. What is important is that any drop in living standards should not be borne disproportionately by one party more than the other. The end of the parties’ marriage has been an economic misfortune for each of them.
In this context, the wife submits that her current standard of living is significantly less than that of the husband. This is attributable to the fact that her rent, because she must lease more child friendly accommodation, is significantly more than that of the husband ($310.00 per week as opposed to $190.00 per week), whilst her recurrent level of income is significantly less. I accept that this is so. On any view, Ms Abbey is not in a strong financial position.
Paragraphs (h), (j) & (k) – Ms Abbey does not seek a sum of money attributable to spousal maintenance.
Paragraph (l) – Ms Abbey, during the next phase of her life, has elected to focus on the care of [X] and [Y]. This is an admirable aspiration but must have financial implications.
In my assessment, both parties are to be regarded as individuals with a high level of family focus. As such, the court must pay heed to Ms Abbey’s wish to continue as a home based parent.
Paragraphs (ha), (n), (naa), (p) & (q) – these considerations are not relevant to the current matter.
Paragraph (m) – Mr Sander has re-partnered and is currently sharing accommodation and expenses with that person, who enjoys a similar level of income to his own. For obvious reasons, this situation provides him with a greater financial bulwark than that accorded to Ms Abbey following the end of the parties’ marriage. This disparity of financial fortunes favours Ms Abbey at this stage of the court’s deliberations.
Paragraph (na) – the weight to be attached to a child support assessment will vary in the circumstances of each particular case concerned. The court is directed to look at the amount of the assessment, the financial circumstances of each of the parties, the needs of the children concerned and whether child support is likely to be paid regularly and at an adequate rate in future.[23]
[23] See Clauson & Clauson (supra) at 81,911
Mr Sander is a PAYG taxpayer. As such, his salary is likely to be readily amenable to the application of the child support formula. He has a limited capacity to manipulate his affairs to escape child support.
However, in this context, I also accept Ms Abbey’s evidence that the payment to her of child support does not fully compensate her for the significant costs attributable to the care of the two infant children concerned.
Hers is to be regarded as a household in very restricted financial circumstances, in which any unforeseen bill or other financial expense is likely to cause significant ongoing disadvantage.
However, the fact remains that Mr Sander will be liable to pay the applicable level of child support stipulated by the legislative formula and the formula itself will be responsive to any changes in his income or arising from a change in relevant care arrangements for the children.
Paragraph (o) – regrettably, one of the most influential factors germane to each of the parties’ respective financial futures, in at least the short to medium term, is the extent of their indebtedness for legal fees.
To a large extent, this factor renders the outcome of the case, certainly so far as the intricacies arising from the calculation of percentages, somewhat otiose. What is clear is that the larger proportion of the proceeds of sale of the Suburb A property will be consumed in the payment of legal fees.
Conclusions
It is now necessary to make the leap from evidentiary concepts to the application of percentages and a consideration of what such figures mean in concrete terms. It is a jump from the abstract to the material.
In my assessment, bearing in mind the extremely limited extent of the pool of assets available to be distributed, any overall assessment of the section 75(2) factors must favour the wife to a significant degree. I assess this in percentage terms to call for a division of 65/35 percent in her favour.
The final step in determining property proceedings is to stand back and consider whether the proposed result represents a just and equitable outcome. Considerations of justice and equity must inform each step of the court’s process and the overall result.
It is all very well to talk in percentage terms, so far as orders are concerned, but at the end of the day what really matters to the parties is what the orders mean in dollars and cents and what effect they have on their long-term aspirations and level of financial security.
In cases involving modest pools, small shifts in percentage calculations can have dramatic consequences for the parties concerned. For this reason, in order to do justice and equity to each of the parties, it is important for the court to consider the practical implications of the orders which it proposes to make.
Sixty five percent of the asset pool, as I have calculated it ($115,395.81), is represented by the sum of $75,007.28, from which must be deducted the sum notionally attributed to the wife ($5,372.10) leaving her due the sum of $69,635.18 from the proceeds of sale of the former home.
The husband is left with $40,388.53, which includes the pool table in his possession. Accordingly, he is left with the sum of $39,788.53 from the proceeds of sale. I acknowledge these are modest sums, which will do little, if anything, to equip the parties against the possible vicissitudes of the future.
In the husband’s case, the sum will go close to clearing his legal fees, as they currently stand. In the wife’s case, after she has paid her costs, she will be left with an extremely small sum to provide some moderate degree of security in the short-term for herself.
As indicated above, I consider it just and equitable to equalise the parties’ respective holdings of superannuation so, at the end of these proceedings they are equally equipped for the future. However, in this regard, it is clearly the case that the husband will recover quicker, so far as retirement planning is concerned than will the wife.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and forty six (146) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 11 July 2019
Clauson v Clauson (1995) FLC 92-595; and Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386
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