Sasse and Sasse
[2008] FMCAfam 477
•5 June 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SASSE & SASSE | [2008] FMCAfam 477 |
| FAMILY LAW – Property. |
| Family Law Act 1975, ss.75(2), 79 and 79A |
| Hickey & Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Ely & Ely [2006] FMCAfam 512 AJO v GRO [2005] FLC 93-218 In the Marriage of Farmer and Bramley [2000] FLC 93-060 |
| Applicant: | MR SASSE |
| Respondent: | MS SASSE |
| File number: | BRC 6136 of 2007 |
| Judgment of: | Howard FM |
| Hearing dates: | 26, 27, 28 & 29 November 2007 |
| Date of last submission: | 27 March 2008 |
| Delivered at: | Brisbane |
| Delivered on: | 5 June 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hamwood |
| Solicitors for the Applicant: | SJP Law |
| Counsel for the Respondent: | Mr George |
| Solicitors for the Respondent: | Pippa Colman & Associates |
ORDERS
I direct that the parties file and serve a proposed final order to reflect these Reasons for Judgment by no later than 4.00 p.m. on 12 June 2008.
I direct that in the event that the parties are unable to reach agreement as to the terms of the order the matter shall be relisted for further mention on 18 June 2008 at 9.00 a.m.
IT IS NOTED that publication of this judgment under the pseudonym Sasse & Sasse is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 6136 of 2007
| MR SASSE |
Applicant
And
| MS SASSE |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant husband is Mr Sasse, born in 1954.
The Respondent wife is Ms Sasse born in 1956.
The parties married in 1976.
The parties have two adult children, [A] (born in 1979) and [B] (born in 1980).
I accept the wife’s evidence and find that the parties separated on a final basis in early January 2001.
The parties cannot agree on how to divide their property.
On 2 May 2002 final consent orders were made dealing with the property of the parties. On 11 May 2007 the consent order dated
2 May 2002was set aside by consent. In circumstances where the parties both consented to the setting aside of the earlier property settlement order I consider it appropriate to make another order under s.79 of the Family Law Act 1975 in substitution for the order that was set aside by consent (note s.79A(1A) of the Family Law Act1975).
I am satisfied that the question of property settlement should be reconsidered.
The four step approach
The well known four step approach must be followed[1]. The four steps are:-
a)What is the net asset pool of the parties?
b)How did each party contribute to that pool?
c)The parties’ current financial and family circumstances and what are their needs both now and in the future?
d)The requirement that the order be just and equitable.
[1] These four main issues to be determined by the Court reflect the well known four step approach in cases concerning s.79 of the Family Law Act (1975). In particular note Hickey & Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143. Also note that this summary of the four step approach has been adapted from a decision of Mead FM in Ely & Ely [2006] FMCAfam 512.
The property pool
The parties agree that the superannuation interests should be included in the same pool as the non-superannuation interests. I find that the property pool is as follows:-
Assets
Ownership or control
Value
The [X] business undertaken by the TRUSTS (note Schedule 1 of the Report of Mr M dated 21 November 2007)
Husband
$512,500.00
Property E
Husband
$290,000.00
Husband’s superannuation
(taking into account adjustment of $20,000 as submitted by the wife)
Husband
$792,358.00
[L] Pty Ltd
Husband
$270,914.00
[F] Pty Ltd
Husband
$Nil
Contents and chattels
(this represents half of the total of the joint items owned by the husband and his current wife)
Husband
$225.00
Wife’s superannuation
Wife
$648,258.00
Property A,
Wife
$875,000.00
Property J
Wife owns a two thirds interest
$380,000.00
Property B
Wife
$535,000.00
Landcruiser
Wife
$7,000.00
Wife’s contents of dwelling
Wife
$17,685.00
Wife’s ANZ bank account
Wife
$251.97
Total Assets (including superannuation)
$4,329,191.97
Liabilities
Responsibility for Debt
Value
Debt by husband to [Mr Sasse] Trust
Husband
$256,468.00
Mortgage to ANZ bank as at 23/11/2007 over Property A
Wife
$194,404.46
Visa Card
Wife
$4,425.68
Total Liabilities
$455,298.14
TOTAL NET ASSETS
$3,873,893.83
Issues concerning the property pool
(a) Properties owned or controlled by the husband’s second wife
I have not included the property situated at Property P because it is registered in the name of Ms S (the maiden name of the husband’s second wife). I have concluded that that property is not the property of the parties to the marriage, or either of them. It is the property of the husband’s second wife. I am not persuaded that any other finding is justified.
I have not included the house situated at Property O as it is owned by [G] Pty Ltd (a company controlled by Ms S the husband’s second wife). I have concluded that that property is not the property of the parties to the marriage, or either of them. It is the property of a company controlled by the husband’s second wife.
(b) Add backs
In the Schedule of Assets and Liabilities provided on behalf of the husband on 27 March 2008 it is noted on page 3 and 4 as follows:
“To reduce the unnecessarily complex procedure of adding back the known legal fees expended by the wife, noting the effect on the superannuation fund, dealing with the difficulty of dealing with the add-backs for Ms Sasse, the husband submits that the source of the funds, namely the sale of Property S should be added back to the pool. Accordingly it is submitted that the sale price of Property S ($322,000) less the payment of the mortgage encumbering her home ($191,858.10) and less the deduction paid by Ms Sasse to her superannuation fund ($40,877.77) should be attributed to the wife”.
That document indicates that the husband seeks an amount of $89,264.00 to be added back into the pool.
I have had regard to the evidence which the husband’s said schedule states as being relied upon to support the submission that an amount of $89,264.00 should be added back into the pool. I do not consider that the evidence referred to is sufficiently clear for a finding to be made that the amount referred to should be added back into the pool. The only relatively clear evidence on the point appears at page 240 of the transcript where I note the following question and answer occurred:
Mr Hamwood:
“…Ok, so really apart from the reduction in the mortgage, much of what you’ve spent from Property S has gone on legal costs of these proceedings and the defamation proceedings, is that right?”
The wife:
“… yes”
Whilst the payment of legal fees in respect of the proceedings under the Family Law Act will, on occasions, be added back into the pool, the difficulty with that approach in this case is that the legal costs in question are stated to have been expended on “these proceedings and the defamation proceedings.” I have not been taken by the husband to any other evidence which will show the distinction between the amount of money spent on legal fees for the Family Law proceedings and the amount of money spent on legal fees in respect of the “defamation” proceedings.
Before there can be a notional add back into the property pool, there must be clear evidence concerning the particular issue. I am not persuaded by the submission on behalf of the husband that the amount sought as an add back falls into either of the remaining two categories identified by the Full Court in AJO v GRO [2005] FLC 93-218 at page 79,617-79,618.
Accordingly, the sum of $89,264.00 sought by the husband should not be added back into the property pool.
(c) The Date of Valuations
The value of the business should go in as at the date of the hearing. This is the general rule in relation to property settlement proceedings. In “Family Law (5th edition)” the learned author, Anthony Dickey QC states at page 528:
“The preponderance of cases, however, especially from the Full Court of the Family Court, have held that normally the proper time to value property is the time of the hearing. This can now be taken to be the general rule.”
The learned author refers to several cases, the most recent of which is AJO v GRO [2005] FLC 93-218 at 79616 where the Full Court stated:
“The starting point is that ordinarily in proceedings under s.79 of the Family Law Act 1975 (Cth) (“the Act”) the property and financial resources of the parties are valued as at the date of trial. See for example Williams & Williams (1984) FLC 91-541 and Hauff & Hauff (1986) FLC 91-747.
[17] We accept that in a particular case there may be reasons which justify the selection by the trial Judge of another date and that in some cases that may be the date of separation of the parties.”
In the written submissions provided by the husband, it is stated at paragraph 7.1 that the “relevant value for the purpose of property adjustment orders between these parties is the value of the asset as it existed at the date of the original consent orders”. The original consent orders were dated 2 May 2002.
I have already accepted the wife’s evidence that separation occurred in January 2001. The trial occurred in November 2007 (although oral submissions were not finalised until March 2008). Therefore, six years and ten months elapsed between the date of separation and the date of hearing. In some cases this may well justify accepting an earlier date as the proper date for the valuation of a particular asset.
It was submitted by Mr Hamwood of Counsel on behalf of the husband that the business had changed substantially between the date of separation and the date of hearing. I do not accept that submission. The [X] business was established originally by the parties jointly. The business was for many years conducted by [H] Pty Ltd as Trustee of the [Mr Sasse] Family Trust. The wife performed bookwork for [H] from approximately 1979 until 2001. Furthermore, the wife was the principal home maker and primary care giver for the children, enabling the husband to spend time building up the [X] business. The [X] business may now well have different clients; may perform different types of work; may have an increased turnover; may have more employees and an increased value. However, I find that the wife was involved in a substantial way with the business by performing the book work and by assisting the husband to build the business. Even though the business may have increased in value since the date of separation (and since the time of the consent orders) I find that the business has only been successful and has only increased in value because of the ground work laid by the husband and the wife during their 25 year marriage and the joint efforts of both of those parties. The business was already secure, profitable and well established by the time the parties separated in January 2001. It is still, essentially, the same business.
Accordingly in my view the correct date for the valuation of the business is the date of the hearing. The value of the business as at the date of the hearing is, according to the evidence of Mr M, $512,500.00. I therefore agree with the submission of Mr George of Counsel (on behalf of the wife) dated 28 March 2008 in this regard.
As to the value of the superannuation funds, in my view there is no reason to depart from the general rule that the date of trial is the appropriate date for valuation at this first stage in the process. Any issues concerning contributions will be referred to in the second stage of the process.
(d) [L] Pty Ltd
The husband has submitted that [L] Pty Ltd and the assets it owns should not be included in the property pool. I note the following statement of principle by Anthony Dickey in the learned author’s 5th Edition of the text “Family Law” at page 523:
“(b) All property of both parties to be taken into account
It is now firmly established that upon the hearing of an application by a party to a marriage for an alteration of property interests under s.79, the court is required to take into account all of the property of both of the parties to the marriage, or if one party has become bankrupt, all of the property of the non-bankrupt party and all of the property of the bankrupt party that is now vested in his or her bankruptcy trustee. As the Full Court of the Family Court said in In the Marriage of Duff [1977] FLC 90-217, “We are of the view that the intention of s.79 is to enable the court to take into account and assess all the property of the parties upon being asked by either of them to make an order altering the interests of the parties in property.” This is indeed implicit in the broad terms of the first limb of s.79(1).
It is irrelevant for the purpose of the exercise involved in this first step how or when the property was acquired. It is accordingly irrelevant that certain assets were acquired before marriage, after separation, through a windfall, or in circumstances unconnected with either the marriage or the other party to it (for example, through an award of damages or an inheritance.) Such facts and circumstances become relevant at a later stage of the proceedings, but not at this initial, “marshalling” stage. It is also irrelevant that an applicant seeks an alteration of interests in only one or more particular items of property. The obligations of the court are the same regardless of the particular orders sought.”
The learned author has referred to several decisions throughout the course of the above quoted passage including In the Marriage of Farmer and Bramley [2000] FLC 93-060.
Accordingly, in my view the company known as [L] Pty Ltd should be included in the property pool at this stage in the four step process.
(e) Wife’s superannuation
I accept the submission made on behalf of the husband in the Schedule of Assets and Liabilities forwarded to the Court on 27 March 2008 that the value to be ascribed to the wife’s superannuation fund should be $648,258.00.
(f) Property J and Property B
The written submission provided by Mr George of counsel on
13 March 2008stated:-
“It is submitted that there was a common actual subjective intention to create a trust for the two sons of the relationship. Consider the unchallenged evidence of one son – [B] – and the evidence in support given by both Mr C and by the witness called by the husband – Ms R (pp 142 et seq T)
Baumgartner v. Baumgartner (1987) 164 CLR 137
Moore & Moore [2008] FamCA 32 – at paras. 49, 173-179”
The husband’s written submissions provided by Mr Hamwood of counsel on 13 March 2008 note the following in respect of this issue:-
“9.The Wife’s allegations of trust in respect of the Property B and Property J properties: The legal basis
9.1The wife seeks declaration that these properties be declared to be beneficially owned by [B] and [A] respectively. Property J is currently owned as to two-thirds by the wife, and as to one-third by the wife’s super fund; the Property B is currently owned by the wife. This has been the situation since about May 2002.
9.2The wife has never transferred these properties to the sons despite it having been in her power to do so from that time.
9.3The wife’s evidence in her affidavit-in-chief, filed
18 September 2007, is as follows:-9.3.1Property J – paragraph 65 – ‘The husband and I agreed in mid-1996 that we would give Property J to [B].’
9.3.2Property B – paragraph 67 – ‘It had been discussed between us for some time that we would give Property J to [B] when he was old enough but that we needed to be fair to both boys. … We decided that it would be a good way to equalise our gifts to the boys by giving the Property B to [A] as we had already agreed to give Property J to [B]. The husband and I agreed that the properties would be given to the boys when they were old enough to appreciate them.’
9.4This position was modified in cross-examination as follows:-
Transcript, page 205
Question:Ok what were the terms of the trust do you say?
Answer:Just that he and I were going to give those properties to our sons.
Question:At some stage:
Answer:When the children were old enough to appreciate them.
Question:When the children were old enough to appreciate them?
Answer:Yes.
Question:Ok are those all of the terms?
Answer:No, when he and I became financially stable.
Question:Ok, how was your understanding different from that?
Answer:Just that when the children were old enough to appreciate the properties, probably then … and (when) he and I became financially stable.
Answer:And then when Mr Sasse and I became financially stable which was fast approaching.
Question:Ok but it never did approach did it?
Answer:Well no it didn’t.
9.5It is clear that on the wife’s own case, the parties never constituted themselves trustees for the children in respect of those properties. The wife’s case at its highest is that the parties had a joint intention to give those properties to the two sons conditional upon two contingencies. Firstly, that the children were ‘old enough to appreciate them’ and secondly, that the parties themselves had become financially stable.
9.6It is the wife’s own case that whatever the first contingency means, the second contingency, in any event, was never met; that is, that the parties as a financial unit, never achieved financial stability but instead separated and in the husband’s case re-partnered.
9.7Even if the Court were able to hold that there was a concluded intention on the part of the husband and wife to gift the properties to the two sons, equity will not intervene to perfect an imperfect gift in the circumstances where the parties having had the capacity at all times to perfect the gift have chosen not to do so.
10.The wife’s allegations of trust in respect of the Property B and Property J properties – The evidence
10.1Prior to the separation, the parties treated both these properties as their own.
10.2Consequent on the May 2002 orders, the husband transferred to the wife his interest in those properties and transferred the parties’ super fund interest into the wife’s super fund. The wife has continued to rent the properties from time to time to declare the rent as her income and to claim tax deductions in respect of expenses in relation to the properties.
10.3The wife filed an affidavit in these proceedings on 18 April 2007. At page 17, paragraph 116 and following in that affidavit, she set out her position in opposition to setting aside the consent orders. At transcript page 214, lines 20 – 30, she swore that the assets she received under the consent orders were income producing assets and that the prior division of assets should remain because she needed those assets to maintain herself. The wife’s position is expressed clearly at transcript page 229, lines 47 to 230, line 9, as follows:-
Question:From the position that you expressed in your affidavit in April which was that the property distribution under the earlier orders should continue because distribution of those assets was necessary and appropriate to allow you to support yourself; that is what you had said in April in a nutshell wasn’t it? You got most of the assets because you needed them for your financial security?
Answer:Yes.
Question:And now you come to court and say ‘Well despite the fact that I said that in April, I am now telling the court that a million dollars worth of those assets are assets that I am determined to give away and so I will have much less; that is your case in a nutshell isn’t it?’
Answer:Yes.
10.4It is submitted that the wife’s applications in respect of the Property J and the Property B properties are ludicrous, self-serving and misconceived.”
I accept the wife’s evidence at page 205 of the Transcript (quoted in paragraph 9.4 of Mr Hamwood’s written submissions).
Furthermore, I accept the submissions made by Mr Hamwood on behalf of the husband and referred to above in paragraph 31. For convenience, I will restate two of the paragraphs here:-
“9.5It is clear that on the wife’s own case, the parties never constituted themselves trustees for the children in respect of those properties. The wife’s case at its highest is that the parties had a joint intention to give those properties to the two sons conditional upon two contingencies. Firstly, that the children were ‘old enough to appreciate them’ and secondly, that the parties themselves had become financially stable.
9.6It is the wife’s own case that whatever the first contingency means, the second contingency, in any event, was never met; that is, that the parties as a financial unit, never achieved financial stability but instead separated and in the husband’s case re-partnered.”
I find that the husband and the wife had a joint intention to give the two properties to the two sons conditional upon the two stated contingencies. I also find that the second contingency was never met – i.e. that the parties had not become “financially stable”.
There is nothing in the evidence of [B], Mr C or Ms R which is contradictory to the wife’s evidence (at page 205 of the Transcript) or to the findings that I have made. The evidence of those three witnesses supports the finding that the husband and the wife had the intention of giving the two properties to their two sons. I do not place any great weight upon the evidence of [B] concerning the “promise” that was apparently made to him by his father. To my mind, what is crucial in this case is the evidence of the discussions between the wife and the husband. In that regard, the second contingency has never been met. This point was conceded by the wife in cross examination. The parties had not become “financially stable” – they separated before that time. That being the case the parties’ intention to give the two properties to their sons was never carried into effect.
Furthermore, I note that one third of the Property J property is owned by the wife’s superannuation fund. That one third interest was (as at the date of the 2002 consent orders) owned by the parties’ joint superannuation fund. These facts are inconsistent with the wife’s contention that the parents (the husband and the wife) were holding the properties in trust for the two children. The trustees of the superannuation funds have legal obligations and responsibilities distinct from the parents’ own legal obligations, responsibilities or intentions.
In addition, I note the following evidence of the wife:-
a)Transcript page 214 lines 20 – 30
“Mr Hamwood: And other assets?
Ms Sasse: Yes sir.
Mr Hamwood: And the assets that you sought to receive were income producing assets such as the Property B, Property J and Property S, weren’t they?
Ms Sasse: Yes.
Mr Hamwood: And you told the Court in April this year that it is appropriate that that division of assets should remain because you needed and still need those assets to maintain yourself don’t you?
Ms Sasse: Yes.
Mr Hamwood: Thank you. Could that document be returned?
…”;
b)Transcript page 229 lines 47 to page 230 line 9
“Mr Hamwood: Okay. So in May you changed your position?
Ms Sasse: Yes.
Mr Hamwood: From the position that you expressed in your affidavit in April which was that the property distribution under the earlier orders should continue because the distribution of those assets was necessary and appropriate to allow you to support yourself; that is what you had said in April in a nutshell, wasn’t it? You got most of the assets because you needed them for your financial security?
Ms Sasse: Yes.
Mr Hamwood: And now you come to Court and say ‘Well despite the fact that I said that in April I am now telling the Court that a million dollars worth of those assets are assets that I am determined to give away and so I will have much less’; that is your case in a nutshell, isn’t it?
Ms Sasse: Yes.”
I accept the wife’s evidence quoted here. This evidence reveals that the wife needed and still needs Property J and the Property B to support herself. These two properties are income producing or are capable of producing income This evidence is, to my mind, inconsistent with the wife’s contention that the properties situated at Property J and the Property B were held by the parents (the husband and the wife) in trust for their two sons.
I find that there was no trust created in favour of the two sons concerning the Property J and Property B properties.
I find that the properties situated at Property J and the Property B do form part of the asset pool.
(g) [F] Pty Ltd
I find that [F] Pty Ltd was deregistered by ASIC subsequent to 30 June 2002. I have therefore not included [F] Pty Ltd in the asset pool.
Contributions
I make the following findings:-
a)the wife provided most of the home making duties in relation to this marriage. Furthermore the wife, by providing the home making duties and caring for the children, enabled the husband to advance his career and increase his earning capacity by building the [X] business;
b)the husband worked primarily in the[X] business. The husband built a substantial and profitable [X]business throughout the course of the marriage;
c)the husband was assisted in the [X] business by the wife (primarily performing bookwork type duties);
d)the parties raised their family together.
e)the parties did their best for the benefit of their family throughout the course of their (approximately) 25 year marriage.
In assessing the contributions based entitlements of the parties I have considered all of the foregoing matters in these Reasons for Judgment. By way of summary only it is to be noted that the matters I have considered include:-
a)the fact that the valuation of [L] Pty Ltd in the amount of $270,914.00 has been included in the asset pool even though this company was only incorporated on 4 June 2003 (after the date of separation);
b)the fact that I have valued the [X] business as at the date of the hearing;
c)the fact that I have included the full valuation of the husband’s superannuation as per the Evidex report prepared by Mr M (section 11) contained in his Affidavit sworn 23 November 2007;
d)the fact that the husband has been able to acquire assets in the name of [L] Pty Ltd and has been able to increase the value of his superannuation by using the earning capacity which he had “built up” or “acquired” during the course of the marriage;
e)all of matters mentioned in paragraph 41 herein.
Conclusion in relation to contributions
I conclude that the contributions based entitlements of the parties up until the date of the hearing are 55% to the husband and 45% to the wife.
What are the current circumstances and the future needs of the parties?
Does there need to be an adjustment pursuant to s.75(2) of the Act?
I will only refer to the relevant matters in s.75(2).
a)(i) The husband is aged 53 years and the wife is aged 51 years.
(ii)The wife does have certain health issues. I accept the evidence of the psychologist, Ms E – that following the initial marital dissolution in 1999 the wife suffered from an adjustment disorder with mixed anxiety and depressed mood.
(iii)I am not in a position to make a finding as to whether or not the wife is suffering from post traumatic stress disorder. In the circumstances I do not consider it is necessary to make a finding concerning post traumatic stress disorder one way or the other. Furthermore, I accept that the anxiety and depressive symptoms suffered by the wife made it impossible for her to work effectively in paid employment. In particular this is due to poor concentration, panic attacks and racing thoughts. I accept the evidence of Ms E that the wife is unfit for employment until she has addressed these debilitating symptoms. I consider that the twelve months of psychological counselling recommended by Ms E is appropriate.
b)(i) Neither party has made a specific submission concerning the income of the parties. Counsel for the husband accepts in his written submissions that the husband has a greater earning capacity and has improved the value of the business with the assistance of his current wife since the separation.
(ii)In view of the fact that the husband has control and ownership of the [X] business and having regard to the fact that, since separation, the value of the business has continued to increase I find that the husband in fact has a substantially greater earning capacity than the wife.
(iii)I do note that both parties are in control of substantial assets, however it is the husband’s substantially greater earning capacity which I am particularly taking into account.
c)Through the course of this 25 year marriage the wife provided substantial home making contributions to the family as well as performing book work for the [X] business. I find that the wife’s prospects of future employability are very limited having regard to the length of time that she has been absent from the employment market (it is approximately 28 years since the wife worked for any substantial period of time in anything other than a family related business).
Conclusion in relation to section 75(2) adjustment
Mr Hamwood, counsel on behalf of the husband, contended that there should be an adjustment in the husband’s favour in the amount of 5%.
Mr George, counsel on behalf of the wife, seeks an adjustment in the amount of 20% in favour of the wife.
I conclude that there should be an adjustment in favour of the wife in the amount of 15%. I have reached this conclusion based on the matters referred to in paragraph 44 herein as well as my impression of the evidence generally, including the evidence given by the husband and the wife in the witness box.
Justice and equity
An alteration of property interests in this case whereby the wife receives 60% of the net property and the husband receives 40% of the net property is, in all the circumstances, a just and equitable outcome.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Howard FM
Associate: J Witenden
Date: 5 June 2008
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