Schaars & Schaars
[2023] FedCFamC1F 12
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Schaars & Schaars [2023] FedCFamC1F 12
File number(s): SYC 8524 of 2019 Judgment of: ALTOBELLI J Date of judgment: 20 January 2023 Catchwords: FAMILY LAW – PROPERTY – Where the husband has always had a high income earning capacity – Post-separation contributions – Where assets include payment of sale of shares yet to be received – Consideration of a three-pool approach.
FAMILY LAW – SPOUSAL MAINTENANCE – Where the husband has capacity to pay – Court not satisfied wife is in need of spousal maintenance.
FAMILY LAW – CHILD SUPPORT ORDERS – Application for non-periodic child support made pursuant to Child Support (Assessment) Act 1989 (Cth) s 124.
Legislation: Child Support (Assessment) Act 1989 (Cth) ss 117, 123, 124, 125
Family Law Act 1975 (Cth) ss 72, 74, 75, 79
Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
NHC & RCH (2004) FLC 93-204; [2004] FamCA 633
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Ferraro and Ferraro (1993) FLC 92-335; [1992] FamCA 64
Hall v Hall (2016) 257 CLR 490; [2016] HCA 23
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Hurst & Hurst (2018) FLC 93-851; [2018] FamCAFC 146
Kowalski and Kowalski (1993) FLC 92-342; [1992] FamCA 54
Marsh & Marsh (2014) FLC 93-576; [2014] FamCAFC 24
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
MS & PS (2006) FLC 93-268; [2006] FamCA 588
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Trask & Westlake (2015) FLC 93-662; [2015] FamCAFC 160
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Division: Division 1 First Instance Number of paragraphs: 107 Date of hearing: 1–3 August 2022 Place: Sydney Counsel for the Applicant: Ms Gillies SC Solicitor for the Applicant: Swaab Attorneys Counsel for the Respondent: Mr Dickson QC Solicitor for the Respondent: Pearson Emerson Family Lawyers ORDERS
SYC 8524 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR SCHAARS
Applicant
AND: MS SCHAARS
Respondent
order made by:
ALTOBELLI J
DATE OF ORDER:
20 January 2023
THE COURT ORDERS THAT:
1.Within 42 days of the date of these orders, the Respondent Wife (“the Wife”) is to pay to the Applicant Husband (“the Husband”) the sum of $200,014.
2.On compliance with Order 1, the Wife is declared the sole legal and beneficial owner of the property situated at and known as B Street, Suburb C in the State of New South Wales (Folio Identifier …) (“the Suburb C property”).
3.In the event the Wife is unable to comply with Order 1, the Wife is to do all acts and things and sign all documents necessary to sell the Suburb C property by public auction and in particular to:
(a)Instruct an agreed Solicitor ("the Solicitor") to prepare a Contract for Sale of the Suburb C property;
(b)Instruct an agreed Real Estate Agent ("the Agent") to list the Suburb C property for sale by public auction at the earliest possible date;
(c)Execute all documents requested by the Agent for the sale of the Suburb C property;
(d)Agree with the Husband in writing as to the reserve price for the sale of the Suburb C property, and to so instruct the Agent;
(e)Request the Agent to appoint an Auctioneer to auction the Suburb C property;
(f)Attend the auction sale and negotiate with the highest bidder if the reserve price is not reached and subject to the Husband's written agreement, accept a price less than the reserve price, either during or after the auction;
(g)Execute a Contract for Sale of the Suburb C property;
(h)Cooperate in every way with the Agent in relation to the auction of the Suburb C property;
(i)Execute all other documents necessary to complete the sale of the Suburb C property;
(j)Instruct the Solicitor to keep the Husband informed as to the progress of the sale of the Suburb C property and to ensure that he is copied into any communication between the Solicitor and the Wife;
(k)Instruct the Agent to keep the Husband informed as to the progress of the sale of the Suburb C property and to ensure that he is copied into any communication between the Agent and the Solicitor instructed on the sale of the Suburb C property.
4.From the proceeds of sale of the Suburb C property, the Husband and the Wife do all acts and things and sign all documents necessary to cause the proceeds to be paid in the following manner and priority:
(a)In payment of the Agent’s commission and auction (if any) due on the sale;
(b)In payment of legal costs and disbursements of the sale;
(c)$200,014 to the Husband;
(d)The balance to the Wife.
5.The parties to do all things necessary to divide equally between them the twelve (12) pieces of artwork within the Suburb C property with the Husband at liberty to select the 1st artwork he wishes to retain, followed by the Wife, and so forth until each party retains 6 pieces of artwork each.
6.The parties divide the furniture and contents (excluding artwork) currently situated in the Suburb C property as agreed upon within 14 days of the date of these orders, but failing agreement:
(a)The Wife shall make two lists headed "A" and "B", roughly equally dividing the said furniture and contents and the Husband shall select which list, either "A" or "B" that he wishes to retain;
(b)The Wife shall make the items so selected by the Husband available for collection at a mutually convenient time within 7 days of the date of the election;
(c)Each party shall be declared the sole legal and beneficial owner of the items of furniture and contents contained in his or her list.
7.Except as otherwise provided herein, the Husband shall retain to the exclusion of the Wife all of his right, title and interest in the following:
(a)All furniture and other chattels currently in his possession, custody or control;
(b)Any motor vehicle in the possession of the Husband, currently Motor Vehicle 1;
(c)Any funds standing to his credit in any Bank, Credit Union or Building Society Account;
(d)His shareholding, and without limiting the generality of the foregoing, in D Pty Ltd, E Pty Ltd and F Pty Ltd;
(e)The Schaars Family Trust and the G Trust, and the assets thereof;
(f)All other assets of whatsoever nature and kind presently in the name, possession or ownership of the Husband.
8.Except as otherwise provided herein, the Wife shall retain to the exclusion of the Husband all her right, title and interest in the following:
(a)All furniture, jewellery and other chattels currently in her possession, custody or control;
(b)Any motor vehicle in the possession of the Wife, currently Motor Vehicle 2;
(c)Any funds standing to her credit in any Bank, Credit Union or Building Society Account;
(d)Her Superannuation entitlements in any Fund;
(e)All other assets of whatsoever nature and kind presently in the name, possession or ownership of the Wife.
9.The Wife’s application for spousal maintenance and child support departure is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Schaars & Schaars has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALTOBELLI J:
INTRODUCTION
These reasons for judgment explain the orders made in a dispute between Mr Schaars (“the husband”) and Ms Schaars (“the wife”) about alteration of property interests, spousal maintenance and child support departure.
BACKGROUND
The husband is the applicant in this case. He is 59 years old, is a finance professional, but describes himself as a director in his affidavit. The wife is the respondent and is 55 years old. They both reside in Sydney. They commenced cohabitation in early 1992 at a time when they each had negligible assets. They married in mid-1993.
They have four children aged 26, 25, 22, and 16.
The husband commenced working with a professional services firm in 1994, and the parties purchased their first family home in either 1997 or 1998. In 2002, the husband became an equity partner in the firm where he worked. Soon after, they sold their first family home and purchased what is now their current family home (“the family home”) using the sale proceeds of the first property and a loan. In 2005, using the security of the family home, the parties borrowed $1 million to fund the acquisition of a share portfolio. The next year they also substantially renovated the family home using moneys drawn down on their bank mortgage, as well as the husband’s income. In 2006, their youngest son was born.
Between 2009 and 2015, the parties made further draw downs on the mortgage to acquire a second share portfolio. The dividends received from both share portfolios covered interest repayments. The home was renovated again in 2012 using a combination of the husband’s income and draw downs on their mortgage.
The parties separated on 6 May 2018. The husband left the family home and moved into rented accommodation. The only minor child spent time with the husband but lived with the wife.
It is common ground that contribution up to the date of separation is to be assessed as being equal. The real focus of this case is assessing post-separation contribution and future needs, a number of issues relating to the constitution of the asset pool, and the approach that should be taken to the alteration of property interests.
After separation the husband caused the share portfolios to be cashed in and applied towards reducing the mortgage over the family home. Within a few months after separation the mortgage was fully paid off.
Between mid-2018 and late 2020, the husband paid $2,060 per week directly to the wife and further payments for expenses relating to the repair and maintenance of the family home, the motor vehicle driven by the wife, private health insurance at a family rate, notional periodic child support for the youngest child, all fees associated with their youngest child’s education including tuition fees and incidentals, a small amount of weekly payments to their adult children, all vehicle expenses for the adult children, and all Higher Education Contribution Scheme fees incurred by the adult children.
The husband commenced the present proceedings on 13 December 2019 at which time the process of obtaining valuations for the parties’ assets began. The husband funded some of the wife’s legal fees.
On 7 September 2020, the parties entered into consent orders that were made by Stevenson J. These orders provided for the husband to pay interim spousal maintenance, which included periodic spousal maintenance as to $2,550 per week payable as a distribution from the family trust, further payments to cover expenses relating to the family home including utilities, maintenance, rates and upkeep, motor vehicle expenses including insurance, and likewise for health insurance. The husband also paid further sums to assist the wife with her legal expenses.
After separation, the husband continued to invest in share portfolios and acquired a 90 per cent interest (with his partner having the remaining 10 per cent interest) in a property purchased off the plan with completion expected in 2023.
In November 2021, final parenting orders were made by consent in this Court which provide for the youngest son to spend time with the husband for four nights each fortnight during the school term, and for half of the school holiday periods.
In early 2022, the shareholders of the firm of which the husband was a director entered into a share sale agreement with another professional services firm. This resulted in a series of actual and anticipated payments to the husband, the nature and details of which will be discussed below where relevant.
By the time of the final hearing in August 2022, the husband had received some, but not all of the payments due to him as a result of what he described as the acquisition of the practice in which he worked.
THE COMPETING PROPOSALS
By the time of closing submissions, the orders sought by the wife may be summarised as follows. She sought a declaration that she was the sole legal and beneficial owner of the family home, and that the husband pay to her a total sum of $516,732 in three instalments by 15 January 2023, 15 July 2023, and 15 July 2024. She proposed orders in relation to the division of artwork at the family home, but that they otherwise keep everything in their possession or control. The wife sought spousal maintenance in the sum of $1,750 per week net of tax until 31 December 2024, and that such spousal maintenance be increased annually in accordance with upward movements in the Consumer Price Index. The wife also proposed that the husband pay all expenses in relation to the family home, and the wife’s motor vehicle and health insurance.
The wife also sought a child support departure order in relation to the payment of health insurance for their youngest son, and payment for all of his education and tutoring expenses including private music lessons. In closing submissions the wife’s senior counsel submitted that the Court would assess contribution as being equal and that the wife would receive an adjustment in her favour pursuant to s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) quantified at 12.5 per cent. The adjustment altering property interests as to 62.5 per cent would be applied across all property and assets of the parties.
In closing submissions, senior counsel for the husband contended that whilst contribution as at the date of separation should be assessed as being equal, the husband made a significantly greater financial contribution in the post separation period. His senior counsel contended there should be three pools of property and assets, the second of which is superannuation assets, and the third of which comprises those payments received by the husband as a result of the acquisition of his practice. Pool one would consist of all remaining assets. Thus, the final adjustment would be as to 50 per cent for pools one and two, but 65 per cent to the husband and 35 per cent to the wife in relation to the third pool, reflecting the husband’s greater contribution. Senior counsel submitted that there would be no further adjustment in the wife’s favour under s 75(2) of the Act, and the Court would neither make an order for spousal maintenance, nor child support departure.
APPLICABLE LAW
PROPERTY
This is an application under s 79 of the Act which relevantly provides:
79 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.
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.
In Bevan & Bevan (2013) FLC 93-545, the Full Court considered the High Court’s decision in Stanford v Stanford (2012) 247 CLR 108, 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 and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143, 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 [39] are:
(1)Identify and value the property, liabilities and financial resources of the parties;
(2)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property;
(3)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
(4)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
Another legal issue that arises in this matter is whether I should notionally add back assets to the property pool. In the Full Court’s decision of Trevi & Trevi (2018) FLC 93-858, Murphy J explains at [27]:
The Full Court held in [AJO & GRO] that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
(Footnotes omitted)
Relevant to this case is the first category—that is, the question of adding back expenditure on legal fees. In this regard, the Full Court in NHC & RCH (2004) FLC 93-204 at [55] and [57] states:
55.This decision appears to confirm the principle that where the payment of legal costs can be regarded as a premature distribution of funds (in which both parties have an interest), it is appropriate to add back those costs as a notional asset. It also confirms the principle that where funds have been borrowed to pay legal fees, and such liability is still outstanding, neither the payment of the fees nor the liability should be taken into account. The decision also supports the proposition that where it is determined that a payment of legal fees should be taken into account as a notional asset, any outstanding liability in respect of those fees should also be taken into account.
…
57.If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
SPOUSAL MAINTENANCE
Spousal maintenance is governed by s 72 of the Act. In Hall v Hall (2016) 257 CLR 490 at [3], the High Court described the “gateway” requirement for the consideration of a spousal maintenance application pursuant to s 74 of the Act. The gateway requirement is set out in s 72(1) of the Act, which provides:
72 Right of spouse to maintenance
(1)A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason.
having regard to any relevant matter referred to in subsection 75(2).
As noted by the High Court in Hall v Hall, the applicant carries the onus of satisfying the Court on the balance of probabilities that she has satisfied the gateway requirement of s 72(1) of the Act.
In MS & PS (2006) FLC 93-268, Coleman J explained at [39] that in determining whether to make an order for spousal maintenance, the Court should follow a four-step process, as follows:
(1)Can the applicant support themselves adequately?
(2)If not, what are the applicant’s reasonable needs?
(3)What capacity does the respondent have to meet those needs?
(4)What order is reasonable, having regard to s 75(2) of the Act?
SECTION 124 OF THE CHILD SUPPORT ASSESSMENT ACT
An application may be brought pursuant to s 123 of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”) for a liable parent to provide child support other than in the form of periodic amounts to a child’s carer. Section 124 provides circumstances in which such an order can be made and states:
124 Orders for provision of child support otherwise than in the form of periodic amounts paid to carer entitled to child support
(1)Where:
(a)a carer entitled to child support or a liable parent makes an application under paragraph 123(1)(a); and
(b)the court is satisfied that it would be:
(i)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(i)otherwise proper;
to make an order that the liable parent provide child support for the child otherwise than in the form of periodic amounts paid to the carer entitled to child support;
the court may make the order.
(2)In determining the application, the court must have regard to:
(a)the administrative assessment in force in relation to the child, the carer entitled to child support and the liable parent; and
(aa)any determination in force under Part 6A (departure determinations) in relation to the child, the carer entitled to child support and the liable parent; and
(b)any order in force under Division 4 (departure orders) in relation to the child, the carer entitled to child support and the liable parent; and
(c)whether the carer entitled to child support is in receipt of an income tested pension, allowance or benefit or, if the carer entitled to child support is not in receipt of such a pension, allowance or benefit, whether the circumstances of the carer are such that, taking into account the effect of the order proposed to be made by the court, the carer would be unable to support himself or herself without an income tested pension, allowance or benefit.
(3)In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make an order under subsection (1), the court must have regard to the matters mentioned in subsections 117(4), (6), (7), (7A) and (8).
(3A)In having regard to the earning capacity of a parent of the child under paragraph 117(4)(da), the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied as mentioned in subsection 117(7B).
(4)In determining whether it would be otherwise proper to make an order under subsection (1), the court must have regard to the matters mentioned in subsection 117(5).
(5)Subsections (2), (3), (3A) and (4) do not limit the matters to which the court may have regard.
Of particular relevance to these proceedings are the considerations set out in s 117(4)(d) and s 117(4)(da) as follows:
(d)the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
…
If the Court makes an order for child support to be in a form other than periodic amounts pursuant to s 124, the Court must also specify whether the payment will reduce the relevant child support assessment pursuant to s 125 of the Assessment Act.
THE EVIDENCE
In support of his case, the husband relied on the following documents:
(a)His affidavit filed 20 July 2022;
(b)Financial statement filed 20 July 2022;
(c)Affidavit of Dr H filed 25 July 2022;
(d)Case outline filed 28 July 2022; and
(e)Various documents tendered during the proceedings, marked as exhibits A1–A7.
In support of her case, the wife relied on the following documents:
(a)Amended Response to Initiating Application filed 5 July 2022;
(b)Her affidavit filed 21 July 2022;
(c)Financial statement filed 21 July 2022;
(d)Case outline filed 28 July 2022; and
(e)Various documents tendered during the proceedings, marked as exhibits R1–R3.
Only the husband and the wife were required for cross-examination.
THE BALANCE SHEET
Immediately before closing submissions, the Court was presented with a joint balance sheet which is reproduced below.[1]
[1] Some descriptions in the joint balance sheet has been amended for anonymization purposes.
Ownership Description Applicant Husband's value Respondent Wife's value ASSETS 1. W B Street, Suburb C $6,250,000 $6,250,000 2. W Motor Vehicle 3 $25,000 25,000 3. H Motor Vehicle 1 $31,300 $31,300 4. W NAB Account …79 $2 5. W NAB Account …30 $8,696 3,430 6. H NAB Account …06 (25.07.2022) $16,546 $16,546 7. H NAB Account …75 (25.07.2022) $20,809 $20,809 8. H Nabtrade High Interest Account …05 (25.07.2022) $1,650,495 $1,650,495+ $57,890 received on 26 July 2022 9. J NAB Account …97 (closed) $0 $0 10. J NAB Account …88 (Wife's living Account) $2,322 $2,322 11. H Artwork and other contents at Suburb J $20,000 $20,000 12. J Contents at Suburb C (excluding artwork) $40,000 $20,000 13. J Artwork at Suburb C $55,000 NIL (to be divided in specie) See notes 14. H Deposit for 90% Interest in K Street, Suburb L $142,500 $142,500 15. H Pre-payment of Stamp Duty for the purchase of K Street, Suburb L $0 $0 16. H Pre-payment fund for school fees at M School $0 $67,500 17. H Pre-payment of flights to United Kingdom $0 $12,555 18. H Pre-payment of 50 Personal Training Sessions to Husband's Trainer paid mid-2022 $0 $8,140 19. H Proceeds from sale of N Pty Ltd[2] Shares per cl. 3.2 of SSA. Subject to being an O Company Partner at time payment due, payable as follows:
early 2023 – $920,414
mid-2023 – $460,205
mid-2024 - $460,206
Subject to allowance for CGT at [38] below.$0 $1,840,824 20. H O Company Payment – signing dividend due to be paid in mid-2023 – subject to tax at [39] below. $0 $510,158 21. H O Company Payment – 50% of N Pty Ltd Salary during the period early 2022 to mid-2022 (net of tax) – due in late 2022. $0 $139,161 22. RHFT NAB Account …11 (25.07.2022) $19,000 $19,000 23. H O Company owed to G Trust 42,007 24. RHFT G1 Class share in N Pty Ltd $1 $1 25. H Trust Account (Swaab) $70,000 $70,000 26. W Trust Account (Pearsons) $158,482 $158,482 27. H O Company Distributions owing $41,981 $41,981 28. W Cash at Suburb C property $10,000 $10,000 Total $8,562,132 $11,160,103 ADDBACKS 29. W Paid legal costs (by Husband) to Pearson Emerson $223,440 See [28] 30. W Partial property settlement Orders paid to Wife and spent (04.08.20, 07.09.20, 27.09.21, 14.03.22) $166,518* 31. J Paid Single Expert fees (by Husband) to Experts ($22,990) $0 $0 32. H Paid legal costs (by Husband) to Swaab ($164,610) $0 $164,610* 33. 34. 35. Total $223,440 $331,128 LIABILITIES 36. H Repairs to the Suburb C property (paid on completion) $8,380 $8,380 37. H Husband's NAB credit card …55 (25.07.2022) $16,000 $12,312* 38. W Wife's NAB credit card …16 $0 $0 39. H Husband's PAYG tax instalment - paid 25.07.2022 $0 $0 40. H Wife's PAYG tax instalment - paid 25.07.2022 $0 $0 41. W Wife's Surgery in 2022 $0 $0 42. H Capital Gains Tax – sale of shares in N Pty Ltd due in early 2023 $647,584 43. H Tax on signing dividend
(estimated at 47% of $510,158)E$239,774 44. H Tax on O Company Distributions made mid-2022 ($136,231) (estimates on the distributions owing $41,981), total $178,212 (estimated tax at 47%) $83,759 NIL 45. Total $108,139 $908,050 SUPERANNUATION Member Name of Fund Type of Interest Applicant Husband's value Respondent Wife's value 46. H Superannuation Fund 1 Account No: …07 (closed – 26.07.2022) $0 47. H Superannuation Fund 2 Account No: …05 (26.07.2022) $969,273 $969,273 48. W Superannuation Fund 3 Account No: …02 (27.07.2022) $180,797 $180,797 Total $1,150,070 $1,150,070 FINANCIAL RESOURCES Ownership Description Applicant Husband's value Respondent Wife's value 49. RHFT NAB Account …11 (25.07.2022) (see #22) $0 See [21] Above 50. RHFT G1 Class share in N Pty Ltd (see #23) $0 See [22] Above 51. H Anticipated Future Receipts - Proceeds from sale of N Pty Ltd per cl. 3.2 of SSA. Subject to being O Company Partner at time payment due, payable as follows:
early 2023 – $920,414
mid-2023 – $460,205
mid-2024 – $460,206
Less anticipated CGT payable 31 March 2023 of $647,584.[3]$1,193,241 See [18] Above Total $1,193,241 SUMMARY Applicant Husband's value Respondent Wife's value Gross Value of Assets $8,562,132 $11,160,103 Addbacks $223,440 $331,128 Gross Assets including Addbacks $8,785,572 $11,491,231 Liabilities $108,139 $908,050 Net Assets including Addbacks $8,677,433 $10,583,181
Superannuation $1,150,070 $1,150,070 Net Assets including Superannuation $9,827,503 $11,733,251 Financial Resources $1,197,409 Nil [2] N Pty Ltd is another professional services firm.
[3] The Court is advised by way of correspondence dated 4 August 2022 from the husband that in relation to Item 51 on the balance sheet, the husband is content for the Court to deal with these items as contingent property. In other words, they constitute a chose in action to the husband capable of being classified as property but that they should not be deemed to be payable in the constitution of any orders made by this Court until that contingency is realised.
The following issues arise in relation to the balance sheet.
The husband conceded that the balance of the account referred to in item 5 should be $3,430.
In relation to item 8, the wife contended that the further amount of $57,890 received by the husband on 26 July 2022 should be added to the value of this account. However, the Court is satisfied that this would be double counting and hence inappropriate. The evidence indicates that $19,000 out of the $57,890 is in fact represented at item 22, another NAB account. Accordingly, the addback at item 8 should only be $38,890 on top of the $1,650,495 referred to there, totalling $1,689,385.
The dispute about the value of chattels referred to in item 12 can only be determined by an admission against interest of the wife, hence the value will be $20,000. However, as the chattels in question are to be divided in specie, it is convenient to treat this item as having a nil value.
In relation to item 13, the parties also agreed that the artworks at the family home would be divided in specie so this item will be nil.
Item 16 represents pre-payment of school fees for the youngest son. The wife seeks an addback but the Court declines to do so. The Court accepts the husband’s evidence as to how, and why, he pre-paid the school fees. The payment was made out of post-separation income. The benefit of pre-paying the fees was greater than the benefit of keeping the money in a bank account. The payment clearly benefits the family and particularly the youngest son in giving security that he will remain at that school. Item 16 will be nil. Senior counsel for the wife submitted that if this is what the Court decided, the pre-payment should be treated as a financial resource available to the husband under s 75(2) of the Act as it may be refundable. The Court does not agree. There is no evidence that the school fees are refundable. Even if the fees were refundable, it is not plausible that the husband would wish to do so.
There is a dispute about item 17 regarding the pre-payment of flights to the United Kingdom. The evidence suggests that this is at least in part business travel and that it was paid out of post-separation income. There is no plausible basis for an addback. The Court will not allow any addback in relation to pre-paid flights so item 17 will be nil.
A similar issue arises in relation to item 18, being pre-paid personal training fees totalling $8,140. It seems conceded, however, that this was funded out of the credit card balance represented at item 37. However, the Court’s view is that this payment is like the pre-paid flight and was paid out of post-separation income. The husband is entitled to spend money on his personal and business expenses in the post-separation period as he considers appropriate. There is no basis for the addback contended at item 18, but equally there is no basis for the credit card debt at item 37. Both entries will read nil. If the husband borrows money in order to support his post-separation lifestyle there is no discernible warrant for including this liability on the balance sheet. It is no answer to submit to the Court that the borrowing represents moneys expended to meet the husband’s obligations pursuant to an order of the Court.
Item 19 is one of the most contentious issues in this Court. This represents the husband’s entitlement to further payments in respect of the sale of his shares in his business as a result of the acquisition by another firm. His contractual entitlement to these payments is established on the evidence. It is the property of the husband because of his contractual rights. At the very least, he has a chose in action to enforce the agreement. The husband conceded he is content for the Court to deal with this item as contingent property but that it should not be deemed payable until that contingency is realised. The Court accepts there is the possibility that the husband will not receive these payments if he dies, or leaves the firm or there is a catastrophic failure of the firm. There is no evidence to suggest that he would willingly leave the firm before his entitlements are received. The possibility of death and catastrophic failure does not change the characterisation of these anticipated payments as being property, but it may be relevant either as to their value or as a s 75(2)(o) factor in the husband’s favour. Senior counsel for the husband quite properly pointed out that un-received funds can hardly be paid to the wife. The Court agrees, but that again does not change the characterisation of these payments as property. Senior counsel’s submission leads the Court to allocate these funds to the husband.
Whilst accepting that these payments were conceded by the husband to be contingent property, the Court notes that it does not accept that these payments are mere financial resources. Indeed, the clearest indication that these are not financial resources is the fact that the husband conceded at item 42 that the capital gains tax payable in early 2023 on the share sale proceeds should appear on the balance sheet. Each of the three anticipated payments will appear at item 19 and the liability at item 42 will also appear. The possibility that the husband will not, in fact, receive part or all of the payments is a matter that will be treated as an adjustment in his favour under s 75(2)(o).
There is a dispute about items 20 and 21 on the balance sheet and its corresponding liability at item 43. These are payments earned and due, but not yet received by the husband. The husband through his senior counsel conceded that item 20 is not income and that if the Court treated it as property, it should go into the contended third pool, a matter that the Court will consider in due course. The remote possibility that the funds will not be received will be treated as a s75(2)(o) factor in the husband’s favour.
Item 21, however, was salary not yet received for work done, but all of it was after the date of separation where, it was submitted, the husband had self-funded his own expenses, as well as the wife’s and the children’s expenses. Thus, the contention was that the husband was entitled to spend as he saw fit. Item 21 is still property and the issues raised by senior counsel for the husband will go to the question of contribution to the payment rather than its characterisation as property. The remote possibility that the funds will not be received will be treated as a s75(2)(o) factor in the husband’s favour.
Both items 20 and 21 should appear on the balance sheet as contended by the wife, but it must follow that the tax referred to in item 43 also remains on the balance sheet.
Item 23 emerged from the evidence as a payment to which the husband was entitled for work already done, with such income diverted to a new trust established by the husband. It is once again money earned, but not yet received. Consistent with the Court’s earlier determination, the money is property to which the husband has an entitlement and its characterisation as such should not be confused with the issue of assessing contribution to it. Senior counsel for the husband submitted that item 23 is a gross payment and if it is to be included in the balance sheet, the corresponding tax liability must also be included. As the Court does not have the benefit of the exact figure for the tax liability, the unknown tax liability will be treated as another s 75(2)(o) factor in the husband’s favour.
Item 28 represents the concession that the wife made in cross-examination that she kept cash of $10,000 at the family home. It should appear at item 28. The Court accepts senior counsel for the husband’s submission, however, the Court could not be satisfied that this figure necessarily represents all of the cash that the wife has at the family home. Indeed, more will need to be said about the wife’s evidence in relation to financial matters. Nonetheless, as an admission against interest, item 28 should clearly stand, and the peripheral issues about disclosure and credibility will be considered in other contexts.
The submissions about items 29–32 relating to legal costs is another complex issue in this case. The fact accepted by all parties is that the husband has paid all legal costs of both the husband and the wife using his post-separation income. It is important to recognise that the husband funded not only the wife’s legal fees, but also complied with both his legal and, arguably, moral obligation to support his family after separation.
It is hard to see how it is appropriate to addback the legal fees paid by the husband for himself out of post-separation income in these circumstances. Senior counsel for the wife submitted that the wife contributed to this income. That is an issue separate to the addback issue. Consistent with the established authorities, there has been no premature distribution of jointly owned property or capital as regards payment he made for his legal fees.
As for the wife’s legal fees paid by the husband pursuant to a court order, three out of the four orders (4 August 2020, 7 September 2020, 27 September 2021 and 14 March 2022 totalling $300,000) were characterised by the judge at the time as being partial property settlement orders. In other words, these were advances on the wife’s entitlement under s 79. There is no discretionary basis on the evidence not to addback these funds. However the wife contends, correctly, that the unused portion of the $300,000 which remains as money held in trust for her, and which appears at item 26 ($158,482) of the balance sheet, needs to be accounted for. This thus brings the addback down to $141,518.
In the exercise of its discretion, and having regard to the totality of the evidence, the Court declines to make any further addback. The Court accepts that the husband made further payments, some of which were voluntary.
In relation to item 43, in closing submissions both senior counsel submitted that this liability would need to be acknowledged as it refers to item 20 on the balance sheet.
Finally, as regards to the balance sheet issues, senior counsel for the wife contended that there was no basis for the liability at item 44 and that this taxation liability was already accounted for in other figures. On behalf of the husband, it was contended that this figure represents the tax payable in relation to items 23 and 21. With respect to the husband, the onus was on him to establish what taxation was payable in respect of which payments either received, or to be received. On the balance sheet, it is hard to see the correlation between the figures at item 44, 21 and 23. Senior counsel for the wife submitted that this lack of transparency should not, in effect, be visited on the wife. The husband’s financial statement filed 20 July 2022 does not assist, and arguably, confuses the issue further such that, for example, it is not possible to either correlate item 44 on the balance sheet to item 53 in the financial statement, or to the other taxation liabilities. In the circumstances, all the court can do is to accept the wife’s contention that there should be no addback at item 44.
Having regard to the Court’s findings, the balance sheet will be as follows.[4]
[4] As above, some descriptions have been amended for anonymization purposes.
Ownership Description Value ASSETS W B Street, Suburb C $6,250,000 W Motor Vehicle 3 $25,000 H Motor Vehicle 1 $31,300 W NAB Account …79 $0 W NAB Account …30 $3,430 H NAB Account …06 (25.07.2022) $16,546 H NAB Account …75 (25.07.2022) $20,809 H Nabtrade High Interest Account …05 (25.07.2022) $1,689,385 J NAB Account …97 (closed) $0 J NAB Account …88 (Wife's living Account) $2,322 H Artwork and other contents at Suburb J $20,000 J Contents at Suburb C (excluding artwork) $0 J Artwork at Suburb C $0 H Deposit for 90% Interest in K Street, Suburb L $142,500 H Pre-payment of Stamp Duty for the purchase of K Street, Suburb L $0 H Pre-payment fund for school fees at M School $0 H Pre-payment of flights to United Kingdom $0 H Pre-payment of 50 Personal Training Sessions to Husband's Trainer paid mid-2022 $0 H Proceeds from sale of N Pty Ltd per cl. 3.2 of SSA. Subject to being O Company Partner at time payment due, payable as follows:
early 2023 – $920,414
mid-2023 – $460,205
mid-2024 - $460,206
Subject to allowance for CGT at [38] below.$1,840,825 H O Company Payment – signing dividend due to be paid in mid-2023 – subject to tax at [39] below. $510,158 H O Company Payment – 50% of N Pty Ltd Salary during the period early 2022 to mid-2022 (net of tax) – due in late 2022. $139,161 RHFT NAB Account …11 (25.07.2022) $19,000 H O Company owed to G Trust $42,007 RHFT G1 Class share in N Pty Ltd $1 H Trust Account (Swaab) $70,000 W Trust Account (Pearsons) $158,482 H O Company Distributions owing $41,981 W Cash at Suburb C property $10,000 Total $11,032,907 ADDBACKS W Paid legal costs (by Husband) to Pearson Emerson $0 W Partial property settlement Orders paid to Wife and spent (04.08.20, 07.09.20, 27.09.21, 14.03.22) $141,518 J Paid Single Expert fees (by Husband) to Experts ($22,990) $0 H Paid legal costs (by Husband) to Swaab ($164,610) $0 Total $141,518 LIABILITIES H Repairs to the Suburb C property (paid on completion) $8,380 H Husband's NAB credit card …55 (25.07.2022) $0 W Wife's NAB credit card …16 $0 H Husband's PAYG tax instalment - paid 25.07.2022 $0 H Wife's PAYG tax instalment - paid 25.07.2022 $0 W Wife's Surgery in 2022 $0 H Capital Gains Tax – sale of shares in N Pty Ltd due in early 2023 $647,584 H Tax on signing dividend
(estimated at 47% of $510,158)E$239,774 H Tax on O Company Distributions made mid-2022 ($136,231) (estimates on the distributions owing $41,981), total $178,212 (estimated tax at 47%) $0 Total $895,738 SUPERANNUATION Member Name of Fund Value H Superannuation Fund 1 Account No: …07 (closed – 26.07.2022) $0 H Superannuation Fund 2 Account No: …05 (26.07.2022) $969,273 W Superannuation Fund 3 Account No: …02 (27.07.2022) $180,797 Total $1,150,070 NET POOL (INCLUDING SUPERANNUATION): $11,428,757 CONTRIBUTION
As noted above, it was conceded that contribution should be assessed as being equal up until the date of separation.
The husband’s case was that he made a significantly greater contribution in the post-separation period, whereas the wife’s case was that the different contributions made by the husband and the wife would ultimately be assessed as being equal, even in the post-separation period to the date of the hearing. The husband’s outline of case document filed 28 July 2022 contends that a third pool should be established consisting of the paid and unpaid amounts pursuant to the Share Sale agreement ($940,414 already received, and $920,411 yet to be received – see item 19 of the balance sheet). In closing submissions by senior counsel for the husband, the Court understood this submission to apply to items 19–21 and 23 of the balance sheet. Thus the husband contended that in the end result, whilst contribution would be assessed as being equal in relation to pools one and two, in relation to pool three, the wife’s contribution would be assessed as 35 per cent and the husband’s 65 per cent.
In assessing post-separation contribution, it is “… crucial to analyse and weigh the nature, form and characteristics of all contributions across the whole of the period under consideration.” (Marsh & Marsh (2014) FLC 93-576 at [107]).
The notion “…that the contribution of the homemaker and parent ceases upon the separation of the parties…” involves “…a serious misreading of s 79(4)(c)” (Ferraro and Ferraro (1993) FLC 92-335 at 79,568).
In assessing contribution, the capacity of one spouse to receive post-separation income needs to be placed in context. In Trask & Westlake (2015) FLC 93-662 at [15] the Full Court stated:
Central to his Honour’s assessment of the parties’ respective post-separation contributions are the findings to the effect that the husband had arrived at his position with Company E by dint of his talents, dedication and hard work but also by dint of the contributions made by the wife across the years preceding that employment. The years of cohabitation had embraced roles for the parties agreed between them that had led them to the point where one of them, the husband, received tangible recognition of, as his Honour put it, the “experience, knowledge and opportunities he had obtained in his earlier employment” (at [84]). The contributions of the wife are much less tangible. The lack of tangible recognition, or the fact that they are not susceptible to a dollar calculation, does not render them less important.
(Emphasis in the original, footnotes omitted)
The Full Court in Dickons v Dickons (2012) 50 Fam LR 244 stated at [24]:
… the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
In closing submissions, senior counsel for the husband submitted that the parties’ post-separation contributions are not equal for two reasons. Firstly, that the wife’s contribution as homemaker was less than it was prior to separation. Secondly, the husband’s financial contribution should be assessed as greater.
On the first point senior counsel submitted as follows:
…in the context of a four year separation… where the wife has a capacity to earn, … she has had a teenager in the house and … the assistance of a housekeeper which has also been funded by the payments that my client has made. It’s part of the reality of homemaker and contributions that take place during a marriage is that you are also providing support to your spouse within that household, and the wife gave some very proud about always making sure he had clean shirts … That she felt she provided support to him in terms of where he was in terms of his work career. She has not provided that support to my client for four years. So the role is not the same.
(Transcript 3 August 2022, p.17 line 39 to p.18 line 5) (As per the original)
On the second point, senior counsel for the husband emphasised that the husband paid all outgoings of the family home and made contributions to the wife and children whilst he still had to “source a home, pay rent, set himself up and do all of those other things that might otherwise have occurred in a supportive relationship with his former spouse” (Transcript 3 August 2022, p.18 lines 11–12). She further submitted that the husband conducted the financial affairs of the parties in a way that attracts a greater post-separation contribution, particularly with respect to his earnings in the financial year ending 2021 following the acquisition. The husband’s case is that those earnings were sourced well post-separation and the wife’s contributions to those earnings should not be equated with his earnings derived prior to separation.
Therefore, the husband’s case for a three pool approach is ultimately that although the parties’ contributions can be assessed as equal up until the date of separation, the husband’s financial contribution is greater post-separation because of the way he conducted his financial affairs. Further, the wife’s non-financial contribution is lesser as she did not qualitatively or quantitatively perform the same homemaker duties to the husband post-separation whilst he had to rehome himself and perform those homemaker duties for himself. This would result in an assessment of contribution as to 65:35 in the husband’s favour as regards to his contended third pool.
The Court notes that there was hardly any challenge to the evidence about the husband’s post-separation contributions. Separation occurred in May 2018, and the hearing took place early in August 2022, over four years later. During this period, the husband derived substantial income from personal exertion, as well as dividends. The share portfolios increased in value and he acquired a 90 per cent interest in a property. His superannuation increased, as did his substantial savings held in bank accounts. The sale of his shares in the practice also generated considerable funds, some of which has been received and some of which remain to be received. Throughout the post-separation period the husband provided extensive financial support to his wife and children, including maintaining and preserving assets such as the family home. The mortgage was discharged using the proceeds of sale of share investments, as well as some of his income.
The issue for present purposes is not whether the husband made a financial contribution in the post-separation period, but rather how that should be assessed having regard to the contribution that the wife also made in the post-separation period. In this regard, the Court does not accept the submission made on behalf of the husband that the parties’ divorce is somehow relevant. It is not. The Court assesses contribution to the date of the hearing, and may even assess contribution after divorce (Kowalski and Kowalski (1993) FLC 92-342). Whether the parties remain married or not neither informs the process of assessing contribution nor establishes a bookend after which contribution is to be somehow assessed in a different fashion.
The Court finds it curious that the husband would concede equality of contribution up until the date of separation, but not to the date of trial. In many respects the contribution of the husband before and after separation was the same. He made the overwhelmingly greater financial contribution reflecting the role that he adopted for the entire period of a long marriage. Nothing changed after separation. The wife continued to have caring responsibilities for the children, the quality of which is unchanged even if the quantity, i.e., the number of children she is caring for, has changed. The husband’s concession about equality of contribution to the date of separation recognises the different roles that they played, and the different contributions they made during their relationship, and places a value on it equal to his. That is entirely logical, and is consistent with authority and family law jurisprudence.
The wife was still homemaker and parent after separation, as she was before. The wife and children enjoyed the benefits of continuing to live in the family home after separation, as they did before. The wife contributed to the development of the husband’s career and earning capacity. One simple uncontested example of this is at paragraph 88 of her trial affidavit filed 20 July 2022 where she states:
[Mr Schaars] and I discussed his career ambitions on several occasions. He would often say, words to the effect, “I can earn a lot of money if I stay in this field and word hard . ... I will need your support if I do, and I will always support you”. My response was to always provide unconditional encouragement and support for [Mr Schaars'] professional career. I never wavered in my support. I relied on [Mr Schaars'] repeated statements that he would support me and our family. As a result, I had no hesitation in actively trying to fall pregnant and start our family.
(As per the original)
This contribution continued even after separation.
In seeking to understand the husband’s case, it seemed at times as if the substantial post-separation support the husband provided to the wife and children was, from his perspective, largesse, but in reality his support was consistent with his legal and moral obligation to do so. This is in circumstances where there was abundant capacity to pay, being a capacity to which the wife contributed throughout their relationship and afterwards. The husband provided this support initially because he accepted there was a need and, presumably, he felt a moral obligation even in the absence of Court order. However, from the point at which the Court ordered him to support the wife and his children in the manner he did, it was a matter of legal obligation. He does not receive special credit for doing what he was required to do by law in circumstances where he had ample capacity to do so, especially a capacity that was developed over a long period and to which the wife had contributed. That is not to say that his contribution is not acknowledged and assessed in the usual manner.
Even if it is accepted that the husband’s earning capacity increased after the date of separation, it does not necessarily follow, as was implicit in his case, that he made a greater contribution. A central platform of the wife’s case is that the husband’s skills were at least in part the product of the contribution that she made over a long marriage. Just because his skills after separation produced even more income, it does not lessen the contribution that the wife made to the development of those skills.
On this basis, there is no logical rationale either for assessing the husband’s contribution in the post-separation period as being greater than that of the wife, or even for creating a separate pool, pool three, which seeks to circumscribe the quantifiable benefits of the husband’s endeavours post-separation.
In assessing the husband’s contention for a third pool of assets and for a differential assessment of post-separation contribution thereto, it remains relevant to examine its tangible manifestation on the balance sheet i.e. its form and characteristics. The contended third pool would consist of items 19–21 and 23 of the balance sheet as found at [55] above. All of these items share the following characteristics:
·They are property at least in the sense that they are a chose-in-action; but
·They represent money not yet received at the time of the hearing; and
·The stated values are net of tax, in accordance with findings of the court; and
·Items 20 and 21 share the same characteristics found by the court as regards item 19;
·Any uncertainty about whether the husband will receive these items, and at what value, is treated as a s 75(2) consideration; and
·No submission was made that any of these items are accounted for elsewhere in the balance sheet.
The total value of items 19–21 and 23 of the pool is $2,532,151, representing about 22.1 per cent of the total net pool of assets of the parties. In relation to this pool, the husband contends that the wife’s contribution would be assessed as 35 per cent and the husband’s 65 per cent. The difference is 15 per cent of $2,532,151 = $379,822.65, producing a substantial differential of $759,645.30. To accede to this submission distracts from the holistic assessment that is required in this case.
In effect the husband invites the court to adopt an asset by asset approach to the assessment of contribution, rather than a global approach. Either approach is available: Norbis v Norbis (1986) 161 CLR 513. The risk of adopting the asset by asset approach in this case was identified by the Full Court in Hurst & Hurst (2018) FLC 93-851 at [22]. The husband’s identifiable, quantifiable financial contributions obscure the not-so-easily identifiable, non-financial contributions of the wife. The Court is not prepared to adopt such an approach and thus rejects both the suggestion of a third pool and a differential assessment of contribution in relation to items 19-21 of the balance sheet.
Contribution will be assessed as being equal across all assets, and there is no need for more than one pool.
AN ADJUSTMENT UNDER SECTION 75(2)?
In the husband’s case, there would be no adjustment in the wife’s favour, but in the wife’s case there would be an adjustment in her favour of 12.5 per cent.
There is nothing about the age or state of health of the parties which would, ipso facto, indicate an adjustment. Whilst the husband is older, he is in good health. Senior counsel for the wife quite appropriately conceded that the medical evidence did not establish that any health concerns pertaining to the wife would mean she could not work.
The most significant issue under s 75(2) is the disparity between the husband and the wife’s earning capacity. He has a very significant earning capacity and there is nothing in the evidence that would lead the Court to conclude that he could not work at least for the next three to five years and earn the same level, if not an even greater income to that which he presently earns. As will be seen below, the Court has grave doubts about the evidence the wife gave about her financial circumstances, including her income.
For present purposes, there can be no suggestion that the wife’s earning capacity is anything but a fraction of that of the husband’s. This is significant because it means that in future he will be able to generate property and financial resources much greater than the wife. Thus, they both have the physical and mental capacity to work, but at significantly different levels in terms of income, and this warrants an adjustment in the wife’s favour under s 75(2) of the Act.
The wife will receive 50 per cent of a pool of assets, the value of which could be $11.5 million. It was part of the wife’s evidence that she prefers to retain the family home if possible, but if that is not possible, her evidence is, and the Court would otherwise infer that, she would need to reaccommodate both herself and the children who are living with her. Despite what the wife said in cross-examination, her capacity to borrow money from a financial institution must be limited, and thus a reasonable inference for the Court to draw is that most, if not a substantial part of her entitlement, will be applied towards reaccommodating herself. By contrast, the husband has already made arrangements in this regard.
The parties’ youngest child who is now 16 years old will live primarily with her. The Court accepts that the husband is paying child support, both periodical and otherwise. The wife considers herself committed to meeting the needs of her other children, but particularly her daughter who, whilst 22 years old, has a particular personal need.
A factor that the Court takes into account in a general sense without attributing significant weight to it is that the parties enjoyed a very comfortable standard of living which for the husband will continue unabated, but for the wife will be more challenging, whether she retains the family home or sells it.
This is a long marriage and the arguments about assessment of contribution reflect the contribution that the wife has made to the husband’s income earning capacity, property and financial resources.
The wife wishes to continue in her role as a parent to the children, even as they get older. The husband pays child support, as already noted.
In all of these circumstances the Court assesses the wife’s needs pursuant to s 75(2) at 10 per cent, a figure which the Court believes recognises that she does have some earning capacity, her parenting responsibility will not continue indefinitely into the future, and that she is likely to receive substantial assets which should be sufficient for her to re-accommodate herself, though not necessarily to the standard that she has enjoyed hitherto.
Earlier in these reasons the Court alluded to the need to consider a s 75(2)(o) adjustment in favour of the husband. This is a consequence of treating assets at full value in the balance sheet (items 19–21) which the husband has not yet received, as well as the risk that he might not receive it even though the Court is satisfied he is likely to receive, and taking into account an unknown tax liability the husband will incur that has not been included in the balance sheet. Another adjustment in the husband’s favour which the Court considers appropriate is to recognise that the wife’s financial disclosure in these proceedings has been problematic, as will be discussed below in the context of spousal maintenance. As already observed, the Court has grave doubts about the wife’s disclosure about her income, and has equal doubts about the assets available to her. For example, as a result of cross-examination, the wife readily conceded that she had $10,000 in cash at home. The Court cannot be satisfied that there is not more. Accordingly, in all the circumstances the Court assesses a s 75(2) adjustment in the husband’s favour of 2.5 per cent.
A Just and Equitable Order
The Court has assessed the wife’s contribution at 50 per cent across all pools of assets. The s 75(2) adjustment of 7.5 per cent in her favour should likewise be applied across all pools. This means that the wife receives 15 per cent more of the asset pool than the husband does. This produces a differential of 15% which equates to $1, 717,313.55. This is less than the husband’s FY2021 income. In the circumstances, therefore, the Court does not consider a 7.5 per cent adjustment to be unjust or inequitable to either party.
SPOUSAL MAINTENANCE
The wife sought spousal maintenance in the sum of $1,750 per week until 31 December 2024, as well as the payment of a number of other expenses relating to the house as and when they fall due, as well as in relation to the wife’s motor vehicle and health insurance. The husband sought that the wife’s application for spousal maintenance be dismissed.
The evidence establishes that the husband has capacity to pay.
The onus of proof was on the wife to establish that she is in need of spousal maintenance and the quantification of that. The Court is not satisfied that she has discharged this onus. The evidence that the wife gave about her financial circumstances in cross-examination gave the Court no confidence about any aspect of the evidence she gave in relation to her income, expenses, assets and liabilities.
In cross-examination she was evasive, unresponsive, and uncooperative at times. There were obvious inconsistencies between her oral evidence and the sworn evidence she gave either in her affidavit or financial statement. She agreed that her evidence was misleading. She accepted that she was working at times when she said that she was not. She suddenly disclosed that she had $10,000 in cash at home. She could give no plausible explanations for transactions in her bank statements showing significant movements of money.
The calculation of her deposed expenses lacked any rigour or logic. To her credit she eventually accepted that most of the expenses deposed to in her financial statement were what she considered she needed as opposed to what she actually spent.
The wife has the capacity, indeed has exercised the capacity, to earn more than what she has disclosed to the Court. The wife’s expenses are far less than what she deposed to. None of the evidence before the Court enables the Court to make findings about what the wife’s actual income is, and what her reasonable expenses either were in the past, or will be in the future.
The wife’s claim for spousal maintenance fails.
AN ORDER UNDER SECTION 124 OF THE CHILD SUPPORT ASSESSMENT ACT?
Pursuant to s 124 of the Assessment Act, the wife seeks an order that the husband pay 100 per cent of the following expenses relating to their youngest son: health insurance premiums as well as any other expenses that are not recoverable from the insurance, all education expenses including incidentals and extras, all tutoring expenses, and private music lessons. The wife specifically seeks an order that the non-periodic payments referred to above are not to be credited against the annual rate of child support payable by the husband pursuant to any administrative assessment.
The husband opposes the making of the order under s 124 as it is his case that he has always met the above expenses and he does not need an order to continue to do so.
The wife’s claim fails. Section 124 requires the Court to consider whether it would be just and equitable to make such an order having regard to s 117(4) which at (d) refers to the income, property and financial resources of the wife, as well as the husband, and at (da) the earning capacity of each parent. Having regard to the Court’s findings in relation to the wife, as discussed in the context of spousal maintenance, the Court cannot be satisfied about these matters and thus declines to make the order under s 124.
ORDERS
In order to make the proposed orders altering property interests in this case it is useful to identify the assets each party already retains.
WIFE HUSBAND ASSETS Description Value Description Value 1 B Street, Suburb C $6,250,000 2 Motor Vehicle 3 $25,000 3 Motor Vehicle 1 $31,300 4 NAB Account …79 $0 5 NAB Account …30 $3,430 6 NAB Account …06 (25.07.2022) $16,546 7 NAB Account …75 (25.07.2022) $20,809 8 Nabtrade High Interest Account …05 (25.07.2022) $1,689,385 9 NAB Account …97 (closed) $0 10 NAB Account …88 (Wife's living Account) $2,322 11 Artwork and other contents at Suburb J $20,000 12 Contents at Suburb C (excluding artwork) $0 13 Artwork at Suburb C $0 14 Deposit for 90% Interest in K Street, Suburb L $142,500 15 Pre-payment of Stamp Duty for the purchase of K Street, Suburb L $0 16 Pre-payment fund for school fees at M School $0 17 Pre-payment of flights to United Kingdom $0 18 Pre-payment of 50 Personal Training Sessions to Husband's Trainer paid mid-2022 $0 19 Proceeds from sale of N Pty Ltd per cl. 3.2 of SSA. Subject to being O Company Partner at time payment due, payable as follows:
early 2023 – $920,414
mid-2023 – $460,205
mid-2024 - $460,206
Subject to allowance for CGT at [38] below.$1,840,825 20 O Company Payment – signing dividend due to be paid in mid-2023 – subject to tax at [39] below $510,158 21 O Company Payment – 50% of N Pty Ltd Salary during the period early 2022 to mid-2022 (net of tax) – due in late 2022. $139,161 22 NAB Account …11 (25.07.2022) $19,000 23 O Company Payments owed to G Trust $42,007 24 G1 Class share in N Pty Ltd $1 25 Trust Account (Swaab) $70,000 26 Trust Account (Pearsons) $158,482 27 O Company Distributions owing $41,981 28 Cash at Suburb C property $10,000 Total $6,449,234 Total $4,583,673 ADDBACKS 29 Paid legal costs (by Husband) to Pearson Emerson $0 30 Partial property settlement Orders paid to Wife and spent (04.08.20, 07.09.20, 27.09.21, 14.03.22) $141,518 31 Paid Single Expert fees (by Husband) to Experts ($22,990) $0 32 Paid legal costs (by Husband) to Swaab ($164,610) $0 33 35 Total $141,518 Total $0 LIABILITIES 36 Repairs to the Suburb C property (paid on completion) $8,380 37 Husband's NAB credit card …55 (25.07.2022) $0 38 Wife's NAB credit card …16 $0 39 Husband's PAYG tax instalment - paid 25.07.2022 $0 40 Wife's PAYG tax instalment - paid 25.07.2022 $0 41 Wife's Surgery in 2022 $0 42 Capital Gains Tax – sale of shares in N Pty Ltd due in early 2023 $647,584 43 Tax on signing dividend
(estimated at 47% of $510,158)E$239,774 44 Tax on O Company Distributions made mid-2022 ($136,231) (estimates on the distributions owing $41,981), total $178,212 (estimated tax at 47%) $0 45 Total $0 Total $895,738 SUPERANNUATION 46 Superannuation Fund 1 Account No: …07 (closed – 26.07.2022) $0 47 Superannuation Fund 2 Account No: …05 (26.07.2022) $969,273 48 Superannuation Fund 3 Account No: …02 (27.07.2022) $180,797 Total $180,797 Total $969,273 Net Total (including superannuation) $6,771,549 Net Total (including superannuation) $4,657,208
The value of the wife’s share pursuant to the orders contemplated in these reasons is $6,571,535.27.
The value of the husband’s share is $4,857,221.73
It is clear therefore that the wife will need to make a payment to the husband of $200,014.
As for the precise terms of the orders to be made under s 79 of the Act, the Court notes that the wife’s preference was that she retain the Suburb C property if possible. Accordingly, in the first instance, the orders for alteration of property interests will reflect this. Provided she is able to pay to the husband $200,014 she may retain the Suburb C property. If the wife is unable to pay this sum within 42 days, the Suburb C property will need to be sold.
It becomes apparent that the wife will not be able to receive any part of the husband’s future payments without increasing her payment to him.
Order 5 about the division of artwork and Order 6 about the division of furniture and contents (excluding artwork) currently situated at the Suburb C property reflects the agreement between the parties. The wife otherwise proposes that each keep the assets in their possession or control.
The issue of the division of superannuation arises. Implicit in the wife’s proposed order is that she retains her superannuation, and the husband his, rather than a division of all superannuation to reflect a 57.5:42.5 split between them. This obviously maximises the amount of cash available to retain the family home. As between the husband and the wife she is in need of cash now, rather than superannuation benefits in the future. Conversely, the husband has no great need for cash either in the short or long term. The wife’s proposal will be accepted so that, in effect, she will keep her superannuation fund and the husband keep his.
The remaining orders proposed by the husband appropriately implement the Court’s intention.
I certify that the preceding one hundred and seven (107) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 20 January 2023
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