Schendel and Rawlin
[2020] FamCA 114
•28 February 2020
FAMILY COURT OF AUSTRALIA
| SCHENDEL & RAWLIN | [2020] FamCA 114 |
| FAMILY LAW – PROPERTY SETTLEMENT – Where the de facto husband is a bankrupt – Where the applicant de facto wife resolved property issues as to non-superannuation property with the de facto husband’s Trustee in Bankruptcy – Where orders sought as to superannuation splitting order – Where discussion of applicable principles – Where appropriate that there be a splitting order in favour of the de facto wife of the husband’s superannuation. |
| Family Law Act 1975 (Cth) ss 79, 90SF, 90SM |
| Bevan& Bevan [2014] FamCAFC 19 Brandt v Brandt [1997] FamCA 21; (1997) FLC 92-758 Chapman & Chapman [2014] FamCAFC 91 Fontana & Fontana [2018] FamCAFC 63 Harris & Harris (1991) 104 FLR 458 Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 Russell & Russell (1999) FLC 92-877 Scott & Danton [2014] FamCAFC 203 Stanford v Stanford [2012] HCA 52 Teal & Teal [2010] FamCAFC 120 |
| APPLICANT: | Ms Schendel |
| RESPONDENT: | Mr Rawlin |
| FILE NUMBER: | PAC | 1220 | of | 2019 |
| DATE DELIVERED: | 28 February 2020 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 6 February 2020 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Pearce of Coleman Greig Lawyers |
| RESPONDENT – SELF-REPRESENTED LITIGANT: | No appearance |
Orders
That a base amount of $38,000 is allocated, as required by Section 90XT(4) of the Family Law Act 1975 (Cth) to the applicant Ms Schendel out of the respondent Mr Rawlin’s (born … 1975) interest in the B Super Fund (“the fund”), member number …31.
That in accordance with Section 90XT(1)(a) of the Family Law Act 1975 (Cth) the Court:
(a)Creates an entitlement on the part of the applicant Ms Schendel to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth); and
(b)Makes a corresponding reduction in the entitlement of the respondent Mr Rawlin, or such other person to whom a splittable payment may be made or would have had in the fund but for this order.
That whenever the Trustee of the fund makes a splittable payment out of the respondent Mr Rawlin’s interest in the fund, the fund shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in the orders above in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth).
That the above orders have effect from the operative time and the operative time is four business days after the service of the sealed copy of these orders on the trustee.
That these orders bind the Trustee of the B Super Fund.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Schendel & Rawlin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 1220 of 2019
| Ms Schendel |
Applicant
And
| Mr Rawlin |
Respondent
REASONS FOR JUDGMENT
On 18 March 2019 the applicant de facto wife commenced proceedings for property adjustment as against the respondent de facto husband, then a bankrupt.
The de facto husband’s trustees in bankruptcy were joined in the proceedings as second and third respondents.
In her application the de facto wife, in summary, sought orders in relation to the sale of the respondent’s home at C Town, transfer to her of the respondent’s property situate at D Town on the New South Wales South Coast and a splitting order in her favour in relation to 50 percent of the de facto husband’s superannuation entitlement.
It is common ground that the non-superannuation assets and/or entitlements of the de facto husband vested in his trustees in bankruptcy.
The parties resided in a de facto relationship from May 2010 to October 2017 as referred to below.
The respondent de facto husband appeared by telephone before the registrar on 13 June 2019. The registrar informed the de facto husband that he was in a position to be heard in relation to his superannuation and the splitting order sought by the de facto wife. On that day the registrar directed that the de facto husband file and serve a Response and a Financial Statement within 30 days with proceedings then being adjourned for further directions to 15 August 2019. He failed to do so.
Subsequently, and on 27 June 2019, interim consent orders were made as between the applicant de facto wife and the second and third respondents as the de facto husband’s trustees in bankruptcy. In summary, those orders provided for the sale of the property at C Town and that upon sale of that property 50 percent of the net proceeds be paid to the de facto husband’s trustees in bankruptcy or as they may direct with the balance to remain on interest-bearing deposit pending further order of the Court.
On 15 August 2019 there was no appearance by or on behalf of the respondent de facto husband before the registrar. Directions were made by the registrar for the applicant and the second and third respondents to jointly instruct a single expert to report as to the value of the property at D Town.
Subsequently, on 1 October 2019, there was again no appearance by or on behalf of the respondent de facto husband before the registrar and proceedings were adjourned to a Conciliation Conference on 27 November 2019.
On 27 November 2019 the applicant de facto wife and the second and third respondents as the de facto husband’s trustees in bankruptcy resolved issues in relation to non‑superannuation property. Consent orders were relevantly made on that day that provided:
a)That the proceeds of sale of the C Town property held on trust be paid in their entirety to the second and third respondent trustees;
b)That the trustees pay the sum of $20,000 to the applicant within seven days;
c)That the applicant vacate the D Town property by 23 December 2019; and
d)That the trustees by 28 February 2020 pay a further sum to the applicant of $17,500.
As to the question of superannuation, proceedings were remitted for judicial case management on 21 January 2020. On that day there was no appearance by or on behalf of the respondent de facto husband and orders and directions were made as follows:
UPON NOTING THERE IS NO APPEARANCE BY OR ON BEHALF OF THE RESPONDENT DE FACTO HUSBAND, IT IS ORDERED THAT
(1)The Applicant de facto wife’s application for property adjustment as to the remaining superannuation asset pool be listed for hearing to 10.00 am on Thursday, 6 February 2020.
(2)In default of there being an appearance by or on behalf of the Respondent de facto husband on the adjourned date, the de facto wife’s application for property orders will proceed to undefended hearing.
(3)The solicitor for the Applicant de facto wife notify the Respondent de facto husband of the orders made today and inform him that the matter will proceed to undefended hearing should there be no appearance by or on his behalf on the adjourned date with the de facto husband to be notified by email at ….
(4)The wife’s costs of today are reserved.
On 6 February 2020 there was again no appearance by or on behalf of the respondent de facto husband. The Court was satisfied that the de facto husband had been notified in accordance with orders made on 21 January 2020.
The de facto wife’s application for a superannuation splitting order proceeded to undefended hearing.
The de facto wife’s documents:
At hearing the de facto wife relied upon the following documents:
a)Her Initiating Application filed 18 March 2019;
b)Her Financial Statement filed 18 March 2019; and
c)Her affidavit filed 16 January 2020.
The de facto wife was born in 1987 and at trial was 32 years of age. The respondent de facto husband was born in 1975 and at trial was 44 years of age.
The parties commenced a relationship in about April 2010 and commenced cohabitation in May 2010. The parties did not marry. The parties separated under the one roof in October 2017 with a final physical separation in about August/September 2018 when the respondent left the parties’ then matrimonial home at D Town.
There are no children of the parties’ relationship.
The respondent de facto husband was declared bankrupt on 21 November 2017. The trustees report identifies significant unsecured creditors relating to the de facto husband’s bankrupt estate of about $1.59 million.
At the commencement of the parties’ relationship the applicant de facto wife had modest savings, a Motor Vehicle 1, superannuation of about $10,000 and an outstanding personal loan liability of about $12,000.
The respondent de facto husband at the commencement of the relationship owned property at C Town having an estimated value of about $220,000 subject to mortgage, a 50 percent interest in E Pty Ltd and accruing superannuation.
On 21 May 2019 the applicant de facto wife put the de facto husband’s superannuation fund, B Super Fund, on notice as to the superannuation splitting order sought by her. By letter dated 24 May 2019 the fund responded suggesting amendments to the proposed superannuation splitting order that have been incorporated into the order presently proposed by the applicant de facto wife.
Benefit statements as to the respondent de facto husband’s superannuation entitlements at various dates comprise Exhibit “C”. Those entitlements are:
1 May 2010 $60,899
29 September 2017 $156,116
7 January 2020 $208,757.
During the period of the parties’ relationship the applicant de facto wife was variously employed as a massage therapist but there were periods where she did not work including from October 2010 to August 2011 as a consequence of illness, from August 2011 to April 2013 at the respondent de facto husband’s request and from April 2014 to October 2014 by reason of injury.
The respondent de facto husband was employed throughout the relationship although there were sporadic periods of unemployment.
Early in the relationship the respondent de facto husband incorporated the company referred to above that traded as a repair business. The company was wound up in July 2017 on application by the Australian Taxation Office owing that office about $800,000. Otherwise, the de facto husband incorporated three other entities the trading circumstances of which are not known to the applicant de facto wife.
The applicant during the period of the relationship until 2014 paid for the majority of groceries and gave to the respondent de facto husband funds to contribute towards the outgoings for the C Town property and living expenses. Of course, during this period she occupied the respondent’s home.
For a period in late 2014 to early 2015 the parties resided in a rental property at F Town on the New South Wales South Coast. The de facto wife paid the rent for that property and outgoings averaging about $240 per week.
In February 2015 the respondent purchased a property at D Town with the purchase price funded wholly by a mortgage borrowing and presumably collaterally secured against the respondent’s property at C Town. The de facto wife says that there were discussions between the parties in relation to that property being acquired in joint names or subsequent to purchase being transferred into the joint names. Such did not happen and the property subsequently became vested in the respondent’s trustees in bankruptcy.
In late 2016 the respondent de facto husband subdivided his C Town property. Part was sold to the respondent’s brother or $550,000 and after payment of mortgage, payment of creditors and other payments a balance of about $8,000 was received by the respondent de facto husband.
The applicant contends contributions by her to living expenses, utility bills, vet bills and mortgage repayments for both the D Town and C Town properties.
Regrettably, her contributions, including financial contributions and non‑financial contributions to those properties, have been subsumed in the orders made by consent between herself and the respondent’s trustees in bankruptcy and it is to be inferred are reflected in the monetary sums to be paid to her pursuant to the orders.
The applicant de facto wife concedes that the respondent de facto husband expended his salary predominantly on mortgage repayments and outgoings on his properties, payment of vehicle loans and day-to-day living expenses. She asserts that he also expended significant sums on gambling.
Otherwise, the nature and extent of the contributions asserted by her were clearly offset by the substantial benefit conferred on her by the occupation of properties owned by the respondent de facto husband over a period of some years. The applicant de facto wife ultimately vacated the D Town property on 23 December 2019 in accordance with the earlier consent orders.
Property adjustment
The parties lived in a de facto relationship to which the Family Law Act 1975 (Cth) (“the Act”) applies.
Part VIIIAB of the Act provides for alteration of property interests between parties formerly in a de facto relationship.
The legislative process and course of consideration is similar to that under Part VIII of the Act in respect of married persons.
Section 90SM of the Act defines the Court’s powers in determining applications for property settlement between de facto couples. Sub-section 90SM(3) of the Act provides that:
The court must 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.
Section 90SM(4) of the Act sets out the matters the Court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters are:
a)The financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship 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 de facto relationship 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 de facto relationship, or a child of the de facto relationship:
i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
ii)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 de facto relationship or either of them; and
c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, 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 de facto relationship; and
e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
g)any child support under the Child Support (Assessment) Act 1989 (Cth) that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
Section 90SF(3) of the Act sets out the relevant further considerations which are as follows:
a)the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship ); 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 de facto relationship 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 (4), 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)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
i)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 de facto relationship 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 s 90SM in relation to:
i)the property of the parties; or
ii)vested bankruptcy property in relation to a bankrupt party; and
o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
i)a party to the subject de facto relationship (in relation to another de facto relationship); or
ii)a person who is a party to another de facto relationship with a party to the subject de facto relationship; 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
p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
i)a party to the subject de facto relationship; or
ii)a person who is a party to a marriage with a party to the subject de facto relationship; 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
q)any child support under the Child Support (Assessment) Act 1989 (Cth) that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
t)the terms of any financial agreement that is binding on a party to the subject de facto relationship
The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203. The approach is similar in de facto matters.
The process ordinarily involves a staged process.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing, and then, whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 90SM(4).
The Court needs to conclude that it would be unjust or unfair to leave property rights intact.
In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by the de facto husband and the de facto wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
In particular, such a circumstance arises where both parties or one party seeks property adjusting orders but are unable to agree as to same. Here the de facto wife seeks orders as to the division of property now comprising only superannuation.
It is appropriate for the Court to make orders altering their present superannuation interests.
If it is appropriate to make orders adjusting property, the Court then considers the contributions made by the parties as defined in s 90SM(4).
The Court must then consider s 90SF(3).
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 90SM(3) of the Act.
The pool and contributions
The assets of the parties for consideration in the context of the present application comprise the applicant de facto wife’s superannuation balance (as at 30 June 2019) of $18,173 and the respondent de facto husband’s superannuation balance (as at 7 January 2020) of $208,757.
By reason of the partial property orders made as to non-superannuation assets, the applicant de facto wife’s contributions both financial and non-financial to those assets have been subsumed into the orders as agreed between herself and the de facto husband’s trustee in bankruptcy.
The nature and extent of the contributions made by the applicant to the respondent’s superannuation is not readily apparent. There are no children of the relationship in respect of which she may have had primary care thus facilitating the respondent continuing in employment.
She asserts that for certain periods of the relationship she was unable to work by reason of illness or injury or at the request of the respondent. During these periods she did not accumulate superannuation although her income was, in any event, modest compared to that of the respondent. However, the respondent continued to accumulate superannuation throughout the relationship.
In the period from the commencement of the cohabitation from May 2010 to the end of their relationship in about October 2017, the respondent’s superannuation entitlements increased by approximately $95,000.
During the period of the parties’ relationship the applicant de facto wife’s superannuation entitlement increased from about $10,000 to the sum of about $18,000 as at June 2019. Such modest accrual particularly in circumstances where the de facto wife was a self-employed massage therapist, is indicative of her income mostly being applied to the parties’ outgoings and living expenses in lieu of contributions to her own superannuation savings.
In assessing contributions the Full Court said in Harris & Harris (1991) 104 FLR 458:
…the task of the court in proceedings under section 79 (and thus s90SM (4)) is not akin to an accounting exercise. To borrow a phrase used by McClelland J in Davey v Lee (1990) DFC 95-084; (1990) 13 Fam LR 688 at 689 in relation to section 20 of the De Facto Relationships Act 1984 (NSW) ''the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind”.
In Fontana & Fontana [2018] FamCAFC 63 at [27] the Full Court reiterated that there is no requirement for the primary judge to particularise percentages for contributions at each stage of the relationship. Indeed, the authorities are consistent in finding that assessing contributions is not an accounting exercise but a holistic one (Brandt v Brandt [1997] FamCA 21; (1997) FLC 92-758; Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513).
Doing the best that can be done, contributions by the applicant de facto wife to the accrual of superannuation by the respondent de facto husband during the period of the parties’ relationship will be assessed at 20 percent with the remaining accrual being attributed to the respondent de facto husband. In monetary terms, this equates to a sum of approximately $19,000.
The Court is, thereafter, required to consider the relevant factors under s 90SF(3). Relevant considerations are discussed below.
The de facto wife is some years younger that the de facto husband. The applicant de facto wife asserts incapacity for her normal occupation as a as a massage therapist by reason of an injury suffered to her wrist during the period of the relationship. There is no evidence as to how long she will be incapacitated or as to any rehabilitation undertaken by her.
As at the date of hearing, the applicant de facto wife was in receipt of Newstart allowance, living with friends and accruing some liability, it appears, for unpaid rent.
There is no direct evidence as to the present circumstances of the respondent de facto husband. At the time of separation the de facto husband was employed as a truck manager earning an annual gross income of about $168,000 per annum. Such income would be consistent with the accumulation of his superannuation entitlements from about $156,000 as at September 2017 to about $209,000 as at January 2020, a period of about 2.3 years. The respondent de facto husband, is to be inferred, will continue to accrue significant superannuation.
The applicant de facto wife, on the other hand, has modest superannuation and little prospect of accumulating any significant superannuation into the foreseeable future.
Any superannuation splitting order made by the Court will not affect any of the creditors of the respondent de facto husband as his superannuation entitlements represent property exempt from his bankrupt estate.
It is not contended by the applicant that the duration of the relationship has affected her ability to earn income but rather that such ability is impacted by injury.
In such circumstances it is appropriate that there be a further adjustment in favour of the applicant de facto wife as to a further 20 percent.
Overall, by reason of the above discussion, the de facto wife is entitled to 40 per cent of the accrual of the respondent de facto husband’s superannuation during the period of the relationship. In monetary terms, that equates to some of $38,000 and, accordingly, there will be a splitting order in favour of the de facto wife in that sum.
Orders will be made accordingly.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 28 February 2020.
Associate:
Date: 28 February 2020
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