Schirmer & Schirmer
[2025] FedCFamC2F 45
•21 January 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Schirmer & Schirmer [2025] FedCFamC2F 45
File number(s): SYC 2420 of 2023 Judgment of: JUDGE MURDOCH Date of judgment: 21 January 2025 Catchwords: FAMILY LAW – PROPERTY – Long marriage – Where there is dispute as to the value and nature of goodwill in the husband’s corporation – Where the single expert valuer opines that the goodwill component determined by him in the valuation of the corporation is enterprise goodwill – Where the husband asserts that inalienable personal goodwill exists and ought not to be part of the value of the company – Where this submission is accepted and the value of the goodwill ascribed by the single expert is deducted from the value – Where monies expended by the wife on legal fees and tax debt post separation are notionally added back to the pool for division – Where contributions throughout the relationship are found to be equal as agreed by the parties – Post-separation contributions favour the wife – Both parties assert that an adjustment should be made to the contribution findings pursuant to s79(4)(d)-(g) of the Family Law Act – Where adjustment made in favour of the husband owing to the disparity in income earning capacity. Legislation: Family Law Act 1975 (Cth) ss 75(2), 79 Cases cited: Kowaliw and Kowaliw [1981] FamCA 70
TWN & PAQ (2005) FLC 93-230
AJO & GRO [2005] FamCA 195
Stanford & Stanford [2012] HCA 52
Trevi & Trevi [2018] FamCAFC 173
W & W [2000] FamCA 1302
Division: Division 2 Family Law Number of paragraphs: 133 Date of last submissions: 27 November 2024 Date of hearing: 26 – 27 November 2024 Place: Sydney Counsel for the Applicant: Mr Ford Solicitor for the Applicant: Doolan Callaghan Family Lawyers Counsel for the Respondent: Mr Fowler Solicitor for the Respondent: Sharon Moss Legal ORDERS
SYC 2420 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS SCHIRMER
Applicant
AND: MR SCHIRMER
Respondent
ORDER MADE BY:
JUDGE MURDOCH
DATE OF ORDER:
21 JANUARY 2025
THE COURT ORDERS THAT:
The Suburb B Property
1.Within 42 days of the date of these Orders, the parties shall do all acts and sign all documents necessary at the wife’s expense to:-
(a)transfer the Husband’s interest in the property situate at and known as C Street, Suburb B in the state of NSW being the whole of the land comprised in folio identifier … (‘the Suburb B property”) to the Wife; and
(b)discharge the joint current mortgage and all liabilities secured over the Suburb B property and the Wife shall refinance all liabilities into her sole name.
2.Simultaneously with Order 1, the Wife shall pay to the Husband the sum of $1,000,758 (“the settlement sum”).
3.Upon completion of the transfer pursuant Order 1, the Wife shall indemnify the Husband in respect of all liability, including any tax liability, penalty or interest in respect of such tax liability, actions, claims, suits and demands, past, present and future in respect of the Suburb B property.
4.Pending the transfer of the Suburb B property, save and except to comply with Orders 1 and 2 above, the parties are hereby restrained from further encumbering and/or increasing liabilities secured over the Suburb B property without the prior written consent of the other party.
E Pty Ltd
5.The Husband retains all of his interest in his business known as E Pty Ltd and indemnifies the Wife in relation to any liabilities whatsoever owed to or by (including but not limited to liabilities to the Australian Taxation Office, and any Division 7A loans) and associated with the said business.
Superannuation
6.Pursuant to s 90XT(1)(a) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes payable in respect of the Wife’s interest in Super Fund 1 (“the Fund”) (Number …) of which D Limited is the trustee (“the Trustee”), the Husband shall be entitled to be paid a base amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth) and that there be a corresponding reduction to the entitlement of the Wife whose splittable payment would have been paid but for this Order.
7.For the purpose of Order 6 herein the base amount the Husband is to receive from the Wife’s superannuation interest is $326,714
8.Having been accorded procedural fairness in relation to the making of these Orders, the Orders bind the Trustee of the Fund.
9.The operative time for Order 6 herein is the tenth business day from the date that the Fund is served with these Orders.
10.The parties shall be equally liable for the costs, if any, incurred by the Trustee in giving effect to the splitting order.
The Trailer
11.Within 14 days from the date of these Orders the parties will do all acts and things necessary to cause the Camper Trailer to be sold by Facebook, marketplace or any other agreed method and for the sale proceeds to be shared equally. Any cost incurred to sell the property or dispose of the property shall be borne equally between the parties. If the camper trailer has not been sold within 30 days of its initial listing then the parties shall dispose of the trailer by an agreed method such as selling parts or a vehicle wreckage service and the parties shall share equally in the cost of giving effect to this Order.
The Joint Credit Card
12.Within 42 days of the date of these Orders:-
(a)the wife shall do all such things as are necessary to discharge all and any liability arising from the F Bank Visa Card account #...62; and
(b)upon the Wife’s compliance with Order 12(a) the parties shall cancel the said credit card.
Retention of Property
13.Except as otherwise provided herein the Respondent Husband shall retain, to the exclusion of the Wife, all of his right, title and interest in the following:
(a)all personal property, jewellery, furniture and other chattels currently in his possession, custody or control;
(b)all funds standing to his credit in any Bank, Credit Union or Building Society account
(c)any motor vehicles registered in his name;
(d)his trailer;
(e)any shares held by him in any public or private companies;
(f)all and any leave, long service leave or any other employment entitlements or benefits held by him;
(g)any superannuation entitlement(s) he has an interest in including his Super Fund 2 entitlements;
(h)any interest held by him with respect to a business or partnership;
(i)any tax refund he receives subsequent to these Orders;
(j)all and any other property of whatsoever nature.
14.Except as otherwise provided herein the Applicant Wife shall retain, to the exclusion of the Husband, all of her right, title and interest in the following:
(a)all personal property, jewellery, furniture and other chattels currently in her possession custody or control;
(b)all funds standing to her credit in any Bank, Credit Union or Building Society account;
(c)any shares held by her in any public or private companies;
(d)all and any leave, long service leave or any other employment entitlements or benefits held by her;
(e)any superannuation entitlement(s) she has an interest in;
(f)any interest held by her with respect to a business or partnership;
(g)any tax refund she receives subsequent to these Orders;
(h)all and any other property of whatsoever nature.
Indemnity and Release
15.The Husband shall be solely responsible for and meet the payment of all liabilities in the Husband’s sole name excluding any liabilities specifically dealt with in these Orders and the Husband indemnify and keep indemnified the Wife from any liability however arising.
16.The Wife shall be solely responsible for and meet the payment of all liabilities in the Wife’s sole name excluding any liabilities specifically dealt with in these Orders and the Wife indemnify and keep indemnified the Husband from any liability however arising.
17.Save and except for all sums to be paid pursuant to these Orders and for any indemnity, warranty, covenant or representation given by these Orders, each party hereto shall release the other from all sums of money, actions, proceedings, accounts, claims, demands, costs and expenses of any kind whatsoever which either party now has or at any time heretofore had, or but for these Orders might have had against the other for or on account of or in relation to any acts, cause, matter or thing whatsoever.
Default Sale
18.In the event the Wife fails to comply with Order 2 herein then on the 56th day from the date of these Orders, the parties shall do all acts and sign all documents necessary to list the Suburb B property for sale as set out in the following manner:
(a)The parties shall appoint a local real estate agent as agreed between them ("the agent"), or failing agreement, the Husband shall nominate the names of 3 agents to the Wife and the Wife shall select one from the list within 7 days; should the Wife not nominate the agent from the list the Husband provides within 7 days, the Husband shall be at liberty to select any agent from the list to be appointed;
(b)The parties shall appoint a solicitor/conveyancer as agreed between them ("the solicitor"), or failing agreement, the Husband shall nominate the a solicitors to the Wife and the Wife shall select one from the list within select one from the list within 7 days the Husband shall be at liberty to select any solicitor from the list to be appointed.
(c)The Suburb B property shall be initially sold via public auction, with such auction to occur within six (6) weeks of the property being listed for sale by the agent, with the reserve price to be as agreed between the parties, and failing agreement as recommended by the agent;
(d)If the Suburb B property remains unsold after a period of 2 weeks following the auction in 1.3 above, the parties shall do all acts and things and sign all documents necessary to list the property for sale via private treaty for a 6-week period thereafter;
(e)If the Suburb B property remains unsold after the private treaty period in 1.4 above, the Suburb B property shall be listed for sale via public auction again, with such auction to occur within a further four (4) week period, with the reserve price to be as agreed between the parties, and failing agreement as recommended by the agent.
(f)The parties shall cooperate in every way with the agent and solicitor, including, without limiting the generality of the foregoing:
(i)Making the key and alarm codes (if any) available to the agent;
(ii)Signing all documents requested by the agent to sell the Suburb B property;
(iii)Executing a contract for sale in the form prepared by the solicitors having the contract of sale at the sale price;
(iv)Allowing the inspection of the Suburb B property at all times as requested by the agent;
(v)Doing all necessary repairs or improvements as recommended by the agent, with such repairs/improvements to be shared equally by the parties;
(vi)Ensuring the Suburb B property, including the grounds, are in a neat and clean condition at the time of inspection by the agent and any prospective purchaser;
(vii)Doing or saying nothing to hinder or prevent a sale being effected.
19.Upon settlement of the sale of the Suburb B property pursuant to Order 18 above, the parties shall apply the proceeds of sale in the following or priority:
(a)In payment of agent's commission, advertising, marketing and auction expenses in relation to the sale;
(b)In payment of legal costs and disbursements in relation to the sale;
(c)In payment and discharge of all mortgages, loans, charges and encumbrances in respect of the Suburb B property, including the mortgages owed to F Bank; and
(d)In payment of the balance thereafter remaining as to:
(i)The sum referred to in Order 2 plus interest at the rate prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 to accrue from the date of non-compliance until final payment; and
(ii)The remainder to the Wife.
Omnibus
20.Except as otherwise provided for in these Orders, the Wife and the Husband each be the sole legal and beneficial owners of all items of all property including household contents, money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively to the exclusion of the other.
21.Except as otherwise provided for in these Orders, the parties are each solely entitled to the exclusion of the other to all financial resources of whatsoever nature and kind in their name, possession, or control and to which they are or may become entitled.
22.Except as otherwise provided for in these Orders, each party shall retain to the exclusion of the other, sole responsibility for all and any liability currently in their names.
23.Each party shall do all things necessary including providing all consents to give effect to these Orders in the time periods described in these Orders.
Section 106A Order
24.In the event that either party fails or neglects to sign any document pursuant to these Orders, a Registrar of the Federal Circuit and Family Court of Australia (Division 2) is hereby appointed to execute such documents in the name of the party in default so as to give validity and operation to these Orders pursuant to s 106A of the Family Law Act1975 (Cth) upon being satisfied of such failure or neglect by way of affidavit evidence.
Costs
25.Should any party wish to make an application for costs of or incidental to these proceedings, they are to file and serve within 28 days of the date of these orders an Application in a Proceeding specifying the orders sought as to costs and any affidavit in support thereof of no more than 5 pages and 5 annexures.
26.In the event that no application is filed pursuant to Order 25 then all applications for costs are 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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MURDOCH
INTRODUCTION
These are financial proceedings commenced by the applicant wife on 6 April 2023 for an alteration of the parties’ property interests pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) following the breakdown of their eighteen year cohabitation and sixteen year marriage. They have been separated for a period of six years.
There are two children of the relationship who have both attained the age of majority. They remain living with the wife and spend time with the husband between two and four nights a fortnight.
By the conclusion of the trial the parties agreed that their contributions up to the date of separation should be found to be equal. At issue is the value of some of the property of the parties, what weight is to be accorded to each parties’ post-separation contributions and what adjustment, if any, should be made to the contribution finding pursuant to ss 79(4)(d) – (g) and s 75(2) of the Act.
EVIDENCE
A direction was made at the commencement of the hearing that no annexures to affidavits or exhibited documents would be read in the matter until they were individually tendered.
The parties prepared:-
·A Balance Sheet (Exhibit J1);
·A Joint Chronology (Exhibit J3); and
·Three Schedules of Agreed Facts (Exhibits J4, J5 and J6).
The wife relied upon the following documents:
·Amended Application for Final Orders filed 19 September 2024;
·Her Affidavit filed 22 October 2024;
·Her Financial Statement filed 22 October 2024;
·Affidavit of Dr G filed 22 October 2024;
·Her List of Issues filed 29 October 2024;
·The Joint Balance Sheet filed 30 October 2024;
·The Affidavit of Mr H (the single expert) filed 5 November 2024 (this contains two valuation reports; one dated 26 March 2024 and one dated 21 August 2024);
·The Affidavit of Mr J filed 5 November 2024;
·List of Factual Findings filed 5 November 2024;
·The Outline of Case filed 19 November 2024; and
·Material tendered throughout the course of the hearing.
The husband relied upon the following documents:
·The Outline of Case with attached minute of orders filed 19 November 2024;
·His Affidavit filed 22 October 2024;
·His Financial Statement filed 22 October 2024;
·List of Issues filed 29 October 2024;
·List of Factual Findings sought by husband filed 8 November 2024;
·The Affidavit of Dr K filed 20 November 2024 (with leave); and
·Material tendered during the course of the hearing including a letter from the husband’s specialist orthopaedic surgeon to his general medical practitioner dated 15 August 2023.
BACKGROUND
The wife was born in 1973 and is 51 years of age. The husband was born in 1976 and is 48 years of age.
The parties commenced cohabitation in 2000. They lived together in a rental property in Suburb M, New South Wales. Their respective incomes were deposited into a joint account. Both parties had access to this account and used it for expenses.
The husband is a qualified tradesperson and in July 2001 established E Pty Ltd (“E Pty Ltd”). He continues to operate this company as a tradesperson.
The parties married in 2002 in Sydney.
The parties’ first child, Ms L, was born in 2004. The wife took twelve months maternity leave. The husband continued to work as a tradesperson.
In 2005 the wife returned to work full time, working from home at least one day each week. The wife’s workplace was an approximately 45-70 minute commute each day and the wife worked long hours.
In July 2005 the wife’s sister and her husband made an interest free loan to the parties of $40,000. These monies were paid directly to the real estate agent acting for the vendor of the first home purchased by the parties at N Street, Suburb O, New South Wales (“the Suburb O property”). Such advance was repaid upon settlement of the purchase of the Suburb O property some six weeks later. The Suburb O property was purchased for $549,000. The 10% deposit comprised the monies advanced by the wife’s family, $7,000 received from the New South Wales Government First Home Owners Grant scheme and $7,900 savings held in the wife’s name.
Mr P, the parties’ second child, was born in 2007. The wife took seven months maternity leave, three months of which was paid. The wife sold shares to assist in financially supporting the family during this time.
The Suburb O property was sold in early 2008 for $647,000. The parties subsequently purchased the property situate at C Street, Suburb B in mid-2008 for $745,000 (“the Suburb B property”). The proceeds of sale of the Suburb O property together with savings of the parties were applied towards the costs of the purchase with the balance of funds required obtained by a loan from F Bank in the sum of $681,700.
From 2008 to 2018 extensive renovations were undertaken on the Suburb B property. Such renovations included the installation of new bathrooms, laundry and indoor/outdoor kitchens, and building a home studio/office in the backyard of the property.
In 2017 the wife commenced working from home full-time in a global role.
The parties separated on a final basis on 29 October 2018 and the husband vacated the Suburb B property. The children at this time were 14 and 11 years of age.
The wife was awarded discretionary share bonuses through her employment in December 2018, 2019 and 2021.
The wife commenced property proceedings on 6 April 2023.
The wife’s Application for Divorce filed in October 2023 was granted in late 2023 and became final a month later.
The matter proceeded to a final defended hearing for two days commencing 26 November 2024.
THE COMPETING PROPOSALS
The wife seeks Orders on a final basis in accordance with the minute attached to her Outline of Case filed 19 November 2024 that broadly:-
·The husband transfer his interest in the Suburb B property to the wife.
·That simultaneously upon such transfer the wife pay to the husband such sum as is required to effect an overall division of 60% to the wife and 40% to the husband of the non-superannuation property pool (“the settlement sum”).
·The husband be paid by way of a splitting order from the wife’s interest in the Super Fund 1 (“the Fund”) of $118,530.
·The husband retain all of his interest in E Pty Ltd and indemnify the wife in relation to any liabilities arising from the company.
·Each party otherwise retain all right, title and interest in property in their power, possession or control.
·An order be made pursuant to s 106A.
·The husband pay the wife’s costs of the proceedings.
The husband seeks Orders on a final basis in accordance with the minute of order attached to his Outline of Case filed 19 November 2024 that:-
·The husband transfer his interest in the Suburb B property to the wife.
·That simultaneously upon such transfer the wife pay to the husband the sum of $1,098,115 (“the settlement sum”).
·The husband be paid by way of a splitting order from the wife’s interest in the Fund the sum of $305,338.
·The parties sell the camper trailer and the net proceeds of sale be shared equally between the parties.
·The wife be solely liable for the joint F Bank Visa Card ending #...22
·Each party otherwise retain all right, title and interest in property in their power, possession or control.
·The wife pay the husband’s costs of the proceedings.
There is no dispute as to the specie of property to be retained by each party with the parties agreeing during the hearing that the camper trailer is to be sold and the proceeds divided equally. Thus to be determined is the settlement sum to be paid by the wife to the husband and the value of the splitting order to be made in the husband’s favour.
CREDIT ISSUES
Counsel for the husband submitted that, arising from the disingenuous and exaggerated nature of the wife’s evidence, if I am required to make a factual finding I would accept the evidence of the husband over that of the wife.
I accept the husband’s submission that her evidence at times was coloured by her non responsiveness to questions asked of her where she gave evidence she thought would best support her case. She was loath to make concessions unless she knew such a concession was in her written affidavit. She did not answer simple questions if the answer did not support her case:
COUNSEL:The husband took a role in caring for the children when you were working late nights or early mornings?
WIFE: I don’t know how to answer that question.
She attempted to minimise the husband’s contributions:
COUNSEL:And when [Mr Schirmer] did pick them up from either school or afterschool care or daycare, he would take them home, bathe them and prepare their meal
WIFE: Yes, like any family would.
I further accept the husband’s submissions and find that:-
·The wife failed to disclose the monies obtained from the liquidation of shares held by her at the date of separation. The wife’s written assertion that she solely paid for various expenses post-separation including the purchase of a dishwasher, the payment of school fees and credit card debts was disingenuous when a proportion of these expenses were funded from the said share liquidation that was marital property.
·The wife’s concession during cross-examination that her written evidence that she had solely paid for all repayments associated with the joint Commonwealth Bank Visa Card and two credit cards in her sole name that had balances totalling some $49,000 as at separation, which “during the post-separation period, [the husband] has continued to use these credit cards and accrued debt that I have had to pay off” was untrue.
Whilst I do not take the approach of accepting the husband’s evidence over the wife’s where they are disparate, I do approach the wife’s evidence with some caution.
The wife appropriately conceded that the husband “immediately” made suitable concessions, for example that both parties cooked meals. The husband gave his evidence in a forthright manner and made concessions where they were warranted. I find that he was a credible witness.
THE STATUTORY REGIME
I should only make orders pursuant to s 79 of the Act if I am first satisfied that it is just and equitable to do so. It must not be assumed that the parties’ rights or interests should be different to that which already exists: Stanford & Stanford [2012] HCA 52 (“Stanford”).
In determining claims for alteration of property interests pursuant to s 79, I am required to:
(a)Make findings as to the identity and value of the property, liabilities, and financial resources of the parties, or either of them, at the time of the hearing and determine the legal and equitable interests of the parties in such property;
(b)Consider, identify and assess the contributions by the parties to the acquisition, conservation and/or improvement of their property, including financial and non-financial contributions and any contributions to the welfare of the family before, during and after the relationship came to an end;
(c)After consideration of altering the interests in the property pool on the basis of contributions, to consider whether there should be any further adjustment to either of the parties on account of the matters set out in s 79(4)(d)-(g) of the Act, including any relevant considerations pursuant to s 75(2) of the Act; and
(d)Ensure that the orders to be made are just and equitable in all the circumstances.
THE PROPERTY OF THE PARTIES
Grounded from the draft Joint Balance Sheet and the concessions made by the parties during the hearing I have constructed the balance sheet comprising the property of the parties to be adjusted as follows. Items listed with an agreed no value or “not known” that were not the subject of any evidence or submissions have been removed whilst retaining the same numbering system of the parties. The remaining disputed items and their asserted values are in bold font.
Ownership
Description
Applicant Value
Respondent Value
ASSETS
1
Joint
C Street, Suburb B NSW
$2,350,000
$2,350,000
2
Husband
E Pty Ltd
$265,294
$117,089
3
Husband
CBA account #...20
$70
$70
4
Husband
CBA account #...39
$206
$206
5
Husband
CBA account #...82
$925
$925
6
Wife
Household contents at Suburb B property
$5,000
$5,000
7
Husband
Motor Vehicle 1
$40,000
$40,000
8
Husband
Household contents
$2,000
$2,000
9
Joint
Camper Trailer
$2,500
$2,500
10
Wife
F Bank account #...85
$1,967
$1,967
11
Joint
F Bank account #...06
$9
$9
12
Joint
F Bank account #...67
$1
$1
13
Wife
Q Company Shares account …49 (… shares held)
$8,212
$8,212
14
Wife
Q Company Shares account …49 (… shares held)
$8,704
$8,704
15
Wife
R Company Shares – Restricted Stock Units – (… unvested units)
$22,942
$22,942
16
Wife
CBA account #...47
$14
$14
17
Wife
Motor Vehicle 2
$22,000
$22,000
19
Wife
Loan to Ms L
Nil
$5,000
Total Assets
$2,729,844
$2,586,639
NOTIONAL ADDBACKS
Ownership
Description
Applicant Value
Respondent Value
A
Wife
Shares sold post-date of separation – legal costs paid
Nil
$20,837
B
Wife
Shares sold post-date of separation – personal tax
Nil
$18,874
C
Wife
Legal costs paid from annual leave cash out
Nil
$12,048
Total Notional Addbacks
Nil
$51,759
LIABILITIES
Ownership
Description
Applicant Value
Respondent Value
20
Joint
F Bank Mortgage accounts #...00 and #...01
$507,189
$507,189
22
Joint
F Bank Visa Card account #...62
$16,482
$0
24
Husband
Loan to director
$124,291
$124,291
Total Liabilities
$647,962
$631,480
SUPERANNUATION
Member
Name of Fund
Type of Interest
Applicant Value
Respondent Value
26
Wife
Super Fund 1
Accumulation
$644,201
$644,000
27
Husband
Super Fund 2
Accumulation
$24,193
$24,193
Total Superannuation
$688,394
$668,193
NET TOTAL NON-SUPERANNUATION PROPERTY
$2,081,882
$2,006,918
NET TOTAL SUPER AND NON SUPER PROPERTY
$2,770,276
$2,675,111
Findings
Assets Item 2: E Pty Ltd
By way of context, the husband is the sole shareholder and director of E Pty Ltd. It trades as “[E Pty Ltd]”. The husband is the sole employee of the corporation. If any works require assistance, the husband hires contractors. An accountant completes the taxation returns for the husband and the company and the BAS statements for the corporation on the husband’s behalf. The husband undertakes invoicing, quotes and paperwork. The corporation’s source of work is primarily word of mouth and the husband’s personal connections. The corporation does not have any ongoing contracts for repeat work. The work undertaken often entails “one off” jobs, from one day jobs to small or medium size renovations. The type of work can vary.
The husband’s unchallenged evidence was that the corporation does not have a website or social media presence and he does not market or advertise the business. The single expert’s oral evidence made reference to a “[Online]” listing. I do not have evidence of such listing before me and I am accordingly unaware as to whether such a listing is “advertising” or simply the listing of a telephone number. I found the husband to be a credible witness; I accept his evidence and find that the corporation does not have a website or social media presence and that he does not market or advertise the business.
The wife contends the value of item 2 is that opined by the single forensic accounting expert at $265,294. The husband contends the value of item 2 is $117,089, being the adjusted net value of the assets of the corporation. The scope of the dispute is the value and nature of goodwill ascribed by the single expert to the corporation of $148,205. The husband contends that any goodwill existing in the corporation is inalienable personal goodwill and ought not be part of the value of the corporation.
The single expert agreed “in a general sense” or “as a general principle” in cross-examination that:
·Personal goodwill derives from, and attaches to, the people or a particular person in a business because of their know-how, experience, ability and personality to attract and retain customers.
·Characteristics of personal goodwill in a business are:
·a small entrepreneurial business, highly dependent on the owner’s personal skills and relationship;
·no non-compete or employment agreements;
·an important feature is that personal service is provided by the owner;
·sales are largely dependent on the owner’s personal relationship with customers; and
·product and/or services, know-how and supplier relationships rest primarily with the owner.
The single expert agreed that, in contrast, enterprise goodwill only exists if it would continue to exist in the enterprise if the individual were not present and that:
..a good litmus test of whether goodwill is enterprise or personal is the extent to which truly excess earnings, that is, over and above adequate return to capital and adequate compensation for work performed, would continue to exist in the absence of the key individual.
As to E Pty Ltd specifically, the single expert conceded during his oral evidence that:-
·The company bears and trades under a name that clearly identifies with the husband.
·The business doesn’t operate a website.
·There are no business premises; the principal place of business is the rented granny flat in which the husband resides.
·There are no employees save for the husband “although there are subcontractors.”
·There are no ongoing contracts and every engagement is a one off assignment.
·The ability to generate work and undertake work rests with the husband, and subcontractors on the occasion they are hired.
·The conduct of the company requires skill and knowledge on the husband’s part.
The husband’s income has varied. His taxable income for the financial year ending 30 June 2024 was $133,854 gross sourced from a franked dividend of $110,000 paid by E Pty Ltd and a franking credit of $36,666. His taxable income for the financial year ending 30 June 2023 was $136,5999 gross sourced from a franked dividend of $110,000 paid by E Pty Ltd and a franking credit of $36,666..
The reason for the variation in the husband’s taxable income between the two years was explained by the chartered accountant of both the company and the husband who provided a statement to the husband’s solicitor dated 8 November 2024. This document was tendered without objection. It opines that:-
·The director’s loan as at 30 June 2018 was $105,121. These loans dated back to the financial year ended 30 June 2011.
·Since their appointment they have been working with the husband over time to tax effectively reduce the Director’s Loans.
·The annual dividend or wages recorded for the director/shareholder include a large component representing Division 7a loan repayments and not actual cash withdrawn from the business for personal expenses or living costs. This has the impact of increasing the dividend or wage required to account for not only the cash withdrawals but also the Division 7a loan repayments for each financial year end loan. This results in higher income tax payable, less cash flow available to fund business expenses, business taxes and ultimately personal renumeration. It recorded that, for example, in the 2024 financial year, whilst $110,00 is recorded as the dividend paid, of this sum $58,409 was an accumulation of the Division 7a annual principal and interest repayments, thus the balance available for living costs (pre-tax) was $58,591.
The single expert’s valuation of the corporation was based upon a methodology of the capitalisation of future maintainable earnings of $150,000 per year multiplied by a Proprietor’s Earnings Before Interest, Tax, Depreciation and Amortisation (“PEBITDA”) multiple of 1.0. From this was deducted the adjusted value of the company assets of $1,795 to obtain the goodwill figure of $148,205. This figure was added to the company’s surplus assets of $139,291 less the financial liabilities of $23,997 to arrive at the ultimate opined value. The future maintainable earning of $150,000 did not include any expense for renumeration of the director or other tradesman employed by the corporation to undertake its works and therefore “the future maintainable earnings are on an income to the owner basis” and for this reason “a further adjustment [for renumeration to undertake the work of the corporation] is not required given the assessment is on a PEBITDA basis.” [1]
[1] Valuation Report of Mr J, appendix 4 page 17.
By way of cross check to his conclusion, the single expert considered an Earnings Before Interest and Tax (“EBIT”) methodology, assuming a market based renumeration to the proprietor of $85,000 including superannuation. The single expert opined that this was an equivalent to an EBIT value of $65,000, and if subject to a multiple of 2.3, would produce a consistent result as to the value of the corporation with his primary opinion. The renumeration to the proprietor value of $85,000 was sourced from a Talent survey for tradespeople and an employment website reporting the average salary of a tradesperson in Australia as being between $75,000 and $95,000. The expert adopted the middle figure. There was no evidence as to the qualifications or experience required to achieve the average reported salary range. The expert did not consider for the purposes of his report the additional work undertaken by the husband when applying website information to opine as to the range of renumeration value.
The single expert accepted that the Talent source relied upon records that the average tradesperson salary in Australia is $86,637 per year and the most experienced tradespersons earn up to $108,680 per year. He later agreed that Salary Expert, another website he has experience with, shows for a tradesperson an average base salary of $102,700 and for a senior tradesperson $126,206. Recruitment agency records an average salary of $85,000, with highly experienced tradespersons earning up to $180,000 annually. The single expert accepted that, given the husband’s experience, adopting a higher market-based salary is not an unreasonable thing to do:
However, I know that in the marketplace, this methodology isn’t used. So, I mean, I spend half my working life going through acquisition transactions and businesses for sale and in this – for a business of this size, it’s simply – it’s not large enough to warrant an EBIT methodology. And that’s because as soon as – as soon as – the EBIT methodology assumes that as soon as the profit is the same as the market base salary, the business has no value – zero capitalised value.
The single expert further agreed that the tradesperson salaries he has referred to did not factor in managerial or directorship roles. He said that:
But I 100 per cent agree with you. If you put a proper market base salary, add on some director fees, do all those things, you will get a very high salary, and you will say the business is worth zero, but it’s not. It’s not worth zero.
That said, the single expert would not agree that the corporation would have no value above the value of its net assets because:
Another [tradesperson] could buy this business, generate $162,000 at that – 30 June 2024, employ a [tradesperson] to – an experienced [tradesperson] but maybe not as experienced as [Mr Schirmer] – and that – that purchaser would get the differential between the $162,000 profit less the – the wage cost of that person.
The single expert would not concede that the goodwill component determined by him in the valuation of the corporation is personal goodwill and not enterprise or commercial goodwill. He was firmly of the view that the goodwill as it exists is transferable to a purchaser.
It was put to the single expert that if the enterprise was earning not more than an experienced and skilled tradesperson could earn himself in the marketplace, then another person in the husband’s position would not be interested in paying a goodwill component for the corporation. The expert disagreed, citing that in the most recent year (2024) the company made $162,000 in profit and from his understanding, albeit sourced from websites, that is in excess of the income of an experienced tradesperson.
To the suggestion that the goodwill would not transfer if, for example, the husband continued to engage in employment as a tradesperson within the same area under his own name or a different business name, the single expert’s evidence was that:
…you would expect the [online] listing to-so enquiries that appear on that would go to the phone number…and that phone number would likely be part of the business….
….
If you were selling the business..the general assumption is the phone number the business uses would transfer to the- to the purchaser.
The single expert was steadfast in his position that there would be a goodwill component to the company even in circumstances where the phone number of the husband was not part of the purchase and if the husband continued conducting a business as a tradesperson in the same area, knowing that the contacts are personal to him. The single expert attempted to fortify this position on the basis that:
..what the buyer would do is they would contact each- each former customer and notify them that the contact details had changed, and they would update the [online] ad listing the current phone number, and they would update the-any other-any other presence….
And if – if the business hasn’t been advertising, well, then there’s another – another opportunity – another avenue to advertise, and that would also mitigate any – if there was some – some personal clients that only wanted to – to deal with [Mr Schirmer] and no one else, well, then that would mitigate that as a negative factor. So the – the hypothetical purchaser would have all the – all the avenues available to any other purchaser of a business to ensure that that goodwill came across.
I do not accept that evidence. It is little more than speculation. It does not consider the evidence of the husband as to the sources of the work, or the hourly rates charged. The expert did not speak to the husband for the purposes of his report. The evidence continued:
COUNSEL: [Mr Schirmer]’s evidence is he doesn’t do service work. He does construction work, that is, for builders that he knows, such as new developments. Why on earth would one of [Mr Schirmer]’s contacts who does building work, if he were to transfer the name [E Pty Ltd] to somebody else – why would they start to use that other person if [Mr Schirmer] is continuing to work in that area as a [tradesperson], doing the same work? It just wouldn’t happen, would it?
EXPERT:Well, my report is – my – I have been engaged to write a report as to the value of the business
COUNSEL: I understand that. And?
EXPERT:…as at 30 June 2024 and separate – not to assume sale or otherwise. And I’m just valuing the business. And my evidence is that that goodwill would transfer.
COUNSEL:All right. But I want to put the proposition back to you. There are specific definitions about – or specific writings and characteristics about personal goodwill and enterprise goodwill that we’ve just gone through, and I suggest to you that, clearly, the goodwill in relation to [Mr Schirmer]’s business, given that he ticks off on nearly every characteristic, must be personal goodwill as compared to enterprise goodwill, because if it was enterprise goodwill as I put the definition to you previously – if it was enterprise goodwill, it only exists if the enterprise is going to continue to derive a return on the capital and that income if the person or the individual is not present. So I am suggesting to you if [Mr Schirmer] is not present in the business but conducting another business in that area, it is highly unlikely that the benefit of the income the company is currently deriving is going to transfer over; it’s simply non-transferable, isn’t it, in those circumstances?
EXPERT:No. I – I – I believe it is transferable. I mean, there – I mean, if you – if – if – if it was a – if you assume some sort of transaction would take place in the future, the – the buyers won’t – won’t pay goodwill unless there’s – there’s some, you know – some protection that [Mr Schirmer] doesn’t try and take back the clients that he has sold – effectively, sold to the purchaser. So – so there would be an assumption there that he wouldn’t be able to---
COUNSEL: Work?
EXPERT:---seek – no – no. Just seek out those – either those clients that he has, effectively, sold or in that – the area that he – geographical area that he operates in. But apart from that, the – I believe that the – it’s transferable.
I do not accept the evidence of the single expert that the ability to generate profit does not rest with the husband but would transfer on a sale of the corporation to a purchaser. I find on a consideration of all the evidence that the business activities of the trading enterprise conducted by the corporation are dependent on the husband’s skill and his personal reputation being the avenue by which clients are gained because:
·The corporation bears a name and trades under a name that clearly identifies with the husband.
·It does not operate a website.
·There are no identifiable business premises. The principal place of business is the rented granny flat in which the husband resides.
·There are no ongoing contracts. Engagements are one off assignments. There is no evidence that there is an established group of return clients or of existing processes or methodologies of work.
·The ability to generate work and undertake work rests with the husband.
·The conduct of the trading enterprise of the corporation requires the husband’s skill and knowledge.
These factors resonate personal attributes, abilities and skills that are not transferable: see W & W [2000] FamCA 1302. I find that the trading enterprise of the corporation is wholly dependent on the husband and hence any goodwill that exists in the corporation’s trading operations is also wholly personal to the husband, and that any enterprise or commercial goodwill attaching to the corporation, if at all, is minimal. Additionally, I find that the corporation’s trading is in reality little more than a vehicle for the husband to earn income. I find that, for the above reasons, any goodwill existing in the corporation is inalienable personal goodwill and ought not be part of the value of item 2. I adopt the course proposed by the husband and will deduct the goodwill value from the value of the corporation and find that the value of item 2 of the balance sheet is $117,089. The income achieved by the husband from trading through the corporation will be considered in the adjustments to the contribution findings.
Assets Item 19: Loan to Ms L
In cross-examination the wife gave evidence that in July 2021 she had solely purchased Motor Vehicle 3 for daughter Ms L for $5,000 on the basis that this sum would be repaid by Ms L “eventually.” The wife noted that though Ms L has not specifically reimbursed her for the car, she has “reimbursed things like car insurance.”
The husband asserts that such monies should therefore be property in the wife’s name. The wife made no submissions in reply.
These monies came from the wife selling shares that existed at the date of the parties’ separation and I find should be on the balance sheet as property in the wife’s name.
Notional Add Backs Items A-C
The husband seeks that a total of $51,759 be notionally added back and credited against the wife’s entitlement to existing property.
The Full Court in AJO & GRO [2005] FamCA 195, identified three clear categories where it may be appropriate to notionally add back an item of expenditure:
·where the parties have expended money on legal fees;
·where there has been a premature distribution of matrimonial assets;
·where there has been a waste, reckless, negligent or wanton dissipation of assets as outlined by Baker J in Kowaliw and Kowaliw [1981] FamCA 70.
Notionally “adding back” items to the asset pool is a discretionary exercise which ought to be the exception rather than the rule.[2] In cases that are not “exceptional” justice and equity can be achieved by the exercise of a different discretion, usually as a relevant s75(2) factor: Trevi & Trevi [2018] FamCAFC 173 at [30].
[2] Chorn v Hopkins [2004] FamCA 633.
Subsequent to separation the wife sold shares that had existed as at the date of separation of approximately $80,000. From these sales it is uncontested that the wife expended $20,837 on legal fees. The wife further “cashed in” leave entitlements so that she received a cash sum rather than taking annual leave. Of these monies, she applied $12,048 to the payment of her legal fees. It is uncontested that the husband has paid his legal fees from post-separation income and savings. I am satisfied that these sums (being items A and C on the Balance Sheet) should be notionally added back to the pool of property available for distribution between the parties.
Item B on the balance sheet is personal income tax arising from the wife’s post-separation income paid by the wife from the sale of shares that existed as at the date of separation. The husband has paid his post-separation income tax from his post-separation income, not from the liquidation of matrimonial property. I am satisfied in those circumstances that this sum should be notionally added back to the pool of property available for distribution between the parties.
Liabilities Item 22: Joint F Bank Visa Card account #...62
The husband submitted that the existing F Bank Visa Card debt of $16,482 in joint names “ought not to be included in the balance sheet.” Whilst the husband conceded that this was a debt incurred pre-separation, it was a debt that would not be just and equitable “to be shelved home to the husband” as there is no specific evidence, or in fact any evidence at all, as to how this debt was incurred. The debt was included in the aide memoir document prepared by the husband showing the effect of the orders sought by him, such that if the debt is excluded from the balance sheet it will increase the adjustment to the wife on the husband’s case in any event.
I do not accept the husband’s submission in this regard. The credit card debt was incurred pre-separation. It would not be just and equitable for it to be on the balance sheet as a joint liability.
Item 26: Wife’s Super Fund 1 Accumulation Fund
The total value of the wife’s superannuation entitlement benefits adds up to $644,201. The husband lists the value as $644,000. Neither party addressed this discrepancy. I accept the wife’s value as an admission against interest. In any event, the difference in value is de minimis.
Conclusion as to the Property of the Parties
Accordingly, I find that the property pool consists of assets and liabilities as follows:-
Ownership
Description
Value
ASSETS
1
Joint
C Street, Suburb B NSW
$2,350,000
2
Husband
E Pty Ltd
$117,089
3
Husband
CBA account #...20
$70
4
Husband
CBA account #...39
$206
5
Husband
CBA account #...82
$925
6
Wife
Household contents at Suburb B property
$5,000
7
Husband
Motor Vehicle 1
$40,000
8
Husband
Household contents
$2,000
9
Joint
Camper Trailer
$2,500
10
Wife
F Bank account #...85
$1,967
11
Joint
F Bank account #...06
$9
12
Joint
F Bank account #...67
$1
13
Wife
Q Company Shares account …49 (… shares held)
$8,212
14
Wife
Q Company Shares account …49 (… shares held)
$8,704
15
Wife
R Company Restricted Stock Units – (… unvested units)
$22,942
16
Wife
CBA account #...47
$14
17
Wife
Motor Vehicle 2
$22,000
18
Wife
Loan to Ms L
$5,000
Total Assets
$2,586,639
NOTIONAL ADDBACKS
Ownership
Description
A
Wife
Shares sold post-date of separation – legal costs paid
$20,837
B
Wife
Shares sold post-date of separation – personal tax
$18,874
C
Wife
Legal costs paid from annual leave cash out
$12,048
Total Notional Addbacks
$51,759
LIABILITIES
Ownership
Description
20
Joint
F Bank Mortgage accounts #...00 and #...01
$507,189
22
Joint
F Bank Visa Card account #...62
$16,482
23
Husband
Loan to director
$124,291
Total Liabilities
$647,962
SUPERANNUATION
Member
Name of Fund
Type of Interest
26
Wife
Super Fund 1
Accumulation
$644,201
27
Husband
Super Fund 2
Accumulation
$24,193
Total Superannuation
$668,394
TOTAL NON SUPERANNUATION PROPERTY
$1,990,436
NET TOTAL SUPER AND NON SUPER PROPERTY
$2,658,830
I find that the value of the parties’ non-superannuation property is $1,990,436.
I find that the value of the superannuation property is $668,394.
The total value of the non- superannuation property and superannuation property of the parties is $2,658,830.
The total value at law of property held by the wife prior to any adjusting order is $1,684,218.50.
The total value at law of property held by the husband prior to any adjusting order is $974,611.50.
WHETHER AN ORDER ALTERING PROPERTY INTERESTS SHOULD BE MADE
I should only make orders pursuant to s 79 of the Act if I am first satisfied that it is just and equitable to do so. It must not be assumed that the parties’ rights or interests should be different to that which already exists: Stanford & Stanford [2012] HCA 52 (“Stanford”).
I find that the requirements identified in Stanford are satisfied in this matter having regard to:
·The parties in this matter, having been married and mixed their finances as a family, have now separated. It is therefore not possible for them to continue to mutually enjoy the accumulated assets. There is not and will not be a common use of the Suburb B property.
·Both parties invoke s 79 of the Act seeking orders for the adjusting of the parties’ current property interests.
·The current legal interests of the parties needing to be changed or adjusted when consideration is given to the contribution and other factors identified below.
It is therefore just and equitable in all the circumstances to make orders pursuant to s 79 of the Act adjusting the financial interests of the parties.
THE ASSESSMENT OF CONTRIBUTIONS
At the commencement of the relationship the wife was working on a full-time basis for S Company. There is no evidence as to her income at this time. She owned a motor vehicle, home contents and personal savings of approximately $10,000. The wife deposes that she “...additionally had a financial resource in shares that I had accumulated from bonuses and Employee Share purchase schemes, of unknown value”. [3] When it was put to her in cross-examination that she did not have shares at the commencement of cohabitation and had not asserted as such in her Financial Questionnaire, the wife deposed that the shares would have formed part of her asserted $10,000 “savings.” The wife bears the onus of proof. In light of the conflicting nature of the wife’s evidence as to the property held by her at the commencement of the relationship, I am unable to make a finding that she owned any shares at the commencement of cohabitation, merely that she had savings of $10,000.
[3] Wife’s Affidavit, paragraph 10.
The husband was working in maintenance for T Company earning approximately $30,000 to $40,000 annually. He owned a motor vehicle, home contents and savings of approximately $5,000.
It is uncontested that during the relationship the wife made superior direct financial contributions by way of her income, earning between $127,877 to $196,923 per annum. The husband’s income varied from approximately $50,000 to $130,000 per annum. The husband made significant contributions to the renovations to the home over a ten year period. The wife also assisted during the renovation period, including caring for the children whilst the husband was engaged. Both parties applied their income to the expenses of the household.
The parties worked in partnership and assisted each other to the best of their ability for the benefit of the household including in the care of the children and the ten-year period of renovations. The husband’s work was arranged so that subsequent to the birth of the children the wife could continue to work full-time.
Whilst there was a significant amount of evidence as to the parties’ respective contributions throughout the relationship, both parties conceded by the conclusion of the final hearing that up to the date of separation the parties overall made equal contributions and I so find.
The children have lived with the wife subsequent to separation, at which time they commenced seeing the husband two nights a fortnight. After three years this increased to four nights a fortnight. More recently it has varied from between two to four nights a fortnight, depending on the children’s schedules. It is uncontroversial that the wife’s post-separation parenting and homemaker contributions weigh in her favour and I so find.
The wife is at pains to depose as to the expenses met solely by her subsequent to separation. It is agreed that the wife made the following payments post-separation:
·$15,417 in direct education expenses for the children;
·$2,116 in family U Fund health insurance payments;
·$27,976 in family V Fund health insurance payments;
·$10,879 in council rates;
·$6,728 in electricity payments;
·$286 in internet payments;
·Gas utility payments of $286;
·$3,225 in gas payments;
·$4,984 in water rates payments; and
·$282,731 in home loan repayments.[4]
[4] Exhibit J4.
Whilst the wife’s contributions to the mortgage and payment of the Suburb B property cannot be ignored and do ultimately weigh in her favour, she has had the benefit of sole occupation post-separation, whilst the husband has lived in a granny flat and paid rent totalling some $165,000 to date.
Further, it is agreed that post-separation the wife received the sum of $80,494 from the liquidation of Q Company shares. Some of those monies were applied to the costs as set out in paragraph 82 above and thus the expenses above are not a sole contribution by the wife.
The wife has received a total of $19,719 from the husband by way of child support since separation. The wife conceded during the course of her cross-examination that her assertion that, save for the child support monies received by the husband post-separation she has solely financially supported the children, ignored that there were further expenses of the children paid for by the husband subsequent to separation including Mr P’s gym fees, the purchase of sports equipment, the costs applicable to Mr P’s major work for his HSC and Ms L’s mobile phone costs.
The wife further conceded during the course of cross-examination that Ms L is not solely financially dependent upon her, as Ms L:-
·has paid for four overseas trips for herself since the parties’ separation;
·pays for her car expenses including registration, insurance and repairs; and
·transfers money from time to time to reimburse the wife for various expenses including food, clothing, shoes and her formal dress.
It was not the subject of dispute that the husband has paid joint debts existing as at separation from his post separation income. He was responsible for paying approximately $50,000 outstanding tax owed to the ATO by E Pty Ltd, with such tax paid from his income over approximately three years post separation.
Post-separation the husband made payments totalling $12,490 to the personal loan which was taken out to facilitate renovations to the Suburb B property including building a home office. That loan was repaid in full in January 2021. The wife has continued to use this home office to her benefit post-separation to the exclusion of the husband.
The wife asserts that she has contributed to the conservation and improvement of the former matrimonial home in the post-separation period, including:
·Removing 3,000 recycled house bricks, cleaning them up and placing them in vehicles to be sold online. The husband conceded she did so;
·Landscaping the front yard including moving five tonnes of rubber and soil and redistributing it. The husband cavilled with the quantity of soil that was moved but did not otherwise object to this having occurred;
·Maintaining the gardens and lawns with the occasional assistance of son Mr P;
·Replacing downlights and exterior eaves in the home with LED downlights; and
·Attending to repairs, documentation collation and cleanup of the home following a major storm in late 2019.
The husband has also made contributions to the maintenance and improvement of the former matrimonial home post-separation, including assisting the wife with removing tree branches from the roof and securing a tarp to stop water ingress following a storm, installing wardrobes in Ms L’s room and installing a fridge into the house.
The Approach Taken
It is uncontested that as at separation the wife’s superannuation entitlement was $317,821 and the husband’s $14,330. Post-separation the wife’s superannuation entitlements has increased by $326,380 to $644,201. The wife’s employer contributions were $106,164 with the balance comprised of voluntary superannuation contributions made by her. The husband’s superannuation has increased in value by only $9,863.
The wife submits that the contributions made to her superannuation post-separation were made absent any contribution by the husband. The husband chose not to apply his income to his superannuation in circumstances where he has been attending numerous post-separation debts, including company taxes, the bank loan and the company loan. In those circumstances the wife submits that the amount by which each of the parties’ superannuation has increased post separation should be a separate pool of property (“Pool B”) and that each party should retain their own superannuation contributions post-separation. As to the remaining property of the parties (“Pool A”) the wife submits that a contribution finding of 55% in the wife’s favour should be made.
It is submitted by the wife that in the event that a global approach is taken to the assessment of contributions, the wife should receive a contribution finding in her favour of 60%. It was submitted that whilst this “might sound extraordinary after an eighteen year marriage” it must be remembered that post-separation contributions have been made for a period of six years.
The husband submitted that a global approach to the assessment of contributions is generally preferred and should be adopted in this matter. He submitted that I would find that the parties engaged in arrangements during the course of their relationship which supported the wife’s career. The husband continued to work for himself because it gave him flexibility, including that he was able to be home of an afternoon to collect and care for the children. As a result of the parenting contributions made by the husband and the husband’s form of work, the wife has been able to progress her career and earn the increasing income she has post-separation. The husband has thus contributed to the wife’s earning capacity and vastly superior superannuation entitlements. To isolate the wife’s superannuation entitlements post-separation would be to ignore the husband’s contributions to them. The husband has also made post-separation contributions of a financial, non-financial and parenting nature.
The husband submitted that I would find that overall the contributions of the parties until the date of the hearing is equal.
Both parties concede that this is a discretionary determination and particular circumstances may dictate that contributions to a particular asset or group of assets should be assessed separately.[5]
[5] Norbis v Norbis [1986] HCA 17.
Conclusion as to Contributions
This is a marriage of sixteen years with the parties making contributions during the course of their eighteen year cohabitation period. Contributions have been made for a further six years post-separation. Each party made differing contributions to the best of their ability. I accept the husband’s submission that it would be unjust to quarantine the wife’s post-separation superannuation contribution as the ability of the wife to earn a higher income and thus have higher superannuation contributions made on her behalf and by her voluntarily was in part owing to the husband’s contributions during the relationship, which enabled the wife to earn a higher income. Neither party sought in the alternative that the entirety of the parties’ superannuation property be dealt with as a separate pool to the non-superannuation property. It is therefore appropriate to assess contributions on a holistic basis with one property pool comprising both superannuation and non-superannuation property held as at the date of the hearing.
I have found that each party did the best they could to contribute to the family both financially, non-financially and by way of homemaking and parental duties during the course of the parties’ cohabitation. Both parties have to the best of their ability made financial and non-financial contributions post-separation. The post-separation parenting contributions favour the wife.
Adopting a holistic approach I assess the parties’ contributions to the non-superannuation and superannuation property of the parties as to 52.5% to the wife and 47.5% to the husband.
This equates in dollar terms to the wife receiving property to the value of $1,395,886 and the husband $1,262,944. By way of cross check, this is a differential in the wife’s favour of $132,942.
ADJUSTMENT TO THE CONTRIBUTION FINDINGS
The wife submits that a 5% adjustment to the contribution finding of Pool A should be made in her favour. In circumstances where the wife seeks the entirety of Pool B, she seeks no further adjustment. Thus on a two pool approach the wife would receive 60% of pool A and the entirety of her post-separation superannuation contributions in Pool B.
In the event the court assesses contributions on a holistic basis to one pool of property the wife submits that she should receive a further adjustment of 5%, thus receiving overall an adjustment of 65%.
The husband submits that a 5% adjustment to the contribution finding should be made in his favour, thus receiving an overall adjustment of 55% in his favour.
The wife is 51 years of age and is employed on a full-time basis as a professional for R Company. Her taxable income since separation has increased from $196,923 in 2018 to approximately $228,430 for the 2024 financial year. Her current total average weekly gross income purely from her paid employment is approximately $4,746 per week.[6]
[6] This figure includes the wife’s weekly salary and her annual variable performance bonus as deposed to in her Financial Statement filed 22 October 2024.
The husband is 48 years of age. He achieves an income from trading through the corporation. His taxable income since separation has increased from $112,523 in 2018 to $133,854 for the 2024 financial year. The husband utilises in a tax effective manner the corporation as a vehicle through which he channels his personal exertion income. Over the course of each financial year, he in reality lives out of the company, meeting some of his expenses in a tax effective way by meeting the costs of his vehicle, telephone and the like. His accountant ensures compliance with the loan accounts he builds during the year and ensures they align with revenue legislation. I further take into account the personal character of the husband’s goodwill in the corporation as part of his income earning capacity.
I find that the wife’s current income is superior to that of the husband. This factor weighs in the husband’s favour.
The physical capacity of each of the parties to continue in their current employment is the subject of contention. Both parties assert that they have health issues affecting their future capacity to work although continue at this stage in their employment.
In 2015 the wife underwent major surgery and took approximately eight weeks of leave from her paid employment. Whilst the wife deposes that she has been told by an unnamed source that she will require further surgery, I place no weight on this assertion in circumstances where the hearsay statement is not sourced and the wife’s medical evidence as to her medical issues predates her 2015 surgery.
In August 2024, the wife attended upon Dr W for review of her knee. Dr W reported that the wife had been in pain for approximately six months. He reported that the wife has difficulty with activities involving twisting and flexion such as using stairs and squatting and she finds it difficult to walk long distances. Dr W opined that the wife’s presentation and history is consistent with symptomatic knee osteoarthritis and she will likely require a knee replacement in the future.
Hopefully this can be delayed for a few years yet and she will first try a corticosteroid injection (and will see her physio). She will let me know if her pain does not improve.[7]
[7] Exhibit W5, page 81.
Dr W reports to the wife’s solicitors that the wife has only attended upon him on one occasion. He records both that the wife is likely to require a total knee replacement within the next five years and that she is likely to require knee replacement surgery “at some stage.” I accept and find that it is likely that the wife will require a knee replacement at some stage in the future. There is no evidence as to the recovery time and effect of such an operation on the wife’s ability to continue in her current position, which allows her to work from home on a full-time basis. This lack of evidence means that I am unable to make a positive finding as to the effect, if any, such likely surgery will have on the wife’s future income and earning capacity.
In 2015 the husband injured his knee which required treatment by physiotherapy and arthroscopy. In 2016 the pain in the knee worsened and he underwent further medical intervention by way of injection and corticosteroid into the joint and later injections. In 2017 the husband’s knee pain worsened and he underwent further surgery to both knees, requiring three weeks of recovery.
A letter from Dr K, orthopaedic surgeon to Dr X dated 9 August 2023 records that:
At this stage [Mr Schirmer] is struggling with respect to his knee and foot symptoms. We have discussed the high likelihood that he will require [foot surgery].
This would involve a 12 week non-weight bearing period where he would be unable to work for approximately six months. Obviously this is not the time to consider surgery though his symptoms are expected to worsen where he will need to plan for this in his future. He is also looking at knee surgery at some time.
…I have encouraged [Mr Schirmer] to continue along a conservative course for as long as possible though if symptoms start to outweigh any inconvenience of the protracted recovery involved or his work as a builder is further compromised, we can always progress to surgery. [8]
[8] Exhibit H9, page 2 as annexed to the Affidavit of Dr K filed 20 November 2024.
A letter from Dr Y, Specialist Orthopaedic surgeon to Dr X dated 15 August 2023 records that:
Unfortunately, though not surprisingly, his knees have deteriorated particularly over the last six months or so worsening with pain particularly medially in both knees…
[Mr Schirmer] has worsening osteoarthritis of both knees…If he develops significant mechanical symptoms he may benefit from further arthroscopic debridement of both knees. He will need bilateral total knee replacements down the track. It is worth trying to put these off as long as possible. [9]
[9] Exhibit H8, page 1.
I am satisfied on the medical evidence that the husband will require total knee replacements and further surgeries at some time in the future and he will not be able to work for at least 12 weeks and up to six months in his current occupation as a result. As a result of this prognosis, and the husband finding that he is no longer able to do some of the tasks required of him in his current occupation, he has investigated other avenues of employment that are not as labour intensive. I accept that whilst the husband has studied to become a builder, he has not obtained a builder’s license as he has not completed the on-the-job training; doing so would require another twelve months working at a lower paid rate. I accept and find that the husband has explored other avenues of employment including site project management and as a foreman at larger construction companies, but he does not have the required qualifications for these roles. I accept and find that the husband’s future income earning capacity is inferior to those of the wife.
Whilst both children have reached their age of majority; they continue to be financially dependent upon the wife, though Ms L does sporadically contribute financially to the household. I am unable to make a positive finding on the evidence before me as sought by the wife that it is likely that the children will continue to remain living with the wife in the foreseeable future. I thus place little limited weight on this factor.
Neither party asserts that the marriage has affected the earning capacity of the parties.
The wife asserts that the husband has commenced living with Ms Z in a de facto relationship, and that the extent of the financial interdependence of this relationship has not been disclosed. I accept the husband’s submission that the evidence does not ground a finding that the husband and Ms Z are living in a de facto relationship. I accept the husband’s unchallenged evidence that he does not contribute to any finances at Ms Z’s home, nor does she at his home. The husband during cross-examination gave frank evidence that the amount of time they spend together is dependent on what days he has the children and that it varies from week to week; on average she may stay at his house three nights per week. The wife had the opportunity to obtain further evidence as to Ms Z’s financial circumstances and issued a Subpoena to Produce Documents to her. The wife chose to not press such Subpoena when objected to by Ms Z. There is no other evidence supporting any of the factors grounding a finding of a de facto relationship as defined in the Act and accordingly I do not find that such a relationship exists.
The superannuation has been considered in a single pool of property.
The wife currently enjoys a higher standard of accommodation than the husband; she living in the house and the husband living in a rented granny flat.
I take into account that three items of property that the wife retains on the balance sheet in reality no longer exists.
Conclusion as to the Adjustment to the Contribution Finding
Having regard to all of the above I am satisfied, again adopting a holistic approach, that the husband should receive an adjustment to the contribution finding of 5%. That equates to the husband receiving a further $132,942.
JUST AND EQUITABLE
The wife will thus receive 47.5% of the superannuation and non-superannuation property; being to the value of $1,262,944. The husband will receive 52.5% of the superannuation and non-superannuation property being to the value of $1,395,886. That is a differential of $132,942.
Whilst both parties propose a superannuation splitting order from the wife’s superannuation entitlements to the husband, save for the issue as to whether the parties’ post separation superannuation entitlements would be assessed as a separate pool, neither party made submissions as to the quantum of a splitting order.
There is a significant disparity in the current value of each party’s super entitlements which is in part a product of their respective roles during the course of their relationship. The husband’s capacity to make superannuation contributions is inferior to that of the wife. I thus will make a superannuation splitting order and such split shall accord with the overall adjustment of property to the parties. The husband will therefore receive superannuation entitlements of 52.5%. The wife will therefore retain superannuation entitlements to the value of $317,487 and the husband will receive superannuation entitlements to the value of $350,907, requiring a splitting order in the husband’s favour of $326,714.
The husband seeks an order that the wife be responsible for the liability arising from F Bank Visa Card account #...62 despite this card being in joint names. Neither party made submissions on this issue. In circumstances where the wife has been paying this credit card subsequent to separation, I will make an order that the wife discharge the debt owing on such card and the parties do all things necessary to cancel the card so as to bring an end to their financial relationship.
The wife will receive non-superannuation property to the value of $945,457. The husband will receive non-superannuation property to the value of $1,044,979.
The parties will therefore receive:
NON SUPERANNUATION PROPERTY
Wife
Husband
C Street, Suburb B NSW
$2,350,000
E Pty Ltd
$117,089
CBA Account #...20
$70
CBA Account #...39
$206
CBA Account #...82
$925
Household contents at Suburb B
$5,000
Motor Vehicle 1
$40,000
Husband’s Household contents
$2,000
Camper Trailer
$1,250
$1,250
F Bank Account #...85
$1,967
F Bank account #...06
$4.5
$4.5
F Bank account #...67
$0.5
$0.5
Q Company Shares account … (… shares held)
$8,212
Q Company Shares account … (… shares held)
$8,704
R Company Shares - Restricted Stock Units – (… unvested units)
$22,942
CBA account #...47
$14
Motor Vehicle 2
$22,000
Loan to Ms L
$5,000
Total Non-Superannuation Property
$2,418,127
$168,512
NOTIONAL ADDBACKS
Shares sold post-date of separation – legal costs paid
$20,837
Shares sold post-date of separation – personal tax
$18,874
Legal costs paid from annual leave cash out
$12,048
Total Addbacks
$51,759
SUPERANNUATION
Super Fund 1
$317,487
$326,714
Super Fund 2
$24,193
Total Superannuation
$317,487
$350,907
LIABILITIES
F Bank Mortgage Account #...00 and #...01
$507,189
F Bank Visa Card account #...62
$16,482
Loan to Director
$124,291
Total Liabilities
$523,671
$124,291
NET TOTAL PROPERTY
$2,263,702
$395,128
The wife will be retaining non-superannuation property to the value of $1,946,215. She will be required to pay to the husband the sum of $1,000,758.
Standing back and looking at the distribution of assets on an overall basis, I find that this distribution achieves a just and equitable alteration of the property interests of the parties.
In the event of non-compliance by the wife of payment of the settlement sum the husband seeks an order for sale of the property and that he be paid from such sale the settlement sum owed to him with interest thereon. There is clear Full Court authority establishing a distinct guideline that, absent some special consideration, where there is to be the sale of non-superannuation property to satisfy a lump sum payment and the calculation of such lump sum arises from a finding as to the value of the property to be sold, then the amount to be paid to one or other of the parties should be expressed in percentage terms rather than by way of lump sum: Noetel and Quealey (2005) FLC 93-230.
Neither party made submissions on this issue. Both parties are legally represented and represented at the hearing by counsel well versed in this jurisdiction. I am satisfied in those circumstances that a departure from the long-standing guideline is warranted.
The husband seeks orders pending the transfer of the Suburb B property to the wife that she be responsible for and pay all outgoings with respect to the property including land tax and emergency repairs and that both parties be restrained from further encumbering the property absent agreement from the other. No submissions were made in support of or against such orders. In circumstances where the wife is responsible for the payment of the settlement sum, I am not satisfied that orders placing obligations on her pending payment of the settlement sum is warranted. I am satisfied that both parties should be restrained from further encumbering the property so as to maintain the current circumstances and so order.
Orders will be made accordingly.
I certify that the preceding one hundred and thirty-three (133) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Murdoch. Associate:
Dated: 21 January 2025
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