Seager & Nikoli
[2022] FedCFamC1F 412
Federal Circuit and Family Court of Australia
(DIVISION 1)
Seager & Nikoli [2022] FedCFamC1F 412
File number(s): SYC 8342 of 2017 Judgment of: SCHONELL J Date of judgment: 6 June 2022 Catchwords: FAMILY LAW – PROPERTY – Where both parties agreed that contributions should be assessed as to 75% to the respondent and 25% to the applicant – Where both parties contended that a 5% adjustment under s 90SF(3) of the Family Law Act 1975 (Cth) should be made in their favour – Where it was not just and equitable to make a splitting order – Where the applicant contended that the respondent had an interest in her late mother’s estate but did not discharge the onus to establish as such – Where the respondent’s assets prior to cohabitation exceeded those of the applicant – Where both parties made significant contributions – Where the respondent is the primary carer of the children post-separation – Where a just and equitable outcome for division of assets was found to be 75% to the respondent and 25% to the applicant. Legislation: Family Law Act 1975 (Cth) ss 90SF, 90SM, 106A
Family Law (Superannuation) Regulations 2001 (Cth)
Cases cited: Adamson & Adamson (2014) FLC 93-622; [2014] FamCAFC 232
Browne v Green (1999) FLC 92-873; [1999] FamCA 1483
Coghlan& Coghlan (2005) FLC 93-220; [2005] FamCA 429
Craig and Rowlands (2013) FLC 93-535; [2013] FamCAFC 45
Dickons v Dickons (2012) 50 FamLR 244; [2012] FamCAFC 154
Hall & Hall (2016) FLC 93-709; [2016] HCA 23
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143; [2003] FamCA 395
Horrigan & Horrigan [2020] FamCAFC 25
Kardos v Sarbutt (2006) 34 FamLR 550; [2006] NSWCA 11
Omacini & Omacini (2005) FLC 93-218; [2005] FamCA 195
Semperton & Semperton (2012) 47 FamLR 626; [2012] FamCAFC 132
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Welch v Abney (2016) FLC 93-756; [2016] FamCAFC 271
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Williams & Williams [2007] FamCA 313
Division: Division 1 First Instance Number of paragraphs: 96 Date of hearing: 30 – 31 May 2022 Place: Sydney Counsel for the Applicant: Mr Bennett Solicitor for the Applicant: Uther Webster & Evans Counsel for the Respondent: Mr Gardiner Solicitor for the Respondent: Allen Evans Family Lawyers ORDERS
SYC 8342 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR SEAGER
Applicant
AND: MS NIKOLI
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
6 JUNE 2022
THE COURT ORDERS THAT:
1.With 90 days of the date thereof, the respondent pay to the applicant a sum of $435,325.50.
2.In the event that the respondent fails to make the payment referred to in Order 1 within the time stipulated, then the respondent shall forthwith do all things and sign all documents reasonably necessary to sell the property at G Street, Suburb B NSW (the “Suburb B property”) for the best price reasonably obtainable and the following orders shall apply:
2.1.the respondent shall list the Suburb B property for sale with an agent within 21 days of the date of the making of these Orders (“the agent”);
2.2.the respondent shall instruct a lawyer to have carriage of the sale for the respondent within 21 days of the date of the making of these orders (“the lawyer”);
2.3.the respondent list the Suburb B property for public auction within 6 weeks of the appointment of the Agent (“the first auction”);
2.4. the reserve price for such auction shall be $2,650,000;
2.5.if the Suburb B property remains unsold after the first auction, the respondent shall do all acts and things and sign all documents necessary to immediately relist the Suburb B property for sale by public auction again, on a date nominated by the agent and at such auction there shall be no reserve price unless otherwise agreed by the parties in writing;
2.6.the respondent shall copy the applicant to all correspondence with the agent and shall authorise and direct the agent to copy all correspondence in relation to the sale to the applicant;
2.7. the applicant shall withdraw the caveat when requested by the lawyer to enable the settlement of the sale of the Suburb B property; and
2.8. the respondent shall irrevocably authorise and direct the lawyer to:
2.8.1. communicate with and provide the applicant with any update he may request in respect of the progress of the sale, inform him of any issues which have arisen and provide him with copies of the contract for sale and any proposed or final settlement statement; and
2.8.2. pay the amount to the applicant as required by Order 4.4 at the time of settlement and before any distribution to the respondent in accordance with Order 4.5.
3.Pending the settlement of the sale of the Suburb B property, the respondent shall:
3.1. pay the D Bank loan as and when it falls due and payable; and
3.2. pay all outgoings on the Suburb B property.
4.On the settlement of the sale of the Suburb B property, the respondent shall cause the proceeds of sale to be paid in the following manner and priority:
4.1. all costs and expenses of sale including legal costs and disbursements, agent's commission, marketing and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties);
4.2. the amounts required to repay the D Bank loan and discharge the mortgage;
4.3. the amounts required to pay all municipal and water rates outstanding with respect to the property;
4.4. to the applicant pay an amount calculated as follows:
$(25% x X) – Y
where:
X = the value of the total net assets and superannuation as determined by the Court plus the net proceeds of sale of the Suburb B property after the payments required by Orders 4.1 to 4.3, plus any amounts not paid by the respondent required by Order 3.
Y = $134,866.
4.5. the balance to the respondent.
5.Other than as provided for herein, the applicant be entitled to all other items of real and personal property in his possession, custody and control as at the date of these orders.
6.Other than as provided for herein, the respondent be entitled to all other items of real and personal property in her possession, custody and control as at the date of these orders.
7.Either party have liberty to apply as to implementation or enforcement of these orders upon the giving of 7 days’ written notice to the other.
8.In the event either party refuses or neglects to execute a document or deed required to give effect to these orders within 7 days of being presented with such document or deed, then pursuant to s 106A of the Family Law Act 1975 (Cth), a registrar or other officer of the Federal Circuit and Family Court of Australia be appointed to execute the said document or deed in the place of the defaulting party.
9.That pending payment to the applicant pursuant to either Order 1 or Order 4.4, the respondent be and is hereby restrained from encumbering or further encumbering the Suburb B property.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Seager & Nikoli has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings for financial adjustment under s 90SM of the Family Law Act 1975 (Cth) (“the Act”) arising out of the breakdown of the de facto relationship between the parties.
Short background
The applicant de facto husband (“the applicant”) was born in 1964 and is 57 years of age. There is no suggestion that he has any health problems. The respondent de facto wife (“the respondent”) was born in 1969 and is 53 years of age. Likewise, there is no suggestion that she has any health issues.
The parties commenced cohabitation in or about 2006, with the respondent contending that cohabitation commenced in or about December in a property she owned at Suburb R.
At the commencement of cohabitation, the respondent owned a property at Suburb R and at Suburb C, superannuation entitlements, cash, a car and contents.
There are two children of the relationship, X born in 2007 aged nearly 15, and Y born in 2010 aged nearly 12.
In or about December 2009, the respondent was posted to City E and the family, constituted then by the parties and X, moved to City E for three years.
Shortly prior to moving to City E, the respondent purchased a property in her own name at Suburb B for $899,000. The purchase price was funded, in part, by borrowings and the proceeds of sale of a property that she owned at Suburb C. It is an agreed fact in the proceedings that the net proceeds of the Suburb C property were some $252,481.21 subject to payment of capital gains tax. Whilst each of the parties concede there was an amount payable by way of capital gains tax, there is no evidence before the Court (for reasons that are unexplained) as to what that capital gains tax payment actually was.
Whilst residing in City E, Y was born and the parties returned to Australia in December 2012.
Upon the parties return to Australia in December 2012, they moved into the Suburb B property until vacating it in 2014 when the property was renovated. The renovations were funded in part from funds provided by the applicant’s mother and the proceeds of sale of the respondent’s property at Suburb R. It is an agreed fact that the proceeds of sale of the Suburb R property totalled $567,807.30. Again, like the Suburb C property, the parties agree that there was a sum of money payable by way of capital gains tax. Again, for unexplained reasons there is no evidence before the Court of what the capital gains tax was.
During the renovations, the parties resided in the applicant’s mother’s home rent free.
In November 2016, the respondent took a voluntary redundancy and as part of the redundancy, converted her defined benefit superannuation into a pension.
The parties separated in or about July 2017.
The respondent did not resume work until July 2018.
The respondent has remained living in the home at Suburb B with the children.
Final orders as to parenting were made by consent on 16 October 2020, which provide for X to spend time with the applicant in accordance with her wishes and for Y to spend time with the applicant each alternate weekend and for one half of the school holidays.
Documents relied and position of each party
The applicant relied upon the following documents:
(1)Amended Initiating Application filed 3 February 2022;
(2)Affidavit of applicant filed 26 April 2022;
(3)Affidavit of Ms F filed 26 April 2022;
(4)Financial Statement of Applicant filed 26 April 2022; and
(5)Case Outline document.
The respondent relied upon the following documents:
(1)Amended Response to Initiating Application filed 18 February 2022;
(2)Affidavit of respondent filed 26 April 2022;
(3)Financial Statement of respondent filed 26 April 2022; and
(4)Case Outline document.
In broad terms, the applicant contended for a property settlement division as to 70% to the respondent and 30% in his favour. The respondent sought to include in the pool the respondent’s defined benefit fund in the payment phase calculated in accordance with the Family Law (Superannuation) Regulations 2001 (Cth) (“the Regulations”). The respondent for her part contended that there should be an 80% split of the parties’ assets in her favour. The parties were at odds, however, as to what constituted the pool of assets.
The parties remarkably seemed to be in broad agreement that the contributions of the parties should be assessed as to 75% to the respondent and 25% to the applicant albeit against different pools. They were apart as to the appropriate adjustment, with the applicant contending that there should be a further 5% adjustment in his favour and the respondent contending that there should be a 5% adjustment in her favour for the various matters under s 90SF(3). As far as the respondent was concerned, she sought an order that would see a payment by her to the applicant of approximately $400,000.
During the course of submissions, an issue was raised with the respondent’s counsel as to the respondent’s capacity to meet orders of the type sought by the applicant in the event that the Court made an order greater than the amount sought by the respondent. The respondent submitted that if there was an order made substantially greater than proposed by her, then the balance after $400,000 should be met by a splitting order out of the pension entitlement of the respondent. The applicant, whilst initially seeking a splitting order, ultimately resiled from that position.
It is an agreed fact that the respondent’s defined benefit fund is in the payment phase and has been valued in accordance with the Regulations at $583,547. It is an agreed fact that the respondent is not able to commute that into a lump sum and that what the respondent has is an income stream.
To make a splitting order would not be just and equitable as between the parties. To make such an order would have the effect of reducing the weekly payment that the respondent receives, making her already parlous financial position as far as income versus expenses is concerned worse. There is, in the Court’s determination, sufficient property available for distribution between the parties to permit a just and equitable division without recourse to a splitting order. For these reasons, I conclude it would not be just and equitable to make a splitting order.
In my view, and for the reasons set out below, neither of the positions of the parties represents a just and equitable outcome.
There has been a complete lack of focus and proportionality brought by the parties in relation to what are relatively straight-forward financial proceedings arising out of their approximately ten-year relationship. Each of the parties’ affidavits contained irrelevant material and involved numerous criticisms of the other party for no apparent purpose.
The respondent’s affidavit comprised some 217 paragraphs of which large numbers were ultimately not read in the proceedings. It is little wonder that the respondent’s costs are almost $200,000 given the focus in the affidavit on largely irrelevant matters, which were ultimately conceded to be as such. The applicant’s evidence was not much better, with it also being replete with criticisms of the respondent.
Appraoch to property proceedings
The approach to be adopted in a financial adjustment case under s 90SM of the Act is to follow the well-recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143). Following such an approach, the Court identifies and values the assets and liabilities at the date of hearing for the purposes of division. Secondly, the Court assesses the contributions of the parties and determines a contribution based entitlement. Thirdly, the Court identifies the relevant matters under s 90SF(3) and determines such adjustment as is necessary to the contribution based entitlement. Finally, the Court considers the effect of the findings and must then determine whether the order as proposed is in all the circumstances just and equitable.
Whilst no submission was made consistent with the ratio arising out of the High Court’s determination in Stanford v Stanford (2012) 247 CLR 108, I am of the view that it is just and equitable that an order be made adjusting the property interests of the parties. The parties are no longer living together and there is no longer the common use of their property. The assumptions and undertakings that governed the use of their property ended with separation and both parties sought that there be an adjustive order.
Pool of property available for distribution
The parties were largely in agreement as to what constituted the pool of assets with a few exceptions. The pool as contended for by each of the parties is contained in Exhibit 3, and is reproduced below.
Ownership Description Applicant's value Respondent's
valueASSETS 1 Respondent G Street, Suburb B NSW ("Suburb B property") $2,650,000 $2,650,000 2 Joint Furniture in the Suburb B property $5,000 $5,000 3 Respondent CBA Account #...27 $292 $292 4 Respondent D Bank Account #...31 $6 $6 5 Respondent 2012 Motor Vehicle 1 $11,000 $11,000 6 Applicant Furniture in rental property $2,500 $2,500 7 Applicant 2015 Motor Vehicle 2 $18,000 $18,000 8 Applicant D Bank Account #...45 $891 $891 9 Applicant D Bank Account #...97 $1 $1 10 Applicant H Pty Ltd $0 $0 11 Applicant L Pty Ltd $0 $0 12 Applicant 1% interest in N Pty Ltd (100 Ord shares) $0 $0 13 Applicant Alleged interest in M Pty Ltd $0 $0 14 Applicant Alleged interest in business franchise $0 $0 15 Respondent Alleged interest in the Estate of the Late Ms J
AKA Ms Q$1,000,000
$0
16 Total $3,687,690 $2,687,690 17 ADDBACKS 18 Respondent Difference between D Bank loan balance at
separation amount owing at trial$55,590
$0
19 Applicant Interim property settlement - orders 5.3.18 $25,000 $25,000 20 Applicant Funds loaned to Mr Seager during relationship from the redraw to purchase a franchise and master franchise $0
$0
21 Total $80,590 $25,000 22 LIABILITIES 23 Respondent D Bank Home Loan Number Ending #...00 $542,488 $542,488 24 Respondent CBA Mastercard Number Ending #...79 $0 $0 25 Respondent Westpac Mastercard Number Ending #...67 $0 $0 26 Respondent Loan from Ms O $0 $0 27 Respondent Loan from Ms O to pay ATO Debt and credit
card debt$0
$0
28 Respondent Loan from Ms O and Ms K $0 $0 29 Applicant Loan from Ms F $0 $0 30 Applicant D Bank Personal Loan Number #...00 $0 $0 31 Applicant Division 7A loan from N Pty Ltd $0 $0 32 Total -$542,488 -$542,488 33 SUPERANNUATION 34 Applicant Super Fund 1 (Accumulation) $88,474 $88,474 35 Respondent Super Fund 2 (Preserved Benefit) $671 $671 36 Respondent Super Fund 2 (Defined Benefit, in payment phase) $583,547 $583,547 37 Respondent Super Fund 3 (Accumulation) $21,419 $21,419 38 Total $694,111 $694,111 39 FINANCIAL RESOURCES 40 Respondent Super Fund 2 See item 36 See note 41 Applicant Ms F NIL Not Known 42 Total $0 $0 43 SUMMARY 44 Total property 3,687,690 $2,687,690 45 Total addbacks $80,590 $25,000 46 Total liabilities -$542,488 -$542,488 47 Total superannuation $694,111 $694,111 48 Total financial resources $0 $0 49 TOTAL $3,919,903 $2,864,313
The differences between the parties arises in respect of Items 15, 18 and 36.
The applicant contended for an asset of $1,000,000 in relation to the respondent’s interest in the estate of her late mother, an addback of $55,590 for an increase in the home loan in the period post-separation, as well as inclusion of the respondent’s defined benefit fund in the payment phase.
The respondent for her part contended that there should be in essence a two-pool approach, one which included the assets and liabilities but excluded the superannuation entitlements, and that the contribution and adjustments finding should be made to the first pool excluding the superannuation entitlements of the parties.
In relation to Item 15, I am not satisfied that the respondent has an interest in her late mother’s estate. The evidence is that the respondent’s mother changed her Will in 2016 (before the parties had separated), leaving no entitlement under the Will to the respondent and instead providing that her estate be divided equally between the respondent’s two sisters.
The respondent’s evidence was clear and not impeached by cross-examination. She contended that her mother had made provision for her during the course of her lifetime, and that was the reason why there was no benefit to come to her out of her mother’s estate. The applicant called the executor of the estate by way of subpoena to give evidence. Her evidence was not impugned in cross-examination in relation to the clear intentions of the testatrix in relation to her estate. She denied there was any agreement that the respondent would receive a share of the estate notwithstanding the terms of the Will.
The applicant’s counsel submitted in some way or other, which was not clearly articulated, that the respondent has an interest in the estate of her late mother. During the course of submissions, it was initially suggested that that interest could arise under contract or alternatively under some trust arrangement. Further exploration of these propositions with counsel for the applicant provided no greater clarity as to the basis upon which it was contended there was some interest or other arising.
The applicant bears the onus of proof to establish the assertion he makes. He has not discharged that onus. I am of the view that the applicant has not established in any way, on the material before me, that the respondent’s assets are other than as disclosed by her in her Financial Statement. I am unable to make the determination sought by the applicant that the respondent has an interest in her mother’s estate at the amount as contended for by the applicant or, for that matter, at any amount.
In relation to Item 18, it is clear that the mortgage balance has increased in the period after separation. The applicant contends this should be an addback.
In Omacini & Omacini (2005) FLC 93-218, the Full Court said:
30.To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-8l6 the Full Court said at 85,262:
“11. 6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband's receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(0) to applications for settlement of property instituted under the provisions of sec 79.”
In Trevi & Trevi (2018) FLC 93-858, the Full Court observed:
27.The Full Court held in Omacini and Omacini that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
28.However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.
29.The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
30.Two fundamental premises emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(Footnotes omitted)
There is nothing exceptional about a mortgage increasing post-separation. Justice and equity can be achieved by dealing with the increase at the adjustment stage. Consistent with the observations of the Full Court, I do not propose to addback the amount contended for in Item 18, but will rather take it into account in consideration of the matters under s 90SF(3).
I do not propose to include the respondent’s defined benefit fund in the pool of assets available for distribution as between the parties. In reaching the conclusion as to the appropriate way to deal with the pension, I have had regard to the Full Court’s decision in Craig and Rowlands (2013) FLC 93-535, where their Honours said:
41. Of course, any consideration of the principles applicable should also recall the majority decision in Coghlan and Coghlan (2005) FLC 93-220 in particular the following:
• There is no mandate to include the value of the superannuation interests of the parties in the pool of assets to be divided in proceedings under s 79. The preferred approach is to prepare a list of any superannuation interests separate to any items of property. The trial judge has a discretion as to how superannuation interests will be treated; and
• Consideration must be had to the overall justice and equity of any proposed order, including the “real nature” of the superannuation interests, ie whether the superannuation represents for example a present sum or a future periodic sum.
It is an agreed fact that the respondent’s interests in her defined benefit fund had a value at the commencement of cohabitation of $150,788. As stated earlier, it is an agreed fact that the pension cannot be commuted to a lump sum payment and is an income stream payable to the respondent.
I am of the view that to properly do justice to the parties, I must take recognition of the real nature of the defined benefit payment, namely, that it is an amount determined by way of a calculation reached by application of a formula which does not take account of income tax.
If I were to include the value arrived at by application of the formula and include that in the pool of assets but leave it with the respondent, that would not be just and equitable. Nor am I persuaded that I need to make a contribution finding to the pension, but propose to take into account at the adjustment stage under s 90SF (3).
I will, however, include the other superannuation entitlements of the parties in the pool for division.
As May J observed in Semperton & Semperton (2012) 47 FamLR 626 (“Semperton”) (referring to the Full Court’s decision in Coghlan& Coghlan (2005) FLC 93-220):
82. The majority emphasised that in circumstances where superannuation interests are dealt with separately from other property, then their “real nature”, as explained by their Honours, can be taken into account at both the adjustment stage and at the just and equitable orders consideration stage:
67. If this approach is adopted, whereby superannuation interests are dealt with separately from property as defined in s 4(1), but are subject to the considerations in s 79(4), then not only will any contributions, both direct and indirect, by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account, both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.
68. When we refer to “the real nature” of the relevant superannuation interest, we are referring to the fact that notwithstanding that its value according to the Regulations may well be calculated to be a very significant amount, that superannuation interest may be no more than a present or future periodic sum, or perhaps a future lump sum, the value of which at date of receipt is unknown.
(Emphasis in original)
I also note the observations of O’Ryan and Thackery JJ in Semperton, where their Honours observed:
174. Murphy J referred to both HRDW and Trott in his judgment in Hayton (above), where he found a judicial pension to be a “superannuation interest” within the meaning of the legislation. Having carefully explained why the law now requires such an interest to be included in the property of the parties, Murphy J went on to say (at [67]):
67. Once an interest is a “superannuation interest” as defined, the court is mandatorily required to determine an amount in relation to the interests in accordance with the Regulations, if the Regulations provide for the determination of that amount in relation to the interest: s 90MT(2)(a). In the event that the Regulations do not so provide there is an alternative mandatory requirement upon the court, namely to “determine the value of the interest by such method as a court considers appropriate”: s 90MT(2)(b).
175. The mandatory requirement to which Murphy J referred arises only when the superannuation interest is to be split. That this is so may be deduced from the opening words of s 90MT(2), namely “Before making an order referred to in subsection (1)”.
(Emphasis in original)
This approach was approved in Welch v Abney (2016) FLC 93-756, where the Full Court said
61. Crucially, at [175] of their joint judgment the plurality in Semperton emphasised that the mandatory requirement expressed in s 90MT(2) of the Act to determine to an amount in relation to a “superannuation interest” as defined arises only when the superannuation interest is to be split.
Accordingly, I find the pool of assets for division between the parties to be as follows:
Ownership Description Value ASSETS 1 Respondent G Street, Suburb B NSW ("Suburb B property") $2,650,000 2 Joint Furniture in the Suburb B property $5,000 3 Respondent CBA Streamline Account #...27 $292 4 Respondent D Bank Account #...31 $6 5 Respondent 2012 Motor Vehicle 1 $11,000 6 Applicant Furniture in rental property $2,500 7 Applicant 2015 Motor Vehicle 2 $18,000 8 Applicant D Bank Account #...45 $891 9 Applicant D Bank Account #...97 $1 10 Applicant H Pty Ltd $0 11 Applicant L Pty Ltd $0 12 Applicant 1% interest in N Pty Ltd (100 Ord shares) $0 13 Applicant Alleged interest in M Pty Ltd $0 14 Applicant Alleged interest in business franchise $0 16 Total $2,687,690 17 ADDBACKS 19 Applicant Interim property settlement - orders 5.3.18 $25,000 21 Total $25,000 22 LIABILITIES 23 Respondent D Bank Home Loan Number Ending #...00 $542,488 32 Total -$542,488 33 SUPERANNUATION 34 Applicant Super Fund 1 (Accumulation) $88,474 35 Respondent Super Fund 2 (Preserved Benefit) $671 37 Respondent Super Fund 3 (Accumulation) $21,419 38 Total $110,564 49 TOTAL $2,280,766 Assessment of contribution
Much of the evidence in the affidavits was of limited assistance and much of it amounted to broad ranging submissions and criticisms of the other party’s behaviour or conduct, which was irrelevant. Its irrelevancy was highlighted by the absence of cross-examination on many of the assertions, or any submission by each of the parties’ as to its relevance.
I have, however, read all of the evidence relied upon in the proceedings including the Exhibits but do not propose to repeat all of it in these reasons. As the High Court reminds in P Pty Ltd v Dixon (2003) 200 ALR 447:
62. … A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not property considered the losing party’s case.
The assessment in a property case calls for the exercise of a discretion and a holistic value judgment of the respective contributions of the parties. The Court is required to consider all of the contributions of the parties as the Full Court in Dickons v Dickons (2012) 50 FamLR 244 makes plain:
24.…the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25.Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “giving overzealous attention to the ascertainment of the parties’ contributions” (Norbis v Norbis (1986) 161 CLR 513 at 524 ; 65 ALR 12 at 18 ; 10 Fam LR 819 at 825 ; [1986] HCA 17) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26.The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
The Full Court reminds consistently, as stated in Horrigan & Horrigan [2020] FamCAFC 25, that the proper approach to the assessment of contributions is:
35.… well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties respective contributions, in a holistic way across the course of the relationship and in the post-separation period to the point of assessment. …
Guided by such Full Court determination, I propose to assess the parties’ contributions.
There is no doubt that at the commencement of cohabitation, the respondent’s assets vastly exceeded those of the applicant. The applicant contends he had approximately $1,000 in cash savings and a nominal entitlement in relation to superannuation.
The respondent, for her part, was the owner of a property at Suburb R as well as owner of a property at Suburb C. She also had a motor vehicle, some savings and some shares. It is an agreed fact, as stated earlier in the proceedings, that her superannuation entitlements at the commencement of cohabitation had a value of $150,788. It is clear by way of measure that her assets exceeded those of the applicant.
Both the applicant and the respondent sought to attribute some value to the respective properties of the respondent at or about the date of commencement of cohabitation. I do not accept the evidence of either of them in relation to the value of the assets of the respondent at the commencement of cohabitation. I do that because neither of them have the requisite qualifications to be able to give evidence as to value but, more specifically, what is relevant is what happened to the assets owned by the respondent at the commencement of cohabitation. As the Full Court observed in Williams & Williams [2007] FamCA 313:
26.We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in so doing it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
Likewise, Brereton J sitting in Kardos v Sarbutt (2006) 34 FamLR 550 observed:
61.… If one party has a house worth $250,000 at the outset, and it appreciates during the relationship to be worth $750,000, the contribution is of a house which at separation is worth $750,000 — not of money worth $250,000.
In my view, those observations are apposite here. There is no doubt that the respondent during the course of the parties’ relationship realised assets that she owned at the commencement of the relationship. What is important in the assessment of contribution is the value realised.
As identified earlier, it is an agreed fact that the property at Suburb C was sold in 2009 and the respondent received proceeds of $252,481.21 subject to the payment of capital gains tax. These monies were applied towards the purchase of the Suburb B property. Likewise, in 2014, the respondent sold the property that she owned at Suburb R and received $567,807.30 subject to the payment of capital gains tax. These are significant financial contributions made by the respondent during the course of the parties’ relationship.
I otherwise note that the parties are significantly at odds in relation to the respective financial and non-financial, parenting and homemaker contributions that they each made during the course of the relationship. The applicant urged that I make credit findings in relation to the evidence of the respondent such that I should ultimately prefer the evidence of the applicant where it is in conflict with that of the respondent.
There is some force to the applicant’s counsel’s submissions that there were parts of the respondent’s evidence that were unsatisfactory. His written submissions record as follows:
3. The credit of the Wife is impeached to the following extent:
…
b. when challenged on certain events, and decisions of the parties the Wife was confrontational on matters that one would think would not be in dispute, such as the suggestion that taking the position in [City E] was either beneficial for her career, or came with some other benefits;
c.similarly, the wife was reluctant to accept basic uncontroversial propositions, such as that she lived within a reasonable distance from her mother;
d.other matters in her affidavit evidence, was contradicted by oral evidence in cross examination, such as:
i.the suggestion that (in her affidavit at [27]) she had met all living expenses, where it was conceded in cross examination he had met some expenses, including with money from his mother;
ii.the suggestion that (in her affidavit at [104]) that during the period in which the parties were carrying out renovations, the husband did not contribute to the care of the children or assist with household duties, where it was conceded in cross examination that he had in fact contributed to the care of the children.
Having said that, I do not make a general credit finding and prefer the evidence of the applicant on all matters to that of the respondent. I am conscious of what the Full Court said in Adamson & Adamson (2014) FLC 93-622:
89.In Carlson & Fluvium [2012] FamCA 32 (“Carlson”) at [165] to [169] Kent J made the following observations concerning the making of adverse credit findings against a parent in a parenting case:
165.As a general proposition, civil courts usually refrain from specific adverse credit findings against litigants if the disposition of the case can legitimately be achieved otherwise. There are good reasons for that approach. For example, a specific finding that a litigant has misled the court might be tantamount to a finding of perjury. Further, it can be accepted as a given that human beings have the capacity to reconstruct or rationalise or even misconstrue past events or conduct, or to engage in self-justification, particularly in recounting events in highly emotive settings or in respect of highly emotive issues. This may make the distinction between an honest, although wrong, account on the one hand, and a deliberate and calculated obfuscation on the other, difficult to draw.
166.To deny significant limitations in the capacity to use assessment of the demeanour of a witness as an entirely reliable guide to his or her truthfulness would be to deny the existence of plausible liars; or those who may be timid, uncertain or unconvincing, but nevertheless truthful, in relating events.
167.Moderation in this respect is also called for when it is recognised that adverse credit findings in arriving at a decision at first instance may present a significant hurdle to legitimate rights of review of that decision on appeal.
168.These observations apply with at least equal, if not greater, force in parenting proceedings such as these in this Court where the decision does not bring an end to the litigants’ relationship. These parties are, and will remain, the parents of D and K and adverse credit findings in this decision carry the inherent risk that, rather than bringing an end to long-standing conflictual issues, they may be embraced as vindication for the pursuit of further conflict in the future.
Whilst these observations are made within the context of a parenting case, in my view, they are apposite to these proceedings.
It is perhaps emblematic of the distrust and breakdown of the relationship of the parties that the respondent was unable to make concessions in relation to the contributions of the applicant. I am left with the view that the respondent has significantly over-stated her contributions and undervalued the contributions of the applicant.
I note that the parties are at issue about the extent of the applicant’s employment during the course of the relationship. In that respect, there was a document tendered (Exhibit 7), being a schedule of the applicant’s taxable incomes over the course of the relationship. Over the ten years his taxable income did not exceed $100,000. In many years it was modest, noting that in the financial year ending 30 June 2010 it was a little over $14,000, and in the financial year ending 30 June 2008 it was a little less than $7,000.
I also note the applicant’s evidence in his affidavit where he properly concedes that the respondent was in full-time employment and that he worked for various periods of time but was, for the most part, out of the paid workforce. The respondent is critical of the applicant in not working (perhaps as hard as she did) and the fact that he had a number of failed businesses. There is no issue that he has not been a successful businessperson. Nor is there any issue that monies have been lost in his business endeavours that would otherwise have been available to spend on the family in other ways.
That said, parties to a relationship take the good with the bad. As the Full Court in Browne v Green (1999) FLC 92-873 observed:
53.… There can be little doubt that had the Hayle project succeeded, the wife would have sought to share in the fruits of that success, and there would seem to be no reason why she would not have been entitled to do so. It is this last-mentioned consideration, being that parties generally expect to share the economic profits of a marriage, which, in our view, requires that there should be good and substantial reasons for departing from the principle that where there are economic losses incurred in a marriage, those losses should be shared, absent any negligence, recklessness or deliberate dissipation of assets by one party. No such good and substantial reasons are apparent to us in this case.
Accordingly, I find that the respondent made the far greater financial contribution by way of income earnt during the course of the parties’ relationship.
The applicant contends that he was in large part the primary carer of the parties’ children in the periods following their birth. The respondent makes little concessions in that respect. I accept some of the criticisms of her evidence as made by the applicant’s counsel. I prefer the applicant’s evidence to that of the respondent in relation to his contributions as a parent during the course of the relationship and find that the respondent has undervalued his contributions while overstating her own. I find that he did make a significant contribution as a parent towards the support of the parties’ children, noting that the respondent was for large periods of time in full-time employment.
The parties are likewise at issue in relation to the respective homemaker contributions made by each of the parties and, in that respect, I note that each of the parties made a contribution.
The parties are also at issue in relation to the contributions made by the applicant whilst the parties resided in City E. It is undoubtedly the case that a significant contribution was made by the respondent in circumstances where she was primarily the party in receipt of income in that period of time, and the parties did have the assistance of paid domestic staff. I do not, however, find that the applicant made no contribution in this period and accept his evidence that he made a significant contribution as a parent during this period of time.
The parties returned to Australia in December 2012, and in 2014 commenced living with the applicant’s mother whilst renovations were undertaken to the home owned by the parties at Suburb B. The parties are at issue as to how long they lived with the applicant’s mother. The applicant contended that it was between January 2014 and June 2015, whilst the respondent contended that it was between July 2014 and May 2015. I prefer the evidence of the applicant’s mother that the parties lived with her between April 2014 and May 2015. I accept her evidence largely because she was not cross-examined.
It is an agreed fact that whilst they lived with the respondent’s mother they were not obliged to make a contribution by way of rental payments. This rent free accommodation is a contribution by the applicant.
The parties are also at issue as to the amount of money provided by the applicant’s mother to the parties and, in large measure, in relation to the payments made on behalf of the applicant’s mother to the building costs on the Suburb B property.
In that respect, the applicant contended in his affidavit of receiving approximately $340,000 from his mother in the period between May 2014 and October 2015. The applicant’s mother was not required for cross-examination and she confirmed the payments made by her to the applicant in this period of time. The applicant further gave evidence that he paid to the respondent, or directly to contractors, the sum of $270,879. The balance of funds he contends were applied to the living expenses of the parties.
The respondent for her part, contends as follows:
107.I could not reconcile in my accounts any amounts greater than $232,000 that [Mr Seager] or [Mr Seager’s] mother has paid for various works for the renovations. There may have been some payments made directly to tradespeople that did not go through me but which were also not detailed to me. The total costs of the build was in excess of $600,000.
In circumstances whereby there is a clear concession by the respondent of at least $232,000 as well as a concession that there could have been other payments that did not go through her, I accept the applicant’s evidence that approximately $270,879 was paid from monies received by him from his mother to the renovations.
This is a significant contribution by the applicant.
Upon completion, the parties resumed occupation of the Suburb B property and in November 2016, the respondent took a voluntary redundancy. She did not resume working until July 2018.
As stated earlier, the parties separated in July 2017 and since that time, the respondent has remained in occupation of the home and been responsible for payment of the mortgage.
In the period post-separation, I accept that the respondent has played a more substantial role than the applicant in relation to the care of the parties’ children.
The applicant has paid various amounts of money by way of child support and I note that his mother has paid the school fees for X to attend S School.
Each of the parties make various complaints about non-disclosure in their affidavits but this matter was not pursued in cross-examination or by way of submission. The each made various complaints about the other, including the respondent contending that the applicant consumed alcohol to the excess. Notwithstanding this assertion, she consented to orders that the applicant have time with Y on weekends and in school holidays. Likewise, the applicant makes various complaints in his affidavit about the respondent not making a proper proposal for settlement of the proceedings. In my view, this is a matter more relevant to costs than under s 90SM.
Taking all of the above matters into account and in particular what I have referred to at [59], [68]–73], [77], and [81]–[82], and assessing the contributions in a holistic way, I am of the view that a proper assessment of the contributions of these parties during the course of this relationship and in the period post-separation is properly determined by a contribution-based finding in favour of the respondent as to 72.5% and in favour of the applicant as to 27.5%. I am persuaded that that the significant contributions of the respondent by way of her initial financial contributions of the Suburb R and Suburb C property as well as her care of the children in the nearly five years’ post-separation call for a substantial adjustment in her favour.
Section 90SF(3) adjustment
The applicant contended there should be a 5% adjustment to him, whilst the respondent contended there should be a 5% adjustment to her. The applicant contended that the relevant adjustment factors in his favour arise in the context of a disparity as to age, monies that are said to be owed to his mother, and the interest that the respondent has in her mother’s estate.
The respondent for her part contended that the 5% adjustment in her favour was warranted in circumstances whereby she has the primary care of the parties’ two children, that the eldest child spends little time with the applicant, and that she does not receive much by way of child support payments. She also contended that the applicant’s mother is a financial resource that should be taken into account under s 90SF(3).
There is no disparity as to income between the parties. According to the parties’ financial statements, the applicant’s income is $1,400 whilst the respondent’s is (ignoring child support) $1,464. Having said that, however, I take account of the applicant’s track record in relation to employment. The applicant simply does not have, consistent with the respondent’s case, a track record of consistent and stable employment.
I accept that the applicant pays a very modest amount by way of child support as determined by the Child Support Agency.
I recognise that the respondent is the primary carer of the children and that X spends very little time in the care of the applicant. I note that the respondent has the benefit of the pension payments and that the applicant made an indirect contribution to the benefits retained by the respondent in the defined benefit fund albeit recognising her initial contributions to that fund as identified at [55].
I also note that the respondent has retained the benefit of about $55,000 drawn against the mortgage post-separation, which has not been added back. I also take into account the effect of the contribution based findings.
I accept that the applicant’s mother has provided funds to him in the past. There is no evidence before me that would enable me to determine the extent of any capacity on her part to advance any further amounts to the applicant. I note the High Court observed the following in Hall & Hall (2016) FLC 93-709 in relation to a financial resource:
54. The reference to “financial resources” in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”. The requirement that the financial resource be that "of" a party no doubt implies that the source of financial support be one on which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee’s discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation.
55. Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.
(Footnotes omitted)
In light of what the High Court has said, I am not satisfied that the applicant’s mother represents a financial resource. There is no evidence that she either has the capacity to make further payments or will. Despite being available for cross-examination, no questions were asked of her.
I accept that each party will have further legal fees to pay.
Weighing all these matters in the balance, I am satisfied that a modest adjustment in favour of the respondent of 2.5% is called for on the basis of her ongoing care of the children and the modest amount of child support she receives for their care. The result is that the pool of assets will be divided as to 75% to the respondent and 25% to the applicant.
Accordingly, having regard to the pool of assets as found by me, which comprises of $2,280,766, 25% of that to the applicant is a sum of $570,191.50. The applicant has assets of $134,866, thus the respondent will be obliged to make a payment to him of $435,325.50. I propose to accede to the orders as sought by the respondent, giving her 90 days to make the payment, failing which there will be a sale of the property in accordance with the terms set out in the applicant’s Minute of Orders. The respondent consented to a restraint on her further encumbering the Suburb B property other than for the purposes of paying the applicant.
I am of the view that this constitutes a just and equitable outcome.
I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 6 June 2022
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