Sherwin and Sherwin (No.2)
[2010] FMCAfam 77
•15 February 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SHERWIN & SHERWIN (No.2) | [2010] FMCAfam 77 |
| FAMILY LAW – Property – parties’ interests in group of companies – parties’ contributions – adjustments for section 75(2) and related factors – current value of the husband’s superannuation – classification of redundancy payments – family contributions more arduous because of domestic violence – just and equitable distribution. |
| Family Law Act 1975, ss.75(2), 77A, 79, 79(1), 79(2), 79(4) |
| In the Marriage of Browne and Green (1999) 25 Fam LR 482; (1999) FLC 92-873 In the Marriage ofHickey (2003) 30 Fam LR 355; (2003) FLC 93-143 Kennon v Kennon (1997) 22 Fam LR 1; (1997) FLC 92-757 In the Marriage of Kowaliw (1981) FLC 91-092 |
| Applicant: | MS SHERWIN |
| Respondent: | MR SHERWIN |
| File Number: | MLC 1365 of 2008 |
| Judgment of: | Monahan FM |
| Hearing dates: | 16-18 June, 23-24 July 2009 |
| Date of Last Submission: | 24 July 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 15 February 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Glover |
| Solicitors for the Applicant: | David Stagg Tonkin & Co |
| Counsel for the Respondent: | Mr J. Williams |
| Solicitors for the Respondent: | Slater & Gordon Pty Ltd |
ORDERS
Within seven (7) days of the date of these Orders the wife authorise her solicitors, David Stagg Tonkin & Co, to pay the following amounts from the moneys held by them on trust for the parties from the proceeds of the sale of the former matrimonial home:
(a)to the husband the sum of $20,713 (plus 32.5% of any interest accumulated from 1 June 2009 until payment); and
(b)
to the wife the balance then remaining in the said trust account (i.e. $112,815 plus 67.5% of any interest accumulated from
1 June 2009 until payment).
Subject to the agreement of the parties to the contrary, the wife retain for her sole use and benefit the following:
(a)the Commodore vehicle;
(b)the Verticon shares;
(c)the $50,000 distributed to her pursuant to the Orders of 2 April 2008;
(d)the furniture and contents currently in her possession; and
(e)her superannuation policies
and the husband shall relinquish all right, title and/or interest that he may have in respect to any of the above and will forthwith sign any documents reasonably requested by the wife to effect this outcome.
Subject to the agreement of the parties to the contrary, the husband retain for his sole use and benefit the following:
(a)the 4WD Toyota HiLux vehicle;
(b)the camper trailer;
(c)the proceeds of sale of the XT 600 Yamaha motor bike;
(d)the $50,000 distributed to him pursuant to the Orders of 2 April 2008;
(e)the furniture and contents currently in his possession; and
(f)save as otherwise provided for in these Orders his superannuation entitlements
and the wife shall relinquish all right, title and/or interest that she may have in respect to any of the above and will forthwith sign any documents reasonably requested by the husband to effect this outcome.
The husband indemnify the wife and keep her indemnified in respect of any claims including taxation liabilities arising from the operations of and his directorship of [L] Pty Ltd, [A] Pty Ltd, [R] Pty Ltd and [C] Pty Ltd.
The husband further indemnify the wife and keep her indemnified in respect to any personal guarantees executed by him in respect of the assets of the following entities:
(a)[C] Pty Ltd;
(b)[H] Pty Ltd;
(c)[L] Pty Ltd
and any other associated entities that may have given rise to the execution of such guarantees during the course of the marriage.
The wife indemnify the husband and keep him indemnified in respect of all acts and omissions of the wife in her capacity as shareholder or director of [H] Pty Ltd, including any third party liabilities to the Australian Taxation Office.
The parties at their joint expense do all such acts and things and sign all documents necessary to dissolve and discontinue any trusts established by them and in the event that there are any assets associated therewith arising from such process then the same be divided in the percentages 67.5% to the wife and 32.5% to the husband.
The parties do all acts and things and sign all necessary documents to give effect to the superannuation splitting orders contained herein.
Orders 8 to 15 (inclusive) herein are binding on the Trustee of the [C] Superannuation Fund (“the Fund”).
The base amount of $16,709.00 be allocated to the wife out of the husband’s interest in the Fund.
Pursuant to section 90MT(1)(a) of the Family Law Act 1975 (“the Act”) whenever a splittable payment becomes payable in respect of the interest in the Fund, the wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“the Regulations”) using the base amount in Order 10 herein and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these Orders.
Order 11 herein has effect from the operative time.
The operative time for the purposes of Orders 11 and 12 herein is four (4) business days after the date of service of a sealed copy of these Orders upon the Trustee of the Fund.
That until such time as the Superannuation split to the wife pursuant to these Orders can be rolled over into a separate account to the wife:
(a)The husband shall provide to the wife no less than twenty-eight (28) days notice before such time as he elects to retire from and/or take voluntary retirement and/or for any reason accept or become entitled to access in whole or in part his entitlement in the Fund;
(b)The husband shall direct and authorise the Trustee of the Fund to communicate with the wife and/or any person authorised by the wife in writing:
(i)to answer any reasonable inquiries as may be made by her or on her behalf from time to time in relation to her entitlement in the Fund; and
(ii)to provide to the wife and/or her authorised representative a copy of any notice of any application or request by the wife which seeks release of entitlements in the Fund in so far as that release may effect the entitlement in the Fund pursuant to these Orders; and
(c)The husband by himself, his servants and/or agents be and hereby are restrained from doing any act or thing which would prevent the wife, her heirs, executors, administrators or nominees from receiving the benefits in the Fund to which she is entitled pursuant to these Orders.
In the event that the Superannuation split to the wife pursuant to these Orders can be rolled over into a separate account to the wife each of the parties hereto shall each do all such acts and things and execute all such documents as may be necessary to facilitate and to implement that rollover.
The husband is to serve a sealed copy of these Orders on the Trustee of the Fund within 7 days of the date of these Orders.
The wife shall forthwith waive any entitlement she may have in relation to holiday leave, long service leave or unpaid superannuation entitlement as may be due and owing as a result of her employment by any of the entities specified in Orders 4 and/or 5 herein.
That unless specified in these Orders and save for the purpose of enforcing any monies due under these or any subsequent Orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders, including any monies in their sole name in any bank or financial institution as well as any furnishings and household or personal effects;
(b)if applicable, any monies to the credit of the parties in any joint bank or financial institution account are to be divided between the parties in the percentages of 67.5% to the wife and 32.5% to the husband and the account closed within 14 days;
(c)insurance policies remain the sole property of the beneficiary named therein;
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which the parties are entitled pursuant to these Orders; and
(e)each party indemnify the other with respect to any debts and liabilities standing in that party’s sole name.
All extant applications be otherwise dismissed.
AND THE COURT NOTES THAT:
A.
The letter from [C] to the solicitors for the husband dated
17 December 2008 confirms that the Trustee has no objection to the making of superannuation splitting orders as proposed in the letter from the husband’s solicitors to [C] dated 17 December 2008.
IT IS NOTED that publication of this judgment under the pseudonym Sherwin & Sherwin (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 1365 of 2008
| MS SHERWIN |
Applicant
And
| MR SHERWIN |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by Ms Sherwin (“the wife”) seeking property orders against Mr Sherwin (“the husband”) pursuant to section 79 of the Family Law Act 1975 (“the Act”).
The wife’s initial application filed on 15 February 2008 sought a property settlement between the parties “as deemed appropriate by this Honourable Court”, with the wife to be “excused from further particularising her claim until the husband provides his financial information”. Within this application the wife also sought specified property orders on an interim basis. The wife subsequently filed an amended application on 16 April 2008 where she again requested a final property settlement “as deemed appropriate by this Honourable Court” but did not specify the content of any such final property orders.
The wife later filed a further amended application on 11 June 2009, where she sought, inter alia, the following final property orders:
“1. That the wife be entitled to the balance of sale proceeds from the sale of the former matrimonial home currently held in the trust account of David Stagg Tonkin & Co. in the approximate amount of $131,000 .
2. That the husband pay to the wife lump sum as deemed appropriate by this Honourable Court and/or periodic spousal maintenance, in the amount of $300.00 per week.
3. That the husband pay to the wife a payment as deemed appropriate by this Honourable Court which represents her entitlement in the husband’s business known as the [F] Group of companies.
4. That the wife be entitled to 70% of the husband’s superannuation.
5. That unless specified in these Orders and save for the purpose of enforcing any monies due under these or any subsequent Orders:
(a) Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;
(b) Each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(c) Insurance policies remain the sole property of the beneficiary named therein;
(d) Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which the parties are entitled pursuant to these Orders;
(e) Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
6. That the husband pay the wife’s costs of and incidental to this application on an indemnity basis.”
In her Minute of Proposed Orders (“her Minute”) submitted to the Court during the final hearing, the wife specifically sought to be allocated a base amount of $21,500 from the husband’s [C] Super Fund (“the fund”), and also sought to have all the husband’s interest in the joint membership and account with [omitted] Credit Union transferred to her.
By his response filed on 31 March 2008, the husband sought, inter alia, the following final property orders:
“11. That the wife shall retain for her sole use and benefit the following:
(a) The proceeds of any bank account in her name;
(b) The furniture and contents located in the former matrimonial home;
(c) Her superannuation and other employment related entitlements;
(d) And the husband shall relinquish all right and title and interest that he may have in respect thereto.
12. That the husband retain for his sole use and benefit the following:
(a) The proceeds of any bank account in his name;
(b) The furniture and contents currently in his possession;
(c) Save as otherwise provided for in these Orders his superannuation entitlements.
13. That the wife will do all things and sign all necessary documents to transfer to the husband, at his expense, all of her right title and interest in the following companies:
(a) [L] Pty Ltd;
(b) [H] Pty Ltd.
14. That within 14 days of the date of these Orders the wife shall resign as a Director of the companies and shall transfer any shareholding she holds in the companies to the husband.
15. That within 14 days of the date of these Orders the wife shall waive any entitlement she may have in relation to holiday leave, long serve [sic] leave or unpaid superannuation entitlement as may be due and owing as a result of her employment by the company.
16. That from the net sale proceeds of the former matrimonial home they be distributed so as the [sic] provide for the following:
(a) Payment of 55% of the said proceeds to the wife;
(b) Payment of 45% of the net sale proceeds to the husband.
17. That the husband, in his capacity as a Director of [L] Pty Ltd shall do all things necessary and sign all documents as may be required to transfer to the wife, at her expense the motor vehicle registration number [omitted] and the wife shall contemporaneously with the Transfer arrange for a re-finance of the Lease liability in relation to the said car.
18. That from the husband’s superannuation entitlements there be a transfer to the superannuation fund nominated by the wife so as to provide for an equalisation of the parties’ superannuation entitlements.
19. That unless otherwise specified in these Orders and save for the purposes of enforcing the payment of any money due under these or any subsequent Orders:-
(a) Each party be solely entitled to the exclusion of the other to all property (including chooses in action) in the possession of such party as at the date of these Orders;
(b) Monies to the credit of the parties in any joint bank account are to be divided equally between the parties and the account closed within 14 days;
(c) All insurance policies are to become the sole property of the beneficiary named thereunder;
(d) Each party will be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
20. That the wife pay the husband’s costs of and incidental to these proceedings.”
In his Minute of Proposed Orders (“his Minute”) submitted to the Court during the final hearing, the husband altered his position in respect of the investment monies remaining from the sale of the former matrimonial property, and now seeks $27,002 from such monies plus 35% of any interest accumulated from the time of trial to payment. In his Minute the husband also agrees to indemnify the wife in regard to a number of the companies within the [F] Group.
The parties also sought various parenting orders (details of which appear in my decision [2009] FMCAfam 777 delivered on
18 September 2009).
The matter initially came before Hughes FM on 2 April 2008 and on that occasion her Honour made various substantive and procedural orders with the consent of the parties including the following order:
“3. From the money is [sic] held in trust by the wife’s practitioners, being the net proceeds of the sale of the former matrimonial home (in the approximately [sic] sum of $230,000), there be paid to [P] Pty Ltd the sum of $8,500, and each of the parties to forthwith receive the sum of $50,000, and the characterisation of such sum (as to whether the same is by way of spousal maintenance or partial property settlement or as repayments to any and, if so, what corporate entity, or otherwise) be reserved until the final hearing of this proceeding.”
The parties attended before Registrar Moser on 12 June 2008 for a Conciliation Conference and on that occasion various orders in the nature of discovery were made by consent, including adjourning the Conference to 19 September 2008. In addition, the parties agreed that the husband’s interests in the various companies would be examined by the forensic accountant engaged by the wife, Mr M.
The matter returned before Hughes FM on 17 June 2008 and on that occasion various interim orders were made including the issuing of subpoenas to ‘[H] Pty Ltd’, ‘Mr Sherwin’ and ‘Mr A’.
On 22 August 2008 the wife filed an additional property application seeking various interim orders (in particular an injunction to restrain the husband from transferring his share in [L] Pty Ltd). This application came before Burchardt FM on 10 September 2008 and on that occasion his Honour made consent orders restraining the husband from transferring his shares in [L] Pty Ltd and reserving the question of the wife’s costs to the final hearing.
On 16 September 2008 Hughes FM made various orders including allowing the wife to issue more than five subpoenas in these proceedings. The wife ultimately filed 29 subpoenas in these proceedings. Return of subpoena hearings subsequently took place on 28 October 2008 and 5 November 2008 (before Hughes FM) and
3 December 2008, 10 December 2008, 17 December 2008 and 10 June 2009 (before myself).
The Conciliation Conference scheduled for 20 November 2008 did not proceed and was indeed vacated with the consent of both parties.
On 18 December 2008 I made final parenting orders in terms of a Minute of Consent Orders signed by the parties. These final parenting orders (in respect of one discrete issue) were subsequently varied by orders made by me on 18 September 2009. For details see my decision [2009] FMCAfam 777 also delivered on 18 September 2009.
The property matters (and one discrete parenting issue) came on for hearing before me over five days commencing 16 June 2009 (and concluding 24 July 2009).
Both parties were legally represented at the final hearing; the wife by Mr Glover of Counsel and the husband by Mr Williams of Counsel.
Relationship history
The wife was born [in] 1974 and was aged 35 years at the time of the final hearing. The husband was born [in] 1972 and is currently aged 37 years. The parties met in early 1992 and commenced cohabitation following their marriage [in] 1997.
There are three children of the marriage; namely, [X] born [in] 2002, [Y] born [in] 2003 and [Z] born [in] 2006 (“the children”).
After several years of unhappiness the parties separated on 1 October 2006 and a divorce order was made on 30 October 2008 (that became final on 1 December 2008). The children have primarily lived with the wife (and spent time with the husband) since separation.
The wife is currently in good health and is engaged in home duties including the care of the three children. The wife states in her first affidavit, at paragraph 6, that during the early stages of the relationship she worked full time. Following the incorporation in May 2005 of [C] Pty Ltd the wife states that she worked on average 50 hours per week until such time as the business moved its office from the parties’ home to its current premises in [suburb omitted].[1]
[1] Wife’s trial affidavit sworn 2 December 2008 and filed 3 December 2008 (“her first trial affidavit”) at paragraph 19.
The Husband is currently employed as a manager of [B] Pty Ltd, and during the marriage was employed in various roles in the construction and rigging industry. From May 2003 onwards the husband was, apart from a short period of unemployment in 2008, self-employed with companies within the [F] Group of Companies (detailed below).
The wife provided the Court with a detailed chronology listing significant events in the parties’ relationship. The parties were not in dispute, or not in any significant dispute, in relation to the following:
·1997: parties marry; parties purchase former matrimonial home at Property M for $125,000 (financed from joint savings of $20,000 with the balance being borrowed);
·2002: [X] born;
·2003: [C] Pty Ltd incorporated with husband and Mr A as shareholders and directors; husband and wife work for company which operates from the former matrimonial home; [Y] born;
·2005: [C] Pty Ltd moves to rented premises at [suburb omitted]; [H] Pty Ltd incorporated with wife and Mr A as shareholders and directors; [H] Pty Ltd is appointed the trustee of the [H] Unit Trust of which the [Sherwin] Family Trust and the [A] Unit Trust are equal beneficiaries; [L] Pty Ltd is incorporated with the husband as sole shareholder and director; [A] Pty Ltd incorporated with the husband as sole shareholder and director; parties purchase investment property at Property M (using borrowed funds);
·2006: [Z] born; [C] Pty Ltd goes into liquidation; [H] Pty Ltd and [L] Pty Ltd commence operation; parties sell investment property at Property M realising approximately $25,000 of which $10,000 is used to decrease the mortgage held over the full matrimonial home and the balance being $15,000 used towards renovations to the former matrimonial home; parties separate;
·2007: parties sell former matrimonial home and deposit balance of sale proceeds (being $231,266.29) in wife’s solicitor’s trust account;
·2008: wife commences family law proceedings; parties each receive $50,000 from moneys held on behalf of the parties in the wife’s solicitor’s trust account; parties divorced; [L] Pty Ltd placed into liquidation; husband receives payments from Incolink; husband commences working for [B] Pty Ltd; and
·2009: Mr A resigns as a director of [H] Pty Ltd; former matrimonial home listed for sale.
The issues
Generally speaking, the following issues were in dispute at the hearing:
·the parties’ contributions made prior to cohabitation;
·the parties’ contributions made during the relationship;
·the parties’ contributions made following separation; and
·the parties’ respective future needs and obligations.
In addition, when the hearing commenced, the parties disagreed about the current net value of the asset pool and, in particular, the value of the parties’ interest in the [F] group of companies. They were also in disagreement about the current value of the husband’s [C] superannuation.
The matter also initially involved competing parenting applications by the parties. On 18 December 2008 final parenting orders were made by consent. At the final hearing the husband, through his Counsel, made an oral application to extend the time the three children of the marriage spend with him. This oral application was supported by his affidavit sworn on 22 May 2009 and filed 11 June 2009. That application was opposed by the wife. As this was a discrete issue which the parties requested be dealt with prior to the property judgment, the Court agreed to deal with this in a separate judgment (Sherwin & Sherwin [2009] FMCAfam 777).
Evidence of the parties
Both parties provided the Court with affidavit and oral evidence. In addition evidence was given by Mr M, forensic accountant on behalf of the wife and by Mr S, accountant, and Mr A, businessman, on behalf of the husband.
Applicant wife’s evidence
The following documents were relied upon by the wife in support of her further amended application filed 11 June 2009:
· her affidavit sworn 5 February 2008 and filed 15 February 2008 (“her first affidavit”)
· her affidavit sworn 31 March 2008 and filed 1 April 2008 (“her second affidavit”)
· her affidavit sworn 28 April 2008 and filed 30 April 2008 (“her third affidavit”)
· her affidavit sworn 20 August 2008 and filed 22 August 2008 (“her fourth affidavit”)
·
the affidavit of Mr M sworn 27 November 2008 and filed
1 December 2008
·
her trial affidavit sworn 2 December 2008 and filed
3 December 2008 (“her first trial affidavit”)
·
her financial statement sworn 2 December 2008 and filed
3 December 2008 (“her first financial statement”)
·
the affidavit of Mr M sworn 9 December 2008 and filed
31 December 2008
· her further trial affidavit sworn 10 June 2009 and filed 11 June 2009 (“her further trial affidavit”)
· her financial statement sworn 10 June 2009 and filed 11 June 2009 (“her second financial statement”)
· the affidavit of Ms M sworn 20 July 2009 and filed 21 July 2009.
The wife also filed a Case Outline document on 11 June 2009. The Court notes that the wife filed a financial statement on 15 February 2008 which she did not rely upon at the present hearing.
The wife gave evidence and was cross-examined by Counsel for the husband at the hearing on 16 and 17 June 2009.
As previously stated, the wife’s forensic accountant, Mr M, also gave evidence to the Court on behalf of the wife on 17 June 2009 and was cross-examined.
Respondent husband’s evidence
The following documents were relied upon by the husband in support of his response filed 31 March 2008:
·his affidavit sworn 28 March 2008 and filed 31 March 2008 (“his first affidavit”)
·his financial statement sworn 28 March 2008 and filed 31 March 2008 (“his first financial statement”)
·
his financial statement sworn 16 December 2008 and filed
17 December 2008 (“his second financial statement”)
·
the affidavit of Mr S sworn 16 December 2008 and filed
17 December 2008
·his affidavit sworn 16 December 2008 and filed 17 December 2008 (“his second affidavit”)
·
The affidavit of Mr S sworn 10 December 2008 and filed
31 December 2008
·
The affidavit of Mr A sworn 7 December 2008 and filed
31 December 2008
·his affidavit sworn 9 December 2008 and filed 31 December 2008 (“his third affidavit”)
·his financial statement sworn 10 June 2009 and filed 11 June 2009 (“his third financial statement”)
·his affidavit sworn 22 May 2009 and filed 11 June 2009 (“his fourth affidavit”)
·his affidavit sworn 10 June 2009 and filed 11 June 2009 (“his fifth affidavit”)
The husband gave evidence and was cross-examined by Counsel for the wife at the hearing on 18 June 2009 and 23 July 2009.
As previously stated, accountant Mr S gave evidence to the Court on 18 June 2009 and 23 July 2009 and was cross-examined. The parties’ former business partner (and current employer of the husband) Mr A was made available by the husband to give evidence to the Court on
23 July 2009 and was cross-examined by Counsel for the wife.
The law – the four steps
Section 79(1) of the Family Law Act 1975 (“the Act”) provides that the Court may make such orders as it sees fit altering interests in matrimonial property. The Court’s discretion is not unlimited and must be exercised in accordance with the factors set out in the legislation and more specifically, section 79(4).
The preferred approach to the exercise of the discretion has been outlined in numerous decisions of the Full Court of the Family Court, more recently in cases like In the Marriage ofHickey (2003) 30 Fam LR 355; (2003) FLC 93-143. That approach involves four interrelated steps:[2]
·Step 1: identify and value the parties’ property, liabilities and financial resources as at the date of the hearing;
·Step 2: identify and assess the parties’ ‘contributions’ within the meaning of section 79(4)(a), (b) and (c) and determine the parties’ contribution-based entitlements expressed as a percentage of the net value of the parties’ property;
·Step 3: identify and assess the relevant matters referred to in section 79(4)(d), (e), (f) and (g) (the other factors) including, because of section 79(4)(e), the matters referred to in section 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution-based entitlements of the parties established at Step 2; and
·Step 4: consider the effects of those findings and resolve what order is just and equitable in all of the circumstances of the case.
[2] L Young & G Monahan, Family Law in Australia, 7th ed, LexisNexis Butterworths, Chatswood, New South Wales, 2009, pp.614-615.
Step 1: the asset pool
Following submissions by Counsel and questioning by the Court, the following table represents the agreed assets and liabilities of the parties (including superannuation entitlements):
Assets
Valuation
Net proceeds from the sale of the former matrimonial home
$133,528
Parties’ interest in [F] group of companies
$Not known (wife) $Nil (husband)
Amount received pursuant to order made 2 April 2008 (wife)
$50,000
Amount received pursuant to order made 2 April 2008 (husband)
$50,000
Commodore (wife)
$6,500
4WD HiLux (husband)
$4,550
Motorbike proceeds of sale (husband)
$2,000
Verticon shares
$500
Camper trailer
$4,500
Subtotal/Assets
$251,578
Liabilities
No liabilities
$Nil
Subtotal/Liabilities
$Nil
Superannuation
REST Super and [C] Super (wife)
$33,497
[C] (husband)
$76,965 (wife)[3] or $66,914 (husband)[4]
Subtotal/Superannuation
$100,411-$110,462
[3] Affidavit of Ms M, paragraph 5 (annexure “JEM2”).
[4] According to the documents accessed by the husband from [C] on 21 July 2009, the current balance estimate is $ $66,913.72 (i.e. $66,914): see exhibit “RH15”.
By the commencement of the final hearing there was no disagreement between the parties over the division of household contents, personal effects and any other personal property.
To determine the net available property pool several matters require determination:
·what is the parties’ financial interest in [F] group of companies (including assets and liabilities)?
·what is the current value of the husband’s superannuation? and
·should the husband ‘add-back’ the Incolink payments he received in late 2008?[5]
[5] This issue was raised by the parties’ respective Counsel in final submissions and was not included in the table of ‘agreed assets and liabilities’ provided to the Court at the commencement of the hearing.
Parties’ interest in [F] group of companies
This issue dominated the final hearing and indeed the numerous subpoena hearings that preceded the final hearing.
The wife commenced these proceedings not knowing the true value of the parties’ financial interest in the [F] group of companies. She did, however, believe that the parties’ interests might be substantial given the lifestyle the parties had clearly become accustomed to during the latter years of their marriage, and the fact that the business still seems to be operating albeit under the control of Mr A. By the conclusion of these proceedings, however, it was clear the parties’ interests in the [F] group of companies were negligible. While it is true that the parties invested considerable time and energy in the establishment and running of the businesses, it was their benefactor, Mr A, who had invested the necessary capital to establish and maintain the businesses.
Mr A, who presented as a fairly astute businessman, clearly envisaged a financial advantage in establishing the [F] group of companies with the parties. When it subsequently became clear to
Mr A that the businesses were not well-managed, and in financial trouble, he ended his financial relationship and took control of the situation.
In contrast to Mr A, neither the husband nor wife presented as astute business people. In his evidence the husband admitted that he was not particularly business savvy. In her evidence the wife similarly acknowledged that she was no more than the companies’ bookkeeper.
While the Court finds that the parties’ interests in the [F] group of companies are now negligible, their association certainly allowed the parties to fund a more affluent lifestyle during the latter years of their marriage (and certainly between the years 2003-2006) and possibly enabled them to retire some household debt while their income was relatively high.
One question that does arise, however, is whether one or both of the parties should shoulder any responsibility for the failure of the businesses.
In property proceedings, a party may submit to the Court that the other party has made a ‘negative’ rather than a ‘positive’ contribution to the assets thereby ‘wasting’ rather than increasing the value of the net asset pool. Negative contributions, like positive contributions, should be taken into account where relevant. The principal case is In the Marriage of Kowaliw (1981) FLC 91-092 (“Kowaliw”) where the Court determined that financial losses incurred by the parties or by either of them during the course of the marriage, where such losses result from a several or joint liability, are generally shared by the parties, although not necessarily equally.[6] In Kowaliw Baker J said that the general principle of joint liability does not apply in the following circumstances: [7]
“(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)(o) to applications for settlement of property instituted under the provisions of sec. 79.”
[6] M Broun et al (eds), Australian Family Law and Practice, CCH Australia Limited, Sydney, 2008, p. 28,794.
[7] In the Marriage of Kowaliw (1981) FLC 91-092 at 76,654.
The Full Court of the Family Court in the case of In the Marriage of Browne and Green (1999) 25 Fam LR 482; (1999) FLC 92-873 rejected the proposition that the above statement from Baker J was a principle; however the Full Court did acknowledge that it was a “well accepted guideline.” [8]
[8] In the Marriage of Browne and Green (1999) 25 Fam LR 482 at 497; (1999) FLC 92-873 at 86,360 (per Lindenmayer, Finn and Holden JJ).
Therefore, if a Court finds that a party to a marriage has wasted assets, that party may receive a lesser proportion of the net property pool or may be called to account for the loss.
The husband was quite candid in his evidence that he while he was experienced in managing construction sites, he was not particularly interested in, nor particularly astute in, the financial management of the [H] business. The wife, as indicated, gave evidence that her role in the business was in the day-to-day managing of the books of account, although this role appears to have ended by 2007. She was not the accountant for the business nor it seems particularly active outside of the office of the business. This is not a criticism because that was not her role. Nevertheless, she was and remains a director and shareholder of [H] Pty Ltd.
The demise of [C] Pty Ltd in 2005/2006 and [L] Pty Ltd in 2008/2009 does not appear to be directly related to a downturn in business activity. Rather, their demise came about because of cash flow issues. There is no evidence that these cash flow issues were the direct result of deliberate actions by either the husband or the wife, nor is there any evidence that either party, but more specifically the husband, had acted recklessly, negligently or wantonly in the management of the business. The husband was certainly late to realise that his financial management skills left a lot to be desired. Similarly, the wife’s behaviour in refusing to co-operate with, and later alienating Mr A and his partner, led to Mr A taking control of the leased ‘assets’ of [H] Pty Ltd. Both parties should shoulder some responsibility for the demise of the business that is now financially negligible in value (if not in debt).
Current value of husband’s superannuation
As stated previously, at the commencement of the final hearing the parties were in disagreement as to the relevant value of the husband’s superannuation.[9] This difference was due to the parties being given different figures from [C] just prior to, and indeed during the course of, the final hearing.
[9] Transcript, 17 June 2009, page 37 (lines 5-15).
The wife asserted that the husband’s superannuation should be valued at $76,965.28 being the value allegedly advised by [C] as at 5 June 2009. In support the wife relied on the affidavit of Ms M. Ms M is the legal secretary for the wife’s solicitor and she alleges in paragraphs 3-5 of her affidavit that she spoke to a [C] representative on 17 July 2009 who confirmed to her that the relevant figure for the husband’s superannuation is the figure [C] provided to the wife in their Form 6 superannuation information form (i.e. $76,965.28). Unfortunately, Ms M’s annexed Form 6 superannuation information form (being annexure “JEM2”) is the form relevant to the wife’s superannuation account and not that of the husband.
According to the documents accessed on-line by the husband from [C] on 21 July 2009, the current balance estimate is $66,913.72.[10]
[10] See exhibit “RH15”.
In his closing address, Mr Glover indicated that, given the confusion allegedly caused by [C], the wife was prepared to accept the figure obtained on-line by the husband (i.e. $66,913.72).[11] Given this concession, and in the absence of evidence to the contrary, the Court will also accept that valuation provided by the husband.
[11] Transcript, 24 July 2009, page 28 (lines 32-38).
Husband’s Incolink payments
This issue was raised by the parties’ respective Counsel in their final submissions and was not included in the table of ‘agreed assets and liabilities’ provided to the Court at the commencement of the hearing. The relevant Incolink documents were tendered by the husband and admitted into evidence as exhibit “RH12”.
‘Incolink’, which is the trading name of the Redundancy Payment Central Fund Limited, was established by the building industry (i.e. relevant unions and employers) to administer the redundancy funds of industry members in order to give employees security between jobs.[12] In other words, the scheme preserves a specified amount of money by employer contributions when an employee in the building industry becomes redundant so that the employee can then draw on that fund until a new job is found.[13]
[12] Transcript, 18 June 2009, page 124 (lines 26-30).
According to the Incolink claims history for the husband (exhibit “RH12”, he has received benefits at various times over a 12 year period from 5 March 1997 until 14 January 2009. Various companies and businesses have contributed payments totalling $32,264.78 during the overall claims history period with the total net amount received by the husband being $22,091.89. During the period from July 2003 until March 2006 the relevant payments into the fund were made by [C] Pty Ltd. During the period from April 2006 until August 2008 the relevant payments into the fund were made by [H] Pty Ltd. Lastly, there were two monthly payments made by [L] Pty Ltd in August and September 2008. The total amount received by the husband following the most recent demise of the [F] business was $12,471.59.
Under cross-examination, the husband admitted that his most recent drawings from Incolink were made whilst he was receiving payments from his new employment with Mr A’s business(es).[14] He also acknowledged that he did so because he was in “financial distress … I had lawyers to pay”.[15] The husband then went on to explain:
“If I just take the money and sit at home I'm not going to be able to pay these lawyers, so like everybody in our industry we draw out on these funds when we quit from a job or we get laid off from a job. You might pick up a job the next day; you still draw out from these funds and it's quite legal to do so. Everything will be put on to my taxation at the end of the year and if it adjusts my income by $10,000 it will do so and the Child Support Agency will know about it. So I can't see why it's such a big deal that I draw on these funds to actually pay back debts that I'm owing.”[16]
[14] Ibid, page 171 (lines 42-44) and page 172 (line 1).
[15] Ibid, page 172 (line 8).
[16] Ibid, page 172 (lines 8-16).
Mr Glover, in his final submissions on behalf of the wife, argued that the Incolink net payments (i.e. $12,471.59):
“… ought to be brought into the asset pool, not because it was income received because Mr Sherwin was made redundant and didn’t have employment but because it enabled him to take out capital which was able to be used for the payment of his legal fees or part thereof.”[17]
[17] Transcript, 24 July 2009, page 28 (lines 19-23).
Mr Williams, in his final submissions on behalf of the husband, argued that to include the Incolink payments as a matrimonial asset was incorrect for a number of reasons:
“… Firstly, it’s like a disability benefit. Secondly, it’s a contingency that may be drawn upon or may not be drawn upon, and it’s not an entitlement that somebody can, as it were, draw upon unless an event takes place.
It’s not like superannuation where you wait for it and you know it is there at the end. If you’re not made redundant, you can’t get it and therefore it’s inappropriate. Secondly, it’s a payment of income and it’s not a payment of capital. Unlike superannuation, which can form in terms of you can get a lump sum, agreed in some superannuation, you can get a weekly or pension entitlement but that’s, in my submission, different because you know you’re going to get it. In this case, you don’t know whether you’re going to become redundant and you may or may not draw upon it. So to include it as an asset is totally inappropriate. Further, the husband has drawn upon it in this case and that can’t be regarded as capital.
It’s got to be regarded as income and the benefit of that, the wife has achieved, because whilst he’s received it, he’s kept on paying his child support obligations which he’s obliged to make and it would be totally disingenuous for any amount of money that he’s paid because he’s been able to support himself and eat and do the ordinary things of life from that as a payment of income. To ascribe it as an asset is just, well, it’s just ill-founded and ill-conceived …”[18]
[18] Ibid, page 19 (lines 20-40).
In the absence of evidence to the contrary, it is difficult for the Court to conclude that the Incolink payments were anything else than income received by the husband, whether rightly claimed or not. Consequently, the Court agrees with the submissions of the husband on this point.
Net value of asset pool
Given the above determinations, the Court finds that the net available property pool is $251,578 (including ‘add-backs’ by the parties and excluding superannuation entitlements) and $357,075 in total (i.e. net assets including superannuation entitlements):
Assets
Valuation
Net proceeds from the sale of the former matrimonial home
$133,528
Parties’ interest in [F] group of companies
$No value
Amount received pursuant to order made 2 April 2008 (wife)
$50,000
Amount received pursuant to order made 2 April 2008 (husband)
$50,000
Commodore (wife)
$6,500
4WD HiLux (husband)
$4,550
Motorbike (husband)
$2,000
Verticon shares
$500
Camper trailer
$4,500
Subtotal/Assets
$251,578
Liabilities
No liabilities
$Nil
Subtotal/Liabilities
$Nil
Superannuation
REST Super and [C] Super (wife)
$33,497
[C] (husband)
$66,914
Subtotal/Superannuation
$100,411
Step 2: contributions
It is clear from the evidence that the parties have, throughout much of their relationship, specialised their respective roles into that of significant ‘breadwinner’ and significant ‘homemaker and parent’. This is quite a normal and sensible division of labour in our society that usually advances both the financial prosperity, and the welfare, of the couple and their children.
While there is no presumption that such specialised roles equalise for contribution assessment purposes,[19] an outcome favouring equality is not unusual in cases involving long relationships following an analysis of the evidence relevant to section 79(4)(a)-(c).[20] Of course, such an outcome may alter following consideration of the other section 79 factors, in particular section 79(4)(e).[21]
[19] In the Marriage ofMallet (1984) 156 CLR 605, In the Marriage of Ferraro (1992) 16 Fam LR 1; (1993) FLC 92-335, In the Marriage of McLay (1996) 20 Fam LR 239; (1996) FLC 92-667.
[20] In the Marriage of McLay (1996) 20 Fam LR 239 at 248-250 (per Nicholson CJ, Fogarty and Dessau JJ).
[21] Ibid, at 250.
The Court is required to consider the parties’ contributions made on and from the commencement of their relationship,[22] during their relationship, and following separation.[23]
[22] In the Marriage of Olliver (1978) 4 Fam LR 360; (1978) FLC 90-499.
[23] In the Marriage of Ferraro (1992)16 Fam LR 1; (1993) FLC 92-657.
Financial and non-financial contributions
It is clear that both parties have made financial and non-financial contributions to the acquisition, conservation and improvement of their matrimonial property. This is particularly so given their mutual investment of their earnings into their property pool and their labours associated with their conservation of the former matrimonial home.
It is also clear from the evidence that the husband, through the parties’ decision to specialise their respective roles, has been able to significantly contribute more of his income and energy into making relevant financial and non-financial contributions than that of the wife.
The wife, understandably, asks the Court to consider her own contributions, not just to the conservation and improvement of the former matrimonial home they lived in during their relationship and her contribution to the parties’ living expenses, but her own competing family contributions that act to erode the significance of the husband’s on-going financial and non-financial contributions.
Family contributions (as homemaker and parent)
As has been previously noted, in addition to her contributions made pursuant to section 79(4)(a) and (b), I am satisfied that the wife was the primary homemaker for the parties and the primary carer of the children. Consequently, I find that she has made a significant contribution to the family pursuant to section 79(4)(c).
The family contribution by the wife as the primary carer of [X], [Y] and [Z] has continued post-separation. That having been said, the husband clearly spends significant time with the children and at the time of the final hearing he was paying the wife assessed child support of $347 per week.[24]
[24] See wife’s second Financial Statement. In his second Financial Statement the husband asserts that he currently pays $348 per week.
In this case the wife also argues that her contributions under section 79(4)(c) were made more arduous because of domestic violence at the hands of the husband.[25] Although the husband was not cross-examined at any length about the wife’s allegations, he does admit that there were some ‘incidents’ between the parties.[26] The husband was not cross-examined at all in relation to any of the wife’s allegations that he denied in his first affidavit.
[25] Transcript, 24 July 2009, page 29 (lines 46-47). Also see in particular the wife’s first affidavit, paragraphs 31-32, 34 and 37.
[26] See in particular the husband’s first affidavit, paragraph 37(y).
In Kennon v Kennon (1997) 22 Fam LR 1, Fogarty and Lindenmayer JJ stated in their judgment:
“Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s 79. We prefer this approach to the concept of “negative contributions” which is sometimes referred to in this discussion.
In the above formulation, we have referred only to domestic violence…but its application is not limited to that.”[27]
[27] (1997) 22 Fam LR 1 at 24.
Later their Honours went on to make this comment:
“It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect…”[28]
[28] Ibid.
Overall the Court finds that the husband’s admitted behaviour had a minor impact in terms of making the wife’s family contributions marginally more arduous than they ought need to have been.
Global or asset-by-asset assessment of contributions
Given the length of the parties’ relationship, and its history, the ‘global’ approach to the assessment of contributions is the most appropriate to the parties’ circumstances.
Step 3: section 75(2) and related factors
The parties are both aged in their late thirties and both are currently in good health. Neither has re-partnered although the husband has a girlfriend with whom he does not live with.
As stated previously, at the time of the final hearing the wife was engaged in home duties including the care of the three children. It can be expected that the wife will seek suitable employment in the near future and particularly when [Z] commences school in 2011.
The husband is currently employed as a manager of [B] Pty Ltd (which is owned by Mr A and his life partner). It can be expected that this employment (or similar employment) will continue into the foreseeable future. That having been said, it is also clear the husband will have to bear the risks associated with his car loan guarantees.[29]
[29] See exhibit “RH14” and Transcript, 24 July 2009, page 20 (lines 1-4).
In light of the above-mentioned circumstances, the Court agrees with the submissions made by the wife that there should be a sizeable adjustment in her favour pursuant to section 75(2) and related factors.[30] As to the relevant percentage, the Court finds that an adjustment of 15% (as proposed by the husband)[31] is appropriate given all the circumstances.
[30] Transcript, 24 July 2009, page 31 (line 44).
[31] Ibid, page 12 (line 6).
Final step: justice and equity
Section 79(2) of the Act provides that:
“The Court shall not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.”
This case concerns a reasonably long marriage where the assets available for distribution are relatively modest.
Overall, the Court is satisfied that on a contributions analysis, the matrimonial property should be divided 52.5% in favour of the wife and 47.5% in favour of the husband.
In addition, as indicated above, I am satisfied that a further adjustment of 15% in the wife’s favour to reflect section 75(2) and related factors is warranted. As a result, an overall adjustment favouring the wife 67.5% to the husband’s 32.5% is just and equitable in all the circumstances.
Based on the agreed valuations and determinations made by this Court, and excluding superannuation entitlements, household contents and other personal property (i.e. $251,578), this represents an amount of $169,815 in favour of the wife and $81,763 in favour of the husband.
The principal asset for division between the parties is, of course, the proceeds of the former matrimonial home. The final payout will depend upon which party receives or retains the other relevant personal property assets. In the absence of agreement to the contrary, the wife should retain the Commodore vehicle and the Verticon shares. The husband should retain the 4WD HiLux vehicle, the camper trailer and the proceeds of the sale of the motor bike.
In relation to superannuation, there will be a superannuation splitting order in respect of the husband’s [C] superannuation entitlements (i.e. with a value determined at $66,914) that will value the wife’s interest at $16,709 and allow her to retain her current REST Super and [C] Super superannuation entitlements (i.e. with an agreed value of $33,497).
There was no apparent disagreement between the parties that, subject to a just and equitable division of the principal asset (together with the other relevant personal property assets included in the pool of agreed assets), each party should retain all the other personal property in their respective possession, including household contents and any monies standing to their respective credit in any bank or financial institution.
Conclusion
As stated, the Court is satisfied that the net available property pool (i.e. $251,578), excluding superannuation entitlements, household contents and other personal property, should be divided in percentage terms 67.5% in favour of the wife (i.e. $169,815) and 32.5% in favour of the husband (i.e. $81,763).
Subject to any agreement to the contrary, the wife will retain the Commodore vehicle, the Verticon shares and the $50,000 received pursuant to the orders made on 2 April 2008 (i.e. a total agreed value of $57,000) and the husband will retain the 4WD HiLux vehicle, the camper trailer, the proceeds of the sale of the motor bike and the $50,000 received pursuant to the orders made on 2 April 2008 (i.e. a total agreed value of $61,050). The parties’ respective shares from the payout of the principal asset will reflect this outcome and each party will be required to sign any documents necessary to effect any transfer of ownership.
In relation to the principal asset (i.e. the remaining net proceeds of sale of the former matrimonial home being $133,528) there will be an order directing the wife to authorise her solicitors to pay the following amounts from the moneys held by them on trust for the parties:
a) to the husband the sum of $20,713 (plus 32.5% of any interest accumulated from 1 June 2009 until payment); and
b)
to the wife the balance then remaining in the said trust account (i.e. $112,815 plus 67.5% of any interest accumulated from
1 June 2009 until payment).
As previously stated, and subject to confirmation by the superannuation trustee that they have been afforded procedural fairness, there will be a superannuation splitting order in respect of the husband’s [C] superannuation in the wife’s favour using the base amount of $16,709.
The Court sees no reason why it should make an order under section 77A of the Act as proposed (with variation) by both parties.
There will also be orders that each party retain all other property currently in their respective possession, free of any claim from the other. This will include the wife’s motor vehicle, monies standing to their individual credit in any bank or financial institution, and any furnishings, household or personal effects.
Each party will be required to indemnify the other with respect to any debts and liabilities standing in that party’s sole name. There will be specific orders (as proposed by the husband) in relation to the husband indemnifying the wife in relation to any claims (including taxation liabilities) arising from the operations of and the husband’s directorship of [L] Pty Ltd, [A] Pty Ltd, [R] Pty Ltd and [C] Pty Ltd. In addition, there will also be specific orders (again as proposed by the husband) in relation to the husband indemnifying the wife in relation to any personal guarantees executed by the husband in respect of the assets of [C] Pty Ltd, [H] Pty Ltd and [L] Pty Ltd, and any other entities associated that may have given rise to the execution of such guarantees during the course of the marriage.
Lastly, there will be orders of the Court to reflect this decision.
I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of Monahan FM
Deputy Associate: M. Raggatt
Date: 10 February 2010
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