Simon & Simon
[2022] FedCFamC2F 234
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Simon & Simon [2022] FedCFamC2F 234
File number(s): DNC 450 of 2019 Judgment of: JUDGE YOUNG Date of judgment: 4 March 2022 Catchwords: FAMILY LAW - alteration of property interests - where the length of the relationship is in dispute - where credibility of parties is in issue - where the husbands earning capacity is significantly more than the wife - court satisfied West & Green calculation appropriate Legislation: Family Law Act 1975 (Cth)ss 75, 79 Cases cited: In the marriage of West and Green (formerly West) (1993) FLC 92 – 395. Division: Division 2 Family Law Number of paragraphs: 38 Date of hearing: 28 February 2022 – 2 March 2022 Place: Darwin Solicitor for the Applicant: Mr Barry of Darwin Family Law Counsel for the Applicant: Mr Mort The Respondent: Appearing on his own behalf
Table of Corrections 7 March 2022 At Order 1 of the Orders and paragraph [40] the referral to ‘respondent’ has been amended to show ‘applicant’. ORDERS
DNC 450 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS SIMON
Applicant
AND: MR SIMON
Respondent
ORDER MADE BY:
JUDGE YOUNG
DATE OF ORDER:
4 MARCH 2022
THE COURT ORDERS THAT:
1.The Applicant is to provide draft orders within 14 days of the date of this order giving effect to this judgment
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 a pseudonym Simon & Simon has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Amended pursuant to r 10.14(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 7 March 2022JUDGE YOUNG
This is an application for alteration of property interests pursuant to s79 of the Family Law Act 1975 (Cth).
Background
The parties met and began a relationship in 2009. They began living together in 2009 in Darwin and married in 2010.
There is a dispute about the length of the relationship. The husband says they separated under one roof in about 2016. The wife says they separated in September 2018 when she left the former matrimonial home.
I find that the separation occurred when the wife left the former matrimonial home. I accept that the parties were unhappy for some period before this, particularly as the wife said she discovered the husband was having an affair in December 2017.
I do not accept that separation occurred in 2016 because the husband said that he continued to assist the wife in a business until sometime in 2017. He said in submissions that this was because he was "kind". I find it is inconsistent with separation in 2016 and I reject the husband's evidence on this point.
The relationship was of a duration of almost 9 years.
The wife is 41 years old and is self-employed as a tradesperson. The husband is 65 years old and is semi-retired. He is a finance professional by profession.
Credibility
I found both witnesses unpersuasive. The wife in cross-examination professed not to understand some simple questions, albeit through an interpreter, and I was left with the impression that she was not always willing to assist the Court with frank evidence. The husband's evidence was often self-serving and exaggerated. I approach the oral evidence of both parties with circumspection.
The property pool
Most items in the property pool were agreed along with their values.
There was dispute in relation to a business that the husband set up in Country B in 2020 and there were complaints about inadequate discovery or disclosure. However, given the approach I have adopted I have not found it necessary to resolve these disputes.
The background to this particular dispute is that the husband used a redraw facility to withdraw $150,000 from the parties’ joint mortgage in February 2020 in respect of the former matrimonial home in C Street, Suburb D. He did not consult the wife about this.
In July 2020 the husband received a redundancy payment of $153,125 from his employment with the Employer E. The husband did not produce any official statement setting out the components of his redundancy, despite the court requesting this of him, until after judgement was reserved. The payment was made up of accrued salary, recreation leave and long service leave and a redundancy component.
The husband prepared his own statement dealing with the redundancy payment which was primarily concerned with asserting what amounts he said should be "excluded" from the property pool. Having regard to my reservations about the husband's general credibility, I accept the start date and end date of his employment as 2003 and 1 July 2020 respectively, and the final payout figure of $153,125 but no other part of his calculation.
The husband used $60,000 of this money to reduce the indebtedness on the F Street unit owned by him. The expenditure of the balance is largely unexplained, although the husband asserted it was spent on living expenses.
The other large lump sum received by the husband was a redraw of $150,000 on the joint mortgage.
In my view both of these amounts should be treated as add-backs.
If I add back these amounts in their entirety then the amount invested by the husband in Country B in a business, and taken from the $150,000, is subsumed within that.
I should say something briefly about that business. It is, according to the husband, a small retail business, in City G, Country B. The husband said it is 50% owned with a partner, Ms H, who I assume is a Country B citizen. There is no evidence about what capital, if any, Ms H invested in the business. The husband said he helped set up the business, developing the accounting and other systems and during 2021 worked in the business without salary because of restrictions on employment of non-citizens in Country B. He said he is entitled to dividends from the business. There is no evidence about its profitability. The one tax return in evidence for the business showed a modest loss. The husband is, however, clearly committed to the business and believes it will be profitable.
The overall level of the husband’s investment in this business is unclear but would appear to be in the order of $200,000.
The parties also incurred legal fees. The husband spent some $43,000 on legal fees. This appears to have come from matrimonial capital accrued during the relationship and ordinarily should result in add-back. The wife's legal fees to trial were $45,000 with an expected further amount of $52,000. The evidence of the wife about the source of her paid legal fees was unsatisfactory. I was told from the bar table that $13,000 came from her superannuation but the source of the balance was unclear. In the circumstances, I do not propose to add-back legal fees for either party, although I take those matters into account.
There were other minor disputes about amounts in the bank, which ought to have been easily agreed but were not. I have selected the most likely number.
There was a dispute about the value of the contents of the former matrimonial home. The husband asserted that he owned the contents before the relationship and refused to put a value on them. In cross-examination he conceded that many of the contents had been replaced or renewed during the relationship. I am satisfied that a figure should be allowed for contents.
The husband also claimed he owed $10,000 to his sister. There is no evidence about this and I will exclude it.
The balance sheet thus appears as follows:
Description Wife Husband Totals Assets 1 C Street, Suburb D $342,500 $342,500 $685,000 2 F Street, Darwin $520,000 3 Westpac Choice Acc $6,366 4 Husband’s household contents $10,000
5 Wife’s household contents Negligible
6 Husband’s Motor Vehicle 1 $5,000 7 Wife’s Motor Vehicle 2 $2,000 8 Sale of fridge and bain-marie $1,250
9 Wife’s bank account $2,258 10 Husband’s business in Country B – value asserted by husband $41,385 Add backs 11 Redraw by husband from joint mortgage account (less value of business in Country B) $150,000
($41,385)12 Husband’s redundancy payment, LSL and recreation leave (less $60,000 payment to F Street mortgage) $93,125
Total assets $348,008 $1,126,991 $1,474,999 Liabilities 1 Westpac loan for C Street, Suburb D $95,013
$95,013
$190,026
2 Westpac Loan for F Street $654,594
3 Husband’s rates etc. $4,224 Total Liabilities $95,013 $753,831 $848,844 Net assets $252,995 $373,160 $626,155 Superannuation 1 Husband’s Super Fund J $657,112 2 Wife’s Super Fund K Negligible Total Superannuation Negligible $657,112 $657,112 Total assets and superannuation $252,995
$1,030,272
$1,283,267
Contributions
At the time the parties began their relationship the husband had concluded a property settlement with his former wife. He said that the property at C Street, Suburb D, which is now jointly owned by the husband and wife, had a value of $420,000 agreed between him and his former wife. He said that after the settlement he had equity in the property of $70,000. There was no independent evidence about this although it was not challenged by the wife.
Much of the value of the C Street, Suburb D property reflects capital appreciation. The property is jointly owned and subject to a joint mortgage. Some allowance ought to be made for the husband's initial equity in the property but other than that I am satisfied that there was an equal contribution to the acquisition of the former matrimonial home, including the amount of the redraw by the husband.
In relation to the redundancy payment, according to the statement from the Employer E, the accrued salary, recreation and long service leave constituted $44,343 and the redundancy component $108,782 of the payment. The great bulk of the first component was accrued during the relationship. It is not entirely clear how the redundancy component was calculated but I accept that it was probably largely based on length of service. The statement provided by the Employer E on termination of the husband’s employment included a component of 33.33 weeks of salary included in the redundancy which I find probably reflects a length of service formula. Counsel for the wife submitted that it was amenable to a West & Green[1] calculation, that is, the years of relationship divided by years of relevant service multiplied by contributions. Using this approach I find the contribution of the wife to the redundancy payment was approximately 30%.
[1] West and Green (formerly West) (1993) FLC 92 – 395.
The husband also asserted that he had a car at the commencement of the relationship on which he had spent $25,000. This car is evidently the one in the balance sheet said to be worth $5,000.
Taking these matters into account I find that the contribution of the wife overall to non-superannuation assets was 40% and the husband 60%. This equates to a payment to the wife of $250,462 should the husband wish to retain the C Street, Suburb D property.
There was an assertion by the husband that the wife owned or controlled property in Country L. The evidence about this issue was unsatisfactory. The wife said that she had spent two amounts, $18,000 and $4,000, in Country L to purchase two vacant pieces of land, one large and one smaller. She admitted that there had been plans drawn up to build shops and a residence on the larger block. There was no further evidence about this and no valuation was provided. The wife provided what was said to be certificates of title from Country L for both properties, showing the titles were held by her sister. These documents were not translated into English and I held them to been inadmissible. I am not satisfied the wife has no interest in those properties but I am unable to quantify her interest.
Another issue the parties raised was their respective travel expenditure. In the case of the wife, this was for travel to Country L, and in the case of the husband, for travel for sporting events to Asia. I am not satisfied that any contributions adjustment is required because of these issues.
Superannuation
Counsel for the wife proposed a West & Green calculation in relation to superannuation and I accept that is appropriate in this case. There were approximately nine years of relationship during which contributions were equal and 17 years’ contribution to the fund by the husband. The calculation is thus 9/17 x .5 x $657,112 which equals $173,941 or 26.5% of the husband’s superannuation fund.
Section 75(2) Factors
The husband is 65 years old. The husband is a finance professional and he was employed in the Employer E for 17 years. When he left the Employer E he was earning about $151,000 a year. He is currently engaged in establishing a business in Country B. He said he hopes to earn an income from that business but without necessarily being involved on a day-to-day basis. There was no evidence about the likely profitability of this business. The only tax return in evidence showed a modest loss. Nevertheless, the husband has sunk in the order of $200,000 into the business and I assume he has done so in the expectation that it will be profitable. In any event, I am satisfied that the husband has significant earning capacity if he were to engage in his profession. He said, and it was conceded by the wife, that he has health problems: atrial fibrillation, Type 2 diabetes and an enlarged prostate. There is no evidence that any of these conditions affected his earning capacity.
The wife is 41 years old. She has limited skills. She has a certificate in hospitality. She earned $29,000 and $30,000 in 2012 and 2013, respectively, when she was employed in hospitality and as a shop assistant. She earned significantly less in following years, but they were years when she operated a business with the husband. In 2020 she earned $17,538. The husband asserted that the wife's income was understated and he claimed it was about $25,000.
The wife's evidence about her earnings was unsatisfactory and unpersuasive. In any event, I am satisfied that if she were to work in hospitality or as a shop assistant she could earn in the region $30,000 a year or more. She complained of some physical restrictions but there was no evidence of that.
I consider the husband's earning capacity, should he choose to exercise that earning capacity, is about three times that of the wife, although the period in which he is likely to be gainfully employed is much less.
There will be orders that the husband is to pay the wife $250,462 within 60 days, and obtain a discharge of her mortgage liability upon which she will provide a transfer of her interest in C Street, Suburb D. If the husband is unable to refinance the property and pay the wife the C Street, Suburb D property is to be sold by private treaty. If it is not sold within 90 days of being listed for sale the property is to be sold by auction. If the C Street, Suburb D property is sold the amount to be paid to the wife is 40% of the sum of the net proceeds of sale of C Street, Suburb D and the value of the other items in the balance sheet constituting the net assets of the parties at the values appearing in the balance sheet.
There will be a super splitting order, subject to procedural fairness being given to the trustee, with a split of 26.5% to the wife. The current flagging order is to remain in place until the split is effected.
The effect of the proposed orders is as follows:
Description Wife Husband Totals Assets 1 C Street, Suburb D $685,000 $685,000 2 F Street Darwin $520,000 3 Westpac Choice Acc $6,366 4 Husband’s household contents $10,000
5 Wife’s household contents Negligible
6 Husband’s Motor Vehicle 1 $5,000 7 Wife’s Motor Vehicle 2 $2,000 8 Sale of fridge and bain-marie $1,250
9 Wife’s bank account $2,258 10 Husband’s business in Country B – value asserted by husband $41,385 Add-backs 11 Redraw by husband from joint mortgage account (less value of business in Country B) $150,000
($41,385)12 Husband’s redundancy payment, LSL and recreation leave (less $60,000 payment to F Street mortgage) $93,125
Husband pays Wife $250,462 ($250,462) Total assets $255,970 $1,219,029 $1,474,999 Liabilities 1 Westpac loan for C Street, Suburb D $190,026 $190,026
2 Westpac Loan for F Street $654,594
3 Husband’s rates etc $4,224 Total Liabilities Nil $848,844 $848,844 Net assets $255,970 $370,185 $626,155 Superannuation 1 Husband’s Super Fund J $657,112 2 Wife’s Super Fund K Negligible Super split $173,941 ($173,941) Total Superannuation $173,941 $483,171 $657,112 Total assets and superannuation $429,911 (33.5%)
$853,356 (66.5%)
$1,283,267
The applicant wife is to provide draft orders within 14 days giving effect to this judgment.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Young. Associate:
Dated: 7 March 2022
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