Snider and Snider
[2017] FCCA 1879
•22 August 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SNIDER & SNIDER | [2017] FCCA 1879 |
| Catchwords: FAMILY LAW – Property – consideration of contributions and s.75(2) factors – income discrepancy after long marriage – 15% adjustment to the wife – consideration of entitlement to spousal maintenance. |
| Legislation: Family Law Act 1975 (Cth) ss.75(2), 79, (1), (2), (4) (d)-(g) |
| Cases cited: Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FLC93-143 Stanford v Stanford (2012) 247 CLR 108 Fielding & Nichol [2014] FCWA 77 |
| Applicant: | MS SNIDER |
| Respondent: | MR SNIDER |
| File Number: | HBC 873 of 2014 |
| Judgment of: | Judge McGuire |
| Hearing dates: | 3, 4 & 5 July 2017 |
| Date of Last Submission: | 5 July 2017 |
| Delivered at: | Launceston |
| Delivered on: | 22 August 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr M. Foster |
| Solicitors for the Applicant: | Murdoch Clarke |
| Counsel for the Respondent: | Mr M. Verney |
| Solicitors for the Respondent: | Matthew Verney Lawyers |
ORDERS
That the husband forthwith authorise the (omitted) Family Trust (“the trust”) and/or the company Company A (“the Company”) to pay to the wife all arrears due and owing under Order No. 2 of the Consent Orders of 4 September 2015.
That unless agreed in writing, within fourteen (14) days of the date of these Orders the parties jointly obtain a market valuation price of the (omitted) motor vehicle in the possession of the husband but being the property of Company A and the husband retain that vehicle at value for the purposes of these orders and that the husband retain the vehicle and any attached liability personally from the date of these orders and for these purposes the parties authorise the trust or the company to effect the transfer to the husband as of the date of these orders.
That the tangible assets of the parties pursuant to the findings in the reasons herein be divided as to sixty-five (65) percent to the wife and thirty-five (35) percent to the husband and also pursuant to the consent orders for the sale of assets made 30 May 2017 and for these purposes each party retain to the exclusion of the other all items of personalty, motor vehicles, balances of personal bank accounts and like investments currently in the possession, control or to the benefit of that party.
That each party be solely responsible for and indemnify the other in respect of any and all liabilities incurred by that party since separation in either joint names or in that party’s name alone.
That each party be solely responsible for and indemnify the other in respect of any liability attaching to any asset retained by that party pursuant to these orders.
That the corpus of the parties’ self-managed superannuation fund known as “Snider Superannuation fund” be forthwith divided equally between the parties on terms as agreed and that the parties or either of them have liberty to apply as to the implementation of this order.
That the interim orders of 4 September 2015 remain in full force and effect until the sale of the business and real estate pursuant to the orders of 30 May 2017 and hence until the execution of Order No. 3 herein, in respect of orders No. 2, 3 (b-g), 7, 8, 14 and 16 and in all other respects the orders of 4 September 2015 be dismissed provided that the parties or either of them have liberty to apply in respect of the variation or discharge of this order.
That there be liberty to the parties or either of them to apply in respect of the sale of real property or the business pursuant to the consent orders of 30 May 2017.
That the wife’s application for spousal maintenance be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Snider & Snider is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT HOBART |
HBC 873 of 2014
| MS SNIDER |
Applicant
And
| MR SNIDER |
Respondent
REASONS FOR JUDGMENT
Applications
In this matter the wife is the applicant. She seeks orders for property settlement whereby she receives 65% of both tangible assets and superannuation. She also argues for spousal maintenance in a quantum of $1,000 per week to be paid on an ongoing basis or, in the alternative, lump sum spousal maintenance of $100,000. Finally, the wife seeks an order effectively being an enforcement order in respect of payments due and owing to her of $1,500 per month made as an interim order by consent in September 2015. Those orders permitted a payment to the wife from a business that the husband continued to operate. It is agreed that the payments have not been made since about September 2016.
The husband opposes any spousal maintenance order. He proposes property settlement orders whereby he retains 55% of the net tangible assets and the parties each retain their current entitlements under a self- managed superannuation fund which, on the material before me, and on the husband's own case as to those entitlements, would give him approximately $245,000 and the wife approximately $146,000 in superannuation.
Background
The wife is 57 years of age. The husband is 56 years old.
The parties married 1985. They separated under the one roof in about December 2013. The wife left the former matrimonial home on 12 February 2015.
There are three adult children of the marriage.
Both parties are qualified as (occupation omitted). They have both historically worked in that field. On 26 March 1990 they commenced practice together in a business known as [Company A business]. The business operates under the umbrella of a family trust and trustee company.
In about 2008 the wife suffered an injury to her arm which has effectively prevented her working in her profession since at that time. She has since 2008 received AMP Income Disability Insurance which currently grosses her $60,000 – $65,000 per annum and is CPI indexed. She has that entitlement until the age of 65 years.
After incurring her injury, the wife took a greater role in the management of the business, its book work, and in also managing the parties’ investment property at Property B. However, from about April 2015 the wife has not managed the (omitted) business. The husband has remained self-employed in that business. She says that the husband effectively 'locked her out' after a dispute on the premises. He admits the dispute but says that the wife has not asked for a key to the new locks. The wife has continued to manage the investment property.
There is no evidence before me that either party has re-partnered to the extent of financial responsibility or dependency.
The husband remains living in the former matrimonial home at Property A. The wife initially rented a three-bedroom property but now lives in a rented studio apartment.
The parties entered into interim consent orders on 4 September 2015 which provided inter alia for a payment to the wife of $6,000 to be later categorised together with ongoing payments of $1,500 per month. These payments were to be authorised out of the business. Those same orders saw the husband receive $1,680 per week plus payment of the mortgage and insurances for the jointly owned home in which he continued to reside.
These parties agreed by a consent order made in May 2017 for the sale of the following although there is no evidence of any pending or prospective sale of any entity:
a)The former matrimonial home at Property A;
b)The investment property at Property B, and
c)The business operating under the umbrella of Company A and its assets.
The Wife's Case
The wife argues that the marriage was a long one and that the parties’ contributions have been equal according to their relative capacities. She says that she has been prevented by the husband from managing the (omitted) business. She says that she has, however, contributed her AMP disability income to the benefit of the marriage firstly into the general revenue of the household and, more lately, to her own support.
The wife argues that the husband has retained the substantial financial benefit from the business which they created together to become a successful enterprise.
The wife says that there should be an adjustment to her of 15% of the property on account of section 75(2) considerations. She says that the husband has a far greater earning capacity than does she by reason of her injury and her income being limited to the quantum of her AMP policy. She says that the income from the business until its sale would bring the husband in excess of $250,000 per annum.
Similarly, the wife seeks an order for spousal maintenance. She says that relative to the husband she is in a disadvantaged position in
re-establishing herself from this marriage. She says that the husband will retain the substantial income of the business or, in any event, the capacity to earn a substantial income from his profession. She is prevented from pursuing her same profession by reason of her injury.The wife says that orders made by consent in September 2015 provided inter alia for her support in the sum of $1,500 per month. She says that the husband has not made these payments since about September 2016. She says that the orders remain in full force and effect and she asks for her entitlement for that period.
The Husband's Case
The husband argues that he should receive 55% of the net tangible assets by reason of his greater contribution since separation. He says that he has continued to work the business. The husband says that by his labours he has maintained the value of the business for the benefit of the parties. He says that consideration of the parties financial positions after a contribution-based distribution of their assets should result in no further adjustment on account of the s75(2) considerations.
The husband seeks orders for the distribution of the funds in the self- managed superannuation fund according to the paper-value of their entitlements.
The husband says that the wife has an income from her AMP insurance and will be able to meet her own reasonable needs. In any event, he says that upon the sale of the (omitted) practice, his income being likely to come from employment as a (omitted) will be substantially less than his current benefits from the business.
The husband says that the wife should not be entitled to any arrears flowing from the orders of September 2015 for her 'maintenance'. He says that, mistakenly, he paid a taxation bill for the wife for the years 2014/2015 and 2015/2016 and that these payments have been 'set off' against the wife's monthly entitlements pursuant to the orders. He concedes that he has not met the Court ordered payments since September 2016 but says he acted on the advice of his accountant.
The Issues
The major issues between these parties can be isolated as follows: -
a)The husband says that an amount of $6,000 should be 'added back' to the property pool. By the orders of September 2015 the wife received a lump sum of $6,000 such to be 'categorised' by the trial judge;
b)The husband argues that a sum of $47,100 be added back to the property pool. This is the total of withdrawals made by the wife unilaterally from the parties’ self-managed superannuation fund;
c)Whether the wife's paid legal costs in a sum of $27,000 be added back to the pool;
d)Whether the husband should receive a loading or adjustment in his favour of 5% or at all on account of superior contributions made post-separation;
e)Whether the wife should receive a loading of 15%, or at all, after consideration of the relevant section 75(2) factors;
f)Whether the wife has an entitlement to spousal maintenance in a quantum of $1,000 per week or at all; and
g)Whether the Court should enforce the payment of arrears of distributions payable to her at $1,500 per month by reason of orders of 4 September 2015 such not being paid since about September 2016.
The Evidence
The wife adduced evidence from Mr R who is a (location omitted) accountant. Mr R has provided a valuation on the business, Company A he also offered comment in respect of the earning capacity of the husband should the business be sold. Mr R was not required for cross-examination.
Mr R valued the business at $200,000 and the parties now agree this value.
At [26] – [29], Mr R deposes:
26. The business conducted by the trust can be described as:
· A successful professional practice that is significantly dependent upon the skill and competence of the practitioner, Mr Snider.
· In addition to the application of his professional skills Mr Snider is required to oversee all aspects of the business including administration, marketing, employment issues and other such matters.
27.Mr Snider works outside of normal hours required by a person solely employed as a practitioner and carries all the personal liabilities that attach to his business.
28.I have not been able to identify any publicly available detail on trades that have occurred with (omitted) practices in Tasmania. I have been provided with some anecdotal evidence of trades in Tasmania, however without full detail of each transaction and circumstances surrounding each transaction I cannot rely on this anecdotal evidence.
29.Due to the fact there is no readily identifiable market for trade of (omitted) practices upon which a market valuation could be determined (as say in the case of (omitted) practices) I have determined that it is appropriate to value the business based upon the following assumptions:
· Mr Snider is currently 55 years of age and it is his intention to continue to operate the business for several years into the future.
· I observe that whilst Mr Snider operates the business the business is capable of earning a profit and resultant cash flow above what would be the fair and reasonable remuneration for a practitioner of his calibre. I will call the profit in excess of commercial wage practice profit.
· I have investigated what a senior practitioner may be paid within the Government sector. I have determined this to be a salary of approximately $100,000 plus superannuation for full time employment. I have deemed that for the additional work load, responsibility and liability for running a practice a fair salary compensation for Mr Snider effort would be 50% premium on that salary paid to a Government employed practitioner. IE $165,000 including superannuation.
· I have reviewed the earnings of the Trust for the period 2012-2015 inclusive adding back all salary and superannuation payments made to Mr and Mrs Snider and adjusting for other non-commercial or abnormal items.
· I have calculated that the average annual profit earned before adjustment for a commercial salary is $290,000. I have no reason to believe that the trust will not earn a similar profit into the future.
· I therefore have deemed that the profit that can be earned by the trust after commercial salary to Mr Snider into the future (ie practice profit) to be $125,000 (ie $290,000 - $165,000).
· I acknowledge that Mr Snider is currently 55 years of age and I have deemed that Mr Snider could be reasonably expected to work in this business at his current pace for a further seven years.
· At the termination of seven years I have assumed Mr Snider may be able to dispose of this business for come goodwill payment. Given his age and expectation of retirement for the purposes of this valuation I have deemed the payment would be entirely in the nature of a goodwill payment and not a restriction of trade. I have surmised that any goodwill plus the value of plant and equipment for the practice in seven years time would be no more than two years of practice profit (ie 2 x $125,000 = $250,000).
· I acknowledge that the achievement of the above outcomes is speculative and dependent upon economic conditions within that business sector, Mr Sniders’ health and the uncertain possibility of an end buyer. I therefore consider an appropriate discount factor to recognise the risk of the above being achieved is 30% per annum.
· I acknowledge that the business does own an asset being the (omitted) motor vehicle being driven by Mr Snider. I am aware that Mr Snider is required to visit (omitted) on a weekly basis. I therefore include the motor vehicle and its attaching finance debt as an essential asset of the business.
Mr R at [32] acknowledges that there is a loan account due to the (omitted) Bank of $113,406 as at 30 June 2015. Mr R assumes that the loan will be paid off progressively over the seven years of the continuance of the business.
Both parties gave evidence and were extensively cross-examined. They each relied on their trial affidavits and sworn financial statements. I found both parties to be candid and honest witnesses.
On occasion the husband, again candidly, deferred to the wife as having a greater role in the financial management of the parties’ business and personal accounts during the course of the relationship and hence having a superior historical recall in respect of financial matters.
Relevant Law
Matters of property settlement are dealt with under section 79 of the Family Law Act (1975) (‘the Act’) where s79(1) provides that in property settlement proceedings, the Court may make such order as it considers appropriate altering the interests of the parties in property.
Whereas previously it was thought well settled that trial judges were to follow a rigid four-step approach to a consideration of interests and alteration of interests in property[1], the High Court in Stanford v Stanford[2] made it clear that the consideration under s79(2) as to whether it be just and equitable to make any alteration of property interests is a preliminary question for the Court and one not to be simply conflated with the considerations of contributions under s79(4). As their Honours said at [40] …
… the question of whether it is just and equitable to make a property settlement order should not be answered by starting with an assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s79(4). The power to make a property settlement order must be exercised in accordance with legal principles, including the principles which the Act itself lays down. To conclude that making an order is 'just and equitable' only because of and by reference to various matters in s79(4), without a separate consideration of s79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
[1] Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FLC93-143
[2] Stanford v Stanford (2012) 247 CLR 108
Nevertheless, their Honours in Stanford also recognised that pragmatically the question under s79(2) is often easily answered and whilst contributions are not a necessary or determinative answer to the s79(2) question, it is clear that such contributions can be a factor in the decision and as noted by Thackray CJ in Fielding & Nichol[3] as follows:
The fact that the 'two inquiries' under s79(2) and s79(4) are 'separate' and 'not to be merged’ also does not mean, as a matter of logic, that matters arising under s79(4) can be ignored when deciding whether it is just and equitable to make any order adjusting existing interests. The provisions of s79(4) encompass what Finn J in Bevan & Bevan described as 'the parties’ financial history (i.e. their contributions) and their present circumstances and future prospects….
[3]Fielding & Nichol [2014] FCWA 77 at [42]
In the matter now before me the parties’ relationship has clearly ended. It was a relatively long relationship. The parties jointly acquired property now registered in their joint names as well as business interests. The parties each made significant and varied contributions to that property. In such circumstances, I am easily satisfied that it is just and equitable to alter those interests.
Consequently, the task for the Court is to firstly establish the content and value of the property pool. Property is inclusive of assets, liabilities, financial resources and, for these purposes, superannuation is to be 'treated as property' although it is often prudent and permissible to proceed on a 'two pool’ basis of tangible assets and superannuation interests.
Having determined that it is just and equitable in the circumstances of this case to consider altering the parties interests in property, I must then consider the contributions to the attaining, maintaining and improvement of the contents of the property pool be those contributions direct financial, indirectly financial or non-financial ones including as homemaker and parent.
After considering the contributions, I am then to determine whether it is appropriate, just and equitable to make any further adjustments of entitlement of either party after circumstantial reference of the numerous factors set out in s79(4)(d)-(g) of the Act including any relevant considerations under s75(2).
Property Pool
The parties disagree as to the following in respect of the property pool:
i)The wife received $6,000 by interim orders of 4 September 2015. The categorisation of those monies was to be determined by the trial judge. At this time the husband was receiving business income of $1,680 per week plus financial benefits from the business. Mr R corroborates a substantial profit factor in the business. The wife's income is limited to her AMP disability insurance. The husband was not paying spousal maintenance. Those same orders determined that the wife was to receive $1,500 per month from the business. I assume, therefore, that she satisfied a 'need' at that time. Consequently, in all of those circumstances, I prefer that the $6,000 be categorised as spousal maintenance and not be 'added back' to the property pool;
ii)Secondly, by four withdrawals in July and August 2016, the wife removed $46,753 from the self-managed superannuation fund. She seems to have given notice to the husband only of the first anticipated withdrawal of $35,000. He did not give his consent. She says that she was entitled to withdraw those monies and confirmed by the fund accountant. Her evidence is vague as to the disbursement of those monies, although she has paid legal costs for these proceedings of $27,000 and I am reasonably comfortable, given the wife's own claimed circumstances, that these costs were met from these withdrawals. Following the well-established principles in Chorn v Hopkins[4] I am satisfied that these legal costs in a quantum $27,000 were paid from a joint asset and should therefore be 'added back to the pool at that quantum. I am unsure as to the wife's disbursement of the remainder of approximately $20,000. I note, however, the substantial disparity in the earnings of the parties during this time and including the significant benefits received by the husband from the jointly established business, I do not consider therefore that justice and equity demands any further add-back to the pool;
iii)The husband has also paid legal costs of around $11,000. He says that he has done so from 'income'. I am able to find that his income included profits from the business assisted by income “distributions” to the wife for tax purposes. I intend to consider that income disparity elsewhere and am not satisfied that the husband's legal costs were payable from 'joint property' in the sense understood by Chorn v Hopkins (supra);
iv)The parties each have credit card liabilities of roughly equal balance. These are fluid in balance and I am not told of the source or purpose of each liability. The liabilities are not substantial within the context of the property pool as a whole. Taking all of these matters into account, I do not intend to include the credit card liabilities in the property pool;
v)The husband says that the current mortgage liability on the Property A property is $164,000. The wife says that it is $196,000. This dispute matters little given extant orders for the sale of this property. However, it is clear that the husband is mistaken as to his understanding and reading of his own bank statements where the 'balance' outstanding is $196,000 with a redraw facility of $32,000. This simply means that repayments are in 'advance' and perhaps corroborates the husband's own evidence that he left the management of household and business finances to the wife; and
vi)The husband wishes to retain the (omitted) motor vehicle which is an asset of the trust and included in the business valuation prepared by Mr R. I do not accept that the value afforded this vehicle by Mr R equals true market value. Rather, if the husband is to retain it then the parties can obtain a market value at their joint expense (if any) from a local reputable (omitted) dealer. Any liability attaching to the vehicle should also be included and retained by the husband personally.
[4] Chorn v Hopkins (2004) FLC 93-204
I find the property pool, therefore, for my consideration to comprise the following:
Property AE575,036
Property B475,000
Company A (net)
(but less value of (omitted motor vehicle)) 200,000
Wife’s (omitted motor vehicle) 30,000
Husband’s (omitted motor vehicle) N/K
Wife’s paid legal costs 27,000
Husband’s bank accounts
(his financial statement 16/6/17 12,118
Self-managed superannuation fund 320,000+
Wife’s car loan 32,196
(omitted) home mortgage E 196,000
(omitted) loan (Property B) E 36,000
(omitted motor vehicle) loan N/K
The values attributed to various items in the pool above are, of course, dependent upon the sale prices for the properties at Property A and Property B together with the sale of the business and a proper value to be attributed to the (omitted motor vehicle).
Contributions
This was a long relationship. Both parties made relatively minor initial financial contributions. Both worked in their profession as (occupation omitted). Both worked in the business until 2008. Thereafter the wife’s role changed to more of a managerial one by reason of her injury. The husband remained in his profession in the business. The wife received an income of disability insurance payments in the region of $60,000-$65,000 per annum gross from 2008. She initially contributed these monies to the joint finances of the family. After the wife stopped, or was stopped in her office manager role in 2015, she ‘contributed’ these monies for her own support. Importantly, the business was created as a joint enterprise under an umbrella of a family trust and trustee company. True it is, that the husband has contributed by his labour to the business and without assistance to the wife at least from 2015. The wife however, contributed according to her reduced capacity to this joint enterprise. She effectively managed the business between 2008 and 2015. Interestingly and significantly in this regard, the husband claims that he mistakenly paid the wife’s taxation bill for the 2015 financial year in a quantum of $54,227.00. This shows only that the wife has ‘contributed’ by allowing income distribution within the trust and company structures thereby providing a joint benefit and one also to the husband. Consequently where the husband has retained the considerable financial benefits of the business and whilst contributing his labours, I am of the view that these two parties have continued to contribute equally according to their capacities. I also note in this regard that the wife has continued to manage the parties’ commercial and residential investment property at Property B. I am not satisfied therefore that there should be any adjustment on account of contributions.
Section 75(2) factors
The wife seeks a 15% adjustment in her favour after consideration of the matters under s75(2) of the Act with emphasis on the disparity in income earning capacity between the parties. The husband says that there should be no adjustment.
Each of the parties to this marriage have the same professional qualifications, skills and experience. The husband continues in the profession. The wife has suffered an injury and not worked in her profession since 2008. She qualifies for and receives AMP income disability insurance of $60,000-65,000 gross per annum subject to CPI adjustments. She is 57 years old. The policy continues until she achieves 65 years.
Although the business is for sale, there is no evidence that it has yet attracted a buyer or interest, and the husband continues to work the business which clearly has established clientele and good will. The income and profit together, according to Mr R is substantial. The husband professes no desire towards immediate retirement but intends to enter the workforce as an employee if and when the business sells. His options appear to be as an employee in a government facility, an employee in private practice or partnership in private practice. Even given those options, I am satisfied on the basis of Mr R’s evidence that the husband’s income will be substantially greater than that of the wife. In the meantime he continues to run and benefit from the established practice.
It was suggested by the husband’s Counsel that the wife retain the Property B investment property. The parties have agreed to sell the Property B property and I do not accept, without accounting evidence, that it would be necessarily financially prudent for the wife to keep that investment as an asset in her entitlement under s79 and to then enjoy the income. In circumstances where the husband has apparently agreed to sell a highly remunerative business and the parties agree to sell Property B, it would not therefore be proper for me to impose its retention on the wife.
The wife’s financial position is static and known into the future. She is 57 years of age. She is unable to use her professional skills. She has no other readily employable skills. Any retraining is likely to see her as a woman in her sixties attempting to re-enter the workforce which cannot be an optimistic prospect.
The husband’s position is different. He intends to sell the remunerative business and the wife does not ask me to impose its retention on him in these orders. It is, however, ‘income capacity’ that I am to consider under s75(2)and not ‘income by choice’. I am comfortably satisfied, therefore, that the husband’s capacity for income far exceeds that of the wife.
I must consider the ages and circumstances of these parties when deciding to make any adjustment under s75(2). The corpus of the asset pool inclusive of superannuation is not substantial when considering it is to be divided. In such circumstances, and where the husband, even in the short term and pending the sale of the business, will continue to have at least his current benefits from the business (pursuant to the orders of 4 September 2015), I am of the view that the income earning capacity disparity achieves greater significance than where the parties might be much younger and have many years left in the workforce to re-establish themselves financially. A number of superior Courts including that in Clauson v Clauson[5] have recognised that it is often the case that an income earning capacity is the most valuable 'asset' that a party can take out of a marriage. I consider that that to be the situation here.
[5] Clauson v Clauson (1995) FLC 92-595
The wife's ‘income' will cease when she turns 65 years. The husband has expressed no desire to retire at any given age and, indeed, volunteered in Court that he intends to continue to work to subsidise his lifestyle. There is no evidence of any buyer or interest in the business and hence the husband retains the superior ongoing benefit from it. Consequently, I must consider the financial situation in the interim until the sale of the three entities as agreed between the parties and enshrined in the orders of 30 May 2017. The business must preferably remain as a going concern to maximise its sale potential. The husband will continue to operate the business. According to Mr R the business has income/profit of as much as $290,000 per annum. The interim order of 4 September 2015 provide for the business to meet the mortgage on the home occupied by the husband plus insurances. I think it proper that these orders continue in their effect which, of course, constitute a considerable benefit for Mr Snider regardless of his efforts in continuing the business.
Consequently, where the nature of the asset pool is not such that either party will leave this marriage with great tangible wealth, but where the income and benefit disparity will be substantial, I am of the view that a 15% adjustment to the wife from that pool is just and equitable. To put that into practical context, and again considering the evidence of Mr R, such an adjustment might equate to only two or three years of current income discrepancy between these parties to a long marriage and where they must each re-establish themselves financially.
I intend to treat the property pool, however, on a 'two pool' basis. The superannuation entitlement sits in a self-managed fund. It remains, however, subject to the usual stringent rules in respect of dealing with the corpus of superannuation funds. The proceeds of that fund would not normally be immediately available to either party save as to the hardship provisions. Although the benefits in the fund are distributed on paper favourably to the husband, it is clear that the parties have jointly contributed to the fund in accordance with my findings as to contributions set out above. In all of those circumstances I prefer that the fund be divided equally. I will leave it to the parties to obtain proper accounting advice as to the most prudent way in which to deal with the fund moving forward.
Spousal Maintenance
The wife seeks an order that the husband pay $1,000 per week spousal maintenance indefinitely until the happening of an event or circumstance that would make such payment no longer appropriate. In the alternative she proposes a lump sum payment of spousal maintenance in the quantum of $100,000.
The considerations here of an entitlement to spousal maintenance are different to those addressed above in respect of an adjustment of property entitlement under s79 although both do reference the many considerations in s75(2) of the Act.
Section 74 of the Act provides:
In proceedings with respect to the maintenance of a party to a marriage, the Court may make such order as it considers proper for the provision of maintenance in accordance with this part.
Section 72 states:
A party to a marriage is liable to maintain the other party, to the extent that the first – mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
a)by reason of having the care and control a child of the marriage was not attained the age of 18 years;
b) believe by reason of age or physical or mental incapacity for appropriate gainful employment;or
c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Where both property and spousal maintenance applications are together before a Court, it is proper to conduct the spousal maintenance consideration after establishing the parties’ relative entitlements to property under s79[6].
[6] Clauson v Clauson (supra)
The wife's sworn financial statement is confusing. At part B she discloses total personal weekly expenditure of $1,495.10. However, the itemised expenditure in the document totals expenses of $2,546 per week. Nevertheless, a number of those expenses do not appear to be necessary and/or are double recorded. The wife deposes to a superannuation expense of $480 per week. This appears to be neither current nor necessary and is in fact, paid by the business. She deposes to loan repayments on a motor vehicle of $152 at both paragraph 29 and part N. She deposes to credit card payments of $175 per week but such should reasonably be extinguished by reason of her entitlement under s79 of the Act. She deposes at part in N to expenses for “Pilates, legal fees” of $160 per week. I am of the view that her Pilates expenses should reasonably be included under 'entertainment/hobbies' of $100 per week. The legal expenses should also be extinguished by reason of her award under s79. Consequently, and without closer examination of her other claimed expenses, I consider that an amount of $815 of those expenses is not reasonable thereby bringing her weekly expenses down to $1,731.
The wife's financial statement discloses a gross income of $1,162 per week. By reason of my orders she will now have substantial cash reserves dependent upon the ultimate sale prices of the real properties and the business but perhaps in the range of $650,000. I have no evidence as to the investment potential of these monies but am comfortably satisfied that they would bring her a reasonable return if prudently invested.
My consideration is conducted on the basis of the wife currently having a rental liability of $280 per week. There was a suggestion from her evidence in Court that she may wish to purchase a property. I consider this to be a decision of preference and, given any lack of concrete evidence as to purchase costs, I consider her expenses on the basis of her rental income.
In all of those circumstances, and given the current and potential income of the wife, I am not satisfied that she would be unable to meet her own reasonable expenses as disclosed on her financial statement. As such, she does not cross the threshold imposed by s72 of the Act and her application for spousal maintenance will be dismissed. I consider, however, that the wife should continue to receive her entitlement under the orders of 4 September 2015 until the sale of the real estate and business.
I think it proper, given the lack of finality provided by these and the orders of 30 May 2017, that I give the parties liberty to apply in respect of the sales anticipated in those orders.
Enforcement
The wife seeks orders for the enforcement of her entitlement to $1,500 per month payable by the business by reason of the orders of 4 September 2015. There is agreement that she has not been paid since about September 2016. The husband says that, on accounting advice, he 'set off' those Court ordered payments by reason of him having paid $54,227 tax for the wife in the 2014/15 tax year and $15,000 plus for the following year.
There are two difficulties with the husband's arguments. Firstly, that the payment of the $1,500 per month was pursuant to Court orders. That order remains on foot. The husband has not made application to set it aside. It was clearly, in my view, designated as a form of 'spousal maintenance' for the wife on a periodic basis and, by reason of being a consent order, must concede her needs at that time. Secondly, and as mentioned above, the wife's gross income for the relevant year was approximately $60,000 from her AMP policy. She could not have incurred a tax liability of $54,227. The only logical explanation is that the wife agreed, expressly or tacitly, for income distribution within the business financial statements. She did not, however, receive the actual tangible benefit of the monies on which the tax liability was struck. The husband was receiving the benefits of the business over and above the benefits to the wife pursuant to the orders of the 4 September 2015. It follows, in my view, that the business should, in any event, have met this tax liability by reason of the benefits it accrued. Consequently, I am comfortably satisfied that the advice received by the husband was poor advice and that the wife should have the benefit of the orders made by consent in September 2015.
There is a further payment prima facie due to the wife pursuant to those orders of 4 September 2015. The wife's superannuation contributions were to be paid through the business and are in arrears. Counsel for the wife does not now, however, pursue those arrears of payment given that it would simply be an exercise in the making a “book transfer”. On the basis of Counsel’s submissions, therefore, I assume there is a preference in the wife (and perhaps both parties) for the superannuation policy to be “split” now rather than contemporaneously with the final distributions of entitlements to property upon the sale of the business and real estate. I am content to make that order. It should follow, however, that the business should immediately cease meeting the contributions for both parties in the interim and despite the orders of 4 September 2015.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Date: 22 August 2017
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Consent
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Costs
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Remedies
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Statutory Construction
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Appeal
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