SPEARS and SPEARS
[2017] FCCA 3203
•22 December 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SPEARS & SPEARS | [2017] FCCA 3203 |
| Catchwords: FAMILY LAW – Property – assessment of contributions. |
| Legislation: Family Law Act 1975, ss.75, 79 |
| Cases cited: Bevan & Bevan [2014] FamCAFC 19 R v Watson; Ex parte Armstrong (1976) 136 CLR 248 Robb & Robb (1994) 18 FamLR 489 |
| Applicant: | MS SPEARS |
| Respondent: | MR SPEARS |
| File Number: | PAC 2101 of 2016 |
| Judgment of: | Judge Obradovic |
| Hearing dates: | 6 December 2016, 20 – 21 April 2017, 10 July 2017 |
| Date of Last Submission: | 10 July 2017 |
| Delivered at: | Parramatta |
| Delivered on: | 22 December 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Schroder |
| Solicitors for the Applicant: | Mark Brown & Associates |
| Counsel for the Respondent: | Ms Haughton |
| Solicitors for the Respondent: | Yeend & Associates |
ORDERS
Within two months of the date of this order, the husband is to pay to the wife the sum of $267,060.
In the event that the husband fails to comply with order 1 above each party shall take all necessary steps to sign all necessary documents to cause the property situate at and known as Property A, in the State of New South Wales, and being more particularly described in folio identifier (omitted), to be sold by private treaty at the earliest possible date at a price to be agreed to between the parties and failing such agreement to be determined by the President of the New South Wales Division of the Australian Property Institute or his nominee, and that the said proceeds of sale be disbursed in accordance with these orders.
In the event that the said property fails to be sold by private treaty within a period of four months, the parties shall at the request of either of them, take all necessary steps and execute all necessary documents to cause the said property to be sole by auction at the earliest possible date at a reserve to be agreed between the parties and failing agreement, to be determined by the President of the New South Wales Division of the Australian Property Institute or his nominee and that the proceeds of the said sale be disbursed in accordance with these orders.
If the property is not sold at auction then the parties shall follow the directions contained in order 2 and 3 above so far as they apply provided a period of five calendar months shall elapse after the attempted auction sale before the property is again put to public auction.
The proceeds of sale of the property situate at and known as Property A, be disbursed in the following manner:
(a)The payment of legal costs and agent’s costs on sale;
(b)The payment of any mortgage; and
(c)In payment to the wife in the sum of $267,060 together with interest as provided herein and the balance to the husband.
In the event of the husband failing to comply with order 1 above the husband shall pay to the wife from his share of proceeds of sale in addition to the said sum, interest on such sum calculated from a date two months from the date of these orders until payment at a rate prescribed by the Rules of the Court.
The husband shall continue to pay as they fall due, all regular instalments in respect of the mortgage, council rates, water rates, household insurance in respect of the property and forthwith pay any arrears in respect of the said instalments and indemnify the wife in respect of all such outgoings.
The husband and wife shall do all things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
In the event that either party refuses to execute any deed or instrument necessary to give effect to these orders, within 7 days of being requested so to do, the Registrar of the Court is appointed pursuant to section 106A to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed or instrument.
Except for otherwise provided for in this order the husband and wife each be the sole legal and beneficial owners of all items of all property including furniture, money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively to the exclusion of the other.
IT IS NOTED that publication of this judgment under the pseudonym Spears & Spears is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 2101 of 2016
| MS SPEARS |
Applicant
And
| MR SPEARS |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property adjustment proceedings between the Applicant wife and the Respondent husband.
The adjustment of parties’ property interests is not a matter of administering “palm tree justice”[1]. It is the exercise of judicial discretion in a principled fashion. Reasonable minds will differ as to what, if any, order adjusting parties’ property interests is just and equitable in all the circumstances.
[1] R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 257 per Barwick CJ, Gibbs, Stephen and Mason JJ; [1976] HCA 39; cited with approval by the High Court in Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52 at [38]
Parties’ Relationship
The parties commenced living together in late 2003. They separated in late 2015. Although they were married on (omitted) 2006, they lived together in a committed relationship for 12 years.[2] The parties are not yet divorced.
[2] Give or take a week or two
Both parties had previously been married. The husband had significant assets and the wife had few. The wife had children from a previous relationship.
At the time of the commencement of cohabitation, the wife’s children Mr A and Ms L, both born on (omitted) 1992, came to live with the parties. Mr A and Ms L lived with the parties until 2010 and 2012 respectively.
The husband was and remains the sole legal owner of the former matrimonial home, being the property located at Property A.
The husband has significant superannuation interests, albeit it is in the payment phase. He was also the beneficiary of a relatively large inheritance from the estate of his late mother.
The wife has few assets in her name at present.
Post separation, the husband has paid to the wife $160,000 over a period of time and by various payments. None of those funds remain[3], albeit some have been converted into other assets which form part of the pool.
[3] Except for a small amount of cash
The parties are significantly apart in terms of the orders which each of them seeks.
The asset pool, for reasons which are explained below, is $1,510,300.
The wife seeks orders adjusting the parties’ property interests such that she receives the benefit of 35% of the pool and the husband receives the benefit of 65% of the pool. This would entail a cash adjustment in her favour of some $511,040[4]. The effect of such an order would see the husband having to either sell or encumber the former matrimonial home as well as handing over to the wife the entirety of the balance of his inheritance. It would leave him with his superannuation and little else.
[4] Based on her calculations of the pool
The husband seeks orders adjusting the parties’ property interests such that he make a payment to the wife of $120,000 and that the parties otherwise retain all other assets and interests which they hold. The order would see an adjustment in the husband’s favour of 90%. The effect of the order would see the husband retaining the former matrimonial home unencumbered, the entirety of his superannuation interests and a significant portion of the balance of his inheritance. It would leave the wife with only the cash amount of the adjustment, her car and household contents.
Overall Approach
The overall approach to the determination of an application for property adjustment orders pursuant to s.79 Family Law Act1975 (Cth) was set out by the High Court in Stanford v Stanford,[5]where their Honours stated:
[5] [2012] HCA 52; (2012) 247 CLR 108
[37] … first, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property… the question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
…
[40]… whether making a property settlement order is ‘just and equitable’ is not to be answered by beginning from the 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 s 79(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 s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
[41] Adherence to these fundamental propositions in exercising the power in s 79 gives due recognition to “the need to preserve and protect the institution of marriage” identified in s 43(1)(a) as a principle to be applied by courts in exercising jurisdiction under the Act…
[42] In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order…
Such approach was subsequently considered by the Full Court of the Family Court in Bevan & Bevan[6], Chapman & Chapman[7] and Scott & Danton[8].
[6] [2014] FamCAFC 19
[7] [2014] FamCAFC 91
[8] [2014] FamCAFC 203
Once the issue of whether it is just and equitable to make any order is resolved, the Court is to then consider the contributions made by the parties as defined in s.79(4)(a) to (c), the matters set out in s.79(4)(d) to (g) and in particular the subjective considerations as to the parties by having regard to the provisions of s.75(2) in so far as they are relevant.
The Court is then to consider the justice and equity of the actual orders to be made, in the context of the Court’s obligations to make appropriate orders as provided for in s.79(1) of the Act.[9]
[9] see generally Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120
The just and equitable requirement is “one permeating the entire process”[10].
[10] Bevan supra at [86]
Pool of Assets
As at the time of final hearing, there was no agreed balance sheet.
On behalf of the wife, the Court was handed a balance sheet setting out the parties stated positions (“joint balance sheet”) and on behalf of the husband, the Court was provided with a new balance sheet in the final submissions.
There were a number of other items referred to in the joint balance sheet which were not agreed, apart from the value of the former matrimonial home. These were the husband’s liabilities, the value of the wife’s superannuation and the moneys expended by the wife post separation said to be addbacks.
It was submitted that the balance sheet, as contained in the submissions handed up at the conclusion of the hearing on behalf of the husband, set out the appropriate assets, add backs and superannuation amounts. The difficulty with the different values[11] attributed to the superannuation amounts for example, was that they were not the subject of any evidence.
[11] As between the balance sheets
Certainly the following was the pool contended by the parties:
Owner
Description
Value
Husband
Property A
$460,000 to $585,000
Husband
Bank Accounts ((omitted))
Approx. $5,000
Husband
Motor Vehicle ((omitted) Motor Vehicle)
$45,000
Husband
Caravan
$40,000 to $48,000
Husband
Shares
$4,557 to $ 31,183
Husband
Household contents
$15,000
Husband
(omitted) Life Policy
$7, 194
Husband
(omitted) Investment
$290,572 to $ 294,480
Husband
(omitted) (Superannuation – payment phase)
$342,541
Husband
(omitted) Super Pension
$187,891 to $192,274
Wife
Bank Account ((omitted))
$3,674
Wife
Motor Vehicle (Mazda)
$20,000
Wife
Household contents
$5,000
Wife
Musical instruments
$7,500
Wife
Add backs
$40,000 to $75,000
Value of former matrimonial home
The value of the former matrimonial home was a hotly contested matter between the parties, and the subject of evidence by two purported experts – one being the agreed expert, and the other the wife’s shadow expert. The difference in the expert’s opinions as to the value of the home was not insignificant, the agreed expert valuing the home at $460,000 and the wife’s expert at $585,000.
Having regard to s79 Evidence Act and relevant authorities, such as Makita (Australia) Pty Ltd v Sprowles[12], Dasreef Pty Ltd v Hawchar[13] Rollerston v Insurance Australia Ltd[14] both reports are lacking in certain regard:
a)The basis of the opinions contained in each of the reports is not clear on the face of the reports;
b)There was no identified reasoning to show how the data identified by each of the experts supported their ultimate conclusions;
c)Little information was provided to show why the various comparable properties were said to be comparable properties by each of the experts;
d)The reports did not enable any detailed assessment to be made of the validity of the reasoning process undertaken by each of the experts;
e)The reports ultimately did not show that the conclusion reached by each of the experts was based on, or was the result of, the application of their specialised knowledge to the facts stated in the reports.
[12] (2001) 52 NSWLR 705; [2001] NSWCA 305
[13] (2011) 243 CLR 588; [2011] HCA 21
[14] [2017] NSWCA 168
Where the Court is not satisfied that either expert has provided an opinion which is an admissible expert opinion in the strict sense, the Court is left with two competing valuations of problematic weight.
The Court therefore finds that the value of the former matrimonial home is in the range $460,000 to $585,000. In all of the circumstances, the Court assesses the value of the home to be the mid-point of the two valuations, namely $522,500.
Husband’s Bank Accounts and Shares
The husband has, in order to meet the order of 27 January 2017 sold a number of shares and paid the wife $20,000.
The husband submits that his shares are now worth $4,557 and his bank accounts have a balance of $5,369. The wife did not make any submissions to the contrary. These values will therefore be accepted for the purposes of the pool.
Caravan
The husband submits that the caravan is worth $48,000. Given that the wife submitted it was worth $45,000 the value assigned by the husband will be accepted as an admission against interests.
Addbacks and Asserted Liabilities
In May 2016 the wife drew down on her superannuation fund from (omitted) Super, on the basis that she did not have enough money to pay her legal costs and to support herself. The total amount received by her was $5,854. During cross-examination the wife appears to have conceded that about $5,000 of such moneys were ultimately spent by her on legal fees. The husband has sought for this amount to be notionally added back into the pool of assets.
Post separation, the husband has paid to the wife $140,000. Such moneys were paid in the period November 2015 to September 2016 and included a payment pursuant to Orders made on 19 September 2016. The wife spent such moneys as follows:
a)$27,000 for the purchase of her motor vehicle. This vehicle remains in her possession and forms part of the pool, albeit its value has decreased to an agreed $20,000;
b)$31,000 for the purchase of furniture and white goods. These assets remain part of the pool, albeit their value is now agreed at $5,000;
c)$3,000 for musical equipment, taken into account as part of the pool;
d)$1,7000 for a bond for rental premises;
e)$34, 530 spent on day to day expenses;
f)$2,600 spent on gifts for her children; and
g)$40,170 spent on legal fees.
In addition, the wife received a further $20,000 by way of consent orders in January 2017. Of that $15,000 has been spent on legal fees. The husband has not sought for this amount to be notionally added back into the pool of assets.
The husband has made much of the funds which he provided to the wife post separation, arguing that he would not have paid such moneys to the wife but for her representation that she would not thereafter seek a property adjustment order. However, there is no estoppel argument raised. Indeed, the husband readily seeks an order adjusting the parties’ property interests. As such, the relevance of much of the cross-examination of the wife in respect of such representations and the tender of emails between the parties going to the issue remains a mystery.
In any event, the husband submits that $55,210 of the $160,000 paid to the wife post separation should be added back as it was utilised by the wife for the payment of legal costs. He also submits that $3,900 should be added back as this was money spent on gifts and not reasonable living expenses, and that a further sum of $11,050, should be added back being 50% of the rent the husband paid on behalf of the wife.
In total, the husband asks the Court to notionally add back into the pool the amount of $75,327. The Court does not accept that the moneys the wife spent post separation on rent was unreasonably spent. The Court does not accept that gifts to her children post-separation should be added back.
On the other hand, the husband’s evidence in cross-examination is that he had paid his solicitor $89,000 in legal costs. The wife has not sought for this amount to be notionally added back into the pool of assets. The husband submits that:
There is no evidence that such sums were paid from any capital amount available to him since separation. He has since separation continued to receive income from his investments and a superannuation pension. There should be no ‘add back’ in relation to any legal fees paid by him since separation.
In respect of the husband’s liability incurred post separation, there is no reason as to why this should be treated any differently than the funds which the wife had expended post separation. There is nothing to suggest that the expenses were not reasonably incurred and it would be unjust to the husband if the wife was to receive the benefit of such expenditure but the husband was not, in circumstances where he chose to pay for such expenses using his credit card rather than cash.
At the date of hearing the husband was said to have had a credit card debt of $10,704. It is referrable to the post separation period. The debt was in fact as of 21 November 2016. Given the debits and payments into that account over the statement period 22 October 2016 to 22 November 2016, it is likely that the husband would have been using that credit card post the filing of his Financial Statement and evidence in the proceedings. There was no later credit card statement tendered. However, it was submitted by the husband that this outstanding credit card liability should be excluded from the balance sheet. The Court will do so on the basis that it is an admission against interests.
In respect of the issue of addbacks:
a)While it is well accepted that because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent and to deal with the costs as a separate issue at the end of litigation[15]; and
b)While it is also well accepted that there is usually no appropriate basis for notionally adding back moneys that existed at separation but which have subsequently been spent on meeting reasonably incurred living expenses[16]
the fact is that an order adjusting the interests of the parties is not an accounting exercise.
[15] See NHC & RCH [2004] FamCAFC 633 at [32]-[60]
[16] Ibid at [42] referring to Marker [1998] FamCA 42
Ultimately, there was little direct evidence as to the amounts the parties had expended to date on legal fees, although it appears to the Court that they have each expended between $60,000 and $90,000. It would not be just and equitable to notionally add back some of the amounts but not all of them. Therefore, it is either a matter of adding back all of the moneys the parties have spent on legal fees or none, whether same were paid by way of capital or from income. It would be illogical to do otherwise, particularly as the husband’s income stream (being his superannuation) is being treated as an asset for the purposes of the asset pool (at the invitation of the parties).
The Court considers in all of the circumstances that the use of the parties’ assets post separation is simply a matter which is to be taken into consideration in assessing overall contributions, including all of the moneys paid by both parties for legal costs. Such an approach is consistent with established authority.[17]
[17] See for example: Bevan & Bevan [2013] FamCAFC 116 ; As to different approach see Vass & Vass [2015] FamCAFC 51. See also NHC & RCH [2004] FamCA 633. But see Farnell & Farnell (1996) FLC 92-681 particularly in relation to adding back amounts expended by the parties on legal fees
The legislation is clear that unless there are justifying circumstances, each party is to bear its own costs.[18] There was nothing put to the Court which would warrant the wife being in part liable for the husband’s legal costs incurred to date.[19] Therefore, any outstanding liabilities for legal costs incurred as a result of these proceedings will be disregarded from the pool of assets[20].
[18] s117
[19] The joint balance sheet does not nominate an amount for the husband’s legal costs, but only an amount for the wife’s legal costs
[20] However and for reasons explained earlier, the funds expended by the parties on legal costs to date will not be notionally added back, the parties have not spent dissimilar amounts on costs to date. The various payments made by the parties post separation are simply taken into consideration as part of the fabric of this case.
Court’s Assessment of Pool
Therefore, the existing legal and equitable interests of the parties in property are as follows:
Owner
Description
Value
Husband
Property A
$522,500
Husband
Bank Accounts ((omitted))
$3,754
Husband
Motor Vehicle ((omitted) Motor Vehicle)
$45,000
Husband
Caravan
$48,000
Husband
Shares
$4,557
Husband
Household contents
$15,000
Husband
(omitted) Life Policy
$7,194
Husband
(omitted) Investment
$294,480
Husband
(omitted) (Superannuation – payment phase)
$342,541
Husband
(omitted) Pension
$192,274
Wife
Bank Account ((omitted))
$2,500
Wife
Motor Vehicle (Mazda)
$20,000
Wife
Household contents
$5,000
Wife
Musical instruments
$7,500
TOTAL:
$1,510,300
Given that both parties are seeking relief pursuant to s.79 of the Family Law Act, the length of the relationship of the parties, the fact of the parties’ separation and that, there is not and will not thereafter be the common use of property by the parties, the Court finds that the requirement of whether it is just and equitable to make any orders adjusting the property interests of the parties is satisfied.
Where the husband has nominated in his submissions lesser amounts than are indicated on the joint balance sheet, the Court has taken those lesser amounts where they have been admissions against interest. Otherwise, the Court accepts the amounts from the joint balance sheet, except to the extent that there have been particular findings otherwise.
Husband’s Contributions
At the start of their relationship, the husband was 52 years old. He had assets as follows[21]:
a)Property at Property A with an agreed value of $400,000 and equity of $250,669;
b)House contents, value unknown.
c)Shares valued at $8,050;
d)Savings of $27,970;
e)Ford vehicle, value unknown;
f)An entitlement to long service leave; and
g)Superannuation.
[21] All figures have been rounded to the nearest $10
The husband was in full-time employment with the (employer omitted) (“(omitted)”), and earning $58,485 per annum. When he retired in 2012, he had been working for the same employer for 37 years. As at late 2003 the husband had been employed by the (employer omitted) for 28 years thus accruing significant entitlement to long service leave[22].
[22] Exhibit RS-8 to the husband’s affidavit, supports the calculation contained in paragraph 14 of the husband’s affidavit, indicating that the husband had entitlement valued at approximately $80,000 in accrued long service leave at the commencement of the parties’ relationship.
Over the period of the relationship, the salary which the husband derived from his employment with the (employer omitted) increased incrementally, such that at retirement he was earning $86,683 at the end of the relationship.
Former Matrimonial Home: Property A
The parties agree that the former matrimonial home was valued at $400,000 at the commencement of their relationship. It was mortgaged and the equity in the home was $250,669. The mortgage was approximately $150,000.
In 2012 the mortgage was paid out in full. At the time, the balance of the debt was approximately $114,000. The wife conceded[23] in cross-examination that the mortgage was paid out in full from the husband’s superannuation. It would have been of significant assistance to the Court (and to the husband’s case) if such matters were the subject of the husband’s evidence in chief.
[23] The wife said she doesn’t know but she’s accepting what is put to her in cross-examination. The wife conceded that at the time of the payout, the parties did not have any savings (whether joint or individual) which could have accounted for the payout. By inference, the money must have come from somewhere else, and the only other large asset the husband had was his superannuation interest.
The Husband’s Superannuation
At the commencement of the parties’ relationship, the husband was a member of the (omitted) Superannuation Scheme (“(omitted)”). He entered the scheme on (omitted) 1975, which is when he commenced working for the (omitted)[24].
[24] Paragraph 19 Husband’s affidavit states husband’s long service leave was accumulated over 37 years
On (omitted) 2001 the husband became a member of the (omitted) superannuation fund. After this date his contributions to the (omitted) ceased.
While the “balance” of the husband’s (omitted) account as at 30 June 2003 was $81,310[25], his withdrawal benefit as at 30 June 2003 was $151,930 and his deferred benefit as at 30 June 2003 was $295,954. The preservation age for the scheme was 55 years, and the cashable component was $226,695. As at 30 June 2003, the husband was almost 52 years old. He had not yet attained the “preservation age”.
[25] Exhibit 10
As at 30 June 2003 the husband’s retirement benefit with (omitted) projected to retirement at age 58 was $330,166 and to age 70 was $349,259. It was further noted that “under certain circumstances, these benefits carry pension options.” [26]
[26] Exhibit 10
Despite the fact that both parties referred to the “balance” of the (omitted) fund as at 30 June 2003 as a starting point for the purposes of assessing the parties’ contributions, such starting point is irrelevant. The balance of the fund at the time is not the value of the fund at the time. There is no expert or other evidence as to what the value of the fund was. The only evidence before the Court in relation to a possible value of the fund at the start of cohabitation is the information contained in the 30 June 2003 statement.[27] This has already been referred to at some length in the preceding paragraphs. In any event, there were no further contributions to this fund by the husband after July 2001 and as such, the entirety of the (omitted) fund was brought into the relationship by the husband.
[27] Exhibit 10
As at December 2003, the closing balance and the withdrawal/retirement benefits of the (omitted) Super fund were $14,248.
Overall, at the commencement of the relationship, the husband had significant superannuation interests/entitlements, made up of the entirety of his interest in the (omitted) fund which although had a “balance” of $81,310 had a deferred benefit of $295,955 and the (omitted) Super fund, which had a balance of $14,248, which was also equivalent to its deferred benefit.
There is no evidence that the wife directly contributed to either of the husband’s superannuation funds during the parties’ relationship.
The husband retired from his employment in 2012 at age 61.
The husband commenced receiving a pension from the (omitted) from the date of his retirement. What the husband’s options were in respect of a pension from this fund, for example in respect of the capitalisation of his benefit, is not the subject of any evidence. The Court is completely in the dark about these matters. Furthermore, based on the matters put to the wife in cross-examination, it appears that the husband withdrew approximately $200,000 from the (omitted) in 2012 which was in part utilised to pay out the mortgage secured over the former matrimonial home.
In January 2013, the husband rolled over $87,946 from the (omitted) Super into the (omitted) Fund. At the date of hearing, the husband had an account called (omitted)[28] “(omitted) Pension” the value of which is agreed at $187,891. There is no evidence in the husband’s case as to how this amount was accumulated, and whether the (omitted) Fund is the same or different to the (omitted) Super Pension.
[28] See RS-23
The joint balance sheet handed up towards the conclusion of the hearing, indicates that as at final hearing, the agreed value of the husband’s superannuation interest in (omitted) Super was $342,541. There was no evidence as to how this value was arrived at.[29]
[29] Presumably both (omitted) and (omitted) Super Pension were valued in accordance with Family Law (Superannuation) Regulations
There is no evidence in respect of the husband’s interest in the (omitted) Super as to whether he had any option about commuting the pension to a lump sum or similar, and what the terms of the payment phase are. By the inclusion of the (omitted) in the balance sheet, the parties are asking the Court to treat the husband’s interest in (omitted) as an asset, rather than a financial resource, and that there ought to be a single pool of assets. Submissions to this effect were made on behalf of the wife.
How superannuation is treated is of course, a matter of judicial discretion, subject to the parties being provided with procedural fairness and that discretion being exercised in a principled manner.
However, given that the parties are both asking the Court to take a single pool approach, and that no superannuation splitting order is sought, the Court will accede to the parties’ application to include the entirety of the husband’s superannuation as an asset, notwithstanding the lack of evidence in respect of that superannuation in the husband’s case.
Husband’s Entitlement to Long Service Leave
As noted, the husband had at the time of the parties’ cohabitation, been employed by the (employer omitted) for 28 years. He had accumulated by that stage, entitlements to long service leave, which ultimately continued accumulating during the relationship.
At the time of his retirement in 2012, the husband took the option of cashing out his long service leave entitlements. On his retirement, he received a net amount of $83,703 which was for the most part his entitlements to accrued long service leave and accrued annual leave, with the exception of the amount of his usual fortnightly pay. He had over $40,000 withheld for taxation on that occasion. In total, his gross termination payout was approximately $124,000.
Almost the entirety of the net amount which the husband received upon termination of his employment was applied by the husband to the repayment of a loan from his mother, as explained below.
Inheritance Received by Husband and Loans from Husband’s Mother
During the parties’ relationship, the husband purchased a number of assets totalling over $180,000[30]. The purchases included the following[31]:
a)Caravan and alterations and accessories to caravan: $78,900[32]
b)(omitted) Motor Vehicle: $71,000[33]
c)(omitted) Motor Vehicle $25,000
d)Other costs and expenses: $5,000
[30] Paragraph 28 Husband’s Trial Affidavit
[31] The figures have been rounded
[32] Currently forms part of the pool of assets
[33] Currently forms part of the pool of assets
At the time of purchasing the various items and paying the expenses, the husband says that he had conversations with his mother about her lending him the funds to buy those assets as he did not have the funds to purchase them. The Court accepts the husband’s evidence about where the funds to purchase these items came from.
The husband later sold one of the (vehicles omitted) for $21,000 and paid back his mother, and also used his termination payment to further repay his mother part of the loan.[34]
[34] Referred to in paragraph 68 of these Reasons
The husband says he received $454,726 by way of inheritance from the estate of his late mother. He exhibits to his affidavit two documents relating to the distributions to beneficiaries by the estate. The first of those indicates that the total distribution received by him was indeed $454,138, including an (omitted) Investment Account of $330,879 in March 2013.
He says that the monies he received by way of inheritance were retained in bank accounts and in his (omitted) Fund. The current balance of the husband’s bank accounts and (omitted) Investment are approximately $300,000 in total.
The Statement of Estate Account for the estate of the late Ms J[35] shows that there was a loan to the husband of $89,564 outstanding. This was re-paid to the estate out of an interim distribution to beneficiaries on 28 August 2013.
[35] Exhibit 7, tab RS-28
As such, it appears on the documents although never put to the husband in cross-examination, that part of his inheritance was used to repay the outstanding loan to his mother. The net result of this is that he received only $365,000 from the estate rather than $454,000.[36]
[36] He retains the caravan and the motor vehicle, they are included in the balance sheet, but their acquisition and inclusion in the asset pool is clearly a contribution by or on behalf of the husband
The submissions made on behalf of the husband do not take the husband’s entire evidence into consideration and erroneously state that the husband received a net amount of $543,076.77 from both his mother and her estate. This is not a correct calculation. If the husband’s mother lent him, as the court accepts, approximately $180,000 to purchase the various assets, on his evidence he has repaid the entirety of that loan back. There cannot be double counting.
The correct approach, mathematically, sees the husband contributing in total $454,000 from the estate, and $80,000 from his termination payment, and leaving at the end of the parties relationship approximately $330,000 in the (omitted) Investment, the caravan and the (vehicle omitted) which had by then somewhat depreciated in value. The balance had been spent. Such an approach takes into consideration the loan from his mother and the repayment of this loan through the sale of assets, partial distribution from the estate and the termination payment, and the assets which have remained.
Wife’s Contributions
At the start of the relationship the wife was 46 years old. She had a motor vehicle and household contents, the values of which are unknown. She lived in rental accommodation with her children. She was in receipt of a single parents’ pension. The wife also worked and received a very modest income[37] which supplemented the pension she received as a single parent.
[37] 2003/2004 Income tax return for wife shows a taxable income of $17,612 as follows: parenting payment single $7306; (occupation omitted) $8450; net income from business $2101
The wife submits that the move to (omitted) from (omitted) where she had lived with her children prior to moving in with the husband “at Mr Spear’s insistence[38]” resulted in her “ceasing her (omitted) career in the (omitted) area”. Except by way of an Income Tax Return for the 2003/2004 year, which included a period of time before cohabitation, there is no evidence[39] before the Court as to the wife’s earnings from her (omitted) career prior to cohabitation. That document reveals gross earnings of $10,230 from the business as a (omitted), together with business expenses of $8,129 resulting in a net income of $2,101 from the business, for the financial year ending 30 June 2004. In any event, whatever earnings the wife received from her (omitted) career and part-time work prior to cohabitation, it was such that she still qualified for the single parents’ pension.
[38] Paragraph 21 Wife’s trial affidavit
[39] The wife in her affidavit provides a summary of ‘gross income’ generated from her (occupation omitted) during the relationship
After the parties commenced living together, the wife remained in paid part-time employment as well as continuing with her (omitted) career, albeit in the (omitted) area where she had to establish herself.
In 2004 the wife ceased regular employment as a (occupation omitted), but continued with her (occupation omitted) until (omitted) 2013.
In 2010 the parties set up a partnership called “(omitted)”. The partnership was set up to assist the wife in her endeavours as a (occupation omitted) and by way of financial planning for the parties. The partnership returns indicate that the husband was a 10% partner in the business and the wife a 90% partner. The deductions claimed by the partnership included motor vehicle expenses, depreciation of motor vehicles, caravan and equipment and other business expenses. [40]
[40] It appears that the assets claimed by the partnership included the motor vehicle and caravan the husband says he purchased by way of funds loaned to him by his mother
The husband often accompanied the wife on trips away, particularly after his retirement, and assisted the wife in her businesses endeavours by packing and unpacking equipment from the wife’s vehicle. During the last few years of the relationship, the husband also operated the (business omitted).
The wife’s income was at all times during the parties’ relationship significantly lower than the husband’s, however, it appears that the business structure afforded the parties some advantage in terms of offsetting losses, claiming depreciation and the ability to utilise business assets for private use.[41]
[41] With appropriate disclosures to the Australian Taxation Office about such matters
Between 2010 and 2015 the wife underwent a number of plastic surgeries. These were done with a view to help the wife with her (omitted) career. The total cost of the surgeries was over $46,000 and the surgeries were funded from the husband’s income.
The wife only ever had very modest superannuation in her name, which was ultimately cashed in after separation and utilised by the wife as described earlier.
Parties’ Other Contributions
The Court accepts the wife’s evidence in respect of her other contributions, both financial and non-financial. The Court accepts that the wife did the majority of the housework, but not all of it.
The Court accepts the husband’s evidence in respect of his contributions to the home and family, with such contributions being greater after his retirement in 2012.
The Court accepts the husband’s evidence in respect of the support he provided to the wife’s children, such support being both financial and non-financial, direct and in-direct. It is a contribution of the kind identified by the Full Court in Robb & Robb.[42] It is a contribution over many years. His support of the wife’s children, continued into their adulthood and post-separation.
[42] (1994) 18 FamLR 489
The husband conceded in his evidence that the wife worked hard during their relationship. He also worked hard. They worked hard together in their partnership, for the common good of their future together.
The husband was supportive of the wife throughout the relationship. He supported her in establishing the partnership so she could get her (omitted) businesses on track. He was able to fund the purchase of the assets for the partnership through money he received from his mother or through realisation of assets he brought into the relationship.
The Court finds that the wife and the husband were both supportive of each other and during their relationship they acted in a manner towards the other which ensured that they could each pursue their own career goals.
There were significant post-separation contributions by the husband. These are made up as follows:
a)The payments to the wife in 2015/16[43] in the amount of $115,000;
b)The payments to the wife of $55,000 by way of consent orders;
c)The upkeep and maintenance of the former matrimonial home;
d)Being a co-lessor/guarantor on the property tenanted by the wife post separation; and
e)Assisting the wife in relocating to her new home.
[43] Excluding the $35,000 paid in September 2016
Assessment of Contributions
It has been long recognised that homemaker contributions are to be given as much weight as those of the primary breadwinner.[44] The Court is mindful of the what the Full Court had to say about marriage and separation and parties’ roles within a marriage[45]:
In most marriage, there is a division of roles, duties and responsibilities between parties. As part of their union, the parties choose to live in a way which will advance their interests – as individuals and as a partnership. The parties make different contributions to the marriage, which the law recognizes cannot simply be assessed in monetary terms or to the extent that they have financial consequences…
On separation, the partnership, and the division of roles and responsibilities which it produced, comes to an end. Individually the parties are left largely in the personal situations that the marriage has assigned to them … Post-separation, the party who had assumed the less financially rewarded responsibilities of the marriage is at an immediate disadvantage…
When the marriage ends, especially where that marriage has been a long one, one cannot separate the parties as individuals from the people they became in the context of the marriage relationship, and the allocation of roles, duties and responsibilities which it entailed…
[44] Waters & Jurek (1995) FLC 92-635cited with approval by the Full Court in Kennon & Kennon (1997) FLC 92-757
[45] Ibid
However, this was not a “traditional” marriage in that sense, where one party was the breadwinner and the other the homemaker. Both parties worked, and both parties contributed to the welfare of the family. Both parties made non-financial contributions to the acquisition, conservation and improvement of property. However, their contributions were not always equal.
The Court assesses the husband’s initial contributions as significant. The Court assesses the husband’s post separation contributions as greater than the wife’s, once again significantly so.
For the duration of the parties’ relationship, the husband’s contributions are assessed as higher than those of the wife, albeit not to the extent of his initial and post-separation contributions; they are only given slightly greater weight.
The Pierce[46] argument in this matter runs very strong, namely but for the significant initial contributions by the husband, the parties would have very little by way of assets at the conclusion of their relationship. It is the use to which the initial contributions have been put to that the Court gives significant regard to in the circumstances of this case. To summarise:
a)The husband brought into the relationship the entirety of the (omitted) fund he held. This fund forms about a fifth of the current pool;
b)The husband brought into the relationship the former matrimonial home which has increased in value and which was paid off during the relationship from the husband’s superannuation. The former matrimonial home forms about a third of the pool;
c)The caravan and motor vehicle which the husband retained at the conclusion of the relationship were capital contributions by him (or on his behalf). These assets form part of the pool;[47] and
d)The husband received a large inheritance late into the relationship, the majority of which remains an existing asset. This forms about a fifth of the pool.
[46] Pierce & Pierce [1998] FamCA 74
[47] They were purchased via a loan from his mother which was subsequently repaid either through the husband’s termination payment or via the inheritance he received
The husband’s (omitted) Super fund account was ultimately rolled over and now forms part of the pool. The majority of this is attributable to the period of the parties’ relationship.
The husband’s post separation contributions are significant. The wife has already received $55,000 by way of interim payments in the form of consent orders. The orders note that these sums are to be taken into account in the final property adjustment, and they have been in the broad brush approach which the Court takes to all of the parties’ contributions.
On weighing up all of the contributions, the Court finds that the husband’s initial financial contributions, his contributions of capital throughout the relationship and his post separation contributions were so significant, that his contributions overall are assessed as much greater than the wife’s. Indeed, so much so that the overall contributions are assessed at 85% to the husband and 15% to the wife.
While at first blush this might seem a little harsh after a 12 year relationship and within the context of both parties working ‘hard’ during the relationship, it is not so. Property adjustment orders are not social engineering. They are not there to equalise the parties’ long term prospects and outcomes. Indeed, the wife is receiving the benefit of a property adjustment order.
Section 75(2) Factors and Effect of proposed orders
Both parties have a number of health issues.
The wife is six years younger than the husband. She still has her (omitted) career and wants to progress it. The wife wants to buy herself a caravan and car to tow the caravan and continue in the lifestyle of a travelling (occupation omitted). She has demonstrated an earning capacity by the “(business omitted)” she has been able to secure post separation. She retains an earning capacity similar to what she had during the parties’ relationship.
The husband is retired and receives income via pensions from his superannuation, and government benefits. There is no evidence that the husband has any other earning capacity.
Taking into consideration the above matters and the disparity that will remain between the parties after the making of these orders, a further adjustment of 5% will be made in the wife’s favour.
Overall
The Court was urged by the wife to take a single pool approach in this matter, and to assess contributions globally[48]. The Court has acceded to this approach.
[48] Such an approach is ultimately to the benefit of the wife.
Having assessed the parties’ contributions at 85% - 15% in the husband’s favour and after finding that a further 5% adjustment is warranted in the wife’s favour, the end result is a 80% - 20% adjustment in the husband’s favour.
Based on a net pool of $1,510,300 and an 80% - 20% adjustment in the husband’s favour the husband is to receive by way of property adjustment orders, assets to the value of $1,208,240 and the wife is to receive by way of property adjustment orders assets to the value of $302,060 in the manner described below.
The husband is to receive:
Owner
Description
Value
Husband
Property A
$522,500
Husband
Bank Accounts ((omitted))
$ 3,754
Husband
Motor Vehicle ((omitted) Motor Vehicle)
$ 45,000
Husband
Caravan
$ 48,000
Husband
Shares
$ 4,557
Husband
Household contents
$ 15,000
Husband
(omitted) Life Policy
$ 7,194
Husband
(omitted) Investment
$ 294,480
Husband
(omitted) (Superannuation – payment phase)
$ 342,541
Husband
(omitted) Pension
$ 192,274
Less Payment to Wife:
($ 267,060)
TOTAL:
$1,208,240
The wife is to receive:
Ownership
Description
Value
Wife
Bank Account ((omitted))
$ 2,500
Wife
Motor Vehicle (Mazda)
$ 20,000
Wife
Household contents
$ 5,000
Wife
Musical instruments
$ 7,500
Payment from Husband
$ 267,060
TOTAL:
$ 302,060
The result in all of the circumstances is just and equitable. It will see the wife with a significant cash amount, the husband retaining the former matrimonial home and his superannuation, but only a small part of his inheritance. It will allow the wife to set herself up and continue to perform as an (occupation omitted), while travelling. It will allow the husband to retain his regular income stream and his home.
Orders will thus be made accordingly as set out at the forefront of these Reasons.[49]
[49] Lastly, a criticism has to be made in respect of the way the parties’ cases were prepared and run, but particularly so the husband’s. There was much time at trial wasted and unduly so. Much of the evidence sought to be relied upon was inadmissible. Important matters were not the subject of evidence in chief, but rather were put to in cross-examination, particularly so to the wife. The case theory was poorly developed. The parties could have been better served by their legal representatives.
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of Judge Obradovic
Date: 22 December 2017
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