SPEARS & SPEARS
[2010] FMCAfam 859
•9 July 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SPEARS & SPEARS | [2010] FMCAfam 859 |
| FAMILY LAW – Property settlement. FAMILY LAW – Spousal maintenance. |
| Family Law Act 1975 (Cth), ss.75(2), 79(2) |
| C & C [2005] FamCA 429 Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395 Pierce & Pierce [1998] FamCA 74 West & Green (1993) FLC 92-395 |
| Applicant: | MRS SPEARS |
| Respondent: | MR SPEARS |
| File Number: | PAC 2259 of 2009 |
| Judgment of: | Harman FM |
| Hearing date: | 9 July 2010 |
| Date of Last Submission: | 9 July 2010 |
| Delivered at: | Parramatta |
| Delivered on: | 9 July 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Kenny |
| Solicitors for the Applicant: | Rowlandson & Co |
| Counsel for the Respondent: | N/A |
| Solicitors for the Respondent: | Mr Tilley |
ORDERS
That the wife shall by 4pm 3rd September, 2010 pay to the husband an amount of $61,614.
Simultaneous with the wife’s compliance with order 1 hereof:
(a)The husband shall:
(i) Do all things, sign all documents and give all consents and authorities necessary to transfer to the wife the whole of the husband’s right title and interest in the property [W] in the State of NSW being all that parcel in Certificate of Title folio identifier [omitted] (hereinafter the [W] property);
(ii) Ensure that all Council and Water Rates and outgoings and service and utility fees with respect to the property are paid up and until the date of transfer and thereafter co-operate in transferring to the wife all such services as and from that date; and,
(iii) Vacate the [W] property giving the wife vacant possession of same and leaving the property in a neat, fit and property state of repair;
(b)The wife shall indemnify the husband and hold the husband forever indemnified with respect to the property and any liability relating to or arising from same.
For the purpose of Order 1 hereof time shall be of the essence and in the event that the wife is not in a position to comply with that order by 4pm 3rd September, 2010 then no extension of time is required to be given by the husband.
That in the event that the wife should fail to comply with order 1 hereof by being unable to tender payment to the husband of the sum of $61,614 by 4pm 3 September, 2010 then the husband shall by 4pm
29 October, 2010 pay to the wife an amount of $615,000.Simultaneous with the husband’s compliance with order 1 hereof:
(a)The wife shall surrender any claim she may otherwise have had or maintained with respect to the [W] property and the husband shall be declared to be the sole and absolute owner, as against the wife, of that property;
(b)The husband shall indemnify the wife and hold the wife forever indemnified with respect to the property and any liability relating to or arising from same.
For the purpose of Order 4 hereof time shall be of the essence and in the event that the husband is not in a position to comply with that order by 4pm 29th October, 2010 then no extension of time is required to be given by the wife.
In the event that neither the wife or the husband have acquired the other’s interest in the [W] property in accordance with these orders and by close of business 29th October, 2010 then each of the parties shall thereafter do all things, sign all documents necessary and given all consents and authorities as are appropriate to cause the [W] property to be listed for sale and sole by private treaty using an agent, a solicitor or conveyancer and at a price agreed between them.
In the event that the parties are unable to agree as to a listing agent, solicitor or conveyancer or listing price then the following shall apply:
(a)In the event that the parties are unable to agree on a listing agent then each party shall be authorised to select one agent to act with respect to the sale and upon such nomination or election being made known both parties will do all things and give all consents, cooperation and authority necessary to enable each of those agents to advertise the property for sale and conduct inspections.
(b)In the event that the parties are unable to agree on a solicitor or conveyancer to act on sale then either party may request in writing of the President for the time being of the Law Society of NSW the appointment of a solicitor or conveyancer and upon such nomination being made by the President or their nominee then each party shall do all things, sign all documents and given all consents and authorities necessary to enable the person so appointed to discharge their role.
(c)In the event of any disagreement as to listing price then the parties or one of them shall request the agent or agents who are instructed to nominate a realistic sale price by a realistic vendor for the property (and in the event that two agents a mean of such advices shall be used) and upon such advice being given the property shall be offered for sale at 105% of that estimate and the parties will accept any offer for sale that is equal to or in excess of 95% of the listing price.
Upon completion of any sale of the [W] property required by these Orders then each of the parties shall do all things, sign all documents and give all consents and authorities necessary to enable the net proceeds of sale after adjustment in payment of council and water rates to be distributed as follows:
(a)In payment of costs on sale and discharge of mortgage including both real estate and solicitor/conveyancer fees;
(b)As to the net balance then remaining to the wife.
Pending completion of the sale of the [W] property the party in occupation of the property shall be responsible for and shall make all payments with respect to Council and Water rates and service and utility fees connected with the property and shall the property insured at all times for its full insurable value and shall maintain the property in a neat, fit and proper state of repair.
That each of the parties shall forthwith do all things, sign all documents necessary and given all consents and authorities as are appropriate to cause the property [M] in the State of NSW being all that parcel in Certificate of Title Folio Identifier [omitted] (hereinafter the [M] property) to be listed for sale and sole by private treaty using an agent, a solicitor or conveyancer and at a price agreed between them and in the event of disagreement with respect to any issue relating to the listing and sale of the property the provisions of clause 8 hereof shall apply.
Upon completion of any sale of the [M] property required by these Orders then each of the parties shall do all things, sign all documents and give all consents and authorities necessary to enable the net proceeds of sale after adjustment in payment of council and water rates to be distributed as follows:
(a)In payment of costs on sale and discharge of mortgage including both real estate and solicitor/conveyancer fees;
(b)In payment of any CGT liability assessed in the name of either party;
(c)As to the net balance then remaining to the husband.
That the husband shall forthwith and within 72 hours do all things, sign all documents and give all consents, co-operation and assistance as may be required to transfer to the wife registration of the [omitted] motor vehicle Registration Number [omitted].
Pursuant to s.78 of the Family Law Act 1975 that each of the parties shall be and is hereby declared to be the sole and absolute owner in law and in equity of:
(a)Any motor vehicle in their respective possession;
(b)All items of furniture, furnishings, contents, personalty and chattels in their respective possession;
(c)Any shares held by them or recorded in the their name;
(d)All funds held by them in any banking account whether in their sole name or jointly with any other person or in trust for any other person;
(e)All contributions to or benefits or entitlements arising from membership of any superannuation fund.
Each of the parties shall be liable for and shall indemnify the other with respect to any liability in their sole name.
In the event that either party shall fail, neglect or refuse to sign any deed, document or instrument required by or to give effect to these orders then the Registrar of the Federal Magistrates Court Parramatta shall be and is hereby authorised, directed and empowered to sign such deed, document or instrument in the name of the defaulting party (same to be proved by production of an affidavit by the party requesting signature) and to thereafter do all things and acts necessary to give validity and operation to same.
All outstanding Applications and Responses are withdrawn and dismissed and all issues removed from the list of cases awaiting hearing.
That upon the expiration of the Appeal period and in the event that no appeal is lodged that all exhibits then be returned to the party who tendered same and that all material produced on subpoena be returned to the person or organisation who produced same.
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 MAGISTRATES COURT OF AUSTRALIA AT Parramatta |
PAC 2259 of 2009
| MRS SPEARS |
Applicant
And
| mr SPEARS |
Respondent
REASONS FOR JUDGMENT
These are proceedings involving competing property adjustment applications which came before me yesterday and have continued to conclusion today.
In dealing with the proceedings, I have read and considered the following material: in the wife’s case, her application initiating proceedings, together with her affidavit of evidence-in-chief filed
8 July, a supplementary affidavit of the wife filed in court on 8 July, together with a financial statement, also filed on 8 July.
In the husband’s case, I have read the following documents, as identified in the husband’s case outline, being his response to application initiating proceedings, filed 22 June 2009, an affidavit of evidence-in-chief filed 30 June 2010, a financial statement filed
30 June 2010, and an affidavit of Mr G filed on 6 July 2010, Mr G providing evidence as to valuation of a superannuation interest and not having been required for cross-examination.
I have also received, as an exhibit in the proceedings, exhibit J1, a supplementary report of Mr G dealing with and estimating likely capital gains tax liabilities and disposal costs, with respect to a property of these parties at [M], to which I will return.
I have also had the benefit of a number of documents, tendered in each party’s case and which have been marked as exhibits in the parties respective case outlines, which have given a skeletal summary of their positions in these proceedings. Each of the parties has given oral evidence and has been cross-examined.
There is, in these proceedings, some very slight – and I use that term advisedly – issue with respect to credit. It is not a case that will be determined having regard to issues of credit. To the extent that submissions are put in relation to that issue, each party asserts that the other has been less than frank and forthright with the court. A number of those submissions relate to transactions that have occurred from 1983 until the early 1990s, which were a period when the parties acquired the substantial majority of their property.
I do not feel, as I have expressed to the parties and each of them and their respective counsel during the matter, that very much at all turns upon what the parties have been able to provide or not provide regarding historical transactions, in some cases up to 23 years old. In any event, however, there are a number of issues with some significance in relation to each party’s position, although overall I find each party has done their best to give frank and truthful evidence to the court and that neither party has, at any stage, sought to actively deceive the court or the other party.
There has been a quantity of cross-examination relating to discovery, disclosure and production of material requested. It would certainly appear that each party complains that the other has been less than forthcoming in the provision of material. However, a quantity of that material has not been germane to the more substantial issues in dispute between the parties.
In relation to the husband’s case, the major criticisms made of him are twofold: firstly, that his evidence regarding a property at [Y], which was introduced to the relationship, was less than frank. I don’t accept that the husband’s evidence was untruthful but certainly, then, when tested in cross-examination and shown a copy of the transfer with respect to the acquisition of the [Y] property, which is an exhibit in the proceedings, A4, the husband did concede that his recollection was, clearly, incorrect, both as to the date of acquisition and the amount paid for the property. However, in that regard, the time of acquisition was not substantially inaccurate, being wrong by some years, but in any event pre-dating the parties’ relationship, which is probably the more fundamental aspect of that evidence. And the husband had not, in his material, given any evidence as to what was paid for the property.
I am asked to infer that the husband knew that full well but chose to withhold it.
I do not know whether that is or is not the case. But certainly, he cannot be criticised for giving evidence that is contrary to that in his affidavit, as the husband simply related, in paragraph 5 of the affidavit, that he owned the property, subject to a mortgage. Indeed, with respect to that property, I have no evidence as to the value of the property or the amount extant on the mortgage at the date of cohabitation. The agreed evidence that I do have is that the mortgage was subsequently paid out in the relationship by a sum of $8178.56. That transaction occurring a few years after the parties had commenced to cohabit.
The second criticism of the husband’s credit is that he has been less than forthcoming with respect to the production of bank statements and had been requested to bring, and did bring some further material to court this morning. The husband, in his defence, indicates, in questions both through Mr Kenny and myself, that he is not particularly computer savvy. I do not know whether that is or is not the case. But certainly there is some suggestion that the husband, as he had indicated in his evidence, runs his financial affairs and his reconciliation on the basis of cheque butts. Certainly, in this day and age, a great many people do not use paper transactions, such as cheques, but some still do and I accept that Mr Spears is one of them.
That is also borne out, to some extent, by entries which arise from exhibit R7, being two bundles of bank statements relating to
Mrs Spears and which evidence that cheques had been provided by
Mr Spears in payment of a spouse maintenance order, made on an interim basis by Henderson FM, since that order was made. As I have indicated, electronic banking is generally preferred by many people these days. But Mr Spears was clear in his evidence, and not particularly tested, that that is not his preference, and I accept that that is so. In any event, not a great deal turns on that other than some very minor issues, to which I will return.
In relation to the wife’s case, it is suggested that she has been less than frank and forthcoming regarding documents, again of a largely historical nature, but also, more recently, in relation to transactions that have occurred with respect to [omitted] work undertaken either by the wife, by the children of the parties, or some of them, at different times, or a combination of all. That is a matter that I will return to in more substance shortly but, in relation to the historical transactions, I make the same remarks. That some of these transactions relate to events that had occurred as late as 1988, 1991 and 1995 being, at the least,
15 years old. The existence of documents and the ability to recreate them would be limited.
In this regard, the wife has attempted and, I am satisfied, has done so to the best of her ability, to reconstruct those transactions, particularly in relation to two inheritances alleged by her. And I use that term, adopting the submission put to me by counsel for the husband. The documents that the wife has produced, as annexures to her affidavit, relate to inventories of property attached to applications for probate, copies of contracts for sale of property and the like. In relation to the second inheritance, the wife has produced an affidavit of executors detailing the assets of the estate and intended distribution. And I note, in relation to the second inheritance, that in fact the wife was one of the executors and, accordingly, that annexure is an affidavit sworn by her.
Not a great deal turns, in my mind, on those historical documents, particularly as, if one were to apply the best evidence rule and I were to accept Mrs Spears’s evidence, as I do, that she does not have originals or other documentation in her possession, the documents she has provided are, in all probability, the best she can do and represent the best evidence that is available for those transactions.
In relation to the more contentious issue that arises, both as a matter of credit and, with respect, contribution and assessment of section 75(2) factors, is the issue of work undertaken, particularly with respect to a company [S] regarding work. Each party has given evidence about this and, to the extent that it is relevant to issues of credit, I note that no attempt has ever been made by the wife to conceal the fact that that work is undertaken. The wife was asked a number of questions. In fact, a substantial portion of her cross-examination regarding that work, the income for it, the manner in which the moneys were dealt with and otherwise. I am inclined to accept the wife’s evidence in that regard. But in any event, lest I am wrong in that regard, I noted that the amounts that are talked of are in the nature of $400 per week, on average, over the periods that this work has been undertaken.
As I have said, the wife has not made any secret of the fact it occurs. The statements and documentation, with respect to the earnings have continued to go to the matrimonial home, in which the husband resides. The children have discussed it openly with their father. Mr Spears has given evidence, both in his affidavit and orally, that he is aware of it, the children’s participation, indeed their complaints to him regarding that participation and, on at least one occasion, that he had also assisted in that work. Accordingly, I am satisfied that it is at least a transparent transaction, irrespective of whose income it might ultimately be attributed to.
Otherwise, with respect to the proceedings, I note that the law governing such proceedings has been dealt with by the Full Court since the instigation of this jurisdiction. The approach to financial proceedings is well established in older case law, such as Ferraro & Best. It is more recently dealt with, particularly following superannuation splitting and the impact of a two-pool or one-pool approach in case laws such as C & C [2005] FamCA 429 and Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395, and I rely upon and adopt the reasoning of all of those decisions. It is well established that there is a four-step approach to be adopted in property proceedings which commences with the ascertainment of a matrimonial pool of property to divide. C & C (supra) has instructed, in this regard:
In noting that whilst superannuation, as a financial resource, is now under the legislation and since 2002 to be treated as though it were a property, it remains a financial resource, simply dealt with as property, although a very different species.
Having ascertained a pool, which in this case is largely agreed, I am required to assess and balance contributions, to then consider factors under section 75(2) and to, ultimately, assess and set out the practical consequences of orders that I have proposed to make and over-archingly, as required by section 79, subsection (2), to consider the justice and equity of that which is to be done.
There is a large body of agreed fact in this case. The parties met whilst both attending work training and commenced to cohabit in either 1986 or no later than February 1987 as alleged by Mr Spears. At the commencement of the relationship, Mr Spears owned a property at [Y]. As I have commented, I’m not aware of what the property was worth at that time or its extent of encumbrance but it existed and that, of itself, is not an issue in dispute.
The husband also alleges that at the commencement of cohabitation he owned a [omitted] motor vehicle which, as I read the evidence, is not disputed, together with savings which are described as “sufficient to discharge the then-mortgage”. That is not conceded and the husband gives evidence that, prior to the relationship, he had received funds of $12,000 from a VCT claim as they are now referred to and $10,000 as a gift from his father. Whether they were included in the savings described or not which, in any event aren’t conceded, I do not know.
The wife alleges that at the commencement of cohabitation, she owned a motor vehicle, [omitted], which is not in dispute but also had savings of $20,000. That is in dispute. The husband does not concede the savings but, in any event, having found that each party has done their best based on their recollection of events in this instance, up to
24 years ago, I accept that the wife had savings although, in the same circumstances, the home at [Y] and the husband’s allegations to savings, I cannot quantify them.
The parties have four children, the eldest of whom is now over the age of 18 years, being a son, [A]. They also have three other sons, [B] who is 14, [C] who is 12 and [D] who is nearly nine. There is very little dispute between the parties as to the care arrangements for these children since separation and particularly that all four children, initially from separation in 2004, which occurred either under the one roof in February 2004 as the wife alleges, or as is agreed by physical separation in June 2004, those children all lived with the wife in rental accommodation.
In 2008, [A] firstly, and shortly thereafter [B], passed to return and live with their father in the matrimonial home. [B] returned briefly from late 2009 until early 2010 to live with his mother, but now [A] and [B] are both living with their father and [C] and [D], the two younger children, are living with their mother. At separation, those four children were aged 12, 9 and not quiet seven and three respectively. Again, there is no dispute that, since separation, the wife has lived in rental accommodation. There is substantial dispute as to how that came to be but no issue as to the fact. The parties do not agree on many things regarding their conduct towards each other since separation but they are largely not germane to the decision I have to make.
The assets that the parties each assert at the commencement of the relationship I have described. The parties’ accommodation at the commencement of the relationship comprised the home at [Y] which was brought into the relationship by the husband, subject to a mortgage of some quantum. That mortgage was paid out in 1989 when an amount of $8,178.56 was paid to the mortgagee and the mortgage discharged. The evidence of the husband asserts that that was a contribution made by him. I find that it was a contribution made in the marriage by the parties and I do not know where the funds specifically came from, although the moneys that were drawn to pay out the mortgage certainly came from a State Bank account in the husband’s name, but I note at that point that the parties had been cohabiting for some three years.
It is also common ground that during the relationship and in 1991 the [Y] property was sold and the parties received net proceeds of some $175,000. The parties then lived for a period of about six months with the wife’s family, rent-free, and then purchased the present matrimonial home at [W]. The parties had the great benefit of not having to obtain a mortgage as they had the funds from the sale of the [Y] property which, at the time of its sale, was five years into the relationship, together with further funds. The parties are at great odds with each other as to where they came from.
I do not need, in my view, to make a finding as to where they came from as clearly, at that time, the parties had been together in a relationship and had began, quite evidently, to combine their financial resources. The parties had been together at that time for approximately six years and, even though the home was purchased in the husband’s sole name, I note that the jurisdiction and discretion of this court under section 79 is to make orders adjusting interests in property. Accordingly, the name in which property is held need not preclude an asset from consideration and, indeed, authorities such as Farmer and Bramley make that clear extending up to and including post-separation acquired property.
There is again, at that point, criticism in the wife’s case of the husband for being selective as to the material to be annexed to corroborate the husband’s allegations. The material is certainly selective, being singular pages of bank statements. Certainly, transactions back to 1991, some 18 to 19 years ago, would be difficult to reconstruct with bank records and it may well be, as the husband says, that that is the only page that he has. Whilst I doubt it, I am not in a position to make any finding about it and, in any event, a finding would not, in my view, be necessary as the parties were clearly together, were intermingling their finances at that point in time and the preponderance of money for the purchase of the [W] property, quite clearly and by concession between the parties, came from the proceeds of the sale of [Y].
Since separation, the husband has remained in occupation in the matrimonial home, and a great deal of evidence has been led regarding the consequence of this. The wife has calculated that she expended in excess of $100,000 in meeting rental and other costs, including re‑establishment costs since separation and seeks adjustments regarding contribution for this. The wife is also critical of the husband in relation to payment of child support and other financial assistance during this period, but I note that the husband certainly has paid the amounts which are required by him of child support, albeit that there would appear to be periods of time where the assessments have been based on either income estimates, or a notional income as a consequence of a tax return not being lodged.
This has, to some extent, been remedied by the issue of amended assessments which have created a debt of $13,000 or in excess of $13,000 as a consequence and based upon incomes now disclosed by tax returns. It’s a matter for the parties to deal with and address that through the child support agency, although I anticipate that they face a myriad of difficulties having regard to the present terms of the legislation and how far back the agency can deal with changes of assessment. During the relationship, there were also allegations with respect to other extraordinary contributions which each party urges me to view, having regard to authorities such as Pierce & Pierce [1998] FamCA 74.
In the wife’s case, there is an assertion in 1988 of a gift from her mother in the sum of $30,000. This is not accepted or acknowledged by the husband but I accept the wife’s evidence that she received a gift. In 1991, the wife received an inheritance from the estate of her grandmother which largely comprised a property at [H] in Newcastle which had been damaged during the earthquakes. The wife asserts that the amount that she received was substantial and in the order of $65,000, so substantial because, in 1991, that amount of money represented significantly more than it does today.
Whilst the documentation that is available from the wife’s material does not include anything that specifically shows the deposit of funds to her account, I accept her evidence that she was a beneficiary as to a one-quarter share in the estate and from the inventory of property and other material provided, that there was cash available to the wife, in all probability, from the proceeds of sale of the home in the order of $34,000, one-quarter share of the value of shares which would have been a little over $3000, and that there was a fund of insurance with relation to earthquake damage. This would begin to move the number towards $60,000 to $65,000 although I can’t be clear as to the specific amount but I am satisfied that it was somewhere within this range.
In 1995, the wife received an inheritance from the estate of her mother. At this time, again, there is some material attached to the wife’s affidavit, although it does fall short, as has been observed, of showing the deposit of funds into a bank account but, again, I hasten to add, it was 15 years ago and the wife’s evidence is clear that she left the home with some items, again, the nature and quantity of which are in dispute between the parties but I find that it would be highly unusual for a party to meticulously search out and pack all financial records before leaving, and that certainly after 15 years, it would be difficult, if not impossible, to reassemble through other independent sources, those documents.
The material produced certainly indicates that the wife was to receive a sum of $96,935.11 as a cash payment from the sale of a property and that there was a further cash fund which, if it were distributed between the four beneficiaries, would have seen the wife receive another $9,000. On that basis, again, whilst the wife asserts that it was an amount of around $112,000, which, on her evidence, she suggests is what her brother, one of her joint executor, told her that everyone received, I can’t find but I accept that it was at least $96,935.
During cross-examination of the husband, a number of game show wins, totalling $42,000, were put to the husband and he conceded them. As an admission against interest, I accept that those amounts came into being.
As a consequence of the above matters, the wife’s evidence is that in 1998, the parties were able to purchase an investment property or holiday home at [M] for $155,000. There is dispute between the parties as to where the deposit came from but it is almost irresistible that the property was purchased with substantial funds and a small mortgage, the parties agree on this, and that the majority of funds accordingly and in all probability, came from the wife’s inheritance.
If I am wrong in this regard, they certainly came from the parties’ resources, savings or otherwise and neither party has suggested with any vigour, and certainly not on the basis producing any evidence or concession, that either party has wasted assets, engaged in frivolous or excessive expenditure, hidden money, or taken other steps. Accordingly, the parties have contributed towards its purchase with a small mortgage which was paid out well before the separation of the parties rendering that property also unencumbered.
There was substantial evidence in cross-examination of the husband regarding his assertion that he had paid the deposit with respect to the purchase of this property and, in support of this, the husband produced, as annexure I to his affidavit, statement number 64 relating to an account in the husband’s name with the Credit Union which deposed, as at December of that year, savings of $31,502. The statement does not, however, go so far as to indicate that those funds were used to pay the deposit; I simply do not know but I can accept that the parties clearly saved well.
There are a number of inferences that one could draw from the fact that such savings were still in existence as to either the frugality of the parties in conducting their affairs, funds from sources other than alleged by the husband being used to meet earlier expenses but the evidence doesn’t allow findings of that, purely that this property was purchased with a small mortgage which was subsequently paid out and accepting that the wife had brought in at least $96,935 from that inheritance.
Again, I do not intend to be overly critical of either party in this regard. It was a transaction that happened 12 years ago, but I am left, and accepting, that, if one page of the statement is available, surely others could be, but I am not prepared to draw any inference that the document is not produced on the basis that it does not show what would otherwise be alleged. The husband also asserts a number of additional contributions beyond those of wage earner or homemaker and parent, including, firstly, a redundancy payment received in 1996 of $50,913.95 on leaving employment [omitted]. The evidence would appear to suggest that for a period of some months and possibly up to six months after that, the husband was without employment and that some, or a proportion, of the redundancy fund was used in meeting expenses. In any event, the redundancy occurred entirely during the relationship and with respect to employment during the relationship.
In February 2004, a lump sum payment was received by the husband, on leaving another employment, of $12,700, and I make the same comments regarding it as above. [Omitted], the husband received a victim’s compensation claim, as a result of injury in the line of employment. The claim was relatively substantial. The husband’s evidence is that he was incapacitated for some months, possibly three, following this and not in regular paid employment. I am urged to treat that contribution separately as it includes components for pain and suffering.
I certainly factor it in, as Pierce & Pierce (supra) requires me, as one of many transactions and contributions by these parties in a total relationship that would appear to span 24 years, if I include the period since their separation. In dealing with separation, whilst the parties have some slight dispute as to when it occurred, it most clearly occurred in either early or mid 2004 and the parties have lived separately and apart since that time. And I presume, from the fact they are here, running and presenting a case, that neither of them has any desire to reconcile the relationship.
Turning, then, to the first stage of this process, that is, for me to compile a pool.
The Pool
I am urged that, as neither party seeks a superannuation splitting order, that I must treat it as one total pool. I do not accept that that is, in fact, the present state of the Full Court’s authority, in cases such as C & C (supra). And I have approached the matter by compiling two separate accounts, one of tangible and one of intangible superannuation assets. Lest I am wrong in that regard, I have, however, calculated the entitlement of the parties and each of them, having regard to both separate and a consolidated pool.
In turning to the assets, the parties agree as to the value of their substantial assets, being real estate, two parcels thereof, and superannuation. The major asset is the home at [W], with an agreed value of $615,000. There is also the [M] property with a value of $300,000. Neither property is encumbered, making these parties somewhat unique in parties before this court, at least. The parties’ respective superannuation entitlements are also agreed. The wife has entitlements totalling $420,073, the husband $293,666 in a number of funds, the majority of which relates to a public service employee fund or an ARIA fund, as identified in the valuation.
The smaller assets of the parties and their liabilities are modest, compared to the above. I have no evidence, or independent evidence, of value of any of those assets and I had indicated, during the course of the hearing, that the only way that I felt I could proceed in dealing with those assets was to accept the value, each alleged for the items which they had, as an admission against interests and I proceed on that basis and find the following further assets: [Omitted] shares held by the husband, with a value of $6132; furniture of the husband, $7000; furniture of the wife, $5000; the husband’s car, $1000; the wife’s car, $4000. The husband has also referred in his material to two debts that the wife has, a loan and a credit card totalling $6293. I intend to take that amount into account for reasons that will become clear.
I have also had, tendered during the hearing as exhibit J1, a calculation as to capital gains tax and realisation costs on the sale of the [M] property, which totalled $33,980. Neither party seeks to retain that property and each urges me to make an order for its sale, which I intend to do. Accordingly, the realisation costs and capital gains tax will be immediately realised and must be included. That leaves a net total of tangible assets of $897,859. The parties’ superannuation entitlements have a total value of $713,739 and I have incorporated both the reasoning as to division of that asset pool and the pool itself into an Excel spreadsheet, which will be incorporated into these reasons and, at the time that orders are handed down, provided to the parties.
As I have indicated, I have taken those figures, where possible, from agreed or non-disputed matters. Where there is dispute, in relation to smaller items worth less than $10,000, I have taken the value that each party has asserted for items they have, as an admission against interests. It is trite to say that parties, in proceedings before the court, generally allege that the assets which they are not retaining have greater value than the person who retains them. That is certainly the case in these proceedings.
But the difference it makes is minimal to the overall value of the pool and I do not intend to put the parties to the expense of producing any greater evidence or taking the path that the Full Court sometimes suggests of ascertaining its value by sale. It would be pointless. I also have some comfort that, to the extent, as Mr Kenny has remarked, that the exercise favours the husband. It does not favour him by anything more than a few thousand dollars and by including the wife’s loans, which she holds at this time, I feel that that more than balances and compensates. There is also issue, raised in the proceedings, that the husband had, at the time of separation, $18,000 in a Bank account.
I accept the husband’s evidence that he paid the bills, which existed at the time of separation, from those moneys, totalling $2571.21. I also accept the husband’s evidence, as conceded by the wife, that the husband, post separation, continued to service, until its discharge, a debt with respect to the vehicle retained by the wife. I feel that that more than offsets that amount of money and, accordingly, have not included it. Neither party has urged me to include legal fees, paid or unpaid, and I do not propose to do so. In any event, I do not know totals for those amounts. The husband has paid some of his fees, although, I imagine, not all. The wife has not been in a position to pay her fees as she has gone along. I am urged to consider this as a section 75(2) consideration and will return to it.
The wife’s debts, as accrued, are modest and I have included them as I have indicated above, as they offset, to some extent, the disparity that is alleged by the wife, in furniture and other items retained. I also accept that the wife has had a lesser income than the husband since separation, and a much greater expense base, through meeting rent and, accordingly, whilst there has been great cross-examination of the wife as to her real income and expenses, I accept that, in vernacular terms, she has struggled and, accordingly, it is not surprising she has some small debt. Indeed, her evidence is that at separation she obtained a loan, for about one half of the present debt, to meet a bond and other expenses.
Contributions
In assessing contributions, there are a number of factors that are put to me. Again, it is clear that each of the parties seeks to rely on authorities such as Pierce & Pierce (supra) as to the initial or extraordinary contributions that they assert. There is also some assistance to me from authorities, such as DR and CAJ, regarding post-separation contributions, alleged by each of the parties. I propose to assess the parties’ contributions, up and until the date of separation, as equal. I accept, unreservedly, that the husband owned the property at [Y], with a mortgage, at the commencement of the relationship. But I do not know, and I do not know how it could otherwise have been proven, what the property was worth or what the mortgage was at its time. The extent of knowledge in relation to [Y] is set out above.
I do accept that the majority of funds for the purchase of the [W] property came from the proceeds of sale of the [Y] property. But the sale of the [Y] property occurred five years into the relationship, after the parties had cohabited for that period, combined their incomes to whatever extent, whether by operating joint accounts or otherwise, and I do not know how I can be in a position to assess, other than arbitrarily, which proportion of funds were, effectively, brought into the relationship and which accrued post-cohabitation. However, the existence of the asset is significant.
Also of significance is the fact that the parties were, through the resources that they then held, whether the husband’s, the wife’s at cohabitation, or a combination of all, or that which they accrued after cohabitation, enabled them to purchase an unencumbered property. And accordingly, they had the great benefit, that the majority of the community does not, of living in an unencumbered, rent-free accommodation for all of their relationship, effectively, noting that the [Y] mortgage was paid out very early on. The wife had also made great contributions, however, through inheritances and I accept, based on the material that is available, that those inheritances were, in all probability, about equal to the amount that came in from the husband’s ownership of property at [Y]. And I note that they came in at not dissimilar times.
The wife’s first inheritance, whether funds from it went towards the purchase of [W] or not, of between $60,000 to $65,000 occurred in the same year as the sale of [Y], and the second inheritance was in 1995, some 15 years ago.
In relation to the game show wins, I concur with Mr Tilley’s observation. They simply go into the pool, but I also take the view that so does the redundancy and the lump sum leave entitlements paid out in 2004. In relation to the VCT claim, I accept that, whilst it is a verdict that relates to an injury to the husband, the evidence before me is not clear as to exactly when the injury occurred and over the length of a long relationship - I note that the Full Court urges in Pierce & Pierce (supra) - that all contributions must be weighed and balanced as part of an intricate fabric of the relationship.
Marriages are not accounting exercises. Married couples and indeed more commonly, de facto couples, tend not to organise their affairs with strict and rigorous accounting and I have no doubt whatsoever, that whilst at different points in time, in one or other of these parties’ minds, such accounting was occurring, that is not the manner in which this court approaches the adjustment of interests in property following separation.
Post-separation, which is now a period of some six years, I accept that there should be some small adjustment made in the wife’s favour for the greater contribution she had made, or perhaps more correctly, the more onerous contribution she had made.
What is clear is that for a period from separation in 2004 until 2008, some four to four and a half years, the wife had the full-time care of four children. That is not, in any way, to criticise Mr Spears. He has always paid child support as assessed and I do not intend to reopen the argument between the parties as to what incomes were or were not used for that purpose. That is an issue that the parties can deal with the child support agency about. However, during that period of time, clearly, the wife’s income was less than the husband’s, irrespective of whether I do or do not include income from work which, at most, would be in the other of $15,000 to $20,000 per year in any given year but not continuously and which, even if it were included would get the wife to a point of around $50,000 a year in income.
Set against that, the husband has had, and again, I don’t intend to factor into my considerations any finding as to who is responsible for the circumstance, clearly to note that it existed, that the husband lived in unencumbered accommodation and thus had no housing cost whereas the wife, during that same period, was incurring cost which she has calculated to be in excess of $100,000 but which has generally been paying rental of approximately $400 per week or $20,000 per annum.
To that extent, I propose to make a five per cent adjustment as urged by counsel for the wife.
Section 75(2)
In relation to section 75(2) considerations, this matter is indeed one where there is not as great a set of considerations as might otherwise be the case. It is trite to say that the level of adjustment for section 75(2) considerations is calculated on a global basis rather than on a factor-by-factor consideration adding up mathematically. It is also trite to say that the greater the asset pool, the greater will be the consequence of any percentage adjustment.
That also turns me back to the consideration of the pool. I have sought to treat tangible non-superannuation assets as a separate and distinct pool to superannuation assets. In relation to the tangible assets, I note that the wife has the care of two of the three children under the age of 18 years and I accept that that is probably not likely to change.
I do not accept that the two elder children have a connection with the home rather than their father. Although, I can imagine that everybody would prefer to be in more luxurious circumstances than they are, irrespective of which child or which parent and certainly teenage children, as the elder children are and the two younger children are becoming, have a well-known self-focus upon their own comfort at the expense of others.
The wife’s income is certainly and has, throughout the period of separation, been less than the husband.
Both parties allege health issues; neither has any substantial evidence to support that, neither substantially seeks to deny the other’s assertion but in any event, it does not favour either party.
Both parties have the capacity for employment although neither is earning an income that would be considered to be excessive. The wife, having the care of the two younger children, does have some relevance as they are children of an age where their care will continue for some little while to come. [C] is 12 and, accordingly, will have another six years of child support eligibility, [D] is not yet nine and has another nine years to go. As they age, their expenses will increase. The mother seeks, as a consequence of that care, also to address an issue which has particular significance for these parties, who will have the option of retaining the [W] property or at least first option.
I am required under section 75(2) to consider the standard of living that each party presently enjoys and will in the future. I am satisfied that both parties will end up in a financial position that will provide them with a comfortable middle-class existence although, at present and for the last six years, I must find that the husband’s income and general standard of living has been slightly greater than the wife although the parties have reached a much greater point of equality since interim spouse maintenance orders were made, an order which the husband has complied with without any assertion otherwise.
Section 75(2) factors also, in my mind, have some particular significance with respect to the issue between these parties as to who would have the first opportunity to retain the matrimonial home.
There is evidence brought before me from both parties as to their borrowing capacity. Mr Spears, from his evidence in the witness box where he has indicated that he has had a meeting with his bank, the local branch of the bank at [W], and that they have indicated that he will not have difficulty borrowing any amount of money. Certainly, there has to be a realistic temper on that but it would seem apparent from the parties’ respective income and the security that they can offer for borrowing that Mr Spears would no great difficulty. I have an affidavit from the wife indicating her borrowing capacity, both of which are of assistance to me.
What is also clear is that the parties have both stayed living in the same area, principally because the children attend schools and other activities in the area. The two younger children, as I have remarked are in the care of, and there would not appear any dispute, at least in the foreseeable future, will continue in the care of the wife.
Whilst the husband certainly has the capacity to borrow, the amount which the husband would need to borrow is likely, on any view of the facts, to be substantially greater than that of the wife although the sale of the [M] property will most assuredly provide a sum of around $260,000 or more based on the value that the parties ascribe to that property for one or both parties.
The wife, in light of the adjustments that I have referred to in relation to contribution, and that I will come to in relation to section 75(2), would need to borrow less money than the husband to be able to retain the property, however, particularly if the [M] property was sold and proceeds were available from that. During the course of the hearing there has been some evidence about use of the [M] property since separation, and clearly the husband has conceded that a quantity of material is stored at that property which belongs to his parents.
I am urged by the wife in her case to consider justice and equity under section 79(2) as requiring that she return to the [W] property. I do not feel that that factor greatly assists either party as against the other.
I am also urged that the wife should have the opportunity of living in the unencumbered [W] property or, with such mortgages as required to enable the wife to purchase the property as she has had higher living costs in the last six years by having been paying rent. I am satisfied that whilst that may not be an issue historically, this court makes decisions based on an application of the law, justice and equity, not sympathy or retribution that the ability of the wife to maintain herself with a lesser income and earning capacity than the husband and, accordingly, with a lesser expense base, is of some importance. Having regard to all of those matters, and in relation to adjustments for section 75(2), it would be my intention to make an adjustment, as urged by the wife, of 10 per cent but only with respect to the tangible assets.
With respect to superannuation, I note that the parties’ entitlements are not dramatically dissimilar although the wife is ahead. I have no evidence before me as to what the parties’ respective superannuation entitlements were at the commencement of the relationship or at separation and, to some extent, one is then left with either undertaking an arbitrary process as used to occur with cases such as West & Green (1993) FLC 92-395 which, the Full Court has been clear, should not occur, or to simply do the best I can to achieve some division or movement of superannuation or another adjustment to compensate parties who have lesser superannuation.
In this case, neither party seeks a superannuation splitting order. The wife had sought a superannuation splitting order in her initiating application but it sought an order moving funds from the husband to her. Suffice to say, on the facts of this case, I would not be persuaded, even if that application was pressed, that that would be appropriate. I do propose to make an adjustment with respect to super but as a cash component. On that basis, I propose to see a division of the total pool of superannuation, $713,739, so that the wife receives 55 per cent of it and the husband 45 per cent.
I would otherwise equalise superannuation between the parties as, to a large extent, was parliament’s intention at the time of the passage of the legislation, save that the parties have been separated for six years and I cannot, with any certainty other than an arbitrary and mathematical fashion, seek to make an adjustment to compensate for post-separation contribution. I do not have any figures to rely upon and I am also conscious of the fact that, if I make it as a cash adjustment, that will have a number of benefits. Firstly, it will enable both parties to continue to contribute to superannuation and develop their own funds without recrimination and, certainly, both parties are in a position, by the time of retirement, to have not dissimilar amounts.
Secondly, it will enable the wife to borrow funds and retain the [W] property should she wish to do so, or be able to do so. It will provide the husband with a very significant deposit towards a property and I find that his ability to borrow is such, as is his ability to service any borrowed money is such, that both parties would more appropriately be able to accommodate themselves through that course than any other.
On the basis of the above, and by reference to the spreadsheet that will be handed out to the parties with the orders, but not forming part of them, I am satisfied that to achieve a 65/35 per cent division of tangible assets it will be necessary for the wife to make a payment to the husband of $34,098 and for her to then retain the [W] property, and the smaller items in her possession, and for the husband to retain the balance of tangible assets. There would also need to be a cash adjustment with respect to superannuation which, again, I have partially tempered for the reasons I’ve described but also, as the adjustment will come as cash rather than a future entitlement to superannuation. That adjustment I calculate would need to be not less than $27,516 so that a total cash payment of $61,614 would be required.
If I am wrong, or alleged to be wrong, regarding the methodology of that calculation, I note that if I were to approach the matter on a combined asset and resources pool that this would have a value a little in excess of $1,615,000 and that the division I propose is then a
60.5 per cent/59.5 per cent division in favour of the wife on the basis of each party retaining their superannuation, and I feel that that figure would be justified and arrived at in those circumstances by finding an equal or 55 per cent contribution in the wife’s favour and a smaller adjustment with respect to section 75(2) factors having regard to the wife’s ability to then avail herself immediately of unencumbered accommodation without the need for an ongoing housing cost, and offset by the fact that she would be retaining a sizable portion of her percentage as superannuation which will not be accessible by her for some substantial period.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Harman FM
Date: 12 August 2010
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