STARKS & STARKS

Case •

[2019] FCCA 1474

•

31 May 2019

FEDERAL CIRCUIT COURT OF AUSTRALIA

STARKS & STARKS [2019] FCCA 1474
Catchwords:
FAMILY LAW – Property settlement – very limited issues to determine in very small property pool – Husband seeks remaining proceeds of matrimonial home held on trust for children – Wife seeks proceeds of matrimonial home are distributed to her in circumstances where she is the primary carer of the children of the relationship – Superannuation split where the amount of superannuation in the pool is misstated by the parties – considerations of justice and equity.

Legislation:

Family Law Act 1975 (Cth), ss.79(2), 79(4), 75(2)
Applicant: MS STARKS
Respondent: MR STARKS
File Number: CAC 203 of 2014
Judgment of: Judge Neville
Hearing date: Written Submissions
Date of Last Submission: 12 March 2019
Delivered at: Canberra
Delivered on: 31 May 2019

REPRESENTATION

Solicitors for the Applicant: Legal Aid ACT
Solicitors for the Respondent: Self-represented

ORDERS

  1. By consent, within 14 days, the entirety of the balance remaining and held by the Court from the proceeds of sale of the former matrimonial home in the sum of $18, 917 be paid to the Applicant Wife by way of a property adjustment, on the basis that these funds are to be used for the sole benefit of the three children of the relationship, [X] (born: … 2005), [Y] (born: … 2008) and [Z] (born: … 2009).

  2. In accordance with section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of Mr Starks’ interest in the SUPER FUND A superannuation fund Ms Starks shall be entitled to be paid $55,000 and that there be a corresponding reduction of the entitlement Mr Starks would have had in the SUPER FUND A superannuation fund but for these orders.

  3. Order 2 binds the Trustee of the SUPER FUND A superannuation fund and any subsequent trustee of the SUPER FUND A fund or a successor fund.

  4. The operative time for these orders is five days from the date of service.

  5. Except as otherwise provided in these orders, each party shall be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature or kind in his or her possession or control as at the date of these orders and for this purpose bank accounts are deemed to be in the possession of the party whose name appears on the bank’s records  thereof, insurance policies are deemed to be in  the possession of the beneficiary thereof, shares are deemed to be in the possession of the registered proprietor thereof, superannuation entitlements, pension entitlements, long service leave and salary bonus entitlements (if any) are deemed to be in the possession of the person who is named as the worker or beneficiary whose age or working future provides the conditions for payment out of such entitlements.

  6. The matter is now finalised, all extant Applications are dismissed and the matter be removed immediately from the docket.

IT IS NOTED that publication of this judgment under the pseudonym Starks & Starks is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CANBERRA

CAC 203 of 2014

MS STARKS

Applicant

And

MR STARKS

Respondent

REASONS FOR JUDGMENT

Introduction

  1. As the file number indicates, these parties have been litigating since 2014.  Almost innumerable court-events have taken place, many of them seemingly of little actual benefit to the parties at all.

  2. The parties have three children from their relationship.  Those young girls are now (approximately) 14, 11 and 10 years of age.  The relationship between the parties was approximately 14 years in length. 

  3. The Wife was discharged from her bankruptcy in April 2018.  Formerly, she ran a modest business but which [perhaps obviously] ran into financial trouble.  Again, I need not recount details of that here.  It is well documented in her lengthy Affidavit material.

  4. The Wife has re-partnered and has another child from that relationship.  The Husband has re-partnered also but, apart from his partner’s children, there are no further children from that relationship.

  5. There remain ongoing child support issues between the parties, which I need not detail here.  They are not directly relevant to the determination of the very few matters that remain for the Court to finalise.

  6. The two outstanding issues that Court must resolve concern what is to be done (a) with the sum of $18,917 that is currently held by the Court (that sum is the surplus remaining from the proceeds of sale of the former marital residence, which was sold by the mortgagee in possession); and (b) with the very modest superannuation pool of $60,000 standing in the name of the Husband (as submitted by the Wife)?  There is a small “wrinkle” in the amount stated: in his written submissions, the Husband states that he has two superannuation funds – a fund (Super Fund B Superannuation) in the Wife’s name with an account balance of $25,000, and the Husband’s SUPER FUND A Superannuation account with a balance of $70,00, which he says was accumulated during the relationship.  This would obviously mean that there is a combined superannuation pool of $95,000.

  7. Although there is a very large amount of material that has been filed by the parties over the years, up to date factual material before the Court is quite limited because the Husband’s last Financial Statement was filed on 11th April 2016, and the Wife’s last Financial Statement was filed on 10th April 2017.  The Wife’s Financial Statement deposed to her having superannuation totalling $25,000.

  8. Both parties are aged 40 years or thereabouts.  The Husband is a tradesman by trade.  He had some “health” issues as set out in his now dated Affidavit material.  In his regular appearances before me in recent years, he presented as sprightly and in apparent good health.  This is not a formal finding but rather an observation.  As already noted, he has not filed anything recently to indicate that he has any particular health issue to which the Court should have any regard.  I am not aware of any major health issue that afflicts the Wife.

  9. The parenting matters have been resolved (and Orders made) whereby the children live primarily with the Mother and spend regular time with the Father.

  10. In fact (or in reality), the issue of the proceeds of sale is somewhat moot because, as recorded in the Orders made on 11th December 2018, the Husband said that he was content for the sum in question ($18,917) to be paid to the Wife provided it was held in trust for the benefit of the children of the relationship (e.g. for counselling or otherwise for the sole benefit of the children).  On this basis, an Order by consent to this effect, will be made.

  11. This being so, the only issue left to determine, albeit on very limited factual material, and somewhat limited written submissions, is what to do with the modest amount of the Husband’s (or the parties’ combined) superannuation?  The Wife seeks that the total be paid to her, but by reference only to the Husband’s superannuation.  The Husband seeks (among other things) that there be, alternatively, an equal split of both funds in amounts specified in his submissions, set out below.

Orders Sought by the Applicant Wife

  1. The Applicant’s Orders Sought were contained in her written submissions filed on 12th March 2019.  They were as follows:

    1.  The final orders sought by the applicant mother are:

    1.1  That the entirety of the balance remaining and held by the Court from the proceeds of sale of the former matrimonial home held  in the sum of $18, 917 be paid to the applicant mother by way of a property adjustment;

    2.1 That, in accordance with section 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of Mr Starks’ interest in the SUPER FUND A superannuation fund, Ms Starks shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $60,000, or a base amount equal to the current value of the fund (whichever is the greater) and that there be a corresponding reduction of the entitlement Mr Starks would have had in the SUPER FUND A superannuation fund but for these orders;

    3.1 That order 2.1 binds the Trustee of the SUPER FUND A superannuation fund and any subsequent trustee of the SUPER FUND A fund or a successor fund;

    4.1 That the operative time for these orders is five days from the date of service;

    5. 1 That leave be granted  to the applicant mother to file a brief affidavit setting out changed circumstances between the trial and current  as to the children’s changed  living arrangements and other matters  relevant to a section 75  adjustment of property;

    6.1 That except as otherwise provided in these orders, each party shall be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature or kind in his or her possession or control as at the date of these orders and for this purpose bank accounts are deemed to be in the possession of the party whose name appears on the bank’s records  thereof, insurance policies are deemed to be in  the possession of the beneficiary thereof, shares are deemed to be in the possession of the registered proprietor thereof, superannuation entitlements, pension entitlements, long service leave and salary bonus entitlements (if any) are deemed to be in the possession of the person who is named as the worker or beneficiary whose age or working future provides the conditions for payment out of such entitlements.

    7.1 In the alternative, if the Court does not make a property adjustment in the wife’s favour in accordance with proposed order 1.1, but instead makes an order the consequence of which a payment would be made to the husband, then pursuant to section 124(1) of the Child Support Assessment Act 1989 , the $18,917 (or such part of it which would otherwise be paid to the husband) be held in trust by an appointed trustee for payment to the Child Support Agency on a monthly basis the amount due pursuant to child support assessments created by the Child Support Agency in relation to the children; and the wife shall forthwith make such application and serve the Child Support Registrar.

Submissions on behalf of the Applicant Wife

  1. The solicitors for the Applicant filed written submissions on 12th March 2019 which were as follows:

    Summary of contributions

    2. The parties commenced cohabitation in 1999 and separated finally on the 25th of August 2013.  There are three children of the marriage [X] born … 2005 and aged 13, [Y] born … 2009 and aged 10 years and [Z] born … 2009 and aged 9 years.  All three girls live primarily with the applicant wife.

    3. The period of cohabitation was approximately 14 years. 

    4. Neither party had assets of any significant value at the commencement of the cohabitation.   The wife worked in the family business known as “Business C” during the cohabitation.  The husband was employed as a tradesman during the cohabitation.  Both parties benefitted from income generated by the business during the cohabitation and from income generated from the husband’s employment during the cohabitation.   The wife’s evidence is that she was the primary carer for the children and that she performed most of the home duties throughout the cohabitation.

    5. The applicant wife became bankrupt on 9 April 2015 during the course of these proceedings. The debts which bankrupted her were matrimonial debts, and included a tax debt associated with the failed family business “Business C” and a debt to the respondent husband’s parents, also associated with the business.  The wife was a director and shareholder of the company which owned the business at the time when the tax debt and other debts were incurred, and the husband was not.  The wife has taken all of the liability for the debts, and the husband has taken none.  

    6. About a week after the separation, the husband settled a personal injuries claim and received a net payout of $92,000, all of which he retained for his own benefit and none of which was used to reduce the matrimonial debts, including the debt to his parents.  The husband has not accounted for or disclosed the manner in which he expended these funds.

    7. Post separation, the husband was in occupation of the former matrimonial home to the exclusion of the wife.  He permitted the mortgage repayments to fall into arrears, of about $10,000 by March 2015, and did not pay the water and land rates for the period of his occupation.

    8. In about March 2015 the husband purchased property at Street D, Property E jointly with his new partner Ms F.  The wife asserts the deposit for the purchase was raised in part using funds the husband should have applied to the mortgage over Street G, Property H during the period he was occupying that property to the exclusion of the wife.

    9. The wife moved back into the former matrimonial home in about March 2015 together with the children. At that time the mortgage payments were already in arrears.  The wife’s evidence is that she paid the mortgage repayments until July 2015 but stopped paying then.  By April 2016 the mortgage arrears were $26,000 including the $10,000 owing when the husband left the former matrimonial home. Post separation the husband had an income of at least $100,000 per annum.  He failed to make any mortgage repayments and he failed to pay child support, apart from a once off payment of $83 in November 2015.  He did not make any contribution to the children’s Catholic school fees. 

    10. The Westpac Bank commenced proceedings against the parties in the Supreme Court for possession on 21 October 2016.   By April 2017 the mortgage was in arrears by about $37, 000 inclusive of penalties and legal expenses, and the husband was in arrears of payment of child support of $17,222 approximately. 

    11. Westpac Bank entered into possession of the former matrimonial home and it was sold by the mortgagee in possession on or about the 10th of October 2017 for $538,000.  The balance remaining after payment out of adjustments, usual outgoings associated with the sale and of all monies due to the Westpac Bank was $37,834.74. 

    12. The Child Support Registrar issued at notice pursuant to s72A of the Child Support (Registration & Collection) Act 1988 to lawyers acting for the Westpac Bank and as a result of this notice the sum of $18,917.37 was paid to the Child Support Agency and then applied to reduce the husband’s child support arrears.  As that was a payment made in reduction of the husband’s  post separation child support liability from the sale proceeds of an asset of the marriage the husband should be treated as having already received a property adjustment of $18,917.37 from the sale proceeds, and the wife , none.

    13. The payment did not extinguish all of the arrears he then owed. However the husband made an application for change of assessment (his third since the separation) and then challenged the outcome in the AAT.  This delayed the conclusion of these proceedings because it put in dispute the quantum of the arrears of child support, and the wife was then seeking that all of the arrears be paid from the husband’s share of any property adjustment.  

    14. The husband also retained all of  the motor vehicles, bikes and trailers in his possession set out at par 39 of the wife’s affidavit of 9 April 2017 and has otherwise retained and not disclosed the proceeds of sale of other motor vehicles (paras 40 and 41 of the wife’s April 2017 affidavit). 

    15. The trustee in bankruptcy asserted by letter to the Court that by court order dated 20 April 2017 the Trustee was entitled to receive 50 % of the proceeds of sale, however, the order was clearly expressed to be subject to the determination of any outstanding applications before the Court.  There were still outstanding applications before the Court. 

    16. The applicant wife was discharged from her bankruptcy on 10 April 2018.    

    17. The trustee in bankruptcy has advised the court by letter dated 10 December 2018 that no formal application for payment of the monies to him will be made, as given the quantum it would be uncommercial to do so.  The Trustee further advises he does not wish to be heard.

    Section 75 factors

    18. The section 75 factors include;

    - the wife’s continuing role as  the primary carer for the children in circumstances where the children reside primarily with her,

    - the disparity in income between the husband and the wife,

    - the  demonstrated unlikelihood that the husband will meet his child support obligations into the future;

    - The wife will continue to pay rent and her credit rating has been affected by the bankruptcy; the husband has purchased the property at Street D, Property E and has an undisclosed equity in it;

    - The wife has limited or no prospect of accumulating superannuation; the husband’s income exceeded $100,000 post separation and he has prospects of accumulating superannuation. 

    - The husband did not provide evidence to support his assertion that his capacity to continue in paid employment or to work as a tradesman would be affected by alleged injuries sustained by him in recreational motorbike riding activities. 

Orders Sought and Written Submissions by the Respondent Husband

  1. The Respondent filed his “concise statement” (this is his terminology for the document filed) on 25th January 2019 which contained his (a) Orders sought and (b) written submissions.  This statement provided as follows:

    Remaining funds held by the court;

    1. For the matter of the $18,917.38 remaining from the sale of the marital home currently held in trust by the court, I please request that the decision be made to place the remaining money in a trust account for each of the children of the marriage, [X] (aged 13), [Y] (aged 10), and [Z] (aged 9). The intention of the children receiving the payment as opposed to either parent receiving it is to be able to provide the children with an amount of money to which they can use to benefit their future and may provide them with an advantage to accommodate the adult that they will become.

    2. I would like to have the money split evenly between the children, placed in a high interest account held in trust until the receiving child reaches their 21st birthday. I have displayed the details of my request in the table below.

Name of child to receive payment

Amount of payment (33.33%)

Date payment will be received

[X], DOB … 2005

$6,305.80

23/05/2026

[Y] DOB … 2008

$6,305.79

13/03/2029

[Z] DOB … 2009

$6,305.79

09/07/2030

Superannuation split;

1. For the matter of the superannuation split that has been requested by the respondent, I please request that an option be selected for the superannuation agreement from the following table based on the contributing factors below;

a) During the 9 years that the respondent owned and successfully operated the businesses, Business C and the Business J, there were no contributions paid into a super fund over that period therefore affecting the amount of super growth, without any financial statements ever being provided for the business it is impossible to know the actual earning capacity of the respondent during this time and the potential contributions that would have been made.

b) For a period of time of over 2 years, the respondent and partner lived in the former martial home and failed to comply with the court order that specifically stated that the mortgage and utilities be paid during the period they occupied the residence. They did not comply.

c) The result of this was a financial loss in the proximity of $60,000 for unpaid mortgage payments, unpaid utility bills and many fees and charges occurred for non-payment during occupancy ad when the home was finally sold. Although the outstanding amounts have now been reconciled through the sale of the martial home, I believe that it was a huge financial benefit for the respondent and her partner to have resided in the former marital home for that period of time without making any payments, and that it had a huge negative impact on the amount of money that remained to be allocated to the net asset pool which would have been split equally between us through our divorce.

d) There joint superannuation funds consist of $25,000 of superannuation contributions held by the respondent with Super Fund B and $70,000 of superannuation contributions accumulated by myself during co-habitation, held in the superannuation fund SUPER FUND A.

e) The combined super totals $95,000.

Option 1  Remaining amount held in SUPER FUND A superfund for Mr Starks Remaining amount held in Super Fund B superfund for Ms Starks

An amount of $20,000 be made as payment directly to Ms Starks’s Super Fund B account.

$50,000

$45,000
Option 2 Remaining amount held in SUPER FUND A superfund for Mr Starks Remaining amount held in Super Fund B superfund for Ms Starks

The 2 funds be combined and an equal spilt of 50% 

$47,500

$47,500

Outline of Principle

  1. The submissions of the parties, in part understandably, were silent in providing any point of reference or principle upon which the Court could (or should) base its decision.  Accordingly, the Court must state, very briefly, the principles used in arriving at its conclusion.

  2. Under s.79(2) of the Family Law Act 1975 (“the Act”) the Court must make any order regarding the distribution of the property of the parties only on the basis that the Order is “just and equitable.” The Court can only arrive at such a conclusion by having regard to the considerations set out in s.79(4) and s.75(2) of the Act. In the discussion below, to the degree that the Court can make any decision that is just and equitable, there will always be an element of discretion, especially given the extremely limited evidence available to the Court. I have already noted this impediment earlier in these reasons, for example when I referred to the now dated Financial Statements and Affidavits of the parties.

Consideration & Disposition

  1. Doing the best the Court can in the light of the extremely limited and dated evidence, and also having regard to the limited assets and the limited issues, I note the following.

  2. As earlier noted, the parties are both in their early 40s.  The Husband is a tradesman by trade.  There is nothing put before me recently to suggest that the Husband is unable to work in his chosen profession, either full time or as he chooses.

  3. The relationship of the parties was some 14 years or thereabouts.

  4. The Mother gave birth last year and has a young baby at home, as well as being the primary carer for the three children of the relationship.  She is a stay at home Mother.  These three young girls spend regular time with their Father.  The Wife is supported financially by her partner, but again details are now quite dated.  There are ongoing child support contests primarily as between the Father and the Child Support Agency.

  5. So far as the Court is aware, there are no current health issues for the Court to consider in relation to either party.  Certainly no such issues have been raised recently.

  6. I have already noted that, by consent, the Court will make an Order to the effect that the funds held by the Court will be released to the Wife/Mother.  This is on the basis that those funds are to be used for the sole benefit of the three children of the relationship.

  7. In relation to the superannuation, having regard to (among other things) (a) the length of the relationship, (b) the current and ongoing parenting arrangements, (c) the health of the parties, (d) the general financial positions of the parties, which the Court finds to be relatively modest but with the Husband having a greater capacity to earn income than the Wife now, and for some time into the future (having regard also to such financial support as the Wife’s partner provides also), and (e) having regard to the Wife’s recent bankruptcy, in my view, the just and equitable Order is that the base amount to be paid to the Wife is $55,000 from the Husband’s SUPER FUND A superannuation account.

  8. The Order proposed by the Wife in this regard, but obviously with a changed amount, should be made.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Judge Neville

Date: 31 May 2019

Key Legal Topics

Areas of Law

  • Family Law

Legal Concepts

  • Consent

  • Remedies

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