SURRIDGE & SURRIDGE
[2015] FamCA 493
•29 June 2015
FAMILY COURT OF AUSTRALIA
| SURRIDGE & SURRIDGE | [2015] FamCA 493 |
| FAMILY LAW – PROPERTY – property settlement – where issue as to the present assets and liabilities of the parties – where issue as to the wife’s hurt on duty pension – where two pools approach adopted – where contributions to primary pool assessed as equal – where wife’s contribution to her pension overwhelming – consideration of relevant s 75(2) factors – where division is just and equitable. |
| Family Law Act 1975 (Cth) ss 75, 79 Police Regulation Superannuation Act 1906 (NSW) s 10B(3)(a) |
| Aleksovski v Aleksovski (1996) FLC 92-705 Bevan& Bevan [2014] FamCAFC 19 Chapman & Chapman [2014] FamCAFC 91 Crawford & Crawford (2013) 48 Fam LR 539 Dickons & Dickons [2012] FamCAFC 154 DJ & AJ (2006) FLC 93-289 Lane & Lemott [2013] FamCA 604 Russell & Russell (1999) FLC 92-877 Schmidt & Schmidt (2009) FamCA 1386 Scott & Danton [2014] FamCAFC 203 Semperton & Semperton (2012) 47 Fam LR 626 Stanford v Stanford [2012] HCA 52 Teal & Teal [2010] FamCAFC 120 Trott & Trott (2006) FLC 93-263 Wheeldon & Wheeldon [2011] FamCA 40 |
| APPLICANT: | Ms Surridge |
| RESPONDENT: | Ms Surridge |
| FILE NUMBER: | PAC | 4412 | of | 2012 |
| DATE DELIVERED: | 29 June 2015 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 22, 27, 28, 29 January 2015, 4 and 5 March 2015 and 5 May 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Schonell SC |
| SOLICITOR FOR THE APPLICANT: | Matthews Folbigg |
| COUNSEL FOR THE RESPONDENT: | Mr Rosic |
| SOLICITOR FOR THE RESPONDENT: | Q Family Law & Mediation |
Orders
By Consent:
That the parties forthwith do all acts and things and sign all documents to cause the following things to occur with respect to the company B Pty Ltd:
(a)The 2013 and 2014 statements of financial position to be amended so as to consolidate into one loan account in the joint names of the parties all advances and loan accounts of the parties reported in the statements of financial position;
(b)Dividends then to be declared to each of the parties fully franked for each of the following financial years:
(i)For the 2013 financial year $37,479 imputation credit and $87,452 franked amount;
(ii)For the 2014 financial year $15,366 imputation credit and $35,855 franked amount;
(iii)For the 2015 financial year $115,505 fully franked;
(c)That on the dividends being declared and the 2015 financial statements and tax return prepared and lodged the company to be struck off the company register conducted by ASIC;
(d) The 2015 financial statements to be prepared so as to:
(i)Write off the office equipment;
(ii)Write off the loan to C Pty Ltd;
(iii)Write off the loan to D Pty Ltd.
That the husband shall assign to the wife the benefit of any loan account in his favour created by virtue of Order (1)(d)(iii) in the event that the wife retains that company and the units in the Surridge Unit Trust pursuant to the final orders for property settlement.
That each of the parties shall pay one half of the costs of implementation of these orders including accounting and ASIC fees.
It is further ordered:
That within that 2 months from the date of these orders the husband do all necessary things and sign all necessary documents so as to transfer to the wife his interest in the property at E Street, Suburb F New South Wales being the whole of the land comprised in Folio Identifier … and that concurrently with that transfer the wife do all necessary things and sign all necessary documents so as to procure a discharge of the present mortgages secured over the said property in favour of the Commonwealth Bank of Australia being home loan number … and line of credit account number … and in respect of such discharge the husband shall sign all necessary documents for his part necessary to facilitate the wife obtaining a discharge of the said mortgages.
That the wife hereinafter indemnify the husband from all or any liability arising out of the present mortgages secured over the Suburb F property.
That within 2 months from the date of these orders the husband pay to the wife $129,683 and concurrently with that payment the wife do all necessary things and sign all necessary documents to transfer to the husband her interest in any units in the Surridge Unit Trust and any other entitlements that she may have in or against the trust, resign all positions that she holds in the trustee company D Pty Ltd ACN … and transferred to the husband her shareholding in the said company.
That the husband shall hereinafter indemnify and save harmless the wife from all or any liability including any liability to the Australian Taxation Office arising from the activities of the Surridge Unit Trust or its trustee D Pty Ltd.
That otherwise the wife shall be declared solely entitled to:
(a)The 4WD motor vehicle;
(b)Her Horse float, horses and equipment;
(c)Her Gold watch;
(d)Her Jewellery;
(e)Her K Super Fund interest;
and that subject to these orders otherwise the wife is declared solely entitled to the exclusion of the husband of all items of personalty in her possession, custody and control including but not limited to motor vehicles, cash at bank, superannuation, furniture and personal belongings.
That the wife shall hereinafter indemnify and save harmless the husband from all or any liability pursuant to the judgement obtained against the parties by the wife’s parents Mr and Ms G.
That otherwise the husband shall be declared solely entitled to:
(a) His K Super Fund interest;
(b) New boat shell;
(c) Boat “A”;
(d) Boat “B”;
(e) Car parts;
(f) Boat equipment;
(g) UTILITY vehicle;
(h) Vintage car 1;
(i) Vintage car 2;
(j) Vintage car 3;
(k) Vintage car 4;
(l) Bike;
(m) Motorcycle 1;
(n) Motorcycle 2;
(o) Watch (Swiss);
(p) Watch (Gold);
(q) Watch (Stainless Steel);
(r) B Pty Ltd Bank account;
(s) D Pty Ltd account;
(t) Bank of America account;
(u) German motor vehicle (net);
and that subject to these orders otherwise the husband is declared solely entitled to the exclusion of the wife of all items of personalty in his possession, custody and control including but not limited to motor vehicles, cash at bank, superannuation, furniture and personal belongings
That the wife shall within 7 days from the date of these orders cause to make available for collection by the husband or his nominee any of the items referred to in the previous order that remain in her possession or control.
The husband shall hereinafter indemnify the wife from all or any liability arising from monies advanced to the husband by his parents Mr H Surridge and Ms I Surridge and any moneys owing to J Repairs.
That within 14 days from the date of these orders the wife shall do all acts and things necessary to cause her existing superannuation entitlements in the K Super Fund to be rolled out of that fund to an approved superannuation fund nominated by the wife and upon completion of that rollover the wife shall resign all positions that she holds in the trustee of the K Super Fund, L Pty Ltd and transfer her shareholding in that company to the husband and the husband shall for his part do all acts and things necessary to promptly facilitate the rollover of the wife’s entitlements in the said fund.
Liberty to apply as to implementation or enforcement of these orders.
That any application for costs be by way of an application in a case filed within one month from the date of these orders supported by affidavit.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Surridge & Surridge has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 4412 of 2012
| Ms Surridge |
Applicant
And
| Ms Surridge |
Respondent
REASONS FOR JUDGMENT
Ms Surridge (the “wife”) and Ms Surridge (the “husband”) were married for 16 years prior to their separation in August 2012. The parties have two children of their marriage, M who is now 16 years old and N who is nearly 15 years old.
The children have not spent time with their father since Father’s Day 2012, and this is in accordance with their wishes.
These proceedings are only concerned with property issues between the parties.
The applicant wife relied at trial on:
(f)Her affidavit filed 12 January 2015; and
(g)Her financial statements filed 13 January 2015 and 5 May 2015.
The husband relied at trial on:
(a)His affidavits filed 12 January 2015 and 21 January 2015;
(b)His financial statements filed 7 January 2015 and 4 May 2015;
(c)Affidavit of Mr O;
(d)Affidavit of Mr P;
(e)Affidavit of Mr Q;
(f)Affidavit of Ms K Surridge;
(g)Affidavit of Mr H Surridge; and
(h)Affidavit of Mr S.
The parties commenced a relationship in 1991 and were married in 1996. The parties separated in August 2012.
There is no issue that the wife was the primary carer for the children and primary homemaker during cohabitation and primary carer for the children post separation.
At the commencement of their relationship the wife was a police officer. The wife joined the force in 1987.
The husband was formerly a police officer but at the time of marriage he operated a shop at Suburb U with his parents. After the business was sold in 2001 he was employed by T Pty Ltd. He had other jobs until 2007 when he and the wife commenced a V Pty Ltd franchise at Suburb W that is referred to below.
The wife at the commencement of the relationship had:
(a)Savings of about $80,000 in accounts with the X Credit Union, National Bank and Westpac;
(b)Superannuation with the Police Service; and
(c)A car.
Prior to marriage the wife applied part of her savings to the purchase of a ski boat “FF” by the husband and further $60,000 was provided to the husband in relation to the shop business.
The husband at cohabitation had:
(a)A property at Y Street, Suburb Z purchased in October 1988 as vacant land for $38,000 with a then mortgage of $24,000. Prior to marriage the husband had erected a cottage on the property and it was tenanted. This property was later sold in 2002 for $380,000. On sale of the property in September 2002 the net proceeds of sale of $340,478 were applied in reduction of the collateral mortgage borrowing that funded the later purchase of the matrimonial home at Suburb F;
(b)50 per cent interest, with his parents holding the other 50 per cent, in the company AA Pty Ltd (“AA”) that operated the shop at Suburb U;
(c)Motor vehicle;
(d)Ski boat; and
(e)Interest in the self-managed superannuation fund AA Superannuation Fund (BB Pty Ltd as Trustee). The wife and the husband’s parents were also members of the fund.
The parties did not cohabitate until their marriage. They lived with the wife’s parents for four to five months rent free following their marriage until the Suburb Z property became vacant. This property was their initial home.
In 1998 AA purchased the shop premises at CC Street Suburb U for $225,000 with a mortgage borrowing of $200,000. The premises were later sold to D Pty Ltd (“D”) as Trustee of the Surridge Unit Trust in April 2002 with an advance from the National Australia Bank of $762,000. The AA Superannuation Fund acquired some of the units in the Trust.
In 2001 the business of the shop trading from the premises at CC Street, Suburb U was sold to T Pty Ltd. The real estate property itself was retained. The shop trading from these premises is now operated by Coles.
From the husband’s ultimate portion of the proceeds of sale of the shop by AA in 2001 he discharged the then mortgage owing on his property at Suburb Z. Otherwise the amount of and distribution of the sale funds of the business by AA is not the subject of evidence, save that some funds payable to the husband later met the stamp duty of $34,415 on the purchase of the parties’ home at Suburb F.
In 2001 the parties purchased the matrimonial home at E Street, Suburb F for $865,000 with a home loan mortgage of $930,000 secured by collateral borrowing over the husband’s Suburb Z property. On sale of the husband’s property at Suburb Z in September 2002 the net proceeds of sale of $340,478 were applied in reduction of this mortgage. At separation the loan was $365,000 and the wife has serviced the interest on that loan as best she could from her pension payments.
In May 2002 the husband and his parents purchased a business at DD Street, Suburb EE using BB Pty Ltd. The purchase price was about $780,000. The purchase was substantially funded by a loan of $500,000. It is to be inferred that the balance came from funds available from the sale of the previous business by AA.
In April 2006 the wife was discharged from the police force as “hurt on duty” under Section 10B (3)(a) of the Police Regulation Superannuation Act 1906 (NSW). Save for periods on maternity leave she had worked full time until then. Thereafter the wife received a pension of $900 net per week increasing to about $1000 per week net at the time of trial. The wife contributed her entitlement to the marriage. At this time the wife also rolled her First State Superannuation benefit of $32,919 to the parties’ self-managed fund the AA Superannuation Fund.
In 2007 the husband’s parents reached retirement age. The parties and the husband’s parents entered into a series of transactions that facilitated the parties exiting the AA Superannuation Fund and purchasing the units in the Surridge Unit Trust such that through D and the Unit Trust they owned the shop property at Suburb U with the husband’s parents retaining BB Pty Ltd and the DD Street shop.
The purchase price of the units in the Unit Trust comprised in part funds repaid to the parties in repayment of debts owed by the husband’s parents or their entities. Those repayments totalled $444,903 and were repaid to the parties from the husband’s parents’ superannuation entitlements.
These transactions also facilitated the superannuation fund holding its assets in cash and allowing the husband’s parents to withdraw their entitlements to repay their debt to the parties and for the parties to rollover their own superannuation entitlements totalling $181,942 to another self-managed fund: the K Super Fund.
In 2008 the husband purchased a utility motor vehicle from the USA at a total cost of about $100,000. This vehicle was sold prior to separation as referred to below. A second utility motor vehicle was purchased in 2011 and retained by the husband at separation.
The parties later advanced further funds to the husband’s parents who had the day to day management of the shop business and in March 2010 the parties secured the balance then owing to them by way of a mortgage of $100,000 secured over the husband’s parents’ home.
The husband’s parents later sold their home to meet their personal and business liabilities. From the sale the parties were repaid $98,481 of their debt. After payment of other debts there were no funds from the sale available to the husband’s parents.
By 2011 the DD Street business was in difficulty and was sold by BB for $300,000 plus stock. The contract for sale dated 19 July 2011 provides for completion within 26 days and the sale price to be paid by instalments with $120,000 deferred for 12 months interest free if paid in that time.
There are no financial statements for the company BB in evidence. Part of the initial sale proceeds of $206,883 was paid into a business account on 5 August 2011 (Exh II) and then $192,883 was paid to the company accountant.
The balance of sale funds of about $110,000 was received in late 2012 or early 2013 and was initially paid to the accountant. Funds have been used by the husband’s parents for living expenses and the later advance of $50,000 to the husband’s company FF Pty Ltd for the purchase of a truck. They have about $20,000 left.
The “loan” from the husband’s parents
The husband contends that from the initial sale price of the business by BB Pty Ltd his parents received in part $192,883 which they paid into their accountant’s trust account and which they then on lent to him.
The accountant’s trust records show a deposit of $192,883 on 10 August 2011. The inference is that this sum represents part of the initial payment of the sale price. Then in a series of transactions over nine days the whole of the funds are paid out. The husband received the funds he says in August 2011. He signed a loan agreement with his father (DS8). The agreement dated 12 August 2011 is witnessed by the accountant. The agreement contemplates inter alia the purchase of a non-identified property by the husband with the advanced funds securing in that property a life tenancy for the father and on his death for the husband’s mother.
In his oral evidence the husband says he was paid in cash by his father either at the bank or at the accountant’s office. No reason was advanced as to why. He says about $20,000 to $30,000 was banked into AA, $20,000 given to the wife for fences, some for the purchase of a vintage motor vehicle and a vintage motor vehicle shell for $45,000, some paid out a vehicle lease, and some spent on home improvements.
The wife for her part, notwithstanding the husband’s assertions, professes no knowledge of the loan alleged and the disposition of funds. She is not a party to the agreement between the husband and his father.
The husband’s father asserts in his affidavit evidence that funds were paid to the husband at his home at Suburb GG except on one or two occasions when the husband accompanied him to the bank.
The AA Westpac (Exh T) accounts reveal that shortly after funds are alleged to have been paid to the husband the following unidentified deposits:
15 August 2011 $ 5,000
15 August 2011 $20,000
19 August 2011 $ 9,781
22 August 2011 $16,575
23 August 2011 $13,510
24 August 2011 $15,130
25 August 2011 $12,875
26 August 2011 $18,100
Total: $110,971
It is to be reasonably inferred that these funds and perhaps some later deposits represented part of the husband’s father’s funds as represented by the husband’s solicitor in a letter in November 2011.
On 29 August 2011 the husband withdrew $100,000 by company cheque (401655). The disposition of those funds is not known save for the husband’s assertion through his solicitor that funds purchased a Boat and a motorcycle. The boat invoice (DS13) in fact reveals a boat purchase for $54,193 with payments of $20,000 in May and June 2012 and a final, it appears, discounted payment of $7,693 in October 2012.
The V Pty Ltd franchise
In 2007 the parties acquired through the husband a joint venture interest in a “V Pty Ltd” retail franchise at Suburb W, borrowing $300,000 from the wife’s parents and $510,000 by way of line of credit from the CBA Bank. The husband’s interest in the franchise was through C Pty Ltd (“C”) as Trustee of the Surridge Family Trust that held units in the Surridge HH Unit Trust that operated the business.
The Surridge Family Trust with the parties as primary beneficiaries received significant distributions from the franchise operation totalling about $1.994m in the 2008 to 2011 financial years. Various payments were made through the family trust for tax including GST, loan payments and living expenses.
One of the beneficiaries of the Family Trust is B Pty Ltd (“B”), the parties’ company. Funds were paid into that company by way of trust distributions and used for various expenses including payment of a wage to the husband and vehicle leasing. At separation B owned a German motor vehicle subject to lease.
The parties enjoyed a good lifestyle, collecting wine, owning horses, purchasing and restoring vintage cars, purchasing expensive watches and motorbikes and making some improvements to their home. The husband over the years had an active interest in ski boats and racing.
The wife attended to the bookkeeping and account management for the franchise. Otherwise the wife worked occasionally for the separate business operating through II Pty Ltd that conducted a delivery business for the franchise.
The delivery business was ostensibly operated by the wife so as to avoid the restriction on family members working in the V Pty Ltd franchise. A Mr P was employed as the driver and the company operated two trucks.
However in May 2012 the husband was locked out of the franchise business and his interest in the franchise was compulsorily acquired by the Trustee of the Surridge HH Unit Trust under the terms of the joint venture agreement dated 30 June 2007. The husband had procured from the franchise payments for security services that were never provided. These payments were paid into AA Pty Ltd by the husband notwithstanding that the company had been deregistered in 2004. There is no documentary evidence as to receipt or expenditure of those funds by AA, although the husband asserts that funds were used for family and other expenses.
The payments for “security services” reimbursable to the business on termination totalled $297,828.
After adjustments, including reimbursement of the phantom security fees, a payment of $441,845 was paid to C to compulsorily acquire its units in the franchise trust. This payment was not made until 19 November 2012, after separation, and was paid by the husband into his company JJ Pty Ltd. Ultimately that sum less $5,200 paid by the husband to his Amex card was placed in a controlled money account pending resolution of these proceedings.
The CBA Line of Credit remains outstanding. As at February 2013 the balance was $512,493 against a limit of $510,000. The wife has serviced that loan with funds borrowed from her mother totalling $25,000 and redraws on the account when available.
The wife’s parents now have a judgment debt for the balance outstanding to them of $200,000 plus interest from 25 June 2013.
Prior to separation the husband sold his one of his utility motor vehicles for $85,000. These funds were deposited into the husband’s X Credit Union account in March 2012.
Prior to separation the husband sold the boat “KK” to a Mr P for $25,000 with some of the funds paid into AA and the balance of $14,000 received by him in cash.
Ski Boat and UTILITY “transaction”
In May 2012, prior to separation, the husband says he agreed to sell the boat “FF” and his other utility motor vehicle to a Mr LL, a stockbroker with the MM Trust. The husband says in early May 2012 he was paid $200,000 in cash at the Suburb U boat ramp and gave a receipt for the payment. The transaction was witnessed by two other named persons, his ski boat observer and the skier. He did not deliver up the boat or the vehicle to Mr LL asserting that Mr LL gave him a couple of weeks to see if he really wanted to sell.
At no time was the ownership of the boat or the vehicle ever transferred to Mr LL nor were they delivered up to him.
Mr LL was not called to give evidence, the husband asserting he was “overseas”, nor were the two other alleged witnesses to this remarkable transaction.
The husband says after initially putting the cash in his safe he then decided to resile from the transaction. He did not refund the cash but decided to pay Mr LL back by cheque after a request by Mr LL that the repayment be in the new financial year. He further suggested that Mr LL directed that half be drawn in favour of his business MM Pty Ltd and the other half to him personally.
He says he deposited $100,000 of the cash in about five or six deposits to the AA account. The AA account was in the control of the husband. Westpac statements for company’s account are Exh T. The account at the relevant time reveals ongoing deposits from the V Pty Ltd franchise until termination of the franchise and other significant cash and cheque deposits of various amounts.
The husband made unidentified deposits to the AA account in the period 15 June to 9 August 2012 totalling $103,226. On 9 August 2012 he drew a company cheque (401676) for $100,000 payable to Mr LL. The ultimate recipient of those funds is not known.
The husband through his previous solicitor represented, in contrast to the husbands oral evidence, that the funds were in fact those of his father: a startlingly different contention.
Otherwise he asserts that he made $50,000-$60,000 in cash deposits to his X Credit Union account. From the balance of about $40,000-50,000 of the cash he says in part he purchased a hull for $20,000 and deposited $12,855 to the AA account.
The husband’s X Credit Union account reveals prior to the alleged sale regular deposits from the V Pty Ltd franchise business and on 27 March 2012 a deposit of $85,000. The $85,000 represented the sale by the husband before separation of one of utility vehicles referred to above. After this deposit the balance of the account was about $75,000. On 25 April 2012 the husband paid NN Pty Ltd $12,078.
In late June and early July the husband makes cash deposits to this credit union account totalling $39,225, not $50,000-$60,000 as asserted by him. The sources of those deposits are not evident from the statements (Exh W) but it is to be inferred may be in part his father’s funds.
The husband from his X Credit Union account withdrew $100,000 on the 11 July 2012 by cheque payable to the “MM Trust”. The whereabouts of these funds are not known. A balance in the account of about $8,000 was retained by him after separation. Thus a substantial portion of the withdrawal thus relates to funds from the pre-separation sale of the utility and V Pty Ltd income.
The husband falsely asserted to the single expert valuer that the boat “FF” had not been run since August 2012 and that it would “need a rebuild” and “likely that turbos have seized”. When the husband was pressed in oral evidence he conceded that the engines had been serviced in April 2012. He had difficulties in recalling as to when the boat had last raced, but finally conceded that the boat had run in a Bridge to Bridge ski race in December 2012 contrary to what he represented to the valuer.
The Vintage motor vehicles
There was significant evidence as to these vehicles. The husband asserts he owns three vintage motor vehicles:
(a)Vintage motor vehicle 1 purchased with his father’s funds as referred to above;
(b)Vintage motor vehicle 2 shell purchased with his father’s funds as referred to above;
(c)Vintage motor vehicle 3 purchased in 2005.
The husband asserts that his father owns a Blue/Green vintage coupe. The wife says the parties own this vehicle. This car was registered in the husband’s name. The registration has been transferred to his mother, that transfer having being facilitated on his evidence by the husband and on the husband’s father’s evidence by him.
The husband asserts that this was purchased by his father in late 2001 just after sale of the first shop. The price was $7,000-$9,000. The husband says that it has always been registered in his name for reasons of cheaper insurance.
Yet in his sworn answer to a request for particulars (Exh O) as to “any Vintage motor vehicles owned by him” he attested as to the four vehicles as he did in his affidavit sworn and filed 5 September 2013 (Exh P) and financial statement filed 8 September 2014 (Exh Q). Otherwise he consented to orders valuing all four on 16 September 2013 and he represented to a government agency that he had purchased the vehicle (Exh R) and provided a receipt in his name for the purchase (Exh S).
Yet the husband’s father’s solicitor in a letter of demand to the wife for the “return” of the vehicle in February 2013 says the car was purchased in August 2000 (before the sale of the Suburb U shop) for $6,000 and provided a completely different receipt for the purchase of the vehicle. The vehicle is in the possession of the husband’s father.
By reason of the husband’s previous evidence and representations in relation to the vehicle it will be included in the parties’ asset pool.
Withdrawals on the AA account
The wife was of the understanding that the AA account had ceased to operate when the parties and the husband’s parents separated their business affairs in 2007 as outlined above. However the husband continued to maintain the account in the name of the company that had been deregistered years earlier.
In May 2010 the husband drew $315,000 from the AA account. In oral evidence he initially asserted that the funds were paid to his parents and uncle.
He conceded that he was unsure as to the source of the funds. Yet the payment was preceded by various deposits (Exh T) including:
3 May 2010 $16,800
5 May 2010 $38,597
6 May 2010 $25,250
10 May 2010 $21,405
13 May 2010 $30,547
14 May 2010 $17,526
17 May 2010 $28,966
18 May 2010 $13,625
21 May 2010 $16,412
24 May 2010 $106,596 with a cheque from B for $85,000 later dishonoured.
25 May 2010 $70,842
The drawing from AA was in fact a bank cheque payable to “Mr OO”. When confronted with the payee of the funds the husband denied any knowledge of same then asserted it was paid on behalf of his parents at their direction.
Yet in May 2010 the husband drew a bank cheque on the B account in favour of “Mr OO” for $85,000 that was, at least to the wife’s understanding, for the purchase of a boat. This cheque was funded by a transfer of $90,000 from the parties’ line of credit account. A few days earlier the husband had drawn a cheque on the B account for $85,000 and paid it into AA. The cheque was not met on presentation due to insufficient funds.
Somewhat perplexingly the husband’s father gives no affidavit evidence of the fund of $315,000 notwithstanding a detailed affidavit as to his asserted dealings with the parties. However in oral evidence the husband’s father asserts that his brother-in-law Mr PP said he put the funds into AA prospectively for the start-up of a tyre and wholesale car business, notwithstanding that the husband solely operated the account. Regrettably Mr PP died in 2012.
The husband’s father has no knowledge as to the later disposition of those funds, except his claim, in error, that the wife withdrew $85,000. The withdrawal by the wife is not evidenced by reference to Exh T or at all.
The husband’s father has no knowledge of the mysterious Mr OO.
The husband “thinks” the funds came from his parents and uncle but could offer no explanation as to why that would be the case. In the account were unexplained deposits in May totalling $224,037 before the withdrawal.
There was no attempt by the husband to adduce any objective evidence as to these transactions or as to the source or disposition of the funds notwithstanding that between himself and his father it is to be inferred that there could have been enquiry.
Later on 7 October 2010 a cash cheque (401627) was drawn on the AA account by the husband for $160,000 (Exh V). The cheque was cashed by the husband. He is unable to recall the transaction. Again before this withdrawal there were various unidentified deposits in September/October 2010 totalling $148,664.
On 19 January 2011 the husband made a withdrawal on the AA account for $126,410 (Exh V). Again the withdrawal was preceded by unidentified deposits totalling about $118,497. On the same day he drew a cheque for $20,530 in favour of the Office of State Revenue (Exh W) on his X Credit Union account, maybe he says “to pay it for someone else”. He was unable to explain these transactions.
On 29 August 2011 the husband drew a cheque on the AA account for $100,000 payable to LL Capital Management. He professes no recall of the transaction except “I think it was for stockbroking”. The mysterious Mr LL was not called to give evidence.
The withdrawals by the husband referred to above total about $886,000.
The source and disposition of these funds is ultimately a matter of conjecture. Only the husband is capable of explaining same. He has not.
The parties received significant distributions from the V Pty Ltd trust in the years from 2008 to 2011. These distributions totalled over $2,000,000. In addition they received repayment of loan funds from the sale of husband’s parents’ home of about $98,000 in mid-2011. Yet there is little to show by way of accretion of assets over this period.
There is a comfortable inference, as submitted by counsel for the wife, that the funds dealt with by the husband are the parties’ funds from the V Pty Ltd franchise operation.
The post-separation period
It is common ground that there were difficulties between the parties over finances for some time prior to separation. The wife had mentioned separation almost three years before the parties in fact did separate.
On separation in August 2012 the wife found a Westpac account statement for the deregistered company AA Pty Ltd trading as Suburb U Liquor and bank correspondence addressed to the husband about the company account. The account shows total deposits of $81,887 for ten days to 9 August 2012 and then a withdrawal of $100,000 on 9 August 2012. That date peculiarly coincides with separation of the parties. The whereabouts of these funds are not known.
After separation with the wife continuing to operate the delivery business contracting to QQ Pty Ltd for a time until December 2012. The wife thereafter had limited work through II Pty Ltd and in November 2013 sold the truck in her possession and discharged the outstanding lease liability.
The husband later through his new company FF Transport Pty Ltd obtained a contract with QQ Pty Ltd after purchasing a truck and employing Mr P as a driver. He asserts that his father advanced $50,000 to fund the purchase of the truck and that by way of periodic payments he has paid back about $22,000 from company income. The husband was able to draw funds from FF as against his loan account of about $30,000 in the year ended 30 June 2013.
The financial statements of FF revealed as at 30 June 2014 a debt to the husband’s father of $75,461. The increase, the husband says, was for unpaid wages.
In late 2013 the husband purchased, in the name of FF, on lease from Macquarie Leasing, a prime mover for the contract with QQ Pty Ltd and the later RR Pty Ltd franchise acquired by the husband. He falsely represented to the finance provider that his taxable income was about $340,000.
The husband lost his QQ Pty Ltd contract in November 2014 but the company retains the truck acquired by it.
On separation the husband retained the German sedan owned by B, the utility and a custom motorbike. Prior to separation the wife had observed bundles of cash in the vehicles. The German sedan was later sold by court order.
The husband says that he had no funds post separation and borrowed $20,000 from his sister and $10,000 from his parents to pay his Amex credit card back down to its $35,000 limit.
The German sedan owned by B was subject to lease payments of $3069 per month. The husband, who had retained the car, defaulted on lease payments for which the wife was also liable. She paid a total of $8903 in payments whilst it was retained by the husband. Orders were made on 1 March 2013 for the sale of the vehicle with a further $8749 being paid from the parties’ CBA mortgage facility on sale of the vehicle to procure a discharge of the lease.
Subsequent to separation the husband returned to the home and removed boat parts, propellers, toolboxes and the boat “FF” and trailer. He removed financial documents and records together with a quantity of wines including cases of expensive vintages. These were stored by him at his sister’s home in Suburb GG. Remaining wines were sent for sale by the wife with funds from the sales paid into the CBA line of credit account.
On 2 November 2012 orders were made for the property at Suburb U to be sold. A new five year commercial lease for the premises was negotiated with the existing tenant but the property has been now withdrawn from sale with the husband seeking to retain the property through D.
On 19 December 2012 the husband withdrew $3,500 from the D account. On 19 September 2014 he withdrew a further $6,000. The whereabouts of these funds are not known.
On 1 March 2013 consent orders inter alia provided that:
(a)$20,000 each be released to the parties’ solicitors for legal fees from the controlled money fund and be categorised as interim property;
(b)Outstanding insurance of $2,668 for the German sedan be paid from the controlled money fund;
(c)That a BAS payment of $2,700 for D be paid from the controlled money fund;
(d)That the joint CBA overdraft (6843) of $30,000 be paid out from the controlled money fund and the account be closed;
(e)That the balance of the controlled money fund be paid in reduction of the CBA line of credit (6878) debt. After payment this debt was reduced to $162,421;
(f)That the husband be at liberty to sell the German sedan and utility vehicles subject to the wife’s consent with funds from the German sedan sale to be paid to B to discharge the vehicle lease with any shortfall payable from the CBA line of credit account and that otherwise the husband retain sale funds from the utility.
On 10 December 2013 the husband withdrew $2,565 from the parties’ accounts.
On 16 October 2014 orders were made releasing further funds from the line of credit with the parties receiving $40,000 each and $20,000 being paid for school fees.
In 2014 the husband signed a debit authority to authorise his credit card to be paid from the CBA line of credit that related to the franchise purchase. In the period 20 June 2014 to 11 August 2014 the procured payments to his credit card totalled $25,204. The expenses to which these funds were applied are not known.
The RR Pty Ltd franchise
In late 2013 the husband acquired a RR Pty Ltd at the Suburb SS.
The husband’s set up costs were about $120,000. He procured finance by selling to his company JJ Pty Ltd and leasing back his utility vehicle and motorcycle for a total of $97,000 and obtaining a personal loan of $20,000 and a credit card for $20,000. Those transactions he conceded were in breach of existing orders. He later transferred registration of a motor bike to his girlfriend Ms TT in recognition of $10,000 advanced to JJ by her. Ms TT is a supplementary card holder on his Amex card, spending $1000 to $2000 a month which he asserts is paid back to him in cash.
The husband obtained a lease on premises and substantially stock was purchased on credit. He traded through the company JJ, opening in late November 2013.
The husband complains that his new business was hampered by lack of access to credit and funding. As at 30 June 2014 the business had an accumulated trading loss of $379,863 (DS 83). The husband asserts that the loss was funded by non-payment of suppliers and factoring of his staff wages. The company otherwise had a balance sheet deficiency of $379,862 including a debt to the husband of $76,018 from funds injected after the utility sale and sale of the motor bike to the company. These debts had initially totalled $121,000 but financial statements for the company reveal a reduction of this debt by about $45,000. The inference is that, despite the husband’s denial, he has been repaid or payments have been made on his behalf of about $45,000.
Notwithstanding the transaction referred to in relation to the Harley, the husband transferred registration of the bike from JJ into his girlfriend Ms TT’s name as “security” for funds advanced directly to the company by her. Ms TT is shown as being owed by the company $32,665 as at June 2014.
Notwithstanding the trading circumstances of his new business in October 2014 the husband procured a loan of $145,000 from his sister who mortgaged her house. The loan funds were advanced to the husband and JJ jointly.
The RR franchise has closed, JJ being locked out by the landlord shortly before trial. Outstanding rent as at 14 January 2015 was $117,201, representing about four months’ rent.
During the trial the husband was arranging with the landlord to remove his remaining stock from the premises. He estimated the stock to have a value of about $200,000.
In his trial affidavit the husband asserts that the business has continued to trade at a loss. Yet notwithstanding he borrowed an additional $145,000 from his sister to provide funds to JJ. JJ however continued to pay mobile phone, motor vehicle expenses and lease payments for two German motor vehicles, the utility, and two motorbikes, conference expenses, dinners and both domestic and international travel expenses. The husband asserts he was meeting his expenses from modest drawings but mostly on credit using his X Credit Union Card, Amex, CBA MM card and Westpac card. These cards totalled about $62,000 at trial.
The husband has travelled overseas and elsewhere since separation. His explanation of how those trips, some with business class airfares, were funded, particularly as his assertion of being refunded significant expenses in cash by others is not corroborated by any evidence at all. The inference is that the husband has lived a very comfortable lifestyle since separation. The further inference is that funds paid out by him from various accounts referred to above have in part come back to him when requested being deposited primarily into the AA account, his X Credit Union account or paid directly off his credit cards.
FF Pty Ltd and the Mercedes
In October 2014 the husband asserts in his affidavit evidence that FF purchased another German motor vehicle for $65,000 using leasing finance from Stratton Finance and then on sold the vehicle for $72,000 to Mr UU. These funds did not pay out the lease but were applied by the husband to JJ and the RR franchise business. FF he says continues to make the lease payments.
The husband’s oral evidence was significantly different, asserting the vehicle was purchased for $140,000 (in fact $145,000) with his “contribution” being $65,000 on lease finance paid to the vendor dealer and Mr UU paying the balance. He further admitted that additional payments relating to the purchase of the car totalling $14,962 were paid using his credit card. He acknowledged the car was registered to FF but asserted that the real owner was now Mr UU who had paid FF $72,000 for its share of the car. Yet when pressed he admitted that Mr UU had in fact not paid the $72,000 at all nor had such funds been paid to the FF account to be lent to JJ for the purpose of the RR franchise notwithstanding his sworn affidavit evidence to the contrary. The vehicle is in Mr UU’s possession. Regrettably Mr UU was not called to give evidence
The husband’s application for the lease finance was less than frank particularly in his assertion that the green vintage motor was his, notwithstanding his sworn affidavit evidence that it was his father’s. His answers in relation his representations in that document were ingenuous.
Child Support and the children’s expenses
The parties’ children are at private school and the wife has had to meet fees from income and borrowings since separation. The husband had paid a total of $795 in child support since separation to trial notwithstanding significant sums of money passing through is hands in that period. He estimated his income for the 2014 year at nil for child support purposes.
An administrative review has ascribed an income of $100,000 to the husband for the period until a terminating event with such sum adjusted by CPI each year. In addition he has a liability for additional lump sums each year until 31 December 2017 for educational expenses for the children.
This determination is subject to the husband’s appeal to the Social Security Appeals Tribunal.
Since separation the wife has borrowed funds totalling $25,000 from her parents to meet school fees. In October 2014 the parties agreed to a mortgage redraw of $20,000 to partially meet outstanding school fees. The balance of school fees outstanding at trial was $4000.
The wife has and continues to meet all of the children’s living expenses and extra-curricular expenses from her income and funds provided by her family and friends by way of loan.
The prospect of the wife receiving child support into the future from the husband absent appropriate enforcement orders appears remote.
The husband’s evidence
As discussed above there are many unsatisfactory aspects to the evidence of the husband. In particular his non-disclosure of relevant matters was made readily apparent during his oral evidence.
He conceded that aspects of his affidavit evidence was false, he departed considerably from his sworn written evidence in cross examination and his oral evidence was deliberately vague and unhelpful particularly in circumstances of this case where the document trail to corroborate his assertions as to many matters was readily available to him.
He simply failed to disclose evidence that by inference would have been unhelpful to his assertions.
A failure to disclose and to be frank and honest with the Court constitutes a fraud and a miscarriage of justice. He failed to call a myriad of witnesses that his evidence suggests may have helped his cause. The inference is that they would not have done so.
There can be no conclusion other than the husband sought to deliberately obfuscate and conceal evidence from the Court. He cannot be heard to complain if the Court makes robust findings against him.
As submitted by counsel for the wife, the husband’s mendacity and deliberate attempts to deceive and mislead the wife, the Court and others include:
(a)His blatantly false evidence in his sworn affidavits;
(b)His wilful breach of injunctive and other orders;
(c)His financial conduct in the years immediately prior to separation and thereafter;
(d)His assertions as to financial impecuniosity post separation;
(e)His circumspect acquisition of the German motor vehicle;
(f)His receipt, disposition and use of loan funds from his father;
(g)His purported sale of the boat “FF”;
(h)The ownership of the vintage motor vehicle;
(i)The alleged payment to the wife of $85,000 from B;
(j)His blatantly false assertions to the valuer in relation to the boat “FF”;
(k)The alleged payments in May 2010 totalling $400,000 to the mysterious “Mr OO”;
(l)His failure to explain the payment to the Office of State Revenue;
(m)The cash withdrawal in October 2010 from AA of $160,000;
(n)The cheque withdrawal in January 2011 from AA of $126,410;
(o)The cheque withdrawal in August 2011 of $100,000 paid to “LL Capital Management”;
(p)The later payments to “Mr LL” of $200,000 in July and August 2012;
(q)His seriously misleading representations to Macquarie Leasing as to his income circumstances.
The evidence of the wife is to be preferred to that of the husband where they conflict and otherwise the evidence of the husband is to be considered with great circumspection unless corroborated by objective third party documents or acceptable evidence.
The approach in property cases
The approach to the determination of an application under s 79 of the Family Law Act 1975 (Cth) (“the Act”) is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan& Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott and Danton [2014] FamCAFC 203.
The process ordinarily involves a staged process.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact.
In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
In particular, such a circumstance arises where both parties seek property adjusting orders but are unable to agree as to same. Here both parties seek different orders as to the division of their property and it is conceded by counsel for both parties that it is appropriate for the Court to make orders altering their present property interests. It is appropriate to do so.
Once the s 79(2) issue is resolved the Court then considers the contributions made by the parties as defined in s 79(4)(a) to (c).
The Court must then consider s 79(4)(d) to (g) 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 (s 79(4)(e)).
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
The present assets and liabilities of the parties
At the conclusion of evidence the parties provided a balance sheet (Exh PP) with, as to be expected, some items in issue.
That balance sheet is as follows including concessions in the course of submissions:
Joint Home at Suburb F 2,100,000
Joint D Pty Ltd (Suburb U ppty) 563,890
Husband New boat shell 36,000
Husband Boat “FF” 100,000
Husband Boat “VV” 40,000
Husband Car parts 3,000
Husband Boat equipment 1,290
Husband Utility vehicle 90,000
Husband Vintage motor vehicle 1 29,000
Husband Vintage motor vehicle 2 32,500
Husband Vintage motor vehicle 3 21,000
Husband Vintage motor vehicle 4 shell 4,800
Wife 4WD motor vehicle 20,000
Wife Horse float, horses and equipment 12,000
Husband Motor bike 1 3,200
Husband Motor bike 2 15,200
Husband Motor bike 3 21,000
Wife Ladies watch 4,000
Husband Swiss watch 4,000
Husband Gold watch 10,000
Husband Stainless Steel watch 7,500
Wife Jewellery 11,390
Joint B Bank account 1,620
Joint D Pty Ltd account 7,748
Husband Monies owed by parents 9,709*
Husband X Credit Union and AA withdrawals
July 2012 and August 2012 200,000*
Husband Unexplained withdrawals 800,000*
Husband Bank of America account 350*
Husband Funds drawn from D account 34,700*
Husband German motor vehicle 80,000*
Liabilities:
Joint CBA mortgage 372,123
Joint Line of Credit 297,481
Joint Wife’s parents 231,714
Husband Husbands parents 192,000*
Husband Husbands sister 165,000*
Husband Amex 70,000*
Husband X Credit Union 14,000*
Husband Car repairs 36,000*
Wife Wife’s parents 42,000*
Wife X Credit Union 13,817*
Wife Loan to payout Amex 10,000*
Wife II Pty Ltd 872*
Joint Unpaid School fees 17,567*
Superannuation:
Husband K Super Fund 279,137
Wife K Super Fund 219,781
Wife Pension 1,022,821
The items marked * in the balance sheet above were ultimately contentious. They are dealt with below.
(a)Husband – Funds owed by husband’s parents – $9,709: The debt arises from the balance owed after sale of the parents’ home. The amount will be subsumed in the “debt” owed by the husband to his parents.
(b)Husband – Bank of America – $350: This sum is the husband’s evidence as to the balance of this account at trial after payments to credit card debt. This figure will be adopted.
(c)Husband – D withdrawal – $34,700: These funds were withdrawn by the husband post separation to meet his credit card debts. They will be considered in the context of s 75(2) adjustments relating to funds retained by the husband.
(d)Husband – German motor vehicle – $80,000: The husband’s remarkable evidence as to this transaction is referred to above. No evidence was adduced from the mysterious Mr UU. The sum approximates the equity in the vehicle on purchase and will be included as a present asset of the husband.
(e)Husband – Debt to parents – $192,000: The transaction is referred to above. Clearly funds came from his parents. The disposition of those funds remains unclear save for the assertions of the husband. He says part of the funds, about $20,000-$30,000 was banked into AA, $20,000 given to the wife for fences, some for the purchase of a Vintage motor vehicle 1 and a Vintage motor vehicle shell for $45,000, some paid out a vehicle lease, some spent on home improvements. The evidence reveals in fact deposits as follows to the AA account:
15 August 2011 $ 5,000
15 August 2011 $20,000
19 August 2011 $ 9,781
22 August 2011 $16,575
23 August 2011 $13,510
24 August 2011 $15,130
25 August 2011 $12,875
26 August 2011 $18,100
$105,971
On 29 August 2011 the husband withdrew $100,000 by AA cheque (401655). The disposition of those funds is not known save for the husband’s assertion through his solicitor that funds purchased a boat and a motorcycle. The boat statement (DS13) in fact reveals a boat purchase for $54,193 with payments of $20,000 in May and June 2012 and a final, it appears, discounted payment of $7,693 in October 2012. The husband’s evidence is to be treated with great circumspection unless supported by objective documents.
It is to be inferred that the husband has the benefit of the items purchased with the funds from AA ($105,971) and the two Vintage motor vehicle items acquired for $45,000. They total $150,971. The wife had no knowledge of the disposition of the loan funds. The evidence is that substantially the husband has had the use of the funds and items purchased remain in his possession. The loan will remain in the pool but the husband will indemnify the wife. It is appropriate that the husband retain sole liability for this loan.
(f)Husband – debt to sister – $165,000: There is no issue as to these funds being advanced post separation. The husband used the funds for his own purposes. Whilst the debt exists it is conceded it is to be excluded for adjustment purposes.
(g)Husband – debt Amex – $70,000: There is no evidence to suggest otherwise than this is a post separation debt unrelated to the matrimonial pool of assets. There is no evidence from the husband that any debt as at separation was related to the matrimonial circumstance. It will be excluded from the pool for adjustment.
(h)Husband – debt X Credit Union – $14,000: Again there is no evidence that would warrant this debt being included for adjustment purposes. It relates to the husband’s remarkable and reckless financial dealings post separation. It is conceded it will be excluded from the pool for adjustment purposes.
(i)Husband –Car repairs – $36,000: This expense was incurred in relation to the Vintage motor vehicle 1. It is to be included in the pool and be a debt of the party that retains the car and thus the benefit of the work done.
(j)Wife – Wife’s parents – $42,000
Wife – X Credit Union – $13,817
Wife – Loan to pay out Amex – $10,000
It was conceded by counsel for the wife that these represent post separation debts much the same as those of the husband referred to above and for adjustment purposes should be excluded.
(k)Joint – Unpaid School fees – $17,567: This is a joint debt of the parties. The parties are engaged in child support proceedings elsewhere where the incidence of school fees will be considered. This item will be excluded for adjustment purposes.
Thus the present assets and liabilities of the parties for consideration in an adjustment sense are as follows:
Joint Home at Suburb F 2,100,000
Joint D Pty Ltd (Suburb U property) 563,890
Husband New boat shell 36,000
Husband Boat “FF” 100,000
Husband Boat “VV” 40,000
Husband Car parts 3,000
Husband Boat equipment 1,290
Husband Utility vehicle 90,000
Husband Vintage motor vehicle 1 29,000
Husband Vintage motor vehicle 2 32,500
Husband Vintage motor vehicle 3 21,000
Husband Vintage motor vehicle 4 shell 4,800
Wife 4WD motor vehicle 20,000
Wife Horse float, horses and equipment 12,000
Husband Motor Bike 1 3,200
Husband Motor Bike 2 15,200
Husband Motor Bike 3 21,000
Wife Ladies watch 4,000
Husband Swiss watch 4,000
Husband Gold watch 10,000
Husband Stainless Steel watch 7,500
Wife Jewellery 11,390
Joint B Bank account 1,620
Joint D Pty Ltd account 7,748
Husband Bank of America account 350
Husband German motor vehicle 80,000
3,219,488
Liabilities:
Joint CBA mortgage 372,123
Joint Line of credit 297,481
Joint Wife’s parents 226,000
Husband Car repairs 36,000
Husband Husband’s parents 192,000
1,123,604
Net: 2,095,884
Superannuation:
Husband K Super Fund 279,137
Wife K Super Fund 219,781
498,918
Total: 2,594,802
Wife Pension 1,022,821
One pool or two or three
It was contended by counsel for the wife that the Court should adopt a two pools approach that in effect excluded the wife’s pension from the primary pool.
The husband contended that a three pools approach seeking a non-superannuation pool, a superannuation pool and a third pool of the wife’s pension.
There is little to distinguish contributions to the non-superannuation pool. As to the superannuation pool save for the pension there is also little to distinguish contributions.
The pension has significant issues as to contribution-based entitlements. The difficulty of assessing contribution-based entitlements to a superannuation interest such as is presently held by the wife was considered by Watts J in Schmidt & Schmidt (2009) FamCA 1386. His Honour relevantly observed at [105] – [110]:
… the husbands current superannuation interest is not primarily based upon the amount of time that the husband was in the SAS trust Corporation Pool Fund. It is based on: -
othe husband being hurt on duty
othe circumstances in which the husband was hurt on duty
othe amount of the husband salary at the time that he was hurt on duty
In this case the amount of the husband’s salary has a significant connection to the amount of time the husband has been with the police service. The husband was hurt when being exposed to a risk in the course of his employment is of the general workforce would not normally be exposed. Consequentially he receives a superannuation interest equivalent to 100 per cent of his salary.
The wife cannot claim any direct contribution arising from the husband being hurt on duty.
The wife has made contributions after separation in her role as parent to the two children of the marriage. I infer further that the wife’s role as parent has to some degree, at least initially during the period of the husband’s impairment, increased, although overtime that additional contribution which the wife has made has lessened as the husband has recovered. But wife can point to contributions that she made to the amount of the husband’s salary by supporting him in the move to Parkes and his move to Condobolin associated with his employment. I infer that during the course of the cohabitation the wife made sacrifices to enable the husband to pursue his career. There were additional burdens imposed on the wife particularly around the time of the birth of the first child when the husband was away from the home because of his promotion.
The level of salary which the husband received at the time he was hurt on duty is in part a result of contributions made by the wife during the cohabitation.
In Schmidt (supra) the husband prior to retirement was in the police force for just over 21 years and the parties were together for seven and a half years. The Court assessed the wife’s contribution to the Hurt on Duty pension entitlement at 10 per cent.
Notwithstanding the valuation arrived at by applying the provisions of the legislation, the nature, form and characteristics of the wife’s pension needs to be considered in evaluating the parties’ contributions to that pension and in determining what orders are ultimately just and equitable (See Trott & Trott (2006) FLC 93-263; DJ & AJ (2006) FLC 93-289; Wheeldon & Wheeldon [2011] FamCA 40; Semperton & Semperton (2012) 47 Fam LR 626; and Crawford & Crawford (2013) 48 Fam LR 539, Lane & Lemott [2013] FamCA 604).
The wife is aged 46. Her present Pension benefit is payable under the Police Regulation (Superannuation) Act 1906 (NSW). Her eligible service period commenced in June 1987, well before cohabitation.
The value of the wife’s future pension is determined by the fund specific factors at $1,022,821. As at trial her pension was about $50,752 per annum. No lump sum is payable in the future to the wife.
The effect of a splitting order is to allow an immediate lump sum to be paid to the husband or for a rollover of that lump sum to another superannuation fund or a combination of the two. The effect of any splitting order is to commensurately reduce the wife’s pension.
In considering the disproportionate contribution issues discussed above it is appropriate to adopt a two pools approach with the wife’s Pension being the discrete second pool and the parties’ other superannuation and non-superannuation assets in the primary pool.
Contributions: The Primary Pool
In assessing contributions:
The task of the court in proceedings under section 79 is not akin to an accounting exercise. To borrow a phrase used by McClelland J in Davey v Lee (1990) DFC 95-084; (1990) 13 Fam LR 688 at 689 in relation to section 20 of the De Facto Relationships Act 1984 (NSW) ''the Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind”. (Harris & Harris (1991) 104 FLR 458 at 464)
The Full Court said some 20 years ago in Aleksovski v Aleksovski (1996) FLC 92-705, per Baker and Rowlands JJ at 83,437:
It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
It really comes down to questions of weight. Whilst weight would and must be given to a contribution which a party makes shortly before the separation, less weight may be given to a contribution made by one of the parties to a marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties' assets or been used up in the payment of family expenses.
and per Kay J said at 83,443:
What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements.
The Full Court of the Family Court in Dickons & Dickons [2012] FamCAFC 154 said:
23. We wish also to refer to the approach of the Federal Magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
24. There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25. Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “…giving over-zealous attention to the ascertainment of the parties’ contributions…” (Norbis v Norbis (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26. The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
There is no evidence from the husband as to the value of his assets at cohabitation. It is to be inferred that the property owned by him represented a significant later financial resource to the parties, particularly as to the collateral borrowing of funds to acquire the later home and the later receipt of sale proceeds of the Suburb Z property. The weight to be attached to this aspect is fettered by the lack of valuation evidence. All that is available is evidence as to the sale proceeds of this property in 2002 and the sale of the shop at about the same time.
The wife injected significant cash resources into the relationship.
Yet overall the inference is that contributions at cohabitation must favour the husband.
Yet after cohabitation the income of the parties was pooled to meet mortgage and other obligations. During cohabitation the parties both made ongoing contributions. It was contended by counsel for the husband that as at separation, leaving aside the wife’s Pension the contributions should be regarded as equal. That contention is proper in the circumstances of this matter.
After separation the wife has had essentially the sole care of the children since September 2012 physically, emotionally and financially.
Counsel for the wife contended for 55 per cent/45 per cent in favour of the wife.
Counsel for the husband submitted that contributions to the superannuation entitlements of the parties in the K Super Fund should be regarded as equal.
Contributions overall to this primary pool, having regard to the history above are to be assessed as equal.
Relevant s 75(2) factors: The Primary Pool
Both parties are of similar age. The husband does not contend for any relevant health factors.
The wife is on a pension.
There is no evidence that the husband is incapable of salaried employment. He has experience as a police officer and in retail. He has chosen not to seek such employment at trial.
The wife at best may have a modest capacity to contribute to future superannuation in the event of some part time employment. Should the husband obtain employment he will also accrue superannuation into the future.
The wife will have the continuing full time care of the children aged 16 and 15, with it appears little prospect of financial support from the husband by way of child support or otherwise.
The property and financial resources of the parties are referred to above. The husband has significant post separation debt that should be his responsibility.
Counsel for the husband contended that by reason of future child care only there should be an adjustment in favour of the wife that negates the disparity in contributions contended for leaving overall a position of equality.
Overall the husband sought an adjustment of the primary pool in favour of the wife as to 57 per cent - 60 per cent with 43 per cent - 40 per cent to the husband. This reflecting an overall s 75(2) adjustment in favour of the wife in the range of about 5 per cent -7.5 per cent.
A consideration of the above matters it is submitted by counsel for the wife is indicative of a further adjustment in favour of the wife of 10 per cent. On the pool set out above that creates a disparity of about $560,000 between the parties. Such an adjustment is not called for where this pool is on a contribution basis to be divided equally.
Thus an adjustment of 5 per cent in favour of the wife as to the matters above is called for. This creates a disparity of about $260,000 between the parties.
However it is contended on behalf of the wife that by reference to unexplained funds received and disbursed by the husband as discussed above there should be a further adjustment to the wife of 15 per cent (s 75(2)(o)). The evidentiary basis for this contention is set out above.
That would create a further disparity of about $790,000 between the parties. Such an adjustment is not called for. This would in effect pay to the wife a most significant portion of the total of funds dealt with by the husband. On a contribution basis she would have been entitled to only 50 per cent.
The wife’s contention would lead to an overall division of the primary pool 75 per cent/25 per cent in favour of the wife or a disparity of 50 per cent between the parties or in cash terms of about $1,297,000. Such an adjustment is not called for.
Overall there will be an adjustment in favour of the wife by reason of all s 75(2) considerations of 12.5 per cent thus creating a disparity between the parties of about $648,000. This sum reflects the subjective factors set out above and a significant adjustment back to the wife from the husband of what may have been her entitlement to funds dealt with by the husband.
Doing the best in the light of the evidence it is assessed that overall the primary pool should be adjusted in favour of the wife 62.5 per cent and to the husband 37.5 per cent.
The Secondary Pool: Pension
There is little evidence as to the background to the pension entitlement of the wife save for post-traumatic stress issues. The rate of pension relates to the wife’s salary at date of her eligibility for payments.
The wife was employed prior to cohabitation for nine years with the Police with the pension entitlement commencing in 2006.
When pressed the husband’s counsel had difficulty asserting a relevant contribution by the husband save “that they were married”. The husband sought a 7.5 per cent - 20 per cent contribution based range of entitlement to the pension benefit. Finally in submissions the counsel for the husband asserted that any adjustment in relation to the husband’s interest in the pension fund could be facilitated by the parties retaining their present disparate entitlements in the K Super Fund.
The wife’s contribution based entitlement to this income stream as between the parties must be seen as overwhelming.
As to relevant s 75(2) factors, the pension is in effect unearned income, indexed and payable during the wife’s lifetime. The husband on the other hand will be required should he so choose to earn income.
A consequence of any splitting order as to the pension entitlement is to commensurately reduce the wife’s pension and procure an immediate cash payment to the husband. The wife is then left with a reduced periodic income.
The wife contends for a modest contribution based entitlement in favour of the husband that in effect would be negated by the offsetting effect on the wife’s income.
Overall a modest adjustment of 5 per cent is appropriate in favour of the husband.
That equates to an approximate lump sum of about $20,000. It is appropriate to adjust this amount in favour of the husband from the wife’s entitlement in the primary pool so as to avoid any reduction in her primary income.
Appropriate orders
The orders proposed do not affect the earning capacity of either party.
The wife has an entitlement to a cash equivalent of about $1,621,250 from the primary pool less an adjustment of $20,000 in favour of the husband from the Pension pool leaving a net figure of $1,601,250. The husband would have an entitlement of $973,050 plus $20,000 being $993,050.
This can be achieved by the wife retaining the following:
Assets:
Home at Suburb F 2,100,000
4WD motor vehicle 20,000
Horse float, horses and equipment 12,000
Ladies watch 4,000
Jewellery 11,390
K Super Fund 219,781
2,367,171
Liabilities:
CBA mortgage 372,123
Line of Credit 297,481
Wife’s parents 226,000
895,604
Net: 1,471,567
Plus cash payment from the husband: 129,683
1,601,250
The husband will retain:
Assets:
D Pty Ltd (Suburb U property) 563,890
K Super Fund 279,137
New boat shell 36,000
Boat “FF” 100,000
Boat “VV” 40,000
Car parts 3,000
Boat equipment 1,290
UTILITY vehicle 90,000
Vintage motor vehicle 1 29,000
Vintage motor vehicle 2 32,500
Vintage motor vehicle 3 21,000
Vintage motor vehicle 4 shell 4,800
Motor Bike 1 3,200
Motor Bike 2 15,200
Motor Bike 3 21,000
Swiss watch 4,000
Gold watch 10,000
Stainless Steel watch 7,500
B Bank account 1,620
D Pty Ltd account 7,748
Bank of America account 350
German motor vehicle (net) 80,000
1,351,235
Liabilities:
Payment to wife 129,683
Car repairs 36,000
Debt to Husbands parents 192,000
357,683
Net: 993,552
Otherwise the parties have agreed as to certain administrative orders in relation to B Pty Ltd. Those orders will be made by consent.
Orders to give effect to the above will be made accordingly.
I certify that the preceding one hundred and ninety-three (193) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 29 June 2015.
Associate:
Date: 29 June 2015
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