Tanberg & Balsano
[2024] FedCFamC2F 256
•7 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Tanberg & Balsano [2024] FedCFamC2F 256
File number(s): PAC 5881 of 2022 Judgment of: JUDGE MURDOCH Date of judgment: 7 March 2024 Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – Where the parties cohabited for 38 years - Where both parties were medically discharged during their employment with the public service and respectively received a pension – Where the husband commuted his pension to a one-off lump sum payment during the relationship – Where the wife received her pension as an income stream and continues to do so – Where it is agreed that a superannuation splitting order should be made from the wife’s pension to the husband – Where notwithstanding the valuation of the wife’s pension arrived at by applying the provisions of Family Law Act and Regulations regard must be had to the nature, form and characteristics of such superannuation interest - Where the Husband can elect to receive a splitting order in his favour as a tax free cash lump sum and the time for the wife to be able, as of right, to commute her pension has passed - Where the requirement to achieve justice and equity permeates the entire s 79 process - Where the wife’s pension ought to be dealt with in a separate pool of property – Finding of equal contributions to both pools of property – Finding that no adjustment ought to be made in respect of either party – Finding that to effect a percentage adjustment of a figure calculated by the Regulations is an artificial exercise and is neither just or equitable - Orders made for an equal distribution of the substantive property pool – Orders made for a lump sum payment to be made to the husband out of the wife’s pension. Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 75(2), 79, 79(4)(d) - (g), 90XT(2)
Family Law (Superannuation) Regulations2001 (Cth)
Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003.
Cases cited: Bulow & Bulow [2019] FamCAFC 3
C & C [2005] FamCA 429
Fields & Smith [2015] FamCAFC 57
Horrigan & Horrigan [2020] FamCAFC 25
Kowaliw and Kowaliw [1981] FamCA 70
Norbis v Norbis [1986] HCA 17
Schmidt & Schmidt [2009] FamCA 1386
Stanford & Stanford [2012] HCA 52
T & T [2006] FamCA 207
Welch & Abney [2016] FamCAFC 271
Division: Division 2 Family Law Number of paragraphs: 180 Date of hearing: 5 – 6 February 2024 Place: Sydney Counsel for the Applicant: Mr Levick Solicitor for the Applicant: Brydens Lawyers Counsel for the Respondent: Mr Livingstone Solicitor for the Respondent: ALA Law ORDERS
PAC 5881 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS TANBERG
Applicant
AND: MR BALSANO
Respondent
ORDER MADE BY:
JUDGE MURDOCH
DATE OF ORDER:
7 MARCH 2024
THE COURT ORDERS THAT:
1.Within 7 days of the date of these Orders both parties shall sign all documents and do all things necessary to cause the balance of the proceeds of sale of the property situated at and known as B Street, Suburb C in the State of New South Wales ("the former matrimonial home") held in the trust account of Amanda Little & Associates as follows:
(a)$428,308 to the Wife; and
(b)$406,405 to the Husband.
2.There be a superannuation splitting Order affecting the interest of the Applicant Wife, Ms Tanberg (also known as Ms Balsano), ("the Wife") in the Super Fund 1 ("the Fund") Member Number … in the following terms:
(a)A base amount of $200,000 is allocated, as required by section 90XT(l)(a) of the Family Law Act 1975 (Cth) ("the Act") to the Husband, Mr Balsano (''the Husband") out of the Wife's interest in the Super Fund 1.
(b)In accordance with section 90XT(I)(a) of the Family Law Act 1975:
(i)the Husband is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation)Regulations 2001 (Cth); and
(ii)the Wife's entitlement to payments out of their interest in the Super Fund 1 and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this Order.
(c)The trustee of the Super Fund 1 ("the Trustee") shall do all such acts and things and sign all such documents as may be necessary to:
(i)Calculate, in accordance with the requirements of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001, the entitlement created for the Husband by Order 2(a); and
(ii)Pay the entitlement whenever the Trustee makes a splittable payment out of the Wife's interest in the Super Fund 1.
(d)These Orders have effect from the operative time and the operative time is the fourth business day after a copy of the sealed Orders is served on the Trustee.
(e)This order binds the Trustee of the Super Fund 1.
3.There be a superannuation splitting Order affecting the interest of the Applicant Wife, Ms Tanberg (also known as Ms Balsano) ("the Wife") in the Super Fund 2 ("the Fund") Member Number … in the following terms:
(a)A base amount of $135,453.50 is allocated, as required by section 90XT (4) of the Family Law Act 1975 (Cth) ("the Act") to Mr Balsano ("the Husband") out of the Wife's interest in the Fund.
(b)In accordance with section 90XT(l)(a) of the Family Law Act 1975 (Cth) (“the Act”), whenever a splittable payment within the meaning of section 90XE of the Act becomes payable to or on behalf of the Wife from her interest in the Fund, the Husband is entitled to be paid (by the Trustee of the Fund) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of $340,377 and there is a corresponding reduction in the entitlement the Wife would have had but for these Orders.
(c)Whenever a splittable payment is made out of the Wife's interest in the Fund, Super Fund 3 ("the Trustee") shall do all such acts and things and sign all such documents as may be necessary to pay the entitlement created in paragraphs 3(a) and 3(b) of these Orders in accordance with the requirements of the Family Law Act1975 and the Family Law (Superannuation)Regulations 2001.
(d)That his Order have effect from the operative time and the operative time is the fourth business day after an original certified copy of the sealed Orders is served on the Trustee.
(e)This order binds the Trustee of the Fund.
4.The parties do all such things as are necessary to close all bank accounts held jointly by the parties and distribute any such remaining balances to the Wife.
5.Subject to the above Orders, the Wife shall be and is hereby declared to be the sole and absolute owner at law and in equity as against the Husband in:
(a)Any motor vehicle in her possession;
(b)All items of furniture and contents in her possession;
(c)All savings or monies in her possession, custody or control, other than stated above;
(d)Her contributions and accumulated entitlements with respect to or arising from her membership of any superannuation fund, other than stated above; and
(e)Her employment related entitlements including but not limited to annual leave, sick leave and long service leave.
6.Subject to the above Orders, the Husband shall be and is hereby declared to be the sole and absolute owner at law and in equity as against the Wife in:
(a)Any motor vehicle in his possession;
(b)All items of furniture and contents in his possession;
(c)All savings or monies in his possession, custody or control, other than stated above;
(d)His contributions and accumulated entitlements with respect to or arising from his membership of any superannuation fund, other than stated above; and
(e)His employment related entitlements including but not limited to annual leave, sick leave and long service leave.
7.In the event that either party fails or neglects to sign any document pursuant to these Orders, a Registrar of the Federal Circuit and Family Court of Australia (Division 2) is hereby appointed to execute such documents in the name of the party in default so as to give validity and operation to these Orders pursuant to s 106A of the Family Law Act 1975 (Cth) upon being satisfied of such failure or neglect by way of affidavit evidence.
8.The costs of the parties are reserved for a period of 28 days from the date of these Orders. Any application for costs is to be by way of the filing of an Application in a Proceeding together with any Affidavit in support within 14 days of these orders.
9.Save as to costs, the Wife’s Application filed on 26 October 2022 and the Response filed by the Husband on 28 November 2022 are otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
REASONS FOR JUDGMENT
INTRODUCTION
The parties to these proceedings each seek orders for adjustment of their property interests pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) arising from the breakdown of their marriage.
Whilst there is a dispute as to the date of the commencement and conclusion of the relationship, it is agreed that the parties lived together for a period of 38 years. They commenced cohabitation in 1980/1981, married in 1981 and separated in 2018/2019. There are two adult children of the relationship who are now 40 and 31 years of age.
Both parties were previously employed with the public service. Both were injured in the course of their duty, were medically discharged and received a pension (“the pension”) pursuant to a state act. In 2012 the husband’s pension was commuted to a lump sum of $680,000 with such funds being applied for the benefit of and to the property of the parties. The wife did not commute her pension and it is currently paid to her in the annual amount of $71,000.
Both parties recommenced full-time employment after receipt of their pensions and remain in full time employment to date.
Central to the property dispute is the nature and characteristics of the wife’s pension, how it is considered and weighed, and the effect of it being subject to a superannuation splitting order.
EVIDENCE
A direction was made at the commencement of the hearing that annexures to affidavits or exhibited documents would not be read in the matter until they were individually tendered and specifically referred to during submissions.
The wife relied on:
·The Amended Initiating Application filed 25 January 2024;
·Her affidavit filed on 15 January 2024;
·The Financial Statement filed on 25 January 2024;
·The Single Expert Report of Mr E filed 12 October 2023;
·The affidavit of Mr F filed 1 February 2024; and
·Documents tendered throughout the course of the hearing.
The husband relied on:
·The Amended Response filed 13 November 2023;
·His affidavit filed 15 January 2024;
·The Financial Statement filed on 15 January 2024; and
·Documents tendered throughout the course of the hearing.
The parties prepared a Balance Sheet containing their respective contentions as to items of property, liabilities and superannuation and the values asserted for each item,[1] a Joint Summary of Issues[2] and a Joint Chronology. [3]
[1] Exhibit C.
[2] Exhibit D.
[3] Exhibit E.
BACKGROUND AND FACTUAL FINDINGS
In these reasons a statement of fact is a finding of fact, unless it is obvious from the context that I am reciting the position of one of the parties. The standard of proof with respect to such findings is the balance of probabilities. [4]
[4] see s 140 of the Evidence Act 1995 (Cth).
The husband was born in 1958 and is approaching 66 years of age. The wife was born in 1963 and is approaching 61 years of age.
The parties have two now adult children, Ms G born in 1983 and Mr H born in 1992.
At cohabitation the parties resided in a rental property in Town K. The wife was seventeen years of age and not engaged in paid employment. The husband was employed by the J Organisation in Town K as a tradesperson. The wife worked on a part time basis in the early period of cohabitation.
The wife was not challenged on her evidence that in 1984 she received an inheritance of $5,000 from her father’s estate. This sum was applied towards the expenses of the household including the parties’ daughter and a holiday overseas.
In 1985 the wife commenced work as a health care worker.
The husband joined the public service in 1984. The wife joined the public service in 1987.
The husband sustained an injury during the course of his employment with the public service in 1987.
In 1991 the parties jointly purchased a property at L Street, Town M, New South Wales (“the Town M property”) for $85,000. They obtained a loan secured by way of mortgage over the property from N Bank.
In 1993/1994 the parties and the children moved back to Sydney for work; the wife being transferred to Suburb O and the husband to Suburb Q. The parties rented various properties in Region R until 1997 when they were both transferred to Suburb P.
The Town M property was sold for $87,000 in late 1996. In late 1996 the parties jointly purchased vacant land at Suburb S, New South Wales for $72,000. A loan was obtained secured by way of mortgage over the property from T Bank.
In 1996 the parties jointly purchased an investment property at Suburb U, Queensland for $98,000.
In approximately mid-1998 the parties refinanced the loan secured by way of mortgage against the Suburb S property. The parties built a home on the vacant land with a builder at a cost of $125,000 and commenced living there in late 1998.
The Suburb U property was sold by the parties in 1999 for $88,000.00.
In 1999 the wife ceased working for the public service. She received a lump sum payment from Super Fund 4 of $17,000 arising from her injuries sustained during the course of her employment. These monies were applied to the benefit of the household.
In 1999 the wife commenced receiving a pension. There is no evidence as to the amount the wife received by way of such pension.
From 1999 to 2000 the wife was employed with another department in the public service.
From 2000 until 2001 the wife was employed on a permanent part time basis with V Company.
From 2001 to 2005 the wife was employed with W Organisation on a permanent part-time basis. From 2001 to 2005, she was also retained by X Organisation.
In 2001 the husband ceased working for the public service. He received a lump sum payment from Super Fund 4 of $36,000 arising from injuries sustained in his employment. The husband asserts these monies were applied to the installation of a pool at the Suburb S property. The wife could not recall in cross examination the sum of monies received by the husband nor how they were applied. He was not challenged on his evidence. I find that the husband received the sum of $36,000 and it was applied for the benefit of the family.
At this time the husband commenced receiving the pension of $44,000 gross per year. Tax was paid on this pension at a reduced rate.
Both parties thereafter made successful applications to increase the pension paid to each of them. The pensions each received increased annually in accordance with the consumer price index.
The husband deposes that he was engaged in some part time paid employment for friends of his in 2002. His evidence in cross examination was that he recalls undertaking some work for two individuals and a company but cannot recall the income received.
In 2002 the parties again refinanced the loan secured against the Suburb S property with Y Bank in the sum of $287,000. The husband cannot recall how these funds were applied. The wife does not give any evidence on this subject matter.
From 2005 to 2019 the wife was employed with Z Department. She studied part time at university from 2008 to 2012 and full time at another university from 2017 to 2019. She was employed by the AA Organisation on a casual basis from 2019 to 2020.
In 2005 the parties and the children relocated back to Sydney. In 2005 the parties jointly purchased a property at Suburb BB, New South Wales for $365,000 funded by a loan secured by mortgage over the property with CC Bank. The parties experienced difficulties in selling the Suburb S property. It was rented and the rental monies received applied towards the mortgage secured against the property.
In 2006 the husband commenced employment as a community worker with DD Organisation. The husband ceased this employment in 2008 and commenced employment within another department.
In 2006 the parties refinanced the mortgages secured over the Suburb BB and Suburb S properties with the EE Bank for $843,000.
In 2008 the parties obtained a further loan secured over the Suburb BB and Suburb S properties with the ANZ Bank for the sum of $60,000.
The Suburb S property was sold by the parties in 2009 for just over $575,000.
In 2013 the husband received the sum of $680,000 by way of lump sum commutation of his pension entitlements from his employment with the public service. It is uncontested that this sum comprised twelve years of the husband’s pension entitlements.
The husband deposes that to the best of his recollection this sum was applied as follows: -
·undertaking renovations to the Suburb BB property;
·approximately $400,000 was applied towards the costs of the Suburb C property purchased by the parties in mid-2013 being the original acquisition costs and extensive renovations;
·approximately $45,000 was applied to the commencement of business conducted by the wife “FF Business”;
·approximately $60,000 was applied towards the legal fees of the wife’s claim against Z Department;
·investments that were not successful; and
·general household expenses including payments of loans, credit cards, and Ms G’s honeymoon.
The wife’s position with respect to this commutation was inconsistent. At the commencement of the hearing the wife contended that the husband occasioned a waste by way of his sole decision to surrender his rights to future payments in exchange for a lump sum equivalent to twelve years of the pension entitlements. During the course of final submissions, the wife conceded that whilst it was the husband’s decision, it must have been joint to some extent as the parties were together at the time the decision was made. The wife submitted both that I would not be able to find that such a decision was a waste as it was not a decision that was so reckless “as to leave the husband with the consequences of it”, and that the wife had not abandoned her case that it was waste whilst accepting the difficulties with such an argument. The wife does not allege that the application of the monies received themselves occasioned waste. She concedes that the lump sum was applied towards the benefit of the family. It is ultimately her case that continuing to receive a pension is a more valuable asset and thus the husband should not have commuted his entitlement to a continuing pension.
The husband asserts that the commutation of his pension to a lump sum was a joint decision. He concedes that the decision was contrary to financial advice received by the parties at that time from a financial planner.
I accept that ultimately the decision to commute the pension was the husband’s. He was required to make such application. I do not accept that such a decision was reckless or negligent.[5] The funds were used by the parties for the benefit of the family and applied towards the improvement of their property. It is an artifice for the wife to now stand back, accept the benefits of the lump sum and then assert that a decision made during the currency of the intact marriage some 12 years ago was a waste.
[5] See Baker J in Kowaliw and Kowaliw (1981) FLC 91-092.
In mid-2013 the parties jointly purchased a property at B Street, Suburb C (“the former matrimonial home”) for $580,000. A loan was obtained by the parties secured by way of mortgage over the property in the sum of $550,000 from the GG Bank.
At this time stock was purchased for FF Business at a cost of $38,000 using funds from the commutation of the husband’s pension as recorded above. Both parties agree that the FF Business was not successful. The unsold stock was stored at the former matrimonial home. The wife took possession of the stock upon vacating the home.
The Suburb BB property was sold by the parties in early 2014 for the sum of $455,000.
In mid-2014 the parties refinanced the mortgage secured against the former matrimonial home with CC Bank. In early 2015 a second mortgage from the Commonwealth Bank was secured against the home. The mortgage was again refinanced in late 2016; with the mortgages with CC Bank and the Commonwealth Bank being discharged and a loan secured by way of mortgage obtained from the ANZ Bank.
The husband’s mother died in 2017.
In 2018 the wife received the sum of $180,000 that she refers as “back pay” from the Z Department. The wife deposes that from this sum, a total of $128,000 was paid in tax over the following two years, $40,000 was used to purchase a motor vehicle and pay credit card debts and a holiday with the parties’ then adult daughter after she was diagnosed with an illness.
The husband’s father died in 2018.
The wife alleges that the parties separated in August 2018 and remained separated under the same roof until she vacated the former matrimonial home in March/April 2019. The husband alleges that the parties separated in April 2019 when the wife vacated the home. Again, the parties agree that nothing turns on the date of the parties’ separation and I am not required to determine this factual dispute.
Upon separation the wife stayed with the parties’ adult daughter for a period and thereafter obtained rental accommodation. The husband remained living in the former matrimonial home.
After separation the husband commenced a relationship with Ms HH. I will refer to Ms HH as the husband’s partner during this judgment. Such a term does not denote a finding as to the status of the relationship.
During the period mid to late 2019 the husband received an inheritance from his father’s estate in the sum of $106,000, comprised of four payments. Such funds were applied as follows: -
·$5,800 in late 2019 to the Husband’s ANZ credit card. It was not contested that this credit card was used jointly by the parties during the relationship.
·The sum of $11,500 was transferred to the wife in late 2019 to assist in the payment of personal loans.
·In mid-2019 the husband purchased Motor Vehicle 1 for the sum of $18,500. The husband conceded that to acquire the vehicle the husband also traded in a car purchased during the relationship and there was a $11,000 difference to be paid subsequent to such trade in.
·An unspecified sum was applied towards the mortgage on the former matrimonial home the husband was occupying and for day-to-day expenses.
·The sum of approximately $40,000 was applied towards the legal expenses of these proceedings.
It was not contested that as at separation the wife had the following liabilities: -
·$48,000 owing to the Australia Taxation Office;
·Approximately $8,000 HECS debt for her tertiary course;
·Approximately $7,000 for a personal loan; and
·Approximately $6,000 on a credit card.
The wife deposes that in 2019 she withdrew from an unnamed account the sum of approximately $22,000. She deposes that such sum was for payment of university expenses, and expenses relating to payment of a bond on an apartment. The husband asserts this sum was $40,000.00, it was withdrawn from the parties’ joint account, and he is unaware as to the use and application of such funds. In cross examination the husband conceded that such funds came from the wife’s successful proceedings against Z Department. In any event the husband conceded that it was reasonable for the wife to use some capital for her expenses post separation and no submissions were made on his behalf as to this withdrawal.
During the COVID-19 pandemic the wife withdrew the sum of $10,000 from her superannuation as she was not engaged in paid employment and did not qualify for government income due to her receipt of the pension.[6] Her evidence that she applied such sum to credit card debts and her accumulated taxation liability was unchallenged and I so find.
[6] Wife’s Affidavit filed 24 January 2024, paragraph 85.
In 2020 the wife commenced employment with W Organisation as a health care worker on a full-time basis.
In late 2021 an Order for Divorce was made and became final on that date.
The parties completed the sale of the former matrimonial home in early 2022. The net proceeds of sale of $919,146.59 were placed into trust for the parties pending agreement as to their disbursement.
These proceedings were commenced by the wife in October 2022.
On 17 August 2023 interim orders were made by consent that each of the parties receive $70,000 by way of partial property settlement “for the purpose of ongoing legal fees.” As a result of such interim distribution, the sum of $834,772.70 currently remains on trust for the parties.
The wife deposes that she applied such sum as follows: -
·$4,600 to the Commonwealth credit card debt;
·payment of $18,270 on two separate occasions for outstanding legal fees arising from the “back pay” claim brought on her behalf;
·payment of $26,000 to the Australian Taxation Office for a “taxation debt of 7 September 2023.” The wife asserts that this was for the back pay received in 2018;
·payment of $1,560 towards a rental bond; and
·payment of $2,000 to her son for a loan previously provided by him.
It was the wife’s oral evidence that approximately $30,000 was applied towards the legal fees of her prior family law solicitors. The wife did not apply any of the funds towards the legal fees of her current solicitors. The husband does not depose as to his application of such funds but it was not alleged that they were not applied solely to his outstanding legal fees in these proceedings. It is agreed that the partial distribution of property to each of the parties is to be an item on the balance sheet.
In late 2023 the wife commenced in her current role as a professional with JJ Department on a fulltime basis. She continues working with W Organisation as a health care worker on a casual basis. The wife earns from such employment approximately $77,000. The wife’s total annual income including the pension is $148,000.
The husband is employed on a full-time basis with DD Organisation and currently earns approximately $117,00 per annum.
THE COMPETING PROPOSALS
The applicant wife seeks orders broadly as follows: -
·The moneys held in trust from the sale of the former matrimonial home be divided equally between the parties. Each party would thus receive the sum of $417,386.50.
·That a base amount of $153,352 be allocated to the husband out of the wife’s interest in Super Fund 1 (“the wife’s pension”).[7]
·That a base amount of $137,285.91 be allocated to the husband out of the wife’s interest in the Super Fund 2.[8]
·The parties close all joint bank accounts and divide the balance equally between them.
·That each party otherwise retain all items of property and interests in their power, position or control and indemnify the other with respect to all liabilities in their respective names.
·That the husband pay the wife’s costs of these proceedings [9]
[7] Referred to as “Super Fund 4” in Exhibit C, item number 24.
[8] Referred to as “Super Fund 2” in Exhibit C, item number 25.
[9] Exhibit W1.
The respondent husband seeks an adjustment of property broadly that: -
·The moneys held in trust from the sale of the former matrimonial home be divided as to:
·$674,976 to the husband; and
·$159,796 to the wife.
·That a base amount of $267,542 be allocated to the husband out of the wife’s pension.
·That a base amount of $340,377 be allocated to the husband out of the wife’s interest in the Super Fund 2.
·That each party otherwise retain all items of property and interests in their power, position or control and indemnify the other with respect to all liabilities in their respective names.
·That the wife pay the costs of an incidental to these proceedings.[10]
[10] Exhibit H9.
ISSUES FOR DETERMINATION AND THE SCOPE OF THE PARTIES DISPUTE
The parties identified the following questions requiring determination: -
·Did the husband act recklessly or negligently in commuting his Super Fund 1.
·Should the wife’s Super Fund 1 interest form a separate pool and be treated differently to the other assets of the parties.
·How should the husband’s commutation of his Super Fund 1 interest be reflected in his contribution findings.
·What is the nature and extent of the husband's relationship with Ms HH and whether an adjustment should be made pursuant to section 75(2) of the Act.
·Whether the wife has made full disclosure.
·The impact of the husband’s health on any adjustment pursuant to section 75(2) of the Act.
·What is the appropriate finding on contribution.
·What is the appropriate finding on adjustment pursuant to section 75(2) of the Act.
It was the wife’s case at the commencement of the trial that the principal issue in the matter is how the wife’s pension should be treated. She contended that the pension should comprise a separate pool from the parties’ other assets and resisted any splitting order of her pension.
The husband’s case was that the case prosecuted by the wife was “tantamount to quarantining …the pension” and equated to him being “penalized” by decisions made during the marriage. He sought a splitting order in his favour from the wife’s pension.
By the end of the trial the wife agreed to a splitting order being made from her pension in the husband’s favour. The parties disagreed as to the value of that splitting order. She maintained her contention that the pension should comprise a separate pool of property from the parties’ other assets.
Thus by the conclusion of the trial the parties agreed that: -
·Each party would receive a sum of money from the proceeds of sale of the home. The wife seeks that the proceeds be divided equally and thus each party would receive a cash sum of $417,386.50. The husband seeks that he receives the sum of $674,976; being 81% of the proceeds.
·The wife’s pension entitlements are property for the purposes of s 79 of the Act.
·Expressly that it is just and equitable for a superannuation splitting order to be made from the wife’s pension for the benefit of the husband. The wife seeks a splitting order of $153,352 in favour of the husband. The husband seeks a splitting order in his favour of $267,542.
·The husband would receive the benefit of a superannuation splitting order of the wife’s defined benefit superannuation with the Super Fund 2. The wife seeks a splitting order of $137,285.91 in favour of the husband. The husband seeks a splitting order of $340,377.
·There would be no splitting order of the husband’s superannuation entitlements.
·Each party would otherwise retain all items of property and interests in their power, position or control and indemnify the other with respect to all liabilities in their respective names.
THE WIFE’S PENSION
The Full Court has repeatedly emphasised the need to give consideration to the “nature, form and characteristics of the property and superannuation interests”: Welch & Abney [2016] FamCAFC 271.
The wife’s pension arises from her being injured whilst employed with the public service. The pension is paid pursuant to a state act. The trustee is KK Corporation. The pension is paid (as at 6 December 2023) in the annual amount of $71,144.56.
A valuation is required by s 90XT (2) of the Act if the court is considering a superannuation splitting order of the wife’s interest in the pension. Mr F gave expert opinion evidence as to the value, nature, form and characteristics of the wife’s interest in her pension by way of affidavit filed 1 February 2024 annexing his report dated 25 January 2024 and oral evidence at trial. I accept and find that Mr F has the appropriate qualifications and expertise to provide such an opinion.
There is no challenge to Mr F’s expert opinion that the value of the wife’s pension for the purposes of a superannuation splitting order pursuant to the Family Law (Superannuation) Regulations 2001 (Cth) (“the Regulations”) and the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 is $1,022,347 and I so find.
Notwithstanding the valuation arrived at by applying the provisions of the Act and the Regulations, the Full Court has repeatedly affirmed that drawing distinctions as to the nature, form and characteristics of superannuation interests is an important task in certain cases.[11]
[11] C & C [2005] FamCA 429 (“C & C”); Bulow & Bulow [2019] FamCAFC 3 (“Bulow”).
I accept the expert opinion evidence that the interest of the wife in the pension has the following characteristics: -
·It is a defined benefit interest in superannuation paid in the form of a pension.
·The pension amount is calculated by the application of the pension benefit multiple of 72.75% applied to the member’s superannuation salary at the time of retirement up to a maximum of 85% (if able to work outside the public service) and 100% (if not able to work outside the public service and the disability was due to an exposure to risk which the general workforce would not be exposed to).[12]
·The eligibility for the pension arises from an employee being injured; not years of service. A pension could become payable after having worked one day. The ongoing pension is not reliant on contributions from the member.
·The relevant act provides for a commutation at age 55 and 60 years of age. The wife is now 60 and 8 months of age. The trustee requires the application form to commute to be lodged within six months either side of reaching 60 years of age. The act provides that the member may make a late election and ask the trustee to exercise its discretion in her favour. It would not be guaranteed. There is no evidence before me that the wife proposes to make an application for the trustee to exercise a discretion to commute her pension and it was not put to the wife in cross examination that she may make such application in the future. I make no finding on this subject matter save that the wife cannot control the determination of any request for commutation.
·It is a pension payable for life and is indexed to movements in the consumer price index (Sydney). The trustee’s ability to require a member to submit to a medical examination no longer applies as the wife has attained 60 years of age.
·There is a reversionary pension component for eligible spouses on the death of the member payable at the rate of 62.5% of the member’s pension.
[12] Report of Mr F, paragraphs 15 and 25.
I accept Mr F’s unchallenged oral evidence that in the event the wife made a successful application to commute her entitlements, the mechanism likely to be adopted by the Trustee is a 10.92 multiple of the wife’s current pension amount of $71,145. Thus, the wife would receive a lump sum of $776,903. This value figure is less than the value ascribed to it by the calculation ascribed by Part VIIIB of the Family Law Act1975 (Cth).
It is uncontested that the reason there is such a significant discrepancy in the value ascribed to the wife’s entitlements for proceedings in this jurisdiction is because such a value represents the trustee’s liability to pay a pension for a lifetime – a prudent trustee would hold the value ascribed and in the event of a splitting order being made, the trustee’s liability would not be increased.
In the event the court was to make a superannuation splitting order then the trustee may commute part of the superannuation allowance paid to the wife to make such payment to the husband and her allowance is commensurately reduced. The effect of a superannuation splitting order to the husband on the wife's annual pension is as follows: - [13]
[13] Report of Mr F, paragraph 45.
Base amount
Pension
Adjustment Amount
Resulting Pension
$100,000
$71,145
9.78%
$64,185.62
$200,000
$71,145
19.56%
$57,226.68
$300,000
$71,145
29.34%
$50,267.73
$400,000
$71,145
39.13%
$43,308.79
$500,000
$71,145
48.91%
$36,349.85
The trustee is required to allocate the base amount, make any adjustments as required by the Family Law Superannuation Regulations2001 and deduct any fees. The trustee has a splitting fee of $1,347.50 which is shared between the parties.[14]
[14] Ibid, paragraphs 50 and 51.
The effect of a superannuation splitting order for the husband is as follows: -
Base amount
Adjustment Amount
Trustee fee
Adjustment
Result
$100,000
9.78%
$673.75
$983.35
$100,309.58
$200,000
19.56%
$673.75
$1,966.67
$201,292.92
$300,000
29.34%
$673.75
$2,950
$302,276.25
$400,000
39.13%
$673.75
$3,933.33
$403,259.58
$500,000
48.91%
$673.75
$4,916.67
$504,242.92
The wife’s superannuation pension is reduced by the trustee to provide for taxation. Whilst the trustee has not advised of the taxation components, Mr F was not challenged on his evidence that in his experience the taxation components payable by the wife would be a tax-free component and a taxable component with an element taxed in the fund.
As the entitlement is in the pension phase, in the event of a splitting order being made the husband would have a choice of payment of a lump sum paid directly to him or a rollover of the amount to another complying superannuation fund.[15] Thus the husband can elect to receive a cash sum payment. As the husband has reached the age of 60 years, any payment to him would be tax free.
[15] Ibid, paragraph 49.
The above differences have a dramatic impact on the justice and equity of the splitting order of the interest, and in turn, the place of that order within the justice and equity of the suite of orders to be made adjusting property between the parties in this matter.
THE WIFE’S SUPERANNUATION WITH SUPER FUND 2
Mr E gave expert opinion evidence as to the nature, character and value of the defined benefit interests of the wife in the Super Fund 2 in a report dated 12 October 2023. He was not required for cross-examination. It is agreed that the value of the interest is $476,034.57 and I so find.
I accept that if a splitting order is made, the wife's entitlement in the Superannuation with Super Fund 2 is reduced at the time of splitting by the ratio of the base amount of the family law valuation or the percentage split. The husband could obtain the benefit as a 100% lump sum, 100% pension or a combination if at least 50% pension is chosen.[16] The husband concedes that such payment is tax free. The wife will be able to access the preserved superannuation benefits upon reaching the age of 60 years if she has permanently retired from the work force or has changed employer on or after the age of 60.
[16] Family Law Valuation Report of Mr E dated 12 October 2023.
THE LAW
In determining claims for alteration of property interests pursuant to s 79, I am required to:
(a)Make findings as to the identity and value of the property, liabilities, and financial resources of the parties, or either of them, at the time of the hearing and determine the legal and equitable interests of the parties in such property;
(b)Consider, identify and assess the contributions by the parties to the acquisition, conservation and/or improvement of their property, including financial and non‑financial contributions and any contributions to the welfare of the family before, during and after the relationship came to an end;
(c)After consideration of altering the interests in the property pool on the basis of contributions, to consider whether there should be any further adjustment to either of the parties on account of the matters set out in s 79(4)(d)-(g) of the Act, including any relevant considerations pursuant to s 75(2) of the Act; and
(d)Ensure that the orders to be made are just and equitable in all the circumstances.
The Full Court has confirmed that the requirement to achieve justice and equitable requirement is one permeating the entire s 79 process.[17]
[17] Bevan (2013) at [86].
THE BALANCE SHEET
The draft Joint Balance Sheet is as follows. The items that were in dispute at the commencement of the hearing and their values are in bold.
Ownership Description Wife's Value Husband's Value ASSETS 1. J Proceeds of sale of B Street, Suburb C $834,772.70 $834,772.70 2. H Motor Vehicle 1 $22,000 $22,000 3. W Motor Vehicle 2 $10,000 $13,075 4. W CBA account (#...50) NIL NK 5. W CBA account (#...01) NIL NK 6. J/W CBA account (#...31) NIL NK 7. J/W CBA account (#...11) $51.13 $75.08 8. W CBA account (#...00) $131.96 $131.96 9. W MM Bank account (#...63) $76.63 $76.63 10. W MM Bank account (#...12) $3,266.59 $3,266.59 11. H T Bank (#...08) $2,027.63 $2,027.63 12. H T Bank (#...01) $9,318.06 $9,318.06 13. H ANZ (#...98) NK NIL 14. W NN Bank Account Item 10 15. H Interim Property division pursuant to Orders
dated 17.08.23$70,000
$70,000
16. W Interim Property division pursuant to Orders
dated 17.08.23$70,000
$70,000
Total 1,021,645 1,024,744 LIABILITIES Ownership Description Wife's Value Husband's Value 17. W Tax Debt $ 33,000 NIL 18. W CBA credit card (#...99) $ 1,900 NIL 19. W ANZ personal loan (#...25) $ 2,023.70 NIL 20. W Loan (#...53) $13.011.86 NIL 21. W Loan $1.278.65 NIL 22. H ANZ Platinum (#...41 card number …58) NIL NIL 23 H Westpac credit card (#...54) NIL NIL Total 51,214 SUPERANNUATION Ownership Description Wife's Value Husband's Value 24. W Super Fund 4 – Defined Benefit $1,022,347.33 $1,020,746.58 25. W Super Fund 2 – Defined Benefit $476,034.57 $476,034.57 26. W Super Fund 5 – Accumulated $5,335.00 $5,335.00 27. H Super Fund 5 - Accumulation Fund NK $201,463 Total 1,503,717 1,703,579 NET TOTAL ASSETS (including superannuation) 2,474,148 2,728,323 BALANCE SHEET FINDINGS
The husband made no concessions and sought an additional sum of $3,771.90 be notionally added back to the balance sheet and credited against the wife’s entitlement to existing property. This was the sum of money disclosed by the wife during the course of cross-examination that she received for the sale of the FF Business stock subsequent to separation. In evidence is an invoice in the sum of $3,771.90. The husband submitted that the offsetting asset of $3,771.90 should be placed on the balance sheet in circumstances where an item on the balance sheet is a loan that relates to FF Business.
The wife conceded she did not disclose the disposal of such property in her Financial Statement. She gave firm evidence that she did not think to do so in circumstances where the costs borne by her to have the stock in a storage facility subsequent to separation totalled $3,000, being a rental cost of $100 a month from the sale of the home until the stock was able to be sold in mid-2023. In evidence are bank statements of the wife recording a monthly payment made by her to a storage unit in the sum of $100 per month. I accept and find that the wife has paid storage fees totalling the sum of $3,000. Whilst the monies received by her and the monthly storage expense should have been on her Financial Statement, I accept the wife’s evidence that she did not disclose this as her expenses for storing the stock exceeded the monies received by her for its sale. I do not find that this was a deliberate attempt by the wife to not disclose her true financial position.
I am satisfied that it is not just and equitable to notionally add back to the balance sheet the monies received by the wife from the sale of the stock nor to take it into account pursuant to s 72(2)(o) in circumstances where: -
·the wife has borne the sole cost of storing stock of a business enterprise commenced during the course of the relationship;
·such costs exceed the monies received by the wife for the sale of such stock;
·such monies may be already accounted for on the balance sheet and to add the sum may result in a “doubling up”; and
·the amount is de minimis.
Items 1 – 16: Assets
Item 3: The Wife’s Motor Vehicle 2
There is no valuation with respect to this motor vehicle. The husband did not respond to the wife’s submission that the value asserted by her of $10,000 could be accepted as an admission against interest. I accept this submission and find that the value of this item to be $10,000.
Items 4-5: The Wife’s CBA Accounts
There was no cross examination of the wife’s assertion that there is a nil balance, nor any submissions made by the husband with respect to same. I find that both accounts have a nil balance.
Item 6: The Joint CBA Smart Access Account #...31
There was no cross examination of the wife’s assertion that there is a nil balance, nor any submissions made by the husband with respect to same. I find that this account has a nil balance.
Item 7: The Joint CBA Smart Access Account #...11
The husband acceded to the wife’s value of $51. This is thus the value that will appear on the balance sheet.
Item 13: The Husband’s ANZ Bank Account #...98
Such value is listed on the Balance Sheet as “not known” by the wife. There was no cross examination of the husband’s assertion that there is a nil balance, nor any submissions made by the wife with respect to same. I find that this account has a nil balance.
Item 14: Wife’s NN Bank Account
There was no submission made nor any evidence to ground a finding other than this account correlates to the wife’s MM Bank Account, and I so find. It will be removed from the Balance Sheet.
Items 17 – 23: Liabilities
The wife conceded during the course of submissions that it would be difficult to press for the following items to be classed as matrimonial debts, but submitted that they be taken into consideration pursuant to section 75(2)(o) of the Act: -
·Item 18: The wife’s credit card debt of $1,900;
·Item 19: The wife’s ANZ personal loan of $2,024;
·Item 20: The wife’s Loan of $13,012; and
·Item 21: The wife’s liability of $1,278.65;
The items will be removed from the balance sheet but will form part of the consideration as to whether any adjustment is to be made to the contribution findings made below.
Item 17: The Wife’s Taxation Debt of $33,000
The wife submitted that her taxation liability can be traced back to the lump sum of money she received by way of back pay from Z Department. The evidence relied upon by the wife to ground this finding is contained in the wife’s affidavit wherein she deposes that at separation she had a $48,000 taxation liability and that:
I paid $15,000 each year and the amount would increase by another $15,000 in interest each year. This debt has remained since the back pay I received in [mid] 2018.[18]
[18] Wife’s affidavit, paragraph 38.
In evidence is the wife’s integrated tax account for the period 1 May 2021 to 1 May 2023. It records: -
·an amount owing of $22,244.56 on 3 May 2021;
·interest being charged each month between $112 and $142.40;
·the taxation liability for the financial year 1 July 2021 to 30 June 2022 was $16,537.90.
·as at 1 May 2023 the sum of $31,191.87 was owed by the wife.
The husband submitted that the wife’s evidence in this regard is problematic in circumstances where she did not tender her taxation returns. I accept this submission.
The wife bears the evidentiary onus to establish that this is a debt that should form part of the pool sought to be adjusted between the parties. There is no evidence to support her assertion that she had a taxation liability at separation of $48,000.00. There is no evidence as to how the sum owing by her to the Australian Taxation Office has been accumulated. This item will be removed from the balance sheet but will be considered as to whether any adjustment is to be made to the contribution findings below.
Item 17: ANZ Personal Loan
The wife was not successfully challenged as to the loan relating to the FF Business. Whilst the husband did not concede that this liability should be on the balance sheet, the only submission made was that the monies received by the wife from the sale of the stock should also be on the balance sheet. I accept and find that this item is a liability that arose from the FF Business and it will remain on the balance sheet.
Items 24-27: Superannuation
Item 24: The Wife’s Super Fund 1
There is no challenge that the value of the wife’s pension for the purposes of a superannuation splitting order pursuant to the Family Law (Superannuation) Regulations 2001 (Cth) (“the Regulations”) and the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 is $1,022,347.
Item 26: Wife’s Superannuation with Super Fund 2
The agreed value of the wife's interests are $476,034.57 and I so find.
The wife conceded the value of the husband’s superannuation is $201,463 and I so find.[19]
[19] Item 27 on the Balance Sheet.
Conclusion as to the Balance Sheet Findings
Accordingly, I find that the property pool consists of assets and liabilities, rounded to the nearest dollar, as follows: -
Ownership
Description Value Found ASSETS J Proceeds of sale of B Street, Suburb C $834,773 H Motor Vehicle 1 $22,000 W Motor Vehicle 2 $10,000 W CBA Account (#...50) Nil W CBA Account (#...01) Nil J/W CBA Account (#...31) Nil J/W CBA Account (#...11) $51 W CBA Account (#...00) $132 W MM Bank (#...63) $77 W MM Bank (#...12) $3,267 H T Bank (#...08) $2,028 H T Bank (#...01) $9,318 H ANZ (#...98) Nil H Interim Property division pursuant to Orders 17.08.2023 $70,000 W Interim Property division pursuant to Orders 17.08.2023 $70,000 Total $1,021,646 LIABILITIES Ownership Description Value W ANZ Personal Loan #...25 $2,024 H ANZ credit card (#...41 card number …58) Nil H Westpac Credit Card (#...54) Nil Total $2,024 SUPERANNUATION Member Name of Fund and Type of Interest Value W Super Fund 1 - Defined Benefit Fund in accordance with the Regulations $1,022,347 W Super Fund 2 – defined benefit fund $476,035 W Super Fund 5 – Accumulation Fund $5,335 H Super Fund 5 – Accumulation Fund $210,463 Total $1,714,180 NET TOTAL ASSETS (including superannuation) $2,733,802
I find that the value of the parties’ non-superannuation property is $1,021,646.
The total value of non-superannuation property held by the wife prior to any adjusting order is $2,002,606.
The total value of non-superannuation property held by the husband prior to any adjusting order is $731,196.
As recorded earlier, the value of the wife’s pension for the purposes of a superannuation splitting order is $1,022,347.
I find the value of the remaining superannuation property to be $691,833. The value of the wife’s remaining superannuation prior to any adjusting order is $481,370 and the husband’s is $210,463.
WHETHER AN ORDER ALTERING PROPERTY INTERESTS SHOULD BE MADE
I should only make orders pursuant to s 79 of the Act if I am first satisfied that it is just and equitable to do so. It must not be assumed that the parties’ rights or interests should be different to that which already exists: Stanford & Stanford [2012] HCA 52 (“Stanford”).
I find that the requirements identified in Stanford are satisfied in this matter having regard to:
·The parties in this matter, having married and mixed their finances as a family, have now separated. It is therefore not possible for them to continue to mutually enjoy the accumulated assets.
·Both parties invoke s 79 of the Act seeking orders for property settlement.
·The current legal interest of the parties needing to be changed or adjusted when consideration is given to the contribution and other factors identified below.
It is therefore just and equitable in all the circumstances to make orders pursuant to s 79 of the Act adjusting the financial interest of the parties.
THE CONTRIBUTIONS OF EACH OF THE PARTIES
The Approach to be Taken
The wife contended that this would be a “two pool” case, submitting that:
•…the contribution and equity factors in respect of the defined benefit payment to the wife are markedly different from considerations for the other assets on the balance sheet…
•In particular, the payment of the defined benefit pension to the wife arises from the wife being injured in the course of her employment with the [public service] and that injury has been accepted […]. The payment of the pension bears no resemblance to contributions made either financially, directly or indirectly to the fund.
•Similar arguments apply with respect to the commuted pension of the husband.
•Further, the wife is forever limited to an ongoing income stream. Any splitting order (if made) will result in the husband receiving a lump sum tax free.
•The result of a splitting order is a commensurate reduction in the wife's pension.
•Those factors require very different considerations to the division of tangible assets and indeed accumulation interest superannuation.
To give force to her contentions, the wife highlighted that if she was able to commute her pension, such commutation (prior to any splitting order) would yield a lump sum to the wife in the order of $770,000, being much less than the value attributed to it for the purposes of a splitting order. She submitted that it is therefore illogical to treat the pension superannuation the same way as the court would treat the other property.
The husband submitted:
…And to a considerable degree, in my submission, it doesn’t really matter whether the assets are treated in one pools or two pools. The High Court tells us in Norbis that both approaches are valid…
But what is relevant is that one doesn’t quarantine it. And because, of course, as we know, there is an aspect to the […] pension and other forms of compensation that might apply, for example, workers compensation applies in other jurisdictions, or, indeed, in terms of just common law damages simpliciter, where a party has been compensated for lost earnings which, but for the injury, those earnings would have continued and the parties in question, including the spouse, would have had the benefit of those earnings. But of course, we know that both parties were injured.
Both parties received compensation. And in my submission, there’s not any relevant difference for the purpose of section 79 what decision was made in respect of precisely whose pension was commuted and whose remained. What is relevant, though, is that post-separation and in the years since post-separation, the wife has had the benefit of 100 per cent of her pension, and the husband’s pension entitlement can be found in other assets, one of which is the former matrimonial home proceeds, of which she received the $70,000, along with the husband, I must point out. But she received an amount equal to him from that, and she is the one who, in all of those years following separation, has been operating, as we now know, at a significant profit each week.
I find that the nature, form and characteristics of the interest of the wife by way of her pension differs from the remaining property of the parties in several important respects, being:
·The statutory formula has application for the purposes of a superannuation splitting order of the wife’s pension and provides a value of $1,022,347. It does not differentiate between that value and its value if the wife commuted her entitlement, which is $776,903 prior to any splitting order. Even prior to any splitting order, this is a difference in value of $245,444.
·The ramifications of a splitting order of the pension differs starkly as between each of the parties. The order provides the husband with the benefit of a lump sum in cash to the value of the order. The wife would then see a commensurate reduction of her income stream that cannot be, as of right, commuted.
I find that the “real nature” ie the nature, form and character of the wife’s pension leads to the conclusion that it is just and equitable that it be considered in a separate category from the other property of the parties. [20] I will refer to this separate category as to the “wife’s pension”. Section 79(4)(d) of the Act requires the court to take into account the effect of any proposed order upon the earning capacity of the party. Section 79(4)(e) Family Law Act and Section 75(2)(f) require the court to take into account the eligibility of either party to a pension under any superannuation fund or scheme. How the proposed splitting orders fit an overall adjustment of property will be revisited when considering whether the orders to be made are just and equitable.
[20] C & C [2005] FamCA 429.
The Parties’ Positions as to the Contribution Findings
The parties sought differing approaches to the assessment of contributions to their property. Both accepted that whilst a global approach to the assessment of contributions is generally preferred, this is a discretionary determination and particular circumstances may dictate that contributions to a particular asset or group of assets should be assessed separately. [21]
[21] Norbis v Norbis [1986] HCA 17.
Whilst the wife acknowledged that contributions of all forms made by each of the parties during and post the relationship must be assessed, she asserted that the contributions made by each of the parties to her pension had a different nature to the remaining property of the parties, including the product of the husband’s commuted pension. It was submitted that the findings as to contribution for each category of property would differ. The wife sought a contribution finding as to 85% in her favour and 15% to the husband to her pension, and as to equality to the balance of the superannuation and non-superannuation property.
In support of this contention the wife submitted that: -
·In reality one would normally expect a contribution finding after 38-39 years of marriage to be one of equality, but “what makes this case different is the unusual circumstance of there being two income streams, one commuted and one not.”
·The wife’s contribution to the husband’s pension was modest and thus it is open to the husband to submit that his contribution to the commutation was greater than the wives at that time, and in a significant way. However, there is a long line of authority that a holistic approach to the assessment of contributions must be taken. The husband’s commutation stopped an income stream which at the time was $59,000 per annum. The wife did not commute, and her pension continues to be paid. Had the wife commuted her pension, she would have received a lower cash payment as her pension was lower.
·The wife’s continued payment of the pension is a greater contribution by the wife for the same reasons as the husband’s was a greater contribution by him: that is, he did not contribute to her injury or her pension entitlement. In this matter both parties made a modest contribution to the pension of the other.
·The wife’s ongoing receipt of the pension contributed to the income of the household from the date of the receipt of the husband’s commutation monies to separation; (being from 2013 until 2019). That is a contribution that favours the wife and is to be weighed against the husband’s contribution as a lump sum and “waters down...the effect and significance of the commutation.” If I understand this submission, the approximate $300,000 the wife received by way of income over that six-year period (which by her analysis the husband also made some contribution to) equates in weighting to the $680,000 the husband contributed from his commutation which is incorporated into the current other property of the parties, leading to a finding as to equality of contribution. The husband described the approach of the wife as illogical. There is merit to that submission.
·In circumstances where the wife was “doing it fairly tough at the time” the inheritance received by the husband post separation, in the overall weighing of matters would not cause an adjustment in the husband’s favour.
·It was then submitted that having regard to the above submissions, the contribution to the property of the parties excluding the wife’s pension is equal.
·Turning to the wife’s pension, it was submitted that for the reasons outlined above and where the triggering event for the pension is the injury and not as a result of benefits accumulating during the course of the relationship, the husband’s contribution to this category was modest and a contribution finding as to the husband of 15% is appropriate.
The husband submitted that a realistic assessment of all of the myriad of contributions in the context of a 40-year relationship is required. The wife’s argument that an asset should be effectively quarantined because of their nature is inconsistent with case law, it is significant that each of the parties were eligible for a pension “so we are comparing lemons with lemons and apples with apples. One doesn't quarantine it.” This matter is not different because the wife received a pension as such a pension was received by both parties. Both parties were injured. Both parties received compensation. There is no relevant difference for the purposes of section 79 of the Act what decision was made in respect of whose pension was commuted and whose remained. What is relevant is that post separation the wife has had the benefit of one hundred percent of her pension and the husband’s pension entitlements can be found within other assets.
It was further submitted by the husband that a 15% superannuation splitting order of the wife’s pension as sought by the wife does not:
…go anywhere close to appropriate recognition of everything that went on in this marriage. Three key points by way of amplification... The first one is the proportion of the superannuation to the balance sheet, the second is the length of the marriage, and the third is the husband’s contributions to the marriage, both directly through his […] pension but also indirectly to the wife’s receipt of that […] pension which, for the last five years, approximately, she has had sole access.
The husband submits that the court should find an equality of contribution to all the superannuation and non-superannuation property of the parties.
The Assessment of the Parties’ Contributions
It is uncontested and I find that both parties had assets of nominal value at the commencement of their cohabitation.
Whilst each of the parties were cross examined at length as to their employment history, neither party made submissions that I should not make a finding that during the relationship both parties engaged in paid employment to the best of their abilities and I so find.
During the relationship each of the parties received lump sum monies for injuries sustained during the course of their employment with the public service; the wife receiving the sum of $17,000 in 1999 and the husband receiving the sum of $36,000 in 2001. The wife commenced receiving her pension in 1999. There is no evidence as to the quantum received by the wife annually from such pension. The husband commenced receiving his pension in 2001 in the sum of $44,000 gross per year. There is no dispute that such monies were applied towards the benefit of the family and I so find.
There is no dispute that the $680,000 received by the husband by way of commutation of his pension was applied towards the acquisition of property and the benefit of the family. The household continued to benefit from the payment of the wife’s pension subsequent to the husband’s commutation of same.
It is well settled that a party cannot claim any direct contribution arising from the other party being injured. The parties have however made indirect financial contributions and contributions as homemaker and parent.[22]
[22] Schmidt & Schmidt [2009] FamCA 1386.
Whilst again there was cross-examination as to homemaker and parenting tasks undertaken by each of the parties at various times throughout the relationship, neither party made submissions having regard to the length of the relationship that I should not find that the wife and husband each contributed to the best of their respective capacities in undertaking homemaker and parenting responsibilities. I accept the undertaking of the responsibilities as homemaker and parent was fluid during the course of the relationship arising from the parties’ respective engagements in paid employment outside the home from time to time; for example the husband would undertake more parenting and homemaker tasks when the wife’s employment outside out of the home required her to travel.
Neither party made submissions having regard to the length of the relationship that I should not find that the wife and husband each contributed to the best of their respective capacities in making non-financial contributions and I so find.
The children were both of adult age when the parties separated.
I find, in circumstances where the wife was not challenged on her evidence, that she made the following contributions subsequent to her vacating the home: -
·Contributing approximately $10,000 towards payment of the home loan to the ANZ Bank secured by way of mortgage over the home whilst the husband continued to have the benefit of occupation. In addition to these monies paid the wife was required to pay rental monies on the property where she lived.
·Organising all real estate agents and viewings.
·Purchasing furniture for the home suitable for it to be viewed for sale.
·Purchasing dog food and walking the dog.
·Purchasing groceries for the husband in circumstances where he was hospitalised in 2021.
The husband’s evidence was that he was “unsure” as to whether the wife paid approximately $1,500 towards the council and water rates subsequent to her vacating the property. The wife was not challenged in any way on her evidence in this regard and I so find.
The husband in cross-examination challenged the wife’s assertion that she paid approximately $6,000 towards the cost of repairs to the home prior to its sale. Whilst the wife was not challenged in her oral evidence, there are no corroborating documents to support this assertion and I am not satisfied the wife has met her evidentiary burden to ground a finding in this regard.
The wife’s evidence as contained in her Financial Statement that she has been paying the sum of $90 per week to the loan with the ANZ bank for FF Business was not challenged and I so find.
Shortly after the parties’ separation the husband received an inheritance from his father’s estate of $105,000. Of this sum, $40,000 was applied to the husband’s legal fees for these proceedings. The wife deposed during cross-examination that she had made a direct contribution to such inheritance as she had cared for both the husband’s parents “periodically over five years - sometimes I stayed three weeks – I was there quite a bit.” The wife does not depose as to this at all in her affidavit and I am not satisfied on balance that she has met her evidentiary burden to establish a finding in this manner.
The Full Court in Horrigan & Horrigan [2020] FamCAFC 25 reinforced the holistic approach espoused in Fields & Smith (2015) FLC 93-638 and stated that the proper approach to the assessment of contributions is:
[35] …established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties’ respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment…
I reject the somewhat blinkered approach to the assessment of contributions adopted by the wife, who highlights certain aspects of her contribution to her pension and dilutes the same contributions made by the husband to his pension which was subsequently commuted. The husband has made a higher contribution to the property pool excluding the wife’s pension. The contributions to the wife’s pension favour the wife.
Adopting a holistic approach to both categories of property and having regard to the length of this marriage, the benefits received by each of the parties whether by way of pension or pension and subsequent commutation and each parties’ contributions within the sphere of the marriage dynamic, I find that the parties made equal contributions to both the wife’s pension and the remaining non superannuation and superannuation property.
ADJUSTMENT TO CONTRIBUTION FINDINGS
The wife submitted that the reality that the husband will receive any splitting order of the wife’s pension as a cash lump sum favours the wife in any adjustment to be made to the contribution finding and thus the wife “maybe…worth a little more than an equal division of the assets..”(being the property excluding the pension). In the alternative, if the contribution finding favoured the husband “then maybe the 75(2) equalises it.” It was submitted that:
The way I pitch the case to your Honour is an equal division of the assets outside [Super Fund 1] and 15 per cent…that receives justice and equity.
The husband submitted that there should be a 10% adjustment made in his favour to the contribution finding. Such an adjustment should be made as a consequence of the husband’s health concerns, the fact that he is older than the wife and does not have the same earning capacity as the wife. It was submitted that having regard to the medical evidence as to the husband’s several lengthy hospitalizations, the problems he has had in relation to his balance on discharge from hospital and that he was the subject of a callout by an ambulance that the court would make a finding that his future earning capacity is guarded.
The wife is currently 60 years of age. She is currently employed with JJ Department as a professional earning $1,488 per week gross. The wife currently receives the sum of $1,362 per week from her pension; and thus has a weekly gross income of $2,850.00. Any splitting order made with respect to her pension will reduce her pension amount as set out earlier in these reasons. She is paying the sum of $750 in rent per week and approximately $527 a week in tax. She is in reasonable health. The wife has not re-partnered and does not live with anyone else. She has no responsibility to support any other person. It is uncontested that as a result of receiving her pension it is unlikely the wife will be able to claim a government pension in the future with the attendant concessions that flow from same and I so find.
The wife has loans and liabilities not listed on the balance sheet of approximately $18,000. She further has a taxation liability of $33,000.
It was submitted on behalf of the wife that the court should take into account that she has outstanding legal fees in the sum of approximately $120,000 and the husband is in a fortunate position of already having paid some $110,000 of his legal fees. I reject this submission as: -
·The monies received by each of the parties by way of partial property settlement was to be applied towards the payment of legal fees in these proceedings and the wife chose not to do so.
·The husband applied $40,000 from his inheritance monies towards his outstanding legal fees and this has been taken into account when determining that the parties made equal contributions to the property of the parties.
·The parties conducted the final hearing on the basis that the paid legal fees of each would not be notionally added back to the pool of property available for distribution.
The husband continues to be employed with DD Organisation on a full-time basis. He earnt the sum of $113,979 in the last financial year. His current financial statement deposes that he earns the sum of $2,249 per week. His income from paid employment is currently $761 per week more than the wife. The wife’s total income per week comprising of her income and pension is currently $600 more than the husband but this disparity in income will decrease upon the making of a superannuation splitting order of the wife’s pension as sought by both parties. The husband pays a total of approximately $1,272 a week in tax and rent. The husband does not have any liabilities.
The husband deposes that subsequent to separation he has had significant health issues and had been admitted to hospital on several occasions. His prescribed medications cost $120 per month and alternative medicines at $365 per month. He is required to undergo monthly tests. He deposes to continue to experience various symptoms and permanent loss of vision in one eye. He was previously on leave from work for a period of time due to an injury.
The husband has not established that any of his current ailments or use of medication has any impact on his future earning capacity. It is the husband’s uncontested evidence that he plans on working until he is 67 years of age. He conceded that the medical evidence is that his current medical conditions do not affect his ability to work. I am not satisfied that the husband’s future earning capacity is guarded and find that both parties have the capacity to continue in full time paid employment.
The husband agreed during the course of cross-examination that he plans to retire at the age of 67 years as that is the age that, with prudent planning, he will be entitled to receive an aged pension and the accompanying financial concessions. He is hoping to buy a home with his property settlement monies, possibly in Queensland as housing is cheaper. Upon retirement his superannuation benefits will provide him with an income stream of approximately $32,000 a year. He will rely upon this income stream, the aged pension and capital to support himself.
Of issue in the matter is the husband’s relationship with Ms HH. The husband conceded and I find that this relationship has been of 4 ½ years duration. The wife submits that the evidence suggests a high degree of interdependence between them and a willingness of the husband to make a financial contribution such that “if push comes to shove, he has got a roof over his head. The wife has no such luxury...”
The wife deposes that shortly after she vacated the former matrimonial home, Ms HH moved in to live with the husband. She deposes that from mid-2018 when she would go to the home to walk her dog she would observe Ms HH’s underwear and clothing on the clothesline, cosmetics in the bathroom, clothes in the main bedroom and the spare bedroom where she used to sleep and candles in the home belonging to Ms HH. When the wife questioned the husband about these items, he asserted that they belonged to his mother. The wife deposes that she had at times cared for the husband’s mother and knew what she wore and her clothing size and the clothing items in the home were not those of the mother. Ms HH was also at the home on most occasions the wife returned to walk the dog.
It is uncontested that financial disclosure sought by the wife as to Ms HH was refused and such refusal was grounded on the assertion that the husband and Ms HH are not cohabiting. The wife deposes that material produced under subpoena from the husband’s superannuation fund records that in early 2021 the husband nominated Ms HH as his beneficiary and she was listed as his “spouse/defacto.” A title search conducted records that Ms HH is the registered proprietor of an unencumbered property in Suburb LL.
It was the husband’s evidence that Ms HH is not in paid employment and is on a disability support pension. She owns her own home in Suburb LL. The husband asserts that he and Ms HH do not live together but Ms HH spends most weekends with him at this home. The husband has provided a key to his home to Ms HH so that she can access his home and the dog in the event he is hospitalised. She assists him by transporting him to medical appointments when he is unable to drive and will attend medical appointments with him. They are financially independent of each other and do not share any bank accounts. They have equally met the costs of their travel together.
The husband asserts he no longer has a nomination in place with respect to his superannuation entitlements and that he made such nomination as he was not on good terms with the children and did not want the wife to receive his superannuation entitlements should something happen to him.
In cross-examination the husband conceded that one of the reasons he and Ms HH have not moved in together is financial; Ms HH will lose her pension benefits if they do so. He denied that the second reason was that it would be an issue in these proceedings. He further denied that it is a reasonable expectation that if he needed to, he could live with Ms HH. The husband did concede that he has left his estate in his will to three people equally; Ms HH and his two children.
Whilst I accept that a hospital record notes that Ms HH is his partner, I do not accept that this must necessarily equate to a cohabitating relationship and accept the husband’s evidence that “it just looks silly when a 65-year-old man talks about his girlfriend.” I accept the husband’s evidence that he and Ms HH do not live together for the reasons he deposed to in his oral evidence. Whilst I am satisfied that the husband has provided for Ms HH upon his death, I cannot be satisfied that the wife has met her evidential burden for me to ground a finding that Ms HH is a source of financial support relevant to any adjustment to be made to the contribution finding.
The husband has no responsibility to support any other person.
It is a matter of discretion as to whether an assessment of any adjustment to the contribution findings under section 79(4) dealt with by way of separate findings against each of the pools of property or whether any adjustments to be made to the contribution finding can be more conveniently made by looking at the superannuation and non-superannuation property pool and the wife’s pension together.[23] I am satisfied having regard to the nature, form and characteristics of the wife’s pension in the hands of each of the parties that it would be unjust and unequitable to make any adjustment to the contribution finding other than separately for each pool of property.
[23] T & T (2006) FLC 93-263.
Having regard to all of the above, I am not satisfied that there are grounds to make any adjustment to the contribution finding for the pool of property excluding the wife’s pension.
Engaging with the reality as to the nature, form and characteristics of the wife’s pension, significant weight is given to the evidence of Mr F that if the wife were able to commute her pension entitlements, she would receive the sum of $776,903. This value figure is prior to any superannuation splitting order being made to the husband and is less than the value ascribed to it by the calculation ascribed by Part VIIIB of the Family Law Act1975 (Cth). There is no evidence to ground a finding that the trustee will exercise its discretion to commute the wife’s pension. This reality leads to a conclusion that the fact of a splitting order in the husband’s favour will provide him with a cash lump sum and the wife with a reduced periodic pension income stream moving forward. This is in addition to the cash lump sum the husband will be receiving from the superannuation splitting order the parties agree will be made from the wife’s Super Fund 2 entitlements and which the wife cannot access at this time. This favours a significant adjustment in the wife’s favour.
Having regard to the nature of the wife’s pension I am satisfied that to make a percentage adjustment in the husband’s favour is an artificial exercise. A percentage adjustment of a figure calculated by way of the Regulations does not equate to the reality of the effect of a superannuation splitting order for both the wife and the husband and would not occasion a result that is just or equitable. I am thus satisfied that it is appropriate to adjust by way of a figure rather than by way of percentage.
Adopting the methodology of Mr F, I find that in the event the court made a superannuation splitting order as sought by the wife of $153,352, the wife’s pension would reduce by 15% or $10,672. This equates to a reduction each week of $205. The resulting pension payable to the wife would be $60,473, or approximately $1,163 a week.
Again adopting the methodology of Mr F, I find that in the event the court made a superannuation splitting order as sought by the husband of $267,542, the wife’s pension would be reduced by 26% or $18,498. This equates to a reduction each week of $356. The resulting pension payable to the wife annually would be $52,647 or approximately $1,012 a week.
Weighing up all of the factors outlined above I am satisfied that the husband should receive an adjustment of $200,000 by way of a splitting order of the wife’s pension. This will be a lump sum cash payment to him. This will reduce the wife’s pension each year by $13,918 and equates to 3 ½ years of the wife’s pension in a cash lump sum.
JUST AND EQUITABLE
The effect of the orders sought by the husband is as follows: -
PROPERTY Wife Husband Proceeds of sale of B Street, Suburb C $159,796 $674,976 Motor Vehicle $10,000 $22,000 Savings $3,527 $11,346 Interim Property division $70,000 $70,000 Total Property $243,323 $778,322 LIABILITIES Personal Loans $2,024 Credit Cards Nil Total Liabilities $2,024 Nil Net Total Non-Superannuation $241,299 $778,322 SUPERANNUATION Super Fund 2 – defined benefit fund $135,658 $340,377 Super Fund 5 – Accumulation Fund $5,335 Super Fund 5 – Accumulation Fund $210,463 Total Superannuation $140,993 $550,840 NET TOTAL $382,292 $1,329,162
Pursuant to the husband’s application he will receive a further cash lump sum payment of $267,542 from the wife’s pension. The wife would receive a pension of $1,163 per week.
There is a significant disparity as to the property each of the parties would retain pursuant to the husband’s proposal. This disparity is even more stark as the monies received by the husband in the Super Fund 2 defined benefit fund will be by way of a lump sum cash payment.
The property that does not include the wife’s pension includes both cash and superannuation entitlements. It is just and equitable when such superannuation entitlements were all accumulated during the course of the marriage that each parties’ superannuation entitlements be equalised.
Thus, an equal division of this category of property will result in each of the parties receiving the following:
PROPERTY Wife Husband Proceeds of sale of B Street, Suburb C $428,308 $406,465 Motor Vehicle $10,000 $22,000 Savings $3,527 $11,346 Interim Property division $70,000 $70,000 Total Property $511,835 $509,811 LIABILITIES Personal Loans $2,024 Credit Cards Nil Total Liabilities $509,811 $509,811 SUPERANNUATION Super Fund 2 – defined benefit fund $340,581.50 $135,453.50 Super Fund 5 – Accumulation Fund $5,335 Super Fund 5 – Accumulation Fund $210,463 Total Superannuation $345,916.50 $345,916.50 NET TOTAL $855,727.5 $855,727.5
The husband will receive a further cash lump sum of $200,000 by way of a splitting order of the wife’s pension. The wife will continue to receive an income stream of $57,000 annually. To divide the wife’s pension equally would not occasion justice and equity taking into account the reality and nature of the entitlement and the effect of a splitting order; whereby the husband receives cash immediately and the wife a reduced income.
Standing back and looking at the distribution of assets on an overall basis, I find that this distribution achieves a just and equitable alteration of the property interests of the parties.
Orders will be made accordingly.
I certify that the preceding one hundred and eighty (180) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Murdoch. Associate:
Dated: 7 March 2024
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