TAPPERT & TAPPERT
[2020] FCCA 3107
•18 November 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TAPPERT & TAPPERT | [2020] FCCA 3107 |
| Catchwords: FAMILY LAW – Parenting and property – parenting orders made by consent – property – division of asset pool – issue of husband’s inheritance – inheritance to be treated as a financial resource of the husband – issue of adding back legal costs – both party’s legal costs added back – equal contributions – just and equitable division of assets. |
| Legislation: Family Law Act 1975 (Cth), ss.75(2), 79, 106A. |
| Cases cited: Bevan & Bevan [2013] FamCAFC 116 Bonnici v Bonnici (1992) FLC 92-272 Calvin & McTier [2017] FamCAFC 125 Farmer & Bramley (2000) 27 FLC 316 Figgins & Figgins (2002) FLC 93-122 Gowda & Malik [2020] FCCA 2519 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Holland & Holland [2017] FamCAFC 166 Jarrott & Jarrott (No 2)[2012] FamCAFC 72 Peabody & Peabody [2013] FCCA 1980 GS & TS (2005) FLC 93-213 Stanford & Stanford [2012] HCA 52 Verley & Verley (No.2)[2008] FamCA 326 |
| Applicant: | MS TAPPERT |
| Respondent: | MR TAPPERT |
| File Number: | MLC 9629 of 2019 |
| Judgment of: | Judge McNab |
| Hearing date: | 27 October 2020 |
| Date of Last Submission: | 27 October 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 18 November 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms K Paull |
| Solicitors for the Applicant: | WL Lawyers |
| Counsel for the Respondent: | Mr D Mort |
| Solicitors for the Respondent: | Vassis & Co |
ORDERS
There be a division of the asset pool of 64% to the Applicant Wife and 36% to the Respondent Husband.
The Wife is to receive $1,730,892.67 of the value of the asset pool and the Husband is to receive $973,627.11.
Within ninety (90) days of the date of these orders:
(a)the Husband transfer to the Wife all his right, title and interest in the property situated at B(1) Street, Suburb C in the State of Victoria, being the whole of the land contained in Certificate of Title Volume ... Folio ... (“the B(1) Street, Suburb C Property”) at the expense of the Wife;
(b)the Wife transfer to the Husband all her right, title and interest in the property situated at B(2) Street, Suburb C in the State of Victoria, being the whole of the land contained in Certificate of Title Volume ... Folio ... (“the B(2) Street, Suburb C Property”) at the expense of the Respondent Husband;
(c)in the event that the mortgages over the respective properties have not been discharged, the Husband sign all documents and do all acts and things necessary to discharge the mortgage (mortgage number ...) encumbering the B(2) Street, Suburb C Property and the mortgage (mortgage number ...) encumbering the B(1) Street, Suburb C Property (“the discharge”) at the expense of the Husband;
(d)contemporaneously to the transfers, the Husband pay the Wife the sum of $651,530.67; and
(e)each party forthwith jointly appoint a qualified accountant to assess whether Capital Gains Tax (CGT) would be due and owing in the event of a triggering event in respect of the B(1) Street, Suburb C Property, with each party to co-operate fully with the jointly appointed accountant and further in the event of tax being assessed, the parties equally share the accountant's costs, being 50% to the Wife and 50% to the Husband.
Pending the transfer, the discharge and the refinancing, the Wife and Husband shall indemnify one another and keep one another indemnified against all instalments pursuant to the mortgage, rates, insurances, taxes and outgoings of or with respect to the former matrimonial home and the investment property of whatsoever nature and kind.
In the event of the payment not being made by the date set out in order 3 above, the B(2) Street, Suburb C Property be sold forthwith by public auction on such terms and conditions as agreed and failing agreement, as otherwise recommended by the President of the Real Estate Institute or his nominee and upon completion of the sale, the proceeds of sale be applied as follows:
(a)firstly, to pay the costs, commissions and expenses of the sale;
(b)secondly, to discharge the mortgage and any other encumbrance relating to the former matrimonial home;
(c)thirdly, the sum of $651,530.66 to the Wife plus interest on the amount outstanding fixed pursuant to the Family Law Rules 2004 (Cth) from the date of non-compliance;
(d)fourthly, the balance to the Husband; and
(e)fifthly, a Registrar or Senior Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975 (Cth), to execute such deed or instrument in the name of the Husband and to do all acts and things necessary to give validity to the operation to the deed or instrument.
From the date hereof and until completion of settlement:
(a)the Wife have the sole right to occupy the B(1) Street, Suburb C Property;
(b)the Wife pay apportioned instalments pursuant to any, rates, insurances, taxes and other outgoings of whatsoever nature and kind with respect to the investment property as and when they fall due;
(c)the Husband have the sole right to occupy the B(2) Street, Suburb C Property;
(d)the Husband pay apportioned instalments pursuant to any, rates, insurances, taxes and other outgoings of whatsoever nature and kind with respect to the former matrimonial home as and when they fall due;
(e)the parties hold their respective interest in the B(1) Street, Suburb C Property and the B(2) Street, Suburb C Property upon trust pursuant to these Orders; and
(f)neither party encumber the B(1) Street, Suburb C and the B(2) Street, Suburb C Property without the consent in writing of the other party firstly being obtained.
Each party indemnify the other and keep the other indemnified from all debts and liabilities held in their sole names, including, but not limited to, any credit card debts, car loans and other debts and liabilities relating to or arising out of any items of property they are to retain pursuant to these Orders.
There be a superannuation Splitting Order, with the Husband to make a splittable payment to the Wife in the sum of $85,083, with such orders to be made in Chambers once trustee approval has been obtained.
Unless otherwise specified by these orders and save for the purposes of enforcing monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of all others to all other property (including choses-in-action and motor vehicles) in the possession of such party as at the date of this order;
(b)each party hereby foregoes any claim they may have to any employment or superannuation benefits that is belonging to or owned by the other save as provided for in these orders;
(c)insurance policies remain the sole property of the beneficiary named therein;
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which the parties are entitled pursuant to this Order; and
(e)any joint tenancy of the parties in any real or personal estate be expressly severed.
The parties make any application as to costs with:
(a)any application for costs to be filed and served by way of submissions (which should include the quantum of costs) with such submissions to be filed within 14 days of the date of these orders, and to consist of no more than four A4 pages.
(b)any response to the application for costs to be filed and served by way of submissions within 28 days of the date of these orders and to consist of no more than four A4 pages.
(c)the question of costs, including the quantum of the costs, to be determined on the papers.
IT IS NOTED that publication of this judgment under the pseudonym Tappert & Tappert is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 9629 of 2019
| MS TAPPERT |
Applicant
And
| MR TAPPERT |
Respondent
REASONS FOR JUDGMENT
Introduction
This proceeding came before the Court on 27 October 2020 in relation to parenting and property disputes.
The Applicant Wife is 55 years old and the Respondent Husband is 54 years old. The parties were married for 21 years, which included 2 years where the parties were separated but remained living together at the same property. The parties now live at separate properties which are physically next to each other.
The parties have two children, X born in 2007 (“X”) and Y born in 2009 (“Y”) (together, “the children”). The children live with the Wife.
Background
The parties formed a relationship in 1992 and commenced cohabitation in in 1997 after the purchase of a property at B(1) Street, Suburb C (“the B(1) Street, Suburb C Property”) for $130,000 plus $6000 stamp duty. That property was purchased with combined savings and borrowed funds secured by a mortgage.
In 2000 the parties purchased B(2) Street, Suburb C (“the B(2) Street, Suburb C Property”) for $255,000 plus stamp duty. The purchase was financed with combined savings and borrowed bank funds secured by a mortgage. The house was renovated over the following year and the cost of renovations were shared equally. The Husband alleges that his parents made a contribution of approximately $53,000 towards the cost of renovation.
The parties married in 2006 and the children X and Y were born in 2007 and 2009 respectively.
The parties separated on 4 September 2016 but remained living under one roof, although the Wife moved into the B(1) Street, Suburb C Property in December 2018.
The Wife makes allegations of family violence against the Husband from November 2016: see the Wife’s Notice of Risk filed on 23 January 2020.
Given the parties were living next door to one another, and that there was a high level of conflict between the parties, there has been ongoing, high-level tension, which has involved the Department of Health and Human Services (“the DHHS”) and the police. A 12-month intervention order was obtained by consent without admission against the Husband in favour of the Wife and the children. The Husband has been charged with multiple breaches of the intervention order with the hearing of those matters pending.
The Husband has been represented at times throughout this proceeding and at other times has appeared self-represented. The Wife has being represented throughout this proceeding.
The final hearing occurred via Microsoft Teams and a number of the interim hearings were conducted over the telephone or via Microsoft Teams. When self-represented at those hearings, the Husband's conduct has been exceptionally difficult to manage and he engaged in long bouts of quite explosive shouting, even when asked by the Court to remain calm for his own benefit.
The Wife filed detailed evidence by way of various affidavits, submissions and a detailed chronology which set out numerous examples of where she says she was subjected to family violence, breaches of intervention orders and where the children have been affected by the Husband’s conduct. In relation to the children it is said that the Husband has screamed at them and repeatedly discussed these proceedings with them.
Shortly before the final hearing the Husband engaged legal representation which has been of great assistance to him and to the Court. To their credit, the parties were able to negotiate final parenting orders with the assistance of the Independent Children's Lawyer and hopefully those orders will operate to the benefit of the children and the parties. The fact that consent orders have been made mean that it is unnecessary for the court to canvass all of the allegations made by the parties regarding each other’s capacity to parent. I note that the orders made by consent allow the Husband to make a further parenting application and I do not wish to make findings in relation to those matters in case I or another judge is called upon to deal with any further application. This of course does not mean that the Court does not take those matters seriously.
Given that parenting matters have been dealt with by way of consent orders, the Court must now decide how the pool of assets in this proceeding is to be distributed between the parties.
Approach to Property Proceedings
The Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39] identified a preferred four-step process in property matters under the Family Law Act1975 (Cth) (“the Family Law Act”):
a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s79(4) of the Act;
c)to consider the factors as are relevant contained in s75(2) of the Act; and
d)finally, to determine whether the order the Court proposes to make is just and equitable to both parties.
This approach was approved in Bevan & Bevan [2013] FamCAFC 116, where the Full Court of the Family Court of Australia considered the High Court’s decision in Stanford & Stanford [2012] HCA 52 (“Stanford”).
Asset Pool
The consideration of the property assets in the proceeding was conducted by way of submissions from Counsel who made reference to the filed evidence and legal submissions. Aspects of the formulation of the asset pool are disputed and both parties provided written and oral submissions as to the composition of the asset pool. On the basis of submissions from the parties, the Court will proceed on the basis that the asset pool, with the disputed assets highlighted, is as follows:
Asset
Value
Assets
B(1) Street, Suburb C
$1,500,000
B(2) Street, Suburb C (Investment Property)
$1,050,000
Wife’s Savings
$448 (Husband)
Nominal (Wife)
Husband’s Savings
NIL (Husband)
Unknown (Wife)
Husband’s 11,940 D shares
$34,387
Husband’s 31 E shares
$549
Funds retained from $250,000 notionally added back by agreement
$90,221.78
Wife’s interim distribution to pay legal costs
$29,362
Husband’s Inheritance
$495,188
Superannuation
Husband – F Super Fund
$246,440
Wife – G Super Fund
$76,274
As can be seen the points of dispute in relation to the ascertaining the property pool is the determination of:
a)the Husband’s inheritance; and
b)the Wife’s interim property distribution.
The parties have agreed to deal with superannuation on the basis that there is an equalisation of interest.
The Husband’s Inheritance
The principal point of dispute regarding determination is the question of the proper approach to the characterisation of the inheritance arising from the passing of the Husband's mother in 2020. The Husband has an entitlement to 20% of his mother’s estate which consists of the value of a property at H Street, Suburb J (“the H Street, Suburb J Property”). There has been no sworn valuation obtained of the H Street, Suburb J Property. The Court made orders on 25 August 2020 for that valuation to be obtained by the Husband, and the Husband has not complied with that order. There are estimations of the value of the property based on rate notices and an appraisal which puts the value of the H Street, Suburb J Property at between $2,000,000 and $2,500,000. The Court has been told at previous hearings in this proceeding that two of the Husband's sisters are currently residing at the H Street, Suburb J Property and it is not clear when the Husband will receive the value of that inheritance.
The parties made divergent submissions in relation to how the Court should treat the inheritance for the purpose of ascertaining the composition of the asset pool.
Counsel for the Husband relies on various cases (see Figgins & Figgins (2002) FLC 93-122 at page 89, 295 – 296; Bonnici v Bonnici (1992) FLC 92-272 at page 79 – 120; see also GS & TS (2005) FLC 93-213; Farmer & Bramley (2000) 27 FLC 316; Verley & Verley (No.2)[2008] FamCA 326; Peabody & Peabody [2013] FCCA 1980; Jarrott & Jarrott (No 2)[2012] FamCAFC 72) in support of the submission that the H Street, Suburb J Property should not be included in the asset pool and that it should be considered a financial resource of the Husband. In relying on those cases, the Husband submits that:
a)although property does not fall into any protected category merely just because it is received as an inheritance, nevertheless the circumstances of how and when property, such as inheritance, is received should be considered on a case-by-case basis;
b)significant weight should be given to circumstances in which a party has received such property, and the other party cannot be considered to have made ‘off-setting’ or significant contributions, as the property is received late in the marriage, if not post–separation; and
c)as such, property which is considered to fall into such a ‘category’ should be considered to be a financial resource of the party who received the property and therefore should not be included in the asset pool.
In response, Counsel for the Wife states that the authorities the Husband refers to “all pre-date the 2017 decisions by the Full Family Court in Calvin & McTier [2017] FamCAFC 125 (12 July 2017) [“Calvin”] and Holland & Holland [2017] FamCAFC 166 (9 August 2017) [“Holland”] which have fundamentally changed the Court’s approach to inheritances.” Counsel for the Wife relies on those decisions in support of the proposition that, effectively, it is erroneous for legal or equitable interest in property acquired post–separation to be considered ‘excluded’ or ‘immune’ from consideration of applications for orders pursuant to s79 of the Family Law Act: see Holland at [25]; see also Calvin at [50].
The Wife’s submissions and the Husband’s submissions
Contributions
Pursuant to written submissions filed by the Wife on 22 October 2020, the parties agree that the contributions are “broadly equal”. While both parties worked full time, the Husband was the primary breadwinner and the Wife was the primary “caretaker and homemaker”.
The Wife has been the primary caregiver since separation and the Husband has had no overnight time with the children since separation.
Future needs
The parties agree that:
a)the Husband has no significant health concerns;
b)the Wife manages the effects of her thyroid problems with medication and counselling, and has regular CT scans to manage her remission of anal and bowel cancer;
c)the Wife’s future earning capacity is significantly lower than the Husband’s, even were she to obtain full time employment;
d)the Wife will retain primary care of the children in the foreseeable future; and
e)the Husband has an ongoing obligation to pay child support which represents an obligation to pay approximately 33% of his net income.
Consideration
Add back of legal fees
In relation to the add back of legal costs which occurred in this proceeding and which the Husband made as an interim distribution, the Husband makes brief submissions as follows:
“In the Marriage of Farnell (1995) 20 Fam LR 513 and In the Marriage of Townsend [1994] FamCa 144 are authority for the proposition that where, after separation, a party to proceedings under section 79 of the Family Law Act 1975 applies joint funds for his or her sole benefit those funds may be brought back to account in those proceedings as a distribution of property in favour of that party. Whilst it may not always be appropriate to do so in a given case, one circumstance in which it will almost invariably be appropriate so to do is where the relevant party has used the funds to pay all or part of his or her legal costs of the property proceedings. To fail to bring it to account in those circumstances would be to require the other party to contribute to the costs of the first party without any order for costs having been made: see Chorn & Hopkins (2004) FLC 93-204.”
The Wife is not opposed to the interim distribution being added back, but says that if the distribution was to be added back, “…the Husband’s legal costs must also be notionally added back. The Husband has disclosed a trust statement from his previous solicitor’s which shows $57,108.60 paid by him in legal costs. It would be inconsistent for the Court to notionally add back funds applied to the Wife’s legal costs but not the Husband.”
Given that the most of the $90,221.78 added back to the asset pool includes legal fees paid by the Husband from the sum of $250,000 that he withdrew from the asset pool and used to pay down mortgages over the properties and to pay legal fees, the adding back of the wife’s legal fees is appropriate to have an equalising effect. The adding back of $90,221.78 has the effect of recognising the use of joint funds by the Husband to pay his legal fees.
On 7 May 2020 the Court made orders that the Husband pay to the Wife the sum of $20,000 as an interim property distribution to go towards the Wife’s costs. The Husband seeks for those costs be added back to the property pool. In my view it is appropriate to bring those costs back into the property pool as they have been expended by one party in order to pay for legal costs: see In the Marriage of Farnell (1995) 20 Fam LR 513; In the Marriage of Townsend [1994] FamCA 144. This is appropriate particularly given that the Husband has been required to add back the value of monies that he has expended on legal costs which form part of the agreed sum of $90,221.78 to be added back into the asset pool.
The Inheritance Issue
In relation to the issue of the Husband’s interest in the H Street, Suburb J Property which was received by way of inheritance from his mother, I refer to the decision of Holland where the Full Court of the Family Court stated at [34]:
“...it is important to emphasise that the categorisation of property as ‘an inheritance’ or as ‘after-acquired’ property often leads to an erroneous argument that unless contributions to that property can be established, the property should be ‘excluded from consideration’. As we have said, that argument is erroneous by reason of ignoring the fundamental premise that section 79 is directed to all of the existing legal and equitable interests in property of the parties or either of them without exclusion of any of those interests.”
At [16] – [43] of Holland, it is made clear that no property is excluded from consideration, although the Court has a discretion as to how the property should be regarded in relation to the asset pool, following proper consideration: see also Gowda & Malik [2020] FCCA 2519 at [80].
I accept the Wife’s submissions that it is not necessarily appropriate to exclude an inheritance from an asset pool. However, in this case, it is not appropriate to include the inheritance as property to be distributed as part of the asset pool, as the quantum of the entitlement has not been determined. The estimated value of the inheritance is more appropriately taken into account as a financial resource available to the Husband, and should be dealt with when considering the future needs of the parties under s75(2) of the Family Law Act.
Final Consideration of Appropriate Split of Assets
In this matter, given the separation of the parties where there has been joint enterprise through a long marriage, it is just and equitable that there be an order made pursuant to s79 of the Family Law Act determining the Husband and Wife’s interest in the matrimonial property.
On the basis of these findings, I find that the pool of assets available for distribution between the parties in this proceeding to be:
Asset
Value
B(2) Street, Suburb C
$1,500,000
B(1) Street, Suburb C (Investment Property)
$1,050,000
Husband’s 11,940 D shares
$34,387
Husband’s 31 E shares
$549
Funds retained from $250,000 notionally added back by agreement
$90,221.78
Wife’s interim distribution to pay legal costs
$29,362
Total
$2,704,519.78
It is expected that there will Capital Gains Tax (CGT) liabilities arising from the transfer of the relevant property and the order made will take into account that possibility, with the liability to be apportioned in accordance with the split of assets as to be determined by the Court.
On that basis, I find that the total value of the asset pool, is $2,704,519.78, subject to the presently undetermined GST liabilities.
The Wife proposed in submissions that the combined assets be split on the following alternative bases:
a)60/40 in the favour of the Wife if the inheritance is to be included in the asset pool; or
b)70/30 in favour of the Wife if the inheritance is to be excluded.
By way of submissions, the Husband presented alternative scenarios based on the asset pool including and excluding the inheritance. The proposals were:
a)45% and 50% in favour of the Wife with the inheritance included; or
b)with the Wife to receive 57.5% and 60% if the inheritance excluded.
Contributions
During this long marriage the parties have, through hard work and careful frugality, been able to accumulate assets of real value notwithstanding that neither party has been a high income earner. Both parties were income earners throughout the marriage, with the Husband earing a higher income in a full-time position and with the Wife having primary care of the children whilst working part–time for much the relationship.
The level of care given by the Wife is significant as is apparent from the evidence that both children are active in extracurricular activities which have principally involved the Wife.
The Husband made significant contributions as an income earner and in his work on renovations of the properties. The alleged loan contribution by his parents to the cost of renovations has not been proved. The husband paid all mortgage payments in 2020 and later repaid the mortgage debt in full and paid regular expenses on the property at B(1) Street, Suburb C. The wife made payments on the mortgage on B(1) Street, Suburb C in 2019. She also paid all the school fees for X in 2019 and 2020.
I note that the summary above does not purport to be an exhaustive list of the respective contributions of each party. However, on the basis of the evidence before the Court and the submissions of parties, I assess the party’s contributions to the available pool of assets at 50%.
Future Needs
Having particular regard to the fact the Wife has primary care of two teenage children, there should be an adjustment of 14% in favour of the Wife with the result that the Wife receives 64% of the asset pool and the Husband 36%. This adjustment is made on the basis that the evidence indicates that:
a)the Wife will continue to maintain full care of two teenage children which is a significant cost;
b)the Wife will likely have to relocate and find suitable accommodation to purchase or rent;
c)the children are heavily involved in extracurricular activities (all of which come at a cost) which the Husband has indicated that he will not be making contributions towards;
d)the Husband has a significantly higher earning capacity even if the Wife was to obtain full time employment, which would be difficult given her care of the children and the activities they are involved in;
e)the Wife has experienced significant ill health and, whilst cancer that she has suffered is in remission, there is a need for ongoing care to manage that and the effect of thyroid problems that she experiences;
f)the Husband has no significant health concerns;
g)the Husband will have access to the value of his inheritance which has been assessed to be valued at about $495,000 and that should be taken into account under this heading for the reasons outlined above; and
h)the Husband has ongoing liabilities to pay child support (which is the sum of about $27,000 per annum taken from a net income of about $80,000), however I take into account his capacity to access the financial resource, being the inheritance, in the future. He also has access to the equity in the real estate asset that he retains.
Conclusion
On the basis of the consideration above, the Court will make orders that:
a)there be a division of the asset pool of 64% to the Wife, and 36% to the Husband;
b)on the basis of that division, the Wife is to receive $1,730.892.67 of the value of the asset pool, and the Husband is to receive $973,627.11.
The Wife is to keep assets in the total value of $1,079,362 which consists of the B(1) Street, Suburb C, valued at $1,050,000, and her interim property distributions in the sum of $29,362. On that basis, the Husband is to pay to the Wife the sum of $651,530.67.
The Court will also Orders will also make orders for the filing of submissions in relation to costs. Any submissions should be made with sufficient detail in relation to the quantum of costs to enable the Court to make a lump cost order without the need to refer any costs to be taxed.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Judge McNab
Associate:
Date: 18 November 2020
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