Trant and Farlow
[2008] FamCA 337
•16 May 2008
FAMILY COURT OF AUSTRALIA
| FARLOW & TRANT | [2008] FamCA 337 |
| FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Adjustment for other matters – Just and equitable |
| Family Law Act 1975 (Cth) ss 75 and 79 |
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
VAK & AK [2005] FamCA 803
In the Marriage of Pellegrino (1997) 22 Fam LR 474
Kessey & Kessey (1994) FLC 92-495
| APPLICANT: | Mr Farlow |
| RESPONDENT: | Ms Trant |
| FILE NUMBER: | NCC | 1306 | of | 2007 |
| DATE DELIVERED: | 16 May 2008 |
| PLACE DELIVERED: | Sydney |
PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Judicial Registrar Loughnan |
| HEARING DATE: | 7 & 8 May 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr G. Gould |
| SOLICITOR FOR THE APPLICANT: | Attwaters Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr W. Tregilgas |
| SOLICITOR FOR THE RESPONDENT: | The Family Law Firm |
Orders
Forthwith upon payment of $10,000 by the wife to the husband, the parties shall do all such acts and execute all such documents as are necessary to transfer the husband’s right, title and interest in Lots 2 and 3 … and Lots 7, 9 and 10 in …, at M in the State of New south Wales together with any associated water rights, to the wife.
The husband and wife shall do all such acts and execute all such documents as are necessary to sell F property, being the whole of the land in Certificate of Title Folio Identifier … for the best price reasonably obtainable and to disburse the proceeds of sale as follows:
(a)In the payment of selling agent’s commission and/or auctioneer’s fees and expenses;
(b)In the payment of solicitor’s or conveyancer’s costs, professional fees and disbursements of acting for the vendors on sale;
(c)In the payment of the “usual” adjustment of rates and statutory charges;
(d)In the discharge of any mortgage secured over any real property owned by the husband the wife together or to which the husband and the wife are parties including as guarantor, particularly including mortgages to … Building Society Limited registered numbers … and …;
(e)In the payment of any Capital Gains Tax assessed as payable by the Australian Taxation Office in consequence of the sale of the unit;
(f)In the payment of 50% of the balance then remaining to the husband; and
(g)In the payment to the wife of the balance then remaining;
The husband shall pay all mortgage instalments and other necessary outgoings in relation to the F property pending the sale.
The husband and wife do all such acts and execute all such documents as are necessary:
(a) to transfer the wife’s right, title and interest, whether as a shareholder, director or secretary in F Pty Limited to the husband, save that the Mercedes Benz motor vehicle, registered number … be transferred to the wife;
(b) to transfer the loans identified, in the Financial Statements of F Pty Limited (ACN …) for the year ended 30 June, 2007 as:
(i) loan – wife;
(ii) loan - Property Purchase L; and
(iii) loan – husband and wife
to the husband.
The husband shall indemnify and keep indemnified the wife as to all liabilities arising from the wife’s interest in such company including her interest as a shareholder, director or secretary, or otherwise and including any taxation liability arising out of the loans referred to in order 4 (b) above.
The husband and the wife shall do all such acts and execute all such documents as are necessary to close the account holding the proceeds of sale of L property (approximately $516,189) and to pay the balance of that account to the husband.
Pursuant to Section 90MT(1)(a) of the Family Law Act 1975 (Cth) as amended, whenever a splittable payment becomes payable in respect of the superannuation interest of the husband in Farlow Superannuation Fund, the wife shall be entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulations 2001, using a base amount in the sum of $71,448 and there shall be a corresponding reduction in the entitlement the husband would have had but for these orders.
Order 7 above shall have effect from the operative time and shall bind the trustee and that operative time for the purposes of these orders shall be the beginning of the 4th business day after the day on which a sealed copy of these orders is served on the trustee.
The trustee of Farlow Superannuation Fund, in accordance with the trustees obligations set out under the Family Law Act 1975 and Family Law (Superannuation) Regulations 2001, shall do all such acts and things and sign all documents as may be necessary to calculate the entitlement of the wife, and make payments in accordance with order 7 of these orders.
Unless the parties otherwise agree in writing, within 7 days after the wife receives the payment split notice from the trustee under regulation 7A.03 of the Superannuation Industry (Supervision) Regulations 1994 she shall do all things and execute all documents to make a request pursuant to the Regulations, for the trustee of the fund to roll over or transfer the transferable benefits of the wife, together with her member entitlements to a fund nominated by her in writing.
Except as otherwise specified herein, each party retain sole right, title and interest to any other assets or resources currently in their respective sole name or possession, including but not limited to furniture, personal effects, chattels, shares, funds held in any superannuation fund, redundancy entitlements, interest in any family trust or company.
Each party retain sole responsibility for any liabilities in their respective sole name including but not limited to credit card debts, loans from family members and each party shall indemnify and keep the other indemnified with respect to all such liabilities.
Both parties shall do all acts and things and sign all documents necessary to give effect to these Orders and in the event either party refuses or neglects to do such act or thing or sign such document within seven days of such act or thing being required or such document being submitted to them for signature, then pursuant to Section 106A of the Family Law Act 1975, a Registrar of the Family Court shall have power to do such act or thing or sign such document on behalf of the defaulting party.
Leave is granted to either party to restore the proceedings within 21 days and on giving at least 7 days prior notice to the Court and the other party in relation to the form of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Farlow & Trant is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: NCC 1306 OF 2007
| Mr Farlow |
Applicant
| Ms Trant |
Respondent
REASONS FOR JUDGMENT
After living together for more than 18 years the parties cannot agree on a settlement of their property. For convenience I will refer to the parties as the husband and wife. I note, however, that they are now divorced.
Applications
Except for 1.2, which was not pressed by the husband, he seeks orders in accordance with a minute of orders provided with his Case Outline as follows:
That by way of property settlement pursuant to Section 79 of the Act, the parties and each of them do all acts and things and execute all deeds and instruments necessary or convenient to effect the following:
1.1the transfer by the wife to the husband unencumbered of the land and premises situate at and known as [M property] in the State of New South Wales being the land and premises contained in Lots 7, 9 & 10 in Deposited Plan […] in the Parish of […], County of […] in the said State;
1.2transfer by the husband to the wife unencumbered of the land at [M] in the said State known as Lots 2 & 3 in Deposited Plan […] in the Parish of […], County of […] in the said State on the condition that the wife do all acts and things necessary to procure the transfer to the husband by the wife’s parents of the southern half of Lot 6 in Deposited Plan […] in the Parish of […], County of […] in the said State in exchange for the transfer by the husband to the wife’s parents of the northern half of Lot 7 in that Deposited Plan;
1.3the sale of the land and premises situate at and known as [F property] being the premises more particularly described as the land and premises contained in Certificate of Title folio identifier […] ("the unit") for the best price reasonably obtainable, and the application of the proceeds of sale in the following order and priority:
1.3.1the payment of selling agent’s commission and/or auctioneer’s fees and expenses;
1.3.2the payment of solicitor’s or conveyancer’s costs, professional fees and disbursements of acting for the vendors on sale;
1.3.3the “usual” adjustment of rates and statutory charges;
1.3.4the discharge of any mortgage secured over any real property owned by the husband the wife together or to which the husband and the wife are parties including as guarantor, particularly including mortgages to […] Building Society Limited registered numbers […] and […];
1.3.5the payment of any Capital Gains Tax assessed as payable by the Australian Taxation Office in consequence of the sale of the unit;
1.3.6the payment of 50% of the balance then remaining to the husband;
1.3.7the payment to the wife of the balance then remaining;
1.3.8that, pursuant to Section 90MT(1)(a) of the Act 1975, whenever a splittable payment becomes payable in respect of the superannuation interest of the husband in the [Farlow] Superannuation Fund, the wife shall be entitled to be paid an amount equivalent to 50% of the difference (calculated as at the date of separation) between the aggregate superannuation entitlements of the parties calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations, and that there shall be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these orders;
1.3.9that order 1.3.8 have effect from the operative time and shall bind the trustee and that the operative time for the purpose of these orders shall be the beginning of the fourth business day after the day on which a sealed copy of these orders is served on the trustee;
1.3.10that the trustee of the [Farlow] Superannuation Fund, in accordance with the trustee’s obligations set out under the Family Law Act 1975 and Family Law (Superannuation) Regulations 2001, shall do all such acts and things and sign all such documents as may be necessary to calculate the entitlement of the wife, and make payment in accordance with order 1.3.8 of these orders.
That other than as provided by order 1, the wife retain and, as against the husband, be solely beneficially entitled to all property in her possession or registered in her name as at the date of these orders including but not limited to Mercedes Benz motor vehicle registered number […], and the wife indemnify the husband and forever keep him indemnified against any liability whatsoever relating to any item of property received by the wife or retained by her pursuant to these orders.
That other than as provided by order 1, the husband retain and, as against the wife, be solely beneficially entitled to all property in his possession or registered in his name as at the date of these orders including but not limited to the shareholding in the company [F] Pty Limited, and the husband indemnify the wife and forever keep her indemnified against any liability whatsoever relating to any item of property received by the husband or retained by him pursuant to these orders.
For the purposes of implementation of order 1.3.5, the parties shall take advice from [N Accountants] in regard to any lawful means of minimizing the amount of Capital Gains Tax assessable in relation to the sale of the unit, and they shall do all acts and things and execute all deeds and instruments necessary or convenient to implement the advice of [N] accountants in this regard provided always that the parties shall each be liable to pay 50% of the amount of Capital Gains Tax assessed in respect of the sale of the unit.
Costs.
The wife seeks orders in terms of a Minute handed up at the commencement of the hearing as follows:
1.That the husband and wife do all such acts and execute all such documents as are necessary to transfer the husband’s right, title and interest in Lots 2 and 3 DP […] and Lots 7, 9 and 10 in DP […] with water rights to the wife.
2.That the husband and wife do all such acts and execute all such documents as are necessary to transfer the wife’s right, title and interest in [F property] being the whole of the land in Certificate of Title Folio Identifier […] to the husband and that the husband forthwith discharge the mortgage thereon and indemnify and keep indemnified the wife as to all liabilities relating to the parties ownership of such property.
(a) That the husband and wife do all such acts and execute all such documents as are necessary to transfer the wife’s right, title and interest, whether as a shareholder, director or secretary in [F] Pty Limited to the husband, save that the Mercedes Benz motor vehicle, registered number […] be transferred to the wife.
(b) That the husband and wife do all such acts and execute all such documents as are necessary to transfer the loans identified, in the Financial Statements of [F] Pty Limited (ACN […]) for the year ended 30 June, 2007 as –
(i)Loan – [wife]
(ii)Loan - Property Purchase [L]
(iii)Loan – [husband and wife]
to the husband.
(c) That the husband indemnify and keep indemnified the wife as to all liabilities arising from the wife’s interest in such company including her interest as a shareholder, director or secretary, or otherwise and including any taxation liability arising out of the loans referred to in order 3 (b) above.
4. That the wife pay to the husband by way of property settlement the sum of $300,000.00.
5. That pursuant to Section 90MT(1)(a) of the Family Law Act 1975 (Cth) as amended, whenever a splittable payment becomes payable in respect of the superannuation interest of the husband in [Farlow] Superannuation Fund, the wife shall be entitled to be paid an amount equivalent to 50% of the difference, calculated as at the date of hearing, between the aggregate of the superannuation entitlements of the parties calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations and there shall be a corresponding reduction in the entitlement to the person to whom the splittable payment would have been made but for these orders.
6.That order 5 above have effect from the operative time and shall bind the trustee and that operative time for the purposes of these orders shall be the beginning of the 4th business day after the day on which a sealed copy of these orders is served on the trustee.
7.That the trustee of [Farlow] Superannuation Fund, in accordance with the trustees obligations set out under the Family Law Act 1975 and Family Law (Superannuation) Regulations 2001, shall do all such acts and things and sign all documents as may be necessary to calculate the entitlement of the wife, and make payments in accordance with order 5 of these orders.
8.Costs.
Affidavits
Affidavit of Husband filed 16 January 2008.
Affidavit of Mr K filed 8 February 2008
Financial Statement of Husband filed 16 January 2008.
Affidavit of Wife filed 25 January 2008
Financial Statement of Wife filed 25 January 2008Issues for determination
The main issues for determination are:
Whether the husband or the wife should retain the parcel of land comprising lots 7, 9 & 10 as part of their property settlement;
The impact on the balance of contributions of the initial contributions, gifts and inheritances received by each of the parties during the marriage; and
The influence of the wife’s relationship with her boyfriend on any adjustment in her favour pursuant to the non-contribution aspects of section 79(4).
Short History
The husband and wife are both 53 years of age. They commenced cohabitation in either 1985 or 1986. They were married in March 1987 and separated in either December 2004 or February 2005. Their divorce became final on 18 November 2006.
Children
The parties have three children:
D who was born in July 1992 and as at the date of the hearing was 15 years of age;
R and Lwho were born in March 1994 and as at the date of the hearing were 14 years of age.
Background Facts
The husband says that the parties commenced cohabitation in about 1985. The wife says it was in April 1986. Nothing much turns on this issue.
At the commencement of cohabitation the wife worked as a public servant, first at B and later at G in Sydney. She owned a property at N which she had bought in 1980. The husband was working doing contracting work in the construction industry and had $30,000 in savings.
The wife sold the N property at some point and in September 1986 she bought R Street property from her parents for $67,000. Each of the properties was rented out and the rent was applied to the mortgages.
The wife resigned from the public service at the end of 1987 and commenced full-time study. By 1990 she had been awarded a Bachelors Degree from the University of Western Sydney and a Diploma of Education. During those years the wife had part-time work as a Waitress and in a shop.
The wife worked for a period as a casual Teacher. The nature of the husband’s work changed to construction contracting.
In about November 1990 the husband bought a unit at F in partnership with a friend, Mr B for $60,000. The husband’s $30,000 came from his share of the profit of a subdivision at W that he undertook in partnership with Mr K.
The parties were trying to conceive and after medical advice the wife moved back to the R Street property. The parties engaged in an IVF program through a clinic at Newcastle. The husband continued to work in Sydney. He stayed with his mother in Sydney and visited the wife on the weekends. During 1991 the wife supported herself by working part-time as a Waitress. In late 1991 the wife fell pregnant.
The wife worked as a casual Teacher until July 1992.
D was born in July 1992.
The wife says that at about that time the husband’s mother died. She says that the husband stayed on in his mother’s house for some days during the week until it was sold in late 1992 and he then moved back with the wife.
On about 9 December 1992 the husband received an inheritance of $59,733.66 from his mother’s estate.
The wife stripped wallpaper from the hallway at R Street and repaired and painted the walls. The parties sanded and polished floorboards in three rooms. The husband says he built a carport. The wife says he arranged for it to be built. The Husband says that he also prepared and painted certain rooms, did tiling in the kitchen and performed general maintenance.
The husband generally left for work between 4.00am and 5.00am. He stayed overnight one night a week in Sydney.
In 1993 the husband embarked on a land development project at K in association with P Company Pty Ltd. They bought 28 acres, subdivided it into one lot of 8 acres and lots of 4. The husband established F Pty Ltd for that project. Ultimately, the company made about $150,000 profit on the development.
By April 1993 the wife had sold the R Street property. It was then unencumbered and realised a net $180,000.
The parties bought Lots 7, 9 & 10 at M from the wife’s parents for $250,000. The wife says they funded the purchase as follows:
$50,000 from the husband’s inheritance;
$180,000 from the wife’s R Street property;
$20,000 remained owing to the wife’s parents.
The husband says he recalls $150,000 coming from the R Street proceeds and thinks the rest was borrowed. He thinks that $50,000 from his inheritance was applied to improvements. The parties both recall that part of the purchase price was later forgiven. The wife says that they paid some of the $20,000 to her parents but that another part was forgiven. The husband thinks that an amount was forgiven but was really set off against on overly generous provision for interest the parties made for funds borrowed from the wife’s parents.
The husband says that the property formally comprised some 32 acres but that 10 – 12 acres had been lost to inundation or erosion by the … River by the date of purchase. There was an old farmhouse on the property that had been used by farm workers over the years. The wife says that she helped her father renovate the property. The husband says that he performed clearing, maintenance and repair work on the house and tidied up the ground; that he installed fences, stock water supply and water troughs; planted trees and established and maintained lawns. He assisted in re-roofing a hay shed; and ran and tended to cattle on the property. In cross-examination the husband said that the wife may have assisted with fences but that contractors were employed. I asked him how he had erected the fences if contractors were employed and the gist of his response was that when he deposed to installing fences he did not mean to say that he physically installed all of the fences.
In mid 1993 the wife fell pregnant.
R and L were born in March 1994.
In about 1999 the husband says that extensions were undertaken to the house at M. He says that he set out, excavated and poured the footings, excavated trenches for services, demolished the existing roof and internal walls, demolished the existing kitchen and bathroom, supervised and assisted tradesmen in the construction of the extension and then replaced the roof on the building.
In October 2003 the wife’s parents transferred to the parties a further 51/2 acres of land adjoining the M property, being lots 2 & 3. The transfer was 99% to the wife and 1% to the husband as tenants in common and was for nominal consideration.
In 2003 the parties bought out Mr B from the F property for $90,000. That sum was borrowed by the wife from the … Building Society.
The parties struck difficulties in their marriage from late 2003 and at Christmas 2004 they agreed to separate.
In May 2005 the property at L was bought at the wife’s request for about $517,500, for her occupation. It was recently sold for the same price. Since then the wife has lived in a property owned by her mother.
The children spend time with each of the parents, largely with the husband on weekends and with the wife during the week.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties
As the case was finally argued there are few significant factual disputes and it is not necessary to make observations about credit, save to observe that the parties have different views about certain events and about aspects of their history together.
Submissions
The submissions made on behalf of the husband were to the following effect:
The overall distribution should be 55%-60% in favour of the husband and in any event could not be less than 50% to him;
The pool of assets is substantially agreed. If the husband is to retain lots 7, 9 & 10 then there is an issue about the impact of water rights on the value of lots 2 & 3 that will remain with the wife.
It is argued that the husband’s contributions exceeded those made by and on behalf of the wife in the proportions 60% : 40% because:
oThe initial contributions favoured him because of his unchallenged evidence of having $30,000 in savings compares to the wife’s evidence of having an unspecified equity in a property at N;
oThe husband was the greater income earner during the marriage;
oSince separation the husband has paid the outgoings on all of the properties, co-operated in the wife’s abortive purchase of a property at L and paid $200 per week without any compulsion or child support assessment for the care of the children;
o$31,000 plus the legal costs of purchase and sale was wasted by the wife in relation to the L property
oThe husband made extensive contributions to the maintenance, improvement and operation of various properties;
oThe husband made the parent and homemaker contribution that he was able to make given his need to travel for work throughout the marriage. Since separation the children live with him for something like half the time;
oNo adjustment is warranted to the wife as she has a financial resource in Mr S, who is wealthy.
The submissions made on behalf of the wife were to the following effect:
The net non-superannuation assets are $2,119,798 and the superannuation is agreed at $230,689 with the husband and $87,793 with the wife;
The wife seeks 50% of the superannuation in the form of a split or roll-over and 65% of the non-superannuation assets which would call for her to retain all of the M lots, what she already has and an adjustment of about $200,000 from the fund holding the proceeds of sale of the L property;
Her case is argued on the basis that her claim could be for as much as 60% on contribution and 12.5% on section 75(2);
Her contributions are said to exceed those of the husband because:
oThroughout the marriage and since she has born the lion’s share of responsibility for the household and the children;
oShe had paid employment, including full-time, part-time and casual for most of the marriage;
oShe came into the marriage with equity in a property at N. The R St property later realised $180,000. Her parents forgave part of the purchase price of lots 7, 9 & 10 and gave lots 2 & 3 to the parties, as to 99%, to her.
An adjustment is warranted to her because:
oThe children live with her most of the time;
oThe husband’s earning capacity is greater than that of the wife;
oThe wife’s relationship with Mr S is not a permanent one, but simply a romantic relationship between boyfriend and girlfriend.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [1]
[1] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
The property of the parties at the date of the hearing
The Court is required to make a finding as to the property of the parties at the date of the hearing.
Paid Legal Fees
The only matter of controversy was in relation to the paid legal fees. The wife has paid legal fees but entirely from moneys gifted by her parents. The husband has paid $15,267.11[2] in legal fees for these proceedings but entirely from his post separation income. The submission on behalf of the husband is that the payments of fees cancel each other out. In my view that is not correct. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted that three clear categories of cases had emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. The first of those was said to be:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.[2] Note the costs advice letter belatedly prepared and dated 14 May 2008 and provided to my chambers by email on that date
In those circumstances there is a difference between fees paid from moneys advanced from outside the resources of a party and those paid from income. Unless there is evidence that the money advances would have been made in any event, then the pool would not have been greater but for the payment of fees. On the other hand a payment made from income must either result in there being a smaller debt if the party in question spends more than he or she earns or in a reduction in savings that would have otherwise existed. In either event the costs should be read back in. I will read back in the husband’s paid costs of $15,267.11.
Otherwise the parties agreed that the relevant list of assets and liabilities is as set out below:
Assets Value Lots 7, 9 & 10, M $650,000 Lots 2 & 3, M $120,000 Proceeds of sale of L property $516,189 F property $220,000 IAG shares (Joint) $1,948 AMP shares (Joint) $415 Shares in F Pty Ltd (H) $590,000 Household contents (H) $5,000 Musical instruments (H) $4,000 Paid legal fees (H) $15,267.11 1988 Mercedes Benz motor vehicle (W) $5,000 Farm business (W) $2,000 Household contents (W) $5,000 Personal effects (W) $2,000 Total $2,136,819.11
Superannuation
It is agreed that the parties have the following interests:
Fund Value Farlow Superannuation (H) $178,448.00 AMP (H) $38,043 AMP (H) $14,198 Farlow Superannuation (W) $86,371.00 AXA superannuation (W) $1,422.00 Total $318,482.00
Liabilities:
The liabilities are agreed to be as follows:
Liabilities Amount Mortgage on F property (Joint) $81,521 Joint loan account with F Pty Ltd $163,242.00 Husband’s loan account with F Pty Ltd $134,717.00 Husband’s loan account with F Pty Ltd – Property purchase L $174,928.00 Husband’s Mastercard $1,267 Wife’s loan account with F Pty Ltd $49,359.00 $605,034.00
The net assets have a value of $1,531,785.11 ($2,136,819.11 - $605,034).
Financial Resources
There are no quantifiable financial resources. The wife has had financial assistance from her parents and her boyfriend. She concedes that her parents and Mr S are financially comfortable. There is no other probative evidence about the financial circumstances of the wife’s parents or of Mr S.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[3]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[4].
A separate pool for superannuation
[3] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[4] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should assess contributions asset by asset or globally, the authorities have it that the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court opined that it is preferable for contributions to superannuation to be assessed separately from those made to other assets. However the Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
Here the parties seek a different distribution of superannuation to that which is proposed for the non-superannuation assets. Indeed they agree that superannuation should be dealt with by a splitting order based on 50% of the current entitlements. I too will deal with superannuation separately. Otherwise the section 79(4) considerations will be applied globally.
Contributions to Non-Superannuation Assets
Section 79(4)(a) Contributions
In relation to the injection of assets:
at the commencement of cohabitation the wife owned a property at N which she had bought in 1980. There is no evidence about the value of the wife’s interest in that property as at the commencement of cohabitation. The husband had $30,000 in savings;
at some time the wife sold the N property and in September 1986 she bought R Street property from her parents for $67,000. The properties were rented out and the rent was applied to the mortgages. By April 1993 the wife had sold the R Street property. It was then unencumbered and realised a net $180,000;
in about November 1990 the husband bought a unit at F in partnership with a friend, Mr B, for $60,000. The husband’s $30,000 came from his share of the profit of a subdivision he undertook in partnership with Mr K at W.
on about 9 December 1992 the husband received an inheritance of $59,733.66 from his mother’s estate;
in 1993 the parties bought Lots 7, 9 & 10 at M from the wife’s parents. The parties both recall that part of the purchase price was later forgiven. The wife says that they paid some of the $20,000 to her parents but that another part was forgiven. The husband says that an undisclosed amount was forgiven but perhaps that was set off against excessive interest they paid on a loan from the wife’s parents;
in 1993 the husband embarked on a land development project at K in association with P Company Pty Ltd. They bought 28 acres, subdivided it and F Pty Ltd was established for that project. Ultimately, the company made about $150,000 profit on the development;
in October 2003 the wife’s parents transferred lots 2 & 3 as to 99% to the wife and 1% to the husband as tenants in common, for nominal consideration.
In my view the injections of funds from the two development projects have a difference character to the other injections of funds because they were part of, connected to or an extension of the husband’s normal working activities. To the extent that funds were needed to invest in those projects, I take it that the funds were joint funds. To the extent that the husband’s time was applied to those projects, it was not applied to his other contracting work. Care is needed not to double count those contributions.
In terms of paid employment:
at the commencement of cohabitation the husband was working doing contracting work in the construction field and the wife worked as a public servant;
the wife resigned from the public service at the end of 1987 and commenced full-time study. By 1990 she had been awarded a Bachelors Degree from the University of Western Sydney and a Diploma of Education. During those years the wife had part-time work as a Waitress and in a Shop.
the wife worked for a period as a casual Teacher until July 1992;
F Pty Ltd was dormant for a period after the K development. Until about 2001 the husband was effectively a contractor to P Company. Since then he has operated his contracting business through F Pty Ltd.
Section 79(4)(b) contributions
The wife stripped wallpaper from the hallway at the R Street property and repaired and painted the walls. The parties sanded and polished floorboards in three rooms. The husband says he built a carport. The wife says he arranged for it to be built. The husband also prepared and painted certain rooms, did tiling in the kitchen and performed general maintenance.
As to lots 7, 9 & 10 there was an old farmhouse on lot 10 that had been used by farm workers over the years. The wife says that she helped her father renovate the property. The husband says that he performed clearing, maintenance and repair work on the house and tidied up the ground; that he installed fences, stock water supply and water troughs, planted trees and established and maintained lawns. He assisted in re-roofing a hay shed; and ran and tended to cattle on the property. It transpired that the husband did not physically undertake all of that work.
In about 1999 the husband says that extensions were undertaken to the house at M. He says that he set out, excavated and poured the footings, excavated trenches for services, demolished the existing roof and internal walls, demolished the existing kitchen and bathroom, supervised and assisted tradesmen in the construction of the extension and then replaced the roof on the building.
Section 79(4)(c) contributions
There are three children of the marriage.
I am satisfied that the wife was the primary care giver of the children and the main homemaker. The time spent by the husband in paid employment and away from the former matrimonial home must have restricted his availability to assist with those roles.
Albeit not to the wife’s satisfaction, the husband has maintained the property comprising lots 7, 9 & 10 since the wife moved out.
Conclusion on Contribution
The husband argues that the parties’ contributions favour him in the proportions 55-60% by him and 40-45% by the wife. The wife argues that the contributions were more like 60% by her and 40% by the husband.
This is a marriage where cohabitation spanned nearly 19 years.
The husband’s initial contribution was probably greater than that of the wife. It is not possible to be certain about that because there is no evidence of the wife’s equity, if any, in her first property at N as at the commencement of cohabitation. In any event there have been valuable contributions since. There is no evidence about a particular, exclusive use to which his savings were put.
In accordance with the discussion about this issue in the Full Court decision of VAK & AK [2005] FamCA 803; In the Marriage of Pellegrino (1997) 22 Fam LR 474; Kessey v Kessey (1994) FLC 92-495 a contribution sourced in a family member of one of the parties will normally be taken to be a contribution on behalf of that party. That approach might not be followed where there is evidence that the donor intended otherwise. Here the intention of the donor is clearer in some cases than it is in others but I think the general approach is appropriate. The husband’s inheritance is an injection on his behalf and the advances from the wife’s father, particularly lots 2 & 3, were made on behalf of the wife. The R Street property ultimately realised $180,000 but it was bought during cohabitation.
The parties each had paid employment, the wife’s employment was interrupted in pursuit of jointly decided arrangements – the wife’s retraining as a Teacher, the involvement in the IVF program and the need to keep the former matrimonial home running while the husband largely worked in Sydney.
Each of the parties was engaged in non-financial contributions. Maintenance and improvements were undertaken at the various properties. The wife’s father assisted in that process.
The wife was the primary care giver of the children and the main homemaker for most of the marriage. That is not to say that the husband was not a loving and involved father, but the wife had the main role.
Since separation, by virtue of his occupation of the home the husband had the main maintenance role. He has also had the main financial responsibility for the family. He has borne a proper proportion of the parenting task since that time and has been very active with the children, particularly on weekends. The wife has not fully exercised her earning capacity since separation but she has not had the use of the former matrimonial home for three years and in recent times has been required to rent. There are arguments for an adjustment one way or the other but the overall impression is one of equality. Certainly that would be the case during cohabitation. Since then contributions may slightly favour the husband because over the last three years the wife has probably been underemployed, the husband has shared the parenting task and has made the overwhelming financial contribution, including sharing in a loss of over $30,000 on the L property. It does not matter whether that loss is treated as a waste or as a contribution to the wife’s living expenses. He shared that cost. The problem is making a meaningful differentiation between the parties for those reasons which apply over a 3 year period, in the context of over 20 years of valuable contributions.
I find that the contributions were equal.
The other matters in Section 79
Dealing with the matters identified in the legislation:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. In this case it is likely that if the wife is to retain lots 7, 9 & 10, her income may increase to a point that better matches her earning capacity. She and her father have plans to grow turf on the combined property. There is no detail about the likely return. On the other hand the husband spoke of the farming activities on the property overall as ‘hobby farming’ and there is no suggestion in his case that he turns a profit or would expect in the future to do so, from farming the disputed lots.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (b), (c), (j), (k) and (l).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the parties. They are both 53 years of age.
There is no significant evidence about their health.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The husband receives $2,396 per week made up of $807 in wages, $128 per week in rent and $1,458 per week through F Pty Limited which contracts out his services. The company pays $29 per week in superannuation contributions for him. He lives alone but for the children when they spend time with him. They have no income. The husband’s fixed expenditure is as follows:
Expenditure
Amount Income tax $848.00 Superannuation contributions $1.00 Mortgage payments to … Building Society on F property $155.00 Rates and levies $67.00 Home and contents insurance QBE $14.00 Personal loan repayment to Farlow Pty Ltd $1,458.00 Mastercard payments to CBA $50.00 Child Support payments $200.00 All other expenses $100.00 Total $2,893.00
The husband says that one half of the expenses he incurs in relation to the F property, being $153, he pays on behalf of the wife. He says that he pays $650 per week on behalf of the children when they are living with him. That sum is made up of their ordinary living expenses when the children are with him, a share of medical benefits insurance and the children’s braces.
As to the husband’s earning capacity, he points to reduced business income for 2006 & 2007. Not much can be done with this evidence. From the 2006 financial year he has lost the benefits of income splitting with the wife. His taxable income for the period since 2001 when he commenced operating his contracting business through F Pty Ltd has broadly increased. His income for 2007 was $140,657. The gross revenue of the company was down about $100,000 in both 2006 & 2007 from $678,596 in 2005. However, he conceded that a bad debt of $36,229 and legal fees of $32,000 incurred in 2007 are very unusual expenses that may well relate to one debtor. There may be some unexplored earning capacity to the extent that the husband incurs losses or is diverted from his paid employment by his hobby farm activities. Subject to that, the husband is probably exercising something like his earning capacity. He is in secure, well-paid employment.
The wife’s income is $281 per week made up of $200 in wages for part-time work for K Company, $20 per week for farm work for her father, $61 for Family Tax Benefits A and B. The wife says she receives no Child Support payments. Apart from the children the wife lives alone.
The wife’s expenses are as follows:
Expense Amount Income tax $33.00 Contributions to A.X.A. National Mutual Superannuation $18.00 Life insurance $1.00 Motor vehicle registration – 1988 Mercedes Benz $12.00 All other expenditure $205.00 Total $269.00
In her Financial Statement those expenses are totalled at $281 per week. In addition the wife asserts that she has a liability to her mother of $200 per week for rent which is not paid as it falls due but will be payable at some point. She conceded that rather than repayment, debts to her parents might be adjusted by them against the claims of her brother and sister to the parents’ assets, at some later time. The wife conceded that her parents are comfortably off.
The wife says that an unknown proportion of her expenses are applied for the benefit of the children. Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
As to her earning capacity, if she receives lots 7, 9 & 10 as part of her settlement she has plans for a turf farming enterprise in conjunction with her father. The wife conceded in cross-examination that in that event her income is likely to increase. It is likely that the wife is not fully exercising her earning capacity. She is highly qualified having worked in the public service and later as a Teacher and yet she works for less than a basic wage. Her boyfriend pays her $10 an hour for her work with K Company. He is financially comfortable. She does not know of any other benefits from that employment. She does not even know if she receives the statutory superannuation contributions. The wife referred to her desire to be available for the children’s extracurricular activities in connection with her reliance on part-time work and the need for flexible hours may account for this situation.
It is the husband’s case that the wife has a significant financial resource in the form of her boyfriend, Mr S. I accept that submission. First, Mr S is likely to be well off. The wife conceded that he is ‘comfortable’, that he owns K Company, a number of properties including an apartment in Sydney, farming properties at …, … and …, several motor vehicles including 2 historic vehicles, a 40 foot cruiser and a helicopter. He has funded overseas holidays for the wife and holidays for the wife and the children. I have referred to the wife’s employment by Mr S’s company and unless he is simply taking financial advantage of the wife, in the circumstances that does not seem to be a normal commercial arrangement. Next, the wife and Mr S have had a romantic relationship for about 3 years. They have stayed together on holidays and at Mr S’s premises. They are not married and the facts would not seem to support a finding that there is a de facto relationship for the purposes of the NSW legislation. It is the husband’s evidence that the wife made a statement to him which lead him to believe that the wife thinks she may have the basis for such a claim. The evidence is not satisfactory about the conversation. The husband asserts and the wife denies a conversation in which the wife referred to obtaining half of Mr S’s assets in a claim between this property settlement and that claim, of the order of $3M or $4M. When tested on the issue the husband had no accurate recollection of the date of the conversation, he recalled where they were when it occurred and offered to refer to his diary for more detail. Neither counsel took up that offer. I am left with a dispute on the evidence and no corroboration. Of course, the wife telling the husband she has a claim does not make it so.
The problem comes in working out the significance of this resource in the context of the proceedings.
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
D is 15 years of age and the twins are 14. The children live with the husband for one half of the school holidays and from Friday evening to Sunday evenings of most weekends. In addition he has the children for dinner separately on an additional night of each week. I take it then that the children spend roughly equal time between the parties with the wife having most of the week day responsibility and the husband having the weekends. The children are of an age whereby the need for close supervision is diminishing.
(d) commitments of each of the parties that are necessary to enable the party to support:
himself or herself; and
a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the detail of those commitments above.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
The parties have been able to generate some superannuation entitlements. They both seek splitting orders.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is little evidence in relation to the standard of living of the parties during the marriage.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
This is not relevant.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
This is not relevant.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
The wife’s role at home and with the children has allowed the husband to maintain full-time employment involving work away from the family home. The wife engaged in studies for a teaching qualification. Without knowing the differential pay rates for a public servant and a teacher it is not possible to know if the studies contributed to the wife’s earning capacity but it appears that in any event the wife no longer intends to work as a Teacher.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The wife moved back to the Newcastle area for the purposes of the IVF program to which the parties’ committed. She gave up teaching with the birth of D. She had low level casual employment for various periods. It is likely that the marriage adversely affected her earning capacity. She was denied the opportunities that come with unbroken permanent employment including the building of skills and experience that can lead to promotion and the other benefits of employment such as leave and superannuation. The husband was free to work in and develop his business.
(l) the need to protect a party who wishes to continue that party's role as a parent;
The wife believes that her income earning capacity is currently affected by the needs of the children. She wants to be available to L and the boys. It must be said that the aspect of the parenting task that involves close supervision will diminish over time. In four years, for example, the children are likely to have completed secondary education.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
Apart from the children, the parties generally live alone. The wife stays with Mr S from time to time.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
The husband pays the children’s expenses and about $200 per week for their support. No application has been made for a child support assessment.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
There is an available argument that because of the wife, the parties suffered a loss of $31,000 and legal fees for the purchase and sale of the property at L. The property was bought at the wife’s request in May 2005 for about $517,500 and was recently sold for the same price. Thus the costs of stamp duty and legal fees on the purchase and agent’s commission and legal fees on the sale were wasted. The wife’s contention is that but for that purchase she would have incurred rent and that may have totalled a similar or greater amount over three years. She was asked in cross-examination whether the timing and fact of the sale were designed to deflect an argument in relation to the competing claims for lots 7, 9 & 10. Her answer was unconvincing with asserted problems with the property leaving her “a little bit glad” she had sold the property. I take it then that at least part of the reason for sale was to avoid an argument that unlike the husband, she had suitable accommodation available to her if she was not permitted to retain lots 7, 9 & 10.
I do not think much turns on this. Even at $200 per week the wife would have incurred over $31,000 in rent over three years. It is possible that the wife’s sale of the property was largely tactical but the sale will ultimately have no bearing on the outcome.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
There are no relevant orders.
Section 79(4)(g)
There is no child support assessment.
Conclusion
The wife argues for a 12.5% adjustment for the “other matters” referred to above and, depending on the findings in relation to contributions, the husband argues that it should be nothing or at worst, no more than would result in an equal distribution of the parties’ property. The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are as follows. Favouring an adjustment to the wife there is:
Ø The imbalance in the parties’ earning capacities. In the wife’s case her earning capacity has been adversely affected by the marriage;
Ø The parties’ arrangement in relation to the children, which has the husband involved on the weekend and the wife responsible for at least one of the children during the weekdays, every week, impacts particularly on the wife’s earning capacity;
Favouring an adjustment to the husband there is:
Ø The wife has a financial resource in the form of her parents who have provided financial assistance with legal fees and other things and her boyfriend Mr S. Mr S is a person of means, he is her employer and has subsidised her expenses, particularly in relation to holidays;
The only adjustment sought is one in favour of the wife. To some extent the factors referred to above tend to cancel each other out. It is often the case, as it is here, that one of the most valuable ‘assets’ of a marriage is a proven history of secure paid employment. The husband’s earning capacity is a more significant factor than the qualified or potential benefit to the wife of financial assistance from her parents and Mr S. It is not possible or appropriate to fully compensate the wife for the differences in the parties’ assets or earning capacities. I should have regard to the dollar impact of an adjustment, not just to the percentages. In this case the factors favouring an adjustment to the wife are significant. I will make an adjustment to the wife of 5%. In the context of this case that makes a difference between the parties of the order of $153,000.
Contributions to Superannuation Assets
Section 79(4)(a) Contributions
The parties made separate provision for superannuation and in addition, joint provision was made to the self-managed fund. The husband made the only recent financial contributions.
Section 79(4)(b) contributions
There is no evidence of relevant non-financial contributions.
Section 79(4)(c) contributions
To the extent referred to above, the wife’s role with the children allowed the husband to maintain full-time employment, often a distance from the family home. The wife was the primary care giver of the children and was largely responsible for household tasks.
Conclusion on Contribution
The husband’s contributions to superannuation were probably greater than those of the wife. She made valuable parenting and homemaker contributions during cohabitation that allowed the husband to pursue his paid employment and among other things, to contribute to superannuation.
The parties have agreed on a split of superannuation by reference to 50% each of the current entitlements. I can see the logic of that approach and will adopt it. In the circumstances it is not necessary to be precise in relation to the balance of contributions as against the other matters in section 79(4).
I am satisfied that the husband’s contributions in relation to superannuation were greater than or equal to those of the wife.
The other matters in Section 79
The parties have adopted a shared approach to superannuation and I will also adopt that approach. The adjustment from the contribution outcome based on the other matters in section 79(4) is such as is necessary to achieve the orders they propose.
Just and Equitable
Based on their contributions and the other matters in s 79 the appropriate division of superannuation interests is an arrangement by splitting order based on an equal division of their current entitlements.
Based on their contributions and the other matters in s 79 the appropriate division of non-superannuation assets property is 55% to the wife and 45% to the husband. I must consider whether it would be just and equitable within the context of s 79 if the net assets of the parties were divided in those proportions.
The net assets have a value of $1,531,785.11. The outcome of that division would be that the husband receive about $689,303 and the wife about $842,482.
Lots 7, 9 & 10 at M
An important issue in the case is the disposition of Lots 7, 9 & 10 at M. The issue involves the area at M bounded by the … River, … Road, … Road and … Road. The roughly rectangular area contains a number of lots although not all from the same Deposited Plan. Fronting the river are lots 9 & 10, behind them are lots 6 & 7, then lots 2 & 3 and at the back of the area and bounded by .. Road, .. Road and … Road, is lot 1. I take it that when the parties started to live together all of the lots (and some adjoining lots) were owned by the wife’s father. During the marriage lots 7, 9 & 10 and later lots 2 & 3 were transferred to the parties. Thus, as at the date of the hearing the wife’s father owns lots 1 & 6. It is agreed between the parties that the wife will retain lots 2 & 3. Each of the parties wants to retain lots 7, 9 & 10. Unlike the other lots, lot 10 includes a residence and a machinery shed.
For completeness I should say that the wife’s father also owns lot 1 in DP … and lot 1 in DP … which are the properties closest to lot 1 referred to above, to the west. All of the lot 1’s front onto … Road.
Copies of a drawing of the properties in question and of an annotated aerial photograph, which were attached to the wife’s affidavit, are attachments “A” and “B” to these reasons.
Lot 7 shares a boundary with lots 2 and 6. Lot 9 shares a boundary with lot 6. Some water for lots 1, 2, 3 & 6 comes over lot 10. During drought times pumps or valves on lot 10 need to be accessed daily for the benefit of the other lots.
The wife’s case is that the property is the venue for a co-operative farming venture with her father and it would be sensible if she retained the lots in dispute. She argues that, unlike the husband, she is from a farming background; she and her father plan to make best use of the property by growing turf. It is her case that poor relations between she and the husband and between her husband and her father make the husband’s proposal impractical. She refers to her evidence of cross words from the husband when he recently complained about her being on his property, when she says she was seeking to access stop valves for the irrigation system. The husband conceded that on 22 April 2008 he asked the wife to leave when she was on the disputed blocks while the children were spending time with him, as he felt she made no attempt to approach the stop valve and was hanging around unnecessarily. In any event the husband did not feel that the interaction was unseemly or inappropriate. The husband conceded that the wife’s father had moved his tractor slasher out of the machinery shed but responded that the wife’s father did not need to do that. It was put to the husband that he was unfriendly to the wife and he responded to the effect that he is indifferent to her. It was put to the husband that the wife had cattle on lot 7. He said that he had moved cattle off that lot to allow it to regenerate and that the wife moved cattle onto the lot without his permission. The husband did not concede that growing lucerne on the property was a better use than cattle. He several times referred to the activities on the blocks as hobby farming.
The husband’s case is that he was required to act to his detriment by living in and maintaining the property for three years since separation. He also suffered by being part of the loss of about $31,000 plus legal fees caused by the acquisition at the wife’s request and the unilateral sale of the wife’s property at N. The husband’s case is that the house on lot 10 is his home and there would be upheaval if he and his farm machinery were to move off the property. He assured the court during examination in chief that he would not interfere with water access for the other lots and would consent to an injunction restraining him from doing so. In submissions for the husband it is noted that the potential for conflict between the husband and the wife and her father is non-existent because, despite the need for co-operation between the wife and her father and the husband, over the three years since separation, there has been no problem with the water supply, with the storage of the wife’s father’s farm equipment and no significant conflict. In cross-examination about water access the husband said that although there is a line through lots 10 and 7 for the other lots, there is an alternate line along the Road. Further, the husband says that he has an important connection with the property in that he has good friends among the other neighbours of the property.
Learned counsel for the husband argued that in those circumstances it would be a superficial approach to rely on the historical connection between the wife and the property and the potential for conflict in the future, as reasons to leave the lots with the wife.
I indicated to the parties during submissions that I was attracted to the approach that the husband’s counsel describes as ‘superficial’. I think the wife’s proposal makes more sense. I accept that the wife may well be exaggerating the potential for conflict if the husband remains. I accept that her proposal may well be unfair on the husband, but there it is. The husband’s proposal would leave the parties and the wife’s father to closely co-operate for an indefinite period into the future. A level of co-operation is required of neighbours and despite the fact that the parties would not be living next to each other (the only residence is on lot 10), the farming activities on the respective blocks would bring the parties into contact. For example the machinery shed on lot 10 has been and continues to be used to store farm equipment owned by the wife’s father and used by the wife on the other lots. Adjoining fences require co-operation and the particular water and irrigation arrangements for these blocks require close and often daily co-operation. The aspiration of section 81 is to separate the financial affairs of divorced parties. There are exceptions for spousal maintenance and child support but there is logic in avoiding the need for the parties to interact and to be interdependent, where that can be achieved.
The wife will retain the disputed lots.
The F property
Neither of the parties wants to retain the F property. The wife wants the husband to have it and he wants it sold. Thus it will need to be sold. I will order that the proceeds be divided equally so that the parties share any loss or gain arising from the sale. The division will need to contemplate any capital gains tax impost. For the purposes of these proceedings the property has an agreed value of $220,000, a mortgage at $81,521 and therefore, an equity of $138,479. Half the equity is $69,239.50.
That would leave the husband with the benefit of:
Assets Value One half of the net proceeds of F property (estimate) $69,239.50 IAG shares (Joint) $1,948 AMP shares (Joint) $415 Shares in F Pty Ltd (H) $590,000 Household contents (H) $5,000 Musical instruments (H) $4,000 Paid legal fees (H) $15,267.11 Joint loan account with F Pty Ltd -$163,242.00 Husband’s loan account with F Pty Ltd -$134,717.00 Husband’s loan account with F Pty Ltd – Property purchase L -$174,928.00 Husband’s Mastercard -$1,267 Wife’s loan account with F Pty Ltd -$49,359.00 Total $162,356.61
In order to bring him to 50% he would need to receive a further $526,947. In these proceedings that means the entire balance of the fund containing the proceeds of the N property ($516,189) and a further adjustment. There may be interest not included in that total. I will also order that the wife pay the husband $10,000. He will owe any unpaid legal fees and any other personal debts.
The wife would have the benefit of:
Assets Value Lots 7, 9 & 10 at M $650,000 Lots 2 & 3 at M $120,000 1988 Mercedes Benz motor vehicle (W) $5,000 One half of the net proceeds of F property (estimate) $69,239.50 Farm business (W) $2,000 Household contents (W) $5,000 Personal effects (W) $2,000 Minus payment to the husband -$10,000 Total $843,239.50
She would owe any unpaid legal fees for these proceedings and any other personal debts.
Superannuation
It is agreed that the parties have the following interests:
Fund Value Farlow Superannuation (H) $178,448.00 AMP (H) $38,043 AMP (H) $14,198 Farlow Superannuation (W) $86,371.00 AXA superannuation (W) $1,422.00 Total $318,482.00
An equal distribution would be $159,241. The wife has
Farlow Superannuation (W) $86,371.00 AXA superannuation (W) $1,422.00 Total $87,793.00
A split of the husband’s interest that achieved an equal distribution would be based on $71,448. Each of the parties seeks such a splitting order.
I mentioned to counsel during submissions that I anticipate that the parties will not want to remain tied to the Farlow Superannuation Fund. I will make provision in the orders for the wife to request that her entitlement in the fund together with the interest referable to the split in her favour of the husband’s entitlement be rolled over or transferred to a fund in her name. Subject to any necessary fees that is likely to mean that assets representing $71,448 together with the wife’s existing $86,371 should be rolled over into a fund in the wife’s name. That represents 157,819/264,819ths or close enough to 60% of the fund. Given the nature of the assets of the fund and the fact that the husband is the trustee, that should not present any problems but the parties can bring the matter back before me in relation to the wording of the orders.
Conclusion under Section 79
The effect of the orders will be that the wife retains the M properties, the husband retains the business, including the parties’ loan accounts and the F property will be sold. The net proceeds of the F property will be divided equally and there will be a distribution of the proceeds of the N property to the husband.
By the sale and equal division of the proceeds of the F property the parties will share the benefit or detriment of any difference between the ultimate net sale proceeds and the value arrived at for the purposes of these proceedings. Naturally the husband will need to maintain the mortgage payments pending the sale. There will be an adjusting payment by the wife to the husband of $10,000. Otherwise the parties will retain what they have and responsibility for what they owe.
The orders are in similar terms to those proposed on behalf of the parties but they are at liberty to relist the matter in relation to the drafting of the orders and any other machinery issues within 21 days.
I certify that the preceding one husband and thirty two (132) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 16 May 2008
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