Trivedi & Awasthi
[2021] FedCFamC1F 194
Federal Circuit and Family Court of Australia
(DIVISION 1)
Trivedi & Awasthi [2021] FedCFamC1F 194
File number(s): SYC 5604 of 2010 Judgment of: BAUMANN J Date of judgment: 25 November 2021 Catchwords: FAMILY LAW – PROPERTY – Assessment of contributions – Where at the time of trial the parties had been separated for over 13 years – three pool approach Legislation: Family Law Act 1975 (Cth), ss 75, 79 Cases cited: Biltoft & Biltoft (1995) FLC 92-614
Chorn & Hopkins (2004) FLC 93-204
Coghlan & Coghlan (2005) FLC 93-220
Hickey & Hickey (2003) FLC 93-143
Jabour & Jabour (2019) FLC 93-898
Kowaliw & Kowaliw (1981) FLC 91-092
Mallett v Mallett (1984) 156 CLR 605
Pierce & Pierce (1998) FLC 92-844
Stanford & Stanford [2012] HCA 52
Townsend & Townsend (1994) 18 Fam LR 505
Trevi & Trevi (2018) FLC 93-858
White & Tulloch v White (1995) FLC 92-640
Division: Division 1 First Instance Number of paragraphs: 89 Date of hearing: 24 and 25 August 2020 Place: Brisbane Counsel for the Applicant: Mr D Dura (via videolink) Solicitor for the Applicant: Horton Rhodes Legal (via videolink) Counsel for the Respondent: Mr A Givney (via videolink) Solicitor for the Respondent: Zraika Partners Lawyers (via videolink) ORDERS
SYC 5604 of 2010 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS TRIVEDI
Applicant
AND: MR AWASTHI
Respondent
order made by:
BAUMANN J
DATE OF ORDER:
25 NOVEMBER 2021
THE COURT ORDERS:
1.That these proceedings be adjourned for Case Management Hearing at 9.00am (Queensland time) on 3 December 2021 in the Federal Circuit and Family Court of Australia (Division 1) at Townsville.
2.That both parties and their legal representatives have leave to appear by telephone on 3 December 2021 by using the Microsoft Teams telephone conferencing system as follows:
(a)They shall each telephone … by 8.55am (Queensland time) on 3 December 2021;
(b)They shall each then enter the pass code …; and
(c)Hold the line until the Court is ready to connect and proceed with the matter.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Trivedi & Awasthi has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
Introduction
This property case between the Applicant wife, Ms Trivedi (“the wife”), and the Respondent husband, Mr Awasthi (“the husband”), has followed a tortuous pathway and despite final separation occurring now over 13 years ago, the level of mistrust and patent angst has been maintained.
The reasons which follow seek to explain to both parties the orders that the Court has assessed will achieve justice and equity to both. However, I accept it is unlikely that any orders (other than what each proposed being wholly adopted (which the Court has not), will satisfy the party.
At this early juncture of these Reasons, I record the efforts of Counsel for the wife Mr Dura and Counsel for the husband Mr Givney who managed, by proper concessions and an earlier aim of achieving many agreed facts to contain their cross-examination and submissions so as to allow the Final Hearing to be completed in two days, when the volume of affidavit material, annexures and exhibits exceeded 1200 pages. I note that their efficiency was not matched by the Court’s more speedy delivery of Reasons, which the Court regrets.
Competing proposals
The wife’s minute of order, attached to her case outline filed 20 August 2020, sought in effect that:
…the Respondent pay to the Applicant $1,485,050.13 or such cash amount that represents the Applicant receiving 60% of the overall net asset pool determined by the Court, with the property at B Street, Suburb C NSW, and any associated mortgage to be excluded from the net asset pool.
The wife otherwise proposed that the parties, after payment by the husband of the above amount, retain all their other property, bank accounts, and superannuation entitlements currently held by her.
The husband’s minute of order contained within his case outline filed 24 August provided for the husband to pay the wife the sum of $150,000 (less one half of any monies paid by the husband to the single expert, Mr D) and otherwise proposed the parties retain all their other property, bank accounts and superannuation entitlements currently held by them.
At the commencement of the hearing, Mr Givney for the husband indicated that the husband had now changed the sum he proposed to pay the wife to a figure of $262,959 payable in two instalment – one of $150,000 within 60 days and the balance of $112,959 by 21 October 2021.
Even a cursory understanding of the parties’ proposals (a difference of over $1.2 million in a pool of slightly over $2 million) coupled with the precise figures advanced, reflect why this case was never likely to resolve be negotiation. Furthermore, and a theme which I will refer to later in these Reasons, each party in the preparation of their trial material clearly felt the exercise of discretion the Court is asked, by leave, to undertake was akin to an “accounting exercise”. Of course, that is not the approach and neither experienced Counsel retained by the parties, by final oral submissions, contended otherwise.
Statutory pathway
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
(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 s 79(4);
(c)to consider the factors as are relevant contained in s 75(2) of the Act; and
(d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
As is clear from the parties’ proposed orders, and the history of the relationship, both parties submit that it is just and equitable to make orders (s 79(2) of the Family Law Act 1975 (Cth) (“the Act”) and Stanford & Stanford [2012] HCA 52). I agree.
credit
Both counsel, on their instructions no doubt, contended for an adverse credit finding against the other party. I do not make any general credit finding, although, where there is a dispute about a critical fact, I will succinctly explain why I accepted the evidence of one party over the other. It is appropriate to record that the wife’s father, Dr Trivedi (aged 89 years at the trial), was, because of his health, unavailable for cross-examination. Mr Dura for the wife, at the commencement of the trial, indicated to the Court that as a “Kennon type” claim was no longer pursued, parts of Dr Trivedi’s evidence and also of the wife (including some old medical reports) were not being relied upon by the wife. As a result, a significant issue as between the parties (the allegation of family violence and its alleged effect) which seems to have fuelled much of the tension in the relationship (both prior to and post separation) was not the subject of cross-examination. However, those tensions (mostly within the genre of controlling or verbally abusive behaviour by the husband towards the wife) clearly shaped the wife’s perceptions of the history.
This observation about “perspectives” is matched by the theme in the husband’s case that the wife gave him no credit for his efforts in creating wealth for the family, and in particular, supporting the wife and their two son’s post separation for some years with the payment of substantial child support, private school fees and allowing the wife to continue to use, for a period, credit facilities established by the husband. Furthermore, the estrangement in the father’s relationship with his two sons, for which he blames the wife, was a persistent and emotional factor that the husband’s treating psychologist, Dr F, referred to in his affidavit evidence. Dr F was not required for cross-examination by the wife.
To a large extent, the contentions for an adverse credit finding were found on suggestions of deliberate or problematic non-disclosure:
(e)So far as the wife was concerned, arising from her evidence about the sale of heirlooms; the arrangements with her father relating to the purchase of the Suburb C property; access to her solicitors file; and her conduct in not bringing an application to commence these proceedings out of time more quickly; and
(f)So far as the husband was concerned, arising from his failure to reveal his eligibility/entitlements arising from his employment with G Company in the United Kingdom; and his evidence, regarded by the wife as “unreliable” relating to seeking employment since September 2018.
Having had the benefit of observing the parties’ in the witness box, I found both parties’ evidence was, at times, shaped by the prism through which they looked at the history from their perspective. Much has happened since separation 13 years ago. However, I did not regard either party as dishonest. The wife was able to make a proper concession that the husband was meticulous in his financial management and record keeping, no doubt engrained from his years of professional training (and again reflected in the tenor and style of his asserted case). The husband was less able to make any concessions that might have been favourable to the wife.
short contextual history
Statements of fact hereafter shall be construed as findings of fact.
The husband is now 63 years of age; the wife is 59 years of age.
In 1986, the husband commenced employment in the United Kingdom with G Company, and in 1990, the wife commenced employment with the public service, and both parties were so employed when cohabitation and marriage occurred in 1994. In May 1994, the couple moved to the United Kingdom to live, initially residing with the husband’s father. They remained living in the United Kingdom until June 2003.
During this time, X was born in 1997 and Y was born in 1999. The mother worked part time until shortly before the birth of X.
In early 1995, the parties purchased a home in Suburb H, City K, for $130,000 with a joint loan of $70,225.
In September 2002 (after employment for a period of 16 years) the husband was made redundant by G Company and received a nett redundancy payment of 54.536. This caused the parties to decide to return to Australia to live. The husband had an expectation upon arriving in Australia, that a suitable position with the local office of G Company would be offered. It was not. I accept this was a difficult time for the husband, and the death of his father in 2002 was an added anxiety.
The parties sold the Suburb H property in May 2003 for 320,000, with nett funds (after discharge of the mortgage and costs of sale) of 243,260. The husband controlled and managed these funds, and how he did so is controversial, and dealt with later in these Reasons.
After the family returned to Australia in June 2003 (the children were then aged six and three), and after a short period living with the wife’s father, they rented accommodation from October 2003. The husband decided to commence self-employment as a professional, through a franchise/license offered by L Company. The husband decided, in July 2005, to operate as a self-employed professional through an entity known as N Company, which continued until September 2018, when the husband says he sent his last invoice for services to a client. The financial benefits derived by the husband from his self-employment, has been a further controversy, dealt with below.
Although the wife, from April 2004, was employed part time in her profession and contributed her nett income to the family expenses, in an effort to supplement her income in August 2007, she began a “direct selling” business known as M Company, deriving minimal return.
In May 2007, the husband received a legacy from the Estate of his father, in the sum of $115,348.
As indicated, the reasons why the relationship ended in February 2008, does not require any particular findings, save I am satisfied it was traumatic for the parties and both of their sons who were enrolled at O School at the time, and were aged 10 and eight.
At Item 25 of the Agreed Statement of Facts, a number of bank accounts (both in Australia and in the United Kingdom) were identified as existing. An analysis of the funds (and other interests, including share portfolios and superannuation) is identified below.
The husband did not commence paying child support immediately, however, it is now conceded by the wife, having inspected credit card records produced by the husband, that she used her supplementary credit card on the husband’s credit card account, and spent a sum between $41,000 and $56,000 over a period which the husband covered from his income. The husband says the amount was closer to $56,000.
In December 2008, the wife commenced full time employment as a professional with a local council, where she was still employed effectively.
As challenging as some of those issues are, notwithstanding the volume of documents produced, the parties need to understand that at the time when a number of post separation transactions, undertaken unilaterally were made, the parties were not engaged in litigation. These proceedings really began after the Orders of the Honourable Justice Austin were made on 8 June 2017, granting the wife leave to proceed with her property application filed 3 November 2015 (then seven years post separation).
Furthermore, the husband’s eligibility and likely benefits arising from a scheme administered on behalf of G Company (UK) were not disclosed initially by the husband. However, by the time of the hearing, full details of those benefits have been ascertained and are the subject of a single expert report by Mr D, attached to an affidavit filed 24 August 2020. The opinion of Mr D is accepted by the parties and he was not required for cross-examination.
Pool of assets and liabilities
In final submissions, Counsel for the wife contended for two separate pools and Counsel for the husband contended for three separate pools.
As I will further explain, I am persuaded that for the purpose of step one of the usual analysis, the characteristics of the G Company (UK) entitlements should be in a separate pool. Furthermore, consistent with the guidance offered in Coghlan & Coghlan (2005) FLC 93-220, both Counsel submitted the superannuation interests should constitute a separate pool from the non-superannuation interests. I agree.
Although the wife had asserted at one time in the progress of her case, that her 39% share in the Suburb C property should be “excluded”, again by final submissions and consistent with authority which requires a Court to consider all legal and equitable interests of the parties, at the time of the trial, the agreed value (and mortgage) is included in Pool One.
I will now deal with and make findings about disputed matters relating to what is commonly called the “balance sheet’ before setting out the position the Court has come to noting that many interests are agreed, both as to their inclusion and the value (see Exhibit 9).
G Company (UK) entitlements
As earlier recorded, by the time of the trial full, disclosure of the husband’s potential future entitlements under the G Company Pension Scheme had been made and those entitlements were the subject of a lengthy and considered report dated 21 August 2020, by the appointed single expert Mr D, annexed to his affidavit filed 24 August 2020 (“the pension report”). As Mr D was not required for cross-examination, I am entitled, but not obliged, to accept his opinion. I do so.
From his report, and for context, I make these findings:
(a)The husband has benefits in the G Company Pension Scheme (“the Pension Scheme”), which is a United Kingdom registered pension scheme and arose from his work from 1 October 1985 to 13 September 2002 (a period of approximately 17 years or 204 months);
(b)Mathematically, approximately 102 months of employment occurred before marriage and the same period from marriage to the time the husband’s employment ceased;
(c)The benefits in the Pension Scheme are in two parts:
(i)A defined benefits scheme in the pre-2000 section where the benefits can be taken as an annual pension paid to the husband in pounds sterling or part can be commuted to a lump sum; and
(ii)A defined contribution in the post-2000 section, which can also be taken as a pension or part as a lump sum.
(d)Current forecasts are that the husband would be entitled to an annual pension (combining both parts) of £23,993 from normal retirement at age 65 years (for the husband being 8 February 2023). Although the annual pension would escalate the underfunding of the Scheme and for the reasons identified by Mr D, it is “less attractive for Mr Awasthi to take these benefits as annual pension than in the usual case” and, even at a marginal tax rate of zero, the options available to the husband of taking a lump sum and reduced pension “do not seem to be tax efficient”;
(e)It may be tax efficient for the husband to transfer the “cash equivalent transfer value” (CET) of his benefits to an Australian superannuation scheme, maximising the amount which could be split between the husband and the wife, however Mr D indicated further advice from “other professionals” would be needed. No further evidence has been offered to the Court on this option;
(f)At paragraph 13 of his report, Mr D identified some options and thereafter some suggested orders and restrictions.
Based on the report and further calculations, the parties, at the hearing, adopted a “value” of the husband’s interest in the Pension Scheme (I infer at this time) but not available until 2023 (unless the husband took an early retirement option – one year earlier in February 2022) at $850,889.63.
The husband’s current interest in the Pension Scheme is not amenable to a “superannuation splitting order” under the Family Law Act 1975 (Cth) unless it is transferred to an Australian superannuation fund. In the opinion of Mr D, the Court of England and Wales would have no jurisdiction to make “the usual pension sharing order” under United Kingdom legislation.
A combination of these issues – which clearly differentiate in my view the characteristics of the G Company Pension Scheme benefits from other Australian superannuation entitlements in existence, or other smaller pension funds held in the United Kingdom by the husband (to which I will refer shortly) – justifies the separate pool designation sought on behalf of the husband.
Other United Kingdom funds and policies
At paragraph 185 of his trial affidavit, the husband gave explanations as to how various values of these interests were reached, and in the absence of significant cross-examination, I adopt those values, namely:
(a)Super Fund 2 Policy …58 – $155,778 (paragraph 185(h));
(b)Super Fund 3 …47 - $257,602 (paragraph 185(b));
(c)Super Fund 4 Plan …40 (paragraph 185(a));
(d)Super Fund 5 Plan …22 (paragraph 185(e));
(e)Super Fund 6 Plan …11 (paragraph 185(c)).
At page 14 of the single expert report, Mr D confirmed that on 18 August 2020 he received information from the solicitors for the husband about “two other UK pension funds” held by the husband – being Super Fund 5 Plan …22 and Super Fund 6 Plan …11.
He opined that these funds arise from the husband’s work at G Company and speculated that they were probably “set up in order to safeguard Mr Awasthi’s protected rights to a Guaranteed Minimum Pension (GMP) which rights are not provided by the G Company Pension Scheme itself”.
On the basis the funds are separate amounts available to the husband and I find akin to Australian superannuation, I propose, where no party seeks an Australian splitting order, to include these funds in the pool of “superannuation interests”, although I accept they probably have slightly different characteristics from both the wife’s Australian superannuation benefits and the husband’s G Company Pension Scheme benefits.
Wife’s motor vehicle 1
In circumstances, perhaps unsurprisingly where neither party sought to have the wife’s motor vehicle valued, I adopt the wife’s estimate of $6,000 as a statement against interest (see Item 40 of the wife’s Financial Statement filed 19 August 2020).
Bank accounts and credit card liabilities
Where the parties have been separated for so many years, I regard it as somewhat artificial to incorporate small bank accounts now (representing to a large extent the fluctuating balances associated with working accounts) or credit card liabilities. To the extent that it seems the parties have agreed to do so, I adopt that position.
When I deal with the issue of “notional” add backs, the arguments advanced as to how the current agreed bank accounts should, in essence, be adjusted for the use of funds post separation will be considered.
Loans to wife from family and friends
The wife in her said trial Financial Statement at Item 50, asserts she owes the following debts to family and friends:
(a)
Her father, Dr Trivedi
$287,000
(b)
Mr and Ms P
$9,050
(c)
Mr Q
$49,670
(d)
Ms R
$11,300
$357,020
The wife contends that these debts should be included in the balance sheet – in effect, as I understand her case, because the debts arose from a need to obtain support for herself and the children post separation through lack of support by the husband. By including the debts in the pool of assets and liabilities, the husband will be effectively contributing to those expenses incurred.
I examine these debts next noting the wife engaged in creating these personal obligations in circumstances where the husband was not involved in the alleged transactions and where the husband has satisfied the Court that he paid substantial child support; private school fees and permitted the wife to use his credit card facility for her expenses for a period post separation.
Also, at no time since separation in 2008, or since she was given leave to proceed with her property application by Austin J in June 2017, did the wife seek any order for spouse maintenance. The Initiating Application filed 3 November 2015 made no application for spouse maintenance, nor am I aware of any application since then being made or pursued.
For these reasons alone, I would not include the debts in the balance sheet, however to further support this conclusion, and on the evidence (primarily given by the wife at paragraphs 164 to 195), part of which was the subject of cross-examination, I further find that:
(a)To the extent the wife had mortgage commitments after she purchased the Suburb C property in 2010, this was a commercial decision she made unilaterally, and if, as she says at paragraph 167, that reduced her resources, then that was a decision she made with known consequences;
(b)The issue is not whether the wife obtained support from family and friends as she says she did, and which I accept she did. The issue is whether it is just and equitable for the husband, in the circumstances of the wife obtaining such funds and, apparently on the basis she would repay the funds, should share the liability;
(c)The wife asserts that she had no access to the proceeds of the Suburb H property sale proceeds. However as I set out below, I am satisfied how those funds have been used by the husband and, as required, that will be taken into account;
(d)At paragraph 169, the wife refers to conversations, which in the case of her brother, Mr S are hearsay and not confirmed on affidavit by him – however whatever may have been the discussions with her family, the table at paragraph 172 which sets out payments to the wife by her father of $197,000 from 13 June 2008 to 3 April 2018 were said to meet “children’s various expenses, including medical and educational expenses”. It was, at any time, open to the wife to seek a departure of child support assessment. She did not do so. There is little detail of what the funds were used for and I note that the wife claims she would repay her father “when we sell the Suburb C property”. There is no evidence the wife intends to sell the Suburb C property;
(e)The wife says that the “loan” of $50,000 on 10 February 2020 was “to assist me meet various expenses, including legal and Counsel’s fees as well as a tax liability of approximately $13,220.09”. It is inconsistent with authority to expect the husband to make a contribution to the wife’s legal fees or taxation that, if payable in 2020, must have arisen from taxable income or activities over 10 years after separation;
(f)There are no written loan agreements as the wife says “culturally it would be considered an insult to request or require loans between friends and family to be recorded in formal loan agreements” (paragraph 195);
(g)No evidence has been advanced from friends, Mr and Ms P, for their “loan” to the wife of $9,050 (paragraphs 176 to 181) said by the wife to be for school fees; to do something nice with the boys and orthopaedic treatments. Although I note the wife says she repaid $11,000, I am not satisfied on the evidence that she will be required to repay the alleged loans;
(h)Although at paragraph 189 the wife claims she owes $37,170 (having paid back $12,500) to Mr Q, no evidence from the “lender” is adduced. The wife says the “loans” were made to assist her to “meet my children’s and family expenses”, but no detail of these expenses is provided to the Court. The wife’s table, at paragraph 183, sets out some sizeable sums shortly after separation, including cash. However, these monies need to be seen in the context of the earlier findings and the child support received and other use of credit cards available to the wife. I am not satisfied on the evidence that the wife will be required to repay the alleged loans;
(i)The wife alleged her friend Ms R has provided her with cash between 1 June 2008 and 19 February 2015 totalling $11,300. No evidence has been adduced by Ms R. If these “loans” were made, I am not satisfied she will be required to repay the loans;
(j)It is also arguable that the enforcement of some of these loans would, considering their age and lack of evidence, even be enforceable.
In the exercise of discretion (see Biltoft & Biltoft (1995) FLC 92-614), I do not include the loans discussed in the balance sheet. I do not ignore the generosity of the wife’s father Dr Trivedi, reflected in his affidavit sworn 5 March 2020. He was not available for cross-examination which goes to the weight to be applied to that evidence. I am sure, if he has been supportive of his daughter, it may be an issue he has to manage with his other children. However, nothing he has said persuades me to regard the support he has offered as a “loan” to be brought into the balance sheet. I am not satisfied he would commence proceedings for recovery (even if he could) and he has other means available to him to adjust the benefits his family derive from him if that is his wish.
Add backs
Exhibit 9 identified the initial position of the parties that:
(a)the husband sought to “add back” as either a “pre mature disposition” or on some other basis (not properly articulated) the receipt of the proceeds of sale of various shares owned by the wife at separation, which she estimated at 28 February 2008 had a gross total value of $68,567.34 (paragraph 113). The wife concedes she sold the shares (on which some Capital Gains Tax might be payable by her in the sum of $3,063) to meet expenses for herself and the children, although a lack of detail of how the funds were used is offered to the Court;
(b)the husband says, and the wife concedes at paragraphs 119 to 128 of her affidavit that she did dispose of a number of other investments/policies in her name which I summarise as follows:
(i)Investment Fund 1 which resulted in a surrender amount of £760 received on 30 June 2017;
(ii)Investment Fund 2 which was a personal equity plan which the wife was able to cancel and withdrawn a benefit of $15,691 on 1 December 2011;
(iii)Investment Fund 3 which was an investment in the wife’s name which resulted in a benefit to the wife of $5,142 received on 13 October 2011;
(iv)Investment Fund 4 investment in the form of an individual savings account in the wife’s name which on closure resulted in a payment of £18,180.24 received by the wife on 12 April 021;
(v)Investment Fund 5 individual savings account in the wife’s name which when closed by her in March 2021, resulted in a credit to her United Kingdom T Bank account of £11,052;
(vi)Super Fund 7, a small life insurance policy established before marriage that resulted in a modest payment of £2,023 in March 2012, when surrendered;
(vii)The children’s Super Fund 8 life policy in the wife’s name which resulted in the receipt of $9,875 when surrendered by the wife in October 2011.
The wife claims all these benefits received totalling $32,731 plus an additional total of £29,992, were used to meet “family expenses” without further proper disclosure, for the reasons set out at paragraph 120 of her affidavit.
(c)The wife appears to seek an accounting for what the husband says is net income of $1,173,896 received by him since 1 July 2008 (see paragraph 154 of the husband’s trial affidavit) apparently on some basis unclear to me;
(d)The wife claims the husband has not accounted for the nett proceeds of sale of the jointly owned Suburb H property. The husband was the subject of cross-examination on the evidence he gave at paragraphs 94 to 100 which explains how the nett proceeds of £243,259.69 received on 5 June 2003 was moved between accounts the husband controlled and spent (see particularly paragraph 93(d)). The sum spent over a period of 17 years is approximately £220,000 (£243,259 - £23,675) and at paragraph 100 the husband says at the trial the sum of £23,675.37 remained in the V Bank Deposit account. I accept the evidence of the husband, which frankly provides for more detail about his expenditure than the somewhat more vague assertions by the wife of how she spent the proceeds of the sale of shares and other investments.
It is clear that “adding back” funds is the exception to the usual principle that the Court consider the interests that actually exist at the time of hearing (see Trevi & Trevi (2018) FLC 93-858 at [47]). Premature distributions in a Townsend & Townsend (1994) 18 Fam LR 505 sense or quantified waste through reckless, wanton or negligent behaviour of a party (Kowaliw & Kowaliw (1981) FLC 91-092), have found favour in some cases as appropriate to notionally “add back” funds which no longer exist. In essence, the task is to achieve justice an equity between the parties and in some cases, perhaps arguably less transparent, consideration to some disposition of a valuable interest is given within the almost “catch all” provision under s 752(o).
In the unusual circumstances of this case where separation took place so long ago, but where the wife says she did not have sufficient funds to support herself and the husband says he has used the Suburb H proceeds transparently both for the family and for his own support at times, I have concluded that no injustice to either the husband or the wife flows from not “adding back” notionally sums they argued should be included in the balance sheet.
Before leaving this topic, I must mention the clear inference available that some of the legal expenses incurred by the parties has been paid from the funds of assets available at separation, and not entirely from post separation income. As Exhibit 7 reveals, substantial legal expenses by both parties has been incurred. On the evidence available to the Court, it is not possible to determine how legal expenses were paid, and sensibly Mr Dura (aware of authorities like Chorn & Hopkins (2004) FLC 93-204) did not contend for any “add back” for legal expenses. Mr Givney did not contend otherwise.
On the basis of these findings and adopting the concessions made by the parties, I find the pool of assets (three separate pools) to be as set out in Appendix One to these Reasons.
It should be acknowledged that the creation of separate pools does not relieve the Court from a “holistic” assessment of contributions and then, ultimately, a determination of what orders achieve justice and equity, topics which I now will consider.
Contributions
I rely upon, but do not repeat, earlier findings made in this Judgment.
I have already noted that it is not an appropriate manner by which to exercise the holistic discretion required in this matter for an overly mathematical focus to be applied. Nor does authority encourage the assessment of contributions to be calculated by reference to different parts of the relationship journey from marriage until trial. However, in this case the following narrative discusses the various and diverse contributions initially; during the relationship until separation in February 2008 and then from separation to the hearing before me.
Whilst the wife holds a view that the husband has failed to make full disclosure and that his control of the family funds has been more directed to his sole benefit, rather than for the benefit of the wife and the children, I do not totally accept that proposition. I have formed the view, consistent with the wife’s concession, that the husband is a careful and meticulous record keeper and that during the marriage, as “money was his thing”, she trusted him “to look after us”.
My assessment of the husband was that he presented as precise and confident in the evidence he gave underpinning his investigations from documents – many of which go back many years – and have been the subject of tables relied upon by the husband. A great deal of the husband’s cross-examination was directed to “testing” his evidence, however little variation was identified from the evidence he gave of the “raw figures”. Of course, it is more than the raw figures that shape the discretion as not only direct and indirect financial contributions need to be taken into account but also non-financial contributions, including those towards the role of homemaker and parent, which are not as easily quantified in money terms, but are not to be given less weight or considered “in any merely token way” (see Mallett v Mallett (1984) 156 CLR 605). I also rely upon the recent statements of the Full Court in Jabour & Jabour (2019) FLC 93-898.
On the evidence, I make the following further findings:
(a)The initial financial contributions by the husband were vastly superior to those of the wife. Although the husband was criticised for not producing documents from 1994 (26 years ago) to corroborate the extent of his portfolio with W Bank, the husband said he assessed the shares from documents and records from the firm U Company – which he acknowledged he had not produced. I accept the husband’s evidence at paragraph 27 that his assets were in the region of £203,000 (or at the exchange rate at that time) approximately AUD$430,000;
(b)The wife does not contest that the husband’s initial contributions were superior, but at paragraph 35 of her affidavit, the wife says she had a Motor Vehicle 2; a portfolio of shares; nominal superannuation; bank accounts totalling $20,000 and an interest in a life policy. On the evidence the wife has provided, it is not possible to estimate the value of the shareholdings at cohabitation. The wife says, and I accept, that the shareholdings ultimately disposed of by her accumulated over time through the dividend reinvestment schemes and issuing of shares, rather than using her income. Of course, this represents an indirect contribution by the husband, where his income was used for living expenses (when the wife was primarily caring for the children), as otherwise the dividends would have entered into the family pool of income. Whilst the husband asserts any monies in the wife’s bank accounts at cohabitation represented a gift by the wife’s father, Dr Trivedi of $19,995 deposited on 5 May 1994, little turns on the source of the funds that the wife introduced into the relationship;
(c)As authorities such as Pierce & Pierce (1998) FLC 92-844 make clear, in considering the weight to be attached to the initial contributions “regard must be had to the use made by the parties of that contribution” and that the “weight to be attached to an initial contribution must be assessed against the rubric of all the contributions, both financial and non-financial made by the parties over the course of their relationship” (Jabour at [55]);
(d)I accept the evidence of the husband at paragraphs 81 to 85 as to how the husband’s funds of approximately £62,000 were used to acquire jointly the property at Suburb H for £130,000 – with a loan of £70,225 from Z Bank. The property was retained as a joint asset from February 1995 until June 2003, when it was sold at the time the family relocated to Australia;
(e)In terms of income derived whilst the couple lived in the United Kingdom, I accept that for a period after cohabitation until before the birth of X (in 1997), the wife worked part-time whilst studying. The husband was clearly the “breadwinner’, and I accept the accuracy of his gross income estimated at paragraph 48. When he was made redundant at G Company (UK) in September 2002, he was earning around £62,286 per annum. As the table confirms, he did not begin to generate income for income tax purposes until he came to Australia and then only again in the year ended 30 June 2005. It follows as a result, that from the time the husband was made redundant for a period of time until at least the financial year commencing 1 July 2006 (over three and a half years), the parties were living substantially on capital and investments. This finding is made on the evidence of the parties that their taxable income for the following years were:
Year ended
Husband
Wife
30 June 2003
Nil
$2,286
30 June 2004
Nil
$5,751
30 June 2005
$16,083
$18,728
30 June 2006
$36,027
$19,680
(f)The capital available from the initial contributions increased in the period from marriage until the husband’s redundancy, through organic growth and savings, noting that the wife was the primary carer and homemaker from the birth of X, who was followed two and a half years later by the birth of Y (in 1999);
(g)At paragraph 61, the husband acknowledged that with the death of his United Kingdom based father in 2002, and feeling pressure to return to Australia for his wife and children, in late June 2002 he requested and obtained the right to be included in the new voluntary redundancy program announced mid-May 2002 by G Company – accepting a nett payment of £54,536 (AUD$153,248) in October 2002. These funds were used towards paying out a loan on a car and other expenses (identified at paragraph 64). It is reasonable to infer that the redundancy payment was based on the husband’s length of service with G Company – half of which occurred during the marriage;
(h)Shortly prior to separation, in May 2007 the husband received a gross legacy from the Estate of his late father equivalent to $115,348 (see paragraph 72). The husband says, and the wife no longer disputes, that he has no interest in a property in AA Street, City K. I accept the husband’s evidence;
(i)At the time of separation, the husband’s income from his self-employment activities had increased substantially. For the year ended 30 June 2008, the husband’s taxable income was $202,298. The wife’s, by comparison, was a modest $31,445;
(j)In the circumstances, it was only fair that the husband continued to provide support from his income and on the capital he retained under his control for the wife and children. Although there is a dispute about the level of support, and without being finite in his calculations, I am satisfied the husband did (as set out at paragraph 189) pay:
(i)Substantial child support as assessed (although not always on time) totalling $128,573;
(ii)Other payments directly to or for the benefit of the wife before payments were being collected by the Child Support Agency of $39,650;
(iii)Credit card charges incurred by the wife between $41,000 and $56,000; and
(iv)Contributions to private school fees of $64,316.
I accept it is hard to determine the precise amount of these total benefits (which the husband says amount to $296,787.94 – paragraph 189) that were sourced from savings or from his income because of a degree of intermingling. What is clear however is that the husband’s income varied significantly over the 10 years after separation. In this regard, I accept the husband’s evidence at paragraph 154 of the income he received, although he also conceded in cross-examination that he was able to derive some benefits from the use of business structures in the form of motor vehicle expenses, telephone expenses and the like. The husband says his income stream was at times reflective of his reduced level of happiness and the strained relationship with his sons post separation. From paragraph 155 to 169, the husband sets out a number of factors which he says affected his earning capacity. He was not seriously challenged on this evidence. I deal with the evidence he relies upon from Dr F later when considering the s 75(2) factors;
(k)Although the husband says it was not outcome he desired, his relationship with X and Y fluctuated post separation. They moved from O School to a State Secondary School, which at least brought to an end the obligation to pay private school fees. X turned 18 years in 2015 and Y turned 18 years in 2017 – when the husband’s obligations under child support legislation ceased. Whilst the wife says she continues to support the boys, she has no legal duty to do so now they are adults;
(l)I do accept the wife, because of the reduced time the children spent with the father, bore the overwhelming responsibilities for the children’s care since 2008. The other factor that I take into account is that the wife’s decision to buy a 39% interest in the Suburb C property with her father in 2010, has swelled the available Pool One interests – mostly by capital gains in the market, but also because it was the wife’s decision to use her income to pay a mortgage. This was a direct contribution by her to the acquisition and maintenance of that interest, to which the husband made no direct financial contribution;
(m)The wife, post separation, continued in employment which has generated a modest income, but has allowed her to salary sacrifice as a wealth creation strategy. It is not possible to determine from the evidence of contributions made since separation to the wife’s superannuation policy, how much of the increase in the wife’s entitlement relates to contributions; how much relates to investment income and what level of deductions for management fees and possibly insurance premiums have impacted on the balance. The wife says the level of her total superannuation at separation was just over $10,000 (paragraph 113).
As already considered, some of the financial interests held by the husband at cohabitation (e.g. the BB Bank investment with his late father and some of the life/investment policies in the United Kingdom) are still held today. The husband submits he should have recognition for his continued preservation of a number of these investments, although he seems to have been a passive investor in the share market and the other interests in his control at this time (referred to in Appendix One) are bank accounts or investment policies which he has not been required to actively manage.
In support of his position that the has preserved the assets; not recklessly diminished them but has preserved them and used most of his post separation income to live on and support the wife and children, he says, at paragraph 178, at separation his assets and interests (excluding the G Company interest at $472,874; and the three pensions I have included in Pool Two – at Super Fund 5 ($68,984), Super Fund 6 ($25,395) and Super Fund 3 ($39,700)) were approximately $800,000 ($1,404,826 - $606,953).
I have assessed the comparable interest now at $797,438 (allowing for the joint account of $14,971).
On the basis of these findings, I find the contribution based entitlements to the three respective pools as follows:
(a)Pool One interests – 55% to the husband and 45% to the wife – a differential on contributions of 10% or $115,500 approximately in the husband’s favour.
(b)Pool Two interests – 55% to the wife and 45% to the husband – a differential on contributions of 10%. This makes allowance for the wife’s total contribution to her Super Fund 9 policy and a partial contribution to the continuing pension funds of the husband held at the commencement of cohabitation by the husband but merely accruing benefits passively since separation at least. This is a differential of $39,800 in the wife’s favour.
(c)Pool three interests. Considering that the G Company Pension Scheme had generated benefits – 50% before cohabitation; 50% after cohabitation and since 2002 has merely increased by factors over which neither party has control, I accept the submission of Counsel for the husband that a finding of equal contribution to this interest is proper.
I now turn to the consideration of and further adjustment to the contribution based findings as a result of the s 75(2) factors – often colloquially described as the “future needs” factors.
Section 75(2) factors
Although the wife is four years younger than the husband, she had enjoyed long term secure employment with a local Council for over 10 years, and at the time of the hearing, she was on “leave without pay” – but essentially she was in transition to a new contract position, and using her accumulated leave which was being paid by the Council at a current gross around $78,000 per annum. The wife did not adduce any admissible medical evidence as to any likely reduction in her capacity to work into the future. I accept she had a car accident in 2011 which she says (at paragraph 109(e)) increased her anxiety, and which condition is continuing to this date. I accept these proceedings have been stressful for her, however with a mortgage to pay, I find it likely the wife will continue to work into the future.
The husband says he has not invoiced any client for professional services since separation 2018. He says he has not felt able to carry on business as a professional and has not sought employment. He said he is “not as sharp as I used to be”.
The husband relied upon a report dated 17 February 2020 by Psychologist Dr F, who was not required for cross-examination. Dr F confirmed that after an initial consultation on 8 April 2011, he has seen the husband at least yearly but monthly during the calendar years 2016 to 2019 (inclusive). Although Dr F assessed the husband as suffering grief associated with a loss of a family and “a chronic sense of helplessness, shame, guilt and stigma”, from a earning capacity perspective, and noting that Dr F is not an employment expert, he indicated and opined that:
(a)it is likely the husband will require long term treatment;
(b)it is uncertain whether the husband will realise a level of professional functioning comparable to his past achievements; and
(c)he suffers from a loss of confidence, motivation, self-worth, loss of identity, professional status and clear purpose in life.
I am prepared to accept, at his age and in a highly competitive job market, he is unlikely to earn $200,000 as he did in the 2008 year, however I am not persuaded he is unemployable. He is, with the litigation complete, not restricted in seeking employment but may not earn more than the levels the wife does. This comparative earning capacity difference and length of possible employment might result in a modest adjustment to the husband.
The ultimate division of the property and other interests will allow each party to control a modest share of capital and the wife has the benefit of an interest in property, which I find she can continue to hold, with the ongoing support of her father, the co-owner with 61% of the ownership. The husband may have more “cash” at his disposal but might be unable to buy a home in Sydney.
The long term benefits that accrue from the Pool Two interest are helpful but modest.
As will become apparent, it is the intention of the Court to make orders that ensures the nett benefit payable to the husband from the G Company Pension Scheme is shared equally.
Although the wife says, and I accept, she has a strong moral commitment to support the adult children’s education, she has no legal duty do so.
The only other factors of significance that arises, in my view, is the asserted “expectation” the wife is likely to receive from either the voluntary transfer of her father’s 61% interest in the Suburb C property to the wife or the likely inheritance she will receive upon the passing of her father who is aged 90 years. Although I have, for reasons given, not include the loans made by Dr Trivedi to his daughter in the pool, I cannot ignore the evidence that the wife says she feels a moral obligation to repay the funds in the future. At paragraph 28 of his (untested) affidavit, Dr Trivedi says:
28.I expect to be repaid the loans I have made to Ms Trivedi at the finalisation of her family law proceedings…
I accept the conveyancing file produced from the purchase of the Suburb C property contains some references to arrangements discussed at the time of the purchase between the wife and her father, however I am not satisfied any concluded agreement between them was reached. After proper discovery, it seems that the husband was bound to accept that Dr Trivedi did contribute, as he swears he did, approximately $700,000 from his savings and by selling two properties, and that his contribution was the basis of the calculation of his 61% share – the wife borrowing the whole of the balance and bearing responsibility for all repayments and outgoings.
The terms of the Will of Dr Trivedi are set out at Exhibit 10 which reveals the testator’s intention to benefit primarily his wife Ms E Trivedi. Whilst I can understand the husband may regard it as unfair that his modest inheritance from his late father’s Estate is taken into account (although as a contribution by the husband), the evidence does not satisfy me that it is consistent with principles enunciated in authorities like White & Tulloch v White (1995) FLC 92-640 to try and bring into account a mere expectation of a possible future benefit to the wife.
When I consider all the factors that are relevant under s 75(2), I do not regard it as proper to make any further adjustment to the contribution based entitlements earlier assessed in respect of each of the respective three pools.
What orders achieve justice and equity for both parties?
Although the “percentages” earlier calculated are a guide, it is the form of the orders which need to be assessed to be satisfied that justice and equity is achieved for both parties. In this regard, I find that orders with these characteristics are, subject to their final form, likely to achieve this aim:
(a)Although some of the husband’s interests in Pool Two might not have the flexibility of immediate redemption and noting no splitting order of the wife’s current superannuation interests is sought, I would adjust in the division of the Pool One interests, the cash equivalent of the 10% differential in the Pool Two interests, namely $35,771 and not alter the parties’ current interests in Pool Two;
(b)If the wife was to receive 45% of the total Pool One interests – being $519,817 to which is added the sum of $35,771, then the wife receiving $555,588 from Pool One interests, would be secured as follows:
Wife’s Pool One interests
$357,712
Plus payment by husband to wife
$197,876
$555,588
(c)As I understand the evidence of Mr D, the husband’s interest in the G Company Pension Scheme cannot be the subject of a pension sharing order in the United Kingdom. The husband could, by taking “early access”, decide how he chooses to take his benefit in the Scheme, as early as February 2022 – however if he waits until he turns 65 years in 2023 to access his full benefits, he can do so;
(d)I am not satisfied what the ultimate nett benefit achieved and available to the husband from the G Company Pension Scheme will be. The “notional figure” of $850,890 is not a nett figure. I have no expert evidence of how the husband’s decision to access his benefits will be taxed where he is an Australian resident taxpayer. I am not satisfied Mr D is an accepted expert on Australian taxation liabilities;
(e)The attraction to the Court, in circumstances where the remaining interests in Pool One is not sufficient to adjust for the wife’s 50% interest in Pool Three, in shaping orders that:
(i)restrain the husband from making an election or decision about accessing his benefits and advising the Trustee of the G Company Pension Scheme, without the wife’s prior consent; and
(ii)restraining the benefit of the interest received or available to the husband from being disbursed without the wife receiving her 50% share of the nett benefit,
is that it encourages the husband to take steps that are likely to result in maximising the benefit to him – which the wife can then share in;
(f)For example, if the husband (who I am satisfied is most likely capable of analysing the most tax effective process) thought taking a full lump sum is most beneficial, then it is a fairly simply exercise for the sum once received (and when any income tax obligation is known), to have the nett benefits divided equally. This, on the evidence, might not need to occur through an Australian superannuation splitting order as the funds would be available in cash.
If the husband decided it is better for him to take a full or partial periodic pension, then how an order can be made to ensure, into the future, that the monthly pension payment is “split” between the husband and the wife, requires more evidence and submissions.
The Court is aware, consistent with s 81 of the Act, that the aim is for finality.
However, the challenges identified require further submissions and perhaps (as Mr D opines) advice from other professionals.
Although less likely in this case with the findings now made, the parties may be able to compromise on an amount payable by the husband to the wife that takes account of the wife’s interest in the G Company Pension Scheme entitlement of the husband – but I do not see how that can be achieved by Court order (unless by consent), as it would essentially use up the husband’s remaining interests in Pool One (after a payment to the wife of say $198,000) and leave him with limited available capital or savings, awaiting perhaps as long as February 2023 to obtain his entitlement under the G Company Pension Scheme and for the additional benefits from the interests he holds in Pool Two.
I anticipate the parties will need to consider these Reasons and would be encouraged to discuss the form of the order consistent with these Reasons. If they agree, further advice/opinions from the other professionals (as suggested by Mr D) will be required, I would invite them to try and identify such experts.
As my scheduled last sitting day this year is Friday, 3 December 2021, I intend to list the matter before me on that day at 9.00am (Queensland time), with the Sydney based parties and their solicitors given leave to appear by telephone. On that occasion, I would expect to hear whether the parties have agreed on a process by which, either by submissions, compromise and/or further evidence, we are able to clarify how to deal with the G Company Pension Scheme.
For completeness, being aware that these parties both sought orders for costs and not being certain of any earlier reserved costs orders made in this long enduring litigation, I would not seek to consider any submissions (if any) as to costs until after the final orders were pronounced.
I would indicate that I will order that the payment by the husband to the wife would need to take into account the wife’s liabilities to reimburse the husband for 50% of the single expert fees charged by Mr D, who was an appointed single expert.
I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 25 November 2021
APPENDIX ONE
| POOL ONE – NON-SUPERANNUATION INTERESTS | ||
| Owner | Description | Value |
| Husband | V Bank accounts | $52,223 |
| Husband | BB Bank TD | $153,818 |
| Husband | ANZ account …04 | $12,562 |
| Husband | ANZ account (Awasthi Family Trust) | $45 |
| Husband | Portfolio with W Bank | $88,040 |
| Husband | Interest in N Pty Ltd and N Company Trust | $14,132 |
| Husband | Super Fund 2 …58 | $155,779 |
| Husband | Super Fund 3 …47 | $257,602 |
| Husband | Shares (J Company and CC Company) | $2,865 |
| Husband | Super Fund 1 …1/1 | $45,401 |
| Husband’s interests | $782,467 | |
| Joint | V Bank account …03 | $14,971 |
| Wife | Bank accounts | $335 |
| Wife | Nett interest of 39% in B Street, Suburb C ($594,750-$348,425 | $246,325 |
| Wife | Shares | $5,121 |
| Wife | Super Fund 10 | $99,931 |
| Wife | Motor Vehicle 1 | $6,000 |
| Wife’s interests | $357,712 | |
| TOTAL COMBINED POOL ONE | $1,155,150 | |
| POOL TWO – SUPERANNUATION AND LIKE INTERESTS | ||
| Owner | Description | Value |
| Wife | Super Fund 9 | $161,497 |
| Husband | Super Fund 5 …22 | $120,460 |
| Husband | Super Fund 6 …11 | $45,560 |
| Husband | Super Fund 4 …40 | $70,497 |
| Husband’s interests | $236,517 | |
| TOTAL COMBINED POOL TWO | $398,014 | |
| POOL THREE – G COMPANY (UK) PENSION | ||
| Husband | G Company Pension Plan | $850,890 |
| TOTAL COMBINED POOL (1, 2, 3) | $2,404,054 | |
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