Upton & Upton

[2021] FCCA 1137

FEDERAL CIRCUIT COURT OF AUSTRALIA

Upton & Upton [2021] FCCA 1137

File number(s):

DGC 3426 of 2020

Judgment of:

JUDGE BURCHARDT

Date of judgment:

28 May 2021

Catchwords:

FAMILY LAW – PROPERTY – property dispute after relationship of over 20 years – agreed equalisation of superannuation – non-superannuation pool consisting solely of proceeds of sale of matrimonial home assessed 85/15 in husband’s favour – husband’s earnings approximately three times those of wife – wife having predominant care of 3 children – 15% future needs adjustment in favour of the wife – 70/30 division just and equitable

Legislation:

Family Law Act 1975 (Cth) ss 90XT(1)(a)

Cases cited:

Mallet v Mallet [1984] 156 CLR 605

Pellegrino & Pellegrino (1997) FLC 92-789

Stanford & Stanford (2012) 247 CLR 108

Number of paragraphs:

18

Date of hearing:

7 May 2021

Place:

Dandenong

Counsel for the Applicant:

Ms Taylor

Solicitor for the Applicant:

Family Law Life

Counsel for the Respondent:

Mr Korke

Solicitor for the Respondent:

Hdl Legal and Consulting

ORDERS

DGC 3426 of 2020

BETWEEN:

MR UPTON

Applicant

AND:

MS UPTON

Respondent

ORDER MADE BY:	JUDGE BURCHARDT
DATE OF ORDER:	28 MAY 2021

THE COURT ORDERS THAT:

1.The nett proceeds of sale of the former matrimonial home (likely to be $2,160,000) be divided:

(a)70 per cent to the husband

(b)30 per cent to the wife

2.Having been afforded procedural fairness, paragraphs 1 – 5 of this Order are binding on the trustee of the Superannuation A, a sub plan of Superannuation B (“the Fund”).

3. Pursuant to Section 90XT(1)(a) of the Family Law Act 1975 (“the Act”), the base amount of $42,992 (“the base amount”) is to be allocated to the Wife from the interest of the Husband in the Fund (member number xxxxxx-xxxxx16).

4.Pursuant to Section 90XT(1)(a) of the Act, whenever a splittable payment becomes payable in respect of the interest of the Husband in the Fund the trustee of the Fund:

(a)Shall pay the Wife the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount specified in Order 3; and

(b)Shall make a corresponding reduction in the entitlement that the Husband would have had but for these Orders.

5.        Order 3 has effect from the operative time.

6.The operative time for the purpose of these Orders is the fourth business day after the day on which a sealed copy of these Orders is served on the trustee of the Fund.

7.        Until the happening of any of:

a)        The establishment of a separate account in the name of the Wife in the Fund; or

b)The transfer or “rolling over” into another superannuation fund of the payment split created by these Orders; or

c)The Wife satisfies the condition of release and is paid the payment split pursuant to these Orders; or

d)The Wife executing a waiver of rights within the meaning of Section 90MZA of the Act in relation to the payment split pursuant to these Orders.

8.        The Husband is hereby restrained personally and through his servants or agents from:

(a)       Executing a death benefit nomination in favour of any person; or

(b)Doing any act or thing which could render any part of his interest in the Fund a “non splittable payment” within the meaning of Regulation 12 or Regulation 13 of the Family Law (Superannuation) Regulations 2001.

9.        The parties have liberty to apply in respect of implementation of these orders.

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 under the pseudonym Upton & Upton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

JUDGE BURCHARDT

INTRODUCTORY

1. This is a property dispute between parties who were in a relationship for over 20 years. They have three children who live with the parents in a 9/5 pattern in favour of the wife. The net asset pool, being these net proceeds of sale of the former matrimonial home, is about $2,160,000. During the currency of the relationship received inheritances which were applied to the benefit of the parties in the sum of $2,162,000. Both parties agree these net total sums are as near equal as makes no difference. The husband seeks an 80/20 division of non-superannuation assets in his favour and the wife seeks a division of 60/40 in the husband’s favour. The parties agree there should be an equalisation of superannuation. For the reasons that follow, I am going to order that the husband pay the wife 30 per cent of the net non-superannuation asset.

2. This is a case in which there is really no material dispute as to the relevant facts.  The matter proceeded by way of submissions as a result and I commended and continued to commend the parties and their counsel for dealing with the matter in such a sensible way.  The husband was born 1974.  He suffers from C Disorder , which has affected a number of the members of his family but has not yet very significantly affected him.  There is no medical evidence to suggest that it will imminently affect his capacity to work and therefore earn a living, but it is a contingency nonetheless.  The wife was born 1975 and is in good health.  The parties commenced co-habitation in either 1998 (husband’s version), supported in the wife’s first affidavit or 1996 (wife’s version).  They married 2003.  They separated on 16 July 2019. 

3. Their children, X, born 2007, Y born 2009 and Z born 2012 followed. All three have until relatively recently been at School D, although it seems to common cause that the parties will not on an ongoing basis have the resources to continue that.

4. From 1998 until about 2005, the parties lived in rent-free accommodation in a property owned by the husband’s grandfather.  From 2005 until 2011, they continued to live rent-free at a property in E Street, Suburb F, which was owned by the husband’s father.  On 23 March 2012, the husband’s father gifted the Suburb F property to the husband, albeit that it was subsequently placed into joint names.  The parties sold the Suburb F property and bought subsequently two properties in Town G, the latter of which at H Road  has been sold with settlement in July and as indicated a likely net profit of $2,160,000.  It should be noted that this will include paying out a mortgage and arrears of fees to School D, amongst others. 

5. The parties effectively concede that this is the only property with which the court is presently concerned. Otherwise, the parties will retain their own chattels and motor vehicles and the like.

6. During the relationship, the husband was largely employed in his own business which appears to have ceased operation in 2019.  The wife says it lost money and the husband says little about this one way or the other, but neither parties have sought to suggest there was any question of wastage.  The husband is now employed in a position that pays him $88,000 plus car allowance and commission, but I note that pursuant to his most recent amended financial statement, he earns $2,963 per week, a total of approximately $150,000 a year.  This is not widely disparate to his earnings from November 2019 till June 2020 of some $77,000.  The wife was earning about $48,000 a year until she was retrenched, and she has not yet commenced further employment.  The husband has asserted and the wife has not denied that she re-partnered relatively shortly after separation, but there is nothing said as to whether or not that new partnership operates in any material way so as to the assist the wife going forward. 

7. The Suburb F property that was transferred to the husband by his father is agreed to have been worth about $800,000 at the time.  The husband’s father died in 2011, and between November 2011 and May 2013 the husband received a total, including executor’s commission, of $1,249,066.  Together with the $800,000 value of the Suburb F property and an additional inheritance from his sister in 2013 of $130,932, the husband’s total inheritance, as said earlier, amounts to $2,162,000. 

   THE SUBMISSIONS AND CASE OUTLINES OF THE PARTIES

8. Counsel’s submissions largely proceeded on the footing that the Court would pay attention in detail to the case outlines they filed. Counsel for the father, unsurprisingly, laid some emphasis on the fact that the husband’s interest in his grandfather’s estate was a purely contingent one. It was noted that the current value of the estate said to be some $18 million. The surviving uncle is 80 years old. It was submitted that the power of the court to make a property adjustment only arose if the resolution was just and equitable and it ought to favour the husband. His contributions are effectively 100 per cent of the pool over the last 10 years. Counsel also laid emphasis on the extensive, that is to say, lengthy period of rent-free accommodation.  Counsel submitted, and this was not put in issue, that the inheritances were to the husband directly and there was no suggestion that they were designed to advance the wife. Counsel referred to the case of Pellegrino & Pellegrino (1997) FLC 92-789 and noted that the husband’s contingent interest in the estate was not property of the husband, but rather a financial resource. Counsel submitted that the uncontradicted evidence of the husband showed that his inheritance has enabled the parties to live a very comfortable lifestyle. Counsel noted the similar age and earning capacity of the parties, albeit that the wife is presently unemployed but will be able to work. Counsel conceded that the husband has some health issues but that these do not, at least presently, affect his capacity to work. Counsel submitted the adjustment sought was appropriate.

9. Counsel for the wife was similarly and commendably concise.  He did not shirk the fact that the husband’s inheritance is worth, almost dollar for dollar, the likely worth of the net matrimonial pool.  He conceded that the inheritances in rent-free accommodation should be taken into account, but noted that the sums inherited by 2013 had not increased in any way.  It was submitted that it was a relationship of over 20 years and that the wife’s contribution should not be assessed in a tokenistic way, referring to a decision of Mallet v Mallet [1984] 156 CLR 605 (“Mallet”)in this regard.  Counsel noted that the parties did not have similar incomes and pointed to the unfairness of the net outcome for which the husband contended.  Counsel submitted that there a myriad of contributions in a long marriage. 

   STANFORD & STANFORD (2012) 247 CLR 108 (“STANFORD”)

10. The Court’s first task is to identify the legal and equitable interests of the parties and determine whether a property adjustment is just and equitable.  Here, however, as it so often the case, both parties seek there be a property adjustment.  Their financial circumstances are now radically different from what they were when they were married and it is plainly just and equitable that there should be a property adjustment, including, of course, the agreed equalisation of the superannuation. 

    THE POOL

11. The pool effectively consists of the $2,162,000 net proceeds of the sale of the former matrimonial home plus the parties’ superannuation. It should be noted that the parties’ superannuation is not gigantic. That of the husband appears to be $155,794 and that of the wife is $70,000.

    CONTRIBUTIONS

12. It is important to bear in mind that an assessment of contributions does not start from any assumption that the contributions were equal and that there should be an adjustment for this or that factor.  Rather, it is a matter of looking at the parties’ contributions as a whole and coming to what, in the ultimate, is a discretionary assessment as to what the contributions can properly be said to be.  It is a fact that the husband’s contributions by was of his inheritances happen to total almost exactly what is now available for division.  It is also a fact that those contributions were received by 2013, and that the net wealth of the family has not expanded, it would seem, at all thereafter.  This lends considerable force to the proposition put forward by the husband, not strenuously, if at all, denied by the wife, that the inheritances enabled the parties to live a very comfortable life, including privately educating their children.  All of these are, of course, potent factors pointing towards a greater contribution by the husband. 

13. By way of contrary distinction, there is no argument, it would seem, that during the relationship it was the husband who was the primary income earner, although the precise circumstances of his self-employment are shrouded in some degree of mystery. The wife has asserted, and the husband does not appear to have vehemently denied, that some of his inheritances were contributed towards keeping the business afloat. The wife has asserted the business was placed into liquidation in 2019 and this does not appear to have been denied. The wife was the primary carer for the children and the husband was the primary earner. The wife did contribute earnings to an extent from time to time and the husband must have played at least some role in the upbringing of the children.

14. I accept the submission by counsel for the wife that in a 20-year relationship like this one there will be many matters to take into consideration. I also accept, obviously, the proposition advanced by the High Court in Mallet that the role of a homemaker should not be assessed in any tokenistic way. In the end, it is a matter of paying proper regard to all these matters and coming out with an assessment. In my view, an assessment of contributions that allots 80 per cent to the husband and 20 per cent to the wife represents a fair calibration of the parties’ contributions to the outcome that now obtains. Self-evidently, this is not a dollar-for-dollar exercise and I did not suggest counsel for the husband to suggest that the husband’s inheritance should be treated in this way. To assess the contribution of the husband’s 85 per cent, in my view, gives appropriate weight to the inheritances that he received and the assistance of rent free accommodation while giving appropriate weight also to the parties’ other contributions to what was, on any view of the matter, a lengthy relationship.

    FUTURE NEEDS

15. The husband appears to earn a lot more than the wife. Assuming I can accept his estimate of his income of just under $3,000 a week is accurate, and it is, of course, a sworn valuation in his assessment in his financial statement, he will have, at least for the foreseeable future, a very substantially greater income than that of the wife. The parties are of similar age and the wife’s health is completely unremarkable. The husband undoubtedly has a degenerative neurological disease which may, but not necessarily will, ultimately affect his capacity to work. I note that the wife concedes that even now the husband walks with a slight limp, so it is plain that there is a genuine difficulty. There is no medical evidence to suggest exactly when, if ever, his difficulty will become so pronounced as to operate upon the husband’s income earning capacity and I note that the counsel did not suggest there was any immediate possibility of this being likely. It is, however, a matter to bear in mind.

16. The wife will not, on any view of the matter, earn anything like as much as the husband.  Her pre-redundancy wages were of the order of $48,000 a year for approximately 3.5 days per week work.  Given her predominant care, particularly during the working week, of the children, it is improbable that she would be able to make much more than this, at least for many years to come, given the children’s age.  She may have some support from her partner, but there is no urgence that enables me to give that factor any weight. 

17. In all the circumstances, I may allot a 15 per cent adjustment to the wife in respect of future needs.

    CONCLUSION

18. It is important always to remember that cases such as these may be very fact specific as, indeed, this one is.  It is an extraordinary circumstance that the amount of money the parties are arguing about equates exactly to direct financial contributions made, in effect, on behalf of the husband.  Equally, however, it was a long relationship and the wife simply cannot be left with a merely token outcome, as I assess the husband’s application to be.  In my view, a division of the parties’ net proceeds of sale of 70 per cent to the husband and 30 per cent to the wife is indeed a fair, just and equitable outcome.  There will be orders accordingly

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Burchardt.

Associate:  

Dated:       3 June 2021