VALENCE & VALENCE

[2020] FCCA 2388

FEDERAL CIRCUIT COURT OF AUSTRALIA

VALENCE & VALENCE [2020] FCCA 2388

Catchwords:
FAMILY LAW – Property – parties aged 67 & 70 - dispute about the date of separation – where the court is satisfied that the parties separated in 2015 after 40 years of marriage – small pool – where there is no warrant for adding back any amounts to the pool save for the husband’s paid legal fees – where the parties have spent about 25% of the value of their modest asset pool on legal costs – where contributions were equal and where it is not appropriate to make a s.75(2) adjustment in favour of either party – pool to be divided equally between the parties.

Legislation:

Family Law Act 1975 (Cth) ss.75, 79

Cases cited:

G & G (1978) FLC 90-498

AJO & GRO (2005) FLC 93-218

Spanos & Spanos (1980) 90-871

Stanford & Stanford [2012] HCA 52

Trevi & Trevi [2018] FamCAFC 173

Applicant: MS VALENCE

Respondent: MR VALENCE

File Number: NCC 248 of 2018

Judgment of: Judge Terry

Hearing dates: 2, 3 & 26 June and 7 July 2020

Date of Last Submission: 7 July 2020

Delivered at: Newcastle

Delivered on: 28 August 2020

REPRESENTATION

Counsel for the Applicant: Mr Tregilgas

Solicitors for the Applicant: Bale Boshev Lawyers

Counsel for the Respondent: Mr Williams

Solicitors for the Respondent: Lucy Urach & Associates

ORDERS

1. Within 21 days of the date of these Orders the parties shall do all acts and sign all documents necessary to list for sale the properties situate at and known as B Street, Suburb C, NSW (“the B Street, Suburb C property”) more particularly described as the whole of the land in Lot ... in Deposited Plan ... and D Street, Suburb E, NSW (“the D Street, Suburb E property”) more particularly described as the whole of the land in Lot ... in Deposited Plan ... on the following basis:

   (a)The properties shall be listed for sale by private treaty with an agent agreed between the parties (herein referred to as “the agent”) and each party shall pay equally, and when it is required by the agent, any upfront fees or disbursements and if one of the parties pays any or all of such expenses on behalf of the other, that party shall be reimbursed from the proceeds of sale in respect of one half of such payments before any division of sale proceeds between the parties occurs.

   (b)If the parties cannot agree on an agent within 35 days they shall jointly request the President of the Real Estate Institute of NSW to appoint an agent and each party shall pay one half of the costs associated with this request.

   (c)The listing price and the selling price of each property shall be as agreed between the parties and failing agreement as recommended by the agent.

   (d)The parties are to cooperate in every way with the agent in relation to marketing of the properties for sale including making the keys available and completing any improvements recommended by the agent in writing or deemed necessary to obtain certificates required to allow the sale of the properties to be completed.

   (e)If one party pays for the completion of improvements recommended by the agent in writing or for work deemed necessary to obtain certificates required to allow the sale of the properties they shall be reimbursed from the proceeds of sale for the cost incurred. 

   (f)Within seven (7) days of agreement being reached for the sale of either property, the parties shall execute the contract for sale as prepared by solicitors for the wife (“herein referred to as “the solicitors”) and all other documents necessary either by the solicitors or the agent to complete the sale of the property including but not limited to all transfer documents and all monies required upfront by the solicitor equally.

   (g)The contract or sale of each property shall provide for completion within 42 days after the date of the contract unless otherwise agreed between the parties.

2. Upon settlement of the sale of the B Street, Suburb C property and/or D Street, Suburb E property the parties shall do all acts and things and sign all documents necessary to distribute the proceeds of sale in the following manner and priority:

   (a)To discharge any registered mortgage.

   (b)To pay the agent’s commission and advertising or other expenses, if any, payable on the sale.

   (c)To pay all outstanding council and water charges.

   (d)To pay all legal costs and outlays relating to the sale.

   (e)The balance to be held in the Trust Account of the wife’s solicitors until completion of the sale of second property.

3. The interim orders made on 10 March 2020 are discharged.

4. Pending the sale of the B Street, Suburb C property:

   (a)The husband shall have sole use and occupation of the property.

   (b)The husband shall pay the mortgage repayments and council and water rates as they fall due and shall keep the property insured and shall indemnify the wife and keep her indemnified with respect to any mortgage repayments.

5. Pending the sale of the D Street, Suburb E property:

   (a)The husband shall be restrained by injunction from taking any action to eject the wife, or any invitee of the wife whosoever, from the D Street, Suburb E property.

   (b)The wife shall make the following payments:

   (i)$1,070.00 per month into the Bank F mortgage account number ...20;

   (ii)$130.00 per month into the Bank F mortgage account ending ...31; and

   (iii)The sum of $260.00 per month as directed by the husband in writing with such monies to be utilised by the husband to pay council rates and insurance relating to D Street, Suburb E.

   (c)The husband and wife shall be restrained by injunction from withdrawing any monies from the accounts referred to in Order 5(b) or any other mortgage loan account held in the name of either the husband or the wife.

   (d)The husband shall pay the difference between the mortgage payments required and the amount paid in accordance with Order 5(b) in respect of the D Street, Suburb E property as they fall due.

   (e)The wife shall pay the water rates as and when they fall due.

   (f)The husband shall pay the council rates as and when they fall due and keep the D Street, Suburb E property insured.

6. Subject to Order (7) upon completion of the sale of the second property the money in trust shall be disbursed as follows:

   (i)50% plus $8,578.00 to the wife

   (ii)50% less $8,578.00 to the husband

7. The parties shall be equally responsible for any Capital Gains Tax payable by the husband as a result of the sale of the D Street, Suburb E property.

8. The wife’s solicitors shall retain the sum of $20,000.00 in trust pending the husband completing his tax return for the year in which the property is sold.

9. Within 7 days of the husband providing a letter from an accountant or tax agent verifying the amount of the Capital Gains Tax he has been assessed to pay the wife’s solicitor shall:

   (i)Pay to the husband the amount of the Capital Gains Tax.

   (ii)Pay the balance remaining in trust as to 50% to the wife and 50% to the husband.

10. Until completion of the sale of both the D Street, Suburb E and B Street, Suburb C properties the husband is restrained and an injunction is granted restraining him from withdrawing any monies from his Super Fund G save for the amount of $4,000.00 per month.

11. Upon completion of the sale of the second property the amount then remaining in the Super Fund G shall be divided between the parties as to 50% less $48.50 to the wife and 50% plus $48.50 to the husband.

12. If it is necessary for a splitting order to be made pursuant to the Family Law Act to facilitate Order (11) the wife’s solicitor shall prepare an appropriate order and forward it to the Trustee and to the husband’s solicitor.

13. Upon the Trustee having been accorded procedural fairness the wife’s solicitor may forward the draft orders to my chambers and unless the husband objects to the orders being made the orders will be made in chambers. If the husband objects to the orders being made the matter will be relisted for further consideration of the appropriate form of order.

14. Subject to these Orders and except for as otherwise provided, the wife will retain to the exclusion of the husband all other assets in her own name, possession and control, including but not limited to:

    (a)The wife’s right title and interest in her Motor Vehicle H;

    (b)Any cash standing to the credit of the wife in any savings or other account funds in any bank, credit union, or building society; and

    (c)Household contents and personal effects.

15. Subject to these Orders and except for as otherwise provided, the husband will retain to the exclusion of the wife all other assets in his own name, possession and control, including but not limited to:

    (a)The husband’s right title and interest in his Motor Vehicle J;

    (b)Any cash standing to the credit of the husband in any savings or other account funds in any bank, credit union or building society; and

    (c)Household contents and personal effects.

16. In the event that either party refuses or neglects or is unable to execute any instrument or document being an instrument or document the execution of which is provided for in these Orders or is necessary to put into effect the provisions of these Orders then at the request of the other party a Registrar of the Federal Circuit Court of Australia is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute any such instrument or document in the name of the party refusing or neglecting or being unable to so execute the instrument or document.

IT IS NOTED that publication of this judgment under the pseudonym Valence & Valence is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 248 of 2018

MS VALENCE

Applicant

And

MR VALENCE

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are property settlement proceedings arising out of a 40 year marriage according to the wife or a 30 year marriage followed by a 10 year separation under one roof according to the husband.

2. The parties are 67 and 70 and considering that it needs to be divided between them the asset pool is modest, worth in total about $712,000.00 in terms of assets which actually exist.

3. The wife proposed that she receive $450,000.00 cash from the non-superannuation pool and a splitting order in respect of the superannuation pool. If I correctly understand her application she is hoping to receive 100% of the husband’s superannuation or an additional $158,000.00.

4. This would result in the wife receiving about 85% of the pool which actually exists but her counsel submitted that this was just and equitable because as a result of the husband’s actions $361,000.00 had disappeared from the pool.

5. The husband proposed that the pool which actually exists be divided 70/30 in his favour. He submitted that his contributions exceeded the wife’s because of the contributions he made during the 10 year period of separation and that there should be a small s.75(2) adjustment in his favour because of his ongoing responsibility for the care of his grandchildren.

6. The husband said that his proposal was also just and equitable because it would enable him to retain the B Street, Suburb C property which was providing a home for his grandchildren. 

7. As is so often the case neither of the proposed outcomes are within a range of just and equitable and regrettably the parties have spent a small fortune trying to achieve these outcomes.  

8. The legal fees incurred by the wife to second day of the trial were $118,829.90 and by the husband were $57,656.00 and the trial did not conclude in that time.

9. The parties have thus spent at least $176,485.90, or about 25% of the value of the pool which actually exists, litigating their dispute.

10. They are 67 and 70 respectively and are both retired and they will never recover this money.

The evidence

1. The wife relied on her Amended Initiating Application filed on 21 February 2020, her Financial Statement filed on 19 December 2019, her Affidavits filed on 19 December 2019 and 21 February 2020 and the affidavits of her son Mr K filed on 21 February 2020 and her brother Mr L filed on 9 March 2020.

2. The husband relied on his Response filed on 9 March 2018, his Financial Statement and Affidavit filed on 25 February 2020 and the Affidavits of his daughter Ms M filed on 4 March 2020, his friend Mr N filed on 25 February 2020 and his friend Mr O filed on 26 February 2020.

Background

1. The husband and wife commenced a relationship in 1993 when they were 23 and 20 respectively and commenced cohabitation in 1975 when they married.

2. They went on to have three children: Mr P born in 1976, Mr K born in 1978 and Ms M born in 1981. Sadly Mr P died suddenly in 2011.

3. The parties physically separated on 31 October 2015 when the wife left the former matrimonial home at B Street, Suburb C and began living elsewhere. The husband asserted however that the parties had separated in March 2005 and had lived separated under one roof from then until 31 October 2015 and I will need to make a finding about the date of separation in due course.

4. The husband was employed from the commencement of cohabitation until he was made redundant in 2014.

5. The wife was engaged in a mix of paid employment and home duties until she left the home in October 2015. She retired from health care in 2000 but continued to do some paid work of various kinds for a period of time.  

6. The parties purchased and sold (or lost) two real properties before purchasing B Street, Suburb C in 2003. They lived in that home until the wife left on 31 October 2015.

7. In 2012 a property at D Street, Suburb E was purchased in the husband’s sole name. There was a dispute about the extent to which the wife was involved in the purchase, including the extent if any to which she contributed financially, and I will need to make findings about that in due course. The purpose of that purchase was to provide a home for Mr K and his family and they were still in occupation of the property at the date of trial.

8. In 2014 the husband received a redundancy payment of $277,684.40 and ceased work. He turned 65 in 2015 and was able to access the money in his superannuation funds, being $468,000.00 in Super Fund G and $174,506.00. Some of that money remains in the pool but the wife’s counsel submitted that the husband should be held to account for the fact that $361,000.00 had disappeared and I will need to consider that issue in depth later on.

9. After the wife left B Street, Suburb C on 31 October 2015 she commenced living in D Street, Suburb E with Mr K and his family.[1]

   [1] Affidavit of Mr K paragraph 13 and Affidavit of the wife filed on 19 December 2019 paragraph 8.

10. The husband remained in the B Street, Suburb C property with Ms M and her four children Ms R, S, T and U. Ms M has had many difficulties in her life and the husband and wife began caring for Ms R when she was a baby. Ms M and her children lived with the husband and wife for much of the decade between 2005 and 2015. 

11. After the wife left there were no discussions about a property settlement but on 1 December 2017 the parties were divorced on the husband’s application and on 29 January 2018 the wife filed an application for a property settlement.

12. The husband filed a response. The matter did not settle at a conciliation conference and in due course it was listed for trial.

13. The case ultimately turns on the determination of two issues:

    i)The date of separation and the implications of this for the assessment of contributions.

    ii)Whether there should be an add-back to the pool as a result of the $920,190.00 the husband received between 2014 and 2015 not being reflected in the pool.

The date of separation

1. It was not in dispute that the husband chose to go on a fishing trip at or about the time of the parties’ 30^th wedding anniversary in 2005 and that the wife was very upset about it because she believed that he had promised to take her to dinner and a show in Sydney and had reneged on the promise.

2. The husband said that while he was away the wife contacted him and told him the marriage was over. His fishing buddy Mr O gave evidence about the husband receiving a call from the wife and informing him that the wife had told him that she was moving out and the marriage was over. Mr N, the other fishing buddy on the trip, said that he recalled the husband receiving a text message and telephone calls during the trip which upset him.

3. I am satisfied that the wife did say words at that time to the effect that the marriage was over because she acted consistently with that by seeking legal advice from two family lawyers and bringing home a partially completed Application for Divorce and a Financial Statement with the front page filled in, signed by her and dated 2005.

4. The wife said that this all blew over but the husband said that the wife’s subsequent actions were consistent with her statement to him that the marriage was over. He said that she moved out of their bedroom and began to occupy the spare room and continued until to do so until she left the home on 31 October 2015. He said that she ceased doing household chores such as his laundry which she had done prior to this date.  He said that in response he ceased to put his wages into the joint account and advised his work that the parties were separated and that the wife should not be included on any invitations to work social events.

5. In support of his case that wife ended the marriage in 2005 the husband tendered extracts from a 2005 diary. Scattered throughout the year are entries referring to “Freedom” and other phrases consistent with an ongoing intention by the wife to end the marriage. He also tendered entries in a 2007 diary which included the following comments:

   Separation from a loveless farce of a marriage ½ of nothing is nothing but we will see who has nothing in the end! The last laugh goes to me for one.

6. He also provided an entry in a March 2015 diary which read:

   100 Pts
   D Street, Suburb E
   Separated under one roof
   Centrelink med certificate Before 2005 (sic)

7. Mr O gave evidence that prior to the 2005 fishing trip he and his wife had socialised with the husband and wife on several occasions and that after that they socialised only with the husband. Mr N said that he had not seen the husband and wife often socially as a couple after that trip.

8. The husband said that over the years he and the wife attended some events together such as Mr P’s funeral and the christening of Mr K’s child but he said that they were just keeping up appearances and that they did not sit with each other at the funeral.

9. Ms M, who lives with the husband and who is estranged from the wife, weighed in on the side of the husband and insisted that the parties did occupy separate bedrooms and lived separate lives after 2005.

10. The husband submitted that the court should place weight on the fact that when D Street, Suburb E was purchased in 2012 it was purchased in his sole name whereas the previous three properties purchased by the parties had been purchased in joint names. He said that he alone contributed financially to the purchase of D Street, Suburb E using money received from Mr P’s superannuation account as a deposit.

11. There are numerous decided cases touching on the issue of how separation is established, many of them decided in the early days of the Family Law Act in the context of divorce applications. They observe that the constituent elements of a matrimonial relationship are not fixed and can vary not only from marriage to marriage but also within a marriage with the passage of time.[2] However they also observe that separation does not necessarily involve the breakdown of every element of the former matrimonial relationship and that parties may have separated even though residual elements of their former relationship still exist.[3]

    [2] G & G (1978) FLC 90-498

    [3] Spanos & Spanos (1980) 90-871

1. The husband’s case was after the wife’s declaration in 2005 that she intended to divorce him they continued to do some things together but those were simply residual elements of the marriage. This included the fact that they continued to live under one roof; that they both attended family events such as Mr P’s funeral and the christening of Mr K’s son; that the wife sometimes ate the meals he cooked; and that he continued to provide some financial support for the household in which he, the wife, Ms M and her children resided.

2. The wife vehemently denied that the parties had separated. She could not deny going to the lawyers but she said that it all blew over and that the parties kept on living together as they had before. She denied that she moved out of the bedroom or ceased doing the husband’s laundry. She did not dispute that the husband ceased putting money into the joint account but said that this was not significant because he kept paying the mortgages and the bills just as he had when the money went into the joint account.

3. Mr K, who lives with the wife and has been estranged from the husband for several years, weighed in on the side of the wife and said that he had not noticed them sleeping in separate bedrooms. He gave evidence about social events the husband and wife attended together.

4. The evidence of most of the witnesses the parties called does not assist me to determine the issue in dispute.

5. The evidence of Mr K and Ms M must be treated with caution. Each child has a motive to provide evidence to assist the case of their preferred parent, particularly Ms M, because if B Street, Suburb C has to be sold because of the size of the husband’s entitlement Ms M and her children will lose their home.

6. The evidence of Mr O and Mr N is unhelpful. The friendship between the husband and Mr O arose out of their shared interest in fishing and there was no evidence of a close relationship between Mr O and his wife and the husband and the wife which ceased in 2005. Mr N’s evidence about socialisation with the husband and wife is too general to be useful.

7. The wife was somewhat evasive when questioned about the diary entries. She suggested that some were not in her handwriting and may have been inserted into the diaries by Ms M but there were occasions during cross-examination when she denied certain propositions put to her but then made concessions. However the diary entries are not in themselves clear evidence of a continuing separation between the husband and the wife as opposed to evidence of the wife’s dissatisfaction about some of the husband’s actions which she had expressed intermittently from the very early days of the relationship.

8. There are a number of pieces of evidence which undermine the husband’s case that the parties were separated throughout the period 2005 to 2015.

9. The husband’s evidence that the wife had no involvement in the purchase of D Street, Suburb E is not correct. The wife said that she and Mr K were both involved in the selection of this property and I might respond “well they would say that” but the wife also said that the property was purchased in the husband’s name for tax purposes because he was employed and the property could be negatively geared and the husband conceded in cross-examination that this had been a consideration.

10. Perhaps most importantly the wife was able to establish that she made a financial contribution to the purchase of D Street, Suburb E. I accept her evidence which was backed up by documents that she paid the stamp duty of $10,580.00 from the amount she received from Mr P’s superannuation. There is also the fact that in order to purchase the property it was necessary for the parties to jointly borrow $38,948.00 and permit the lender Bank F to secure a second mortgage over the B Street, Suburb C property.

11. Mr L, the wife’s brother, gave evidence on behalf of the wife. He lives in Queensland and said that he had visited the husband and wife on occasions between 2005 and 2015 and stayed at their home and did not notice anything different about their relationship. He maintained that they shared a bedroom. He said that the husband and wife visited him and his wife in Queensland in 2011 and shared the same bedroom and seemed to him to be a couple.  He said that they also stayed with him in 2015 when they came up for 10 days coinciding with the funeral of the wife and Mr L’s mother.

12. The husband agreed that he and the wife shared a bedroom at Mr L’s home but said that this was only because there was nowhere else for them to sleep. However Mr L’s evidence is important because although he did not have many opportunities to observe the husband and wife he is a member of their family and it is curious that if they were indeed separated he had no inkling of it.

13. There is also the fact that the family events the husband and wife continued to attend included not just Mr P’s funeral and Mr K’s child’s christening but the husband’s niece’s wedding in Queensland and the wife’s mother’s funeral in Queensland.

14. The wife commented that the husband was caring toward her in 2011 when she broke her wrist and this evidence was not challenged and the husband and wife were both involved in the court case not long before October 2015 over whether Ms M’s youngest child U could remain in her care.

15. Finally there was no dispute that prior to the wife leaving Suburb C the parties had planned a trip to Country V to sprinkle Mr P’s ashes at a location used in one of his favourite movies. The husband said that he had purchased tickets to Country V for himself and the wife and had also booked accommodation. He claimed that it was to be separate accommodation but nevertheless a joint trip was planned. It never took place because the wife left the former matrimonial home just before the parties were due to go and the husband went on his own and also did a trip through Region W.

16. I cannot be satisfied on the balance of probabilities that the parties separated in 2005 and remained separated under one roof for the next 10 years. I cannot be satisfied on the balance of probabilities that the wife moved out of the parties’ bedroom in 2005 but even if I could, the sharing of a bedroom was only one element of the marriage between these parties.

17. The reality of this marriage was that the elements of it varied over time and I cannot be satisfied on the balance of probabilities that the parties were separated until the wife left the former matrimonial home on 31 October 2015 and did not return.

The assets, liabilities and superannuation

1. The parties have the following assets:

Description	Ownership	Value
B Street, Suburb C	Joint	$600,000.00
D Street, Suburb E	Husband	$460,000.00
Motor Vehicle H	Wife	$22,000.00
Motor Vehicle J	Husband	$6,500.00
Boat and Trailer	Husband	$5,000.00
Total	$1,093,500.00

1. The parties agreed about the value of every item in the balance sheet except for the wife’s motor vehicle which the wife estimated to be worth $22,000.00 and the husband estimated to be worth $25,000.00.

2. The wife’s counsel submitted that perhaps I should simply halve the difference but I am going to include the vehicle in the pool at $22,000.00. There is no admissible evidence about its value and that is the wife’s admission against interest.

3. The wife’s counsel contended that there should be an add-back to the pool. He was coy about suggesting a figure but submitted that the court should have regard to the fact that $361,000.00 of the amount of $920,190.00 which the husband received between 2014 and 2015 “had gone somewhere” and that as this was solely the result of the husband’s actions the court should consider adding an amount back to the pool so the wife in effect received a share of the missing money.

4. Adding amounts to the pool as notional assets can be a useful tool to ensure that justice and equity is done between parties and for reasons set out at length in AJO & GRO the following categories of cases often attract a strong add-back argument:

   i)Where the parties have expended money on legal fees.

   ii)Where there has been a premature distribution of matrimonial assets.

   iii)Where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.[4]

   [4] AJO & GRO (2005) FLC 93-218

5. However whether an amount is added back is within the discretion of the court and in Trevi & Trevi Murphy J emphasised that parties do not go into a state of suspended economic animation upon separation and that reasonably incurred expenditure should not attract an add-back remedy.[5]

   [5] Trevi & Trevi [2018] FamCAFC 173

6. Turning to the facts in this case there was no dispute that between 2014 and 2015 the husband received or became entitled to three lump sums:

   ·    $277,684.00 which he called a redundancy package and which he received in 2014 when he ceased work.

   ·    $174,506.00 which he withdrew from his Super Fund X in 2015 shortly after he turned 65.

   ·    $468,000.00 which was the balance of his Super Fund G when he turned 65.

7. The husband and wife were still together when each of these amounts was received.

8. The husband set out in his affidavit how he used his redundancy payment of $277,684.00 and it included purchasing the motor vehicle which is in the pool for the wife for $38,500.00 and paying $180,000.00 off the mortgage secured over B Street, Suburb C.

9. The husband said that he also used the money to pay legal fees associated with care proceedings for the grandchildren and used some of it to do improvements to the D Street, Suburb E and B Street, Suburb C properties. He also said that he made gifts to his children and grandchildren including paying for a holiday and car repairs for Mr K and that he purchased newborn items and car seats for T and U.

10. The husband said that at the end of all this he had $35,000.00 left and that he used this for living expenses between 2014 when he ceased work and 2015 when he turned 65 and was able to apply for an age pension and access his superannuation.

11. The wife’s counsel did not challenge the husband’s evidence about how he used this money but he was critical of him for spending $35,000.00 in five months which equated to $7,000.00 per month. However the husband was paying the B Street, Suburb C and D Street, Suburb E mortgages and he and the wife were supporting their grandchildren and at this time the wife was also living in the home and I do not accept that the husband engaged in profligate spending.

12. The $277,684.00 was all spent prior to separation and there is no evidence which would allow me to find on the balance of probabilities that any of the expenditure was unreasonable or represented waste or a premature distribution of matrimonial assets.

13. In 2015 the husband accessed his Super Fund X and he applied all of it to the B Street, Suburb C mortgage reducing it to $25,608.00. This expenditure also cannot be criticised.

14. In 2015 the husband was also able to access his Super Fund G which was worth $468,000.00.

15. The husband has made three lump sum withdrawals from this fund. In 2015 he withdrew $23,000.00 which he said was paid as to $10,000.00 to the solicitor who represented him and the wife in the care proceedings, as to an undisclosed amount to pay for a holiday in Queensland visiting his brother and as to $1,000.00 as a gift to his niece. He also said that it was also used to pay medical expenses for his eldest grandchild Ms R.

16. He withdrew $80,000.00 on 12 November 2015 which was used to pay for a holiday in Country V which he and the wife had been planning because they wanted to scatter Mr P’s ashes at a location used in a recent movie. There were also plans to travel in Region W. The wife left the relationship on 31 October 2015 and did not take part in the trip but the husband went on the trip as planned.

17. The husband also referred to spending $14,000.00 on a cataract operation.

18. It is likely that the holiday cost a considerable amount but it was planned before separation.[6] Parties are permitted a level of discretionary spending without it being branded waste or a premature distribution of matrimonial assets. I class the holiday of a lifetime in that category and the husband cannot be criticised for arranging the cataract operation.

    [6] See wife’s affidavit filed on 19 December 2019 paragraph

19. The final lump sum was $50,000.00 which the husband withdrew on 15 December 2017. In his affidavit he said that he used that money to pay ongoing legal fees, rectification work on the B Street, Suburb C property and medical and surgical expenses for himself and his grandchildren.

20. The husband said that he had also used about $8,300.00 to purchase a vehicle for Ms R’s 18^th birthday and pay costs associated with the vehicle.

21. No information was provided about how much of the $50,000.00 was used to pay legal fees or what the legal fees were for. The husband was the applicant for the divorce which was granted in December 2017 but it is unclear if he incurred any legal fees in connection with that.  

22. The husband cannot be criticised for the other expenditure.

23. The Super Fund G has also reduced because in 2015 the husband arranged to receive a pension of $3,000.00 per month and in December 2017 this increased to $4,000.00 per month. The wife’s counsel calculated that the husband had received $204,000.00 between 2015 and June 2020.

24. The husband did not do anything wrong in arranging to be paid a pension from his superannuation. It commenced when the marriage was still intact and the wife as well as the husband benefitted from it until October 2015 because the husband continued to pay both mortgages and provide money to meet the costs of the household. After that the wife continued to benefit from it insofar as it went to pay the D Street, Suburb E mortgage and the rates and insurance on D Street, Suburb E.

25. I do not accept that when the wife left the marriage the husband should have asked her if it was still alright for him to continue to draw the pension. I also do not accept that after the wife left the husband should carefully have conserved the remaining money pending the wife proposing a property settlement.

26. The fact that the husband has been drawing the pension has resulted in the Super Fund G balance reducing but this does not successfully attract an add-back argument.

27. The final issue raised by the wife’s counsel was that while it was conceded that the husband used his lump sum payments to reduce the B Street, Suburb C mortgage in 2014 and 2015, the mortgage balance was $53,786.00 at 31 October 2015 and it was now $191,454.00, an increase of $137,668.00.

28. The husband’s plaintive cry during cross-examination was that the money “was used because it had to be used” and I accept his evidence.

29. After the husband turned 65 in 2015 he began to receive the full aged pension and he also began to receive $3,000.00 per month from his superannuation. He did not declare his superannuation entitlement to the Department of Human Services (“DHS”) and continued to receive the full age pension until September 2017. His pension was reduced when DHS found out about the payment he was receiving from his superannuation fund and he currently receives $182.00 per week according to his according to his affidavit or $172.00 per week according to the financial statement he affirmed on the same day.

30. At or about the time his age pension was reduced the husband increased his superannuation pension to $4,000.00 per month.

31. The loan repayments on the B Street, Suburb C and D Street, Suburb E mortgages are currently $3,706.19 per month. Other bills for the household also have to be paid including groceries, private health insurance for the grandchildren and all the other incidentals which go with keeping a house in good order and repair and clothing, educating and entertaining children.

32. Ms M and her children Ms R (19), S (16), T (7) and U (5) continue to live at B Street, Suburb C. Ms M and the husband both said that Ms M made a contribution towards the costs and outgoings of the household. Ms M said that she paid utility bills and made a contribution to the B Street, Suburb C mortgage. Some amounts have also come in historically from Mr K who occupies B Street, Suburb C. However there are three children under the age of 18 in the husband’s home and the youngest two have special needs. The mortgage payments alone are high and it is very easy to understand why the husband would not be able to live on the income available to him.

33. I do not accept that there should be any add-back simply because the B Street, Suburb C mortgage balance has increased since October 2015.

34. I do consider however that $27,656.00 which represents the husband’s paid legal fees should be added back.[7]

    [7] Exhibit “E”.

35. The husband admitted that $14,000.00 had been drawn from the B Street, Suburb C mortgage to pay his lawyers. In the letter his solicitors provided at the request of the court about his paid and unpaid legal fees it was stated that information about the source of the funds used to pay the balance of the legal fees had been sought from the husband. That information was never provided to me and it is difficult to see how the husband could have obtained this money except by drawing on the B Street, Suburb C mortgage. I am therefore satisfied that the full amount of $27,656.00 should be added back.

36. The parties thus have assets of $1,121,156.00 as follows:

Description	Ownership	Value
B Street, Suburb C	Joint	$600,000.00
D Street, Suburb E	Husband	$460,000.00
Motor Vehicle H	Wife	$22,000.00
Motor Vehicle J	Husband	$6,500.00
Boat and Trailer	Husband	$5,000.00
Addback: Husband’s paid legal fees	Husband	$27,656.00
Total	$1,121,156.00

1. The parties have the following liabilities:

Description	Ownership	Value
Bank F Mortgage ending ...45 (B Street, Suburb C)	Joint	$191,500.00
Bank F Loan ending ...31 (B Street, Suburb C)	Husband	$38,095.00
Bank F Loan ending ...20 (D Street, Suburb E)	Husband	$307,125.00
Total	$536,720.00

1. The husband was initially seeking to have included as relevant liabilities a Visa Card debt of $16,476.00 and a debt to the DHS of about $9,700.00.

2. The Visa Card debt was accrued post-separation and the DHS debt arose because the husband failed to inform them about his Super Fund G pension and received more aged pension than he was entitled to between 2015 and 1 September 2017. During submissions the husband’s counsel conceded that these amounts should not be included in the balance sheet as debts in which the wife was required to share.

3. If D Street, Suburb E is sold the husband may well be required to pay Capital Gains Tax. He provided evidence from an accountant that if it sold for $460,000.00 he would be taxed on a capital gain of $47,000.00. No information was provided about what that would mean for him in dollar terms.

4. I cannot take that liability into account at this stage of the exercise but as discussed in submissions it will need to be taking into account in drafting orders.  

5. The parties have the following superannuation:

Description	Ownership	Value
Super Fund G	Husband	$154,722.00
Super Fund Y	Wife	$97.00
Total	$154,819.00

1. The parties thus have non-superannuation assets worth $584,436.00 and superannuation worth $154,819.00, a total of $739,255.00.

The applicable law

1. S.79 (1) of the Family Law Act 1975 empowers the court to make such orders as it considers appropriate altering the parties’ interests in property.   

2. S.79 (2) provides that the court shall not make an order under this section unless it considers that it would be just and equitable to do so.

3. In Stanford & Stanford[8] the High Court stressed that when an application for a property settlement was made the court must first identify the parties interests in property and then consider whether it was just and equitable to make an order altering those interests. It stressed that this question could not be answered simply by considering whether a party had made contributions as set out in s. 79(4) of the Family Law Act. 

   [8] Stanford & Stanford (2012) FLC 93-495

1. I am satisfied that it is just and equitable to consider making property settlement orders in this case as it clearly comes within the following situation referred to in Stanford:

   In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship.  It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship and the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).  

2. I intend to take the usual steps to resolve the question of what particular alteration of interests would be just and equitable and those steps are:

   i)to assess the contributions of the parties under s79(4)(a), (b) and (c) and to express those contributions as a percentage;

   ii)to consider the matters in s.79(4)(d), (e), (f) and (g), which includes the matters in s.75(2) so far as they are relevant, and determine whether any adjustment should be made as a result to the contribution based entitlements;

   iii)to consider the effect of those findings and resolve what orders are just and equitable in all the circumstances of the case.

Contributions

Initial contributions

1. Neither party had any significant assets at the commencement of cohabitation. The wife did not identify any assets and the husband said that each party had a motor vehicle.

Contributions during the marriage

1. The husband was employed throughout the marriage and made his income available for family purposes. Even after he ceased to deposit his income into the joint account in 2005 he continued to pay the mortgage and meet other household expenses just as he had before.

2. The wife was employed as a health care worker when the parties commenced living together. She went on maternity leave in the first half of 1976 and remained out of the paid workforce until 1986 when the parties’ youngest child Ms M commenced school. She then returned to work part time.

3. The husband said that the wife studied between 1990 and 1996 and then returned to work. Even if this is correct it makes no difference to the overall assessment of contributions.

4. The wife retired from health care in 2000, around the time that the parties decided to care for Ms M’s eldest child Ms R. She said that she thereafter did some short term work including working as a customer service officer at a local business and working for Employer Z but she was not specific about when that started and ended. Ms M said that the wife last worked in paid employment in 2011 but nothing turns on whether this is correct.

5. The wife was the primary homemaker and parent between mid-1976 when she went on maternity leave prior to Mr P’s birth and 1986 when she returned to the work part time after S commenced school. She otherwise carried out parenting and homemaker tasks throughout the childhood and adolescence of the children. She carried out homemaker tasks until the marriage ended and also provided care for her grandchildren from 2000 until separation in 2015.

6. I accept that the husband did his share of parenting and that he did some housework. He said and I accept that after the wife returned to work in 1986 he and the wife would work opposing shifts with him working during the day and the wife at night, so that one of them was always available to care for the children. I also accept that the husband as well as the wife provided care for the grandchildren.

7. The parties purchased a number of real properties during the marriage.

8. In 1974 they purchased AA Street, Suburb BB but it was repossessed in 1977 after they fell behind with the mortgage repayments. Each party blamed the other for this but I cannot make a finding about why it occurred and nothing turns on it.

9. In 1987 they purchased CC Street, Suburb DD and in 2003 they sold CC Street, Suburb DD and bought B Street, Suburb C.

10. I am satisfied that the parties both contributed financially and non-financially to renovations which were done to these properties.

11. A number of lump sums came in during the marriage but none of them had their genesis in any work done by a party prior to the marriage or any injury suffered by a party prior to the marriage.

12. In 1987 the wife received compensation of either $87,000.00 according to the wife or $74,707.00 according to the husband for a knee injury suffered in 1982. She said that $49,000.00 of this money went into purchasing CC Street, Suburb DD. The husband said that a much smaller amount went into CC Street, Suburb DD and he was not sure what happened to the rest. I cannot make a finding about this but there was no evidence that the money was wasted.

13. In 1997 the wife suffered whiplash in a motor vehicle accident. In 2003 she received $35,000.00 compensation for this injury and used the money to pay out the loan on a motor vehicle she had recently purchased.

14. In 2012 the husband and wife received $91,000.00 from the superannuation fund of their son Mr P who died suddenly and tragically and it was paid as to half to the husband and half to the wife. The husband used his share to pay the deposit for the purchase of D Street, Suburb E and the wife used $10,850.00 of her share to pay the stamp duty for this purchase. The bulk of the money for the purchase of D Street, Suburb E was borrowed and Bank F took a second mortgage over B Street, Suburb C for part of the purchase price.

15. The wife said that the balance of the money she received was used to pay household expenses and legal fees arising out of court proceedings over the care of U which had been initiated by the Department of Family & Community Services. These assertions were not disputed at trial.

16. I have discussed earlier what happened to the three lump sums the husband received between 2014 and 2015.

Post Separation Matters

1. The husband has lived at B Street, Suburb C since separation and has met the mortgage payments which are currently $1,792.00 per month. He has also paid the rates, insurance and other outgoings subject to Ms M providing some assistance to meet these expenses.

2. The husband has had sole occupancy of the jointly owned B Street, Suburb C property since separation and he is not entitled to credit because he has made the mortgage payments and paid other expenses nor is he entitled to credit for paying for any repairs or renovations. On the husband’s own evidence the money used to pay for renovations came from the lump sums he received or from drawing down on the B Street, Suburb C mortgage creating an increased liability for the wife as well as himself.

3. The husband has also been paying the two mortgages taken out when D Street, Suburb E was purchased. He said that when Mr K first occupied the property he paid rent of $1,200.00 per month. He said that the interest only mortgage payments were $1,400.00 per month and that he paid the shortfall and also paid the rates and insurance and this evidence was not disputed.

4. The husband said that in March 2018 Mr K reduced his payments to $600.00 per month. He said that he then had to use the redraw facility to meet the mortgage payments.

5. It would appear that at or about this time the mortgage payments increased to $1,702.00 per month as the husband began paying principal and interest.

6. The husband said that the wife then placed a stop on him using the redraw account which caused him financial hardship.

7. In December 2019 the husband filed an application in the NSW Civil & Administrative Tribunal (NCAT) seeking to evict the wife, Mr K and Mr K’s family from D Street, Suburb E.

8. On 3 February 2020 NCAT ordered that the wife and Mr K pay rental arrears of $14,900.00 and that they vacate the property.

9. The wife and Mr K did not vacate the property and the husband applied for a warrant of possession.

10. The wife had filed an application in a case in this court seeking to prevent the eviction and on 10 March 2020 I made orders by consent that the wife pay a total of $1,460.00 per month for the mortgage and outgoings and that pending further order the husband be restrained from taking action to evict the wife from the property. It appears from the evidence at trial that these payments may not have been fully made but no point was made about this during submissions.

11. The husband is not entitled to credit because he has been making the payments on D Street, Suburb E. Again he has been using money accrued during the marriage to do so and therefore the wife has been indirectly making a contribution.

12. The wife has benefited from this expenditure however. She has made at best a moderate contribution to her housing costs from her aged pension[9] and this considerably undermines any argument she might have for the husband being held to account for a diminution in the pool since separation.

    [9] Wife’s affidavit filed on 21 February 2020 paragraphs 59 and 61.

Assessment of contributions

1. The parties’ contributions during the marriage were equal. They both worked in paid employment and carried out homemaker and parenting tasks in accordance with their aptitude and availability. There were no initial contributions and the lump sums which came in during the marriage all derived from work done or accidents occurring during the marriage.

2. Nothing which has happened in the post separation period justifies an adjustment in favour of one party and I am satisfied that contributions should be assessed as equal.

3. This entitles each party to $369,627.50.  

4. It is important for the husband to note that even if I had determined that he and the wife separated in 2005 it may not have made a difference to this assessment.

5. The husband’s solicitor proposed that contributions be assessed as 65% to 70% in the husband’s favour because of the husband’s contributions between 2005 and 2015 but this would have created a differential of either $221,776.50 or $295,702.00 between the parties’ entitlements.

6. Even if the husband was given credit on an arithmetical basis for the entirety of the value of his redundancy and his superannuation attributable to 9 or 10 years of separation he would only be entitled to an additional $186,421.00 and there would be no likelihood of him receiving credit for anything like that amount.

7. The parties lived under one roof between 2005 and 2015 and the contributions they made during this period were much the same as before. The husband ceased putting money into the joint account but he continued to pay the mortgage and outgoings and to provide some financial support for the wife. The wife made the financial contribution she was able to make and she continued to carry out a role as homemaker. She also continued to conduct the agreed joint enterprise of caring for the parties’ grandchildren and the husband was able to go to work unfettered by a need to take on this role during the day.  

8. The findings about the post-separation period would be the same and an outcome of 50/50 would have been be arguable even if the husband’s date of separation had been accepted.

S. 79(4) (d) (e) (f) and (g) matters

1. I am required to consider the matters in s. 79(4) (d) (e) (f) and (g) of the Family Law Act. The only relevant subsection is (e) which requires the court to have regard to the matters in s. 75(2) of the Act.

S. 75(2) matters

1. The wife is 67. She is retired and is in receipt of an age pension of $466.70 per week.

2. The wife went into considerable detail in her affidavit about her health issues but she has been out of the workforce for about 9 years and even absent that evidence I would have readily accepted that she had no capacity for paid employment.

3. The wife is entitled to $369,627.50 on the basis of contributions. Sadly she owes legal fees of at least $118,829.90 which means that the amount she can expect to receive is no greater than $250,797.60 and that will be affected, probably negatively, by the impact of the actual sale price of the properties compared to their valuations, the selling costs and the allowance which will have to be made for the capital gains tax payable by the husband.  

4. If the value of the wife’s motor vehicle is deducted then subject to those same considerations she can expect to receive $228,797.60 once her lawyers are paid.  

5. Pursuant to S.75 (2) (o) of the Family Law Act the court can take into account any fact or circumstance which the justice of the case requires to be taken into account and the wife’s counsel submitted that if the court declined to add a sizeable amount back to the pool it should consider making an adjustment in the wife’s favour pursuant to s.75 (2) (o) because of the diminution of the pool between separation and the date of trial.

6. This would not be appropriate. I have added back an amount for paid legal fees but not only am I satisfied that the balance of the money is not  “missing” because of waste or premature distribution of the matrimonial pool to the husband, the wife received some benefit from the “missing” money in the form of maintenance and repairs being done to the real properties, the mortgages and outgoings being paid including on the property in which she was living and her grandchildren continuing to be provided with financial support without cost to her.

7. The husband is 70. He retired in 2014. He also has health issues but again I readily accept that he has no capacity for paid employment.

8. The husband is entitled to $369,627.50 on the basis of contributions. His legal fees are not quite as high as the wife’s but he still owes at least $30,000.00.  If this is all there is to it he will be left with $339,627.50. If the value of his boat, his motor vehicle and the add-back for paid legal fees are deducted the husband can expect to receive $300,471.50 subject to the same considerations about the impact of selling costs and the actual sale prices on the amount he receives.

9. At the time of trial the husband had two additional debts, a Visa Card debt of $16,476.00 and a debt to DHS of about $9,700.00. They were not included in the balance sheet but they remain debts of the husband. They are the kind of debts however which can often be paid off by instalments rather than paid in a lump sum.  

10. The husband’s solicitor submitted that the husband had an ongoing financial and non-financial responsibility for his grandchildren the youngest of whom are 7 & 5 and have special needs and that this should attract and adjustment in his favour.

11. There is no evidence that the husband has a legal obligation to support these children. There were Children’s Court proceedings but I was not provided with any details about them or any orders which had been made and the husband is not receiving any Centrelink payments which suggest that the children are legally in his care.

12. The only inference open to me is that Ms M is the person legally obliged to support them and s.75 (2) (d) therefore does not apply.

13. The husband feels a strong responsibility to support these children because he and the wife took on that responsibility from the time of Ms R’s birth. They acted on it over the course of 10 years and the husband has continued to provide support for the grandchildren since separation as has the wife indirectly because of the source of funds used to support them.

14. The wife is estranged from Ms M however and in addition it seems unlikely that the small amount she will receive from these proceedings will enable her to help her grandchildren. The husband on the other hand has a strong bond with Ms M and is likely to continue to support them if he can.

15. I could take this into account under s.75 (2) (e) or (o) but the children have a mother who is legally obliged to support them and who at the time of trial was employed. The pool is small and when it is divided between the parties and legal fees are taken into account each party will be left with little enough and in the exercise of my discretion I do not intend to make an adjustment in favour of the husband because of this issue.

16. Nothing else would attract an adjustment to the parties’ entitlements on the basis of contributions and each party remains entitled to $369,627.50.

The orders

1. Making orders in this matter presents a challenge because the proposals of both parties about outcomes were wide of the mark and they both proposed orders which fitted with their proposed outcomes.

2. The orders the husband proposed in his response were that the wife transfer her interest in the B Street, Suburb C property to him and that the parties sign all necessary documents required to discharge the mortgage over B Street, Suburb C and replace it with a mortgage in favour of the husband. He proposed that contemporaneously with this he pay the wife $116,500.00. By implication he proposed that he retain D Street, Suburb E and his Super Fund G entitlement.

3. On the outcome I have arrived at the husband would have to pay the wife $347,627.50, not $116,500.00 if he wanted to keep B Street, Suburb C, D Street, Suburb E and his superannuation.

4. The husband is 70. He did not provide any evidence about his borrowing capacity and there would have to be some uncertainty about whether he would have been able to persuade a bank to refinance the total mortgage of $229,595.00 which is secured over B Street, Suburb C or even the $191,500.00 which pertains to B Street, Suburb C alone, let alone be able to borrow more to pay the wife.

5. Another difficulty is that if he used his Super Fund G entitlement to partially pay the wife his income of $4,000.00 per month would disappear and he would need to service a substantial mortgage from his age pension.

6. The equity in D Street, Suburb E is $152,875.00. The wife’s entitlement could not be completely met by giving her the equity in D Street, Suburb E plus the husband’s superannuation but it would go close and an option would be for me to order that the wife receive these two amounts in full settlement of her claim on the basis that justice and equity favours an outcome which would see the husband being able to retain B Street, Suburb C.

7. That might be a solution if the wife wanted to keep D Street, Suburb E but she does not. She proposes that it be sold and it would be unjust if her entitlement alone was reduced by selling costs and an amount necessary to be set aside to pay the husband’s capital gains tax and if she alone had to bear the loss if the property sold for less than the valuation.

8. It would also mean that the husband would have to attempt to refinance the B Street, Suburb C loan and pay the mortgage payments when his only income was the age pension.

9. It is regrettable that both properties have to be sold. The value of each parties’ entitlement will be considerably reduced as a result of selling costs and the capital gains tax payable on D Street, Suburb E. However the husband did not suggest that he be given time to investigate ways in which he could keep B Street, Suburb C if the court did not make the findings he proposed about percentages and I am satisfied that the only appropriate course is to order the sale of both real properties and I have drafted Orders to that effect.

10. I also intend to order that the superannuation be divided evenly between the parties.

11. Leaving aside all other issues the husband is entitled to $367,627.50 and he will receive it made up of:

Description	Value
B Street, Suburb C	$600,000.00
D Street, Suburb E	$460,000.00
Bank F Mortgage ending ...45 (B Street, Suburb C)	($191,500.00)
Bank F Loan ending ...31 (B Street, Suburb C)	($38,095.00)
Bank F Loan ending ...20 (D Street, Suburb E)	($307,125.00)
Less amount payable to the wife on the sale of the real properties:	($270,218.00)
Motor Vehicle J	$6,500.00
Boat and Trailer	$5,000.00
Husband’s paid legal fees	$27,656.00
Super Fund G	$77,409.50
Total	$369,627.50

1. The wife will be entitled to:

Description	Value
From the sale of the properties	$270,218.00
Motor Vehicle H	$22,000.00
Super Fund Y	$97.00
Super Fund G	$77,312.50
Total	$369,627.50

1. This is however subject to a small amount of the sale proceeds being retained until the husband’s capital gains tax on D Street, Suburb E is assessed. I have picked a figure of $20,000.00 which is almost certainly too high but after the CGT is assessed the balance can be divided between the parties.

2. This is also subject to the fact that I intend to order that until the properties are sold the husband retain control of his superannuation and that both parties continue to comply with the interim orders made on 10 March 2020. To do otherwise would create a risk of the bank taking recovery action or imposing penalties because the mortgage payments are not made. Upon completion of the sales the amount in the Super Fund G can be divided between the parties.

Conclusion

1. The saddest thing about this case is that the parties have chosen to spend such a vast amount of money litigating their dispute.

2. It is also sad that they will both very likely become long term renters instead of property owners but that is the reality of them having such a small pool to divide.

3. I am satisfied that the outcome is just and equitable.

I certify that the preceding one hundred and seventy three (173) paragraphs are a true copy of the reasons for judgment of Judge Terry

Associate:    

Date:             28 August 2020