VMC & LVC

[2005] FMCAfam 348

FEDERAL MAGISTRATES COURT OF AUSTRALIA

VMC & LVC [2005] FMCAfam 348

FAMILY LAW – Property – long marriage – where husband alleges parties entered into informal property agreement – informal agreement does not establish an estoppel or oust the courts jurisdiction – agreement not established – nor did wife act so as to allow husband to maintain belief there was agreement – superannuation – nature of contributions towards superannuation discussed – where at separation a non–employee spouse has contributed to the capital sum held in superannuation, and the fund continues to grow, this contribution continues after separation, albeit in most circumstances to a lesser degree than pre–separation – there is no presumption of equality irrespective of the length of the union.

Family Law Act 1975, ss.74, 75, 79, 87
Child Support (Assessment) Act 1989 (Cth)

In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626
In the Marriage of Ferraro (1993) FLC 92-335

In the Marriage of Clauson (1995) FLC 92-595
Russell v Russell (1999) FLC 92-877
Woodcock v Woodcock (1997) FLC 92-739

Burgoyne (1978) FLC 90-467
In the Marriage of Dupont (No.3) (1987) FLC 91-103
Candlish & Pratt (1980) FLC 90-123
Coghlan [2005] FamCA 429
Hickey and Hickey and AG for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143
Biltoft (1995) FLC 92-614
Chorn & Hopkins (2004) FLC 93-204
Farmer & Bramley (2000) FLC 93-060
Querasimu (1999) FamCA 1314
Parshen v Parshen (1996) FLC 92-720
Figgins (2002) FLC 93-122
In theMarriage of Rainbird (1977) FLC 90-256
Gosper (1987) FLC 91-818
Kessey (1994) FLC 92-495
Pellegrino (1997) FLC 92–789
Pierce v Pierce (1999) FLC 92-844
Hauff (1986) FLC 91-747
Wilkinson [2005] FamCA 430
Tomassetti (2000) FLC 93-023
Mallet (1984) 156 CLR 605

Applicant: VMC

Respondent: LVC

File Number: PAM2609 of 2004

Judgment of: Ryan FM

Hearing date: 30 May 2005

Date of Last Submission: 20 June 2005

Delivered at: Parramatta

Delivered on: 11 July 2005

REPRESENTATION

Counsel for the Applicant: Mr P Campton

Solicitors for the Applicant: Matthews Folbigg

Counsel for the Respondent: Mr M. Twigg

Solicitors for the Respondent: Adrian Twigg & Co.

ORDERS

1. Within three months of the date of these orders the husband shall pay to the wife the sum of two hundred and seventy-nine thousand four hundred and twenty five dollars ($279,425).

2. Simultaneously upon compliance by the husband with Order (1) the wife shall do all acts and execute all documents as are necessary to transfer to the husband the whole of her right, title and interest in the property situate at and known as “Crofton”, Conimbla in the state of New South Wales.

3. Simultaneously, upon compliance by the wife with Order (2), the husband shall give the wife a discharge of mortgage in relation to the Westpac mortgage secured against “Crofton” or, alternatively, a release from Westpac Bank in relation to her liability pursuant to the mortgage in registrable form.

4. In the event the husband fails to comply with Orders (1) and (3) the parties do all such acts and execute all such documents as may be required to effect a sale of the property situate and known as “Crofton”, Conimbla in the state of New South Wales to be sold by private treaty at a price agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee.

5. Upon the completion of the sale proceeds of the sale be applied as follows:

   (a)To pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the matrimonial home.

   (b)An amount sufficient to pay any capital gains tax liability imposed on either party.  In this regard the parties shall jointly retain an accountant who shall calculate the capital gains tax payable (if any) in relation to the sale.  The amount calculated shall be retained in the husband’s solicitor’s trust account or controlled money account until each party has been assessed by the ATO for their personal taxation in the relevant tax year.  The amount assessed shall be released by the husband’s solicitor to those parties liable to pay CGT.  Any balance remaining shall be distributed 60 per cent to the husband and 40 per cent to the wife.

   (c)40 per cent to the wife.

   (d)Balance then remaining to the husband from which the husband shall immediately pay to the wife the sum of $47,876.

6. In the event Crofton has not been sold three (3) months from the date Order (4) becomes operative the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction of the property upon the following terms:

   (a)The auctioneer shall be a real estate agent;

   (b)The reserve price shall, unless agreed upon by the parties, be as proposed by the auctioneer.

   (c)That auction will take place within three months of the husband failing to comply with Order (4).

7. Each party has the right to bid at the auction.

8. Upon payment to the wife of the monies due pursuant to Order (1) the wife shall simultaneously transfer to the husband all of her right title and interest in any jointly held shares in IIG (Integrated Investment Group).

9. Pursuant to s.90MT(4) of the Family Law Act 1975 in respect of the husband’s membership of Westpac Staff Superannuation Fund VMC is allocated a base amount of $60,136 out of the interest held by the husband and the husband’s entitlement is correspondingly reduced.

   (a)The operative time is 30 May 2005.

   (b)This order has effect from the operative time.

   (c)This order binds the trustee of the Westpac Staff Superannuation Fund or trustees from time to time of the fund.

10. The wife shall, within twenty one days of the date of these orders notify in writing the trustees of Westpac Superannuation, of:

    (a)The name of the trustee;

    (b)The name of the fund;

    (c)The address of the fund.

    which she nominates to receive the base amount.

11. Pursuant to Regulation 14F of the Family Law (Superannuation) Regulations 2001 and subject to the Act, any payments from the husband’s superannuation interests made after the trustee has rolled over or transferred the base amount to the superannuation fund of the wife’s choice, are not splittable payments as between the husband and wife.

12. The wife or her administrators, executors, beneficiaries, heirs or assigns shall be entitled to payment of entitlements pursuant to this order on satisfying a condition of release in Regulation 7A.07(3) SISR, and to facilitate payment to the wife or her administrators, executors, beneficiaries, heirs or assigns in the event she or they are reliant on the husband satisfying a condition of release in order to be eligible to receive her entitlements, the trustee of Westpac Superannuation shall notify the wife in writing immediately of the happening of a condition of release.

13. The husband shall, within seven days of these orders do all acts and things necessary to serve a copy of these orders upon the trustee of Westpac Superannuation.

14. Within seven days each solicitor shall uplift all documents produced under subpoena and return the documents to their own.

15. Unless an appeal is lodged, at the expiration of one calendar month all exhibits shall be returned to the person who tendered the documents.

16. Subject to any application for costs all outstanding applications are dismissed.

17. Any costs application shall be made within 21 days and listed by arrangement with my Associate. 

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
parramatta

PAM2609 of 2004

VMC

Applicant

And

LVC

Respondent

REASONS FOR JUDGMENT

1. These are proceedings for the adjustment of property pursuant to s.79 of the Family Law Act 1975.

The application

1. VMC (“the wife”) started the proceedings when she filed an application for final orders on 21 May 2004.  At the end of the hearing, the wife’s counsel submitted that the court would find that the parties’ contributions are equal and pursuant to s.75(2) order a 7.5 per cent adjustment in her favour.  The wife proposed that the property known as “Crofton” is sold and that she receives 90 per cent of the net sale proceeds with the husband taking the balance.  In addition, the wife seeks a selection of furniture and artworks and proposes that she transfers her joint shareholding in specified companies to the husband. 

2. LVC (“the husband”) filed his response on 17 June 2004.  During opening remarks, the husband’s solicitor provided an amended response[1] which sets out the orders he seeks. The husband submits that the court should find his s.79(4) and other contributions favour him 65 per cent compared with the wife’s 35 per cent and make no s.75(2) adjustment. The husband opposes Crofton’s sale. Rather he proposes to pay the wife $150,000 and that by way of a superannuation splitting order she is allocated $50,000 from his Westpac Staff Superannuation Fund. The husband accepts the share transfer however says the wife has the personalty she wished to retain and no further adjustment is appropriate.

   [1] Exhibit B

3. On 30 January 2005 the husband’s solicitors wrote to the trustee of Westpac Staff Superannuation Plan enclosing a copy of his amended response.  By letter dated 19 January 2005, the trustee confirmed that it will be able to comply with the proposed orders[2].  Thus, the trustee having been afforded procedural fairness the court is able to split the husband’s superannuation.  For her part, the wife opposes splitting the husband’s superannuation and wishes to have her entire property settlement from immediately available assets. 

   [2] Exhibit B

The hearing

1. The applicant wife relied on the following evidence:

   ·Her affidavits sworn 16 June 2004, 23 December 2004 and her oral testimony.

   ·Her financial statement sworn 18 January 2005.

   ·Paragraph 43 of the husband’s financial statement filed 17 June 2004.

2. The respondent husband relied on the following evidence:

   ·His affidavits sworn 15 July 2004 and 23 December 2004 and his oral testimony.

   ·His financial statement sworn 23 December 2004.

   ·Affidavit of LSC sworn 17 December 2004 and his oral testimony.

The issues

1. The principal issues raised in the proceedings are:

   ·The extent of the husband’s initial contribution and its significance.

   ·The nature and extent of advances received from Lloyant, trustee for the LSC Family Settlement Trust.

   ·Whether the parties reached an agreement concerning the distribution of matrimonial assets.

   ·If the court is not persuaded there was an agreement, whether the wife allowed the husband to act to his detriment believing that there was agreement.

   ·The nature and extent of the parties’ comparative contributions subsequent to separation.

   ·Minor issues concerning the asset pool.

Short history

1. The wife was born in 1949 and is 55 years old.

2. The husband was born in 1950 and is 55 years old.

3. The parties married in 1975.  They did not cohabit prior to marriage. 

4. In 1977 their eldest child, VC was born.

5. In 1978 their daughter PC was born.

6. The parties separated in March 1999.

7. On 24 May 2003 the parties’ divorce decree became absolute.

Chronology

1. At the commencement of cohabitation the wife worked at as a clerk earning approximately $7,000 per annum.  She had a small selection of household goods, but otherwise no assets, liabilities or financial resources of significance. 

2. At cohabitation the husband was employed by a finance company as credit manager earning approximately $7,500 per annum.  In the year prior to their marriage, the husband purchased a unit in Gore Hill for $31,000.  The husband’s parents, JC and LSC jointly advanced him $24,000 secured by way of first mortgage against the Gore Hill property.  The husband met the shortfall from his savings.  The husband treated Gore Hill as an investment and the property was rented.  The mortgage incurred 8 per cent interest paid monthly and was repayable on demand. A few weeks prior to their marriage, the husband purchased a property in Artarmon for $42,750.  In his affidavit the husband said he borrowed $12,000 and the balance of the purchase price came from his savings.  The husband located an Epitome of Mortgage[3] which evidences a $12,000 loan his father advanced for Artarmon.  However, LSC recalls that he and JC advanced $24,000 to enable the Artarmon purchase.  The husband agreed that it is possible his parents advanced $12,000 each.  The husband appeared to have little independent recollection of the transaction and was reliant on documents in order to reconstruct its details.  However his father is adamant that he advanced $24,000 for each of Gore Hill and Artarmon.  Although the husband has only managed to locate evidence of his father’s $12,000 advance on Artarmon, I am satisfied his parent’s advanced $24,000.  At cohabitation the husband had stamps, coins, a few pieces of antique furniture, artworks and a small amount of shares.  Other than the mortgage on Gore Hill and Artarmon, the husband had no debts of substance.  As the husband’s real estate purchases occurred so shortly prior to marriage I infer the net equity in each property had not altered since its acquisition.  Thus the husband had a net equity in Gore Hill of $7,000 and $18,750 in Artarmon.  The husband alone contributed towards the acquisition of these properties.

   [3] Exhibit H

3. Upon their marriage, the parties lived in the Artarmon property.

4. The wife stopped paid work in November 1976.  Thereafter she remained at home caring for the children on a full time basis until late 1979. 

5. In late 1976 the husband left the finance company and commenced employment with American Express, where he remained until February 1980.

6. In 1978 the parties jointly purchased a new family home at Killara for about $81,000.  Settlement on Killara occurred before either Gore Hill or Artarmon sold.  In order to complete the Killara purchase, the parties raised bridging finance from LSC.  Gore Hill sold in 1978 for $44,000.  The entire net sale proceeds were applied towards the reduction of the Killara mortgage.  Artarmon sold on 2 February 1979 for $62,500.  Its net sale proceeds were also paid into the Killara mortgage.  After completion of the two sales, approximately $30,000 was outstanding on Killara. 

7. In August 1980 the parties purchased a property known as “Crofton” at Conimbla for $70,000.  The parties contracted builders to construct a home on the property.  The construction cost was $70,000 which means the total acquisition costs for the Crofton land and home was $140,000.  The family moved to Crofton on 17 March 1981.  From the time the parties moved to Crofton, the husband worked the land.  The wife also worked on the land, with both parties actively involved in the children’s care.  Predominantly, the wife was responsible for maintaining the interior of the home and the husband more substantially responsible for the property.  I do not mean to suggest the wife’s work was entirely indoors, rather that she worked the land when she was not working inside or caring for the children.  Basically the parties worked equally hard, caring for their children, home and developing Crofton.

8. Killara sold for $143,000 in 1981.  The parties applied the entire sale proceeds towards the Crofton mortgage and their home construction costs.  Essentially the Killara sale proceeds paid out the Crofton borrowings. 

9. In 1983 the wife commenced work two and a half days per week at Woolworths where she remained until 1988.  Working at Woolworths the wife claimed she was paid approximately $8,000 per annum.  However her 1988 taxation assessment[4] shows that year she earned $6,762.  It is not surprising the wife is unable to precisely recall her salary earned so long ago.  While she appears to have slightly over stated her income nothing turns on the discrepancy.  The wife left Woolworth’s in order to spend more time working on the farm.  From the time she left Woolworths the wife worked on the farm full time until 1995. 

   [4] Annexure A  husband’s affidavit filed 16 July 2005

10. In May 1987 the husband obtained part time work with another finance company.  His income varied depending on his hours.  The husband worked for the finance company, as well as continuing to work the farm until early 1990.  In May 1990 he commenced full time employment with Westpac as a financial advisor. 

11. In 1995 the parties engaged a share farmer to work Crofton.  Although the property was worked by a share farmer the wife continued to assist as a rouse-about for the parties’ sheep.  From that time, until March 1997, the wife undertook paid casual seasonal work for which she earned approximately $8,000 per annum. 

12. In 1995 the parties purchased a property in the husband’s sole name at Holmwood for $71,500.  The purchase price was entirely borrowed from Westpac and secured by a mortgage over the property.  The parties have always treated the Holmwood property as being VC’s property and it appears he moved there not long after its purchase. 

13. After the parties moved to Crofton, they purchased $100,000 in shares in a company float called “Workman Industries”.  The shares were purchased in escrow using entirely borrowed money.  Workman Industries subsequently became known as IIG.  The parties borrowed $50,000 from Westpac Bank and $50,000 from the LSC Family Settlement Trust.  Although aware the husband raised $50,000 from Westpac for the share purchase until after separation the wife was unaware the husband borrowed an additional $50,000 from the settlement trust.  Throughout their marriage the husband regarded financial dealings with the trust as primarily his domain.  The wife was aware of some of his financial dealings with the trust but far from all.  As there is no dispute $100,000 in shares were purchased and no suggestion the parties contributed their own funds in order to complete the purchase I am satisfied $50,000 was borrowed from the trust.  Both parties were optimistic about the Workman Industries product and worked to promote its success.  The husband was particularly involved in doing so.  At one stage the shares reached 75 cents.  Unfortunately, because the shares were still held in escrow the parties were unable to sell at this price and subsequently the share price has plummeted. 

14. The parties moved to Sydney in April 1997 at which time the husband was promoted to manager in Westpac’s National Customer Relations Division.  The wife took part time work briefly with Westpac before starting contract work through Drake in September 1997. 

15. Not long after the parties moved to Sydney, Crofton was and remains tenanted. 

16. The parties separated in March 1999.  At separation their assets comprised:

    ·Crofton.

    ·The Holmwood property.

    ·IIG shares.

    ·Furniture and personalty.

    ·Husband’s superannuation entitlement of $71,815.04.[5]

    [5] Exhibit D

17. At separation they had the following liabilities:

    ·Westpac housing loan on Crofton $23,149.05.

    ·Westpac interest only loan procured on the Holmwood property $18,666.57.

    ·Westpac loan secured on the Holmwood property $57,000.53.

    ·Westpac cheque account $137.22.

    ·A second Westpac cheque account $366.33.

    ·Westpac premium option home loan $58,659.48.  $50,000 of this advance was used to acquire Workman Industry shares and the remaining $10,000 used to purchase a pump for the farm.

    ·$20,000 loan from Lloyant subsequently forgiven.

18. As to the later the husband makes no mention of this loan in his affidavit with its details emerging during cross-examination.  Thus the wife’s counsel submitted the husband’s evidence is a concoction.  I do not agree.  Both parties impressed me as doing their best to recall their financial history.  At times memories falter and with the passage of time a different gloss may be applied to events.  In this instance I accept the husband genuinely overlooked this outstanding loan when he prepared his affidavits and created exhibit C and that his recollection of it was jogged by cross-examination.  The husband’s evidence on this issue reflects the unsecured liabilities Crofton Pastoral Co’s balance sheet shows as outstanding to Lloyant Pty Ltd as 30 June 1998 and 1999.

1. Since separation the husband has received all income earned on the parties’ assets and paid all joint liabilities. 

2. The husband alleges that the parties reached agreement for an equal division of matrimonial assets in October 2000.  The parties agree the husband visited the wife at her Castle Hill home in October 2000 during which he raised the issue of property settlement.  The wife wrote a small list of personalty she wanted, some which she already had while other items were with the husband.  The husband agreed the wife would have the requested furnishings, which he delivered to her at Castle Hill the following day.  The husband had difficulty recalling the conversation which he says comprised their agreement.  The parties agree the husband accurately identified their main assets, being the farm, shares, the Holmwood property and his superannuation and attributed values to each item.  In total, the husband said the matrimonial assets were $670,000 and that there were $265,000 liabilities which he rounded out to $400,000 net assets.  Having identified the assets and liabilities[6] the husband said to the wife, “Half of this is $200,000”.  The wife asked if there was anything else to which the husband responded “that’s it”.  The wife describes the discussion as a one sided monologue, that is the husband telling her what amount she should accept.  The wife made no comment concerning the values attributed to the items.  She had no idea of the value of the husband’s superannuation and was unaware of the farm’s value.  At the time the wife thought the shares were worth less than $120,000 and the Holmwood property worth more than $75,000.  The wife had some understanding of their indebtedness but no idea they had debts of approximately $265,000.  Relevantly, the wife did not agree that the husband would pay her $200,000 by way of property adjustment.  Her silence could not reasonably be construed as tacit acceptance of the proposal or that she would make no claim greater than $200,000.

   [6] Exhibit C

3. At its highest, the husband’s list is an informal offer which the wife did not accept.  The wife denies any suggestion that the husband believed he had reached a property settlement with her.  In furtherance of this issue the husband recounted a telephone conversation in late 2003 during which the wife said she thought the farm was worth more and she was no longer happy with the settlement. The wife denies this conversation occurred.  I accept her denial.  It is counterintuitive that if the parties agreed in late 2000 the husband would pay the wife $200,000 she did nothing to force payment and there was no further discussion during the ensuing three years concerning payment.  Surely if the parties agreed the husband would pay the wife $200,000 when he did not do so, discussion would follow.  I accept the first the wife knew the husband asserted they reached an informal agreement was in January 2004 when she instructed lawyers to negotiate a property settlement.  The wife’s failure to agree to accept $200,000 strongly counters against any notion of agreement.  So to does the husband’s failure to pay her the money he says she was to receive or make any real attempt to do so. 

4. With his professional experience in the financial world, I am not satisfied the husband believed he and the wife reached an agreement. 

   
   

   I infer he understands an agreement involves offer and acceptance.  Although the parties dealt with each other amicably, potentially, this was a highly significant transaction which, if agreement had been reached, the husband would have documented it in a more sophisticated manner.  Perhaps at least having both parties sign an agreement and identify in rough terms at least a time frame for payment.  Although the husband has dealt with the majority of the matrimonial assets since separation as though they were his alone, this does not corroborate his evidence that he believed there was an agreement.  His conduct is consistent with the wife’s evidence that during their marriage she tended to be on the periphery of their financial dealings.  The wife explained her failure to commence property proceedings sooner on her understanding that she could not do so until after the parties divorced.  This is consistent with the sequence of events and I accept her reason for inaction.  Thus I am satisfied there was no agreement reached in October 2000 nor that the wife allowed the husband to act to his detriment on the assumption there was.

5. In about December 2002 the husband received $134,255.58 from the LSC Family Settlement Trust.  With this payment, he relinquished any entitlements he had in the trust.  At the time, the husband owed the trust $50,000 for the Workman Industries purchase.  The trust retained $50,000 offset against the husband’s loan, as a result of which he received $84,255.58.  The husband deposited those monies into a BT Financial Services account. 

6. The parties always agreed that VC would have the opportunity to buy the Holmwood property.  In April 2004 the husband transferred the Holmwood property to VC for $110,000, its fair market value.  At settlement, the husband discharged the mortgage which stood at $76,000.  It appears this loan was partially secured against the Holmwood property with the balance comprising the Westpac loan secured against Crofton.  The husband incurred a capital gains tax liability of $9,400 on the sale, which liability is included in his 30 June 2004 taxation return.  Although the wife cavilled with its inclusion in the asset pool, I am satisfied this was a joint matrimonial liability, properly paid out from the sale proceeds.  The husband retained the remaining sale proceeds and they form part of his Westpac Banking Corporation savings account. 

7. The wife’s mother died on 13 July 2004.  Unfortunately probate of her mother’s estate was delayed by a dispute between beneficiaries.  Eventually the wife received a $26,000 inheritance.

8. Since separation the husband has paid $1,100 in respect of the wife’s superannuation policy, given her $2,000 towards re-establishment costs and paid $990 to her nominated valuer.  I reject the husband’s assertion his $574 payment for divorce filing fees is a relevant contribution.

Relevant law

1. The approach to the determination of an application under section 79 is well established by authority In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595 the process ordinarily involves a multiple part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in section 79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in section 75(2) insofar as they are relevant, any other order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child to the marriage.

2. In determining what order the court should make under section 79, the court must be satisfied in all the circumstances that it is just and equitable to do so [Section 79(2)]. It is the justice and equity of the actual orders that the court must consider. Russell v Russell (1999) FLC 92-877.

3. An important issue in this matter is whether the parties entered into an informal property agreement and if so, its effect.  In Woodcock v Woodcock (1997) FLC 92-739 the Full Court of the Family Court answered two questions stated by Frederico J regarding the application of the doctrine of estoppel to applications for property settlement and spousal maintenance pursuant to the Family Law Act 1975.  After discussing previous authorities, including Burgoyne (1978) FLC 90-467 as well as In the Marriage of Dupont (No3)[7] and Candlish and Pratt[8] the Full Court held; “In our view the cases referred to above clearly indicate that the Court’s jurisdiction to grant relief under s74 or s79 can only be ousted by court order or by agreement approved pursuant to the provisions of s87.  It may be that the ability to take into account the terms of an unapproved agreement creates in the words Hoffman LJ ‘the worst of both worlds’ as it will be impossible to predict from case to case, exactly what weight should be given to the agreement (Schokker v Edwards: agreement followed; cf Klesnik: agreement given little weight).  However it is the unwavering thread of all the cases that the parties cannot by their conduct or agreement oust the jurisdiction of the Court.”

   [7] (1981) FLC 91-103

   [8] (1980) FLC 90-123

4. Woodcock establishes that an agreement[9] does not establish an estoppel.  The facts and circumstances relied upon to establish the agreement is nonetheless relevant in a section 79 application.  For example the agreement may be relevant to whether it is appropriate to make an order (s.79(1) as well as whether it is just and equitable to make any and if so what section 79 order (s.79(2).  I respectfully agree with Nygh J’s statement In the Marriage of Dupont (No 3) ‘It may be that where a party to an agreement allows the other to assume by tacit acceptance of compliance with the agreement that no claim will be made under s79 and the other party acts on that assumption to his or her detriment” that this is a matter that can be taken into account pursuant to s75(2)(o). The court is not limited to taking the agreement into account in only one instance.  It can be relevant in a number of respects in the same case.”  This is clear from the Full Court’s statement in Candlish and Pratt “The fact that the parties have entered into a Deed relating to their financial affairs (whether or not registered) is a relevant factor for the Court to consider (under s75(2)(o) and under s79(2) and also on general principles…”[10]

   [9] other than an approved s87 deed of agreement

   [10] at par 75,169

Assets and liabilities as at the date of hearing

1. The parties agree on the value of most of their assets and liabilities.

2. Subject to receiving further documents the court reserved its decision on 30 May 2005.  Subsequently the Full Court delivered judgment in Coghlan (2005) FamCA 429. In this judgment the Full Court discusses the relevant provisions of Part VIIB including the manner in which a court should formulate the asset pool. Specifically, whether the court should effectively adopt a two pools approach, one for s.4(1) property and a separate pool for superannuation. Concerning the different approaches, the majority held:

   “Nothing we have said in this judgment would prevent a Court in the exercise of its discretion from including a superannuation interest as an item of property in the list of property which is drawn as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings.  This approach could be adopted where the parties agree that it should be adopted, or where the Court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the Court to conclude that this would be an appropriate approach. 

   The parties’ contributions to all items on that list (including the superannuation interest) would then be assessed on either a global or an asset by asset basis.  It might then be necessary in the s 75(2) context to have regard to the parties’ future superannuation entitlements (having regard of course to any division proposed on the basis of their contributions), with consideration then being given to the overall justice and equity of any proposed award or order (including any proposed splitting order).  Indeed, this is the approach which the Full Court has used on its re-exercise of the trial Judge’s discretion in Ilett and Ilett (which will be delivered contemporaneously with the decision in this case). 

   However, given the conclusions we have reached above, we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise).  This of course is the approach which the trial Judge adopted in this case.

   Then for the reasons we earlier gave, whether or not a splitting order is sought on either party’s application, the parties’ contributions to both the property (as defined in s 4(1)) and also to the superannuation interests should be assessed.  The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered.  Specifically in the context of s 79(4)(e), that is the s 75(2) factors, any division of the property (as defined in s 4(1)) and any “division” of any superannuation interest (in the sense of an allocation of the base amount) based respectively on the assessments of the parties’ contributions to the property and to any superannuation interest, would then be considered.  Similarly, the parties’ future superannuation prospects (be they in capital or income form) would also need to be considered.  The overall justice and equity of the ultimate award (including any proposed splitting order or the need for such an order) would then be considered.”  

3. Following Coghlan neither party sought to list the matter.  At trial it was agreed the superannuation would included as an asset and submissions were made on a global basis, concerning superannuation and non superannuation assets.  Basically following the approach suggested in Hickey and Hickey and AG for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143. Provided the court does not overlook particular evidence concerning contributions to superannuation it seems to me justice is done adopting a hybrid approach. That it clearly delineating superannuation and non superannuation interests in the first step and then completing the balance of the stages using a global approach. Maintaining a separate pool when the court comes to consider s.75(2) and s.79(2) is complicated and in my view fraught with the risk of injustice. Both as to double counting financial contributions and undervaluing homemaker and parent contributions. It is for this reason hitherto one sees an asset by asset approach rarely adopted and usually only where contributions are predominately financial and s.75(2) considerations do not result in further adjustment. Thus while I feel I must depart from the parties agreed pre Coghlan approach to the asset pool, as non financial, s.75(2) and s.79(2) issues loom large in this case, thereafter the matter will be considered on a global basis.

4. I find the assets, liabilities and financial resources as at the date of hearing are as set out in the tables below.

Non superannuation assets	$
Crofton, Conimbla (Joint) (Agreed)	630,000
Savings (H) (Agreed)	107,685
Savings (W) (Agreed)	6,260
Coin collection (H)	1,000
Stamp collection (H)	1,330
Antiques and paintings (H)	10,795
Hilux (J) (Agreed)	2,500
Shareholdings (J) (Agreed)	14,771
Furniture (W) (Agreed)	6,000
Total non superannuation assets	780,341
Liabilities
Crofton (J) (Agreed)	51,128
Total liabilities	51,128
Net non superannuation assets	729,213

Superannuation assets
Westpac Superannuation (H) (Agreed)	175,371
ING Superannuation (H) ( Agreed)	7,890
Recruitment Superannuation (W) (Agreed)	18,276
Mercantile Mutual Superannuation (W) (Agreed)	1,130
Total superannuation assets	202,667
TOTAL ASSETS	931,880

1. There are a number of findings that require explanation. 

2. The most significant matter is whether the husband must repay $84,255.58 received in December 2002 from the LSC Settlement Trust.  The husband’s father says the money, “Was by way of an interest free loan ….granted in lieu of future benefits forgone, and I do not believe the court should regard it as an asset of LVC, as it was not a direct gift and I may need to ask for repayment over time, dependent on my circumstances”.  In Biltoft (1995) FLC 92-614, the Full Court of the Family Court held, “The court has indicated that it may properly determine not to take into account or to discount the value of an unsecured liability in certain circumstances.  Such liabilities would include, but are not limited to a liability which is vague or uncertain, if it is unlikely to be unforced or if it was unreasonably incurred”.  There are a number of factors which persuade me the husband is unlikely to be asked to repay the advance.  In prior dealings, both Lloyant (the trustee company) and the husband’s parents, when dealing with their own funds, has secured significant advances by mortgage and formally documented the loans.  The husband received these funds two and a half years ago and has received no request for repayment.  Mr LSC’s language concerning repayment is circumspect.  On balance, I consider the prospect of repayment is remote and doubt that the husband will be asked to repay any part of the advance.  Thus the advance comprises a matrimonial asset.  Contributions towards this asset is a separate issue. 

3. The parties have modest visa card liabilities.  Their credit card liabilities have arisen during the six years since separation.  There is no suggestion the amounts borrowed relate to assets available for distribution or necessary expenses. I agree with the husband’s solicitor’s submission that these small liabilities should be excluded from the asset pool and the parties take personal and exclusive responsibility for repayment. 

4. An issue emerged concerning treatment of the parties’ legal fees.  Relying on Farnell (1996) FLC 92-681 the wife submitted that paid legal fees should be added back into the list of assets. Farnell was recently considered in Chorn & Hopkins (2004) FLC 93-204. In Chorn and Hopkins the Full Court of the Family Court discusses, “add backs” of funds expended after separation.  The principles which emerge from the Full Court’s review of previous decisions can be summarised as follows:

   ·Monies reasonably disposed by a party in the conduct of their post-separation lives should not usually be added back.

   ·The treatment of funds used to pay legal costs remains ultimately a matter for discretion.

   ·In determining how to exercise that discretion, regard should be had to the source of funds.

   ·If the funds used to pay legal fees existed at separation and are such that both parties can be seen as having an interest in them (for example by way of contributions) then such funds should be notionally added back as an asset of the party who has had the benefit of them.

   ·If the funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example: by way of inheritance), these would generally not be notionally added back.  Nor would any borrowing undertaken by a party post-separation for payment be taken into account as a liability in the calculation of the net property of the parties.

   ·Funds generated from assets or businesses to which the other party has made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions. 

   ·Outstanding legal fees themselves are generally not taken into account as a liability. 

   ·If in the exercise of discretion it is determined that legal fees already paid should be taken into account as a notional asset, then normally any liability associated with the acquisition of the monies used to pay the legal fees should also be taken into account.

1. For these proceedings the wife has paid $24,154 in legal fees while the husband has paid $17,440. The husband appears to have paid his legal fees from income earned since separation.  The wife borrowed $24,000 from a credit union in order to pay legal fees.  Upon receiving $26,000 from her late mother’s estate, the wife reduced her credit union debt by $12,000.  It was submitted on her behalf the court would notionally add back both parties paid legal fees and include her outstanding $12,000 credit union debt as a matrimonial liability.  This submission is inconsistent with the Full Court’s decision in Chorn and Hopkins. Applying Chorn and Hopkins to these facts the proper treatment of these items is to exclude from the matrimonial pool each party’s paid legal fees, the wife’s spent inheritance and her remaining credit union debt.

2. Given their modest value, it is surprising the husband’s coin and stamp collections, antiques and paintings achieved such prominence in the hearing.  The wife submits that the court will find these items have the values the husband attributes to them in his financial statement on the basis these statements are admissions against interest.  However, the court has better evidence than the husband’s belief.  Attached to the husband’s second affidavit are a series of valuations from appropriate valuers obtained for each asset category.  Pragmatically, these valuations are admitted without objection.  The valuations are current and based on expertise which the husband does not have.  Thus the values attributed to these items in the above table reflect these valuations. 

Section 79(4) contributions and other factors

1. Section 79(4) requires that the court looks at the entirety of the contributions, both financial and non-financial to the welfare of the family, as well as the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense. Farmer & Bramley (2000) FLC 93-060, Querasimu (1999) FamCA 1314.

2. In Parshen v Parshen (1996) FLC 92-720 the Full Court of the Family Court held, “In our view in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s.79 that monies how so ever received by a party during the course of the party’s cohabitation, are used by that party for the benefit of the family unit.  Such monies, in those circumstances, thus constitute a financial contribution by the party who received the money”.  These principles apply during cohabitation.  Both parties worked hard to maximise their families future.  Neither calls the other to account for funds received during cohabitation.  The sense I have is that each recognises the other party worked hard to maximise the families’ future and accepts both contributed all of their income, from whatever source to joint matrimonial purposes.  I am satisfied that each party contributed all money received during cohabitation was used for the benefit of the family.  Notwithstanding this, one of the pivotal issues in this case is the significance of the husband’s greater financial contribution.

3. On 20 June 2005 the court received correspondence from the husband’s solicitors enclosing their client’s income tax returns and a selection of Lloyant Pty Limited returns.  The letter and tax returns forms part of the evidence[11].  These documents reveal distributions from Lloyant Pty Limited as follows:

   [11] Exhibit K

Distribution from Lloyant Pty Ltd
Year ended	Distributed to	Amount $
June 1982	LVC	1,335
June 1983	LVC	9,000
June 1984	LVC	15,798
June 1985	LVC	10,998
June 1986	LVC	11,834
June 1987	LVC	13,943
June 1988	LVC	7,869
June 1989	LVC	9,500
June 1990	LVC	15,000
June 1991	LVC	9,695
June 1992	LVC	5,331
June 1993	LVC	5,439
June 1994	LVC	9,101
June 1995	LVC	2,200
June 1996	LVC	10,6000
Total for husband	134,643
June 1995	VC	7,400
June 1996	VC	3,000
June 1997	VC	9,000
June 1998	PC	10,000
June 1999	PC	10,615
June 2000	PC $5,950 VC $5,000	10,950
June 2001	PC	12,741
June 2002	PC	10,566
June 2003	PC $200; VC $200	400
June 2004	Nil
Total for children	74,672
TOTAL	209,315

1. The distributions made to PC commenced in 1997, after she turned 18.  Distributions to VC were first made in the financial year ending 1995.  VC turned 18 on 17 March 1995.  Based on the scheme of payments it seems likely that neither child received distributions until each turned 18.  These advances appear to have been made to the children in their own right and not as an indirect contribution to matrimonial property.  These distributions are thus neither financial contributions nor contributions to the welfare of the family.  In these proceedings they are irrelevant transactions between adult children and the trustee.  The trust distributions and advances made by the husband’s parents are a different proposition.

2. Situations where a parent advances property as a gift are analogous to those where a party receives an inheritance.  Figgins (2002) FLC 93-122.In In theMarriage of Rainbird (1977) FLC 90-256 at 76,376, the Full Court held that the “contributor” of a gift is usually determined by the original intention of the donor. In Gosper (1987) FLC 91-818 the Full Court held that the donor’s intention is not necessarily the determining factor. The essence of Fogarty J’s judgment is that the court is able to treat a gift as a financial contribution made on a spouse’s behalf by the spouse’s relative. This can be displaced by evidence that the donor intended to benefit both parties to the marriage. In Kessey (1994) FLC 92-495 the Full Court applied Gosper saying that as a general approach a parental gift is to be treated as a financial contribution made on behalf of the child of the donor parent. Where the intention of the donor is not clear the court can look to any special relationship between the donor and one of the spouses and regard the gift as having been contributed by that party. 

3. The issue of gifts and advances is further discussed in Pellegrino (1997) FLC 92–789.  In that case Chisholm J sagely acknowledged that parents do not usually have an intention as to who they intend to benefit when making gifts to their married children. If the motivating circumstance leading to the gift was the parent/child relationship, the gift may be regarded as the contribution of the son or daughter: and not also of his or her spouse.  These principles apply to all intra familial advances.

4. Prior to their marriage the husband’s parents loaned the husband money so that he could acquire property, a pattern which continued after marriage.  Using the family settlement trust further monies were advanced, both as trust distributions and loans.  The relevant nexus in these transactions is the husband’s relationship with his parents.  The wife had virtually no involvement in these transactions, a factor which highlights the significance of the husband’s personal relationship to the transactions.  Since separation the trustee has continued to make advances to the husband however none has been made to the wife.  Taken as a whole these factors persuade me the trust distributions and all other advances made by the husband’s parents are contributions made on the husband’s behalf.

5. A pivotal issue in this matter is an assessment that should be attached to the parties’ initial contribution.  The husband submitted the court could effectively trace the parties equity in Crofton to the husband’s ownership of Gore Hill and Artarmon.  While I accept the husband’s ownership of these properties provided the seed capital for subsequent property acquisition it would overstate his initial contribution to conclude the husband alone contributed to the acquisition of Crofton. The manner in which the court should treat initial contributions is considered in Pierce v Pierce (1999) FLC 92-844. In Pierce the Full Court held, “In our opinion it is not so much a matter of erosion of contribution, but a question of what weight is to be attached, in all the circumstances, to the initial contribution.  It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife.  In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution”. 

6. I have already made findings about the assets held by each party at the commencement of cohabitation.  The husband’s ownership of Gore Hill and Artarmon was pivotal to the parties’ financial success and their capacity to enjoy a reasonable standard of living.  In percentage terms, the husband had approximately 44 per cent equity in Artarmon and 22 per cent equity in Gore Hill.  His ownership of Gore Hill enabled him to increase the family income earned through rental that at least partly serviced its mortgage.  Because he owned Artarmon, the parties had a home that they could live in without paying rent.  The monies paid into the Artarmon mortgage worked for them, rather than a landlord.  Importantly, his ownership of these properties enabled the parties to have assets that increased in value merely because of upward movements in the property market. The wife’s submission undervalued the real significance of the nature and value of the husband’s initial contribution.  More than anything else, it was his ownership of these properties that provided the cornerstone for the parties’ subsequent acquisition of Killara and later acquisition of Crofton and thus must be properly recognised.

7. As well as the husband’s earned income, which includes half of any income earned from Crofton and the Holmwood property, during cohabitation he received payments from Lloyant which appear to have primarily been used to supplement the parties’ day to day living expenses.  The wife’s earned income, which also includes half of that produced by Crofton and the Holmwood property, was less than the husband’s.  When the husband’s total income is considered cumulatively, it exceeds the wife’s. 

8. The husband’s superannuation interest commenced during cohabitation.  During cohabitation, his financial contribution to his superannuation is greater than the wife’s.  Generally, the accepted approach to superannuation contributions is that the non-employee spouse is recognised as making an equal contribution to the acquisition and development of superannuation that accrued during cohabitation.  See Hauff (1986) FLC 91-747. Essentially, this is because courts have long accepted that parties contribute to superannuation directly, but also indirectly by the way in which they have ordered their lives.

9. When evaluated comparatively, the husband made a greater initial contribution and a greater overall financial contribution to the acquisition, conservation and improvement of the assets of the parties as at the date of separation. 

10. Both parties worked hard to maintain and improve the homes in which they lived. Both worked tremendously hard establishing and improving Crofton. Neither party claims greater non-financial s.79(4) (b) contributions than the other. It appears both recognise that their individual s.79(4)(b) efforts over the years are matched by the other parties. Although at different times the wife had greater responsibility for Crofton than the husband at other times he had greater responsibility than her. On balance, I am satisfied that as at the date of separation the parties s.79(4)(b) contributions were comparable.

11. The wife’s contribution to the welfare of the family is important.  Having stopped paid work in November 1976, the wife was a full time parent and home maker for three years.  By inference, the husband’s full time employment until the parties moved to Crofton meant that the wife was more available to care for the home and children, which she did.  After the parties moved to Crofton, family roles were not so clearly delineated and the parties shared the children’s care and working the property.  To the extent that there was a dichotomy in roles, the wife was primarily responsible for maintaining the interior of the home while the husband was more responsible for working the land.  At times, roles overlapped.  When the wife started part time work in 1983 the husband’s role with the children increased somewhat.  By this time, both children were at school.  As the wife was working two and a half days per week, largely during school hours, it is unlikely that the husband’s role with the children substantially increased or that his home maker or parent role exceeded the wife’s.  Rather, it appears that although the wife was working part time, the roles in the family continued along those broad lines previously established.  The wife stopped paid employment when the husband obtained part time work with Monitor Money.  At this point the wife again resumed overwhelming responsibility for maintaining the interior of the home and the children’s care.  Her role as home maker and parent increased again when in May 1990 the husband commenced full time employment.  By working at home caring for the home, children and farm, after the husband obtained full time employment, the wife freed the husband of significant responsibility for the home and children.  Thus, he was able to pursue his career, free of concerns about Crofton, the home and children. 

12. Comparatively, the wife’s contribution to the welfare of the family during cohabitation exceeds the husband’s contribution.  Her contribution must be given significant weight.  See Ferraro. 

13. During cohabitation, these parties worked as hard as they possibly could in order to improve their family’s prospects.  They made the best use possible of the husband’s greater initial contribution and diligently ensured that their earned income as well as Lloyant advances was used for the betterment of the family.  When farming income was insufficient to support the property, the parties took part time work.  Working part time, running a property and raising a family was an onerous responsibility to which each gave their all.  When one considers the significance of the husband’s greater initial contribution, I am satisfied that as at the date of separation, contributions favour the husband 53 per cent compared to the wife’s 47 per cent. 

14. Because the parties separated six years ago post separation contributions are unusually significant.  In this context there are three primary issues.  These are growth in the husband’s superannuation, the extent to which the husband has supported Crofton and the Holmwood property and advances from Lloyant.  As for the later, for the reasons already given these are contributions made indirectly by the husband alone.  Lloyant post separation contributions amount to approximately $135,000.  This sum is fully accounted for.  It paid out the IIG $50,000 loan and the balance is deposited in the husband’s savings account.  Thus it comprises a significant percentage of the asset pool and carries real weight.

15. When the parties separated their children had reached 18 years of age and since then neither party has contributed as a home maker or a parent.  The wife has not returned to Crofton or Conimbla since separation and has made no s.75(2) (b) post-separation contributions.  The husband has regularly visited both Conimbla and Crofton.  Both properties have been tenanted and the husband has not been personally involved in improving or maintaining either property.  To the extent needed VC has maintained Conimbla.  Crofton’s tenants have maintained the home and property. 

16. Since separation the husband’s superannuation has increased from $71,815.04 to $175,371.  Since separation he has at least continued his financial contributions via his employer’s contributions.  During the same period the wife has not contributed financially to his superannuation.  The issue is whether the wife should be credited with making any contribution to its increase.  Superannuation has long been regarded as a joint venture whereby parties make provision for retirement income, often using only one spouse’s superannuation scheme to do so.  Financial contributions to superannuation are usually made directly by the employee spouse and indirectly by the non-employee spouse.  For example, by contributing to the employee spouse’s capacity to pursue employment or co-operating in a financial venture which diverts family income into superannuation the non-employee spouse also contributes.  In most circumstances this type of indirect contribution ceases on separation.  However, it would be wrong to ignore that most industry superannuation schemes provide returns calculated by reference to the entire capital sum then invested.  Depending on prevailing market conditions there are positive or negative returns.  In favourable markets the annual return will reflect growth on the entire sum.  It would be inconceivable that if poor market conditions resulted in a fall in the fund’s value, the fall would be ignored when determining the asset pool.  That is, the amount held at separation notionally added back.  Or reflect adversely on the spouse employee, for example as a negative s.75(2)(o) factor.  It follows where at separation a non-employee spouse has contributed to the capital sum held in superannuation, and the fund continue to grow, this contribution continues after separation, albeit in most circumstances to a lesser degree than pre-separation.  This is because commonly the most significant contributions will be those made directly by the employee spouse’s periodic superannuation payments.  Thus while I am satisfied the husband made the overwhelmingly larger post separation contribution to the increase in his Westpac superannuation fund, the wife also contributed, albeit to a lesser degree.  

17. It appears the wife’s superannuation interest was established after separation and thus she alone contributed to it.  Similarly her savings have accrued since separation and are contributions referable to her efforts alone.

18. Attached to his affidavit filed 30 December 2004 the husband provided tables[12] identifying income he has received and expenses paid for both properties.  In total, the husband alleges that since separation Crofton’s expenses have exceeded its income by $35,621.  Concerning the Holmwood property the husband alleges its expenses exceeded its income by $21,737.  The wife’s counsel says these tables are unreliable.  He emphasised that the identified losses are all claimable taxation deductions and when the husband’s allowed deductions are taken into account, his losses are significantly reduced.  So as to highlight the alleged inaccuracies the wife’s counsel analysed the husband’s 2002 taxation returns and contrasted the information there with that set out in the tables.  Having undertaken the same exercise, I am satisfied the husband’s 2002 figures are generally consistent with those included in his taxation returns.  For taxation purposes, Crofton is treated as two entities, Maple Tree Way, Conimbla (the home) and Crofton Pastoral Company (crop growing) which makes direct comparisons a little difficult.  Not all of the expenses identified in the husband’s tables are included in his taxation return, whereas depreciation is included in the taxation returns but not the tables.  The difference appears to be actual expenses compared to allowable taxation deductions.  In his tables some of the bank charges are higher than claimed as deductions.   When the business schedules in the taxation returns for both Crofton entities are added together the husband’s tables, subject to the above observations, are reasonably accurate.  Cross-checking the husband’s tables with his taxation returns, occasionally figures are wrongly transposed, but overall other than minor variances the relevant figures coincide. 

    [12] Annexure’s F Crofton and G The Holmwood Property

1. The following tables comprise the key features of the husband’s tables and his claimed deductions.  The first table summarises the husband’s evidence concerning the two properties income and expenses.  Whereas the second table outlines the husband’s claimed losses in relation to the same properties.

Year	Income	Total Expenses	Loss
Crofton	$	$	$
4 - 6/99	992	8,829	7,837
6/00	12,188	24,800	12,612
6/01	13,659	16,793	3,134
6/02	7,348	18,729	11,381
6/03	19,888	16,116	(3,772)
6/04	9,900	14,329	4,429
TOTAL	63,975	99,596	31,621
Conimbla
4-6/99	1,550	2,518	968
6/00	4,640	9,880	5,240
6/01	6,330	8,447	2,116
6/02	6,240	8,153	1,913
6/03	4,000	11,328	7,328
6/04	3,460	7,632	4,172
TOTAL	26,220	47,958	21,737

Year	Total Loss	Claimed taxation deductions
1999	8,805	NK
2000	17,852	18,391
2001	5,250	9,828
2002	13,294	14,832
2003	3,556	5,448
2004	8,601	9,999

1. Even if the husband received 48 per cent tax rebate for his claimed investment reductions, the tables demonstrate that as well as preserving these assets, the husband maintained the properties at real cost to him.  It would be wrong to ignore that the husband met the shortfall in outgoings throughout the year from his own income while the tax rebate was received at the end of the financial year.  The wife’s counsel submitted in relation to Crofton, the husband had done no more than preserve his hobby and lifestyle.  This submission ignores that Crofton is these parties’ most valuable asset and the husband’s financial contributions since separation has resulted in its preservation.

2. I accept the husband’s evidence that he has financially supported Crofton and Conimbla since separation.  However, his contributions are moderated by the taxation rebates he has successfully claimed for both properties.  Both properties have been income earning and thus the husband able to claim significant expenses as legitimate taxation deductions.  The husband claims that he alone supported these properties, a submission I do not accept.  This is because the wife is a joint owner of Crofton and she was entitled to receive half of its income.  The husband retained all of Crofton’s income which funds he used to meet its outgoings.  Thus, the wife contributed one-half of the monies received from Crofton towards its support.  Because the husband also contributed additional funds in order to maintain Crofton, his post-separation contribution to Crofton exceeds the wife’s.  Although the husband was the sole registered proprietor of Conimbla, this property was acquired during the course of the marriage.  It appears the property was purchased in the husband’s sole name as a legitimate vehicle for negatively gearing against the husband’s higher taxation liability.  The wife contributed indirectly via her contributions freeing the husband to maximise his earning capacity.  Indirectly, her contribution to Conimbla as at the date of separation is equivalent to the husbands.  Thus, since separation the husband has used a joint matrimonial asset to produce income and offset his taxation liability.  This means the wife’s indirect contribution does not end at separation.  Hence post-separation the wife contributed to its continued capital growth (as she did with Crofton) and one half of the income earned.  Because the husband supplemented the shortfall in Conimbla post-separation, his post-separation contribution exceeds the wife’s.

3. The wife’s counsel submitted that if the court included the Lloyant advance as an asset, this warranted a 5 per cent adjustment in the husband’s favour viz post separation contributions.  When the totality of the husband’s post-separation contributions are taken into account, overall the husband’s contributions increases to 65 per cent compared to the wife’s 35 per cent.

4. The orders I propose will not affect the earning capacity of either party. 

Section 75(2)

1. Subsection (a).  The husband and wife are of similar ages.  The wife is in fair health.  The husband has a number of health difficulties.  In 1997 he suffered two heart attacks before having a heart bypass operation.  Recently, he has been diagnosed as suffering from type 2 diabetes.  Also, he recently underwent an operation for a hernia and removal of a benign pre-cancerous growth.  Following surgery and with treatment, there is no suggestion that any of the husband’s health difficulties requires medication, further surgery or a shortened life expectancy.  None of these matters warrant an adjustment pursuant to the subsection in the husband’s favour.

2. Subsection (b).  It seems likely both parties will continue paid work of a style that they are currently engaged in, if not the actual position until retirement.  Since 1990 the husband has worked at Westpac and is a manager at its national office.  For the financial year ended 30 June 2003 the husband’s taxable income was $99,173 and for 2004 $127,526[13].  Presently, his total average weekly income is $2,685.  This comprises salary of $2,147 with the balance being rental and investment income.  As the husband plans to continue renting Crofton, for the foreseeable future, his investment income is assured.  By virtue of these proceedings, the husband’s non superannuation assets will diminish by the amount he must pay the wife.  Nonetheless, his non-superannuation assets will still substantially exceed the wife’s. For reasons already given I consider it highly unlikely that the husband will be called upon to repay post separation advances received from Lloyant.  The wife will have more available assets than she presently has as well as a credit union loan to service. The wife works full time as a clerical worker performing contract work.  Her income is identified in her financial statement.  In summary, she earns $844 per week.   As a contract worker, the wife has neither security of tenure, nor an established working relationship with an individual employer.  Compared to the husband’s secure employment, the wife is in a considerably more vulnerable position.  These factors warrant an adjustment in the wife’s favour pursuant to the subsection.

   [13] Exhibit E

3. Subsection (c).  This issue does not arise.

4. Subsection (d).  Including all of the husband’s personal and average weekly expenditure identified in his financial statement, the husband’s income exceeds his expenses whilst simultaneously enabling him to maintain a comfortable living standard.  By comparison excluding average weekly expenses, the wife’s personal expenditure is $691 per week.  If actual expenses are included it is likely the wife is unable to meet her expenses without going into debt.  Indeed the wife appears to have used credit cards in order to meet a shortfall between income and expenses.  These matters warrant an adjustment in the wife’s favour.

5. Subsection (e).  Neither party has a responsibility to support any other person.

6. Subsection (f).  Neither party is in receipt of an income tested Commonwealth benefit. The husband has significant superannuation, the parties contributions to which have already taken into account.  The wife’s modest superannuation entitlement will increase as a consequence of the superannuation splitting order that will be made.  Nonetheless, since separation, the husband has demonstrated that through his superior income earning capacity, he is able to increase his superannuation interests and thus provide for his retirement at a pace the wife is unlikely to ever achieve.  Thus upon retirement the husband’s superannuation interest will still significantly exceed the wife’s.  Thus I make an adjustment in the wife’s favour pursuant to the subsection.

7. Subsection (g).  Prior to separation, both parties left the former matrimonial home and have lived in rented accommodation since.  In the sense of no longer having the amenity of their own home, both have suffered a drop in the standard of living enjoyed during the marriage.  An examination of the parties’ expenses went on maintaining their standard of living, demonstrates that the husband’s standard of living is greater than the wife’s.  However, the effect of this differential has already been considered under s.75(2)(d) and does not warrant further adjustment. 

8. Subsections (h) – (l).  These matters do not arise. 

9. Subsection (m).  The husband resides with his partner Ms L.  Ms L is aged 44 and earns $1,386 per week.  Ms L owns the property in which the husband resides and he pays her $233 per week rent.  Thus, it is apparent that the financial circumstances of cohabitation with Ms L enhance the husband’s financial security in the sense of having a partner who can contribute to their shared costs of living and whose ownership of property contributes to security for so long as their relationship continues.  The wife lives alone.  These matters warrant a small adjustment in the wife’s favour pursuant to the subsection. 

10. Subsection (n).  In Wilkinson [2005] FamCA 430, the Full Court allowed an appeal, inter alia, because the trial judge concluded the husband, “Has much greater superannuation than the wife.  It will provide him with financial security in the future” erred by failing to take into account the consequences to the husband’s superannuation of the splitting order the judge was about to make.  Reading the judgment as whole, it appears that the Full Court was not unduly concerned by which subsection this issue is considered.  While this issue might previously have been considered the domain of s.75(2)(n), it now appears possible to consider it under a number of different subsections.  The important issue is that the effect of the proposed orders is taken into account but not double counted.  As I have already taken into account the changes to the parties’ superannuation and non superannuation assets by virtue of the orders I will make, no further adjustment is appropriate under this subsection.

11. Subsections (na) – (p).  I make no adjustment under the subsections.

12. Having regard to all of the s.75(2) factors, I find it is appropriate that there should be an adjustment in the wife’s favour of 5 per cent.  This outcome reflects the cumulative findings of the outcomes I have made pursuant to s.75(2).  See Tomassetti (2000) FLC 93-023.

Section 79(2) is this a just and equitable outcome?

1. Because the court must consider the actual orders, not just the percentage distribution under s.79(2), justice and equity in cases where the court may order a splitting or flagging order requires careful consideration of the range of orders available. The wife opposes the husband’s proposed superannuation splitting order. Central to her submission is the wife’s need to buy a home. Essentially, the wife says she needs to receive her entire property entitlement entirely from the immediately available assets if she is to re-house appropriately. With her modest income and thus, limited borrowing capacity I agree that the wife will secure more appropriate accommodation at a price she can afford to support if she receives her property entitlement from the immediately available assets. Counsel for the husband submitted in essence that both parties should have to wait for the husband’s superannuation entitlement to be paid out and that it would be unjust for the wife to take all of her property entitlement from the immediately available assets whereas the husband had a disproportionate share of his from assets that he cannot immediately access.

2. The intent of the super splitting legislation is to ensure that the artificial divide whereby one party, commonly the husband, has the sole benefit of superannuation saved for during cohabitation, no longer operates. Because of the super splitting legislation the non-member party, usually the wife, can share in the benefits of retirement planning through superannuation. Thus, the spectre that in her retirement she is more likely to live in comparatively parlous circumstances can be redressed. Does this mean that the court must order the distribution of the assets in accordance with the findings otherwise made pursuant to s.79(4) and 75.(2) to both the splittable superannuation and also the available assets? In my view it does not. The court is enjoined to consider the particular circumstances of each case and hence deliver individual justice. Thus, in some cases it will be appropriate to order that a party take their superannuation entitlement by an adjustment to other assets. In this case, I do not have evidence concerning the amount the wife needs to re-house. There is no suggestion that even if taking 100 per cent of her entitlement from available non-superannuation assets, the wife will have enough to buy a home without borrowing additional funds. If this result is ordered the wife will have considerably less available superannuation upon her retirement. Unless provision for her future retirement is provided in these proceedings there is a real prospect that she will have manifestly inadequate superannuation upon retirement. Examined from the wife’s perspective I am satisfied that the wife should take her ordered entitlement from both superannuation and non-superannuation interests applying the overall percentage to each asset category. Examined from the husband’s perspective, there are no compelling factors which drive one outcome rather than the other. His greater earning capacity means that he can service higher mortgage repayments than the wife and still make greater contributions to superannuation than she will. Nonetheless, I am satisfied that in this case the court delivers a just and equitable outcome by treating like assets the same, providing for the parties’ need for proper future financial security through a mixture of superannuation and non superannuation assets.

3. I will not repeat the findings made thus far.  There are key findings that lead to my comfortable satisfaction that an outcome favourable to the husband 60 per cent compared to the wife’s 40 per cent is just and equitable.  Simply put, these include that the husband made an important greater initial contribution which contribution was fundamental to the parties’ future.  During cohabitation the husband’s family advanced funds, which although some were later repaid, all contributed to the parties’ security.  For these parties, cohabitation was a joint venture where both parties put in all of their efforts in securing their financial future, through the acquisition, maintenance and improvement of property (including superannuation) and providing for their family.  While both parties contributed to the welfare of the family in their role as home maker and parent, overall the wife’s contribution exceeded the husband’s. By taking significant responsibility for the home and children the wife contributed to the husband’s superannuation and his capacity to earn an income.  Post-separation contributions substantially favour the husband.  The funds received from his family were used to pay out joint matrimonial debts and otherwise are available for distribution.  The husband has made significant contributions to superannuation, which has more than doubled post-separation.  The increased value in the available assets which he has contributed has been significant and must be properly acknowledged.  The wife’s financial future is more modest and she does not have the capacity to earn an income comparable to that which the husband earns, nor to grow her superannuation at the rate he can.  The husband’s relationship with his partner modestly enhances his financial position in a manner not available to the wife.  The disparity in the parties’ future circumstances requires an adjustment in the wife’s favour.  I have carefully considered whether a 60 per cent – 40 per cent gap after such a long marriage is too wide. The wife’s counsel emphasised that the parties cohabited for nearly 24 years and marriage occurred 30 years ago.  The flavour of the submission was that with a long marriage there is a presumption of equality of contributions.  There is no presumption of equality between parties to a marriage, irrespective of the length of their union.  See Mallet (1984) 156 CLR 605.  For the reasons already given this differential is just and equitable.

Structure of the orders

1. The parties agree that the husband should have the opportunity to acquire the wife’s interest in Crofton.  Thus, the effect of the orders will mean that the husband has the home, his savings, coin and stamp collections, antiques and paintings, Hilux motor vehicle and shareholdings, the total of which is $768,081.  Because the husband has Crofton he will also have responsibility for the mortgage which means he will have net non-superannuation assets of $716,953.  Sixty per cent of $729,213 (net assets) is $437,528.  The wife has assets the total value of which is $12,260.  Forty per cent of $729,213 is $291,685.  Therefore, the husband must pay the wife $279,425.  The husband must pay the wife this amount within three months.  This is sufficient time for him to make such inquiries and implement necessary arrangements in order to borrow additional funds.  The wife’s need for payment is great and any longer period, given her circumstances, is inappropriate.  At the same time the husband must give the wife a discharge of mortgage or release from the Westpac Bank concerning the mortgage.  It is inappropriate to keep the parties financially connected in any way and doing so offends s.81 finality.

2. In the event that the husband fails to pay the monies ordered, Crofton will be sold.  Although it has an agreed value, the net proceeds cannot be known.  The total assets excluding Crofton (and the mortgage) are $150,341, forty per cent of which is $60,136.  Therefore, on Crofton’s sale, when the wife receives her forty per cent net share, there will have to be an adjustment in her favour paid from the husband’s sixty per cent.  The adjusting figure is $47,876. 

3. I agree with the husband’s solicitor that on its sale, Crofton may well incur a capital gains tax liability.  Provision must be made in the orders for payment of any capital gains tax liability that either party incurs on sale.  As the husband has possession of Crofton and he alone receives its income, pending settlement he must maintain the property and pay any rates and taxes as and when they fall due.  If he defaults, default must be paid out of his sale proceeds.

4. The parties’ total superannuation assets are $202,667.  Forty per cent of which is $81,066.  The wife has superannuation interests worth $19,406.  Therefore, the husband’s Westpac superannuation interest shall be split so that the wife receives a base amount of $60,136.  In Wilkinson, the Full Court held, “We are of the view, at least as presently advised, that the operative date or time should as a general rule be the date of valuation of the interest for the reason that the member’s interest may continue to grow from the date of valuation to the date the orders are made”.  In this matter the parties agreed on the value of the husband’s superannuation interest as at the date of hearing.  If it was calculated by reference to an earlier valuation date there is no evidence of this.  Thus, the operative date will be the date of hearing.  Any earlier date would be arbitrary and inconsistent with the intent apparent in Wilkinson .

5. The wife wishes to have additional personalty from Crofton.  The items claimed were acquired during cohabitation and have no particular intrinsic value to either party.  However, the wife has twice sought personalty from the home, all of which was readily provided by the husband.  In the six years since separation, the husband has had the items which the wife now claims.  This long after separation, there is no basis for further adjustment to personalty. 

1. For these reasons I make the orders as at the start of this judgment.

I certify that the preceding one hundred and one (101) paragraphs are a true copy of the reasons for judgment of Ryan FM

Associate:  S. Mashman

Date:  11 July 2005