Volman and Volman

[2018] FamCA 345

FAMILY COURT OF AUSTRALIA

VOLMAN & VOLMAN [2018] FamCA 345

FAMILY LAW – Property adjustment – Where both parties bankrupt – Where the only property for division is modest accrued superannuation entitlements  – Where appropriate to make adjustive orders – Where non-disclosure by the husband – Where appropriate to be robust in considering the outcome – Where contributions favour the wife – Where s 75(2) considerations favour the wife – Where appropriate that there be a splitting order in favour of the wife of the totality of the husband’s superannuation.

Family Law Act 1975 (Cth) ss 75(2), 79

Bevan & Bevan [2014] FamCAFC 19
Chancellor & McCoy [2016] FamCAFC 256
Chapman & Chapman [2014] FamCAFC 91
Russell & Russell (1999) FLC 92-877
Scott & Danton [2014] FamCAFC 203
Stanford v Stanford [2012] HCA 52
Teal & Teal [2010] FamCAFC 120

APPLICANT: Mr Volman

FIRST RESPONDENT: Ms Volman

SECOND RESPONDENT: Mr Leganzo (Trustee in Bankruptcy for Mr Volman and Trustee for Volman Family Trust

THIRD RESPONDENT: Mr Curtis (Trustee in Bankruptcy for Ms Volman)

FILE NUMBER: PAC 4140 of 2015

DATE DELIVERED: 18 May 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 21 March 2018

REPRESENTATION

APPLICANT – SELF-REPRESENTED LITIGANT: Mr Volman in person

SOLICITOR FOR THE FIRST RESPONDENT: Ms Wade of Fairfax Lawyers

SOLICITOR FOR THE SECOND RESPONDENT: Mr Muir of Oliveri Lawyers

SOLICITOR FOR THE THIRD RESPONDENT: Ms Sweeney of Hammond Nguyen Turnbull

Orders:

1. That pursuant to s 90MT(1)(b) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes payable in respect of the superannuation interest held by Mr Volman in the B Super (Membership: ..19) then Ms Volman shall be entitled to be paid 100 per cent of the interest of Mr Volman calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth) and that there be a corresponding reduction to the entitlement to Mr Volman to whom the splittable payment would have been made but for this Order.

2. That the Trustee of the B Super shall do all acts and things and sign all documents as may be necessary to pay the entitlement whenever the Trustee makes a splittable payment out of the interest of Mr Volman in the fund.

3. That Orders (1) and (2) shall have effect from the operative time and the operative time is four (4) business days after service of this order on the Trustee.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Volman & Volman has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 4140 of 2015

Mr Volman

Applicant

And

Ms Volman

Respondent

REASONS FOR JUDGMENT

1. The application for determination is the wife’s application for property adjustment orders in circumstances where the wife and the husband are both bankrupt.

2. The wife’s application is limited to seeking a splitting order in respect to the husband’s superannuation entitlements that did not vest in his trustee in bankruptcy.

3. It is common ground that the finalisation of the parties’ bankruptcies will see little or no surplus for ultimate return to each of the parties.

4. The wife at hearing relied on the following:

   a)her Amended Response filed 26 February 2018;

   b)her trial affidavit filed 26 February 2018; and

   c)her Financial Statement filed 26 February 2018.

5. Whilst the proceedings were listed for undefended hearing the husband appeared in person and was permitted to rely on his affidavit filed in Court on 21 March 2018.

6. The husband seeks that the wife’s application for a superannuation splitting order be dismissed.

Context

1. The wife seeks a superannuation splitting order in her favour of the entirety of the husband’s superannuation benefit in the B Super Fund.

2. The wife is presently 34 years old and the husband is presently 36.

3. The parties married in 2005.

4. There are four children of the relationship now aged 12, seven, nearly five and three years of age. The children live with the wife and have done so since the parties’ separation in early November 2014.

Short history

1. In February 2003 the husband purchased an investment property at Suburb C, NSW for $250,000.00 with a mortgage of about $225,000.00. The balance of purchase price was funded by the husband. The property was subsequently tenanted until February 2015 with rental income applied to the mortgage and outgoings.

2. In September 2004 the parties purchases a property at Suburb D, Qld that was to be the matrimonial home.  The property was purchased for $450,000.00 with a mortgage of $400,000.00. The balance was funded by way of loan from the wife’s brother for $75,000.00. This loan was paid back by 2007 with interest.

3. The property was refinanced in 2006 with the parties borrowing an additional line of credit facility for $48,000.00.

4. At the time of marriage the husband was self-employed. The wife worked in retail and also did some bookkeeping for his business.

5. In May 2007 the parties purchased a property at E Town, Qld for $85,000.00 and using the Suburb D property as collateral security borrowed the whole purchase price. The property was occupied by the parties as the matrimonial home and the Suburb D property was tenanted. In August 2009 the E Town property was sold and the parties returned to the Suburb D property with the husband then leasing a yard for business equipment.

6. The parties formed a partnership as to the husband’s business in March 2008. In 2010 the company F Pty Ltd was incorporated as trustee of the Volman Family Trust. The partnership continued to trade, leasing equipment to the Trust.

7. As the business expanded equipment was acquired on lease but the business struggled with debt. The parties borrowed further funds from the Commonwealth Bank and drew from the children’s bank accounts.

8. The parties separated for a time in early 2014 but reconciled and moved to rented premises in Sydney in August 2014. The Suburb D home was rented out.

9. The parties finally separated in November 2014 with the children remaining with the wife. The husband moved into the Suburb C property in February 2015 before moving to his parents’ home in Queensland in March 2015, leaving the Suburb C property vacant. The husband refused to relet the premises.

10. The wife resumed full time work in April 2015 so as to support herself and the children. The husband had an initial child support assessment of about $90.00 per week that was later reviewed resulting in arrears of $15,154.00 as at April 2017. He remains about $12,700.00 in arrears.

11. These proceedings were commenced in August 2015 by the husband.  In May 2016 orders were made to require the parties to tenant the properties at Suburb C and Suburb D with net income to be paid towards the mortgage debts. Otherwise, interim orders were made as to the children.

12. As at late 2015 the parties had assets that comprised:

    a)their partnership Ms and Mr Volman;

    b)the Volman Family Trust;

    c)the company F Pty Ltd;

    d)the Suburb C property valued at about $460,000.00 and subject to mortgage of about $$260,000.00; and

    e)the Suburb D property valued at about $600,000.00 and subject to a mortgage of about $330,000.00.

13. In October 2016 orders were made appointing a Single Expert to value the parties’ partnership, the company and the Trust. However, in November 2016 the husband caused a meeting of the members of F Pty Ltd (that is himself) to resolve to wind up the company. A liquidator was appointed to the company F Pty Ltd and later both the husband and wife were declared bankrupt.

14. The company liquidator later lodged a proof of debt in the sum of about $354,000.00 in the husband’s bankruptcy proceedings relating to a debt owed by the husband to the company.

15. The husband then disengaged from these property proceedings, failing to appear on several occasions leading to the matter being listed for undefended hearing on 21 March 2018.

16. In late 2016 the wife discovered that the husband’s new partner Ms G had incorporated H Pty Ltd to which the husband had “sold” on terms the assets and equipment of F Pty Ltd and the partnership Ms and Mr Volman. Ms G is required by agreement to make a $20,000.00 contribution to the husband’s bankrupt estate.

17. Final Consent orders were made as to the children on 26 April 2017 with the husband appearing by phone. The children live primarily with the wife and spend a few days with the father each month in addition to some holiday time.

18. On 16 May 2017 the parties’ real estate property was vested in their trustee in bankruptcy for sale. The trustees inform the Court that there will be little, if any surplus, in the parties’ respective bankrupt estates.

19. The property at Suburb C has been sold by the husband’s trustee in bankruptcy with net proceeds of about $171,000.00 to be divided by agreement between the parties’ trustees in bankruptcy as to 55 per cent to the wife’s bankrupt estate and 45 per cent to the husband’s.  A similar division between the parties’ bankrupt estates is expected as to the sale proceeds of the Suburb D property. Funds so derived will be applied to meet the claims of creditors.

20. The trustees acknowledge that the parties’ respective superannuation entitlements are non-divisible property in the parties’ bankruptcies and exempt from any action by the trustees.

The Approach to Property Adjustment

1. The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.

2. The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order. 

3. Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.

4. There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4).

5. The Court in the application of s 79(2) of the Act needs to conclude that it would be unjust or unfair to leave the parties’ property rights intact. In Chancellor & McCoy [2016] FamCAFC 256 the Full Court said:

   42.In adopting the approach she did, her Honour proceeded in accordance with what the Full Court said in both Bevan and Chapman, namely that it is open to a trial judge to take into account the matters stated in s 79(4) (or s 90SM) of the Family Law Act 1975 (Cth) (“the Act”) when determining whether it is “just and equitable” to adjust existing property interests. However, consistent with Stanford, her Honour also recognised that it was not open to her to decide that issue merely by reference to those matters. 

6. In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship. 

7. In particular, such a circumstance arises where both parties seek property adjustment orders but are unable to agree as to same. Here the wife seeks an order for adjustment of property. The husband does not.

8. The “asset pool” of superannuation such as it is for division comprises:

   Wife              J Super   $  84,647.00

   Husband        B Super     $  67,348.00

9. Otherwise, a consideration of s 79(4) factors as discussed below reveals it would be unjust or unfair to leave the parties’ property rights as they are.

10. In the circumstances as discussed above where there will be little if anything remaining from the parties’ bankrupt estates and where the wife has the ongoing primary care of the four children of the relationship now aged 12, seven, nearly five and three years of age with little support from the husband, it is just and equitable to make an order in relation to the modest superannuation entitlements of the parties.

11. It is appropriate that property adjustment orders be made.

12. Section 79(4) requires a consideration of the contributions made by the parties as defined in s 79(4)(a) to (c). The Court must then consider s 79(4)(d) to (g), in particular, the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant: (s 79(4)(e)).

13. The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.

Contributions

1. As to superannuation there is no evidence as to any accrued entitlements as at the commencement of cohabitation. It is to be inferred that benefits have substantially accrued thereafter. There is nothing to suggest that otherwise the parties’ various contributions should not be regarded as equal up to separation. Yet after separation the wife has had the primary care of the children.

2. As at November 2015, some months after separation the husband had about $60,500.00 in accrued superannuation. The wife at the time of separation had about $64,500.00 in accrued benefits.

3. As at the time of hearing the wife had accumulated superannuation in the sum of $84,647.00 by reason of further contributions from her post separation employment and fund growth. The husband’s had increased by only a few thousand dollars being indicative of no or very modest contributions after separation.

4. Overall, given the wife’s return to work and primary care of the children post separation, contributions as at the final hearing must favour the wife 65 per cent to the husband’s 35 per cent.

Section 75(2)

1. Both parties are only young. There is no evidence as to ill health such as would impact on their working capacity.

2. The wife is in full time employment earning about $65,000.00 per annum.

3. The husband has provided no financial disclosure and by reason of the discussion above it is difficult to infer what his circumstances are. It is appropriate that the Court take a most robust view of his non-disclosure in favour of the wife.

4. The “pool” for division is modest and represents preserved superannuation benefits that must await the parties reaching their statutory preservation age for release in many years hence, save for any application for early release on the basis of financial hardship in the interim.

5. The wife has the ongoing primary care of the parties’ four children with little financial support from the husband albeit in the context of an ongoing battle over child support.

6. There is a suggestion that the husband is cohabiting with a partner but there is no evidence as to the circumstances of such cohabitation.

7. Otherwise, the current pool of superannuation represents, it appears, the sole financial outcome of the parties’ relationship. It is a small sum to be divided.

Overall

1. Overall in the circumstances of this matter, particularly given the wife’s greater contributions and care of the children post separation and the husband’s non-disclosure and non-engagement with these proceedings, it is just and equitable and appropriate that the whole of the husband’s accrued superannuation entitlement be split in favour of the wife.

2. Orders will be made accordingly.

I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 18 May 2018.

Associate: 

Date:  18 May 2018