WAHLERS & BAGLEY
[2011] FMCAfam 169
•5 April 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WAHLERS & BAGLEY | [2011] FMCAfam 169 |
| FAMILY LAW – Property – de facto relationship of 10 years – consideration of contributions and section 90SF(3) factors as well as whether to make a superannuation splitting order – given relatively small asset pool and respondent’s superior earning capacity orders made for applicant to retain a greater proportion of the realisable assets and there be no superannuation splitting order. |
| Family Law Act 1975, ss.75, 79, 90SF, 90SM |
| Mallet and Mallet (1984) FLC 91-507 Norbis v Norbis (1986) FLC 91-712 Robb and Robb (1995) FLC 92-555 Clauson and Clauson (1995) FLC 92-595 Pierce and Pierce (1999) FLC 92-844 Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 |
| Applicant: | MS WAHLERS |
| Respondent: | MR BAGLEY |
| File Number: | MLC 5057 of 2010 |
| Judgment of: | Bender FM |
| Hearing date: | 4 March 2011 |
| Date of Last Submission: | 4 March 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 5 April 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Middlemis |
| Solicitors for the Applicant: | J A Middlemis |
| Counsel for the Respondent: | Mr Puckey |
| Solicitors for the Respondent: | Walsh & Blair Lawyers |
ORDERS
The parties sign all documents and do all things necessary to place the property at Property R, Victoria (“the real property”) on the market for sale (“the sale”) and upon completion of the sale, the proceeds of the sale be applied:
(a)firstly to pay all costs, commissions, and expenses of the sale;
(b)secondly to discharge the mortgages and any other encumbrance affecting the real property;
(c)thirdly the balance then remaining be divided in the proportion of:
(i)26 per centum thereof to the applicant; and
(ii)74 per centum thereof to the respondent and from the respondent’s share of proceeds of sale the respondent pay to the applicant the sum of $37,462.53.
Pending the payment or completion of the sale:
(a)the applicant have the sole right to occupy the real property and during such right of occupation the applicant pay all rates and taxes and the like apportionable outgoings of the real property as they fall due;
(b)the parties hold their respective interests in the real property upon trust pursuant to these orders; and
(c)neither party encumber the real property without the consent in writing of the other party.
In the event the Holden Commodore Clubsport motor vehicle and/or the Toyota Land Cruiser motor vehicle currently in the possession of the applicant are registered in the respondent’s name, then the respondent forthwith do all acts and things and sign all necessary documents to transfer to the applicant, at her expense, all his right, title and interest in the Holden Commodore Clubsport motor vehicle and/or the Toyota Land Cruiser motor vehicle.
In the event the 2003 Ford F250 Ute and Jail Truck in the respondent’s possession are registered in the applicant’s name then the applicant forthwith do all acts and things and sign all necessary documents to transfer to the respondent, at his expense, all of her right, title and interest in the 2003 Ford F250 Ute and Jail Truck.
The respondent be liable for and indemnify the applicant against all payments in respect of the loans on the Holden Commodore Clubsport motor vehicle and the 2003 Ford F250 Ute.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the property being deemed to be in the possession of the applicant);
(b)insurance policies remain the sole property of the owner/beneficiary named thereon;
(c)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
IT IS NOTED that publication of this judgment under the pseudonym Wahlers & Bagley is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BENDIGO |
MLC 5057 of 2010
| MS WAHLERS |
Applicant
And
| MR BAGLEY |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter relates to an adjustment of property between the parties who were in a de facto relationship between 1999 and May 2009.
The applicant is seeking orders in the following terms:
a)the former family home be sold and that from the net proceeds of the sale the applicant receive 90 per cent and the respondent receive 10 per cent;
b)the applicant retain the Holden Commodore Clubsport motor vehicle, the Toyota Land Cruiser motor vehicle, the horses, tack and float and her superannuation;
c)the respondent retain the 2003 Ford F250 Ute, the Jail Truck, the ride-on mower, tools of trade and his superannuation; and
d)the respondent be responsible for the debts owing on the Holden Commodore Clubsport and the 2003 Ford F250 Ute.
The respondent is seeking orders in the following terms:
a)
the former family home be sold and from the net proceeds of sale the applicant receive 11 per cent and the respondent receive
89 per cent;
b)the applicant retain the Holden Commodore Clubsport motor vehicle, the Toyota Land Cruiser motor vehicle, horses, tack and float, the chattels in the former family home and her superannuation;
c)the respondent retain the 2003 Ford F250 Ute, the Jail Truck, ride-on mower and his superannuation; and
d)the respondent be responsible for the debts on the Holden Commodore Clubsport, the 2003 Ford F250 Ute and for the credit card debts with ANZ and GE Finance.
Background
The applicant was born [in] 1961 and is 49 years of age. She is employed on a part-time basis as a [omitted]. She earns approximately $40,000.00 per annum. Her two youngest children from a previous relationship [X] aged 18 years and [Y] aged 17 years live with her. She has not re-partnered.
The respondent was born [in] 1971 and is 39 years of age. He is employed as a [omitted] and is currently based in the Philippines. His current salary package is $200,000.00 per annum. He has not re-partnered.
The parties commenced their relationship in mid 1998. The applicant moved from her home in Bendigo to [omitted], New South Wales in January 1999. The parties lived in various parts of New South Wales until moving to the former family home in Property R, Victoria in 2005. The applicant’s two youngest children, [X] and [Y], lived with the parties for the entirety of the relationship.
The parties had a somewhat unusual relationship in that for a significant part of their time together, the respondent was employed away from the former family home working either in another city or overseas.
The initial affidavits filed by the parties in these proceedings were very vague and, it is conceded, somewhat inaccurate as to the parties’ financial history. However both parties filed trial affidavits, the applicant on 7 February 2011 and the respondent on 15 February 2011, which both agreed accurately reflected their financial history. From the later affidavits the following financial history became apparent:
4 April 1996 The respondent purchased Property K, New South Wales (“the Property K property”), with his then partner Ms J for $143,000.00. A mortgage of $125,000.00 was secured over the property;
1998 The respondent and Ms. J separated;
13 February 1999 Ms. J transferred the Property K property to the respondent. The respondent paid Ms J $22,000.00 and refinanced the loan into his sole name for an amount of $115,135.20. The consideration on the transfer was $85,000.00, representing 50 per cent of the value of the property at that time;
February 1999 The respondent purchased an investment property at Property C, New South Wales (“the Property C property”), for $339,900.00. The totality of the purchase price was borrowed;
July 1999 The parties moved into the Property K property;
March 2003The property at Property W, New South Wales (“the Property W property”), was purchased in the respondent’s sole name for $160,000.00. A $16,000.00 deposit was paid from savings and otherwise the balance was borrowed. An additional $45,877.00 was also borrowed which was utilised for improvements on the Property W property, plant and equipment and for living expenses. The parties moved to live at the Property W property;
20 January 2004 Property K sold for $360,000.00. The net proceeds of sale was $126,080.00 and was utilised by the parties for living expenses;
January 2005 The parties purchased Property R, Victoria (“the former family home”) for $320,000.00 in their joint names. The deposit of $32,00.00 was paid from savings and otherwise the purchase was funded by two joint loans from ANZ bank in the sums of $255,000.00 and $85,000.00 respectively;
January 2006 Property W was sold for $250,000.00. After discharge of the mortgage on that property and a reduction in the mortgage on the former family home by $57,137.62, the net proceeds received were $19,857.09 and were used for living expenses;
2005-2009The applicant has a keen interest in horses. Horses, tack and a horse float were purchased during the relationship;
February 2009 The respondent sold the parties’ tractor for $5,000.00. The parties dispute how the sale proceeds were utilised. The applicant claims the proceeds of sale were retained by the respondent. The respondent claims $1,000.00 was spent on a laptop computer, a digital camera and the applicant otherwise retained the balance;
2005-2009The parties purchased various motor vehicles throughout their relationship. At the time of the final hearing they owned a Holden Commodore Clubsport, a Toyota Land Cruiser, the 2003 Ford F250 Ute and a Jail Truck. The Holden Commodore Clubsport and the 2003 Ford F250 Ute are subject to finance in the respondent’s name. The respondent is servicing those debts. The applicant has retained the Holden Commodore Clubsport and the Toyota Land Cruiser and the respondent has retained the 2003 Ford F250 Ute and the Jail Truck. Since separation, the respondent has also purchased, and is restoring, a Harley Davidson motorcycle.
Post separation The respondent paid the mortgage until December 2010. The respondent has paid and continues to pay the car loans and credit card debts.
Both parties agree that the former family home is to be sold. The applicant is not in a position to buy the respondent’s interest in the property and the respondent does not wish to retain the property.
The Issues
The issues that I have identified as between the parties in relation to their property matter are as follows:
a)What compromises the property pool, and in particular:
i)What is the value of the horses, tack and float?
ii)What is the value of the ride-on mower?
iii)What is the value of the respondent’s tools and should they be included in the pool?
iv)Should the jointly valued chattels in the former family home be included in the pool?
v)Should the respondent’s current bank balance be included in the pool?
vi)Should the proceeds from the sale of the tractor be included in the pool? and
vii)Should the credit card debt at separation be included in the property pool?
b)What adjustments should be made for the parties’ respective financial and non-financial contributions?
c)Should there be an adjustment in the applicant’s favour pursuant to section 90SF(3) of the Family Law Act 1975 (“the Act”)? and
d)How should the Court approach a division of the parties’ property and in particular should the parties’ superannuation entitlements:
i)Be dealt with on an asset-by-asset basis or on a global basis? and
ii)Should the Court make a superannuation splitting order or should the applicant retain a greater proportion of the parties’ realisable assets?
The legislation
Part VIIIAB of the Act sets out the Court’s powers when dealing with financial matters relating to de facto relationships.
Section 90SM of the Act defines the Court’s powers in determining applications for property settlement between de facto couples.
Sub-section 90SM(3) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 90SM(4) of the Act sets out the matters the Court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters are:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i)to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii)otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c)the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e)the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
The matters to be taken into account under section 90SF(3) of the Act are as follows:
(a)the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship ); and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(i)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i)the property of the parties; or
(ii)vested bankruptcy property in relation to a bankrupt party; and
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i)a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii)a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i)a party to the subject de facto relationship; or
(ii)a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(q)any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship; and
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship; and
(t)the terms of any financial agreement that is binding on a party to the subject de facto relationship.
The four-step approach
In Hickey and Hickey and Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 at [39], the Full Court of the Family Court described the preferred four-step approach in property matters. Whilst this decision related to a couple who had been married, I am satisfied that the approach is equally applicable to parties who were in a de facto relationship. The four-step approach was described by the Full Court in the following terms (for the sake of clarity, where ss.79(4)(a), (b) and (c) are referred to, the relevant sections in this matter are ss.90SM(4)(a), (b) and (c), where ss.79(4)(d), (e), (f) and (g) are referred to, the relevant sections in this matter are ss.90SM(4)(d), (e), (f) and (g) and where s.75(2) is referred to, the relevant section in this matter is s.90SF(3)):
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), ("the other factors") including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case ….
Assets and liabilities
The parties agree that former family home is valued at $425,000.00 and encumbered by two mortgages to the ANZ Bank in the sums of $235,000.00 and $27,000.00 respectively.
The parties also agree on the value of their motor vehicles and the level of their indebtedness.
At the conclusion of the parties’ evidence, because of time constraints, it was ordered that both parties provide to the Court and each other written closing submissions. It was from those submissions that the “issues” in paragraph 10 herein were identified.
In her written submissions, the applicant estimated the value of the horses, tack and float to be $5,000.00. In her oral evidence she estimated their value to be $8,500.00. This later figure was adopted by the respondent in his written submissions. Absent independent evidence, I accept the figure of $8,500.00 as best reflecting the value of these items.
The applicant estimates the value of the ride-on mower to be $6,000.00. The respondent estimates its value to be $1,500.00. Neither party produced independent expert evidence supporting their respective estimates. It was the respondent’s evidence that the ride-on mower is of some age and that when he collected it from the former family home, it was in poor condition and had not been used for many months. In all the circumstances, I am of the view the respondent’s estimate is more accurate than that of the applicant. I find the value of the ride-on mower to be $1,500.00.
In relation to the respondent’s tools, neither party provided affidavit or oral evidence at the final hearing of the matter as to what the respondent’s tool collection consisted of, or its value. It was however included in the list of assets contained in the applicant’s closing submissions. In such circumstances I am not in a position to make any findings as to the existence of the tool collection or its’ value. Hence I am unable to include the tool collection in the asset pool.
By agreement, the parties engaged [omitted] Auctioneers Pty. Ltd. to value the motor vehicles, chattels and plant and equipment at the former family home. Such valuation took place on or about
26 October 2010. The value of the inspected items, excluding motor vehicles, was $5,000.00. It is agreed these items will be retained by the applicant. Their value will be included in the asset pool.
Post-separation savings of the parties do not form part of the parties’ joint assets and will not be included in the property pool.
It was the respondent’s evidence that he sold the parties’ tractor to a neighbour for $5,000.00 in February 2009. He deposed that the neighbour made an initial payment of $1,000.00 which was spent on a laptop computer and digital camera and that the balance of $4,000.00 was utilised by the applicant. The applicant refutes this evidence. It is her evidence that the entirety of the sale proceeds were retained by the respondent. Neither party was cross-examined on this issue. Whatever happened with the proceeds of sale, the sale of the tractor occurred prior to separation and in those circumstances I am of the view the proceeds should not be included in the asset pool.
It is the respondent’s evidence that at separation there were credit card debts of $8,700.00 payable to ANZ and GE Finance. There was no evidence given to the Court that confirmed the figure claimed, which of the parties had access to the credit cards and what the credit cards had been used for. In her closing submissions, the applicant did not acknowledge the credit card debts to be joint debts of the parties. It was the respondent’s evidence that he had been paying credit card debts since separation but he did not specify which credit cards or whether they related to pre-separation or post-separation usage. Neither party was cross-examined on this issue. On balance, and absent any evidence, I am of the view the claimed credit card debts should not form part of the pool.
In all the circumstances, I find the pool consists of the following:
Property R
Less mortgages to ANZ Bank$425,000.00
<$235,000.00>
<$27,000.00>
$163,000.00
Holden Commodore Clubsport motor vehicle $12,000.00 2003 Ford F250 Ute $45,000.00 Toyota Land Cruiser motor vehicle $8,500.00 Jail Truck $2,500.00 Horses, Tack and Float $8,500.00 Ride-on mower $1,500.00 Chattels in the former family home $5,000.00 Total $246,000.00 Liabilities:
Ford credit debt on 2003 Ford F250 Ute <$38,000.00> Holden Commodore Clubsport finance <$17,000.00> Total <$55,000.00>
REALISABLE NET ASSET POOL $191,000.00 Superannuation:
Applicant’s Superannuation $7,429.12 Respondent’s Superannuation $104,800.00 Total $112,229.12
TOTAL NET ASSET POOL $303,229.12
Contributions
Whilst it was conceded by the applicant that the respondent made an initial contribution to the parties’ property arising from his equity in the Property K property, the applicant argued that there was no evidence before the Court as to the value of that equity. The applicant argued that whilst the respondent claims the value of Property K at the time of transfer to Ms. J was $175,000.00, no sworn valuation was produced confirming that valuation.
The applicant further argued that this initial contribution has been “eroded” over the 10 years of the parties’ relationship arising from her contribution as homemaker and partner during this period.
The applicant argued that the parties’ contributions during the 10 year relationship should be considered to be equal. It was argued that the parties’ living arrangements were something they agreed to as between themselves and that in so doing the applicant enabled the respondent to advance his career.
Further, the applicant argued that the parties’ agreed living arrangements, increased her role as homemaker, rather than reducing it, as the burden of maintaining the parties’ homes was borne more fully by her.
The applicant further argued that whilst the respondent did earn a considerable income during the relationship, the parties’ net property position at the end of their relationship was not reflective of that high level of income. It was suggested that this was a reflection of the respondent’s “spend-thrift” ways, rather than any profligate spending on the applicant’s part. This submission was based on the respondent’s unconvincing evidence as to why, when in receipt of an income of $200,000.00 per annum plus all living expenses when working in the Philippines, he has only been able to save $6,000.00 since separation.
It was therefore submitted on behalf of the applicant that any loading to the respondent for his contributions should not exceed 10 per cent.
It was submitted on behalf of the respondent that his contributions in this matter are “overwhelming”. They were summarised to include three phases:
a)a significant initial capital contribution in the form of the equity in the Property K property, which figure was put at $126,000.00, being the amount realised upon its sale in January 2004;
b)a greater contribution of income and financial support of the applicant and her children of a previous relationship throughout the relationship; and
c)a greater post-separation contribution in the form of servicing the mortgage on the former family home and the finance on the Holden Commodore Clubsport motor vehicle retained by the applicant.
It was submitted on behalf of the respondent that it was his equity in the Property K property that enabled the parties to invest in the various properties that resulted in their ability to acquire the former family home.
It was further submitted that the respondent’s initial contribution has not been eroded by any contributions of the applicant during the relationship. The respondent argued the applicant derived considerable support from the respondent in the form of income and accommodation for herself, [X] and [Y].
The respondent further argued that the applicant’s contribution as homemaker should be given limited weight because of the unusual nature of the parties’ relationship, in that the respondent’s long absences from home because of his employment meant neither personally supported the other.
The respondent submitted that the applicant’s care of her children does not constitute a relevant welfare contribution on her part, whereas the respondent’s financial and non-financial contribution in the support of her children is a relevant factor on his part. The Court was referred to the Full Court decision of Robb and Robb (1995) FLC 92-555 where their Honours Lindenmayer, Finn and Joske JJ held:
“In considering whether the justice of a case requires some act done by a party to be taken into account under s. 75(2)(o), the Court should, we think, have regard primarily to the existence or otherwise of any legal obligations, as between the parties, in relation to the doing of that act, and also, perhaps, to ordinary notions of justice and equity between the parties.
In this case, the wife has a legal duty to maintain the children of her prior marriage, which duty had primacy over the duty of any other person, other than the children’s father, to so maintain them: ss. 66A and 66B of the Act. The husband, on the other hand, had no legal duty to maintain these children at any time during the marriage because, by s. 66G, a step-parent has such a duty only if he or she is a guardian of the child, or has custody of the child by an order of a court, or a court having jurisdiction under Part VII of the Act by order determines that it is proper for the step-parent to have that duty. None of those precautions existed in this case.
Accordingly, in contributing to the support of these children the wife was merely honouring a legal obligation which she owed to the children, whist the husband, in making his contribution, was acting essentially as a volunteer assisting the wife in the discharge of her legal obligations. Upon that basis, whist we consider the justice of the case clearly required the husband’s contribution to be taken into account under s. 75(2)(o), the same cannot be said of the wife’s contribution. In making that contribution the wife was in no way discharging or assisting to discharge any legal obligation of he husband.”
Finally, it was submitted on behalf of the respondent that when considering the question of the impact of the passage of time on a party’s initial capital contribution, a consideration of the facts and determination in Pierce and Pierce (1999) FLC 92-844 is a useful guide to an appropriate division in this case.
In Pierce and Pierce (supra) the parties were in a relationship of some 10 years. The husband contributed the capital which largely funded the purchase of the former family home. It was submitted that, as with this case, the equity in the former family home as the time of the trial was not a lot more than the initial contribution. The Full Court assessed the husband’s contribution as attracting a 20 per cent loading in this favour.
The respondent submitted that in Pierce and Pierce (supra), the parties had two children and the wife’s contribution as homemaker and parent was considerably greater than that of the applicant in this matter. It was therefore argued the applicant could not argue she had made a greater contribution than that of the wife in Pierce and Pierce (supra).
It was therefore submitted that there should be an adjustment for his greater contribution in the respondent’s favour of 30 percent of the non-superannuation assets.
It was quite clear that it was the respondent’s initial equity in the Property K property that enabled the former family home to be acquired.
I do not agree with the respondent’s contention that the contribution by the respondent from the Property K property should be valued at $126,000.00. This is the amount realised when this property sold
five years after the commencement of co-habitation. I am satisfied that at the commencement of cohabitation the value of Property K was $175,000.00. In January 1999 the mortgage on the property was $115,000.00. Thus the equity in the property at the commencement of co-habitation was $60,000.00.
I am also not persuaded by the respondent’s arguments that the applicant’s contribution as homemaker was somehow diminished by the rather unusual living arrangements of the parties arising from their mutual decision in relation to the respondent’s career. Such decision placed the homemaking load squarely on the applicant’s shoulders.
Whilst the respondent’s income during the relationship was significant, especially when working overseas, this is not reflected in the parties’ asset base. No evidence was put before the Court as to why the parties were unable to accumulate any savings or reduce their level of debt during their relationship. Both seem to lay the blame for this at the feet of the other.
I am satisfied that there should be a loading in the respondent’s favour for his initial contribution, but not at the level claimed by the respondent. I am of the view that there should be a 20 per cent adjustment in favour of the respondent.
Section 90SF(3) factors
The applicant is 49 years of age. She currently earns a modest income of $40,000.00 per annum as a [omitted]. She has not re-partnered. She has responsibility for the care of her two youngest children who are
18 and 17 years of age respectively.
The respondent is 39 years of age. He is employed in the [omitted] industry working on [omitted] overseas. His current salary package is $200,000.00 per annum, plus living expenses whilst working overseas in the Philippines. He has not re-partnered.
It was the applicant’s evidence that when she left Bendigo to join the respondent at the commencement of their relationship, she sacrificed a prospective career as a [omitted]. The respondent disputes this claim. It was his evidence the applicant was unemployed, or at best, doing some part-time [omitted] when they met. The applicant provided no evidence supporting her claim of career sacrifice in moving to join the respondent at the commencement of their relationship. She returned to live in the Bendigo region in 2005 and gave no evidence of attempting to re-ignite this career. Her evidence in this regard was not compelling.
It was submitted on behalf of the applicant that the disparity in the parties’ respective earning capacities, the disparity in their skill base and their age differences are such that there should be a 15 per cent loading in the applicant’s favour on the basis of section 90SF(3) factors.
It was argued on behalf of the respondent that whilst there is a clear disparity between the parties’ respective earning capacities, the applicant’s earning capacity has not been adversely effected by the relationship.
The respondent’s Counsel referred the Court to the matter of
Clauson and Clauson(1995) FLC 92-595 at page 81,912 where the Full Court held that section 75(2) factors (in this case section 90SF(3) factors) are
“not an exercise in social engineering.”
Reference was also made to the High Court decision of
Mallet and Mallet(1984) FLC 91-507 at page 79,127 where it was held
“The object of this section [sic being section 90SM(4) for the purposes of this matter] is not to equalise the financial strengths of the parties.”
As noted earlier in this judgment, the Full Court in Robb and Robb (supra) held that where a party to a relationship maintains the children of the other party, it is appropriate that such contribution be considered pursuant to section 75(2)(o) of the Act (the comparable section to section for the purpose of this matter being section 90SF(3)(r)).
The respondent supported the applicant’s children for the entirety of the relationship, including supporting private schooling for [Y].
It was submitted on behalf of the respondent that there should be no substantial adjustment in the applicant’s favour because of their income disparity and at best such adjustment should be no more than five to
10 per cent.
Balancing the competing section 90SF(3) factors, I am of the view there should be an adjustment in the applicant’s favour of 10 per cent.
Superannuation
It was submitted on behalf of the applicant that the Court should adopt a global approach to this matter.
The applicant submitted that as neither party is seeking a superannuation splitting order, their superannuation entitlements should be included in a single asset pool, and a division of the parties’ assets should be determined on the basis that each party seeks to retain their superannuation entitlements.
The respondent submitted that the parties’ superannuation entitlements should be considered separately to their non-superannuation assets.
In the written submissions on behalf of the respondent, it was argued that where there had been
“limited cohabitation, no children, enormous disparate contributions, superannuation accumulated directly from employment… and both parties are now employed, adjustments to superannuation accumulated by each party should not be significant if the contribution and maintenance factors are properly applied. It is submitted that each party should retain their superannuation entitlements and no further adjustments should occur in relation to superannuation.”
It was further submitted on behalf of the respondent that if the Court were to make any significant adjustment in favour of the applicant in respect to superannuation, it should be done by way of a superannuation splitting order and not by way of increasing the division of the non-superannuation assets.
I am not persuaded by the respondent’s argument that there should be no adjustment as between the parties in relation to their respective superannuation assets.
It is a matter for the discretion of the Court as to whether it deals globally with the parties’ assets, including their superannuation entitlements, or takes and asset-by-asset approach.
That either approach is a legitimate and appropriate exercise of discretion when determining property matters has been confirmed by the High Court in Norbis v Norbis (1986) FLC 91-712.
The Court is not bound by the proposals of the parties as to what orders it makes as to the division of their property. The Court will make the order it deems is just and equitable having considered all the relevant factors under section 90SM of the Act, including whether a superannuation splitting order would achieve a just and equitable outcome.
Just and equitable
It was the applicant’s submission that the Court should make an overall adjustment in her favour of 55 per cent. She seeks that no superannuation splitting order be made and that in those circumstances she receive 90 per cent of the net proceeds of the sale of the former family home.
It was the respondent’s submission that there should be a division of the non-superannuation assets in his favour on the basis that he receive 70 per cent of these assets and the applicant receive 30 per cent of these assets. On the respondent’s asset pool, and in line with the agreed division of motor vehicles, chattels, horses, plant and equipment, it was the respondent’s position that he would retain
89 per cent of the net proceeds of the sale of the former family home. The respondent otherwise proposed that the parties retain their respective superannuation entitlements.
Neither party’s proposal can be seen to be a just and equitable resolution of this matter. Theirs has been a relationship of some
10 years duration. The respondent made a larger initial contribution and the applicant’s entitlements under section 90SF(3) are greater than those of the respondent.
I have determined that the parties’ realisable assets should be divided 60:40 in the respondent’s favour.
I am of the view that such a division is also applicable to the parties’ respective superannuation entitlements on the basis that the respondent has made the greater contribution to his superannuation, both pre and post-separation.
In relation to the non-superannuation assets, and based on the agreed division of the assets and liabilities as between the parties, the practical result of my determination is that upon settlement of the sale of the former family home and payment of sale costs and discharge of the mortgages, the applicant would receive 26 per cent of the net proceeds of sale and the respondent would receive 74 per cent of the net proceeds of the sale.
Given the disparity in the parties’ respective earning capacities, it is apparent the respondent has the ability to rebuild his asset base in a relatively short period of time. By comparison, the applicant’s capacity to rebuild any form of capital asset base is very limited and will be very much dependent on the monies she receives from these proceedings.
In all the circumstances, I am of the view that the just and equitable outcome of this matter is there be no superannuation splitting order and that there be an adjustment in the applicant’s favour such that the respondent pay to the applicant the sum of $37,462.53 from his share of the proceeds of sale of the former family home reflecting 40 per cent of the parties’ superannuation entitlements.
Accordingly, orders will be made whereby the former family home will be sold and the net proceeds divided such that the applicant receives
26 per cent of same and the respondent receives 74 per cent of same. From the respondent’s share of the sale proceeds, he shall pay the applicant $37,462.53. Otherwise the parties will retain the assets and motor vehicles currently in their possession and the respondent will indemnify the applicant in respect to the loans on the Holden Commodore Clubsport motor vehicle and the 2003 Ford F250 Ute.
I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of Bender FM
Date: 5 April 2011
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