Waite and Waite
[2012] FMCAfam 73
•31 January 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WAITE & WAITE | [2012] FMCAfam 73 |
| FAMILY LAW – Substantial initial contribution of property by husband – husband’s contribution to care of children not children of the marriage. |
| Family Law Act 1975 (Cth), ss.75, 79, 90MT Family Law (Superannuation) Regulations 2001, r.14 Superannuation Industry (Supervision) Regulations 1994, r.7A |
| Hickey [2003] FLC 93-143 Coghlan [2005] FLC 93-220 |
| Applicant: | MR WALTERS |
| Respondent: | MS WALTERS |
| File Number: | DGC 120 of 2010 |
| Judgment of: | Phipps FM |
| Hearing dates: | 2, 3 & 4 August 2011 |
| Date of Last Submission: | 21 October 2011 |
| Delivered at: | Dandenong |
| Delivered on: | 31 January 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hall |
| Solicitors for the Applicant: | John Conquest Lawyers |
| Counsel for the Respondent: | Mr Glover |
| Solicitors for the Respondent: | Warren Graham & Murphy Lawyers |
ORDERS
That on or before 30 March 2012 (“the date”) the husband pay the wife the amount of $158,000 (“the amount”).
If the husband does not pay the amount on or before the date the property at Property H (“the property”) together with its water rights be sold in a manner to be agreed and if not agreed by an agent nominated by the President for the time being of the Real Estate Institute of Victoria or his or her nominee and in a manner determined by the agent so nominated and the proceeds of sale disbursed as follows:
(a)First in payment of the costs and expenses of the sale;
(b)Second in payment of any mortgage and any other encumbrances over the property;
(c)Third by payment of the amount less 20% of any capital gains tax payable as a result of the sale together with interest at the rate of 10.5% per annum on the amount so payable from the date until payment;
(d)Lastly by payment of the balance to the husband.
Otherwise each party is declared to have no interest in the property, including superannuation, in the possession or name of the other party, the contents of the house, all farm equipment and chattels and (omitted) and other livestock at the property are deemed to be in the possession of the husband.
That the following Order has effect from the operative time;
(a)That;
(i)A base amount of $100,000 is allocated, as required by s.90MT(4) of the Family Law Act 1975 (Cth), to the wife out of the husband’s interest in the Equipsuper Superannuation Fund (“Fund”); and
(ii)Pursuant to s.90MT(1)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of the husband’s interest in the Fund, the wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these Orders.
(b)That, having been accorded procedural fairness in relation to the making of this Order, this Order binds the Trustee of the Equipsuper Superannuation Fund (“the Trustee”).
(c)The operative time is the beginning of the fourth business day after the day on which an original certified copy of the final sealed Orders are served on the Trustee of the Fund.
(d)Liberty to either party or the Trustee to apply to implement this Order.
(e)That, after service of the payment split notice pursuant to the r.7A.03 of the Superannuation Industry (Supervision) Regulations 1994, the wife shall do all such acts and things and sign all such documents as may be necessary, including but not limited to, exercising her request pursuant to r.7A.05 of the Superannuation Industry (Supervision) Regulations 1994 for the creation of a new interest in her name in the Fund.
(f)That;
(i)The value of the transferable benefits to be transferred from the husband’s interest to the wife’s interest will be calculated by the Trustee in accordance with r.7A.11 of the Superannuation Industry (Supervision) Regulations 1994; and
(ii)Pursuant to r.14F of the Family Law (Superannuation) Regulations 2001, any payments made from the husband’s interest in the Fund after the Trustee has created a new interest in the wife’s name in the Fund, as contemplated by paragraph 4(e) of these Orders, are not splittable payments.
Otherwise all extant applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Waite & Waite is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DANDENONG |
DGC 120 of 2010
| MR WALTERS |
Applicant
And
| MS WALTERS |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Waite, the husband and Ms Waite, the wife, lived together on a farm owned by the husband. They have reached agreement on orders for the child of the marriage but do not agree on the property settlement. Both propose that the husband keep the farm and make a payment to the wife. The husband proposes that he pay $100,000 and that there be a splitting order of his superannuation so that the wife receives a base amount of $100,000. The wife proposes that the husband pay her $350,000 and the splitting order for superannuation be $150,000.
Issues arise under each of the four steps of the property process. Section 79(1) of the Family Law Act 1975 (Cth) provides that in property settlement proceedings the court may make such order as it considers appropriate. The following sub-sections set out the considerations the court is to take into account in deciding what is appropriate. This is a four step process. First, determine what are the assets and liabilities of the parties, next consider the parties’ contributions taking into account the matters in s.79(4)(a)-(d), next consider whether an adjustment should be made taking into account the matters referred to in s.75(2) insofar as they are relevant, and finally consider whether in all the circumstances it is just and equitable to make the proposed order. The four step process is usually applied to superannuation and non superannuation assets separately, but there are cases where this may not be appropriate.[1]
[1] Hickey [2003] FLC 93-143. For superannuation Coghlan [2005] FLC 93-220
The husband was born on (omitted) 1951. He is 60 years of age. The wife was born on (omitted) 1965. She is 47 years of age. The parties commenced living together in May 1997. The wife has two children from a previous relationship, Z born (omitted) 1989 and Y born (omitted) 1991. These children lived with the parties during the relationship.
The parties married on (omitted) 2000 and separated in January 2009. There was an unsuccessful attempt at reconciliation after that date. There is one child of the relationship, X born (omitted). He is aged five.
At the commencement of the proceedings the parties reached agreement on final orders in relation to X. They provide for the parties to have equal shared parental responsibility, and for him to live with the wife. They provide for X to spend time with the husband five nights in each fortnight, half school holidays and on the usual celebratory occasions.
Assets
The principal asset is the farm at Property H. The farm adjoins the (omitted) River and has 200ml of high reliability water rights and 89ml of low reliability water rights. The husband runs a (omitted) business purchasing (omitted) for sale. The property was valued by Mr R.
Mr R. valued the property on two bases, one assuming the water rights were sold with the property and the other assuming that the property and water rights were sold separately. When sold together with the water rights the property overall is worth more. Mr R. said that a purchaser would pay more overall for the property if it came together with the water rights, putting a higher value on the water rights when they came with the land.
The water rights can be sold separately. The husband submits this is the appropriate method of valuation because to pay money to the wife for the property settlement the only way he can raise the money is by selling water rights.
When the property and water rights are sold together Mr R. valued the farm at $720,000 as follows:
Direct comparison
41 hectares at $17,500 per hectare ($7,100 per acre)
say $720,000
Summation
Land and irrigation infrastructure
41 hectares at $5,000 $205,000
Dwelling and garage $ 95,000
Shedding and (omitted) $ 11,000
Water rights 200ml high reliability at $2000/ml $400,000
Water rights low reliability $89ml at 100/ml $ 9,000
Total $720,000
When the property and water rights are sold separately Mr R., in his written valuation, valued the property at $340,000 and the water rights at $310,000, a total of $650,000 He used a value of $1,500/ml for the high reliability water rights. After a number of matters were put to him in cross examination he amended the value for high reliability water rights to $1,650/ml, the midpoint of a range of $1,500-$1,800. Mr R. is an experienced valuer. His evidence of how he had reached the original figure of $1,500 was cogent. The value of, and demand for water rights has decreased because of good rain. A recent auction by the public water authority had mixed success. In the end, Mr R. used a combination of the publicly available information and enquiries to two other agents. After cross-examination he accepted that it was reasonable to use the midpoint of $1,500-$1,800. Public records showing recent sales at $2,000/ml, are, on Mr R.’s evidence, almost certainly sales of water rights with land.
When the property and water rights are sold separately Mr R.’s, adjusted valuation is $680,000 as follows:
Direct comparison
41 hectares at $8,300 per hectare ($3,350 per acre) say $340,000
Water rights separate from land $340,000
Total $680,000
Mr R. explained that the amount per hectare for the land was higher when it was sold without water rights.
Following separation the husband purchased another 50ml of water rights. He purchased them as an investment not because they were needed to work the farm. He said that 150ml of water was needed to work the farm.
This means that the husband could sell 50ml of water rights without affecting the viability of the farm. 50ml at $1,650/ml is $82,500. He has $330,500 superannuation, some of which is non preserved. He concedes that there should be a superannuation splitting order so that the wife receives $100,000 of his superannuation. The wife’s proposal is $150,000. The husband’s income is solely from the farm, an average of $23,000 per year in recent years. In closing submissions his counsel used $24,000 a year as the husband’s current income. The husband said he has not made any inquiries whether he could borrow money against the farm. He was employed until 2004 at the (omitted). He is able-bodied enough to work the farm. He has managed other properties on occasions. He has some prospects of casual work.
The husband wishes to retain the farm. It is probable that he will be able to find the funds to pay out the wife without selling more than 50ml of water rights. If he cannot the farm will then be sold, both land and water rights, and the wife paid the amount due to her and the balance to the husband. If that occurs it would be unfair to the wife to value the property on the basis that land and water rights would be sold separately. If the husband keeps the farm its value will be on the basis of land and water rights together. If the husband sells 50ml of water rights the farm’s value will be reduced. The reduction in value of the farm seems likely to be more than the amount he receives from the sale of the water rights. Logic suggests the reduction will be the difference between the value of the water rights with the land, $2,000/ml and the value without the land $1,650/ml but this is not clear from the evidence. Mr R. was not asked to make this valuation. There may be some tax benefit because if the husband sells the water rights bought after separation there will be a capital loss. Again this is not clear. While it would be unfair to the wife to use the lower valuation it is not necessarily unfair to the husband, and if there is any unfairness to him, it is quite small.
If I was to attempt to use a valuation between the two given by Mr R., I would have to engage in a degree of speculation, and I cannot do that. The appropriate valuation to use is $720,000, the value of the land with the water rights.
The husband values the (omitted) at $62,000. The wife values them at $80,000. (omitted) are sold by weight. As part of farm management the husband weighs the (omitted) from time to time. He last weighed them in April. The average weight was (weight omitted). When taken to the sale yards the (omitted) are curfewed for at least 12 hours before being weighed. The average weight loss is between 5% and 10%. The husband said he allowed 7% and so used an average weight of (weight omitted).
The husband used the most recent market report which showed sale prices between $1.62 and the $1.86 per kilogram. He used the amount of $1.65. The wife had analysed sales figures of (omitted) from the farm over previous periods and had a higher amount per kilogram. The husband says that this was for (omitted) in prime sale condition, including weighing over (weight omitted). None of the (omitted) on the farm were in this condition.
The husband then subtracted the various costs of sale totalling $80. He set out the component parts of the $80. They are not contested so it is unnecessary to set them out.
The (omitted) were not valued by a qualified valuer. The husband’s evidence of value is factual rather than opinion. The contest between the parties is the figures he has used, principally the amount per kilogram, although to some extent cross-examination was about value per animal. The husband’s evidence shows that (omitted) of the type he stocks are valued per kilogram, not per head. The amount the husband used, $1.65 per kilogram is reasonable. It is at the lower end of the recent sales figures but they are amounts for (omitted) in prime condition. The husband’s approach is reasonable. The value of the (omitted) is $62,000.
The husband values various items of farm equipment at a total of $8,000. He was cross-examined about values contained in a letter from a valuer, Mr P., of (omitted) Valuers dated 11 March 2010. He conceded in absolute terms only a few of the values. He did not make concessions sufficient to alter the figure of $8,000. The farm tax return for 2011 has a closing depreciated value of $8,444 but that includes sheds, farm improvements and the irrigation pump, all of which are included in the farm valuation.
The husband has a (year omitted) Mitsubishi Lancer motor vehicle which he values at $5,000. The wife has a (year omitted) Toyota motor vehicle which is financed through salary sacrifice through her employer, the (omitted). The wife puts a negative value on the motor vehicle, but since she obtains some benefit through the method of financing it is difficult to give it a comparable value to the husband’s motor vehicle. I will not include either motor vehicle in the assets.
At or about the time of separation there was about $100,000 in a farm bank account. The husband spent $48,500 buying 50ml of water rights which is included in the farm valuation. The wife seeks to include the balance in the assets.
The husband says the money has been spent on purchasing (omitted) and farm expenses, about $40,000 and the balance on living expenses. He gave evidence that all purchases and sales are recorded in the accounts and he was not challenged about this statement. There is no basis for disputing his evidence. The expenditure has been reasonable and so should not be added back as an asset.
The non-superannuation assets are :
Farm $720,000
(omitted) $ 62,000
Farm equipment $ 8,000
Total $790,000
Superannuation is agreed as follows:
Husband $330,528
Wife $123,000
Total $453,528
This is a case where superannuation and non-superannuation assets are to be treated separately. I will consider non-superannuation assets first.
Contributions
The parties commenced living together in May 1997 and separated in January 2009. They were separated for 12 months in 2004 when the wife moved into a nearby farm. The wife describes the situation as complicated. She said there were 12 months when her older boys could not live with the husband. It was not a separation in the sense that there was no relationship at all between the parties, but they were there were living in separate residences. The relationship was for 12½ years but with a one year interruption which was not a complete separation.
At the commencement of the relationship the husband owned the farm. He purchased the property in October 1995 for $282,000. Mr R. valued it as at 1997 at $340,000. At that time it had a mortgage of $83,000 and so a net value of $257,000. The valuation and the mortgage amount are agreed. In 1997 water rights could not be sold separately from the land. The husband had superannuation of $84,000 at the commencement of the relationship. He had the motor vehicle worth $5,000 and a four-wheel-drive tractor and plant and equipment worth $33,000. He had savings of $24,000. The wife’s only asset was a Nissan Bluebird motor vehicle.
From 1995 until March 2004 the husband was employed for 37 hours per week at the (omitted) doing (omitted). He says his income at the time the employment finished was $600 net per week. The employment ceased because the (omitted) burnt down and was not rebuilt. Otherwise he worked on the farm. Until 2000 it was used for agistment of (omitted). In 2000 the parties formed a partnership and commenced the (omitted) business which the husband still continues. The partnership has been dissolved.
In 2000 the husband received an inheritance of $30,000 which he used to reduce the mortgage on the farm.
At the commencement of the relationship the wife was working part time at (omitted) earning about $270 a week gross. After the relationship commenced the wife worked full-time except for a time around the birth of the child. She had several employers but now is employed by the (omitted) at the (omitted) on a salary of about $55,000 per year. The wife's financial statement puts the total sum of wages before tax of $891 per week and her benefit from employment of motor vehicle salary sacrifice at $245 per week. The financial statement says that she receives $210 per week family tax benefit.
The husband has made by far the greater financial contribution. The assets now available for distribution are the assets the husband owned at the commencement of the relationship with the exception of some water rights purchased soon after separation and the (omitted). Both parties worked during the relationship. Some of the income came from the farm. The wife assisted with the work on the farm and gives details in her affidavits. However given the wife had the principal care of three children it follows that the husband carried out more of the work. He was the one with the expertise.
The farm was operated as a partnership between the husband and wife, but it was the husband's capital contribution and largely his efforts that produced the income. The combination of the husband's employment earnings and the farm until 2004 means that up until then he had the greater income. Subsequent to that the wife had the greater income.
The approach to contributions where one party brings assets into a relationship has been discussed by the Full Court of the Family Court of Australia.
In Williams & Williams [2007] FamCA 313 the Full Court said at [26]:
We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in so doing it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
This passage was quoted with approval by Full Courts in Cabbell & Cabbel [2009] FamCAFC and Norman & Norman [2010] FamCAFC 66.
In Pierce and Pierce (1998) FamCA 74, (1999) FLC ¶92-844 the Full Court said at FamCA [28] FLC 85,881:
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. In the present case that use was a substantial contribution to the purchase price of the matrimonial home.
In this case the husband, at the commencement of the relationship, contributed the matrimonial home and a substantial part of the asset which produced the farm income. He contributed all the land and about half the water rights.
The principal asset is the farm with its water rights. The (omitted) are about 8% of the assets. The farming partnership, and so the acquisition of (omitted) started after the commencement of the relationship. The (omitted) would not have been purchased if the farm did not exist and do not require separate consideration from the farm. The equipment, for the purpose of assessing contributions, can be included with the farm. Some of the equipment existed at the commencement of the relationship. The value of the balance is insignificant.
The husband brought the farm asset into the relationship less the mortgage of $83,000 and water rights purchased subsequently. In addition at the commencement of the relationship the husband had $24,000 in a bank account and received an inheritance of $30,000 in the year 2000 which he applied towards the mortgage. These two amounts account for about two thirds of the mortgage.
Mr R.’s valuation as at 1997 shows that the husband at that time had 98ml of water rights. He valued them at $700/ml at the time. He said that when legislation provided for the unbundling of water rights the husband would have been issued with 50ml of low reliability water rights in addition to 98ml of high reliability water rights. This means that since the relationship commenced about 100ml of high reliability water rights and 39ml of low reliability water rights were obtained. 100ml of high reliability water rights at $2,000/ml is $200,000 and 39ml of low reliability water rights at $100/ml is $,3900. When these are subtracted from the value of the farm it means that the farm as it was brought into the relationship by the husband now has a value of about $500,000, about 70% of the non-superannuation assets. The balance is the rest of the water rights and the (omitted).
The percentage cannot itself be used as a means of determining contributions but it does give an indication of the significance of the husband's initial contribution.
The wife claims a contribution by assisting in the obtaining and planting of 20,000 native plants. The property abuts the (omitted) River. The water authority removed Willow trees and planted native trees. Some died and some were killed by contractors spraying for weeds. The husband was able to obtain additional trees from the (omitted) and the wife and her two older children assisted in planting them.
In addition trees were planted along the creek which runs through the property and along boundaries and elsewhere. The wife says that she did much of the work in applying for grants and obtaining the seedlings. She and her sons assisted in planting.
There is no evidence that the plantings increased the value of the property but it is a non-financial contribution by the wife. The wife in her affidavit referred to 20,000 trees. The husband said there were not that many. The wife in her oral evidence said that not all were trees many were small plants. She made the estimate from her recollection of the number of seedlings she obtained. I accept that the wife made the necessary applications and did the work to obtain many thousands of seedlings and that she and her sons helped plant them.
The wife has made a contribution as homemaker and in caring for the child of the marriage. The care of the wife’s two older children cannot be taken into account because they are not children of the marriage for the purpose of s.79(4)(c) of the Family Law Act 1975 (Cth). A substantial amount of the wife's efforts as homemaker and carer for the children would have been in caring for the two older children.
All the income of both parties and from the farm was expended on the farm itself and the family. Some of it went towards the care and maintenance of the wife’s two older children. The husband estimates about $42,000 went towards the care of the two older boys during the relationship. That may not be a precise amount but it would have been a substantial amount.
The husband contributed to the care of the two older boys, financially through the relationship at least during the earlier years of the marriage and non financially. It seems there was a falling out between him and the older boys at a later stage. Nonetheless, an affidavit from one of the older boys acknowledges his caring for them and taking them on outings in the early part of the relationship.
The circumstances in this case in relation to the two older children are similar to those considered by the Full Court in the decision of In the Marriage of Robb [1994] FamCA 136. The wife had a legal obligation to maintain the children, the husband did not. The Full Court said that the wife's care of the children from a previous relationship was not a contribution by her under s.79(4)(c), nor was the husband’s. The husband's contribution to the care of the two older children, both financial and nonfinancial, is to be taken into account under s.75(2)(o).
The husband submits that his source of income is the farm and that that is a relevant consideration under s.79(4)(c). He submits that if the amount awarded to the wife is such that the only way he can pay it is by selling the farm he will be deprived of his source of income. His income from the farm is $24,000 a year, but it is sufficient for him to manage. Earlier in these reasons I concluded that the husband would probably be able to raise sufficient money such that he could probably keep the farm. The evidence does not permit a finding of the amount of money beyond which the husband would not be able to keep the farm. The consideration has no relevance.
Counsel for the wife submits that the parties’ contributions during the relationship are equal. Counsel for the husband conceded that during the relationship both parties contributed to the best of their ability, but that the substantial amount of effort the wife expended in caring for the two older children must be taken into account, since it is not a contribution under s.79(4).
The submission by counsel for the husband is correct. Some allowance must be made against the wife for her care of the two older children.
The husband's initial contribution is significant. The proper approach is to recognize the current value of the asset, the farm, the husband brought into the relationship. I have discussed above how except for the acquisition of additional water rights it is essentially the same asset. The plant and equipment have reduced in value but they are not a significant asset. The wife made a financial contribution by working and assisting with the farm work. She contributed as a homemaker and a carer for the child of the marriage, but a significant part of her effort was directed towards the two older boys. The assessment of contributions for non superannuation assets is 80% by the husband and 20% by the wife.
Section 75(2)
The relevant matters are these.
The age and state of health of each of the parties
The husband is 60, the wife is 47. Both are in good health.
Income property and capacity for employment
The husband earns $24,000 per year from the farm. Currently this is his sole income. His evidence shows that he works the farm fairly intensively. He moves the (omitted) daily using (omitted). He must operate irrigation equipment and he cuts hay. Given his age his prospects of full-time employment must be limited, if they exist at all, and the need to work the farm is another limitation on the sort of full-time work he could look for. There is no direct evidence of work off the farm being available, but in an irrigated farming area which includes (omitted) farms the husband, with his farming skills and experience, must have some prospects of casual work.
I consider on the balance of probabilities, given the order I propose to make, that he will be able to retain the farm and so he will have a home. Whatever other sources of financing he has, he will have to sell some water rights to make the payment to the wife. He says that the farm needs 150ml of water rights. Obviously the amount of water needed depends on the amount of rain. If there is a season with good enough rain the husband will receive some or all of the low reliability water allocation. Less water means less grass and hay, and so the farm will feed fewer (omitted), but it will still be producing. If the husband has to sell more than 150ml of high reliability water rights, reducing it to below 150ml. to pay the wife, he will still have an income from the farm.
The wife earns $55,000 a year plus superannuation in a secure (omitted) job. She does not own a home and so must rent. At the time of the hearing she was renting in (omitted) but will move to (omitted) before the commencement of school in 2012. She has some credit card debts.
The husband has more superannuation than the wife, but the wife will continue to accumulate superannuation as she works. The reasonable conclusion is that for the purpose of looking at financial resources including potential financial resources the superannuation position is about equal.
The wife has a relationship with Mr H.. He is a (occupation omitted) in the (omitted) at the (omitted). He is trained as an (omitted) and works in an (omitted) position, essentially a desk job. He rents a two bedroom apartment in (omitted).
The husband alleges that they are in a bona fide domestic relationship, but in terms of the wife’s financial resources the evidence shows that they have not been living together. Each week they spend a substantial amount of time together, with the wife staying at Mr H.’s apartment in (omitted), sometimes with the child X, and Mr H. staying at the wife's house in (omitted). Mr H. will stay in (omitted) until at least 2015 and may stay longer. He is 53 and must retire at 60. He says that he does not intend to, and does not wish to form a permanent domestic relationship. He could be posted away from (omitted) including overseas.
The Wife says that she does not intend to commence living with Mr H. and will obtain her own house in (omitted). The evidence does not permit a finding that the wife's relationship with Mr H. provides financial assistance to her or is likely to do so in the near future.
Care of children
The wife has the care of the child, aged 5, for 9 nights out of 14 each fortnight during school time and half school holidays. The husband has his care for the rest of the time.
Commitments for support and standard of living.
Each party has the normal commitments to maintain their standard of living.
Commitments to support others
The two older children are now adults and so the wife has no commitment to support them.
Child-support
Because of her higher income the wife pays child support to the husband, but not a great amount. As from 1 August 2011 the assessment was $701 per year.
Other matters
The husband's financial and nonfinancial contribution to the care and support of the wife’s two older children are described earlier in these reasons. The Full Court decision of In the Marriage of Robb [1994] FamCA 136, also referred to earlier in these reasons, shows that these contributions are to be considered under this heading.
Conclusion s.75(2)
The wife has a higher income and secure employment. She has a higher proportion of care for the child X. The husband has a stronger asset position, in particular he has a home whereas the wife must rent at present. A payment to her from the husband plus a secure income position means that she should be able to use the payment as a deposit for a home and obtain a mortgage for the balance. The husband's stronger asset position and the wife's higher proportion of care for the child is balanced by the wife’s higher income, secure employment and the husband’s contribution during the relationship to the care of older two children. There is no adjustment for s.75(2) matters.
Superannuation
The husband's initial contribution of $84,000 superannuation is 18.5% of the total of $453,528. Of the remaining amount, $369,528, the husband has contributed $246,528, 66%. Counsel for the husband submitted that contributions to superannuation should be assessed 55% by the husband and 45% by the wife, with no adjustment for s.75(2). This would lead to an adjustment of $70,000 in favour of the wife. Nevertheless the husband’s counsel said that the husband stood by his proposal for an adjustment of $100,000, which is about an equal division.
The discussion of contributions earlier in these reasons does not lead to a conclusion that the wife's financial and nonfinancial contributions and contribution as home maker and carer for the child of the marriage should outweigh the husband’s initial contribution and subsequent greater contribution to superannuation. The discussion of s.75(2) considerations earlier in this reasons shows there is no basis for an adjustment under this heading.
The overall conclusion is that the wife should receive a payment of 20% of the non-superannuation assets, that is $158,000 and a superannuation splitting order in her favour with a base amount of $100,000.
Just and equitable
The order will contain provision for sale of the farm if the amount of $158,000 is not paid. Capital gains tax will be payable on the sale of the farm. The question of capital gains tax was discussed at the hearing and whether there was a need for evidence. Capital gains tax can be dealt with without the need to calculate the possible amount. If the husband pays the amount of $158,000 to the wife, he will remain on the farm into the indefinite future. Any possible sale and so capital gains tax liability is far enough into the future that it does not need to be taken into account in assessing the value of the farm or considering whether the proposed order is just and equitable.
If the farm is to be sold immediately capital gains tax must be taken into account. The parties should bear it in the same proportion as contributions, that is 80% by the husband and 20% by the wife.
Sale of the farm will mean sale of the (omitted) and this may mean an increased income tax liability for the husband because sale of the (omitted) has been brought forward. This is not necessarily the case, particularly given the averaging provisions for primary producers in the Income Taxation legislation. If there is any increased amount it will be small in proportion to the value of the assets and does not need to be taken into account.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of Phipps FM
Date: 31 January 2012
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