Walbridge and Walbridge - [2010] FMCAfam 768

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WALBRIDGE & WALBRIDGE

[2010] FMCAfam 768

FAMILY LAW – Property adjustment – assessment of contributions – section 75(2) matters.

Family Law Act 1975, ss.72(2), 79, 79(4)(a) – (g), 75(2), 75(2)(o), 79(2)
Family Law Regulations 1984

C v C (2005) Fam LR 414
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of West & Green (1991) 16 Fam LR 811
PJM & STM (2005) FamCA 1245

Applicant:

MS WALBRIDGE

Respondent:

MR WALBRIDGE

File Number:

BRC 1086 of 2009

Judgment of:

Jarrett FM

Hearing date:

26 February 2010

Date of Last Submission:

26 February 2010

Delivered at:

Ipswich

Delivered on:

4 June 2010

REPRESENTATION

Counsel for the Applicant:

Mr Linklater-Steele

Solicitors for the Applicant:

Gallagher Legal

Solicitors for the Respondent:

The Respondent appearing on his own behalf

ORDERS

That the proceeds of sale presently in the solicitor’s trust account be paid out to the husband save for the sum of $480.00, which is to be paid to the wife in reimbursement to her of the costs evaluations obtained by her for the purposes of these proceedings.
That each party be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks' record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRC 1086 of 2009

MS WALBRIDGE

Applicant

And

MR WALBRIDGE

Respondent

REASONS FOR JUDGMENT

Revised from the transcript

This is an application for property adjustment and lump sum spousal maintenance between Ms Walbridge and Mr Walbridge. The parties cannot agree on how they should divide their property now that their marriage relationship has ended. The husband proposes that the parties’ property be divided 80 per cent to him and 20 per cent to the wife, excluding the parties’ superannuation benefits including the husband’s military pension. The orders he seeks can be found in his amended response filed on 2 September, 2009.
The wife seeks orders that the property be divided 83.5 percent to the husband and 16.5 per cent to her, including the parties’ superannuation benefits and the capitalised value of the husband’s military pension.
The issue, ultimately, is how one might deal with the capitalised value of the husband’s military pension.
The law to be applied in this application is straightforward. It is a four step process, as demonstrated by cases such as Hickey (2003) 30 Fam LR 355 and C v C (2005) Fam LR 414.
The first task is to identify the pool available for distribution between the parties, and value that pool. The second is to assess the parties’ contributions to that pool according to the manner set out in section 79(4)(a), (b) and (c) of the Family Law Act 1975. The third step in the process is to determine whether that contribution based assessment ought to be adjusted by reason of the matters set out in section 79(4) (d), (e), (f) and (g). Finally, the court needs to fix on the orders that it intends to make and then to determine whether the orders it proposes are, in the circumstances, just and equitable. The court’s only power in this matter is to make orders that are just and equitable: s.79(2) of the Act.
The case was argued on the basis that there should be one pool of property and that whatever apportionment I concluded should be applied to the property should be applied across that one pool. As I indicated earlier the difference between the parties was that the husband argued that the capitalised value of his military pension ought to be excluded altogether.
The preferred approach, set out by the Full Court of the Family Court of Australia, in C & C, is to deal with the matter by way of two or more pools and to approach the matter by applying the relevant 79(4) steps to each pool of property so identified. C & C makes it clear that superannuation interests, such as those in this case, are to be treated as if they were property.
C & C also makes it clear that in cases where there are orders seeking superannuation splits, such as this case, it is necessary to have the relevant superannuation interest valued according to the regulations made for that purpose. A good example of the way in which the approach is applied is the decision of Coleman J in PJM & STM (2005) FamCA 1245. That was an appeal heard by Coleman J sitting as the Full Court, determining an appeal from a Federal Magistrate.
His Honour determined that the appeal should be allowed and went on to re-exercise the s.79 discretion in that case. In doing so, his Honour adopted a “two pools” approach. One of the significant assets in that case was a DFRDB pension that was being paid to the husband which had a capitalised value of some hundreds of thousands of dollars. The evidence clearly demonstrated that the husband would never receive it as a lump sum and would only ever receive it as a pension. His Honour applied the two pools approach and assessed the relevant contributions and 75(2) factors, in accordance with each of the pools.

I propose to adopt a similar approach in this case.
I turn then to the assets that are available for distribution between the parties. The first asset is the proceeds of sale of the former matrimonial home, resident in a solicitors’ trust account, of $30,814. The wife has furniture and effects of $4500, determined by a valuation, a motor vehicle worth $10,500, determined by a valuation, and some jewellery of $500. The husband has furniture and effects which he estimates at $7000, a motor vehicle estimated at $10,000 and a ride-on mower of $1500.
The husband’s estimates for his furniture and effects and motor vehicle are not vouched for by a valuation and I will return to this matter shortly. But for present purposes, I am content to adopt those values as they are the values assigned by him and, apparently, agreed by the parties at the trial, as being the value that they are at least worth. The total value of the non-superannuation assets, then, on a gross basis, is $64,824.
The parties have some liabilities. There is a NAB Visa card which had a balance at separation of $3800. The husband has an outstanding liability, under a personal loan of $7000 which he used, he said, to buy his furniture and effects. There is an outstanding loan to B in respect of his motor vehicle of $7700. The wife owes a debt to C of $2500 and there is a capital gains tax liability on the part of the husband, by reason of the sale of a property which is valued at $19,449. The liabilities, therefore, total $40,449.
The superannuation interests are as follows: the wife has a Super Fund D interest of $2408 and a Super Fund E interest of $10,142. The husband has military superannuation in the growth phase of $27,822.34, a small Super Fund F policy of $356 and his military super pension, in the payment phase, valued, according to the Family Law Regulations at $389,974. The total of the superannuation interests in the growth phase is $40,728.44. The total of the non-superannuation assets and the superannuation assets in the growth phase is $65,103.44, on a net basis.
I propose to assess contributions in respect of three pools. The first pool is the non-superannuation assets. The second pool is the superannuation assets in the growth phase, or the accumulation interests. And the third pool will be the husband’s superannuation interest in the payment phase.
The parties’ material demonstrates that at the time they commenced cohabitation in about the middle of 2000 the wife had a motor vehicle, which she says was worth about $17,000, but was sold soon after the parties got together for $15,000. They married in 2002. They separated in 2008 whilst living separately under the one roof. They physically separated on 14 January, 2009.
It was an eight year relationship and the parties have two children, X, who is nearly seven years of age and Y, who is five and a half years of age. The children presently live with each of the parents, pursuant to orders made by this court by consent, on a week about basis.
One of the difficulties in this case, in assessing contributions, is the nature of the husband’s affidavit material. There was only one affidavit relied upon by him in the application. It is, rather than an affidavit that sets out his evidence in respect of the salient points, an affidavit which is responsive to an affidavit that the wife filed when the application was initially commenced. As a result of that there are some gaps in the husband’s evidence which are not covered because his evidence is a response to that of the wife. Be that as it may, it is possible to make some assessment about contributions.
At the time the parties commenced their cohabitation, I have already remarked that the wife had a motor vehicle. It was sold soon after cohabitation for $15,000. She says that money was used to retire some debt. The husband had a house at Suburb G that was purchased by him in about 1999 for about $75,000.
I accept the wife’s evidence that the husband borrowed $60,000 for that purchase – that is what the mortgage documents reveal – and he therefore must have had a deposit of about $15,000. The parties did not live in the same area when they commenced their relationship but soon after, the wife moved to Suburb H, and soon after that the husband moved to live in the same residence with her.
There is an issue between the parties on the material as to whether they were living in a de facto relationship or not, but that issue is irrelevant. What is relevant for the purposes of these proceedings are the contributions made by each of the parties to the acquisition, conservation and improvement of their property and nothing else. How one might characterise their relationship is really neither here nor there.
I accept the wife’s evidence that the parties contributed equally to the living expenses that they incurred at that time, those contributions being made from their respective incomes. I am satisfied that at the time the parties commenced their relationship and until 2004, the husband was employed in the Employer J. The wife was employed from time to time. I accept her evidence about her employment history, set out in detail in her affidavit.
Her employment during the course of the relationship was more or less full time, although there were periods there when she did not work following the birth of each of the children and a third period in respect of which she was unwell. But I accept her evidence set out in paragraph 32 and 33 of her affidavit about her employment and I factor that into the equation.
What is not before me is evidence by either of the parties of their earnings during the course of the relationship. I am left to infer what their earnings on an annual basis might have been. The wife swears that she was earning approximately $450 per week at the commencement of the de facto relationship, as she describes it, but there is no other evidence about what she went on to earn during the course of the relationship.
From about the end of 2000 until the middle of 2004 the parties were able to accommodate themselves in some married quarters provided by Employer J. The evidence is not before me as to whether that was subsidised housing or not, but I infer that it was – it being provided to the husband through the course of his employment. The benefit to the parties of that subsidised accommodation is not quantified in the material before me, so I can only take it into account in a global way.
In 2007 the parties purchased a property at K Street, Suburb L. That property became what might be described as their former matrimonial home and they moved to it from Employer J accommodation at Suburb M.
The husband retired from Employer J in about 2004. For the last 12 months of his employment he was committed to the mental health unit, although according to his evidence which I accept, he was able to sleep at his house overnight each night. At about that point in time, the parties agreed that the husband would become the primary carer of the children, that is, he would stay at home and look after the children, and the wife would increase her employment so as to increase the parties’ income. The husband’s income decreased when he left Employer J, as one might expect, and he went on to an invalidity pension. The wife’s income increased – although by how much is not clear from the evidence – and the husband commenced looking after the children on a full time basis.
Despite the parties’ agreement, however, that the husband continued to work from time to time and the wife sets out in her affidavit at paragraph 36, some evidence about where the husband worked after he was discharged from Employer J. I accept that evidence. Nonetheless, the parties agreed the husband was the person who would stay at home and become the full time primary carer of the children. The wife says that he did not do a very good job, that he did not do things that he was supposed to do in terms of keeping the house clean, keeping the housework done and the like, but ultimately, in my view, that does not matter. The fact is that he did it. Whether he did it to a particular standard or not is neither here nor there.
The wife sets out in her affidavit that the Suburb G home was sold for about $260,000, and the funds liberated by that sale were used to pay off a substantial part of the mortgage of the Suburb L property. That was purchased for $300,000, but the borrowings used to purchase it amounted to $325,000. When the Suburb G home was sold, about $198,000 was paid off the mortgage over the Suburb L property.
In round terms that left another $125,000 or so owing on the Suburb L mortgage. There were other expenditures made from the proceeds of sale of the Suburb G property set out in the wife’s affidavit, at paragraph 52, which I accept.
The husband deposes that when he resigned from Employer J he received a lump sum of $44,000, which he applied to the conservation of the parties’ property. His evidence in that respect is very general. He said it was contributed towards house repairs, “all our bills,” and some surgery for the husband, but other than that there is no evidence as to what the money was used for, or in what proportions it was paid. For example, how much was paid for house repairs? How much was paid out for “the bills?” And how much was paid out for “the surgery?” Despite the gaps in the evidence, I accept that the lump sum was a contribution by him that needs to be taken into account.
The husband makes the point in his affidavit material that he made all of the mortgage payments in respect of the Suburb G property and the Suburb L property from his pension. The wife disputes that and says that she was making half of the mortgage payments.
Ultimately again, it does not matter. What is clear is that by the time this relationship came to the end, these parties had very little by way of assets. They had earned income during the course of this relatively modest relationship, and they had applied that income to their joint purposes. Whether the money had gone to the repayment of mortgages, whether the money had gone to the purchase of food or the payment of household expenses, whether the money had gone to the upkeep of the parties’ children is of little consequence. What is demonstrated by the evidence is that the parties contributed each in their own way and to the best of their ability for the purposes of their joint relationship. I have no doubt that they worked to the best of their abilities.
I should say some things about the husband’s invalidity. He discharged from Employer J on the basis of medical unfitness, it seems, although there is no precise evidence about that before me. His invalidity relates to a number of matters: some psychiatric injuries and some physical injuries, and there is some evidence before me that suggests that he is not fit to engage in full time employment because of his mental and physical illnesses and severe osteoarthritis.
The evidence does suggest that he does have capacity to engage in light duties or part time employment but only up to eight hours per week. There was an issue at the trial about whether the husband has been working since separation.
Since separation, the husband has occupied the former matrimonial home. The wife has had to rent her own accommodation. The husband was paying the mortgage but sought that the wife contribute half of the mortgage repayments and the like. Because of her financial circumstances she could not do so. I accept that evidence. But as a result, the husband stopped paying the mortgage himself, or at least all of it, and in that sense he has led to a deterioration in the parties’ property pool because the mortgage was greater than it would otherwise have been. The relevant property has been sold now and I have included in the asset pool the net proceeds of sale.
The contribution-based entitlement in my view to the parties’ non-superannuation asset pool needs to take into account the significant initial contribution made by the husband, the $44,000 contribution made by him, and the financial contributions and non-financial contributions made by each of the parties.
Leaving aside the initial contribution by the husband and the $44,000 it is my view that the parties’ contributions to their non-superannuation assets up to the date of the trial ought to be seen as equal, notwithstanding the husband’s non-payment of the mortgage post-separation. That was for a relatively modest period, and so is not a matter which is of particular significance.
But factoring in the husband’s initial contributions which can be in a modest way now traced through to the proceeds of sale of the former matrimonial home, it seems to me that I should assess the parties’ contributions to the non-superannuation assets of $64,824 as being seventy per cent to the husband, and thirty per cent to the wife.
I turn to the second pool of superannuation interests which are in the growth phase, or the accumulation interests. There is no evidence before me about each of those funds. There is some evidence before me about the husband’s military super in the growth phase. That evidence is attached to the wife’s affidavit, rather than the husband’s, and it indicates that his eligible service commenced in 1988, and he became a member of the Military Superannuation Benefits Scheme in 1992.
Beyond that, there is no evidence about the nature or extent of the superannuation interests when the parties got together. Which interests existed when they commenced their relationship and which ones did not is not revealed by the evidence. How much they were worth at the time of separation is also not clear. They are all matters that one would need to know, as Coleman J demonstrates in PJM & STM and as discussed more fully by the Full Court in C & C, before one could make any sort of assessment about the parties’ contribution-based entitlement to the second pool of accumulation superannuation interests. Given the absence of evidence I am satisfied that I should assess the parties’ contributions to that pool, by merely reflecting the proportions that their interests represent in the pool as it stands at the date of trial. That is to say, the wife’s contributions should be seen as the amount of her Super Fund D interest and the Super Fund E interest, and the husband’s contributions should be seen as the value of the military super in the growth phase and the Super Fund F superannuation interest.

I turn then to the third pool – the husband’s military super in the payment phase. It has been valued according to the Regulations to have a value $389,979. There is little evidence before me about the nature of that interest. It seemed to be accepted at the trial that that interest cannot be the subject of any commutation by the husband. That is, he will never receive any of it as a lump sum. It is an invalidity pension, I presume payable for life, although there is no evidence about that, either. He also receives a Department of Veterans’ Affairs pension which seems to me to be a different interest, and which may not be payable for life, and is subject to re-evaluation from time to time.
It is possible, having regard to the evidence before me in the wife’s affidavit, to carry out a rough type of West v Green calculation in respect of the military super in the growth phase. If I was to assume that the husband’s entitlement to that interest is a function of his military service overall, then it might be said that his service, which seemed to span from 1988 to 2004, was three quarters part of the parties’ relationship, and one quarter after.
But I am uncomfortable in applying any sort of calculation like that to the husband’s military super in the payment phase, because it is a defined benefit interest. The basis upon which it is payable, and how it is calculated, is not before me in evidence and it may be that it has nothing to do with the length of service at all, but rather, a function of other factors. To conclude it was a function of the length of service and thereby perhaps give some basis to making a West v Green calculation would be to speculate in a way that I am not prepared to do.
In my view, I should conclude, and I do conclude, that the military superannuation in the payment phase ought to be proportioned between the parties, one hundred per cent to the husband, and none to the wife.
I turn then to the question of 75(2) factors. The 75(2) factors are conveniently dealt with by the wife in her affidavit material, commencing at paragraph 77. She is in good health. She has from time to time, I accept, suffered from depression but I accept her evidence that she has recovered from that. She is in a position to earn income. She currently is employed as a health care worker by Employer N. She earns, at least at the time of the trial, about three to four hundred dollars per week, depending on the hours that are available to her. She had earned as high as $650 per week and she also receives a Centrelink pension of $160 per week.
I am not satisfied that the husband’s injuries and illnesses prevent him from earning. One of the issues in this case was whether the husband has engaged in income earning activities that he has not disclosed, since separation. It was put to him that he had registered a business, O, and perhaps that he had been doing some lawn mowing and other those types of activities for remuneration that he had not disclosed.
I found the husband an evasive and difficult witness on those issues, and I was unconvinced by his explanations about them. I am satisfied that the husband has been earning income that he has not disclosed in these proceedings, and his lack of disclosure about those issues is consistent with his lack of disclosure generally, in these proceedings.
The wife sets out in her affidavit in a very useful way, the complaints that she makes about the husband’s failure to disclose. Those complaints are set out in paragraph 103 onwards. I accept the wife’s evidence about those matters. I accept that the husband has, throughout the course of these proceedings, been very reluctant to disclose any of his financial circumstances. He has not obtained valuations when it was his obligation to do so, and he has left the court in a position where it can only take his word for the minimum value of some of the assets in his hands.
The failure of the husband to make proper disclosure is a factor to take into account under section 75(2)(o), and I take it into account.
Both parties have responsibility for caring for the children more or less equally. The wife pays the husband some child support by reason of the disparity in their earnings.
Ultimately, in my determination, in respect of the non-superannuation assets there is no need to make an adjustment under section 72(2) of the Act in favour of one party or the other. The wife has a superior earning capacity. The wife is exercising it. The husband has an income to which he will remain entitled, even though he does not need to work for it. I refer to his pensions. His lack of disclosure about those interests does not permit me to find that they ought to be excluded from consideration a income tested pensions benefits or allowances. But be that as it may, he does have some significant health concerns which may in the future affect his capacity to earn an income.
I am not satisfied that ought to be an adjustment under section 75(2) of the Act in respect of the non-superannuation assets.
For the same reasons, I am not satisfied that there should be adjustments under section 75(2) or 79(4)(d), (e), (f) and (g) in respect of the superannuation interests in the accumulation phases, or the superannuation interests in the payment phase.
The upshot of all of that is that the wife is entitled to 30 percent of the non-superannuation assets, plus her proportion of the superannuation in the growth phase, and none of the husband’s superannuation interest in the growth phase.
That means that she is entitled to $7,312.50 of the parties’ non-superannuation pool on a net basis, and the husband would be entitled to the balance.
The wife has in her hands, about 53 percent of the pool when one takes into account what it is that she has presently in her possession. She has her furniture and effects of $4,510, the Motor Vehicle P of $10,500, her jewellery of $500, and she has a debt to C of $2,500. That totals in her hands $13,010, whereas she is only entitled to $7,312.50. She has superannuation interests totalling $12,550, being her Super Fund D interest and her Super Fund E interest.
The husband has net assets of $11,365 in his hands – his furniture and effects, his motor vehicle, his ride-on mower and, if I include the proceeds of sale of the former matrimonial home at $30,814 but also include the income tax debt that he has, then his total nett assets are $11,365, or 47 percent of the pool.
To make the relevant adjustment between the parties it is necessary for the wife to pay the husband the difference between what she has and what she is entitled to, but in the following circumstances I am not satisfied that it would be just and equitable to make such an order.
I propose to make an order which simply leaves each party with the property that is presently in their possession, including their superannuation interests, and subject to a couple of small adjustments an order that the sum presently resident in the solicitor’s trust account be paid out to the husband. He will be responsible for the debts in his name, including the income tax debt.
The reason I take that approach is as follows. I am not satisfied that the husband has made proper disclosure, and I have already made some remarks about that. This is a very small pool of property, and the fact that the husband’s military super in the payment phase has a very large capitalised value is one of the reasons that this case has reached this stage. But as Coleman J demonstrates in the case to which I have referred to earlier, it would be entirely artificial to bring the capitalised value of the pension into account when it will never be received as a capital sum. There is no doubting, however, the benefit of the income stream represented by the pension in the husband’s hands. Further, the husband will have all of the cash assets, that is, he will have the proceeds of sale of the former matrimonial home.
For those reasons, it seems to me just and equitable that I should make an order that the proceeds of sale presently resident in the solicitor’s trust account be paid out to the husband save for the sum of $480, which should be paid to the wife in reimbursement to her of the costs of valuations obtained by her for the purposes of these proceedings, which valuations ought to have been obtained by the husband.
Otherwise, each party will keep what they have in their present possession. As I understand it, the Motor Vehicle P is registered in the wife’s name and the husband’s vehicle is registered in the husband’s name, and in those circumstances it will be unnecessary to make any further orders.
All other outstanding applications will be dismissed.

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Date: 22 July 2010