Warford and Warford

[2016] FamCA 55

FAMILY COURT OF AUSTRALIA

WARFORD & WARFORD [2016] FamCA 55

FAMILY LAW – PROPERTY – Settlement in relation to marriage – Where the husband and wife cohabited for between six and seven years – Where there are two children aged eight and five – Where the wife has primary responsibility for the care of the children – Where the husband’s financial contributions far exceeded those made by the wife – Where the wife made greater contributions to the welfare of the family unit than the husband – Where the contributions overall were found to be 70 percent by the husband and 30 percent by the wife – Where the husband and wife have similar earning capacities – Where it is appropriate to make a 20 percent s 75(2) adjustment in favour of the wife – Where it is appropriate to make a superannuation splitting order in favour of the wife.

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

Bevan & Bevan (2013) FLC 93-545
Chorn & Hopkins (2004) FLC 93-204
Clauson and Clauson (1995) FLC 92-595
Finlayson v Finlayson & Gillam (2002) FLC 93-121
Stanford v Stanford (2012) 247 CLR 108

APPLICANT: Mr Warford

RESPONDENT: Ms Warford

FILE NUMBER: SYC 845 of 2013

DATE DELIVERED: 9 February 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston J

HEARING DATE: 15 & 16 December 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Spain

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers

FOR THE RESPONDENT: Ms Warford in person

Orders

1. That within 60 days the husband shall pay to the wife the sum of $122 152.

2. That in the event that the husband should fail to comply with the above order he shall forthwith do all things and sign all documents necessary to sell his property at B Street, Suburb A for the best price reasonably able to be obtained.

3. That the net proceeds of sale of the said property shall be paid as follows:

   (a)In payment of agent’s commission and costs of sale including legal costs of sale;

   (b)In payment of all monies outstanding on the mortgage over the said property;

   (c)In payment to the wife of $122 152 together with interest at the rate prescribed in the Family Law Rules 2004; and

   (d)In payment of the balance to the husband.

4. That the Court allocates, as required by s 90MT(4) of the Family Law Act 1975 (Cth), (“the Act”) a base amount of $40 000 to Ms Warford (“the wife”) out of the interest of Mr Warford (“the husband”) in the AMP North Personal Superannuation Fund.

5. That, in accordance with s 90MT(1)(a) of the Act:

   (a)The wife (or the wife’s administrators, executors, beneficiaries, heirs or assigns) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

   (b)The entitlement of the husband in the AMP North Personal Superannuation Fund (or the entitlement of such other person who becomes entitled to receive a payment out of the husband’s superannuation interest) is correspondingly reduced by force of this order.

6. That the trustee of the AMP North Personal Superannuation Fund (“the trustee”) shall do all such acts and things and sign all such documents as may be necessary to:-

   (a)Calculate, in accordance with the requirements of the Act the entitlement awarded to the wife in the immediately preceding clause of this order; and

   (b)Pay the entitlement whenever the trustee makes a splittable payment from the husband’s interest in the AMP North Personal Superannuation Fund.

7. That this order has effect from the operative time and the operative time is four business days after the date of commencement of these orders.

8. That, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 (“the SIS Regulations”), the husband shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the wife’s request in accordance with the SIS Regulations, for the rollover or transfer of the non-member spouse interest to a complying superannuation fund of the wife’s choosing in accordance with the SIS Regulations.

9. That the Court notes:

   (a)The value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and

   (b)Any payments from the husband’s superannuation interest in the AMP North Personal Superannuation Fund made after the trustee has created a new interest in the wife’s name in the AMP North Personal Superannuation Fund are not splittable payments in accordance with the requirements of the Family Law (Superannuation) Regulations 2001.

10. That pursuant to s 79 of the Act each party is declared to be the sole owner of all other property and superannuation in their possession and/or control respectively.

11. That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to s 106A of the Act to execute such deed, document or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

12. That the husband shall indemnify, and keep indemnified, the wife in relation to all liabilities of Warford Pty Limited and its business.

13. That both the husband and the wife hereby release the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other for or by reason of or in respect of any act, cause, matter or thing.

14. That all exhibits be released.

15. That each party have leave to re-list these proceedings by arrangement with the Associate to Johnston J in relation to implementation of these orders.

16. That these orders not commence operation until 3 March 2016.

17. That both parties have leave to re-list these proceedings by arrangement with the Associate to Johnston J not later than 2 March 2016 for any further submissions in relation to the form of the orders only.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 845 of 2013

Mr Warford

Applicant

And

Ms Warford

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are property proceedings. 

2. Mr Warford, 36 years (“the husband”) and Ms Warford, 31 years (“the wife”) commenced their relationship in June 2005, commenced cohabitation in 2006 and were married in 2009.

3. They separated under the same roof in October 2012 and separated on a final basis in March 2013.

4. There are two children of the marriage C who was born in 2007 (almost nine years) and D who was born in 2010 (five and half years).

5. The parties have been unable to resolve their dispute about property and have asked this Court to determine a property settlement for them.

Applications

1. The husband, who is the applicant, is seeking orders to the following effect:

   ·That a superannuation splitting order be made in relation to his interest in the AMP North Personal Superannuation Fund in which the wife would be allocated a base amount of $21,314 out of his interest in the fund, and the necessary machinery orders;

   ·That otherwise each party respectively retain their interest in

   (a)All personal property in their possession and/or control respectively;

   (b)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in their sole name respectively; and

   (c)All life insurance policies and superannuation funds standing in his / her sole name respectively; and

   ·An enforcement order

2. On the other hand the wife seeks orders to the following effect:

   ·   That the husband do all things and sign all documents necessary to transfer to her his interest in the property at B Street, Suburb A on the basis that the wife would refinance the mortgage and be solely liable therefor;

   ·   That a superannuation splitting order be made in respect of the husband’s interest in the AMP North Personal Superannuation Fund allocating a base amount of $50 000 to the wife; and

   ·   That each party be declared the sole owner of all other property in their possession and/or control respectively.

3. The actual form of the orders sought by each party is annexed to these Reasons for completeness.

Background

1. In 2004 the husband purchased a home unit at B Street, Suburb A (“the Suburb A unit”) for $442 000.

2. The parties commenced their cohabitation at the Suburb A unit.  A room mate was also living at the Suburb A unit with the parties.  At this time the Suburb A unit had a mortgage of $390 000.

3. The wife was working for Body Corporate Services earning approximately $40 000 per annum, and the husband was employed by E Pty Ltd earning approximately $120 000 to $130 000 per annum.

4. The wife became pregnant in May 2006. During this time she undertook study at TAFE to obtain her professional licence, and the parties separated for a short time.

5. When C was born in 2007 the husband took two weeks of leave from work to assist with his care. After the birth of C the wife took maternity leave until December 2007 at which point she undertook paid work on a part time basis. Prior to commencing maternity leave the wife received a lump sum payment from her employer.

6. Prior to C’s birth the parties moved from the Suburb A unit to the husband’s parents’ home and the Suburb A unit was rented out.  They subsequently moved into rented accommodation in Suburb F. The parties returned to living at the husband’s parents’ home when C was a few months old.

7. In early 2008 the husband’s parents purchased a townhouse in Suburb G and the parties moved to live there. They stayed there for approximately two years. They paid rent at below market rate.

8. In 2009 the husband’s aunt passed away and he received an inheritance of $300 000.

9. As indicated above, the parties were married in 2009.

10. In April 2009 the husband resigned from his employment and established Warford Pty Ltd (“Warford”) which was formed using a shelf company, H Pty Ltd that the husband’s father had established. The husband’s parents loaned Warford $10 000 and a further amount of $20 000 to assist with start-up costs. The husband was appointed as secretary and director, and the wife was also appointed as a director.

11. In early 2010 the wife commenced working with the husband at Warford for three to four days per week.

12. In April 2010 the parties moved into a rented duplex in Suburb I where they stayed for approximately two and a half years.

13. As indicated above, the parties’ younger child D was born in 2010. The wife continued to work at Warford up until D’s birth, and returned to work some weeks after D’s birth.

14. By early 2011 the parties’ relationship had deteriorated. In February 2011 the wife and the children went to the Region N for several days. The wife did not inform the husband in advance of this trip.

15. In February 2011 the parties attended Relationships Australia for counselling which continued for four to five joint sessions.

16. In August 2011 the husband had spinal surgery.  The husband worked from home to some extent during his convalescence.

17. In October 2011 after an argument, the wife was removed as a director of Warford.  The husband said that he had the wife removed as a director because Warford was having an ongoing legal dispute and there was a threat of litigation.

18. Shortly after ceasing work for Warford, the wife commenced working at J Pty Ltd for three days per week. At this time C and D attended day care.

19. In 2012 C commenced kindergarten at K School.

20. From February 2012 the parties separated for a period of time and the husband moved into his parents’ home. During this time the wife injured her foot and required surgery, so the husband returned to the home. The wife was in hospital intermittently from February to May, with specialist appointments until August. She was unable to walk or drive for a period of time and required crutches. The parties hired a nanny to assist with the care of the children during this time.

21. In August 2012 the parties moved into a rented home at Suburb L.

22. As indicated above, in October 2012 the parties separated under the same roof.  They slept in separate rooms.

23. From 29 October to 4 November 2012 the parties and children went on a holiday to M Town which they had planned prior to separation.

24. On 21 November 2012 the wife’s solicitors wrote to the husband’s solicitors requesting that the husband vacate the Suburb L property due to the increasing conflict. The husband refused to leave.

25. The wife and children spent Christmas 2012 with her family at the Region N.

26. On 2 March 2013 the wife moved out of the Suburb L property with the children and into rented accommodation at Suburb I at a cost of $475 per week. The wife obtained a personal loan of $10 000 to fund the costs associated with moving. The wife did not inform the husband of her plans to move with the children until 28 February 2013.  At this time the husband moved in with his parents.

27. When the wife moved out of the home, the parties formed an arrangement whereby the husband would spend time with the children on alternate weekends and Wednesday afternoons.

28. There were considerable problems between the parties about the arrangements for the children to spend time with their father.  To the parties’ credit they have been able to resolve their differences about such arrangements.  During this hearing orders were made by consent about these matters.

29. In March 2013 the husband became aware that the wife had a new partner, whom she is now no longer seeing.

30. On 8 April 2013 this Court made interim orders to the effect that the parties share parental responsibility for the children, the children live with the wife and spend time with the husband on alternate weekends, each Wednesday night, on special occasions and holiday time. The husband was also ordered to pay the wife a sum of $30 000 by way of partial property settlement. 

31. On 29 September 2013 the husband took the children to O Town for seven days in accordance with the interim orders of 8 April 2013.

32. In September 2014 the husband commenced a relationship with Ms P. The children were introduced to her in December 2014.

33. On 22 December 2014 Q Accountants, the single expert appointed to value Warford, released the valuation report.

34. In January 2015 the husband injured his back which required surgery.

35. On 1 January 2015 the wife made an application to the Child Support Agency for review of the husband’s child support assessment.  The husband lodged a notice of objection on 1 May 2015 and he continues to pay $550 per month.

36. C is currently in year three at K School and D is to commence school in 2016.

The Applicable Law

1. Sub-section 79(1) of the Family Law Act 1975 (Cth) (“the Act”) provides to the effect that in property settlement proceedings the Court may make such order as it considers appropriate altering the interests of the parties to the marriage in the property.

2. Sub-section 79(2) provides that the Court shall 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.

3. Sub-section 79(4) sets out various matters which must be taken into account in considering what order (if any) should be made under the section. These matters include direct and indirect contributions, financial and otherwise by or on behalf of a party or a child to the acquisition, conservation or improvement of any property of the parties, contributions by a party to the welfare of their family including as a homemaker or parent, relevant matters referred to in s 75(2) and the other matters referred to in s 79(4).

4. The operation of s 79 was the subject of consideration by the High Court in the case of Stanford v Stanford (2012) 247 CLR 108. In this case the majority said (at page 120) in referring to ss 79(2) and 79(4) as follows:

   35.… the requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.

   36.The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. … while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.

5. The High Court said that the first of these propositions is for the court to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.

6. The second is that although s 79 confers a broad power on the court, it is not a power that is to be exercised according to an unguided judicial discretion. It must be exercised in accordance with legal principles, including the principles which the Act itself lays down.

7. The High Court said that the third fundamental proposition is that the question of whether the order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters set out in s 79(4). To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2) would be to “conflate” the statutory requirements and ignore the principles laid down by the Act.

8. And the High Court majority went on to say (at page 122) as follows:

   41.…  The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.

The Parties’ Existing Legal and Equitable Interests in Property

Balance Sheet Issues

1. To the parties’ credit there was agreement about most of the items in the joint balance sheet.  But the wife included as a liability what she said was a loan from her uncle for legal fees paid by him on her behalf of $83 309.  The wife sought to have admitted into the evidence a Statutory Declaration by her uncle, Mr R, declaring that he had lent the wife the sum of $75 817.75 “to cover legal bills in the course of settling her divorce”.  The declaration went on to declare that the money would be repaid to Mr R in full when the wife received her final settlement before the proceeds of settlement were distributed to her. 

2. Application to tender this Statutory Declaration into the evidence was strongly objected to by learned counsel for the husband.  In these circumstances I decided to permit the wife to arrange for Mr R to give evidence by telephone in respect of this matter which subsequently occurred.

3. I accept that Mr R has paid this amount of $75 817.75 to the wife’s lawyers for her legal costs. 

4. Mr R’s oral evidence included evidence to the effect that while he expected the money to be repaid by the wife, he would not sue her to enforce this debt. 

5. I do not propose to include this liability of the wife in the balance sheet.  In my view this is consistent with the principles set out by the Full Court in Chorn & Hopkins (2004) FLC 93-204.

6. At paragraph [55] thereof the Full Court said as follows:

   This decision [Finlayson v Finlayson & Gillam (2002) FLC 93-121] … confirms the principle that where funds have been borrowed to pay legal fees, and such liability is still outstanding, neither the payment of the fees nor the liability should be taken into account.

1. The rationale for this appears to be the general rule as set out at s 117(1) of the Act that each party shall bear their own costs. If the Court was to include the wife’s liability to Mr R in the balance sheet, this would in effect make the husband liable in a practical sense for part of the wife’s legal costs.

2. In relation to the husband’s payment of approximately $140 000 in legal costs from his $300 000 inheritance, I expressed the view during submissions that I thought it might be appropriate to add back that $140 000.

3. I have decided not to add back the $140 000.  Clearly the $300 000 was a large contribution which came to the husband as an inheritance and from which he paid, amongst other things, $140 000 of his own legal costs.  I shall regard his contributions as not including this amount.

4. I have also decided not to add back the $30 000 partial property settlement which was paid to the wife from the inheritance. But I shall take this into account when I come to consider the relevant s 75(2) matters.

5. During cohabitation, Warford paid various living expenses of the husband and the wife such as rent for their own accommodation, energy and water, childcare and other expenses.  The husband said that these have been included in a shareholder loan account, the total of which is now $116 502.  I shall refer to this again below.

6. Warford is in fact owned by the husband’s brother and his parents.  I propose to treat the business as such for the purpose of these proceedings.  I am satisfied that it has a Nil value as valued by the single expert valuer, Q Accountants. 

7. Exhibit 3 was a letter dated 6 November 2015 by Carroll and O’Dea, the solicitors for the business Warford which was prepared to explain the legal position concerning the ownership of the shares in Warford. 

8. The solicitors indicate that the shareholding as represented in the ASIC register is incorrect.  The shareholding in the ASIC register is as follows:

   -    Mr Warford  5000 Class A shares

   -    Mr T Warford and Ms U Warford

   -    (the husband’s

   parents) (jointly)   2500 Class B shares

   -    Ms Warford  2500 Class C shares

9. Apparently the ASIC register reflects what all relevant parties intended.  But the solicitors say that the legal ownership of the shares of the company remains as follows:

   -    Mr V Warford (the husband’s brother)  75 Class A shares

   -    Mr T Warford and

   Ms U Warford (jointly)             25 Class B shares

10. I accept this evidence and find that neither the husband nor the wife hold any legal interest in Warford.

11. In any event, as I have said, this company has no value.

12. In relation to the husband’s assertion that the husband and wife owe the company money through the shareholders’ account, as the wife submitted, how could this be the case if they are not shareholders.  I am inclined to agree with the wife. 

13. But even if I am wrong about this I would not propose to bring into the balance sheet the amount of $116 502 which the husband asserts he and the wife owe the company. 

14. His case is that the sum of $116 502 should be brought into the balance sheet.  Yet in my view, to do so would be quite unfair to the wife, as she has submitted.

15. It is clear that since separation the husband has continued to have the business pay some of his personal expenditure including substantial sums for his legal costs of these proceedings.

16. Mr Q, the expert who valued the business at Nil also referred to the then $116 708 in what was referred to as a shareholder loan account which he described as representing “moneys owed by the parties to (Warford Pty Limited)”.  He reported that although some transactions were able to be identified as connected with the husband or the wife, the “overwhelming majority” of transactions could not be.

17. Mr Q raised this with the parties through their solicitors.  The response was that the wife did not know the details of the loan account or which shareholders were represented in relation to the account.  But she did acknowledge that some of the payments therein were made for the benefit of the husband, the wife and the children.

18. The response on behalf of the husband was that he asserted that the shareholders’ loan was for the benefit of both the husband and the wife on an equally shared basis.

19. Yet it became clear during the wife’s cross-examination of the husband about these matters that this was not the case.  Mr Q’s report was dated 19 August 2014.  The husband conceded that “a bit less” than $16 000 of his costs of these proceedings was added to the shareholders’ loan account during the 2013/2014 financial year and that it also included some of his personal expenditure.  He also conceded that in the 2014/2015 financial year, drawings for his personal expenditure were made including $2500 for a mortgage payment and approximately $14 000 was for his legal costs of these proceedings.

20. These latter drawings would not appear to me to affect the amount of $116 708 because they appear to have been drawn after Mr Q reported.  But the significance of this material just adds to what I regard as the unsatisfactory nature of this whole issue about this so called shareholders’ loan account.

21. It is the husband who submits that the Court should include the $116 502 as a liability to be taken into account against the pool of property and superannuation of the parties.  He is the person who would have been able to obtain the appropriate detail about the relevant drawings.  Mr Q gave him an opportunity to do so and from what I see from Mr Q’s report, this was not done.  And the husband could have placed the detail before this Court.

22. In the absence of such detail, I am far from persuaded that it would be fair to the wife to include $116 502 as a liability which should be borne by both parties.  As I said, the wife has conceded that some of the debt would flow from expenditure on the family.  But this is impossible to quantify in the absence of detail.

23. In all these circumstances, I shall not include the $116 502 in the balance sheet. But given the wife’s concession, doing the best I can in difficult circumstances I shall take this into account when considering s 75(2) matters.

24. The parties’ interests in property and superannuation are as follows:

$
1.         Husband’s unit at B Street, Suburb A	575,000
2.         Husband’s ING account number …	1,452
3.         Husband’s furniture and effects	10,000
4.         Wife’s ING account number …	13
5.         Wife’s ING account number …	115
6.         Wife’s Japanese motor vehicle registration number …	8,000
7.         Wife’s furniture and effects	10,000
8.         Wife’s jewellery	8,000
9.         Wife’s share of cost of expert report	4,950
10.      Wife’s rental bond	1,800
_____________
$619,330

1. The husband has a benefit in the AMP North Personal Superannuation Fund with a value of $117 806.  The wife has a benefit in superannuation with a value of $7221.  This is a total of $125 027.

2. The total value of property and superannuation is therefore $744 357 ($619 330 + $125 027 = $744 357).

3. On the other hand the liabilities consist of the following:-

$
1.         Mortgage on B Street, Suburb A	354,574
2.         Wife’s BankWest personal loan	14,719
_____________
$369,293

1. The surplus of property and superannuation over liabilities is therefore $375 064 ($744 357 - $369 293 = $375 064).

Sub-Section 79(2)

1. Sub-section 79(2) of the Act provides:

   The court shall 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.

2. In their decision in the case of Bevan & Bevan (2013) FLC 93-545 the Full Court (Bryant CJ and Thackray J) said as follows at page 87,234:

   In our view, it will be less likely that the separate issues arising under s 79(2) and s 79(4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order. 

3. In the present case, the parties cohabited for between six and seven years and have two children.  Their financial circumstances are quite modest.

4. If the Court did not make orders, the husband would derive great benefit as sole owner of the Suburb A home unit and because his interest in superannuation vastly exceeds the value of that of the wife in her superannuation.  Without orders the result would be unfair to the wife. 

5. In these circumstances, in my view it would be just and equitable to make an order under s 79 of the Act.

Contributions

1. As indicated above, at the commencement of cohabitation the husband had some modest equity in his Suburb A apartment which he had purchased approximately two years prior to commencement of cohabitation, some shares and a motor vehicle subject to finance.  He was working as a strata manager earning an income of between $120 000 and $130 000 a year.

2. At this time the wife had no property of significant value.  She was also working in strata management although earning an income of approximately $40 000 a year.

3. The husband worked full time during the parties’ cohabitation and marriage.  The wife worked full time up to the birth of their eldest child C after which she went on maternity leave.  As indicated above, she received a lump sum payment prior to commencing maternity leave.  From December 2007 she undertook part time work.  But early in 2015 the wife commenced working full time with E Pty Ltd.

4. So they have each made financial contributions although there can be no question that the financial contributions by the husband far exceeded those made by the wife especially taking account of slightly more than one half of the husband’s inheritance.  He was the main income earner for the family.

5. The husband’s parents have made contributions by offering accommodation in their home rent-free for a total period of approximately 10 months and by permitting the husband, the wife and C to live at a reduced rental at their Suburb G apartment for approximately two years to enable them to save for a family home.

6. As also indicted above, the husband inherited approximately $300 000 from the estate of his late aunt.  This contribution is to be regarded as having come in on the husband’s side of the ledger as it were.  The husband provided details of how the inheritance was expended at [193] of his affidavit.  But his account is not accurate because in his explanation the total of the amounts expended comes to $336 850 not $300 000.  Nevertheless, I accept that he inherited $300 000, a considerable part of which was spent on the purposes of the parties, as distinct from spent on the husband’s own purposes, which included the $140 000 on his own legal costs referred to above.  So of the $300 000 inheritance, I regard only $160 000 as being a relevant financial contribution.

7. After separation the husband paid the rent and the costs of the mortgage.  While the parties continued to reside under the same roof the husband also paid most of the household costs and private health insurance.  He paid a modest amount of child support.  As indicated above, after separation the wife borrowed $10 000 initially to fund establishment of a rented home and she borrowed a further $15 000 subsequently and paid out the balance of the $10 000 loan.

8. Each of the parties made contributions to the welfare of their family unit constituted by themselves and the children and as homemakers and parents.  But I am satisfied that the wife made greater contributions in this regard than the husband.  After all, he was the major breadwinner for the family and made it clear that his paid work involved long working hours.  But I accept that he was closely involved in the care of the children and that the husband’s sister and his parents gave considerable assistance with this.

9. The husband conceded that the wife did most of the cooking as well as undertaking most of the household chores.  I accept that he did some of these tasks.  I also accept that he undertook the work involved in maintaining the lawns and grounds of the various homes.

10. There was a strong submission on behalf of the husband that such was the level of his contributions, particularly his initial contributions, his inheritance and the contributions by his parents, that the appropriate assessment of contributions by or on his behalf would be that these amounted to 70 percent overall.

11. I accept this submission, even bearing in mind that the husband paid $140 000 of his legal costs from his inheritance. 

Sub-section 75(2) matters

1. The husband is 36 years of age and he is in good health.  His income is approximately $65 000 per annum from operating the business Warford.  In addition he receives a car allowance and is provided with a mobile telephone.  On all current indications, in my view, he has the capacity to continue to work in this position or similar for the foreseeable future.

2. The wife is 31 years of age and also in good health.  She commenced working in a new position early this year and her income is approximately $85 000 or $86 000 per annum not including superannuation.  On present indications, in my view, the wife has the capacity to be able to continue in this or similar employment for the foreseeable future.

3. I have referred to the property and superannuation of the parties and I note their commitments.

4. The husband has a partner, Ms P.  My understanding is that Ms P does not cohabit with the husband.

5. The husband pays $550 per month child support.  The husband has been assessed to pay at a higher amount and he has sought a review. 

6. The wife has the primary responsibility for the care of the children.  The children will be spending five nights per fortnight, half school holidays and certain other times with the husband pursuant to orders made on 15 December 2015 in relation to the parenting aspect of these proceedings.  Otherwise they will be living with her.

7. The primary care of the children will be an onerous responsibility for the wife and it is a significant matter to take into account pursuant to s 75(2) of the Act.

8. So far as the parties’ respective income earning capacities are concerned, in my view their capacities are similar.  True it is that the husband is earning considerably less than he did, even when the parties commenced cohabiting.  But he said his work at that time required commitment of very long hours.  He decided to establish his own strata management business as a way of endeavouring to reduce his working hours so that he could spend more time with the children.  He is confident that he will be able to develop his business and thereby earn an income considerably higher than his present income.

9. In my view, when one considers the value of the husband’s motor vehicle allowance and provision of mobile telephone provided by the business, the husband’s remuneration would be similar to that of the wife.  The wife conceded that in her view, the parties have a similar capacity for earning income.

10. I have referred above to the fact that the business is owned by the husband’s brother and his parents.  Yet it is the husband who has been the person primarily responsible for the business and its operation.  The husband gave every indication that he regards the business as his.  His clear intention is to develop the business in an endeavour to increase his income.  Clearly the business has practical value to him.  I also note that the parties had a benefit from payment by the business of some family expenditure.

11. As indicated above, the wife received $30 000 by way of partial property settlement.  But she also borrowed funds to assist her in establishing a new residence for herself and the children.

12. In my view, the most significant s 75(2) matter is the fact that the wife has the primary care of the children and on all current indications this responsibility will be likely to continue until the children grow up. This will need to be reflected in an appropriate adjustment of property in favour of the wife in order to achieve a just and equitable order. But it is also relevant to take into account the significant difference between the parties on contributions.

13. In the case of Clauson and Clauson (1995) FLC 92-595 the Full Court of this Court indicated that trial judges need to consider the value of the s 75(2) adjustment in real terms. The Full Court said at FLC page 81,911 as follows:

    There is, we think, at times a tendency to assess s 75(2) factors in percentage terms without considering its real impact, and we think there is legitimacy in the views expressed in more recent times that the Court has tended to operate in this area within artificially delineated boundaries. That is, it appears almost to be inevitable that the s 75(2) factors will be assessed in a range between 10% and 20%. A number of cases will justify an assessment outside those parameters and in any event it is the real impact in money terms which is ultimately the critical issue.   [emphasis added]

14. In all the circumstances, including the modest nature of the assets available for division between the parties, in my view, there should be an adjustment of 20 percent of the available property and superannuation in favour of the wife taking account of s 75(2) matters. This would be a differential between the parties of $150 026.

Conclusion and fourth step

1. The wife is to have 50 percent of the available property and superannuation.  This is property and superannuation with a value of $187 532 (50 percent of $375 064 = $187 532).

2. The wife has the following:

$
1.         ING account number …	13
2.         ING account number …	115
3.         Japanese motor vehicle	8,000
4.         Furniture and effects	10,000
5.         Jewellery	8,000
6.         Share of the cost of expert report	4,950
7.         Rental bond	1,800
_____________
$32,878
Plus superannuation	7,221
________
$40,099

1. But the wife has the following liabilities:

$
1.         BankWest personal loan	14,719

1. Accordingly, the wife has property and superannuation with a value of $25 380 ($40 099 - $14 719 = $25 380).

2. To achieve property and superannuation with a value of $187 532 the wife will require further property with a value of $162 152 ($187 532 - $25 380 = $162 152). 

3. On the other hand, the husband is to have 50 percent of the available property and superannuation.  As I have said, this is property and superannuation with a value of $187 532.

4. The husband has the following:

$
1.         Property at B Street, Suburb A	575,000
2.         ING account number …	1,452
3.         Furniture and effects	10,000
__________
$586,452
Plus AMP North superannuation	117,806
_______
$704,258

1. But the husband has the following liability:

$
1.         Mortgage on Suburb A home unit	354,574
_____________
$354,574

1. Accordingly, the husband has property and superannuation with a value of $349 684 ($704 258 - $354 574 = $349 684).

2. If the husband was to pay the wife $162 152 this would leave him with $187 532 ($349 684 - $162 152 = $187 532).

3. How could this be achieved equitably and in a practical sense?

4. Both parties have sought a superannuation splitting order, the husband in the amount of $21 314 and the wife in the amount of $50 000.

5. Both parties are young and, having funds in superannuation at this point, as distinct from available money, when they both have the demands of providing for two young children, would not be attractive.  Nevertheless, in my view, a superannuation splitting order is appropriate because it would be unfair for the husband to have to bear almost the entirety of the superannuation. 

6. I propose to make a superannuation splitting order in favour of the wife of $40 000.

7. If the wife was to take an interest in the AMP North Superannuation Fund in such an amount she would have total superannuation with a value of $47 221 ($7221 + $40 000 = $47 221). 

1. The husband would pay the wife $122 152 ($162 152 - $40 000 = $122 152).  The wife would then have:

$
1.         Husband’s payment	122,152
2.         Her personal property referred to above	32,878
3.         Superannuation	47,221
__________
$202,251
But she also has her personal loan of	14,719
_______
$187,532

1. On the other hand, the husband would have the property and superannuation referred to above worth $664 258 ($704 258 - $40 000 = $664 258) less the mortgage of $354 574 less the payment to the wife of $122 152.  This would be $187 532 ($664 258 - $354 574 - $122 152 = $187 532). 

2. But in reality the wife will probably have to repay her uncle for her legal costs which would leave her with $46 334 ($122 152 - $75 818 = $46 334).

3. And the husband might have to pay $116 502 to Warford at some time although this is far from clear.  If he did, this would leave him with $71 030 ($187 532 - $116 502 = $71 030).  I propose to require the husband to indemnify the wife in relation to any liability which she might have in relation to the so-called shareholders loan account.

4. In my view, this is a most unfortunate situation which has come about because the parties have spent much more on legal costs than what has remained of their property and superannuation for division between them.

5. Nevertheless, in my view, what is proposed will be just and equitable in all the circumstances.

6. In the event that the husband does not pay the wife the sum of $122 152, his home unit at Suburb A will have to be sold and the wife paid this amount from the sale proceeds together with interest.

I certify that the preceding one hundred and thirty-eight (138) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 9 February 2016.

Associate:     

Date:              9 February 2016

ANNEXURE A

Minutes of Orders Sought by the Parties

HUSBAND

The Husband contends that there ought be a property settlement effected between the parties such that he receives 65%, and the Wife receives 35%, of the assets, liabilities, superannuation interests and financial resources available for division.

The Husband's ability to particularise the precise Orders he seeks has been hampered by the Wife's failure to comply with her obligation to fully and frankly disclose her financial circumstances. Accordingly, the Orders the Husband seeks may be amended subject to receipt of the Wife's disclosure documents and/ or what may fall from the Wife in cross examination.

1. That the Court allocates, as required by section 90MT(4) of the Family Law Act 1975, a base amount of $21,314.00 to the Wife out of the Husband's interest in the AMP North Personal Superannuation Fund.

2. That, in accordance with section 90MT(1)(a) of the Family Law Act 1975:-

   2.1the Wife (or the Wife's administrators, executors, beneficiaries, heirs or assigns) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

   2.2the entitlement of the Husband in the AMP North Personal Superannuation Fund (or the entitlement of such other person who becomes entitled to receive a payment out of the Husband's superannuation interest) is correspondingly reduced by force of this Order.

3. That the trustee of the AMP North Personal Superannuation Fund ("the trustee") shall do all such acts and things and sign all such documents as may be necessary to:-

   3.1calculate, in accordance with the requirements of the Family Law Act 1975 the entitlement awarded to the Wife in the immediately preceding clause of this Order; and

   3.2pay the entitlement whenever the trustee makes a splittable payment from the Husband's interest in the AMP North Personal Superannuation Fund.

4. That this order has effect from the operative time and the operative time is four (4) business days.

5. That, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 ("the SIS Regulations"), the Husband shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the Wife’s request in accordance with the SIS Regulations, for the rollover or transfer of the non-member spouse interest to a complying superannuation fund of the Wife's choosing in accordance with the SIS Regulations.

6. That the Court notes:

   6.1the value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and

   6.2any payments from the Husband's superannuation interest in the AMP North Personal Superannuation Fund made after the trustee has created a new interest in the Wife's name in the AMP North Personal Superannuation Fund are not splittable payments in accordance with the requirements of the Family Law (Superannuation) Regulations 2001.

7. That, as between the Husband and Wife, and subject to the above Orders the Husband and Wife shall each respectively retain all interest in and entitlement to: -

   7.1All personal property now in his/her respective possession or control.

   7.2All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively.

   7.3All interests in life insurance policies and superannuation funds standing in his/her sole name respectively.

8. Pursuant to section 81 of the Family Law Act 1975 the parties intend these orders to finally determine all financial relations and issues between them and avoid further proceedings between them.

9. That each party shall do all things necessary including providing all consents to give effect to these orders in the time periods prescribed in these orders.

10. That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

11. That both the Husband and the Wife hereby release the other from all actions, proceedings, claims, demands, costs and expenses whatsoever and howsoever arising which either of them had or may have against the other for or by reason of or in respect of any act, cause, matter or thing.

NOTATIONS:

A.IT IS NOTED THAT pursuant to orders made by the Court on 8 April 2013, the Wife received a cash payment from the Husband in the sum of $30,000.00 by way of partial property settlement.

B.IT IS FURTHER NOTED THAT the parties agreed (in inter-solicitor correspondence) and notwithstanding the Order directing that the costs of the single expert valuers engaged in these proceedings be shared between the parties, that the Husband would meet the entirety of those costs in the first instance and the Wife's 50% share (amounting to $4,950.00) would come out of her property settlement

WIFE

Points -> [Mr Warford] is not a shareholder in the company therefore share holders loan does not apply to him.

[Mr Warford] has an earning capacity of upward of $150,000.00 (as per attached contract date 2006)

Financial Summary

Assets:          Property owned  $586,452.00

Superannuation  $117,806.00

Total  $704,258.00

Liabilities:  $418,063.00

Less Shareholders Loan       $58,251.00

Total  $359,812.00

Total Asset Pool                  A ->                $704,258.00

L ->                 $359,812.00

Total               $344,446.00

That [Mr Warford] transfer the [Suburb A] Unit into the wife’s name subject to the mortgage with paying all associated costs and [Mr Warford] transfer $50,000.00 super to the wife’s super.