Warner & Warner
[2008] FamCAFC 156
•23 October 2008
FAMILY COURT OF AUSTRALIA
| WARNER & WARNER | [2008] FamCAFC 156 |
| FAMILY LAW - APPEAL – From decision of Federal Magistrate – PROPERTY SETTLEMENT – The Federal Magistrate indicated in his reasons for judgment an intention to divide the net “assets” by 70/30, in favour of the wife, and to divide superannuation entitlements equally – To give effect to the superannuation division, the Federal Magistrate indicated in his reasons for judgment an intention to make a “splitting order” – The Federal Magistrate recognised the claims of the wife to retain the former matrimonial home, albeit subject to a mortgage – Husband appealed – The orders relating to the division of property did not provide for any adjusting cash payment by the wife to the husband – The effect of the order was to give the wife more than 70% – The Federal Magistrate failed to give any weight to an entitlement of the wife under her late father’s will – Respondent conceded appeal should be allowed FAMILY LAW - APPEAL – Re-exercise of discretion – Consideration of s 75(2) factors – Assets treated the same as before the Federal Magistrate with superannuation assets separated from other property – Contributions of both parties of equal value – Adjustment in wife’s favour conceded by husband due to her health and future needs – Consideration of the wife’s inheritance from her father’s will and whether it should be treated as a s 75(2) factor – Distribution of assets in kind, including superannuation – Orders made FAMILY LAW - APPEAL – Costs of and incidental to the appeal – Costs certificates awarded to both parties |
| Family Law Act 1975 (Cth), s 75(2) Federal Proceedings (Costs) Act 1981 (Cth) |
| APPELLANT: | MR WARNER |
| RESPONDENT: | MS WARNER |
| APPEAL NUMBER: | SA | 29 | of | 2008 |
| FILE NUMBER: | DGC | 728 | of | 2007 |
| DATE DELIVERED: | 23 October 2008 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bryant CJ, Warnick and Boland JJ |
| HEARING DATE: | 10 October 2008 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 19 March 2008 |
| LOWER COURT MNC: | [2008] FMCAfam 179 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms E Swart |
| SOLICITOR FOR THE APPELLANT: | Anderson Partners |
| COUNSEL FOR THE RESPONDENT: | Mr G Combes |
| SOLICITOR FOR THE RESPONDENT: | Alpass & Associates |
Orders
That the appeal be allowed.
That the orders of Federal Magistrate Turner made on 19 March 2008 be set aside.
That by way of alteration of property interests of the parties:
(i)the wife pay the husband the sum of $34,617.50 as follows:
(a)$20,000.00 on or before 45 days from the date hereof;
(b)the balance within 2 years from the date hereof, together with interest on so much thereof as is outstanding from time to time at the rate of seven per cent per annum, such interest to be paid annually, calculated from the date hereof.
That contemporaneously with compliance with Order 3(i)(a) the husband transfer to the wife all his right title and interest in and to the real property at [Property F].
That the wife indemnify and keep indemnified the husband against any and all liability under the mortgage to the Commonwealth Bank of Australia secured over the property at [Property F].
That contemporaneously with the transfer of the husband’s interest to the wife in the [Property F] property, she transfer to the husband all her right, title and interest in the real property situated at [Property B].
That the husband indemnify and keep indemnified the wife against any and all liability under to the mortgage to the Commonwealth Bank of Australia secured over the [Property B] property.
That, save as aforesaid, each party retain ownership of the assets presently in their possession, power or control including superannuation entitlements.
That the court grants to the appellant husband a costs certificate pursuant to the provisions of section 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by the appellant husband in relation to the appeal.
That the court grants to the respondent wife a costs certificate pursuant to the provisions of section 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by the respondent wife in relation to the appeal.
IT IS NOTED that publication of this judgment under the pseudonym Warner and Warner is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 29 of 2008
File Number: DGC 728 of 2007
| MR WARNER |
Appellant
And
| MS WARNER |
Respondent
REASONS FOR JUDGMENT
Following the breakdown of their marriage in early 2006, Mr and Ms Warner litigated over property settlement issues before Federal Magistrate Turner in the Federal Magistrates Court of Australia. The learned Magistrate found that the parties had net assets (excluding superannuation) of about $223,500.00. The husband’s superannuation acquired during the marriage was worth approximately $66,000.00, the wife’s $29,000.00. The Federal Magistrate indicated in his reasons for judgment an intention to divide the net “assets” by 70/30, in favour of the wife, and to divide superannuation entitlements equally and, to give effect to the superannuation division, to make a “splitting order”. In his reasons, his Honour recognised the claims of the wife to retain the former matrimonial home, albeit subject to a mortgage.
The husband appeals the Federal Magistrate’s orders and pursues five grounds.
The first ground is that the orders relating to the division of property led to the wife retaining or receiving net assets of $198,350.00, whereas 70 per cent of the non-superannuation assets was only $156,415.00. The orders did not provide for any adjusting cash payment by the wife to the husband. The Federal Magistrate’s reasons for judgment implied that, when addressing the justice and equity of the proposed orders, he had not considered the prospect of the wife paying cash of approximately $41,000.00 to the husband.
Mr Combes, counsel for the wife, concedes (in our view soundly) that the appeal must succeed. He also acknowledges strength in another ground, which is that the learned Magistrate failed to give any weight to an entitlement of the wife under her late father’s will.
In these circumstances, we need only address a re-exercise of the discretion, which both parties, sensibly in view of the amounts in issue, seek that we do. The husband had sought to put further evidence of financial matters before us. The wife sought dismissal of that application, but alternatively that she also have leave to adduce further evidence. Neither party now pursues an application for leave.
Before going to the re-exercise of discretion, we record a minor procedural issue. The last order made by Turner FM was:
(10)The parties are to prepare and file with the Court within 28 days agreed orders to give effect to this decision and orders as to property and superannuation.
This may or may not be a “machinery” order. Its presence may render the other orders “interlocutory”. Nothing has been done pursuant to it. If necessary, Ms Swart for the husband seeks an extension of time within which to seek permission to appeal Turner FM’s orders. Mr Combes does not oppose this course. Thus, we entertain the appeal, one way or another.
The re-exercise of discretion
The following facts from the Federal Magistrate’s judgment are uncontroversial and are, in large part, as expressed in his reasons.
The assets of the parties are:
Assets
Matrimonial home at
[Property F]
$ 335,000Less mortgage
–$ 135,000
Net value
$ 200,000
Property at [Property B]
$ 200,000Less mortgage
– $ 180,000–181,000
Net value
$ 19,500
Husband’s four wheel drive
$ 10,000
Husband’s tools
$ 1,000
The value of the husband’s boat is not agreed: there was an insurance payout of $4,200 less an outstanding loan of $2,000
$ 2,200
The value of the wife’s commodore is not agreed.
The car was unregistered.
It was sold to a wrecker for $350 which is the only proper measure of its value before the Court$ 350
Total Assets
$ 233,050
Less credit balances owing:
Husband (agreed)
Wife (agreed)
– $ 7,600
– $ 2,000
– $9,600
Net Assets
$ 223,450
The wife also has a one third interest in a house, under her late father’s will. In her statement of financial circumstances, the wife asserted:
Interest in any trustSpecify
Estate of [X] deceased (father) 33%
interest to be received in 5 years$E 100000
Or deceased estate
Under cross-examination at trial, the wife confirmed that $100,000.00 would “just be an estimate”. She also said that “in one of the meetings with a solicitor he advised [D] [the wife’s stepmother] that she would be within her rights really to contest the will to live in there for the duration of her life. As far as I’m aware and I’m an executor, nothing has been said except extending the three to five years at the moment.”
As to matters relevant to contributions and s 75(2) factors:
· The husband brought $18,000.00 into the relationship and the wife brought in $9,000.00.
· During the marriage the husband paid $6,000.00 off a debt from a failed business venture during a previous marriage;
· During the marriage the husband paid approximately $60,000.00 for the support of his children from a previous marriage;
· Both parties contributed to the welfare of the children of the marriage, although the wife made the larger contribution;
· The husband made direct contributions to the improvement of the matrimonial home through the input of his skill and labour. He arranged for his brother to do work on the roof. He also worked on a property at [Property B];
· The parties were married for 15 years, ending in their separation on 13 February 2006;
· The husband had been paying child support of $680.00 per month;
· [At trial] The wife was 45 years of age and the husband was 41 years of age. The wife is in poor health;
· The wife is earning around $50,000.00 per annum and the husband $55,000.00 per annum. The physical capacity of the wife to continue in gainful employment is of concern;
· The duration of the marriage has not affected the state of the wife’s health, which is likely to deteriorate;
· There appears to be no reason why the husband cannot continue to work;
· The wife has the major responsibility for the care and control of two children of the marriage, S and T, who were [at trial] 17 and 14 years old respectively. A [at trial] was 18 years old. Although the children of the marriage stay at the husband’s house up to seven nights per fortnight, the evidence is that they go to the matrimonial home for some time almost every day;
· The wife is the major contributor to the needs of the children including their schooling, health and medical expenses; and
· Based on the asset pool and income of the parties, neither party will enjoy more than a reasonable standard of living.
Each counsel was content that we treat the assets as did Turner FM, namely separating superannuation assets from the other property.
As to contributions, Ms Swart contended for a division of 55/45 per cent in the husband’s favour, on the basis that the husband’s contributions to the improvement of the former matrimonial home and the Property B property should lead to a 5 per cent adjustment in his favour, although all other contributions of each party might point to an equal division. Mr Combes suggested that contributions were of equal value.
Having regard to all of the contributions, including the reduction in the financial contribution from the husband’s income caused by his payment of child support for the children of his previous marriage, we conclude that contributions to trial by each party are of equal value.
As to factors relevant under s 75(2), at trial, and, subject to one qualification before us, the husband conceded that there should be a 15 per cent adjustment in the wife’s favour, because of her state of health and future needs deriving from it. Before us, Ms Swart added that there should be a 5 per cent reduction or set-off in the husband’s favour, because of the wife’s inheritance. Though Mr Combes conceded that the wife’s interest in her father’s estate was relevant, he argued that it should be of minimal weight. Mr Combes also argued that there should be further adjustments in the wife’s favour because of her greater contributions in respect of the financial and non-financial responsibility for the children, in particular the youngest child.
It seems to us that, at least arguably, the wife’s interest in her father’s estate was property, it being a vested interest. Before us, however, Ms Swart is content that we treat it as a s 75(2) factor. While uncertainty surrounded its value, because what was before the court was only the wife’s estimate, that was nonetheless a concession against interest that could have been relied upon and we do so, subject to the observation that the wife is held out of the realisation of her interest at least for a few more years. We also take some account of the possibility that the wife’s stepmother might seek to acquire a life interest in the property.
In our view, the wife’s health and likely future needs on that account are the most significant factors and call for a substantial adjustment in her favour having regard to the modest size of the asset pool. An added factor is her ongoing care of the youngest child, but not one of very much weight, given the husband’s contributions both in care and through child support, and the age of the child. These factors favouring the wife are mitigated to some modest degree by the wife’s interest in her father’s estate. We consider that there should be a 15 per cent adjustment on account of s 75(2) factors, thus making the final division of non-superannuation assets 65 per cent to the wife and 35 per cent to the husband.
The real tension in this case is about the distribution in kind of the assets, including superannuation. Ms Swart submitted that the husband had need for cash to re-establish himself and that if, to meet that need, it was necessary for the wife to sell the former matrimonial home, she could do so without injustice, as cheaper properties were available.
We note that the equity of the wife in the former matrimonial home is $200,000.00. We are not in a position to conclude that she could buy alternative accommodation of any comparability.
The learned Magistrate found (at paragraph 8):
…It is appropriate that the wife retain the matrimonial home for her and the children to live in. …
The retention of the matrimonial home will enhance the mother’s ability to care for the children.
These conclusions were not the subject of attack before us, save for Ms Swart’s submission about the wife’s capacity to buy elsewhere. In our view, in deciding the justice and equity of orders, considerable weight ought be given to the claims of the wife to retain the former matrimonial home.
Mr Combes for the wife takes no issue with a notional (but not an actual) 50/50 split of superannuation, though, of course, that is from the platform of a 70/30 division of the other assets in favour of the wife. He said (we think incorrectly) that this would see the wife paying the husband $18,457.50. We infer that she is able to raise this sum and retain the former matrimonial home, subject to the mortgage.
To notionally divide total superannuation of $94,915.00 equally produces $47,457.50. The wife already has a $29,000.00 entitlement, so the husband would have to pay her $18,457.50 (not the wife pay the husband that sum).
If the wife also retained the Property F home (subject to the mortgage), her car and her credit card liability – totalling $198,350.00, then, on a 70/30 division of non-superannuation assets she would have to pay the husband $41,935.00 minus $18,457.50, thus $23,477.50.
If non-superannuation assets were divided as we propose, 65 per cent to the wife, she is entitled to $145,275.00. Therefore, if she keeps property worth $198,350.00 net and superannuation is notionally divided equally, the calculation of what she should pay the husband is as follows:
$198,350.00 net property retained by wife
$145,245.50 65% of non-superannuation net assets
$53,075.00 wife to pay husband
$18,457.50 less adjustment in wife’s favour to notionally divide
superannuation equally$34,617.50 Amount payable by wife to husband
The husband seeks to maintain the splitting order in respect of superannuation and argues for a lesser division of non-superannuation assets than 70/30 per cent in the wife’s favour. On the division of non-superannuation assets that we propose, if the splitting order was maintained, the payment by the wife to the husband would be $53,075.00.
In our view, justice and equity is served by notionally dividing superannuation equally. The resulting sum payable by the wife to the husband ($34,617.50) is likely to be a helpful cash sum and represents about 15 per cent of the non-superannuation assets. The lesser cash sum maximises the opportunity for the wife to retain the Property F home.
However, while we infer that the wife can immediately raise a sum of the order of $20,000.00, we do not infer that she can raise $34,617.50. We intend to balance the competing claims of the parties to provide that the wife pay the sum of $20,000.00 in the near future to the husband and the balance within two years, but bearing interest at the rate of 7 per cent per annum, payable annually.
The costs of the appeal
Each party sought a certificate under the Federal Proceedings (Costs) Act 1981 and we consider the grant of certificates appropriate.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 23 October 2008
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