WELCH & ABNEY
[2018] FamCA 135
•6 March 2018
FAMILY COURT OF AUSTRALIA
| WELCH & ABNEY | [2018] FamCA 135 |
| FAMILY LAW – PROPERTY SETTLEMENT – Contributions – Where the trial was the result of remittal for re-hearing after a successful appeal – Where the parties are not in paid employment – Where the wife’s Total and Permanent Disability pension is not included in the pool of assets as its nature is that of an income stream – Where the submission that the husband has a financial resource in the form of a Common Law Claim is rejected – Concluded there is to be an overall division of 55 per cent to the husband and 45 per cent to the wife – Ordered the husband pay the wife $52,052 to achieve the percentage division – Ordered the wife retain her property – Ordered the husband retain his property – Ordered the husband be removed from the wife’s family trust |
| Family Law Act 1975 (Cth), ss 75, 79 |
| Bevan & Bevan [2013] FamCAFC 116 Kowaliw & Kowaliw (1981) FLC 91-092 Semperton v Semperton (2012) 47 Fam LR 626 Stanford & Stanford (2012) 247 CLR 108 Vass & Vass [2015] FamCAFC 51 |
| APPLICANT: | Ms Welch |
| RESPONDENT: | Mr Abney |
| FILE NUMBER: | NCC | 629 | of | 2013 |
| DATE DELIVERED: | 6 March 2018 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Cleary J |
| HEARING DATE: | 23 – 26 May 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Gregilgas |
| SOLICITOR FOR THE APPLICANT: | Burke & Mead Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Bates |
| SOLICITOR FOR THE RESPONDENT: | Hunter Valley Law Centre |
Orders
Within 60 days of the date of these orders the husband shall pay to the wife an amount of $52,052 such payment to be made into the bank account nominated by the wife or as she otherwise directs.
That the wife shall retain, to the exclusion of the husband, all her right, title and interest in the property known as and situated at C Street, D Town (“the D Town property”) being Lot … in DP … and indemnify and keep indemnified the husband for any liability secured against same.
That the husband shall retain, to the exclusion of the wife, all his right, title and interest in the property known as and situated at E Street, F Town (“the F Town property”) being Lot … in … and indemnify and keep indemnified the wife for any liability secured against same.
That the parties do all acts and things as are necessary to cause the husband to:
4.1Resign as trustee of the Ms Welch Family Trust (“the Trust”);
4.2Relinquish any beneficial entitlements under the Trust;
4.3Be removed as a beneficiary of the Trust.
That unless otherwise specified in these orders each party shall:
5.1Be solely entitled to the exclusion of the other to all property, real and personal, in the possession of such party as at the date of these orders;
5.2Forego any claim that party may have to any superannuation benefit or interest belonging to or earned by the other.
That in the event of either party refusing or neglecting to sign within (3) days of receipt of a written request to do so any documents necessary to put into effect the terms of these orders then a Registrar of the Family Court of Australia is hereby appointed to execute such documents on behalf of that party pursuant to Section 106 of the Family Law Act 1975 (Cth).
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Welch & Abney has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT NEWCASTLE |
FILE NUMBER: NCC629/2013
| Ms Welch |
Applicant
And
| Mr Abney |
Respondent
REASONS FOR JUDGMENT
Introduction
These are competing applications for adjustment of interests in matrimonial property. The parties separated six to seven years ago in 2011 after a relationship of about 16 years.
The trial before me was the result of the matter being remitted for re-hearing after a successful appeal by the wife against orders made in this Court on 14 December 2015.
The parties
The Applicant wife (“the wife”) is Ms Welch aged 51 years. She was suspended from her employment in 2009 on medical grounds and has not been in paid employment since. She was medically retired.
The Respondent husband (“the husband”) is Mr Abney aged 55 years. His employment was also terminated on medical grounds in 2013. He has not been in paid employment since that date.
History of Events During Relationship
The parties began living together in 1995. For about two years they lived in a property at L Street, K Town (“L Street”) owned by the husband.
At that time the husband was estranged from his first wife, with whom he had three children, then aged seven, five and four years. The wife was single with no children.
Both parties were working and the wife was also in the final stages of completing her doctorate.
In 1996 the parties married. Even by modern standards it was an exceptionally busy marriage which became overburdened by the events which unfolded.
Later that year the parties jointly purchased and moved into a property at M Street, K Town (“M Street”). The purchase price was $153,000. They borrowed $177,000. The debt was secured on M Street and a property in J Town owned by the husband.
In 1997 the husband studied for and attained a Masters degree..
In 1997 the first child of the parties was born. She is now almost 21 years.
By 1997 the husband was managing the parties’ finances.[1]
[1] Affidavit of the wife filed 28 April 2017, para 138
In 1998 the husband began four years of study for his doctorate. He continued to work full time.
In June 1998 the wife, having attained her PhD, began academic work.
In 2000, the second child of the parties was born. She is now 18 years and is completing Year 12.
In mid-2000 the husband sold L Street with the net proceeds of sale being approximately $111,500.
In about 2001 the wife sold her property at Suburb I for $105,000 with the net proceeds unknown.
In 2003 the husband worked part time as an academic and completed his doctorate. Thereafter he travelled overseas from time to time on special projects which left the wife with full-time care of the children whilst also working.
In 2008 the parties bought a semi-rural property on acreage at D Town (“D Town”) for $420,000. It became the family home.
By that time it is uncontested that the wife was suffering from depression.
In 2008/09 the husband sold his land in J Town and the parties sold M Street.
Also at that time the husband started a hire business. The wife was having serious professional difficulties in her work place. The parties fell into conflict over the cost and who should manage the business.
In 2010 the husband’s daughter from his first marriage died. The husband was in a grief stricken state and the wife attempted to help him.
Soon after the husband’s father died.
In February 2011 the wife was admitted to hospital after a suicide attempt. Her employment was terminated on medical grounds.
The parties separated either in April 2011(wife) or October 2011 (husband). Nothing turns on that dispute. There was probably a period of separation under the one roof.
In September 2011 the husband acquired a property in E Street, F Town (“F Town property”) and has remained living there.
In October 2011 the husband left the matrimonial home in D Town. He moved into the F Town property.
In 2013 the husband attempted suicide in a public place in the presence of his children. He was subsequently made subject to an AVO for the protection of the wife and children.
In November 2013 the parties were divorced.
In late 2013 the husband married Ms N, a Country H national, whose residence and work is in Country H.
The husband lives in Australia and travels regularly to Country H.
History of events after first Application
In March 2013 an Initiating Application was made by the wife to the Federal Circuit Court.
On 29 July 2014 final parenting orders were made by consent. The wife has had sole parental responsibility. The two children, now young adults, have seen very little of their father since the separation of their parents.
In May 2015 the husband effected a payment to himself of his superannuation interests in DD Super (“DDS”). The amount received was $640,397 gross; $548,896 nett of tax.
In July 2015 the husband effected a payment to himself of his superannuation interests in MLC Superannuation Fund. The amount received was $388,681 gross; $326,402 nett of tax.
Total nett superannuation received: $548,896
$326,402
Total$875,298
Over four days in November 2015, there was a trial in respect to adjustment of interests in property.
On 14 December 2015 final property orders were made (“the 2015 orders”) and reasons for judgment delivered.
The orders can be summarised as follows:
- Wife to pay to husband cash sum of $1,992;
- Husband to transfer his interest in the D Town property to the wife with wife to indemnify husband in respect to liabilities;
- Husband to retain F Town property and to indemnify wife in respect of liabilities;
- Wife declared to be sole owner of farming equipment and tools;
- Husband declared to be sole owner of Country H timeshare;
- Husband to cooperate with his removal from the Family Trust of the wife;
- Each to otherwise keep assets and be responsible for liabilities in the name/possession of each.
On 16 December 2015 the husband sent cheques to Ms N, his wife in Country H, for $665,015.
On 22 December 2015 the wife filed an appeal against the 2015 orders.
The funds were later forwarded back to the husband in the context of the appeal and an application for a Stay and various injunctive orders.
The outcome was a restraint on the husband from dealing with, and further mortgaging the F Town property. Other applications were dismissed.
In mid-2016, whilst the appeal was pending, and pursuant to Order 1 of the 2015 orders, the husband transferred his interest in the family home at D Town to the wife and the wife discharged the mortgage secured on the property and refinanced the debt.
Further, the husband paid to the wife the balance owed by him of a costs order after deducting the cash sum payable to the wife [$1,992] referred to above.
The Appeal and decision of Full Court
On 22 December 2016 the Full Court upheld the appeal.
After an appeal is heard and upheld the Full Court of the Family Court of Australia may order a re-hearing on such terms and conditions if any as considered appropriate.[2]
[2] Family Law Act 1975 (Cth) s 94(2)
In this matter the presiding judges of the Full Court discussed issues around the Total and Permanent Disability (“TPD”) pension of the wife and the likely need for updating evidence.[3]
[3]Welch & Abney [2016] FamCAFC 271, paras 86-98
The Full Court concluded that the matter would be remitted for re-hearing by a judge other than the trial judge. No terms or conditions were imposed.
Second trial - May 2017
The proceedings came before me in May 2017. The trial was concluded within the allocated four days.
Judgment was reserved.
The matter proceeded before me on the basis of fresh evidence by each of the parties (and in the case of the husband his witnesses) and by updating single expert reports.
The parties did not consent to adopting any of the findings of His Honour the previous trial judge.
In my view that course was open to them on many findings relating to contributions during the relationship.
The contentious issue in the appeal was the approach to be taken by the Court to treatment of the TPD pension of the wife.
However this is a re-hearing on the facts and circumstances at date of further trial.
The Evidence
The documents relied on in respect of the application were as follows:
The wife [Applicant]
(a)Amended Initiating Application filed 28/02/2017;
(b)Affidavit of the wife filed 28/04/2017;
(c)Financial Statement of the wife filed 28/04/2017;
The husband [Respondent]
(d)Amended Response of Husband filed 13 March 2017 varied by Minute of Order dated 26 May 2017;[4]
[4] Exhibit 16
(e)Affidavit of the husband filed 28/04/2017;
(f)Financial Statement of the husband filed 28/04/2017;
(g)Affidavit of Mr O filed 28/04/2017;
(h)Affidavit of Mr P filed 28/04/2017;
Reports
(i)Single Expert Report of Ms Q filed 16/05/2017;
(j)Single Expert Report of Mr R filed 18/05/2017;
(k)Single Expert Report of Ms S filed 16/05/2017;
(l)Single Expert Reports of Mr G filed 22/05/2017, Tax Advisory Specialist;
Single Expert reports (2) of Mr T filed i) 17/04/2015 and ii) 18/05/2017.
Applications
The applicant wife seeks an adjustment in her favour, in the form of a cash payment to her by the husband of $638,000.
The husband in his Amended Response proposed a cash payment by him of $135,000 to the wife, together with a split of the interest of the wife in her V Super Defined Benefit Plan with payment back to him of $135,000.
During the course of the trial the husband abandoned that position and proposed that the application of the wife be dismissed. [5]
[5] Exhibit 16
The husband opposes, pursuant to s 79(2) of the Family Law Act 1975 (“the Act”) any further adjustment being made.
The section says this:
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.
Approach to Alteration of Interests in Property
The decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 at 490 compels this Court to be satisfied that having regard to existing legal and equitable interests [properly identified as part of the exercise] it is just and equitable to make a property settlement order, that is to alter the identified existing interests.
The husband submits that the interests of the parties at date of trial are such that no further adjustment should properly be made.
Accordingly in this matter the Court is obliged to follow the following long established four step process in coming to a proper outcome.[6]
(i)Identify the existing legal and equitable interests of the parties in property;
(ii)Consider whether it would be just and equitable in the particular circumstances to make an alteration;
(iii)
If an alteration is called for, to consider the matters contained in
ss 79(4) (Contributions) and 75(2) (Future Needs) of the Act in coming to an adjustment; and
(iv)Analyse and consider whether the adjustment under consideration would be just and equitable.
[6]Stanford & Stanford (2012) 247 CLR 108; Bevan & Bevan [2013] FamCAFC 116
1. Identify the assets and liabilities of the parties
The parties’ assets are set out in the joint balance sheet:[7]
[7] Exhibit 17
| Ownership | Description | Wife’s value | Husband’s value | ||
| ASSETS | |||||
| 1. | J | C Street, D Town … | $ 600,000 | $ 600,000 | |
| 2. | H | E Street, F Town … | $ 470,000 | $ 470,000 | |
| 3. | H | Property W, Country H | $ 262,000 | $E 230,000[8] | |
| 4. | W | US Timeshare | $ 30,000 | $ 30 000 | |
| 5. | H | Country H Timeshare | $ 20,000 | $ 20,000 | |
| 6. | W | Motor vehicle 1 | $ 22,000 | $ 22 000 | |
| 7. | H | 4WD | $E 69,000 | $ 60,500 | |
| 8. | H | Motor vehicle 2 | $ 25,500 | $ 20,250 | |
| 9. | W | Z Bank Account #..00 | $ 4,300 | $ 4,300 | |
| 10. | W | Z Bank Online Savings Account #..18 | $ 5 | $ 5 | |
| 11. | W | CBA Smart Access Account #..88 | $ 1,745 | $ 1,745 | |
| 12. | W | CBA Net Saver Account #..96 | $ 1,026 | $ 1,026 | |
| 13. | W | IAG Shares | $ 2,579 | $ 2,579 | |
| 14. | W | NIB Holdings Shares | $E 3,306 | $E 3,306 | |
| 15. | H | Y Bank Account # | $E 108,000 | $E 108,000 | |
| 16. | H | Westpac Account #..31 | $ 849 | $ 849 | |
| 17. | H | Westpac Account #..06 | $ 11,097 | $ 11,097 | |
| 18. | H | AA Bank Account #..13 | $ 853 | $ 853 | |
| 19. | H | AA Bank Account #..21 | $ 176 | $ 176 | |
| 20. | H | Z Bank Account #..18 | $ 66 | $ 66 | |
| 21. | H | Z Bank Account #..06 | $ 3,864 | $ 3,864 | |
| 22. | H | X Mutual Account S1 | $ 4,719 | $ 4,719 | |
| 23. | H | X Mutual Account S3 | $ 2 | $ 2 | |
| 24. | H | IAG Shares | $ 3,456 | $ 3,456 | |
| Total Est | $ 1,644,011 | $ 1,548,824 | |||
[8] Exhibit 22 amended balance sheet by correspondence. Amended balance sheet appears.
| ADJUSTMENTS | ||||
| 25. | H | Proceeds of sale of Motor vehicle 4 | $ 10,000 | $ 0 |
| 26. | H | Proceeds of sale of Motor vehicle 3 | $ 13,000 | $ 0 |
| 27. | H | Monies taken from Wife’s bank account | $ 46,889 | $ 0 |
| 28. | H | Termination monies | $E 60,000 | $ 0 |
| 29. | H | Taxation – DDS monies | $ 91,501 | $ 0 |
| 30. | H | DDS/MLC monies utilised to pay family law legal fees to Ms BB | $ 4,500 | |
| 31. | H | DDS/MLC monies utilised to pay family law legal fees to CC Lawyers (December 2015) | $ 43,218 | |
| 32. | H | DDS/MLC monies utilised to pay family law legal fees to CC Lawyers (April 2016) | $ 6,361 | |
| 33. | H | DDS/MLC monies utilised to pay family law legal fees to CC Lawyers (July 2016) | $ 7,067 | |
| 34. | H | DDS monies disposed of by Husband prior to November 2015 | $E 190,000 | $ 0 |
| 35. | H | MLC monies disposed of by Husband prior to November 2015 | $ 120,393 | $ 0 |
| 36. | H | Tax paid on MLC monies | $ 62,279 | $ 0 |
| 37. | H | DDS/MLC Monies disposed/unaccounted since December 2015 | $E 240,000 | $ 0 |
| 38. | H | Balance of monies owed to Wife pursuant to Order 1 of Orders dated 18 February 2016 | $ 1,992 | $ 0 |
| Total | $ 904,957.97 | $ | ||
| LIABILITIES | ||||
| 39. | W | CBA Mortgage – D Town | $ 458,589 | $ 458, 589 |
| 40. | W | EE MasterCard | $E 1,700 | $ 1,700 |
| 41. | H | AA Bank Mastercard | $ 5,846 | $ 15,775 |
| Total | $ 466,135 | $ 476,064 | ||
| SUPERANNUATION | |||||
| Member | Name of Fund | Type of Interest | Wife’s value | Husband’s value | |
| 42. | W | JJ Super | Accumulation | $ 33,332 | $ 49,519 |
| 43. | W | KK Superannuation Master Trust | Accumulation | $ 10,455 | $ 13,398 |
| 44. | W | V Super | Defined Benefit | $E 276,617 | $ 347,658 |
| 45. | W | V Super | Accumulation | $E 44,900 | $ 54,159 |
| 46. | W | V Super | Pension | $ 904,380 | |
| Total | $ 365,304 | $ 1,369,114 | |||
| FINANCIAL RESOURCES | |||||
| Ownership | Description | Wife’s value | Husband’s value | ||
| 47. | W | V Super Disability Pension | $ 666,473 | ||
| 48. | H | Workers Compensation and Common Law – Chose in Action | $ 500,000 | $ 0 | |
| Total | $ 1,166,473 | ||||
Notes
In relation to any disputed items and all disputed values for items a party should state, using the item number as a heading:
Why an item should not be on the balance sheet.
Whether expert evidence is required to resolve a dispute as to value and what steps have been taken to agree upon and appoint a single expert.
Whether documents in the possession of the other party need to be provided before the value of an item can be agreed.
Any other comment a party wishes to make in relation to the disputed item.
| Item No | |
| 3 | To be addressed in submissions. |
| 7 and 8 | Wife adopts purchase price. Husband adopts Redbook value. |
| 25 - 38 | To be addressed in submissions. |
| 41 | To be addressed in submissions. |
| 42 | Wife value as per Form 6 valuation dated 29 October 2012. Husband value as per Form 6 valuation dated 10 February 2017. |
| 43 | Wife value as per form 6 valuation dated 23 October 2012. Husband value as per form 6 valuation dated 14 February 2017. |
| 46 | As per the valuation provided in Mr S’s Report dated 10 April 2017 calculated in accordance with the Family Law Regulations for the purpose of a splitting order. Noting the Husband concedes the current accumulated value as an income stream is $666,472.52 |
Revised Totals
I note that there is there is an error in the addition of the asset totals. The correct totals are as follows.
| Corrected Totals | $1,644,543 | $1,598,793 |
There is a further error in the addition of the adjustment totals for the wife. The correct totals are as follows.
| Corrected Totals | $897,200 | $0 |
Revised Balance sheet
The following items were the subject of submissions:
Item 3
This is an apartment in Country H purchased by the husband in the name of his wife Ms N in 2016. There was a reduced disparity on the value of this item by the time of submissions. A difference of $32,000. The wife contends for $262,000 with the husband conceding, after submissions, $230,000. There was a complex explanation by the husband around the purchase.[9]
The relevant Country H document discloses amounts on its face inconsistent with either figure contended for and incalculable given the inclusion of a reference to “mortgage debt”. The final figure of $230,000 represents one of the two figures for the purchase price, which the wife contended should be the value used, although the dollar number was in dispute and I have accepted that figure.
[9] Affidavit of the husband filed 28 April 2017, paras 188-195, Annexure DA50
Items 7 and 8
Vehicles owned by the husband. In his Financial Statement the husband attributed lesser figures for these vehicles, $53,100 and $17,000 due to damage incurred.
In the absence of formal valuation where the wife relied on an estimated figure for the larger vehicle and where a concession has been made by the husband I have accepted the husband’s revised figures of $60,500 and $20,250.
Items 25-29; 34-37 (Items 30-33 and 38 were not pressed)
All these items are entitled “Adjustments”. Previously, before the decisions in Stanford, Bevan and Vass[10] the title of this section of the Balance Sheet would probably have been “Add-Backs”.
[10]Vass & Vass [2015] FamCAFC 51
Unless there has been recklessness in the disposal of assets amounting to waste,[11] the Court should be reluctant to add back the value of money spent and assets disposed of during the course of a relationship. This is especially so where one party, in this case the wife, properly concedes that the other had the running of marital finances. A party should not be permitted to effectively say ‘I was content to leave the money management to you but looking back now I disagree with what you did.’
[11]Kowaliw & Kowaliw (1981) FLC 91-092
In this case there were periods of time when one or both parties were suffering mental illness, particularly depression. Both have attempted suicide at times of severe illness. Both were retired medically unfit and have been unable to return to the workforce. Logically decisions could have been made which were objectively poor or irrational. That is a fact of the shared life of these parties.
Of course the benefit of such funds can and should be taken into account in considering contributions during the relationship and after it ends.
One clear example is in respect of Item 29. This is the sum of $91,501 paid by the husband in tax as a result of converting superannuation interests to cash and income. Even he, looking back regrets doing so although he had immediate need of funds. More tax effective advice could ideally have been obtained. The expert advice of Mr G laid out in detail alternative arrangements such as the structuring of a super split. However the fact is that the husband took the course he did.
The other items would be impossible to exactly account for. The husband used some funds for example from sale of vintage vehicles during the marriage. He used some of his superannuation money to purchase the apartment in Country H in 2016. He has also made regular trips between the two countries.
He has used superannuation funds now rather than later but has used at least some of it for the same purpose, that is to live on both here in Australia and with his wife in Country H.
Accordingly I have not added back these amounts into the joint balance sheet
Item 41
This a tax debt of the husband incurred post separation. I have omitted it.
Item 46
This is the V Super pension of the wife and the most controversial item. In line with the authority in Semperton & Semperton (2012) 47 Fam LR 626 and the reasons given by the Full Court in the Appeal[12] in this matter I have excluded the value from the Balance sheet. There is no splitting order sought, which is the operative factor for the use of that value. The income it produces for the wife will be taken into account as a factor in Section 75(2).
[12]Welch & Abney [2016] FamCAFC 271
Item 48
This is the estimate of value of a successful Common Law Claim by the husband if brought. I have excluded it from the Balance Sheet as a financial resource on the basis set out in paras 159-169 of these Reasons.
Revised Balance Sheet
The revised Balance Sheet is therefore as follows:
| Ownership | Description | Wife’s value | Husband’s value | ||
| ASSETS | |||||
| 1. | J | C Street, D Town … | $ 600,000 | ||
| 2. | H | E Street, F Town … | $ 470,000 | ||
| 3. | H | Property W, Country H | $E 230,000[13] | ||
| 4. | W | US Timeshare | $ 30 000 | ||
| 5. | H | Country H Timeshare | $ 20,000 | ||
| 6. | W | Motor vehicle 1 | $ 22 000 | ||
| 7. | H | 4WD | $ 60,500 | ||
| 8. | H | Motor vehicle 2 | $ 20,250 | ||
| 9. | W | Z Bank Account #...00 | $ 4,300 | ||
| 10. | W | Z Bank Online Savings Account #...18 | $ 5 | ||
| 11. | W | CBA Smart Access Account #...88 | $ 1,745 | ||
| 12. | W | CBA Net Saver Account #...96 | $ 1,026 | ||
| 13. | W | IAG Shares | $ 2,579 | ||
| 14. | W | NIB Holdings Shares | $E 3,306 | ||
| 15. | H | Y Bank Account # | $E 108,000 | ||
| 16. | H | Westpac Account #...31 | $ 849 | ||
| 17. | H | Westpac Account #...06 | $ 11,097 | ||
| 18. | H | AA Bank Account #...13 | $ 853 | ||
| 19. | H | AA Bank Account #...21 | $ 176 | ||
| 20. | H | Z Bank Account #...18 | $ 66 | ||
| 21. | H | Z Bank Account #...06 | $ 3,864 | ||
| 22. | H | X Mutual Account S1 | $ 4,719 | ||
| 23. | H | X Mutual Account S3 | $ 2 | ||
| 24. | H | IAG Shares | $ 3,456 | ||
| Total Est | $ 1,598,793 | ||||
[13] Exhibit 22 amended balance sheet by correspondence. Amended balance sheet appears.
| LIABILITIES | ||||
| 39. | W | CBA Mortgage – D Town | $ 458,589 | $ 458, 589 |
| 40. | W | EE MasterCard | $E 1,700 | $ 1,700 |
| Total | $ 460,289 | $ 460,289 | ||
| SUPERANNUATION | |||||
| Member | Name of Fund | Type of Interest | Wife’s value | Husband’s value | |
| 42. | W | JJ Super | Accumulation | $ 49,519 | |
| 43. | W | KK Superannuation Master Trust | Accumulation | $ 13,398 | |
| 44. | W | V Super | Defined Benefit | $ 347,658 | |
| 45. | W | V Super | Accumulation | $ 54,159 | |
| Total | $ 464,734 | ||||
2. Would it be just and equitable to make an adjustment to interests in property
A Balance Sheet set out in the traditional method is not, in my view, conducive to readily appreciating what each party presently has in his and her possession.
Legal and equitable interests of each of the parties can be analysed as follows:
Assets in possession of wife
Assets presently held by the wife:
| Item No. | Description | Value |
| 1. | C Street, D Town … | $ 600,000 |
| 4. | US Timeshare | $ 30,000 |
| 6. | Motor vehicle 1 | $ 22,000 |
| 9. | Z Bank Account #...00 | $ 4,300 |
| 10. | Z Bank Online Savings Account #...18 | $ 5 |
| 11. | CBA Smart Access Account #...88 | $ 1,745 |
| 12. | CBA Net Saver Account #...96 | $ 1,026 |
| 13. | IAG shares | $ 2,579 |
| 14. | NIB Holdings shares | $ 3,306 |
| 42. | JJ Super | $ 49,519 |
| 43. | KK Superannuation Master Trust | $ 13,397 |
| 44. | V Super | $ 347,658 |
| 45. | V Super | $ 54,159 |
| Sub-total | $ 1,129,694 | |
| 39 40 | Less liabilities Mortgage EE Finance | $ 458,589 $ 1,700 |
| Total of Net assets | $ 669,405 |
Assets held by husband
Assets in possession of the husband:
| Item No. | Description | Value |
| 2. | E Street, F Town … | $ 470,000 |
| 3. | Property W, Country H | $ 230,000 |
| 5. | Country H Timeshare | $ 20,000 |
| 7. | 4WD | $ 60,500 |
| 8. | Motor vehicle 2 | $ 20,250 |
| 15. | Y Bank Account | $ 108,000 |
| 16. | Westpac Account #...31 | $ 849 |
| 17. | Westpac Account #...06 | $ 11,097 |
| 18. | AA Bank Account #...13 | $ 853 |
| 19. | AA Bank Account #...21 | $ 176 |
| 20. | Z Bank Account #...18 | $ 66 |
| 21. | Z Bank Account #...06 | $ 3,864 |
| 22. | X Mutual Account S1 | $ 4,719 |
| 23. | X Mutual Account S3 | $ 2 |
| 24. | IAG shares | $ 3,456 |
| Total of Net Assets | $ 933,832 | |
| TOTAL NET ASSETS OF PARTIES | $1,603,237 |
ANALYSIS
On the face of it the wife has 42 per cent of the nett asset pool as analysed by me, the husband 58 per cent.
The husband proposes maintenance of this status quo. The wife proposes a cash payment to her of $638,000 which would represent a division in the ratio 82 per cent to the wife and 18 per cent to the husband.
Clearly the Court should proceed to consider the contributions and relevant adjusting factors before coming to a conclusion about what is just and equitable.
3. Consideration of ss 79(4) and 75(2) of the Act in order to come to a just and equitable adjustment
Contributions under section 79(4)
At cohabitation in mid 1995
In 1995 the husband had equity in two properties in J Town and K Town subject to a mortgage, secured over both, with approximate nett equity of $130,000. He had a personal loan and credit card debt together less than $20,000.
He was employed earning $1,600 per week.
The wife had equity of about $21,000 in a property at Suburb I and a car worth about $20,000.
She was employed earning $510 per week.
At commencement the husband brought more by way of assets and income to the marriage and provided a home for the parties for the first two years.
During the relationship
Both parties worked almost impossibly hard. Each also undertook further study, although the wife had almost completed her doctoral work by date of marriage.
Both were working as academics.
Each party was involved in the care of the children, managing to attend to their needs around work and study. After 2003 when the husband began travelling overseas for special projects the wife was solely responsible for the care and supervision of the children whilst continuing to work.
Properties owned prior to marriage were sold and the property at D Town, which became the final family home was purchased.
Both parties suffered from mental illness, including severe depression. The wife attempted suicide a few months before separation, the husband two years after separation. The parties were mutually supportive of each other when the wife suffered from misconduct in her work place and the husband dealt with family tragedy, the death of his daughter. Later they turned on each other with bitter accusations and blame.
Until they reached adulthood the husband paid child support for the three children of his first marriage.
The contributions after 16 years should be considered equal.
After separation
The wife had the benefit of remaining in the family home with the children. However the husband had the F Town property to live in. The funds were borrowed against the D Town property and a fund of money obtained by the wife for Workers Compensation was also used.
In 2012 the wife carried out extensive improvements on the family home using some or most of the proceeds [$500,000] of a successful Common Law claim against her former employer. It seems unlikely that the majority of funds was used. The property was purchased in 2008 for $420,000 and was valued for this trial in 2017 at $600,000.The increase in value does not reflect enhanced capital gain through the injection of such a significant sum.
The husband paid the mortgage instalments until 2013.
After March 2013, after the exposure of the children to their father’s attempt at suicide, the wife had all of the care of them.
In 2015 the husband accessed his superannuation interests. He paid off a loan secured on the F Town property amongst others discussed in these reasons.
In 2014 the parties converted their home loan to an interest only loan and paid equal instalments.
Prior to the first trial the contribution of the wife exceeded that of the husband with particular reference to her care of the children.
After the First Trial in late 2015
In mid-2016 the wife refinanced the loan and paid out the interest of the husband. The orders had required her to indemnify the husband in respect of the mortgage but the finalising step of transfer and payment out was taken, probably at the urging of the husband.
The wife chose to pay on an interest only basis so the loan has not reduced as it would have if payments of principal had been made.
At date of trial I consider the wife’s contributions favoured the wife 55 per cent to 45 per cent.
Relevant factors under section 75(2)
The age and state of health of each of the parties
The wife is 51 and has been medically retired since late 2011. Her TPD Pension is for disability arising from mental illness; depression, anxiety, PTSD and suicidality. It can be inferred from continuing payments that those illnesses, suffered since at least 2008, are ongoing.
The husband is 55 and is unemployed. He went on to Workers Compensation Benefits in 2012 for stress arising from the impact of his wife’s workplace situation on his work in the same workplace, the marital relationship and family life. In 2013 he attempted suicide.
The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
The parties have income from insurances being paid for medical incapacity. Each has a residence in the FF Town area.
The wife
Since early 2012 the wife has received a non-commutable Total and Permanent Disability (TPD) Pension and also a monthly payment under an Income Protection Policy from GG Insurance. The total weekly amount (nett of tax in respect of the GG Insurance payment) is $2,260.
Unless she regains fitness to work, both payments will continue until the wife reaches the age of entitlement to superannuation. That is probably age 66, in 15 years’ time.
The husband
The husband receives a monthly payment under an Income Protection Policy from GG Insurance. The payment is $982 nett of tax per week.
Unless he regains fitness to work, the payment will continue until he reaches the age of entitlement to superannuation probably 65 years of age, in 10 years’ time.
The wife has income which exceeds that of the husband by a factor of about 2.25 per cent. Of their income streams combined the husband receives 30 per cent, the wife 70 per cent.
The parties are intelligent, articulate highly educated people. They both undertook post graduate study and research. Both have been awarded a doctorate in their respective field of expertise. Both have worked as academics.
Each party probably has the physical capacity for employment in their former occupations but have been assessed for reasons relating to mental illness to be unfit.
Whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The parties have two children. The younger child Ms HH has just turned 18. She will complete her secondary education by the end of 2018.
The older child is 20 and a full time tertiary student working part time.
Commitments of each of the parties that are necessary to enable the party to support: (i) himself or herself; and (ii) a child or another person that the party has a duty to maintain
The wife has accepted the responsibility for providing a home for the younger child at least until she finishes school and probably until she has completed tertiary studies.
The responsibilities of either party to support any other person
Neither party is responsible for the support of another adult person.
The current wife of the husband is self-supporting.
Subject to s 75(2)(3), the eligibility of either party for a pension, allowance or benefit under: (i) any law of the Commonwealth, of a State or Territory or of another country; or (ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party
The wife receives a superannuation pension.
This is a very significant matter.
I have accepted that the value attributed to the TPD fund in accordance with the rules relating to valuation, should not be included in the pool of assets. The reason for that acceptance is that the real nature of the TPD fund is as an income stream. The valuation would have been relevant to a splitting order had it been sought.
The TPD pension equates to a secure income for the wife until retirement age at 65 or 66 years.
The wife also has a GG Insurance payment.
The wife has superannuation benefits with a present value of $464,733 accruing without personal contribution.
The income position of the wife is stronger and more secure than that of the husband.
The husband has some cash from his superannuation pay out but will have no fund on retirement. He no longer has interests in superannuation. He has used the money which has diminished by becoming taxable income.
Where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
The wife maintained a reasonable standard of living for herself and the parties’ children by remaining in the family home at D Town.
The property is on three and a half acres. It requires substantial maintenance and management.
The husband is living in the F Town property and also spending time in Country H with his wife.
He too has retained a reasonable standard of living.
The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
The parties lived together for sixteen years; they were married after a year of cohabitation.
Both parties achieved higher levels of education and improved their income earning capacity and actual income during the marriage.
The need to protect a party who wishes to continue that party's role as a parent
The wife wishes to maintain a stable household for her daughters and to allow their completion of tertiary education.
The legal obligations of parenthood in terms of parental responsibility ends as children turn 18 years.
It is customary in Australia for parents able to do so to accommodate and financially assist young adult children, especially if they are students. Parents are not obliged to do so unless there is a specific order for maintenance.
It is reasonable to take into account this being the final year of high school for the younger child, although she has turned 18. However if after the end of 2018 the wife provides a home for the parties two young adult children that will be by her own choice.
Accordingly it is not a significant adjusting factor.
If either party is cohabiting with another person--the financial circumstances relating to the cohabitation
The husband has remarried a Country H national who continues to live in Country H. The husband does not contribute financially to her support.
The wife does not disclose any current partner.
Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
The husband has paid child support as assessed since separation.
Included in the assessment of income was superannuation which the husband had elected to receive as income. The husband calculates, and was not challenged on that calculation, that he paid $18,515 dollars attributable to superannuation income in addition to approximately $800 per month for both children from income from employment.
He currently pays $144 per week for the younger child.
This will likely continue to the end of school in 2018.
Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
The proposed Workers Compensation and Common Law Claims of the Husband
Workers Compensation
A request was made by this Court, on behalf of solicitors for the wife, to the Workers Compensation Commission for the production of the file of the husband in that Commission.
The response from the Commission was that the matter had been discontinued on 13 July 2016 and the file archived.[14] The production of the file was not further pursued.
[14] Exhibit 1
It was apparent that the claim already rejected by the insurer had been abandoned by the husband.
Common Law Claim
As there had been at the first trial there was expert evidence given about the possibility and practicality of a Common Law Claim being pursued by the husband.[15]
[15]Welch & Abney (No 2) [2015] FamCA 1116, [91]-[93]
The Single Expert, Mr T, stated that if the husband had a further assessment and there was found to be a whole person impairment (“WPI”) of (not less than) 15 per cent, he could make a claim, subject to leave being granted to apply out of time.
Pressed, the Single Expert expressed the view that it was “a case that would go nowhere”.
I have no reason to reject that opinion but it is not the basis for a positive finding that a claim is unlikely to be made or, if made, is bound to be unsuccessful.
The Single Expert correctly identified that this Court would make a factual assessment as to whether the husband would pursue a further WPI assessment and use that to make a Common Law claim.
The fact is that the husband has not pursued a claim.
His evidence is that he does not propose to pursue a Common Law Claim and has instructed his solicitors accordingly.
The husband went further and gave an undertaking not to pursue the claim.
As a matter of public policy, I do not consider that the husband could be held to that Undertaking. However I take it into account as the means chosen by the husband to persuade this Court that he was genuine in his decision not to pursue the claim.
He could still do so. If he was successful in reaching the threshold of impairment, and was granted leave to apply out of time, the claim could ultimately deliver a benefit in an unknown period of years in the future.
In my view, given both his expressions of intention not to do so and the threshold obstacles as to impairment and limitation period, there is now a remote possibility of the husband pursuing another assessment.
For these reasons I reject the submission that the husband has a financial resource unavailable to the wife of the proceeds of a Common Law Claim.
Analysis - adjustment
I take into account the several similarities of the circumstances of the parties. There is no evidence to suggest that either will enter the work force. The wife is five years younger, but they are both in their fifties. By the end of this year neither will have a legal obligation to maintain another person including their own children.
The most significant factor is that the wife has a much more secure future than the husband. Her superannuation disability pension is a guaranteed income additional to GG Insurance presently in total about $117,500 per annum until her retirement age. Thereafter her superannuation funds, accruing during the period, will deliver income.
The husband has a GG Insurance pension income of about $51,000 per annum until retirement age, thereafter he becomes eligible for an Old Age pension.
After consideration of contributions the parties are poised at 55/45 in favour of the wife given her post separation contributions.
To do justice an adjustment is required on account of the large disparity of present and future incomes.
However I must take into account the nature of present assets.
The superannuation interests of the wife are not available to her until retirement age in about 15 years. Their value has been included as an asset in the revised Balance Sheet. That value of her superannuation interests represents 70 per cent of her present assets [30 per cent of the total nett asset pool].
The wife has assets in the form of her home at D Town, encumbered as it is, a car and modest savings; plus superannuation for her future.
The husband has access to all of his assets and no superannuation for his future.
In those circumstances a somewhat smaller adjustment of 10 per cent in favour of the husband is appropriate, rather than the range 15-20 per cent which suggests itself by the size of the present and future income disparity.
That is to say an overall division of 55 per cent to the husband and 45 per cent to the wife.
Conclusion
The wife presently has in her possession 42 per cent of the assets. To achieve 45 per cent of the assets a payment by the husband to her of $52,050 will be required.
The wife presently has $669,405 plus $52,050 = $721,455.
The husband presently has $933,832 minus $52,050 = $$881,782.
Success in an appeal on a point of law does not inevitably lead to a more favourable overall outcome for an appellant.
That, other than by way of comparatively small adjustment, has proved to be the case here.
Orders are made accordingly
I certify that the preceding one hundred and eighty-five (185) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cleary delivered on 6 March 2018.
Associate:
Date: 6 March 2018
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