WIDMANN & WIDMANN
[2017] FamCA 602
•28 July 2017
FAMILY COURT OF AUSTRALIA
| WIDMANN & WIDMANN | [2017] FamCA 602 |
| FAMILY LAW – PROPERTY –Where the parties were in a relationship for approximately 22 years and have three children of the relationship – Where the wife sought a sum equivalent to 80 per cent of the husband's one-third share of the net proceeds of one of the properties –Where the husband sought that the wife’s application be dismissed as there is no basis for any alteration of his legal interest in assets acquired by him from an inheritance received from his late father –Where the husband received a substantial inheritance approximately six years after the parties' separation – Where the contributions of the parties were equal as at the date of separation – Where adoption of a two-pool approach would not achieve a just and equitable outcome to the proceedings - Court finds that the net assets and superannuation should be divided as to 65 per cent to the husband and 35 per cent to the wife – Court finds no reason for an adjustment in favour of either party on account of section 75(2) factors – Orders made for the husband pay to the wife a sum of $312,490 within three calendar months of the date of the orders. |
| Family Law Act 1975 (Cth), s 75(2), 79, 79(4)(a-e,) 80(1)(h). |
| Stanford v Stanford [2012] HCA 52 |
| Bonnici and Bonnici (1992) FLC 92-272 |
| APPLICANT: | Ms Widmann |
| RESPONDENT: | Mr Widmann |
| FILE NUMBER: | SYC | 2334 | of | 2012 |
| DATE DELIVERED: | 28 July 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Stevenson J |
| HEARING DATE: | 7-9 March 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Fermanis |
| SOLICITOR FOR THE APPLICANT: | Rockliffs Solicitors & IP Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Enox |
| SOLICITOR FOR THE RESPONDENT: | Pearson Emerson Meyer Family Lawyers |
Orders
Within three (3) calendar months of the date of these Orders, the husband will pay to the wife a sum of $312,490.
Otherwise, each of the parties is declared to be solely entitled to all real property, chattels and superannuation benefits presently in his and her respective control.
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 Widmann & Widmann 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 SYDNEY |
FILE NUMBER: SYC 2334 of 2012
| Ms Widmann |
Applicant
And
| Mr Widmann |
Respondent
REASONS FOR JUDGMENT
The proceedings
The applicant wife, Ms Widmann, and the respondent husband, Mr Widmann, are parties to litigation concerning alteration of property interests. By an Amended Initiating Application filed on 12 April 2016 the wife sought the following orders:
1.That within 28 days of the date of these Orders the Husband shall pay the Wife, as she may direct, a sum equivalent to 80% of the Husband's one-third share of the net proceeds of sale in the property known as [G Street, C Town] in the State of New South Wales being the whole of the land in Folio Identifier … ("the [C Town] property").
2.Unless otherwise provided in these Orders, both parties shall be declared the sole legal and beneficial owner of all items of property and financial resources currently in their respective names, possession and control, including but not limited to real estate, savings, motor vehicles, superannuation entitlements, furniture and personal effects.
3.Unless otherwise provided in these Orders, each party shall solely be liable for an indemnify the other against any liability encumbering any item of property to which that party is entitled to pursuant to the terms in these Orders or stands in either party's sole name as at the date of these Orders."
The respondent husband sought the dismissal of the wife's application. He contended that there is no basis for any alteration of his legal interest in assets which he acquired from an inheritance received from his late father, following his death in 2015.
Background
The husband was born in 1956 and is presently 61 years of age. The wife was born in 1956 and is also aged 61 years. The parties married and commenced cohabitation in 1987. There was a dispute as to the date of separation, with the husband and the wife asserting respectively that their relationship broke down finally in November 2004 and on 26 September 2009. The parties were divorced by an order made on 27 August 2012. I will make findings as to the date of separation below in those reasons.
There are three children of the parties' marriage:
·Mr H born in 1990 (27)
·Mr J born in 1992 (25)
·Mr E born in 1995 (21).
The children are all employed and they live independently of the parties.
At the commencement of cohabitation the wife owned a car and household furniture. The husband owned a home unit at Suburb L, which was subject to a mortgage, household items and a lithographic collection. The husband maintained and the wife disputed that he had savings of approximately $40,000 but produced no corroborating evidence. The husband adduced no evidence to corroborate his assertion that he had these savings. The wife disputed that the husband had these savings. The husband held a superannuation benefit.
In September 1980 the husband purchased vacant land at M Town for $19,000. He caused a house to be built on the land at a cost of approximately $43,000. In 1984 the husband sold this property for $135,000 and received net proceeds of some $60,000.
In 1986 the husband purchased the Suburb L property for approximately $73,000. He paid a deposit of $10,000 and borrowed the balance of the purchase money. This property was sold for $90,000 in 1987.
At the commencement of cohabitation the husband was employed as a manager. He worked in various management positions until 2003, when he purchased a business. At the date of the marriage the wife was also employed as a manager and continued in full-time work until she was made redundant in January 1990.
In 1987 the parties purchased jointly a townhouse at Suburb D. They borrowed $125,000 or $127,000 from the Advance Bank Australia and increased this mortgage to meet costs associated with the construction of this property. The parties moved into the Suburb D townhouse in 1989 or 1990.
The parties sold the Suburb D property in 1992 for $335,000. They purchased a cottage at Suburb O for $290,000. This purchase was funded by the sale proceeds of the Suburb D property and a mortgage advance.
In 1992 the wife received an inheritance of $10,000 from her aunt. She deposited this money into the parties' joint account, from which they met their living expenses.
The husband also received an inheritance in 2002, upon the death of his mother. He acquired a one-third interest in a house property at C Town, subject to a life tenancy in favour of his father.
During the 1990s the parties carried out extensive renovations to the Suburb O property. They each asserted a greater input into these renovations but this comparison is not germane to the outcome the proceedings.
Between 1999 and 2002 the wife worked as an administration assistant. In 2002 she purchased a business known as "R Pty Ltd" ("the R business"), in conjunction with Ms S. They paid $5,000 for goodwill and $46,000 for stock. Both the wife and her co-director made loans to this business.
In 2003 a $50,000 overdraft facility for the R business was arranged, with the husband and Ms S as guarantors. Ms S and the husband agreed that she would repay him, in the event that he was called upon to make a payment pursuant to the guarantee. This agreement was confirmed in writing on 24 June 2003.
In 2008 the husband was assessed to pay a tax debt of $30,000. He did not pay this debt and the ATO obtained a default judgment in the sum of $111,744 in 2008. The husband commenced proceedings in relation to this debt in the Administrative Appeals Tribunal, which were finalised in August 2010. His enquiries in 2014 indicated that he has an outstanding debt of $155,731 to the ATO. In 2015 the Deputy Commissioner of Taxation wrote to the husband and informed him that this debt was not being pursued "at the present time".
In August 2002 the wife provided personal guarantees to suppliers of stock for the business. She has also provided a personal guarantee in relation to rental of the R business premises.
In 2003 the husband purchased a business known as T Pty Ltd, which was rebranded as Business U Suburb O in 2004. In approximately 2006 the husband took on a partner in the business.
The husband maintained that his father provided him with sums of $50,000, $30,000 and $20,000 in 2003 and 2004 by way of assistance with expenses of his business and the day-to-day finances of the family. The husband contended that a sum of $100,000 was deducted from his share of his father's estate, following his death in 2015.
The husband contended that he and his partner sold the real estate business for $173,000 in 2008. The wife claimed that she was unaware that the husband received any money from the sale or closure of this business. The husband annexed to his affidavit a document dated 30 June 2009 which he prepared for Centrelink (annexure 5). This document contained entries of $56,500 and $30,000 for "sale of business monies".
In 2004 the parties sold the Suburb O property for $1,165,000. The wife claimed that she was unaware that the mortgage had increased substantially, until the husband informed her that accrued arrears necessitated an immediate sale of the property. She contended that the husband was responsible for the parties' mortgage repayments and that he had control of the parties' joint account. This issue was not explored during the trial.
The husband deposed that the parties received a net sum of approximately $250,000 from the sale of the Suburb O property, after payment of the mortgage and business debts. The wife contended that no debts of her business were discharged from these sale proceeds. She maintained that she never became aware of the precise amount of the net sale proceeds.
In 2004 the parties moved into rented accommodation at Suburb V. The husband asserted that the parties separated under one roof at this time but, as appears below, the evidence contained strong indications to the contrary. The evidence supported the wife's contention that the parties separated on 1 September 2009, when she and the children moved to rented accommodation at Suburb O.
In 2004 Ms S decided to withdraw from the R business. She resigned as a director in August 2004 and relinquished her shareholding to the wife in 2013.
Ms S exited the business on the basis that she paid to the wife a sum of $25,000 in reduction of the overdraft. They agreed that the wife would gradually reduce the balance of the overdraft and indemnify Ms S in relation to the personal guarantees. They agreed further that Ms S would gift to the wife all loans which she had previously advanced to the business.
By September 2006 the funds in the parties' joint account had been reduced to a balance of $5.24 (annexure 5 to the affidavit of the wife). Sale proceeds of the Suburb O property previously had been applied to meet rental and living expenses for the family and private school fees for the children.
In 2008 the parties agreed to withdraw the children from W School, due to financial difficulties. Mr J then attended a State high school and Mr E a private school.
After the disposal of his business in 2008, the husband was largely unemployed but held several corporate entities. He was the proprietor of X Pty Ltd, Y Pty Ltd and Z Pty Ltd.
In 2008 and 2009 the parties experienced difficulty in paying rent for their premises at Suburb V. The husband's father and the wife's mother provided financial assistance.
In February 2010 the wife obtained part-time employment as an administration assistant. She continued to operate the R Business.
In March 2015 the wife listed her business for sale on the Gumtree website. On 9 April 2015 the husband filed an Application in a Case, by which he sought an injunction to prevent the wife from proceeding with the sale of the business. On 25 May 2015 the parties consented to interim orders which permitted the wife to sell the business.
The husband's father died in 2015 and a grant of probate in relation to his estate was made on 27 October 2015. At this time, the C Town property was run down and in need of repairs prior to its sale.
The C Town property was sold for $1,640,000 in May 2016 and the husband received $513,312 from the net proceeds. The husband also received a parcel of shares as part of his inheritance. He deposed that he received a total of $1,460,482 from the estate of his late father.
On 12 April 2016 the wife filed an Application in a Case, whereby she sought orders which sought to preserve a portion of the proceeds of sale of the C Town property pending the determination of these proceedings. On 26 April 2016 an order was made which required the husband to pay to the wife a sum of $65,000 on account of interim costs. The husband had exchanged contracts for the purchase of the property B Street, Suburb A. Consequently, these orders provided that the parties do all things necessary to create an equitable charge in an amount of $365,000 in relation to the Suburb A property.
In May 2016 the purchase of the Suburb A property was completed, at a cost of $545,100. The husband has carried out renovations to this property, at an estimated cost of $76,500.
From his inheritance the husband purchased three cars, which he intends to renovate or restore, at a cost of $53,281. He has paid legal costs of $68,992 to his current solicitor and $5,100 to a previous firm.
In June 2016 the wife listed the R Business for sale on a website, at a price of $15,000 plus stock. She received two enquiries but no offers to purchase the business. She reduced the price to $3,000 in December 2016 but still received no offers.
On 16 December 2016 interim orders were made which required the husband to pay to the wife a sum of $80,000 by way of partial property settlement. According to the wife's Financial Statement of 22 February 2017, these funds are held in the trust account of her solicitor to cover her costs of these proceedings.
On 28 December 2016 the wife gave notice to the property manager that the R business would vacate the retail premises on 31 January 2017. In response to a request from the husband's solicitor, the wife's lawyer advised that she intended to sell the remaining stock at retirement villages. In February 2017 the wife calculated that the business had outstanding debts totalling $23,150. These debts included unpaid rent, accountancy fees and trade creditors.
Approach to these proceedings
In Stanford v Stanford [2012] HCA 52 the majority of the High Court of Australia held at [35] as follows:
35.It will be recalled that s 79(2) provides that “[t]he 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”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under this section. 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.
Their Honours further observed as follows:
“42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).”
As appears below, I am satisfied that the parties separated on 1 September 2009 and thus cohabited for approximately 22 years. They raised three children together and, during their relationship, they both made contributions of various kinds which are recognised by section 79 of the Act. It is clear that there will be no intermingling of their finances in the future, they both having determined to put an end to their relationship.
As appears below, in the context of my determination, to adopt a "one pool approach" to the proceedings, I reject the submissions on behalf of the husband that "there is no factor which warrants any adjustment to his legal title to his inheritance". I refer below to various authorities which, in my view, justify a recognition of the contributions of the wife by way of a distribution to her from the only assets which are available in realistic terms. I am satisfied that it is just and equitable that there be orders for alteration of property interests.
That process firstly necessitates a determination of the identity, value, quantum and ownership of assets, liabilities and financial resources of the parties. All relevant contributions of each of the parties, within the meaning of paragraphs (a) to (c) of section 79(4) of the Act must be identified and weighed against each other. The matters set out in paragraphs (d) to (g) of section 79(4), particularly paragraph (e) which takes up by reference the provisions of section 75(2), must be considered and a determination made as to what if any alteration should be made to the entitlements of the parties as earlier assessed on account of contribution.
The evidence and witnesses
The applicant wife relied on the following affidavits:
1. Ms Widmann (the wife) sworn on 22 February 2017
2. Mr AA (the wife's father) sworn on 21 February 2017
3. Ms AA (the wife's mother) sworn on 21 February 2017
4. Financial Statement sworn on 22 February 2017.
The wife and Mr AA were required for cross-examination. I was informed that Ms AA fractured her clavicle three days before the trial and she was excused from cross-examination.
Mr AA deposed that he and his wife asked their three daughters for assistance in meeting their mortgage repayments in 2007. He deposed that the wife advanced a total of $9,000, in small instalments, between July 2007 and February 2010. He deposed that they loaned a sum of $2,000 to the wife to meet Mr E's school fees in 2013.
Mr AA annexed to his affidavit his calculation of advances made to the wife and her repayments. He deposed that he and his wife have repaid all funds advanced to them by the wife. In my view, he was unshaken in his evidence in cross-examination.
Ms AA deposed that she loaned to the wife sums of $6,000 in October 2004 and $3,000 in November 2004, to assist with the cash flow of the R Business. She deposed that the wife repaid $9,000 to her in January 2005. Ms AA deposed further that she loaned the wife $3,000 in March 2006 and $2,500 in July 2009. She also deposed that she and her husband advanced $2,000 to the wife on account of Mr E's school fees in 2013 and that she loaned $1,000 for the same purpose in 2014.
The respondent husband relied on his affidavit of 24 February 2017 and Financial Statement of the same date. He also gave oral evidence.
The parties' counsel reached agreement as to objections to affidavit material, which was put in writing and read as follows:
Agreement as to material: objections
1.The parties agree that they will each not rely on:
(i) assertions as to value;
(ii) assertions as to medical opinions.
2.The wife will not rely on the allegation of threats nor what might amount to coercive behaviour as referred to in paragraphs:
77, 78 (first sentence), 80, 81, 132, 133, 135, 137
of her affidavit sworn 22 February 2017.
3.The husband will not rely on the hearsay accounts of his conversations with his late father as referred to in paragraphs:
107, 109, 110
of his affidavit sworn 24 February 2017 save and except that under s.136 of the Evidence Act the husband will rely on those paragraphs as proof of what was said but not as to the accuracy of the contents of those statements.
4.Neither side will press generic adjectival descriptions such as "significant", "substantial" or "incorrectly" non-essential.
5.The parties accept sole liability:
- As to the husband for his ATO debt in the sum of $30,000
-As to the wife for her debt to the Education Department in the sum of $32,000.
6.The wife's affidavit: not read:
Paragraph 88 – I felt I had no choice
90 – I was shocked
97 – "[Mr Widmann] got very angry…and my proposal"
98 – Last sentence
104 – Whole paragraph of last sentence
114 – First sentence
116 – Refused to discuss
170 – "In addition to…to end of paragraph
201 – Not read
209 – Orders made
230 – Failed to account
263 – Not read
264 – Not read
7.Wife's affidavit of 23 February 2017 not read:
8.The husband will not read the following tabs to exhibit SAWC1 to his affidavit sworn 24 February 2017:
8.1. Tab 21
8.2. Tab 22
8.3. Tab 48
8.4. Tab 49
8.5. Tab 50
8.6. Tab 51
8.7. Tab 52
8.8. Tab 53
8.9. Tab 57
8.10 Tab 58
The date of separation
Ultimately, senior counsel for the husband did not appear to contend for a separation date in November 2004. In final submissions he said words to the effect "for legal purposes the date of separation must be 1 September 2009". In any event, I am satisfied and I find that the parties separated on 1 September 2009.
In cross-examination the husband was shown a Divorce Application which relied upon a separation date of 1 September 2009. He was the applicant and had the benefit of legal representation. Unconvincingly, the husband deposed:
174.When I instructed my lawyer to file the application for divorce I did not appreciate that a husband and wife could be separated whilst living under one roof. I understood the date of separation to be the date [Ms Widmann] and I lived in separate homes. I have since come to understand that parties can be separated under one roof.
The husband conceded in cross-examination that he swore an affidavit in 2013, at a time when he was unrepresented, in which he deposed that the parties separated after 22 years of marriage. They married in 1987, hence he must have asserted a separation date in 2009.
In annexure J to an affidavit which he affirmed on 28 October 2014 in the Federal Court (Exhibit 10) the husband referred to 2008 tax returns of "self and spouse". In that affidavit the husband deposed that the ATO audit process took over five years and "destroyed my professional and family life …"
In a document prepared for Centrelink dated 30 June 2009 the husband included an item "taxable income aw". The husband agreed in
cross-examination that this reference was to the wife and said words to the effect "it was used for me to see where money coming into and going out of the family".
In my view, the husband's own evidence was sufficient to support a finding that the parties separated on 1 September 2009. The wife gave evidence of a shared life after 2004, upon which she was not shaken in cross-examination.
The wife deposed that the parties shared a bed between 2004 and 2009, when they lived at the Suburb V property. She maintained that they took holidays with the children together during that period. She deposed that she organised a 50th birthday party for the husband in 2006 and they attended the wedding of his niece together in 2008.
For these reasons, I find that the parties separated on 1 September 2009. It would thus appear that the husband's contention that the parties separated in November 2004 was an attempt to bolster his position in the proceedings.
The assets, superannuation, liabilities and financial resources
The parties submitted a balance sheet in the following terms:
ASSETS Ownership
Description
Wife/de facto partner's value Husband/
de facto partner's value1 Husband B Street, Suburb A 600,000 600,000 2 Wife Japanese motor vehicle registration no. …
700
7003 Husband 4WD and German car
55,500
55,5004 Wife Interest in R Pty Ltd Nil Nil 5 Wife Personal effects and furnishings 2,050 2,050 6 Wife Savings – CUA #...35 and #...30 335 335 7 Joint NAB account #...62 Nil Nil 8 Husband CBA #...13 and Westpac #...26 2,054 2,054 9 Husband CommSec share portfolio #...47 357,272 357,272 10 Husband Personal effects 10,000 10,000 11 Husband BB Pty Ltd & CC Pty Ltd Nil Nil 12 Husband Money held at Pearson and deposit by Mr K
72,221
72,22113 Wife Money held at Rockliffs 80,000 80,000 Total $1,180,132 $1,180,132 ADDBACKS Ownership
Description
Wife/de facto partner's value Husband/
de facto partner's value14 Wife Part property settlement per Orders made 26.4.16
Nil
65,000Total $0 $65,000 LIABILITIES Ownership
Description
Wife/de facto partner's value Husband/
de facto partner's value15 Wife NAB credit card 637 637 16 Husband Business loan #..25 NK 28,292 17 Husband ANZ credit card NK 17,823 18 Husband Debt to Mr HH Nil 10,000 19 Husband Capital gains tax 12,682 12,682 20 Wife R Pty Ltd personal guarantee
6,561
6,561Total $19,880 $75,995 SUPERANNUATION Member
Name of Fund
Type of Interest
Wife/
de facto partner's valueHusband/
de facto partner's value21 Wife GG Super accumulation interest #...13
26,611
26,61122 Total $26,611 $26,611 FINANCIAL RESOURCES Ownership
Description
Wife/de facto partner's value Husband/
de facto partner's value23 Total $0 $0
Disputed assets and liabilities
The husband sought to treat as an asset the sum of $65,000 which he paid to the wife pursuant to orders of 26 April 2016. The wife contended this money should be excluded from the balance sheet.
The relevant order of 26 April 2016 read as follows:
1.The husband shall pay to the solicitor for the wife by way of interim costs:
a. $5,000 within seven days from today's date; and;
b. as soon as practicable after 7 July 2016, the sum of $60,000.
Obviously, therefore, these funds were paid to the wife pursuant to section 117(2) of the Act and not by way of partial property settlement, pursuant to sections 79 and 80(1)(h).
The wife deposed in her Financial Statement of 22 February 2017 to a total credit balance of $335 in bank accounts. On that basis, I am prepared to draw an inference that she has spent the sum of $65,000 to fund her litigation.
No doubt the husband has also used funds available to him to fund his litigation. There was no suggestion that any such money expended by the husband should be treated as an asset. I see no reason why money expended by the wife to fund the proceedings should be included as an asset and sums so applied by the husband should be excluded from the balance sheet. I will not include the sum of $65,000 paid to the wife pursuant to the orders of 26 April 2016 as an asset.
The husband sought to include as a liability a "business debt" of $28,292. This debt apparently arose during the operation of the husband's real estate business. The husband's oral evidence was that he and his partner received approximately $173,000 on the sale of this business, with his share of these proceeds being about $86,000. The husband gave no explanation why this debt was not discharged from the proceeds of sale of the business. There was no evidence of any recent demand for payment of this debt. In these circumstances, I will not include this business debt as a liability in the balance sheet.
The husband sought to include as a liability his credit card debt of $17,832. He deposed that this debt "accumulated during the course of the relationship". In his oral evidence the husband said that this debt has been "frozen" and that interest is not presently being accrued on the principal sum. In these circumstances, I will not include this credit card debt as a liability in the balance sheet.
The husband sought to include as a liability a sum of $10,000 which he allegedly owes to Mr HH. The husband deposed that he advanced a sum of $15,000 to Mr HH in 1989, for an investment which proved to be a failure. The husband conceded that Mr HH has never made a demand for repayment. The husband adduced no evidence from Mr HH. There was no evidence whatsoever of the terms and conditions of this alleged debt. In these circumstances, I am not prepared to include a sum of $10,000 as a liability.
The balance sheet submitted at trial included as a liability a credit card debt of the wife in the sum of $637. This debt must have accrued after the parties' separation and, for that reason, I will not include this liability in the balance sheet.
Accordingly, I find the parties' assets, superannuation and liabilities to be as follows:
($) 1. B Street, Suburb A (H) 600,000 2. Japanese motor vehicle (W) 700 3. Motor vehicles (H) 55,500 4. Furniture and personal effects (W) 2,050 5. Personal effects (H) 10,000 6. Bank savings (W) 335 7. Bank savings (H) 2,054 8. CommSec share portfolio (H) 357,272 9. Funds held by solicitor (H) 72,221 10. Funds held by solicitor (W) 80,000 $1,180,132
Superannuation
11. GG Super benefit (W) 26,611 Liabilities
12. Capital Gains Tax (H) 12,682 13. R Pty Ltd personal guarantee (W)
6,561$19,243
In the above table the letters "H" and "W" are intended to indicate ownership of assets and superannuation and legal responsibility for liabilities by the husband and the wife respectively.
Senior counsel for the husband contended that a two-pool approach should be adopted, because the wife "made absolutely no contribution to the shares and money which the husband inherited from his father". Senior counsel for the husband put the proposition that the contributions of the parties during the marriage were "essentially equal" and then posed the rhetorical question "but to what assets?".
The issue of treatment of property which was acquired by one party after separation was recently considered by the Full Court in Calvin & McTier [2017] FamCAFC 125. The Full Court cited with approval the following passage from the judgment of Finn J in Farmer & Bramley [2000] FamCA 1615. Her Honour said:
56.First an issue has arisen in this appeal as to whether an entitlement based on contributions made to the welfare of the family can only be satisfied out of property available to the parties at the time the contribution was made. In my view, there is nothing in s 79(4)(c) or indeed else in the Act, or in the authorities to date, which would justify such a limitation. Again in my view, if such a limitation were to be applied in any particular case, its justification would have to be found in the generally worded limitation in s 79(2) that a court shall not make an order under s 79 "unless it is satisfied that in all the circumstances it is just and equitable to make the order."
The Full Court in Calvin & McTier said also:
49.The passage is redolent of the discussion of the exercise of a discretion. In Bonnici, the question of whether after-acquired property should be included in the property available for division was said to depend very much on the circumstances in each matter and the exercise of the discretion of the court. The court in Bonnici was, however, principally concerned with the reasons of the primary judge in that case and, in particular, the reasons why there had been a finding of equality of contributions by the parties notwithstanding the receipt of a significant inheritance by one of the parties after separation. The point being made was that if the inheritance was to be included in the property for division the introduction of that property would need to be reflected in the findings as to the parties' financial contributions. Bonnici was not concerned with submissions akin to those made in this matter.
The Full Court said "in short, we consider that the court retains a discretion as to how to approach the treatment of after acquired property".
In Bonnici and Bonnici (1992) FLC 92-272 the Full Court said:
43.A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question."
The Full Court in Bonnici observed as follows:
42.The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband's inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of a family and also performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance.
These observations of the Full Court in Bonnici are apposite to the present proceedings. The parties hold negligible property other than that which derived from the husband's inheritance.
In my view, adoption of a two-pool approach would not achieve a just and equitable outcome to the proceedings. Senior counsel for the husband acknowledged that the contributions of the wife were "essentially equal" to those of the husband during the relationship. In practical terms, the adoption of a two-pool approach would result in minimal recognition of the contribution made by the wife, to which the husband admitted, during the parties' cohabitation.
The parties cohabited for 22 years and raised three children. The husband engaged in paid employment for most of the parties' cohabitation, although he relied heavily on Centrelink payments and financial assistance from his father after the sale or closure of his real estate business in 2008.
The wife left the paid workforce and adopted the role of primary homemaker and carer for the children at various times during the marriage. She operated the R Business, although seemingly without much financial benefit, after 2002.
It was submitted on behalf of the husband that the wife deliberately set out to diminish the value of the R Business so as to advance her position in the litigation. I do not accept that the wife took any deliberate steps to diminish the profitability or value of this business. In my view, neither of the parties operated their business ventures with notable success. The fact that, essentially, they have no assets outside the husband's inheritance would tend to support that observation.
I am satisfied, and I find, that the wife made no contribution in the form of care for the husband's father. I accept that she took the parties children to visit him on occasions but, in my view, she did so only in the course of ordinary family life.
I do not accept the submission on behalf of the husband to the effect that the wife used "matrimonial funds" for the benefit of her parents. Essentially, the evidence of Mr AA was that the mutual advances balanced each other out over the whole of the relevant period. As noted above, I consider that Mr AA was unshaken in his evidence in cross-examination.
For these reasons, I find that the contributions of the parties were equal as at the date of separation. As noted above, senior counsel for the husband essentially made a concession to that effect.
The whole of the wife's superannuation benefit must have been accrued by her since the separation of the parties. She commenced employment with as an administrative assistant in 2010 and the parties separated on 1 September 2009. Accordingly, the husband has made no contribution to the wife's superannuation benefit.
In my view, the fact that the husband received a substantial inheritance approximately six years after the parties' separation is a matter of considerable relevance to contribution. This factor obviously must weigh in the husband's favour in a meaningful manner and attract proper recognition.
In all of the circumstances I assess the contributions of the parties as at the date of trial to be 65 per cent to the husband and 35 per cent to the wife.
Section 75(2) factors
Both of the parties are aged 61 and might reasonably be expected to have a time-limited future in the paid workforce. The husband worked for a short period after the separation but, presently, his income consists of dividends paid on his share portfolio. He estimated that his weekly income from this source is approximately $222.
The wife has part-time employment as an administration assistant. She gave evidence that she intends to increase her working hours from three to five days per week, after she has completed the sale of the remaining stock of her business.
The husband owns an unencumbered home and four motor vehicles, three of which were purchased for his hobby of car restoration. The wife rents a room in shared accommodation and owns a 1997 model car. She has a modest superannuation benefit, which she will be able to augment during the remainder of her working life.
In these circumstances, I see no reason for an adjustment in favour of either party on account of section 75(2) factors.
Result
Accordingly, I find that the net assets and superannuation should be divided as to 65 per cent to the husband and 35 per cent to the wife. The net pool of assets and superannuation has a value of $1,187,500, of which 65 per cent and 35 per cent equate to $771,875 and $415,625 respectively.
The husband will retain the following assets:
($) 1. B Street, Suburb A 600,000 2. Motor vehicles 55,500 3. Personal effects 10,000 4. Bank savings 2,054 5. CommSec share portfolio 357,272 6. Funds held by solicitor (H) 72,221 $1,097,047 He has a liability for capital gains tax of $12,682. Accordingly, the husband holds net assets to the value of $1,084,365, which exceeds his entitlement of 65 per cent by $312,490.
The wife will retain assets and superannuation as follows:
($) 1. Japanese motor vehicle 700 2. Furniture and personal effects 2,050 3. Bank savings 335 4. Funds held by solicitor 80,000 5. GG Super benefit 26,611 $109,696
She will retain a liability of $6,561 on account of personal guarantees for the R business. Accordingly the wife holds net assets and superannuation to the value of $103,135, which falls short of her entitlement of 35 per cent by $312,490.
I will order that the husband pay to the wife a sum of $312,490 within three calendar months of the date of the orders of the court. I will allow the husband that time period to determine what arrangements he will make for this payment to the wife.
I am satisfied that this result is a just and equitable outcome to the proceedings in all of the circumstances.
I certify that the preceding ninety-two (92) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 28 July 2017.
Associate:
Date: 28 July 2017
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