Woodland and Woodland
[2014] FCCA 2697
•11 December 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WOODLAND & WOODLAND | [2014] FCCA 2697 |
| Catchwords: FAMILY LAW – Property – just and equitable – consideration of the property pool – adjustment for s.75(2) factors. |
| Legislation: Family Law Act 1975 |
| Bevan & Bevan [2013] FamCAFC 116 Bateman & Gaffney (2010) FMCAfam 103 Stanford & Stanford [2012] HCA 52 |
| Applicant: | MS WOODLAND |
| Respondent: | MR WOODLAND |
| File Number: | MLC 2102 of 2014 |
| Judgment of: | Judge McGuire |
| Hearing date: | 18 November 2014 |
| Date of Last Submission: | 18 November 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 11 December 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hall |
| Solicitors for the Applicant: | DLT Legal |
| Counsel for the Respondent: | Mr Boden |
| Solicitors for the Respondent: | Pasha Legal |
ORDERS
That within sixty (60) days of the date of these orders the wife pay to the husband a lump sum of $192, 498.00.
Contemporaneously with the payment referred to in order 1 hereof the wife shall transfer to the husband all her right, title and interest in the following absolutely :
(a)The property situate at Property M in Victoria;
(b)The husband’s motor vehicle;
(c)All personalty and chattels in the possession of or under the control of husband as at the date of these orders;
(d)The balances of any bank accounts or like investments in the name of or to the benefit of the husband as at the date of these orders;
(e)The husband’s 2012/2013 financial year tax refund;
(f)The husband’s 2013/2014 financial year tax refund;
(g)Any shareholdings in the name of or to the benefit of the husband.
(h)Any superannuation policy or entitlement of the husband but subject to these orders.
The wife be solely responsible for and indemnify the husband in respect of the following:
(a)Any mortgage liabilities secured against the property situate at Property L in Victoria;
(b)Any and all liabilities attaching to any of the assets to be retained by the wife pursuant to these orders;
(c)Any and all liabilities incurred by the wife since separation in either joint names or in her name alone.
That the husband shall contemporaneously with the payment referred to in order 1 hereof transfer to the wife all his right, title and interest in the following absolutely:
(a)The property situate at Property L in Victoria;
(b)The wife’s motor vehicle;
(c)All personalty and chattels in the possession of or under the control of the wife as at the date of these orders;
(d)The balances of any bank accounts or like investments in the name of or to the benefit of the wife as at the date of these orders;
(e)The wife’s shareholdings; and
(f)Any superannuation policy or entitlements of the wife.
The husband be solely responsible for and indemnify the wife in respect of the following:
(a)Any mortgage secured by the property situate at Property M in Victoria;
(b)Any and all liabilities attaching to any of the assets to be retained by the husband pursuant to these orders;
(c)Any and all liabilities incurred by the husband since separation in either joint names or in his name alone;
That pursuant to s.90MT of the Family Law Act 1975 (Cth), the amount of $49,250 is allocated as the base amount to be deducted from the interest of the husband in the (omitted) Superannuation and whenever a splittable payment becomes payable out of the interest of the husband in the (omitted) Super Savings Trust, the wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there shall be a corresponding reduction in the entitlement of the husband to whom the splittable payment would have otherwise been made but for these orders.
These orders shall have effect from the fourth business day after the day upon which a sealed copy of these orders is served upon the trustee.
That after service of a payment split notice pursuant to Regulation 7A.03 of the Superannuation Industry (Supervision) Regulations 1994, the wife shall do all such things required for the creation of a new interest in her name in a superannuation fund of her choice.
That the value of a transferable benefits to be so transferred from the husband’s entitlement to the wife’s entitlement shall be calculated by the trustee in accordance with Regulation 7A.11 of the same Regulations and pursuant to Regulation 14F of the Family Law (Superannuation) Regulations 2001, any payments made from the husband’s interest in the superannuation fund after the trustee has created the new interest for the wife are not splittable payments.
That a copy of these orders be served upon the trustee of the said superannuation fund as soon as practicable.
IT IS NOTED that publication of this judgment under the pseudonym Woodland & Woodland is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 2102 of 2014
| MS WOODLAND |
Applicant
And
| MR WOODLAND |
Respondent
REASONS FOR JUDGMENT
These are proceedings for property settlement. There were also issues in respect of the parties’ three children. They are X, born (omitted) 2000 (aged 14 years), Y, born (omitted) 2002 (aged 12 years), and Z, born (omitted) 2006 (aged 8 years).
By the time of the commencement of the trial, the only remaining children’s issue was whether the mother contact the children, when they are with the father, by mobile phone or by landline. That issue had resolved by the end of the evidence and I made consent orders in respect of the children, providing, inter alia
(1)That the parents have equal shared parental responsibility for the three children;
(2)That the children live in a regime with the father as follows:
(a)In week one, from the conclusion of school or 3.30 pm on Wednesday until 9 am Monday (commencing 4 February 2015);
(b)In week two from the conclusion of school or 3.30 pm on Wednesday until 5 pm on Friday (commencing 28 January 2015).
(3)That the children otherwise live with the mother.
The agreement provides for equal time between their parents.
Issues
The remaining issues between the parties can be summarised as follows:
a)The wife proposes a cash payment to the husband of $174,000 in return for her retaining the former matrimonial home. The husband proposes a cash adjustment of $270,000. However, given some discrepancies in the pool, it is safer to take the husband’s case from his counsel’s opening and closing submissions where he will concede five per cent of the pool to the wife on account of relevant section 75(2) matters and seeks a distribution of the tangible assets as to 55 per cent to the wife and 45 per cent to himself. He argues for a 50/50 division of the accrued superannuation entitlements. The wife seeks 60 per cent of the tangible assets but agrees a 50/50 division of the joint superannuation entitlements which would result in a splitting order in her favour from the husband’s superannuation entitlement of $49,250.
b)An issue remains as to whether the husband’s HECS debt will be included as a liability in the property pool. The husband says that it should be included and the wife says that it should not be so included. There is a dispute (and a lack of evidence) as to the current quantum of that liability;
c)Whether a liability of $9,598 be included in the property pool as a liability as claimed by the husband as expenditure on the home and denied by the wife;
d)Whether the husband’s tax refund of $15,335 for the financial year ending 30 June 2013 be included in the property pool as an asset and whether the husband’s 2014 tax refund, estimated at $7000, be included in the pool as an asset in the hands of the husband, or as a financial resource, or at all; and
e)Whether the husband’s paid legal fees of $11,500 be “added back” to the property pool.
Background
The applicant wife is 45 years old. The husband is 46 years of age.
The parties cohabited from 1994. They married on the (omitted) 1996. Separation took place under the one roof in late December 2013. Physical separation occurred in February 2014.
These proceedings were commenced on the wife’s application filed 13 March 2014.
The wife is employed as a (occupation omitted) and works shift work.
The husband is employed as a (occupation omitted).
The Relevant Law
Issues of alteration of property interests are provided for in section 79 of the Family Law Act 1975 (“the Act”) as follows.
Alteration of property interests
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
(2) 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.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant;
The matters that the Court are to consider and reference the probative evidence and the parties’ proposals to under section 75(2) of the Act, include but are not limited to the following:
a)the age and state of health of each of the parties;
b)the parties’ income, property and financial resources and their physical capacity for appropriate, gainful employment, and hence their income-earning capacity;
c)whether either party has the responsibility for the care and control of a child of the marriage who has not attained the age of 18 years;
d)the commitments of each of the parties that are necessary to enable that party to support himself or herself;
e)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
f)the duration of the marriage and the extent to which it has affected the earning capacity of the parties.
The High Court in Stanford & Stanford[1] and then the Full Court in Bevan & Bevan[2] have recently reconsidered what was thought to be an established “four stage process” for trial judges in making determinations under section 79 of the Act. The High Court in Stanford has laid down three “fundamental propositions” which guide trial judges through the section 79 process and summarised in Bevan at [73] as follows:
1. Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
2. The discretion conferred by statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
3. A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.
[1] [2012] HCA 52
[2] [2013] FamCAFC 116
In respect of the former “four step process”, the Full Court in Bevan at [72] observed:
It follows the Judges would be well advised to avoid what we consider to be arid discussion of the “stage in the process” at which “adjustments” are permissible. Such discussion tends to elevate the four-step process to the status of a statutory edict, when in fact it is no more than a shorthand distillation of the words of a statute which has but one ultimate requirement, namely not to make an order unless it is just and equitable to do so.
In my view, there remains a pathway of consideration for the trial judge. The Court must determine the legal and equitable interests of the parties in property as at the date of the hearing. Superannuation is to be treated as property for these purposes. The Court is to then attribute a value to each item including assets, liabilities and financial resources.
The Court in Bevan commented that it may be inappropriate to continue a practice of courts making “notional add-backs” of an asset to the pool where one party has otherwise had the benefit of an asset that might no longer be available. Rather, such matters may more properly be dealt with under section 75(2)(o) of the Act being “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account” in adjusting the entitlements of the parties.
The question of “add-backs” was relevant in a number of the issues between these parties including the husband’s paid legal fees, moneys expended on the home and the husband’s taxation refunds and expected refunds. The issue was raised with counsel for both parties in their final submissions and they generally agreed that, in this particular circumstance, it may be “cleaner” to include any such findings as “added back property” rather than deal with the matter under the multitude of considerations under section 75(2).
Issues As To The Property Pool
The husband concedes that he has paid $11,500 towards his legal costs. Cross-examination elicited that the payments were made substantially from bank account balances existing at the time of separation. In any event, in his final submissions, counsel for the husband agreed that the sum of $11.500 should be “added back” to the property pools.
Since separation the husband has received a tax return of $15,335. This is in respect of the financial year ending 30 June 2013. The parties did not separate until December 2013. The assessment and return, therefore, is in respect of earnings made during the currency of the marriage. The husband has retained those moneys.
Counsel for the husband argues that the aforesaid tax refund should be offset against monies received by the wife from Centrelink being a sum of $6,000 (leaving aside a further sum which was an overpayment and subject to repayment). This is not a convincing argument. The tax refund related to an entitlement from income achieved during the marriage. The wife’s Centrelink benefit is a means tested entitlement made available to her for assistance and support of herself and the children post-separation. The wife’s evidence is that the money was used accordingly. In all of the circumstances, I am satisfied that the tax refund of $15,335 should also be “added back to the pool”.
The husband has not yet completed or lodged his tax return for the financial year ending 30 June 2014. He concedes an expectation of a tax refund of approximately $7,000. The wife’s counsel in his submissions was prepared to accept this quantum. Again, the parties separated in December 2013 being approximately halfway through the financial year. Given, that the refund of $7,000 (agreed) is available and has been available to the husband simply on the lodging of his tax return, I see no reason to treat this amount any different than the 2013 tax refund. Any issues of contribution will be taken into account.
The wife’s documents and aide-memoir suggest a liability for “Property L – works required” in an amount of $9,200. In his final submissions, however, counsel for the wife did not press this argument. There is now an agreed valuation of the property which apparently takes into account this contingency.
The husband claims a liability of “Property M property – maintenance spent” in a sum of $9,598. Cross-examination of the husband disclosed that this was not a current liability but a total of monies he had spent on the property since separation. There is no evidence that the expenditure came from joint funds existing at separation. I prefer that the husband has made these payments from his own monies accrued since separation. In this sense the $9,598 should be a contribution to him rather than a liability in the property pool. I will treat it accordingly.
The husband has a HECS liability arising from his study and completion of a (course omitted) during the latter stages of the marriage. It is clear that his income is such that the HECS debt is in its repayment phase. Repayments occur by an eight per cent deduction each year from the husband’s gross income. Unfortunately, I was not provided with a current statement of amount owing. By way of comment, this would have been a relatively easy task for the solicitors who represent either of the parties. The failure to provide such basic evidence says little as to their forensic abilities but also makes the task of this court unnecessarily onerous in a forensic sense. Nevertheless, I am satisfied that the HECS debt is a current liability and it is in its payment phase. I am satisfied that it should be included in the property pool as a liability. Its quantum, however, is more problematic. The applicant wife opened her case stating the debt to be estimated at $18,000 although the information base is not somewhat out of date. There was no evidence to the contrary. In his final submissions counsel for the husband conceded this quantum. I am prepared to include it in the pool at $18,000.
Finally, and in respect of the HECS debt, counsel for the wife in arguing that it not be included as a liability in the pool referred me to a decision of my colleague Phipps FM (as he then was) in Bateman & Gaffney[3]. His Honour dealt briefly with a HECS debt. In that matter it is clear that the husband was not yet required to make any payments. His Honour considered it not to be a contingent debt but analogous to taxation in reducing the husband’s income. I respectfully cannot accept the analogy. In the matter now before me there is a debt. It is currently repayable by reason of the extent of the husband’s income. The fact that it is paid by a compulsory extraction from his gross income is, in my mind, irrelevant.
[3] (2010) FMCAfam 103
Consequently, and given the other matters agreed between the parties, the pool of property including superannuation can crystallise as follows:
Assets
Former matrimonial home $650,000
Property M property $160,000
Wife – cash at bank $35,000
Husband – cash at bank $5,000
Husband’s paid legal costs $11,500
(add back)
Husband – 2013 tax refund
(add back) $15,335
Husband – 2014 tax refund $7,000
Wife’s motor vehicle $4,675
Husband’s motor vehicle $9,475
Husband - shares $1,350
Wife - shares $6,061
Total: $905, 396.00
Liabilities
Mortgage – former matrimonial home $80,000
Mortgage – Property M property $100,000
Husband’s HECS debt $18,000
Husband’s credit card $1,000
Moneys owing on sale of Property M $1,000
Total: $200,000
NET ASSETS: $705, 396
Superannuation
Husband – (omitted) Super $183,000
Wife – (omitted) Super $84,500
Total: $267,500
Justice and Equity
These parties commenced co-habitation approximately 20 years ago. There are three children of the relationship. The parties have a shared legal interest in various assets. There are numerous contribution considerations and matters under section 75(2) of the Act. In all of the circumstances and given the history of the relationship, I am satisfied that it is just and equitable to alter the parties’ property interests.
Contributions
Given the lengthy relationship, the parties properly each agree equality of contributions. Given my findings as to the property pool, the husband might well have claimed a small contribution to his 2014 tax refund for the period of that financial year which was post-separation and a contribution to the maintenance of the Property M property. However, given the other contribution factors and the parties relative financial circumstances wince separation with the amount in question, I do not see any adjustment as being appropriate.
75(2) Factors
The husband has an income of $101,000 per annum. The wife’s income, according to her sworn financial statement, is approximately $62,000 per annum. In addition, the husband now has the benefit of his (qualifications omitted) which was achieved during the relationship and, as provided above, by way of accruing a debt for his fees and charges which is now a debt of the marriage. The wife is unlikely to receive any material benefit from the husband’s (qualifications omitted). To the contrary, I should infer by reason of its intention that the husband may well accrue a benefit in his employment and income. It is not unreasonable to equate the obtaining of further qualifications with potential income capacity although that is not immediately evident to this time.
The children live equally between the parents. Both parents work. However, I find some merit in the submission of counsel for the wife that Ms Woodland’s own work capacity might be more inclined to be limited by the children than that of the husband. He is able to work a usual five day week. The wife works shift work. She obviously does so in order to maximise her return from hours worked. I accept as a reasonable and meritorious submission made by counsel for the wife that the wife’s employment opportunities may well have “peaked” whereas the husband is in well paid employment and has the thrust of his qualifications to progress up the corporate ladder.
On the state of the evidence before me, none of the other factors under section 75(2) are relevant. The husband’s income is currently significantly greater than that of the wife. From this marriage he takes with him the benefit of his (qualifications omitted). I am satisfied that he will be in a far better position to re‑establish himself financially after the breakdown of this marriage. The property pool has a net value of only some $700,000 and the range of the dispute in dollars terms is therefore only $35,000-$70,000. In such circumstances, I am satisfied that an adjustment of 10 per cent of that pool in favour of the wife is appropriate on a consideration of the section 75(2) factors.
There will, therefore, be orders where the wife receives 60 per cent of the net tangible assets set out above. The parties agree that the superannuation entitlements be divided so as to achieve equality. I have been given evidence of procedural fairness on the superannuation fund. The wife is to retain the former matrimonial home. The husband will retain the Property M property. The parties otherwise keep those items of chattels, motor vehicles and bank account balances currently in their possession and control.
The property pool (net assets) has a value of $705,396. The wife retains the following:
Home $650,000
Cash at bank $35,000
Motor vehicle $4,675
Shares $6,061
–––––––
$695, 736
Loan $80, 000 _______
$615, 736
The wife’s entitlement at 60% of the net assets is $423,238. Therefore the wife will pay to the husband $192,498.
Given the history of the relationship and the current circumstances of the parties, I am satisfied that such orders are just and equitable.
The parties agree on an even distribution of their current superannuation entitlements. This will necessitate a splitting order in respect of the husband’s policy and entitlement with (omitted) Super with a base amount to the wife of $49,250.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Date: 11 December 2014
Key Legal Topics
Areas of Law
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Family Law
Legal Concepts
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Remedies
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Statutory Construction
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Jurisdiction
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