Wrixon & Orton
[2008] FMCAfam 232
•17 March 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WRIXON & ORTON | [2008] FMCAfam 232 |
| FAMILY LAW – Property – 4 years since separation – assessment of initial contributions – nature of advances from parties’ parents – self managed super fund – add backs – assessment of section 75(2) factors. |
| Family Law Act 1975 (Cth), ss.75, 79 |
| Aleksovski & Aleksovski (1996) FLC 92-705 Coghlan& Coghlan (2000) FLC 93-220 Gosper v Gosper (1987) 11 Fam LR 601 Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143 Illett & Illett (2005) FLC 93-221 In the Marriage of Clauson (1995) FLC 92-595 In the Marriage of Ferraro (1993) FLC 92-335 In the Marriage of Lee Steere (1985) FLC 91-626 Lorriman & Lorriman [2004] FamCA 1010 Norbis and Norbis (1986) 161 CLR 513 Omacini & Omacini (2005) FLC 93-218 Pellegrino & Pellegrino (1997) FLC 92-789 Parshen & Parshen (1996) FLC 92-720 Pierce & Pierce (1999) FLC 92-844 Sippel & Sippel [2004] FamCA 201 Wilkinson & Wilkinson (2005) FLC 93-222 Williams & Williams [2007] FamCA 313 |
| Applicant: | MS WRIXON |
| Respondent: | MR ORTON |
| File number: | SYM 7090 of 2005 |
| Judgment of: | Sexton FM |
| Hearing dates: | 25 & 26 February 2008 |
| Date of last submission: | 26 February 2008 |
| Delivered at: | Sydney |
| Delivered on: | 17 March 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Stephen Stewart |
| Solicitors for the Applicant: | Beverley Foster and Associates |
| Counsel for the Respondent: | Mr Peter Batey |
| Solicitors for the Respondent: | Gayle Meredith and Associates. |
THE COURT ORDERS THAT:
Within 30 days of order, the parties do all acts and things and sign all documents necessary to cause the sale of the property situate and known as Property C in the State of New South Wales (“the investment unit”) being the whole of the land in folio identifier 5xxx at the best price reasonably obtainable.
In the event the parties are unable to agree on the arrangements for sale by a date no later than 30 days from the date of order, the sale shall proceed by way of public auction with a real estate agent agreed between the parties or failing agreement within 7 days by an agent appointed by the Real Estate Institute of New South Wales at a price agreed between the parties and failing such agreement at a price to be determined by the President of the Australian Property Institute of New South Wales or the President’s nominee and the parties pay any fees incurred equally.
The investment unit remain on the market until sold.
Upon the completion of the sale of the investment unit, the proceeds be distributed in the following order and priority:
(a)In payment of all legal costs, commissions, and agent expenses (including advertising expenses) in relation to the sale;
(b)In adjustment of rates and other outgoings in accordance with usual conveyancing practice;
(c)In payment of loans secured by way of mortgage on the investment unit and on Property D in the State of New South Wales (“the D property”); and
(d)In payment of any balance, referred to as “the net sale proceeds of the investment unit” in accordance with Orders (17) herein.
The husband be responsible for the outgoings, including repayments on the equity loan, on the investment unit until sale, after payment of the rental income on the investment unit towards those expenses.
Within 60 days of order, the wife and husband do all acts and things and sign all documents necessary to cause the sale of the property situate and known as Property D in the State of New South Wales (“the D property”) at the best price reasonably obtainable.
In the event the parties are unable to agree on the arrangements for sale by a date no later than 60 days from the date of order, the sale shall proceed by way of public auction with a real estate agent agreed between the parties or failing agreement within 7 days by an agent appointed by the Real Estate Institute of New South Wales at a price agreed between the parties and failing such agreement at a price to be determined by the President of the Australian Property Institute of New South Wales or the President’s nominee and the parties pay any fees incurred equally.
The D property remain on the market until sold.
Upon completion of the sale of the D property the wife and husband cause the sale proceeds to be divided in the following order and priority:
(a)In payment of all legal costs, commissions, and agent expenses (including advertising expenses) in relation to the sale;
(b)In adjustment of rates and other outgoings in accordance with usual conveyancing practice;
(c)In discharge of the loans secured by way of mortgage on the
D property; and(d)In payment of any balance, referred to as the “net sale proceeds of the D property” in accordance with Orders (17) herein.
Within 14 days of exchange of contracts on the D property, the wife facilitate the collection of the following items by the husband or the husband’s nominee:
(a)Home theatre and Hi Fi and speakers including CD player;
(b)Grandmother’s antique queen sized bed;
(c)Large cedar chest of drawers in bedroom 1;
(d)Home office cedar store cabinet and contents less any items belonging to the wife;
(e)German chef’s knife and ham knife;
(f)Kauri pine hall stand;
(g)Entire tool set;
(h)Small cedar chest of drawers for boy’s bedroom;
(i)Various photos;
(j)Cedar antique square coffee table;
(k)Husband’s father’s water colour painting of Exeter;
(l)Approximately 40% of classical CD collection including those given to husband by his aunt as a wedding gift;
(m)A set of black steel filing cabinets;
(n)Wolf electric garden shears;
(o)Antique cedar letter holder;
(p)Approximately 5 quality cook books;
(q)N’s wardrobe; and
(r)Persian hall rug.
The wife have exclusive occupation of the D property until settlement of the sale of the D property and be responsible for outgoings, including home loan repayments, on the D property until settlement of the sale.
Forthwith the following occur in relation to the Orton Wrixon Super Fund and the parties cause the Trustee of the Fund to take all steps necessary to effect compliance with this Order:
(a)The property owned by the Super Fund at Property S (“the shop”) to sold for the best price reasonably obtainable and upon completion of the sale the net proceeds of sale to be paid into an account in the name of the Super Fund;
(b)The parties do all things necessary to cause any capital gains tax arising from the sale of the shop to be paid from the funds of the Super Fund;
(c)The balance of the funds in the Fund, referred to as “the net value of the Fund” be allocated to the husband and the wife in the proportions held in the Fund by each of them at the date of these orders, being 45.1% to the wife and 54.9% to the husband; and
(d)The husband and the wife do all acts and execute all documents necessary to cause the wife’s entitlement in the Orton Wrixon Super Fund to be rolled into a Fund nominated by the wife and thereafter, if applicable, the wife take all necessary steps to resign as a Trustee of the Fund.
The husband be entitled to his share in the R property.
Within 14 days of order, the husband do all things necessary to transfer to the wife his interest, if any, in the Lancer motor vehicle in the possession of the wife.
The wife be responsible for payment of all and any debts payable to members of the wife’s family and indemnify and keep indemnified the husband in relation to those debts.
The husband be responsible for payment of all and any debts payable to members of the husband’s family and indemnify and keep indemnified the wife in relation to those debts.
As soon as practicable, the wife receive 58% and the husband 42% of the sum of the following:
(a)The net value of the Fund referred to in Order (12)(c) herein; and
(b)The net proceeds of sale of the investment unit referred to in Order (4)(d); and
(c)The net proceeds of sale of the D property referred to in Order (9)(d); and
(d)$9,863.00; and
(e)$92,093.00.
and the wife’s entitlement shall include the assets and liabilities which amount to the total of $9,863 referred to in Order (17)(d) herein and the husband’s entitlement shall include the assets and liabilities which amount to the total of $92,093 referred to in Order (17)(e) herein.
The husband indemnify the wife and keep her indemnified in respect of all claims, suits and demands that are made at any time hereafter in respect of any company of which the wife has been director and/or shareholder during the course of cohabitation with the husband, including but not limited to debts and taxation liabilities.
Except as otherwise provided in these orders, each party be entitled to the exclusion of the other to all bank account proceeds, motor vehicles, jewellery, personalty and superannuation entitlements held by that party.
Within 30 days of order the wife do all acts and execute all documents required to cause to be transferred to the husband her interest in any loan account (if any) in the AT Pty Ltd.
Except as otherwise provided in these orders, the husband and the wife remain liable for any debts, howsoever arising, in their own name at the date of these Orders and in this respect shall indemnify, keep indemnified and hold harmless the other from any liability in relation thereto.
Each party have liberty to apply at 7 days notice in relation to the implementation of these Orders.
In the event the husband or the wife refuses or neglects to comply with any of the Orders herein, the Registrar of this Court at its Sydney Registry be appointed pursuant to section 106A of the Act to execute, in the name of the husband or the wife as the case may be, all deeds and instruments necessary to give effect to the orders herein, or any of them, and do all acts and things necessary to give validity and operation to the said deeds and instruments.
All exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
With the exception of any application for costs, all outstanding applications otherwise be dismissed and the matter removed from the list of cases awaiting finalisation.
IT IS NOTED that publication of this judgment under the pseudonym Wrixon & Orton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYM 7090 of 2005
| MS WRIXON |
Applicant
And
| MR ORTON |
Respondent
REASONS FOR JUDGMENT
Introduction
This case concerns property adjustment. The parties separated in May 2004 after living together for 17 years. They have two children J aged 10 and N aged 7. Consent orders were made in relation to parenting issues on 24 October 2007. As a result of those Orders, the children live with the wife and spend 4 nights each fortnight with the husband during school terms as well as time during holidays and on special days. The wife and children live in the former matrimonial home at D and the husband in rented accommodation in S.
The parties are in dispute about the value of the asset pool to be distributed between them and as to the percentage of the net asset pool each party is entitled to. The wife seeks 65% of her version of the net asset pool. The husband seeks 55% of his version of the net asset pool. The wife seeks to retain the D home. The husband believes the wife’s proposal to retain the home is unrealistic financially and wants the home sold.
The wife is 45 years and the husband 47. They started living together in 1987 and married in April 1989. At separation in May 2004, J was 6 years and N 3 years of age. The children have lived the majority of their time with the wife since separation. They attend D Public School. The parties divorced in March 2006. While neither party lives with another partner, the father has a girlfriend, Ms H. The wife is self-employed full time as an administrative consultant and the husband is self-employed full time as a building consultant and building educator by two companies of which he is the sole director and shareholder.
Issues
The approach to the determination of an application under section 79 of the Family Law Act 1975 is well established by authority[1] and involves consideration of these questions:
a)What were the assets, liabilities and financial resources of the parties and their values at the time of hearing?
b)What were the financial and non-financial contributions made directly or indirectly by or on behalf of each party to the acquisition, conservation or improvement of the property of the parties?
c)What was the contribution made by each party to the welfare of the family including contributions made in the capacity of homemaker or parent?
d)What is the effect, if any, of any proposed order upon the earning capacity of each party?
e)What matters referred to in sub-section 75(2) of the Act are relevant and what adjustment, if any, should be made as a result of these factors?
f)Have there been any other orders made affecting a child or either party and is child support payable or likely to be payable in the future for the children of the marriage?
g)After consideration of these matters, is it just and equitable to make the actual orders?
What were the assets, liabilities and financial resources of the parties at the time of hearing and their values?
[1] In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595; Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143
The parties agree on the division of household furniture and contents and therefore ask the court to exclude home contents from the net assets available for distribution. They also agree that neither party’s paid legal fees should be included in the net pool. The parties agree the husband’s interests in AB Pty Ltd, AP Pty Ltd and AT Pty Ltd have no value. I have therefore excluded these items from the list of assets and liabilities.
The parties ask the court to make findings in relation to three items:
a)Debt to husband’s mother;
b)Proceeds of the sale of the Magna motor vehicle; and
c)Sale costs of the former matrimonial home at D.
Debt to husband’s mother. The husband says he borrowed $9,000 from his mother on 30 January 2004 to acquire and install office equipment and to complete the renovations of the commercial premises at Property S, owned by the parties’ self-managed superannuation fund. At hearing, the husband says that as a result of accrued interest, he now owes his mother $11,500 and this liability should be included in the net asset pool available for division between the parties. The husband does not adduce evidence from his mother. To prove the debt, the husband relies on one page of a document annexed to his affidavit[2] which is headed:
This is Annexure “B” referred to in Mortgage by the Mortgagor (noted in Item 1 of Annexure “B”) to of the land in the T Title Reference noted in Item 2 of Annexure “B”.
[2] Annexure J to the Husband’s Affidavit sworn 1 August 2007
The wife’s counsel called for the entire document, but the husband said it was at his office. Annexure J names the husband as the Mortgagor, states the principal sum as $9,000, the final date for mortgage discharge as 31 January 2014, the interest rate as 7% per annum “calculated at daily stops”, annual payments as $700 per annum calculated at 7% and First Payment date as 31 January 2005 “for the period from the day of settlement to 31 January 2005.” The husband concedes he has been in breach of the agreement for over 3 years. The husband says he has not repaid any part of the principal or any interest, because he has not been able to afford to. The husband adduces no evidence as to any variation in the terms of the agreement since the date of the agreement.
The wife says she became aware of the husband’s claim about the debt after these proceedings started. She was aware the parties had borrowed $1,000 - $2,000 from the husband’s mother during the relationship to pay a credit card debt, but was unaware of any other loans from the husband’s mother. She does not know whether the parties ever repaid the $1,000 - $2,000. She has not spoken to the husband’s mother about any loan.
The wife’s counsel submits that the debt should be excluded from the net pool of assets because there is no evidence that the husband’s mother will require the debt to be repaid.
The husband’s counsel submits the court must include the debt on the terms set out in Annexure J to the husband’s affidavit. Counsel contends the debt should be treated in the same way as any other mortgage.
I find the husband’s evidence in relation to the debt to his mother unsatisfactory. The husband relies on one page of a document which sets out the terms of a loan agreement. The husband concedes he has not complied with the terms of the agreement. He says he has not repaid any part of the debt. He has therefore been in breach of the agreement since the first payment was due on 31 January 2005, over 3 years ago. He adduces no evidence as to any variation of the agreement and adduces no evidence from his mother as to whether or not she intends to enforce the agreement or any part of it. He adduces no evidence of his mother demanding repayment. At hearing, the husband claims he owes his mother $11,500 being principal and interest. In his Financial Statement, sworn just before hearing, he claims he owes $9,000 with no mention of interest. I do not accept the husband’s counsel’s submission that this loan should be treated like any other mortgage. A usual mortgagee could be expected to take enforcement action when terms have been breached over a period of more than 3 years.
On the basis of these factors, I am not persuaded the debt to the husband’s mother should be included in the list of assets and liabilities available for division.
Proceeds of sale of the Magna motor vehicle. It is common ground that the Magna motor vehicle was registered in the name of the company AP Pty Ltd and leased by that company. It is common ground that in May 2004 the husband used funds from the parties’ ANZ equity loan rather than company funds, to pay out the residual on the lease in the sum of $9,750. The husband sold the car in March 2007 for $7,100.00. In his affidavit sworn 1 August 2007, (and in the case outline submitted by the husband’s counsel), the husband says he paid the $7,100 into the ANZ equity manager account in the joint names of the parties to reduce the equity loan. However, in oral evidence, the husband says he deposited the sale proceeds to the AP Pty Ltd cheque account, as directed by his accountant. The husband was unable to explain why the company had not reimbursed the parties’ equity loan account the $9,750.
The wife says $7,100 should be added back to the net asset pool available for division as a result of the husband’s company retaining the sale proceeds. She does not ask for reimbursement to the equity loan account of the $9,750.
The Full Court in Omacini & Omacini (2005) FLC 93-218 referred to three categories of cases where it is appropriate to notionally add back to the pool of assets. They are:
a)Where the parties have expended money on legal fees [DJM and JLM (1998) FLC 92-816];
b)Where there has been a premature distribution of matrimonial assets [Townsend and Townsend (1995) FLC 92-569]; and
c)In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092.
The wife relies on (b). The wife’s counsel submits the husband’s decision to pay out the lease on the Magna from the joint funds of the parties and then to pay the sale proceeds of the Magna to the company unfairly disadvantages the wife.
The husband’s counsel submits the husband quite properly paid the sale proceeds of the Magna to his company account, given the car was owned by that company. Counsel refers to the parties’ agreement to value the husband’s shares in that company at Nil. Counsel contends it would be unfair to add the $7,100 back to the asset pool when there is no evidence as to how the parties applied the equity loan funds generally.
I am not satisfied the $7,100 should be added back. I am satisfied the sale proceeds of the Magna were properly paid to the company account which owned the Magna and which held the obligations under the lease. I have almost no evidence before me about the financial arrangements between the parties and the company, nor as to the use made by the parties of the equity loan funds. I am therefore unable to single out one transaction to make the finding sought by the wife. I have excluded the $7,100 from the pool of assets available for division.
Sale costs of the D property. Although each party’s counsel told the court the parties are in dispute as to whether or not the sale costs of the D home should be included as a liability in the list of assets and liabilities available for distribution, each counsel agreed, if the
D property were to be sold, it was open to the court to apportion the net proceeds of sale after payment of sale costs. That is the approach I have taken. The sale costs have therefore not been included as a liability.Superannuation. Each party’s counsel submitted the court should treat the non-superannuation assets and the superannuation assets in a single list. Most of the parties’ entitlements in their self managed superannuation fund are held in the commercial premises at Property S which will be sold. In these circumstances, I find it appropriate to adopt an integrated approach to the superannuation and non-superannuation assets of the parties as sought by both counsel. The majority of the Full Court in Coghlan & Coghlan (2000) FLC 93-220 said there is no binding principle as to the exercise of the Court’s discretion in deciding which approach should be adopted:
Nothing we have said in this judgment would prevent a Court in the exercise of its discretion from including a superannuation interest as an item of property in the list of property which is drawn as ‘the first step’ in the determination of proceedings under s.79, whether or not a splitting order is sought in those proceedings.
I find the total value of the net assets of the parties available for division between them to be $1,126,555.54 as identified in the following table:
| Assets and liabilities at the date of hearing | $ |
| D property (held as tenants in common equal shares) | 940,000.00 |
| Property C investment unit (wife’s name) | 260,000.00 |
| R property (20% share held by husband) | 100,000.00 |
| Husband’s ANZ Bank Account | 1,600.00 |
| Wife’s CBA Bank Account (including children’s trust account.) | 13,795.00 |
| Wife’s 1994 Lancer | 1,850.00 |
| Wife’s jewellery | 1,000.00 |
| Debt to wife’s parents | (6,782.00) |
| Mortgage on D (joint) | (78,008.88) |
| Equity based loan (joint) | (322,252.41) |
| Renovation debt on Property S | (18,458.17) |
| Husband’s Macquarie superannuation fund | 8,951.00 |
| Husband’s entitlement to Orton and Wrixon superannuation fund (held in Property S and a cash deposit) | 123,384.00 |
| Wife’s entitlement to Orton and Wrixon superannuation fund (held in Property S and a cash deposit) | 101,477.00 |
| Total net asset pool including superannuation | $1,126,555.54 |
Contributions
The court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties’ assets as well as to the welfare of the family before and after separation.[3]
[3] Aleksovski & Aleksovski (1996) FLC 92-705 at 83,437 and Sippel & Sippel [2004] FamCA 201
Neither party’s counsel invited me to deal with this matter on an asset by asset basis, and I have adopted the global approach. In Norbis and Norbis (1986) 161 CLR 513, the High Court held that either approach is legitimate but also said:
However there is much to be said for the view that in most cases the global approach is the more convenient.
The authorities make it clear there is more than one way to approach the question of contributions, particularly when there is a significant period between separation and trial.[4]
[4] Wilkinson & Wilkinson (2005) FLC 93-222 and Illett & Illett (2005) FLC 93-221
In the present case, nearly 4 years have passed since the parties’ separated. Given this length of time, and the evidence from each party as to what occurred during the post-separation period, particularly in relation to the parties’ liabilities, I find it appropriate to give separate consideration to the parties’ contributions during cohabitation and after separation before assessing each party’s contributions overall.
Financial contributions during cohabitation
Employment. Each party was in paid employment during most of the period they lived together. Although qualified as a registered nurse, at the time of commencement of cohabitation the wife was working in the women’s fashion industry in sales and production. Apart from a period of travel overseas with the husband and a period of study, the wife worked in that industry and as a nanny, until she had a child 10 years later. A few months after the birth of the parties’ first child J, the wife worked part-time until the birth of the parties’ second child, N. A few months later the wife returned to part-time employment which she continued 3 days a week until separation.
While the parties lived together, the wife completed a Certificate in Book-keeping and Office Administration and a Typing Certificate. The wife says she did the book-keeping for AP Pty Ltd from 1995 until 2005. The wife says she paid all company accounts, prepared BAS statements, prepared the financial records for the year end and presented the financial material to the company accountant. The wife does not give evidence of her earnings during cohabitation, nor as to whether the company paid her for book-keeping and administrative support. The husband minimises the contribution made by the wife from her earnings and criticises the standard of her administrative support for the company.
The husband has building qualifications. The husband worked in the building industry for a company known as S Pty Ltd until 1991. He earned a gross income with entitlements of over $87,000 in 1990 and 1991. The husband then set up his own company to operate a business undertaking residential building works, project management and building consultancy. From June 1998, the company was named AP Pty Ltd. In June 1998, the parties established a trust known as the AT Pty Ltd and their incomes and income distributions were paid into and out of the Trust. The husband ran the building consultancy business until approximately the time of separation from the former matrimonial home. The business paid a proportion of the parties’ household expenses and car expenses.
The wife says in the husband’s early years of self-employment he earned very little and on two occasions she accepted $500 from her parents to help with household expenses. The wife says in the two years prior to separation, the husband took extended breaks from the business to write a book and to develop the software for a web based owner builder’s course. She says the husband’s business income declined during this period.
In 2004, the husband says that he and a Mr L acquired a shelf company known as AB Pty Ltd. They obtained course accreditation for their online education courses in late 2005 from the Department of Fair Trading. The wife’s evidence differs slightly as to the timing of these events but I find the difference immaterial.
While each party downplays the role of the other in earning income for the family, I am satisfied each party applied his/her skills and qualifications appropriately. In the absence of any evidence to the contrary, I have assumed both parties contributed their incomes to the benefit of the family during the period of cohabitation.[5]
[5] Parshen & Parshen (1996) FLC 92-720
Assets and liabilities. The wife says at the commencement of cohabitation, she had $10,000 as well as various items of furniture and chattels. She says her father held the $10,000 in an entity known as TC in her name. The wife adduces no documentary evidence to verify her claim nor does her father provide evidence on this issue. The wife says she was unaware this fact was in dispute. The husband initially did not accept the wife held these funds, but in cross examination conceded that he does not know. I found the wife a credible witness and I accept her evidence as to the $10,000.
The parties agree that at the commencement of cohabitation the husband owned vacant land at G, later sold for a net $36,000, various items of furniture and chattels, and a superannuation entitlement, valued at $14,507 in the year following the commencement of cohabitation. The husband says he also had savings of $5,000. I accept his evidence.
The parties purchased a property at P in 1988 for $135,000. In cross-examination, the wife conceded an error in her affidavit as to the purchase price of P. The husband’s unchallenged evidence is that he paid the deposit on the purchase with a $5,000 gift from his parents and used $8,500 from the proceeds of the G land to meet the deposit of $13,500. I do not know whether the $5,000 gifted by the husband’s parents was the same $5,000 the husband says he held in savings at the date cohabitation started. The husband then says “I used some of the remaining proceeds of the G property towards the acquisition costs of the property”. The settlement sheet in relation to the purchase of the P property[6] states that the parties themselves contributed $13,893.70 at settlement of the purchase. The wife says that she applied her $10,000 to the costs of purchase of the P property. The parties agree that they borrowed $109,624 from St George Building Society for the purchase. I accept the evidence of each party as to their contributions to the purchase of the P property. I also accept the husband’s evidence that he applied the remainder of the proceeds of sale of the G property as a loan offset against the mortgage and towards the renovation costs of the property.
[6] Annexure G to the Husband’s Affidavit sworn 1 August 2007
On the basis of these findings, I am satisfied the husband made a significantly greater initial capital contribution than the wife.
The weight to be afforded to initial contributions was comprehensively discussed in Pierce & Pierce (1999) FLC 92-844 at 85,881. The Full Court in the recent decision of Williams & Williams [2007] FamCA 313 affirmed the principles in Pierce. The Full Court in Pierce said:[7]
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution… regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase of the matrimonial home.’
[7] At 85,881 paragraph 28
The wife’s counsel submits that given the length of the relationship, and the need to consider all the contributions made by each party during the relationship and after separation, I should not give significant weight to the husband’s initial contribution when assessing contributions overall. The husband’s counsel contends that the court must give the husband appropriate credit for this initial contribution given it enabled the parties to purchase and improve real estate and to substantially increase the value of their assets. I accept the husband’s counsel’s submission and take into account that the husband made an initial capital contribution of approximately $55,000 (including superannuation) as against the wife’s approximately $10,000.
In March 1991 the husband was retrenched from S Pty Ltd and received $24,048 by way of redundancy in addition to one month’s salary.[8] The husband’s unchallenged evidence is that he used those funds to repay a credit card debt from the parties’ overseas trip, to incorporate a company known as C Pty Ltd, to purchase office furniture and stationery for the new business, to purchase a Subaru motor vehicle for business use and to purchase a second hand Corolla for the wife. Given most of the redundancy was used to set up his business, and the shares in the husband’s companies have no value, the husband’s redundancy payment is not a factor to which I give particular weight.
[8] Annexure E to the Husband’s Affidavit sworn 1 August 2007
In 1991, the husband’s mother gave the husband and his three siblings a 20% share each in a property at R which the husband’s mother had owned since 1978. The parties agree that for about 2 years they paid a modest sum into an account for expenses on R and enjoyed holidays there, rent free, every year. While there is no evidence before me as to the value of this gift to the husband in 1991, the parties agree the husband’s interest in the property has a present net value of $100,000. While I accept the wife’s evidence that she undertook minor improvements on the property with the husband, I give the husband credit for his contribution of a 20% share in the R property, with an agreed present value of $100,000.[9]
[9] Pellegrino & Pellegrino (1997) FLC 92-789; Gosper v Gosper (1987) 11 Fam LR 601; Lorriman & Lorriman [2004] FamCA 1010
The wife’s unchallenged evidence is that in 1995, she applied a $6,000 payout from her former employee towards the mortgage on the P property. In 1996 she applied $2,000 received from her late grandmother’s estate to the mortgage, as well as $2,000 towards living and household expenses. I have regard to these contributions from the wife.
I find no other financial contribution by either party during the course of cohabitation warrants special weight. I outline the short history. Having substantially reduced the mortgage loan balance on the P property from earnings, the parties sold the P property in November 1995 for $225,000 and at the same time purchased the former matrimonial home at D for $295,000 using the sale proceeds of P and a bank loan. In November 2003, the parties purchased an investment unit at Property C in the wife’s sole name. Although each party gives a different figure for the purchase price I am not satisfied anything turns on the difference. The parties borrowed the funds required for the purchase, stamp duty and legal costs from the ANZ Bank. This loan is also secured against the D home. In 2003, the parties caused the Orton Wrixon Super Fund to be established. The husband rolled over his superannuation entitlement of $83,964.32 into the Fund and according to her unchallenged evidence, the wife contributed approximately $32,056 from her superannuation entitlements to the Fund. The husband says that at that time, the AT Pty Ltd commenced making superannuation contributions for each party. In November 2003, the parties purchased commercial premises at Property S in the name of the Super Fund, for $126,500 in addition to stamp duty and legal expenses. AP Pty Ltd operated its business from that property from April 2004 and continues to do so.
On a weighing of these factors, I am satisfied the husband made a substantially greater financial contribution than the wife to the acquisition of the assets of the parties during the period of cohabitation.
Non-financial contributions during cohabitation and contributions to the welfare of the family
The husband says he researched and inspected properties in 1988 with a view to the parties buying a property together, and did the same again in 1995 when the parties purchased the former matrimonial home at D. He says he undertook his own building inspections and organised pest inspection reports.
In relation to the P property, the husband says he used his skills as a builder and designer to design the renovations and was able to reduce the architect’s fees as a result of his skills and connection with the industry. The parties renovated the P property purchased early in the relationship over an 18 month period. The wife says the parties engaged contractors as well as undertaking the work themselves. In relation to P, the husband says his brother, a landscaper, undertook a lot of the garden improvements as a wedding gift to the parties and the parties won a prize for the courtyard design. The husband says the wife did almost nothing towards the renovations undertaking with her father only the painting of the hallway and lounge room and assisting with the planting of smaller plants.
The parties also renovated the D property, again using contractors and undertaking some of the work themselves over a 3 year period. The wife gave birth to the parties’ first child while the renovations were underway. The wife says the parties landscaped the front and rear yards, improved the kitchen and bathroom, painted inside and out, installed sliding doors and flooring. The husband denies the wife made more than a minimal contribution to the renovations of either property. The husband claims to have managed and supervised the contractors and says he undertook some of the renovations himself.
In relation to D, the husband says he renovated this property at night after work and on weekends over the 3 year period. The improvements included landscaping front and back, adding decking, renovating the kitchen, bathroom, laundry, adding an open plan living room, upgrading fireplaces, light fittings and toilets, adding new gutters, fences, demolishing a rear wall, and painting inside and out. He says he received a gift of commercial grade sliding doors and external aluminium doors as a result of work he had supervised at M. In 2001 the husband says he received a gift of an air-conditioning system which was installed at D. Since completing the renovations, the husband says he undertook all the repairs and maintenance, and looked after the lawns and gardens until the last 12 months before separation, when the wife undertook those tasks.
The wife says that she was primarily responsible for all household chores including shopping, washing, cooking, cleaning, ironing and paying bills with the husband giving her irregular assistance. The wife says they shared external work on the properties until 12 months before separation, when she looked after the outside of the property alone. The husband also claims to have done most of the cooking prior to the children being born, most of the shopping for food and household supplies. The husband says from mid 1991 until 2004 he was working from the home and was actively involved in day to day tasks including shopping, cooking and washing. From 2001 he says the company paid for the cleaners.
The husband says he made all arrangements for the maintenance and repairs to both cars and the insurances for the cars and household.
The parties’ first child was born 10 years after the parties started living together and 7 years before they separated. The wife says she took the majority responsibility for the day to day care of the children during the parties’ relationship.
Despite the apparent contradictions in each party’s position, neither party’s evidence on any of these issues was seriously challenged. While I accept that, given his skills and experience in the building industry, the husband is likely to have played a pivotal role in managing the renovations of both the P and D properties, I also accept that the wife contributed to the renovations. I accept that once the parties’ first child was born, the wife’s primary focus would have been the children, while the husband continued to earn income. I accept that the husband assisted the wife with the myriad of tasks involved in running a household with young children.
On a weighing of all these factors, I find the husband’s non-financial contributions during cohabitation were marginally greater than those of the wife.
Financial contributions after separation
Each party has been in employment since separation, the husband on a full time basis. The wife was working 3 days a week at separation but since 2006 when N started school, has worked full time. The husband has continued to operate his two businesses. Since 2007, the husband has been sole director and shareholder of the two companies through which the businesses are run.
At the time of separation, the husband moved to his mother’s home for a few months. In October 2004, the husband moved to the parties’ investment unit at Property C where he lived until December 2006. The husband then moved to other rental premises and has recently moved again.
Since separation, the wife has remained living in the D home with the parties’ two children. The wife has paid the loan instalments and expenses on the property and the balance of the D loan has decreased since separation.
The wife claims that the husband failed to meet his financial obligations after separation, causing her financial disadvantage. Firstly, the wife alleges the joint equity debt in the parties’ name obtained to purchase the investment unit, has increased since separation because the husband has not met the repayments as he should have. The parties agree the loan balance increased from $279,000 at the date of separation to $320,955 at July 2007. Secondly, the wife claims the husband’s company is paying rent at substantially below market value for use of the commercial premises at Property S owned by the self-managed Fund, in breach of his obligations as trustee of the Fund.
The wife also claims to have carried almost the whole financial responsibility for the parties’ children since separation as well as the major responsibility for the children’s day to day care.
The husband says the parties agreed at separation that he would make the repayments on the equity loan, being the much larger loan, and the wife would make the payments on the smaller loan on D. In exchange, the husband would not pay child support. The wife acknowledges this arrangement was discussed but says the husband never gave a clear answer as to whether he agreed. However, it seems that the parties followed the arrangement, at least for a period. The wife paid the expenses and mortgage instalments of $160 a week on D, and the husband initially paid the instalments on the equity loan. The husband did not pay child support until his liability was assessed by the Child Support Agency at the end of 2007.
From the date of separation, the parties continued to receive rental income from the investment unit of approximately $200 a week and applied that income towards expenses for the unit. The husband moved to the unit in October 2004. The husband says he then paid the equity loan repayments of $415 per week as well as the expenses for electricity, water and council rates and strata levies. From early November 2005, the husband says he reduced the equity loan repayments to $213 per week and shortly afterwards stopped payments altogether for 3 months. He says from February 2006 until December 2006 he paid $215 per week towards the equity loan. However, his claim to have paid a total of $18,175 contradicts his evidence. I am unable to make findings as to precisely what amounts the husband contributed and neither party provided me with statements of account. The wife says she made repayments of $3,500. It is common ground that since December 2006, neither party has made repayments on the equity loan, though the rental income from the unit of $220 a week is used to meet unit expenses. The equity loan balance is over its limit.
The husband deposes to a current gross income from the businesses of $1206 a week in addition to modest benefits for telephone, car, electricity and insurance expenses. The husband says his education company has 8 sub-contractors and the building consultancy business 5 sub-contractors. The husband says that the gross fees of AB Pty Ltd have increased from $94,600 in the 2006 financial year to $190,842 in the 2007 financial year.
It is the husband’s case that he was unable to afford the equity loan repayments despite his agreement to pay them. Yet the husband acknowledges these facts:
a)In March 2007 the husband acquired by way of a 5 year lease a Lexus motor vehicle registered in the name of AB Pty Ltd, a liability of $65,000. This was at a time when he was making no repayments on the equity loan and was paying his wife no child support.
b)On 21 June 2007, AB Pty Ltd paid $45,012 to Ms H Real Estate, a business operated by Ms H, the husband’s girlfriend, on the basis of a verbal contract, in part for advance advertising.
c)The husband pays rent in his new premises of $650 a week, an increase of $180 a week from the rental he paid until the end of last year.
d)In relation to hotel and restaurant expenses on his visa card for the period October to December 2007, the husband was unable to differentiate between business and private expenses.[10]
[10] Exhibits 2 and 3
The husband said the $45,012 was a payment for advertising his businesses on Ms H’s website. He said the figure was calculated on a monthly rate of $1200 over 2 years. However, $1200 per month for 2 years does not equal $45,000. He gave contradictory evidence about the period of advertising the payment covered. I do not accept the husband’s evidence as to the purpose of the payment to Ms H’s business.
I find it unlikely the husband has lacked the capacity to meet the equity loan repayments, while finding the funds to meet these other substantial expenses.
In relation to the rental paid by AP Pty Ltd to the parties’ superannuation fund, the company entered into a lease with the Fund in May 2004 and the company then paid rent at $125 a week, later increased to $127.50 a week. The Fund pays the water and council rates. Despite a request from the wife for the company to pay increased rent, in accordance with advice from an estate agent that the market rent was between $234 and $255 a week,[11] the husband refused to pay increased rent. The husband says the agent used inaccurate criteria to assess its rental value. The husband adduces no evidence of these alleged inaccuracies. I am satisfied on the basis of the letter of advice addressed to the husband of May 2007 from PRD Nationwide[12] that the husband has been paying substantially less than market rental for the commercial premises.
[11] Annexure C to the Wife’s Affidavit sworn 13 July 2007
[12] Annexure C to the Wife’s Affidavit sworn 13 July 2007
There is no dispute that the wife has received the whole of the tax benefit from the negative gearing of the unit in the 2005, 2006 and 2007 financial years.[13]
[13] Exhibit 1
There is no dispute that the wife has received no child support until December 2007 and that she has received $1,044 in total since then.
Non financial contributions and contributions to the welfare of the family since separation
The husband says he has undertaken improvements on the commercial premises since separation and has also arranged for minor repairs to be undertaken on the investment unit. The wife says she spent 5 hours on 23 December 2006 cleaning the investment unit to arrange for new tenants because the husband left it in such a poor state when he moved.
The wife has maintained the D home since separation.
The wife’s unchallenged evidence is that she has taken the major responsibility for the children since separation. The children did not spend 4 nights a fortnight with the husband, nor holiday time on a regular basis until 18 months after separation. The High Court has unequivocally determined that the contribution of a homemaker and parent should be taken into account in a substantial way.[14]
[14] Norbis v Norbis (1986) 161 CLR 513 at 523-4
On a balancing of these factors since separation in relation to both financial and non-financial contributions, I am satisfied the wife’s contributions overall have been greater than those of the husband in the years since separation.
In relation to each party’s contributions overall, including the 17 years of cohabitation and the period since separation, Mr Batey, the husband’s counsel submits the husband should be entitled to 60%.
Mr Stewart, the wife’s counsel submits the parties’ contributions overall should be assessed as equal.On a weighing of my findings as to contribution issues, I have assessed the husband’s contributions overall at 56% and the wife’s contributions at 44%.
What is the effect, if any, of any proposed order upon the earning capacity of each party?
Neither party’s earning capacity will be affected by the proposed orders.
What matters referred to in sub-section 75(2) of the Act are relevant?
I have considered each of the relevant factors listed in section 75(2) of the Act.
The wife is 45 and the husband 47 years of age. Neither party has any health issues.
The wife has been self-employed as an administrative consultant for 3 years. She works full time. The husband is self employed as a building consultant and educator. According to their most recent financial statements, the wife earns, by way of business income, approximately $10,000 a year more than the husband, taking into account the benefits the husband receives from the business.
The wife claims the husband has a greater earning capacity than she does, given the restriction on her capacity to work with young children.
While the husband acknowledges a recent increase in gross fees from his education business, he says expenses have also increased and he cannot assume the business will continue to improve, given changes in the course licensing arrangements. However, the husband is confident that if his income from the education business were to decrease, he would increase his income from the building consultancy business. I accept that the husband has more working hours available to him than the wife and that it is possible he may be in a position to earn a greater income. I am however, unable to make such a finding on the evidence available.
The wife has the majority responsibility for the parties’ children aged 10 and 7 years. As a result of this factor, I make a significant adjustment in the wife’s favour.
According to each party’s Financial Statement sworn just prior to hearing, each party has accrued debts since separation for which each party will be responsible. I make no adjustment for this factor.
I accept the wife’s evidence that she has borne almost the whole of the financial responsibility for the children since separation. The husband’s liability for child support has now been assessed by the Child Support Agency. Since 1 December 2007, the husband has paid a total of $1,044 in child support. I am satisfied the wife is likely to receive only modest child support from the husband in the future. I therefore make a further adjustment in favour of the wife.
The wife’s counsel submits the court should make a minimum 15% adjustment in favour of the wife. The husband’s counsel submits the court should make a 5% adjustment in favour of the wife as a result of her majority care of the parties’ children.
I am satisfied, on a weighing of the factors to which I have referred, an appropriate adjustment in favour of the wife is 14%. Overall, the wife will receive 58% of the net asset pool, and the husband 42%.
Have there been any other orders made affecting a child or either party and is child support payable or likely to be payable in the future for the children of the marriage?
These matters have already been addressed.
Is the result just and equitable?
Section 79(2) provides that:
The Court shall not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.
The Court must be satisfied that the actual orders provide for a just and equitable distribution of the property of the parties.
The parties lived together for 17 years and have been separated for nearly 4 years. I have found the total net asset pool available for division between the parties to be $1,126,555.54. The wife will receive 58% which is equivalent to $653,402.21. This includes $101,477 in superannuation, equivalent to 45.1% of the value of the Orton Wrixon Super Fund. The husband will receive 42% of the net asset pool which is equivalent to $473,153.33 including $123,384 equivalent to 54.9% of the Orton Wrixon Super Fund. The parties agree each should retain his/her current percentage entitlement to the self-managed Fund and those entitlements will be precisely ascertained on the sale of the commercial property at Property S.
In addition to her superannuation entitlement, the wife has her bank account proceeds, jewellery and motor vehicle. She will take responsibility for the debt to her parents. Excluding superannuation, she therefore already has $9,863.00 in net assets as set out in the following table:
| Assets to be retained by wife | $ |
| Wife’s bank account proceeds | 13,795.00 |
| Wife’s motor vehicle | 1,850.00 |
| Wife’s jewellery | 1,000.00 |
| Debt owed to wife’s parents | (6,782.00) |
| TOTAL | 9,863.00 |
In aIn addition to his superannuation entitlement from the Orton Wrixon Super Fund, the husband already has his Macquarie Superannuation Fund entitlement, his bank account proceeds and his share in the R property. He will take responsibility for the renovation debt on Property S. Excluding his superannuation interest in Orton Wrixon Superannuation Fund, the husband therefore already has $92,093 in net assets as set out in the following table:
Assets to be retained by husband $ Net sale proceeds of his share of R property 100,000.00 Husband’s bank account proceeds 1,600.00 Shares in ABE Pty Ltd Nil Shares in AP Pty Ltd Nil AT Pty Ltd Nil Entitlement in Macquarie Superannuation Fund 8,951.00 Debt owed for renovations on S property (18,458.00) TOTAL 92,093.00
The wife seeks to retain the former matrimonial home at D where she has been living with the two children since separation. She says if she is unable to do so, she will purchase alternate accommodation within the inner city area, so the children can remain at D Public School. The wife adduces no evidence as to her borrowing capacity or as to how she would meet her financial obligations if the court made an order for her to retain the D property.
The parties agree that their investment unit at Property C will be sold. That unit has an agreed value of $260,000. The ANZ Bank is owed $322,252.41 secured by the investment unit and the D property. The D property has an agreed value of $940,000 and the bank is owed another $78,008.88 secured by that property alone. The net value of the two properties is therefore just under $800,000. The wife is entitled to approximately $542,062 from these properties, being her entitlement of $653,402.21 less her entitlement to superannuation and the $9863 in net assets already held by her. If she were to retain the D home subject to mortgage, [$940,000 – $78,008.92 – balance of equity loan] on the figures agreed at hearing, she would have a debt of nearly $400,000 to achieve 58% of the net pool. The wife adduces no evidence to satisfy me such a result is achievable. The D property will therefore be sold.
I have ordered the sale of the 3 properties. In relation to the commercial premises owned by the Orton Wrixon Super Fund, the wife will receive 45.1% and the husband 54.9% of the net funds available in the Fund after sale and the payment of expenses. The wife will roll over her entitlement into an accredited Fund of her choice. In relation to the investment unit and the D properties, after an adjustment for the “other net assets”, the wife will receive funds so as to give her 58% of the net assets overall.
I am satisfied that the orders set out at the beginning of these Reasons are just and equitable.
I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of Sexton FM.
Associate: Skye Owen
Date: 17 March 2008.
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