Wu & Leong
[2023] FedCFamC2F 480
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Wu & Leong [2023] FedCFamC2F 480
File number(s): CAC 1783 of 2013 Judgment of: JUDGE MANSFIELD Date of judgment: 28 April 2023 Catchwords: FAMILY LAW PROPERTY Final Orders to proceedings that have been on foot for over nine years – Antiquated transactions permitted as addbacks – Neither party’s case as to extensively greater contributions or section 75(2) factors made out - Mixed titles to real properties, potential capital gains tax liabilities at large and a non-commutable pension present significant difficulties to arriving at final orders that are capable of being adhered to and enforced in both financial and practical terms. Legislation: Child Support (Assessment) Act 1989 (Cth)
Family Law Act 1975 (Cth) ss75, 79, 81, 90SM. 90XS, 90XT, 90XZD
Family Law Legislation Amendment (Superannuation) Act 2001 (Cth)
Cases cited: Bulow & Bulow (2019) FLC 93-885
C & C (2005) FLC 93-220
Dickons & Dickons [2012] FamCAFC 154
D & D (2006) FLC 93-256
Dovgan & Dovgan [2021] FamCA 306
Kennon & Kennon (1997) FLC 92-757
Kowaliw & Kowaliw (1981) FLC 91-092
Mullis & Quimby [2023] FedCFamC1A 16
Norbis v Norbis [1986] 10 FamLR 819
AJO & GRO [2005] FamCA 195
Preston & Preston(No 2) [2022] FedCFamC2F 303
Rosati v Rosati (1998) FLC 92-804
Stanford v Stanford (2012) 247 CLR 108
Taffner & Taffner [2021] FamCAFC 68
Weir and Weir (1993) FLC 92-338
Division: Division 2 Family Law Number of paragraphs: 126 Date of hearing: 30 October – 2 November 2022 Place: Canberra Counsel for the Applicant: Mr Masters Solicitor for the Applicant: SCB Legal Pty Ltd Counsel for the Respondent: Mr O’Keefe Solicitor for the Respondent: Tu’Ulakitau McGuire ORDERS
CAC 1783 of 2013 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS WU
Applicant
AND: MR LEONG
Respondent
order made by:
JUDGE MANSFIELD
DATE OF ORDER:
1 APRIL 2023
PURSUANT TO PT VIII OF THE FAMILY LAW ACT 1975 (CTH), THE COURT ORDERS THAT:
The real properties
1.Within 28 days, the applicant wife is to:
(a)Do all such things as are necessary to transfer her right, title and interest in the real property and improvements comprising Volume … Folio … Edition … being the property more commonly known as A Street, Suburb B in Region T (“the Suburb B property”) to the husband, who is declared the sole legal and beneficial owner of the property.
(b)Do all such things as are necessary to discharge any loans in joint names, whether or not secured by mortgage registered over the Suburb F property, to indemnify and keep indemnified the husband against any and all liabilities connected to the Suburb F property.
(c)Do all such things as are necessary to discharge any loans in joint names, whether or not secured by mortgage registered over the Suburb D property, to indemnify and keep indemnified the husband against any and all liabilities connected to the Suburb D property.
2.Within 28 days, the respondent husband is to:
(a)Do all such things as are necessary to transfer his right, title and interest in the real property and improvements comprising Lot … PS…, Volume … Folio … being the property more commonly known as E Street, Suburb F in the state of Victoria (“the Suburb F property”) to the wife, who is declared the sole legal and beneficial owner of the property.
(b)Do all such things as are necessary to transfer his right, title and interest in the real property and improvements comprising Volume … Folio … Edition … being the property more commonly known as C Street, Suburb D in Region T (“the Suburb D property”) to the wife, who is declared the sole legal and beneficial owner of the property.
(c)Do all such things as are necessary to discharge any loans in joint names, whether or not secured by mortgage registered over the Suburb B property, to indemnify and keep indemnified the wife against any and all liabilities connected to the Suburb B property.
(d)Provide to the wife copies of all documents and information with respect to any tenancy or occupation agreements or arrangements with respect to the Suburb F property and the Suburb D property.
3.Pending transfer of the Suburb F property provided for in Order 2(a), the husband:
(a)Is restrained by injunction from increasing the loan amount secured by mortgage, using the Suburb F property as security for any further borrowings or otherwise encumbering the Suburb F property in any manner;
(b)Shall be responsible for all mortgage payments, statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the Suburb F property incurred prior to the date of transfer and shall make all such payments as and when they fall due and hereby indemnifies the wife in respect of all other liabilities incurred prior to the date of transfer.
4.Pending transfer of the Suburb D property provided for in Order 2(b), the husband:
(a)Is restrained by injunction from increasing the loan amount secured by mortgage, using the Suburb D property as security for any further borrowings or otherwise encumbering the Suburb D property in any manner;
(b)Shall be responsible for all mortgage payments, statutory rates and charges, other utilities, insurances, outgoings and expenses in relation to the Suburb D property incurred prior to the date of transfer and shall make all such payments as and when they fall due and hereby indemnifies the wife in respect of all other liabilities incurred prior to the date of transfer.
5.The parties have liberty to show a copy of these sealed Orders to any person to whom it is necessary to engage with in order to give effect to these orders or to demonstrate the rights accruing pursuant to these Orders.
6.Within 28 days, the wife is to pay, or cause to be paid, to the husband the sum of $133,193.
Default
7.In the event the wife does not comply with Order 1(b), Order 1(c) or Order 6 between 28 and 56 days of the date of these Orders, the wife shall do all things and sign all documents necessary to place the Suburb F property or the Suburb D property or both properties if necessary, on the market for sale in accordance with the Terms of sale of property at Orders 25-27.
8.The proceeds of sale shall be paid in the following manner and priority:
(a)To pay out any loan accounts required to discharge any mortgages registered over the titles to the Suburb F property and the Suburb D property;
(b)To pay all reasonable costs, commissions and expenses of the sale that were not paid upfront by the wife;
(c)The usual rates adjustments;
(d)Payment to the Husband of the amount of $133,193 plus interest calculated in accordance with the interest rate prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 from the date of default until the date of payment;
(e)The balance then remaining to be paid to the wife.
9.In the event the husband does not comply with Order 2(c) between 28 and 56 days of the date of these Orders, the husband shall do all things and sign all documents necessary to place the Suburb B property on the market for sale in accordance with the Terms of sale of property at Orders 25-27.
10.The proceeds of sale shall be paid in the following manner and priority:
(a)To pay out any loan accounts required to discharge any mortgage registered over the title to the Suburb B property;
(b)To pay all reasonable costs, commissions and expenses of the sale that were not paid upfront by the husband;
(c)The usual rates adjustments;
(d)The balance then remaining to be paid to the husband.
Capital Gains Tax
11.In the event the Suburb B property, the Suburb F property or the Suburb D property is sold or there is any other event that causes the wife to incur a capital gains tax liability with respect to any of the properties prior to 30 June 2025, the husband is to pay, or cause to be paid, to the wife 50 per cent of any such liability.
12.In the event the Suburb B property, the Suburb F property or the Suburb D property is sold or there is any other event that causes the husband to incur a capital gains tax liability with respect to any of the properties prior to 30 June 2025, the wife is to pay, or cause to be paid, to the husband 50 per cent of any such liability.
13.For the purposes of the preceding Orders, production of a Notice of Assessment from the Australian Taxation Office prior to 31 December 2025 shall serve as notice of the liability upon which payment is due within 28 days.
14.Each party shall be solely liable for and shall indemnify the other against any capital gains tax liability incurred after the periods provided for in Orders 11-13.
15.Within 14 days of a request, each party is to produce to the other all documents and information required to assess any capital gains tax liability.
The Super Fund H interest
16.In accordance with section 90XT(1)(b) of the Family Law Act 1975, (the Act), whenever a splittable payment within the meaning of section 90XE of the Act becomes payable to or on behalf of Mr Leong (born 1964) from his interest in Super Fund H, Ms Wu (born 1964) is entitled to be paid (by the Trustee of the Super Fund H) 50% of the splittable payment and there shall be a corresponding reduction in the amount Mr Leong would be entitled to receive but for these Orders.
17.The operative time for the preceding Order is seven business days after the service of the final orders on the Trustee.
18.The parties are prevented by injunction from serving the final orders on the Trustee of Super Fund H pending compliance with Orders 19-20.
19.Within 30 days, the wife is to provide notice to the Trustee of Super Fund H such that the trustee is accorded procedural fairness in relation to the making of an order, as at Orders 16-17, binding on the trustee;
20.Within 60 days, the wife is to provide to the husband by email, and to the Court by email to …@...:
(a)Confirmation of procedural fairness being accorded to the Trustee of Super Fund H; and
(i)Confirmation the Trustee of Super Fund H does not object to the terms of Orders 16-17 which bind the Trustee; or
(ii)Confirmation the Trustee of Super Fund H has not given written notice of any objection within 28 days of being notified of the terms of Orders 16-17 to bind the Trustee.
21.The parties are at liberty to relist the matter if the Trustee of Super Fund H objects to the orders.
AND IT IS NOTED:
A.Notice to the Trustee of Super Fund H may be sent to the J Corporation, as Trustee of Super Fund H by email to …@....
Other
22.Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other real assets, personal assets, and superannuation interests in their respective possession as at the date of these orders, for which purpose superannuation interests are deemed to be in the possession of the named superannuant; and
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the real and personal property in their respective possession, and any other debts in their respective sole names.
23.Any and all other outstanding applications between the parties for relief under Pt VIII of the Family Law Act 1975 (Cth) are dismissed.
24.In the event of either party refusing or neglecting to sign, within seven days of a written request to do so, any document necessary to implement the terms of these Orders a Registrar of the Federal Circuit and Family Court of Australia (Division 2) is empowered to execute such documents on behalf of the parties pursuant to section 106A of the Family Law Act 1975 (Cth).
Terms of sale of property
25.In relation to any sale of the Suburb F property or the Suburb D property, the Vendor shall be the wife.
26.In relation to any sale of the Suburb B property, the Vendor shall be the husband.
27.The property shall be listed for sale by private treaty with such real estate agent as chosen by the Vendor (“the Property Agent”) and the Vendor will pay any costs of such appointment;
(a)The Vendor shall instruct a solicitor chosen by them to do all legal work associated with conducting the sale of the property.
(b)The Vendor will pay all costs associated with the sale of the property.
(c)The listing and sale price of the property shall be as determined by the Vendor.
(d)The Vendor is to co-operate in every way with the Property Agent in relation to the property sale.
(e)That upon an offer being accepted for sale of the property, the Vendor shall within 48 hours execute the contract of sale and all other documents necessary to complete the sale of the property including all transfer documentation forthwith upon its submission to her by the Property Agent or their solicitor.
(f)The contract of sale shall provide for completion within 42 days after the date of the contract.
(g)In the event the property is not sold by private treaty pursuant to the above provisions or on or before three (3) calendar months from the date it is first listed, then Vendor shall do all acts and sign all documents as are necessary to sell the property by auction and the following shall apply:
(i)The property shall be listed with the Agent appointed under Order 27 (hereinafter called “the Property Auctioneer”) for sale by auction within a further two (2) months.
(ii)The Vendor shall execute all documents requested by the Property Auctioneer for sale of the property by auction.
(iii)The Vendor shall determine the property reserve price in consultation with the Property Auctioneer.
(iv)The Vendor shall pay to the Property Auctioneer any sums requested for advertising or auction expenses.
(v)The Vendor shall give such instructions as are necessary to the solicitor appointed under Order 27(a) to prepare a contract of sale and provide it to the Property Auctioneer prior to the auction, no later than the date sought by the Property Auctioneer.
(vi)The Vendor is to co-operate in every way with the Property Auctioneer in relation to the sale by auction including allowing inspection of the property at all times reasonably requested by the Property Auctioneer.
(vii)The Vendor shall attend at the auction and negotiate with the highest bidder in the event of the reserve price not being reached.
(viii)The Vendor shall agree to a sale price of the property being any amount in excess of the reserve price but in the event of the reserve price not being reached, any offer received after the auction to buy the property at a price that is at least 90% of the reserve price shall be accepted by the Vendor.
(h)In the event the property is not sold at the auction pursuant to Order 27(g) (and the sub-paragraphs) or within fourteen (14) days after the date of the auction by further negotiation, then the Vendor shall cause a further auction of the property to be held within two (2) months after the date of the first auction and at two (2) monthly intervals until sold.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wu & Leong has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MANSFIELD:
INTRODUCTION
These are property proceedings which have been on foot for over nine years. 168 documents have been filed. 36 sets of Orders have been made. The events since the parties’ separation in 2012 and the consequences of the proceedings since 2013 have dominated the parties’ lives since. My impression of the parties is that objectivity and relativity slipped away some time ago. Hopefully if nothing else, these final orders bring certainty and closure to the parties.
The property of the marriage consists of three real properties situated in Suburb B, Region T, Suburb D, Region T and Suburb F, VIC and four different superannuation interests. The parties are in dispute as to a great many things. The issues in dispute relevant to Part VIII of the Family Law Act 1975 (“the Act”) are determination of addbacks contended for by the wife and assessments of the parties’ contributions and section 75(2) factors.
Mixed titles to the real properties and their associated liabilities, potential capital gains tax liabilities and a non-commutable pension present significant difficulties to arriving at final orders that are capable of being adhered to and enforced in both financial and practical terms. For the reasons that follow, it is just and equitable that the property of the parties to the marriage, or either of them, is altered to the effect of equalising the non-superannuation and superannuation interests of the parties with a modest adjustment to the wife.
BACKGROUND
The uncontroversial facts are set out chronologically in the following table. Key events are in bold and court procedural events are italicised.
1989 Husband immigrated to Australia Early 1998 Parties met in Country K Late 1998 Parties became engaged in Country K 1999 Parties married in Country K 1999 Wife moved to Australia 1999 Parties purchased property in Suburb M funded by mortgage, joint savings and a small loan from husband’s friend 2001 Parties purchased property in Suburb L funded by mortgage, joint savings and equity in the Suburb M property 2003 Husband obtained employment in City N. Wife stayed in Suburb M to prepare for birth of child 2003 X born Late 2003 Husband obtained full time employment (Commencement of Super Fund H entitlements) Late 2003 Wife and child move to Suburb D to join husband 2003 Suburb M property rented. Suburb D property purchased. August 2004 Parties separate. Wife and child move to rented accommodation in Sydney Early 2005 Parties travel together to USA for husband’s family to meet child Late 2005 Husband borrows $100,000 secured against Suburb M and Suburb D properties January 2006 Husband transfers $60,000 out of a joint account 2007 Suburb L property sold. Husband receives net proceeds of $119,977 March 2008 Parties reconcile and wife and child return to live in Suburb D property Sometime in 2008 Husband says he lost around $150,000 on stock market 2009 Suburb M property sold, proceeds applied to Suburb D mortgage Late 2009 Family travels to Country K 2010 Husband opens new line of credit and purchases Suburb F property in sole name Late 2010 - Early 2011 Wife and child travel to Country K 2011 Commencement of escalation of conflict 2011 Suburb B property purchased as tenants in common as to husband 90 / wife 10 funded by mortgage and equity in the Suburb D property Mid-2011 Husband, wife and child move from Suburb D to the Suburb B property. Sometime in 2011 The husband establishes the SMSF (Leong Family Super) Early 2012 Wife and child travel to Country K 2012 Husband charged with assaulting child. Wife obtains FVO. Husband moves out of Suburb B. 29 November 2012 Parties separate on a final basis (X 9 years old) February 2013 Husband lodged an objection to child support assessment 2013 Husband pleaded guilty and convicted August 2013 Wife receives child support for the first time by way of CSA automatic deduction Late 2013 Wife and child move out of Suburb B into rented accommodation. November 2013 Wife commences parenting and property proceedings Late 2013 Wife registers caveat over the Suburb F property Late 2013 Westpac took possession of Suburb B property. Husband managed to retain it. Early 2014 Husband commences living in Suburb B property (vacant since late 2013) 2014 FVO extended for 2 years 2014 Husband applies for FVO against wife Early 2014 Husband moves out of Suburb D and into the Suburb B property 2014 Husband’s FVO application dismissed November 2019 Final parenting and property orders made in absence of the husband January 2020 Husband’s application to re-open proceedings heard and dismissed Mid-2020 Wife stops working due to ill health June 2021 Husband’s appeal of Jan 2020 decision upheld. 2021 X turns 18 August 2021 Orders made by consent for discharge of Nov 2019 and for re-hearing June 2022 Matter listed for final hearing commencing 31 Oct 2022. August 2022 Order pursuant to s 102NA that husband is prohibited from cross-examining the wife personally September 2022 Husband’s application to adjourn final hearing dismissed 2021 The J Corporation approved the husband’s application for invalidity retirement 31 October 2022 Final hearing commenced
ORDERS SOUGHT
The husband’s position
In his affidavit, the husband seeks as a “bare minimum” to obtain the Suburb B property unencumbered and to retain his current superannuation entitlements. On the second day of the hearing, the husband tendered a Minute of Orders (Exhibit R3) and on the third and last day of hearing the husband tendered his final minute (Exhibit R4) which sought, without specifying any cash adjustment, that:
(a)There be a division of the property as to 80 / 20 per cent in favour of the husband;
(b)The wife obtain the Suburb F property;
(c)The husband obtain the Suburb B and the Suburb D properties;
(d)Any capital gains tax liability be shared;
(e)The parties each retain their own superannuation entitlements.
The husband’s closing submissions were consistent with the above. Though not enunciated, inherent in the orders sought by the husband is to adopt a one pool approach incorporating non‑superannuation and superannuation entitlements.
The wife’s position
In her Case Outline Document filed the day before the hearing, the wife contended that there be an overall division of property as to 56 / 44 per cent in her favour and sought orders to the effect that:
(a)The husband pay to her $524,435;
(b)The wife obtain the Suburb D and Suburb F properties;
(c)The husband retain the Suburb B property;
(d)There be a splitting order as to the husband’s Super Fund H entitlements using a base amount of $227,606.
(e)There be splitting orders as to 56 per cent of the husband’s other superannuation entitlements.
On the first day of the hearing, the wife tendered a Minute of Orders which sought:
(a)There be a division of the property as to 65 / 35 per cent in favour of the wife;
(b)The wife obtain the Suburb D and Suburb F properties;
(c)The husband retain the Suburb B property;
(d)The husband is to pay to the wife such amount as to effect the 65 / 35 division in cash;
(e)If the husband defaults, there be splitting order as to the husband’s Super Fund H entitlements using an equivalent base amount;
(f)The parties otherwise retain all of their interests in their superannuation entitlements.
Inherent in the orders sought and confirmed by counsel for the wife at hearing, the wife pursues a one pool approach incorporating non-superannuation and superannuation entitlements.
ISSUES
The issues for determination are:
(a)Whether or not to include the addbacks contended for by the wife in the otherwise agreed final balance sheet;
(b)Assessment of contributions including consideration of family violence;
(c)Assessment of section 75(2) factors;
(d)How to account for potential capital gains tax implications consequential to final orders;
(e)The treatment of the husband’s interests in Super Fund H which is in the payment phase;
(f)Crafting of orders to retain a just and equitable result whilst finally determining the financial relationship between the parties.
THE HEARING
There is a difficult and tortuous history to these proceedings which is not necessary to disentangle beyond what has been included in the chronology above. I acknowledge that it has been racked with issues, particularly about non-compliance with obligations to make full and frank disclosure of financial circumstances and non-compliance with procedural orders.
The matter came before me for final hearing over three days commencing on 31 October 2022. Despite final orders having previously been made, those orders were subsequently discharged and I am satisfied that the matter is still properly before the court having been duly commenced by the wife by Initiating Application in November 2013.
There was a discussion as to who in fact was the applicant as technically the matter also came before me by way of the Application in a Case filed by the husband on 20 May 2021 in which he sought Orders that the final Orders made on 18 November 2019 be stayed.
The husband was anxious not to be considered as the applicant. I understood his position was that he did not want to be seen by the Court as the agitator and the person responsible for the proceedings. I expressly state that in any assessment of the evidence and at arriving at the outcome, no different regard has been had as to which of the parties is the applicant or the respondent.
The parties have been variously represented at different times over many years. The wife had been representing herself since August 2022 and the husband since June 2022. At final hearing, both parties were represented by virtue of the family violence scheme which is responsive to section 102NA of the Act. As is often the case with representation under this scheme, counsel for the parties are not as familiar with the brief compared to long standing, privately engaged counsel and they are in the unenviable position of having to do their best with the cards that they are dealt with. That is, the material already filed by their client.
I have read all of the evidence in this matter within which there is great deal of white noise. It is not necessary to refer to every matter raised by the parties in these proceedings in making determinations. If I have not referred to a particular fact or matter it does not follow that I have not had regard to it. Likewise, where I have referred to a particular fact or matter, it does not follow that I have had regard to that fact or matter only in reasoning a finding.
Regarding the husband’s approach generally
Taking into account that the husband prepared all of his own material for hearing, the consistent tone and tenor of his narrative and that this matter has been before the court for over nine years, there is utility in answering what I understand to be some of the husband’s primary contentions. Hopefully, this will have the effect of ensuring for the husband (and the wife for that matter) that his voice has been heard and how some of his most impassioned arguments have been dealt with.
I have no doubt that the father aspired to achieve what he perceived as a happy, loving and respectful family life including financial security. That has not eventuated and the father is bitterly disappointed. He has been unable to come to terms with the reality of the situation and to understand how and why his ideals are not shared by the wife and the Court. From the tone of all of his evidence, his targets of blame are firstly the wife and, secondly, the system that has provided the wife with an ability to not have had to yield by now. In the meantime, the status quo of living in the Suburb B property and receiving his pension suits himself such that a resolution of the proceedings is not necessarily in his interests.
In his affidavit and case outline, the husband has prepared an extensive series of tables that painstakingly itemise and detail a voluminous number of events in the parties’ lives. He then attributes a percentage contribution, positive or negative as the case may be, to each item upon which he then makes sub-total and grand total calculations of contributions. Firstly, such an approach is inconsistent with the holistic approach to contributions that I am required by law to take. Secondly, many of the items that the husband seeks to rely upon are merely his own opinions and commentary and do not fall for consideration pursuant to section 79 of the Act as interpreted by the authorities. Instead, they go to the husband’s narrative that:
(a)He has done all that could be expected and more of a husband and a father and is without fault;
(b)The wife has unreasonably shunned him, taken advantage of him, made false allegations against him and subsequently alienated him from his daughter;
(c)The wife ought to be penalised and he ought to be rewarded for behaviour, attitudes and conduct during the relationship, post separation and during the course of these proceedings.
Regarding the wife’s approach generally and family violence
The wife’s evidence seeks to denigrate and blame the husband at every opportunity. She devotes a large proportion of her trial affidavit to complaint evidence of psychological, physical and financial abuse. There are significant gaps and inconsistencies in the wife’s snap shot type descriptions of her many complaints. They often lack the requisite context and are transparently one sided.
For example:
(a)The wife deposes that in September 2003 she did not agree to purchase the Suburb D property but the husband forced her to sign the documents. No particulars are provided.
(b)The wife describes an ongoing period of abuse and threats leading up to an interim family violence order made in 2004. The wife deposes that pressure was building because there was no money to buy groceries and nappies. She used to prepare both of their tax returns but became too occupied with house chores and the baby to do the husband’s tax return despite them both knowing that he was due to receive a significant return on account of losses incurred from an investment property. She deposed the husband would rather watch TV than do his tax return and instead repeatedly and forcibly attempted to have the wife sign documents to instead borrow money.
(c)The wife deposes that she did not know until after separation in 2012 that the documents she and the husband co-signed and witnessed by a shop-assistant in 2010 were two credit contracts when the husband had told her that it was “rearrangement for the loan to make it easier to manage.”
(d)The wife complains about the husband borrowing money to fund overseas trips for himself and his parents as though that is not an expense of the marriage and is something that he alone should somehow have paid for.
The husband also cites voluminous examples of irrelevant behaviour to which he seeks a negative inference be drawn against the wife, or perhaps in defence of her allegations against him. For example, he describes how in 2001 the wife took offense and challenged him about him serving prawns to guests before serving them to her. The husband goes on to depose to adverse and debilitating impacts upon his physical and mental health as a consequence of the wife’s ongoing false allegations and persecution of him.
I have no problem accepting that the relationship between the parties was dysfunctional and untrustworthy. I have no problem finding that the relationship grew worse to become volatile and devious. I comfortably find that both parties made each other’s lives unpleasant and more difficult during their relationship. However, I do not find that either party has demonstrated a case attracting the principles in Kennon & Kennon (1997) FLC 92-757 whereby a trial judge is entitled to take family violence into account when assessing the parties’ contributions pursuant to section 79 of the Family Law Act 1975 where there is a course of violent conduct by one party towards the other which occurs during the marriage and which is demonstrated to have either:
(a)had a significant adverse impact on that party’s contributions to the marriage or
(b)to have made that party’s contributions significantly more arduous that they ought to have been.
LEGAL PRINCIPLES
Section 79 of the Family Law Act 1975 (‘the Act’) relevantly sets out the following:
(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)an order for a settlement of property in substitution for any interest in the property; and
(c)an order requiring:
(i) either or both of the parties to the marriage; or
…
(ii)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.
In exercising that discretion, the court is required to take into account the matters set out in s 79(4) of the Act, as follows:
(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; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), at [35] confirmed that before an order is made adjusting the parties’ property the court is required to make a determination that it is just and equitable to do so. That determination is to be made, however, not as a discrete or preliminary issue but requires the Court to consider the matters set out in section 79(4) of the Act.
In Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143 (“Hickey”), the Full Court held at [39] that, in considering the matters set out in section 79(4) of the Act, the preferred approach was to adhere to the following four steps:
(a)Identify and determine the value of the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);
(b)Identify and assess each of the parties financial and other contributions up until the date of the hearing (this can include the financial contributions made before, during and after the marriage);
(c)Assess how future and other events may have a financial impact on either of the parties, such as their age and state of health and their income and property or financial resources (known as the section 75(2) factors); and
(d)Step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
The High Court noted at [35] in Stanford, section 79(2) of the Act provides that the Court shall not make an order altering the interests of the parties to the matrimonial property, “unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Accordingly, since Stanford, it has generally been the practice of the Court to determine, as an initial issue, whether it is just and equitable to make an adjustment of marital property.
Is it just and equitable to make a property adjustment?
Both parties contend that it is just and equitable for the parties’ property interests to be adjusted. I am satisfied that this should occur in circumstances where the parties relationship is at an end and they no longer have the common use of their property. The express or implicit assumptions which underpinned their relationship, including that they would be able to consensually adjust their interests in such property, are at an end. (See Stanford at [42]).
Superannuation
Since 28 December 2002, when the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth) commenced, superannuation has been treated as property under the Family Law Act 1975 (Cth). Superannuation entitlements can be dealt with directly by the court as set out in Pt VIIIB of the Family Law Act which is headed “Superannuation Interests”.
Section 90XS provides that orders under section 79 may include orders in relation to superannuation interests and notes that although the orders are made in accordance with Pt VIIIB, they will be made under either section 79 or 90SM. Therefore they will be generally subject to all the same provisions as other orders made under that section.
Section 90XT allows the court to make orders in relation to superannuation interests. Before making a superannuation splitting order a determination of value must be made under s 90XT(2) of the Act. The court can also make such orders as it thinks necessary for the enforcement of a superannuation splitting order. These orders bind third party trustees provided they have been given procedural fairness.
In accordance with the majority of the Full Court’s judgment in C & C (2005) FLC 93-220, consideration must be had to the overall justice and equity of any proposed (superannuation splitting) order, including ``the real nature'' of the superannuation interests (that is, whether the superannuation represents, for example, a present sum or future periodic sum or a future lump sum), and an assessment of the contributions of the parties to their superannuation entitlements.
Superannuation and non-superannuation do not need to be divided in the same percentages. The Full Court of the Family Court confirmed in D & D (2006) FLC 93-256, that the mix of superannuation and non-superannuation was discretionary.
THE BALANCE SHEET
The assets and liabilities
At trial the parties were agreed as to the identification and value of the assets, liabilities and the superannuation components of the balance sheet. (Exhibit C1). The only assets and liabilities identified by the parties and sought to be included are the three real properties and the respective loans secured by mortgage. I am content to proceed on that basis particularly in circumstances where the parties have been separated for 10 years. The wife’s financial statement discloses only nominal cash and personal property. The husband did not file a financial statement.
There is no evidence why, but title to the three real properties is held as:
(a)Suburb D property – Joint tenants or tenants in common as to equal shares;
(b)Suburb F property – Sole title to the husband;
(c)Suburb B property – Tenants in common as to 90% to the husband and 10% to the wife.
The joint balance sheet appears to be relatively free of dispute, save for addbacks contended for by the wife. There are however complications arising with respect to potential capital gains tax liabilities and the husband’s interests in Super Fund H.
Addbacks
The wife seeks to include in the balance sheet three notional asset items. The description of them and a summary of the evidence in relation to them is as follows.
The wife seeks to include an amount of $119,977 ($56,000 plus $63,977) being proceeds of sale of the Suburb L investment property in mid-2007. The settlement statement as to these amounts being net proceeds was in evidence. Under cross-examination, the husband said to the best of his recollection it was transferred to the Suburb D loan (in his sole name) but he would like to check the statement. The closest in time statement that was disclosed by him was from mid-2007. The relevant statement was called for by counsel for the wife. It was not able to be produced by the husband.
The wife seeks to include an amount of $60,000 (3 x $20,000) being withdrawals from a joint bank account to a different bank’s account in the husband’s sole name on 10, 11 and 12 January 2006. The husband conceded that he performed the transfers and invested that amount through a broker called P Financial Services in trading US stocks and US options. He said that it was done during the period of separation between 2004 and 2008 as justification for not informing the wife. He reckoned that whatever profits or losses were made as a result of his investments were to be shared. He was asked if he had any documentation to corroborate the loss of the $60,000. He said that he had it and he had disclosed it. Counsel for the wife said that she didn’t have anything. Counsel for the husband could not produce anything. Counsel for the wife called for said documents. They were not able to be produced by the husband.
The wife seeks to include an amount of $100,000 being the amount obtained by the husband from a NAB credit facility in mid-2005. The husband conceded that he invested that amount through O Bank. Again, he said that it was done during the period of separation between 2004 and 2008 as justification for not informing the wife. Again, he reckoned that whatever profits or losses were made as a result of his investments were to be shared. There is no corroborating documents in evidence.
The only evidence in chief from the husband with respect to the investment losses is at paragraph 85 of his trial affidavit, tucked away under the unrelated heading ‘second trip to US.’ Writing in the third person, he deposes “The Husband took efforts to trade shares, during the Global Financial Crisis, the Husband lost about $150K despite his good intention but turned into bad result.”
Whether to add back an amount is always a discretionary decision. The courts have emphasised time and time again that add-backs are the exception and not the rule. In AJO & GRO [2005] FamCA 195 the Full Court of the Family Court identified three types of add-backs that are commonly encountered. Only one of those categories is applicable to this case being in the circumstances outlined by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092 at 76,644, including:
(a)Where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; or
(b)Where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
I have also had regard to the two-step process set out by the full court in Weir and Weir (1993) FLC 92-338 to “avoid providing a charter for fraud in proceedings of this nature.” Once it is established that there has been “deliberate non-disclosure,” then “the Court should not be unduly cautious about making findings in favour of the innocent party.”
In relation to the addbacks contended for by the wife and opposed by the husband, I find as follows:
(a)The husband admits to unilaterally dealing with matrimonial assets of $199,977, $60,000 and $100,000 in 2007, 2006 and 2005 respectively.
(b)The wife has been unable to establish what in fact happened to those funds, by subpoena or otherwise, despite being aware of them for at least several years.
(c)The husband admits to ‘losing’ about $150,000 of invested money in or about 2008.
(d)I have had regard to the circumstances that transactions of this nature and age would ordinarily have great difficulty being recognised as notional assets that ought to be added back to the balance sheet. However, the nature and antiquity of these transactions relative to both the date of trial and also the date of separation is offset by the evidence in this case that at times the parties operated independently of each other and the wife was not involved in or aware of these transactions until after final separation.
(e)I have had regard to the circumstances that losses attributable to investment of matrimonial property during the relationship would ordinarily have great difficulty being recognised as notional assets that ought to be added back to the balance sheet. However, after being satisfied that the husband caused those specific amounts to be removed from the pool, the husband has failed to satisfy me on the balance of probabilities as to what happened to those amounts.
(f)I find it incredulous that the husband was unable to produce any documentation corroborating his evidence in circumstances where the husband has demonstrated in other areas of his evidence an understanding and ability to obtain and disclose relevant evidence despite its antiquity, and, the nature of the transactions he describes would have yielded abundant documentation.
(g)I am satisfied that the husband’s non-disclosure is deliberate and I should not be unduly cautious about making findings in favour of the wife on this issue.
I decline to permit an addback of the full amount of $359,977. Despite being satisfied by the evidence that this was the amount by which the matrimonial assets were reduced by, I am not satisfied by the evidence that this whole amount ought to now be visited upon the husband alone. I do however exercise my discretion to permit an addback of $150,000 attributable to the husband. That is the amount the husband admits to ‘losing’ and the amount that justly accounts for the reduction of the matrimonial assets in the circumstances of this case.
I consider that dealing with the wife’s contentions in relation to addbacks could alternatively have been dealt with pursuant to s 75(2)(o) of the Act as a fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account. To the extent of choosing to deal with them as a question of addbacks compared to under s 75(2)(o), the factors leaning towards addbacks include that it was real money that was taken by the husband and remains in issue, the parties sought to deal with the issue at trial as a question of addbacks and in my view is able to better demonstrate the doing of justice as between the parties. If I was wrong as to those facts and circumstance being properly dealt with as addbacks, I do not consider that the alternative pathway pursuant to s 75(2)(o) would have made any difference to the overall effect.
Capital Gains Tax
Neither party seeks Orders for the sale of any real properties. Both parties seek orders that alter the title to the real properties. The husband puts any Capital Gains Tax (“CGT”) liability in issue by seeking an order that accounts for it.
In Rosati v Rosati (1998) FLC 92-804 the Full Court of the Family Court set out the proper approach to be adopted by a court in proceedings under s 79 of the Act in relation to the effect of potential CGT, which would be payable upon the sale of an asset. One of the general principles [at 6.36] is:
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale in determining the value of that asset for the purpose of the proceedings.
On the evidence, all three properties have increased in value since being obtained and all three properties have been rented at different times. On that basis each of the three properties are likely to carry a CGT liability. Neither party sought or submitted that CGT be taken into account in the value of the assets or that CGT should be included as a contingent liability on the balance sheet.
The husband seeks an order that any CGT liability arising be shared. The order he seeks does not include any mechanism for how CGT may be determined or how the sharing of any liability is to occur. No evidence has been adduced as to any liability for CGT in relation to any of the properties. Further, there is no evidence as to the status of the parties’ respective personal income tax returns.
Superannuation
The values of the parties respective superannuation entitlements were agreed (Exhibit C1). Nevertheless, there remains complications as to treatment of them.
In effect, the husband wants an Order that there be no splitting order and each party retains their own superannuation interests. The wife has always sought some manner of splitting order. Her last contention was that the capitalised value of the husband’s interest in Super Fund H be used effectively as a cash balance from which a sum certain can be drawn in order to balance a percentage division of the combined non-superannuation and superannuation pool. There is no evidence that the wife has accorded procedural fairness to the trustee in relation to the order she proposes pursuant to s 90XZD of the Act.
The husband’s interests in Super Fund H
In Bulow & Bulow (2019) FLC 93-885 the Full Court of the Family Court determined that it is necessary for a trial judge to consider the nature, form and characteristics of a party’s superannuation interest, where it is a defined benefit interest, when making a splitting order in favour of the other party whose superannuation is an accumulation fund.
With respect to the husband’s interests in Super Fund H, Exhibit C3 is an affidavit of Mr Q which annexes a report which “gives the value of superannuation in accordance with the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001.” Prima facie, it provides that the husband’s interests are in Super Fund H and are in the payment phase. The “Type” is invalidity. The valuation date is late 2022. The Annual Pension Payment is $65,653.90 and the Family Law Value is $990,120.99.
Neither party put in issue the qualifications or methodology used by Mr Q. Neither party sought to interrogate the report. Mr Q was not called by either party to further explain or describe the nature, form and characteristics of the husband’s superannuation interest.
I proceed on the basis that the nature, form and characteristics of the husband’s Super Fund H superannuation interest is that it is not available as a capitalised sum and it is an annual pension of $65,653.90 that is proportionally splittable.
Being a non-commutable pension, it is to be treated as an income stream and not as a capitalised asset on the balance sheet. Preston & Preston(No 2) [2022] FedCFamC2F 303.
Other superannuation interests
The wife deposed that the husband set up the SMSF (Leong Family Super) sometime in 2011. She says he rolled $51,432.98 into it at commencement but the husband has not disclosed its whereabouts or value since. The trust deed is not in evidence.
The wife deposed that “He also has [Super Fund R] which I only became aware of from the subpoena material. [Mr Leong] has not provided me with any information in relation to this and I am unaware as to its value.”
The husband adduced no evidence as to the details of either of these funds.
I proceed on the basis that the values are as agreed between the parties pursuant to Exhibit C1. This was the only evidence of valuation.
Final balance sheet
Accordingly, I find the final balance sheet to be:
Ownership Value Assets Suburb F property H 800,000 Suburb D property J 580,000 Suburb B property 90H/10W 790,000 Total Assets 2,170,000 Addbacks H 150,000 Liabilities Suburb F mortgage H 298,980 Suburb D mortgage J 242,677 Suburb B mortgage 90H/10W 368,043 Total Liabilities 909,700 Net Non-Superannuation 1,410,300 Superannuation Super Fund H H - Super Fund R H 42,550 Mr Leong Family SMSF H 43,021 Super Fund S W 122,904 Total Superannuation 208,475 Combined Total 1,618,775 CONTRIBUTIONS
The Court is required to make an assessment of the nature and quality of the totality of the parties’ contributions throughout the entirety of their relationship, together with their contributions in the period subsequent to their separation. Dickons & Dickons [2012] FamCAFC 154. See also Dovgan & Dovgan [2021] FamCA 306 at [347], which restates the need to holistically assess contributions following the case of Dickons, and that ‘all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder’.
Initial contributions
The parties’ initial contributions were nominal. The husband’s uncontested evidence is that he paid $10,000 for the wedding. When the wife moved to Australia in 1999 she brought $12,000 in savings.
Contributions during the relationship
The parties were in a relationship for nearly 14 years from early 1999 to November 2012.
Both parties evidence is difficult to reconcile as both parties maintain an ongoing misconception about contributions. They both present narratives that describe their respective contributions as measured for or against each other By way of metaphor, like two runners competing on the same track in their separate lanes.
For example, the husband deposes that he contributed at least $10,000 to the wife’s living expenses, textbooks and student fees whilst she studied at the commencement of their marriage. On the other hand, the wife deposes that during the period 2008 to 2010 she deposited “an additional $13,391.00 into our joint saving account which came from the Family Tax benefit B paid under my sole name.”
The wife complains about financial decisions made by the husband throughout the marriage and as far back as 2005. She says that she was opposed to some of them and that she was forced or effectively duped into signing documents. She presented no evidence of any occasion whereby the parties made a decision together or where the husband made a favourable decision. This makes it difficult to assess the veracity of her complaints made with the benefit of hindsight.
There seems no reason why title to the real properties is held in the various forms rather than the usual joint names. My overall impression is that both parties want to disassociate themselves from any financial decision until it is possible to determine its outcome, then blame the other for poor outcomes or seek sole attribution for a positive outcome.
Throughout the relationship at different times the wife studied, worked part time, worked full time and/or attended to home duties particularly in relation to the care of X. Throughout the relationship at different times the husband worked fulltime as a contractor or as an employee and/or attended to home duties. Both parties report operating bank accounts in their own name and receiving income and meeting expenses. It seems to be common ground that the husband received all of the rental income from the properties during the marriage over the years into ‘his’ account and it seems to be that it has at least generally been applied to the respective mortgages. Both parties report operating joint accounts. Both parties complain about unequal contributions towards family expenses from their ‘own’ accounts.
Both parties seek assessments in their favour to the effect that they worked harder, endured more hardship and contributed more than the other. The evidence does not support either contention. I am not satisfied that either party has demonstrated holistically that their contributions during the relationship were sufficiently disparate as to warrant an assessment in their favour, except for the contributions attributable to the wife by way of the gifts from her parents.
The wife’s parents sent a total of $106,212 across six transactions from the U Bank between 1999 and February 2012.
Post separation contributions
It has been 10 years since the parties separated on a final basis in November 2012.
The wife commenced personal leave in mid-2020. At trial she deposed that her accrued personal leave ran out soon after and she has been on unpaid leave since then.
X was nine years old at separation. She is now 20 years old. The wife has had fulltime care, control and responsibility for X since separation. The husband has paid child support late, under objection and only by virtue of assessment and deduction from his pay.
The wife deposes that she has relied upon her parents to support herself and X post separation. The wife’s parents sent to herself or to X a total of $361,932 (which includes legal fees) across nine transactions from the U Bank between March 2016 and March 2022. She deposes this has come at great cost to her parents whose resources have now been exhausted.
It seems to be common ground that post separation the husband has continued to receive all of the rental income from the properties post separation. The husband claims that he has solely contributed just over $600,000 in expenses to the preservation of the properties. He adduced only his self-authored tables as evidence. That figure includes rental income but not the benefit he received from occupying a property. The wife deposed that she received no rental income from any of the properties but is silent as to any contributions to maintenance and preservation expenses. Inadequate disclosure from the husband means that none of the above can be verified. For example, the husband has self-managed the Suburb D property since moving out in early 2014 and failed to disclose anything about that.
By virtue of remaining in the Suburb B property and gainfully employed until moving to receipt of a pension, the husband has managed to retain a standard of living comparable to pre separation. The wife’s standard of living has been reliant upon the contributions made on her behalf by her parents.
Akin to their arguments with respect to contributions during the marriage, both parties seek assessments in their favour because they say that their respective forms of post separation contributions were more than the others. The wife by way of her sole care of X, her lessor earnings, higher living expenses including rent and receiving no benefit from the investment properties. The husband by way of his willingness and offers to share the care of X, his higher earnings and this sole maintenance and preservation of the properties.
The evidence does not support either contention. I am not satisfied that either party has demonstrated holistically that their contributions during the relationship were sufficiently disparate as to warrant an assessment in their favour, except for the contributions attributable to the wife by way of the gifts from her parents.
Of the $361,932 transferred by the wife’s parents to the wife or X post separation:
(a)$129,946 was transferred to X after she turned 18 and I disregard this amount.
(b)The wife deposes that she has spent “around $120K in legal fees” and I disregard that amount.
As to the balance of $111,986, I accept the wife’s evidence that it was expended on the welfare of the wife and X. The wife deposed and maintained under cross-examination that she continues to afford groceries only by using her father’s credit card.
Overall assessment of contributions
The financial and non-financial contributions of the parties are equal, except for the contributions attributable to the wife by way of the gifts from her parents.
Consistent with Dickons and Dovgan (per paragraph 64 above) that ‘all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder,’ I do not separate the contributions attributable to the wife and her parents and weigh them against the remainder. Assessed holistically, the contributions to the property of the parties ought to be assessed in favour of the wife to a modest amount.
RELEVANT SECTION 75(2) FACTORS PURSUANT TO SECTION 79(E)
Both parties are presently 58 years old.
The wife deposed that she has been unable to work since mid-2022 due to the many years of being subjected to domestic violence and dealing with the court proceedings, particularly after she thought the proceedings were finalised in November 2019. In addition to her “mental illness associated with all past and ongoing traumas by [Mr Leong’s] abuse” she deposes to physical problems such as a medical condition meaning she has trouble walking 200 meters, standing and exercising.
She has had a series of employer medical reviews and what she anticipated to be a final review in late 2022 where after her position would be terminated as there remained no improvement in her condition or prospects of being able to return to her positon. It seems her most favourable prospects of appropriate gainful employment is two days per week.
It was an agreed fact (Exhibit C2) that in late 2021, the J Corporation approved the husband’s application for invalidity retirement. He deposes that “because of years of traumatisations [sic] he suffered from the damages his Wife has done to him, as a result he has lost his job, there is no prospect for similar employment especially after suffering this brutal unjust charge and conviction.”
Both parties have limited to no means for appropriate gainful employment into the future. X remains living with the mother but is now an adult and not a person to whom the mother is financially responsible for.
By virtue of remaining in the Suburb B property and gainfully employed until moving to receipt of a pension, the husband has managed to retain a standard of living comparable to pre‑separation. The wife’s standard of living has been reliant upon the generosity of her parents which has been exhausted. The standard of living for both parties is now limited to what the property of the marriage can provide.
The husband alleges that the wife stands to inherit about $3.3M from her elderly parents. The wife deposes that her parents’ resources have been exhausted. There is no evidence to corroborate either claim. The evidence does not support regarding the wife’s parents or any potential inheritance as a financial resource of the wife and I do not do so.
Having regard to the matters referred to in subsection 75(2), so far as they are relevant, the needs of the parties are equivalent. There need not be any adjustment on account of the section 75(2) factors except for the husband’s interests in the payment phase of Super Fund H such that the income stream derived from it be equalised.
JUSTICE & EQUITY
Consistent with the above findings as to contributions and section 75(2) factors, the property of the parties to the marriage or either of them, ought to be equalised except for the contributions attributable to the wife by way of the gifts from her parents which warrants a modest adjustment in her favour.
Having identified the asset pool, assessed each party’s contributions, and assessed how future events may have a financial impact on either of the parties, pursuant to the fourth step in Hickey it is necessary to “step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.”
A one-pool approach in this case is appropriate and useful as the amount of the superannuation interests has been clearly identified and it is likely to become available to the parties soon after the property settlement.
On the balance sheet that I have determined, an equalisation of the combined pool of $1,618,775 would yield $809,387 each and equalisation of the income stream from Super Fund H.
It is not necessary or useful for comparative purposes to attempt to express the effect of the percentage divisions sought by the parties in dollar terms because they both sought to incorrectly include the family law value of the Super Fund H of $990,120.99 as a capitalised asset on the balance sheet, and neither of them were able to account for the inclusion of the addback as determined previously in these reasons.
It is suffice to say that the husband’s contention for a division of 80 /20 per cent in his favour plus retention of all of his Super Fund H interests is well beyond the realms of just and equitable. The wife’s proposed division of 65 / 35 including the Super Fund H interests is closer, but is still not just and equitable.
I am satisfied that an equalisation of the pool and a modest adjustment in the wife’s favour is a just and equitable result in monetary terms. However, the manner in which the parties’ interests should be altered in order to achieve a just and equitable result in practical terms presents as a significant difficulty in this case.
Procedural fairness has not been accorded to the trustee of any of the superannuation funds, potential capital gains tax liabilities are at large, the husband is the sole repository of undisclosed information about tenancies of the properties, both parties want to obtain real property but there is no evidence of either party’s ability to refinance the respective home loans secured by mortgage or to pay a cash adjustment sum. Rather, the evidence is that it is unlikely that either party will be able to obtain finance.
I must also have regard to the effect of any order upon the earning capacity of either party pursuant to s 79(4)(d). The parties earning capacity with respect to the income stream derived from the Super Fund H being in the payment phase is known. There is evidence that the Suburb F property and the Suburb D property earn rental income. The wife deposes the husband self manages the tenancies and also has a boarder in the Suburb B property. The husband has not adduced into evidence any of the tenancy or occupation agreements or arrangements.
I have no confidence that bringing the parties back in an attempt to fill the evidentiary voids would be worthwhile. On the history of these proceedings and my impression of the parties’ attitudes at hearing, I regard it more likely that such a course would create more difficulty, uncertainty and delay. Both parties are effectively self-represented and have been in high conflict for 10 years. There is no utility in any order that requires any measure of co-operation, trust or agreement as between the parties.
A wider array of potential orders, for example the appointment of a trustee, could be useful however it is well established that I am limited by natural justice and procedural fairness to the types of orders contemplated at hearing.
Against all of that, I also have regard to the Court’s duty pursuant to s 81 of the Act to, as far as practicable, make such orders as will finally determine the financial relationships between the parties and avoid further proceedings between them.
Since Norbis v Norbis [1986] 10 FamLR 819, it is well settled that the Court can adopt either a global approach or an asset by asset approach to property proceedings under s 79 of the Act. Whilst a global approach has been taken to the assessment of contributions and section 75(2) factors, it is necessary to adopt an asset by asset approach in order to achieve a just and equitable result.
THE ORDERS
The real properties
Both parties seek for the Husband to obtain sole title and responsibility for the Suburb B property and for the wife to obtain sole title and responsibility for the Suburb F property. Orders 1(a) and 2(a) provide for this to occur.
Both parties seek to obtain sole title and responsibility for the Suburb D property. Order 2(b) provides for the wife to obtain the Suburb D property.
Orders 3 to 5 are consequential to the transfers of the properties and seek to provide for an orderly and accountable process.
Order 6 requires the wife to pay a cash adjustment to the husband of $133,193.
The financial effect of Orders 7-10 and of the inclusion of the addback as determined previously in these reasons is as follows:
Husband Wife Assets Suburb F property 800,000 Suburb D property 580,000 Suburb B property 790,000 Total Assets 790,000 1,380,000 Addbacks 150,000 Liabilities Suburb F mortgage 298,980 Suburb D mortgage 242,677 Suburb B mortgage 368,043 Total Liabilities 368,043 541,657 Cash adjustment 133,193 -133,193 Net Non-Superannuation 705,150 705,150 50% 50%
The practical effect of the orders is that the husband is to obtain the Suburb B property and the wife is to obtain the Suburb F and Suburb D properties and they are to each procure the release of the other from the mortgage over their respective properties. In the event either of them is unable to do so, they will need to sell a property. In the event the wife is unable to make or cause to be made the cash adjustment she will need to sell a property.
In this case, I have determined a lump sum payment based upon the application of a percentage adjustment to agreed values. In the event that at least one of the properties are to be sold, I consider it certain that the lump sum payment would not reflect the same percentage adjustment with the effect of benefiting one of the parties to the detriment of the other.
I note the recent decision of the Appellate Jurisdiction of Division 1 of the Federal Circuit and Family Court of Australia in Mullis & Quimby [2023] FedCFamC1A 16 [at 8] which recognised the principle that the preferred course to be adopted to achieve a just and equitable division of the parties’ property was to make orders for a percentage division from the net proceeds of sale of the subject property, rather than a lump sum payment as determined by the primary judge. Particularly in circumstances where it could reasonably be anticipated that there would likely be a substantial delay between the conclusion of evidence, including as to valuation, and delivery of judgment. In Mullis & Quimby, the delay was one year and four months.
Delay is not really the issue here. Although it is acknowledged that ideally the judgment would have been able to be delivered in less than nearly six months, even if judgment were delivered ex-tempore and a property was consequently sold immediately thereafter, I would still consider it certain that the property would not yield the exact sum as the value agreed for the purposes of these proceedings. Nevertheless, where neither party’s position was to sell a property and in the circumstances of this case (per paragraph 103 above), Orders 1-15 are considered to be the best course to achieve a just and equitable division of the parties’ non-superannuation property components.
In the event either party is unable to discharge the loans secured by mortgage over the title to their respective properties, or the wife is unable to make the payment, Orders 7 and 9 provide for the sale of properties and Orders 25-27 provide for the terms of sale. It is not necessary for the parties to agree on the sale price or any other aspect of the sale as the vendor of whichever property is to be sold is solely interested in maximising the net sale proceeds within the timeframes permitted by the orders.
Capital Gains Tax
On the husband’s evidence, the mother’s parents are capable of funding the cash adjustment and the payout of any property mortgages. On the wife’s evidence, the husband has taken and not disclosed money capable of funding the payout of any property mortgages. On the balance of probabilities, I have found that the evidence does not support either of these propositions. If they are nevertheless true, then it is less likely that the sale of any property will occur in the near future.
However, on the evidence I am satisfied that a sale of at least one of the properties is inevitable or will probably occur in the near future. It follows that a CGT liability will arise upon the sale of any of the properties. It is well established that despite CGT not being calculated, it cannot be ignored if it is foreseeable that CGT will be payable in the short to midterm. This places the court in a problematic position whereby CGT needs to be accounted for with no evidence or even proposals from the parties on how to do so.
In the matter of Taffner & Taffner [2021] FamCAFC 68 [at 46], the Full Court of the Family Court determined that where the CGT could not be taken into account on any list of assets and liabilities, and hence in determining the share of the net property each party should receive, that a formulaic order which would ensure that the payment of such a liability would not disturb the ratio of the division otherwise found to be just and equitable.
Orders 11 and 12 are therefore made so as to preserve the division of property found to be just and equitable. The period of until 31 December 2025 in Order 13 provides for any sale within the next two financial years being 2023/24 and 2024/25 plus six months for any assessment to occur. In the event neither party brings CGT to account in that period then any liability for capital gains tax thereafter should lie where it falls per Order 14.
Order 15 is to ensure each party has the information and documents that are required for the assessment of any CGT liability.
Super Fund H
Orders 16-17 seek to provide for the equalisation of the husband’s interest in the Super Fund H.
There is no evidence that procedural fairness has been accorded to the trustee which is a mandatory pre-condition to the making of such orders pursuant to s 90XZD of the Act. Orders 18-21 require the wife to afford procedural fairness to the trustee in relation to the making of the orders.
Other Superannuation interests
The financial effect of not making any orders with respect to the parties’ other superannuation entitlements is as follows:
Superannuation Super Fund R 42,550 Leong Family SMSF 43,021 Super Fund S 122,904 Total Superannuation 85,571 122,904 41% 59%
The financial effect of the combined total is therefore:
Net Non-Superannuation 705,150 705,150 Total Superannuation 85,571 122,904 Combined Total 790,721 828,054 49% 51%
The 9 per cent differential to superannuation entitlements in the wife’s favour represents a 1 per cent differential to the combined total. I am satisfied that modest differential is sufficient to meet the modest adjustment required to recognised the greater contributions attributable to the wife as determined previously in these reasons.
I certify that the preceding one hundred and twenty-six (126) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansfield. Associate:
Dated: 27 April 2023
0
6
0