Wylie and Russo
[2015] FCCA 3257
•11 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WYLIE & RUSSO | [2015] FCCA 3257 |
| Catchwords: FAMILY LAW – De facto property division – date of separation – defined benefit superannuation scheme in payment phase – no splitting order sought – treatment of superannuation benefit. |
| Legislation: Family Law Act 1975, ss.4, 4AA, 75, 79, 90SF & 90SM. |
| Moby v Schulter [2010] FamCA 748 Jonah v White [2011] FamCA 221 Jacob v Lawrence [2013] FamCA 188 Sinclair v Whittaker [2013] FamCAFC 129 Cadman v Hallett (2014) 52 Fam LR 149 Aitken v Deakin [2010] FMCAfam 35 Stanford (2012) FLC 93-518 Watson v Ling (2013) 49 Fam LR 303 Bevan v Bevan (2013) 279 FLR 1 Vass v Vass [2015] FamCAFC 51 Semperton v Semperton (2012) 47 Fam LR 626 B v B [2005] FamCA 1034 PJM v STM (2005) FLC 93-242 Hayton v Bendle (2010) 43 Fam LR 602 Craig v Rowlands (2013) 49 Fam LR 136 T v T (2006) 35 Fam LR 181 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 |
| Applicant: | MR WYLIE |
| Respondent: | MS RUSSO |
| File Number: | ADC 1715 of 2014 |
| Judgment of: | Judge Cole |
| Hearing dates: | 14 & 15 July 2015 and 13 August 2015 |
| Date of Last Submission: | 13 August 2015 |
| Delivered at: | Adelaide |
| Delivered on: | 11 December 2015 |
REPRESENTATION
| Solicitor for the Applicant: | Ms D Morosini |
| Solicitors for the Applicant: | Di Morosini & Co |
| Counsel for the Respondent: | Mr J Bowler |
| Solicitors for the Respondent: | Lee & Partners |
ORDERS
That the applicant pay to the respondent the sum of ONE HUNDRED AND THREE THOUSAND DOLLARS ($103,000.00) within thirty (30) days of the date of this Order.
That the applicant forthwith transfer to the respondent:
(a)his interest in the property situated at Property A; and
(b)his interest in the burial plot.
That the respondent indemnify the applicant and keep him indemnified in respect of all outgoings on the said assets referred to in paragraph 2 hereof.
That any interest the applicant may have in:
(a)the property situated at Property C;
(b)the property situated at Property P;
(c)the property situated at Property T;
(d)the respondent’s savings; and
(e)the respondent’s superannuation benefit with (omitted) Super and (omitted) Super;
vest in the respondent absolutely with the respondent to indemnify the applicant and keep him indemnified in respect of all associated outgoings and liabilities thereafter.
That any interest the respondent may have in:
(a)the property situated at Property R;
(b)the Mercedes-Benz in the applicant’s possession;
(c)the applicant’s share portfolio;
(d)the applicant’s savings; and
(e)the applicant’s (omitted) superannuation benefit;
vest in the applicant absolutely with the applicant to indemnify the respondent and keep her indemnified in respect of all associated outgoings and liabilities thereafter.
That each party otherwise retain the property in their possession and indemnify the other in respect of any liabilities arising therefrom.
That the proceedings be otherwise dismissed.
That there be liberty to apply as to consequential orders.
IT IS NOTED that publication of this judgment under the pseudonym Wylie & Russo is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 1715 of 2014
| MR WYLIE |
Applicant
And
| MS RUSSO |
Respondent
REASONS FOR JUDGMENT
The Proceedings
This matter concerns the parties’ competing applications for division of the assets they accumulated during the course of their de facto relationship.
In addition, there is a somewhat vague claim by the applicant for a declaration that the relationship concluded when the applicant was posted to Perth in the course of his employment with the (employer omitted); the respondent having remained in Adelaide.
The applicant seeks orders that would transfer the property in which the respondent is currently residing to her, transfer the burial plot held by the parties to the respondent, with each party to otherwise retain their assets.
The respondent seeks orders that there be a division of both the non-superannuation and superannuation assets as to 60% to the respondent with 40% to the applicant.
To give effect to that, she seeks orders that the applicant transfers his right, title and interest in the Property A property to her and pays her a sum of $416,519.60 within 60 days.
The evidence
The applicant relies on:
a)his Initiating Application filed on 15 May 2014;
b)the affidavit of Mr J filed on 15 May 2015;
c)his trial affidavit filed on 17 June 2015;
d)his Financial Statement filed on 17 June 2015; and
e)the affidavit of Mr S filed on 17 June 2015.
The affidavit of Mr S was admitted on the basis that it was evidence in respect of the value of the fund.
The applicant gave evidence and was cross-examined.
The respondent relies on:
a)her Response filed on 30 July 2014;
b)her trial affidavit filed on 19 June 2015;
c)her Financial Statement filed on 19 June 2015; and
d)her updating affidavit filed on 3 July 2015.
The respondent gave evidence and was cross-examined.
Chronology
The applicant was born on (omitted) 1948 and will be aged 67 in December this year. The respondent was born on (omitted) 1948 and is aged 67.
The parties commenced cohabiting on or about (omitted) 1987.
There is no dispute that the parties formally separated on 26 September 2013, although the applicant would seek a declaration that the relationship concluded when he was transferred to Perth in 2000.
There are no children of the relationship. Each party has children from their prior relationships.
Common ground
The parties commenced cohabiting in about (omitted) 1987. The respondent’s children then aged 9 and 7 formed part of the household of the parties.
In 1987, the respondent was working as a (occupation omitted) and the applicant was employed as a (occupation omitted) at the (employer omitted). There is no dispute that the applicant became a member of the (employer omitted) whilst employed at the (employer omitted).
In (omitted) 1988, the applicant purchased the respondent’s husband’s interest in the Property B property. The amount paid was approximately $20,000.
The respondent was residing in the home she jointly owned with her first husband. Each party was in the process of finalising the division of assets with their first partner.
There is some controversy about the debts the respondent had at the commencement of cohabitation and the amount spent by the applicant on renovations to the property.
The respondent concedes that the applicant received a sum of $30,000 from the net proceeds of the sale of the property held with his first wife in (omitted) 1988.
In (omitted) 1992, the parties sold the Property B property receiving net proceeds of sale in the sum of approximately $80,000.
The parties then purchased as tenants in common in equal shares the property at Property K for $254,000. The house was purchased with the net proceeds of the sale of the previous property and a mortgage from the bank.
In (omitted) 1997, the applicant transferred from a (occupation omitted) to a permanent member of the (employer omitted), following his redundancy resignation from (employer omitted) in (omitted) 1996.
In (omitted) 2000, the Property K property was sold for approximately $245,000. The parties received net proceeds of $93,583 which they divided equally between them.
In (omitted) 2000, the parties moved into the (omitted) married quarters in (omitted), South Australia.
On or about this date, the respondent purchased a property at Property C for $103,500, applying her share of the proceeds of the Property K property toward the purchase price and borrowing the remainder. The applicant’s evidence is that he was unaware of this purchase until reading of it in the Court documents.
In (omitted) 2000, the applicant moved to reside at the (omitted) base in Perth. There is no dispute that he resided away at various (omitted) base camps until 2012. There is controversy however over the frequency and length of his stays in South Australia.
The respondent:
a)in (omitted) 2002 purchased property in her sole name at Property P;
b)in (omitted) 2003 purchased property in her sole name at Property T; and
c)did not inform (on the applicant’s evidence) the applicant of either purchase.
In (omitted) 2009, the parties purchased Property A for $400,100. The applicant was approaching compulsory retirement age from the (employer omitted) and the parties could no longer access the married accommodation in South Australia.[1]
[1] See paragraph 70 of the applicant’s trial affidavit filed on 17 June 2015.
The applicant paid the deposit of $102,248.57 from savings and from the sale of 2000 (omitted) shares. The balance of the purchase money was borrowed from the (omitted) Credit Union.
There is no dispute that the applicant paid the mortgage instalments to the Credit Union until the mortgage was discharged.
There is some controversy over the amount spent by the applicant on improvements or renovations to the property, the applicant claiming that he spent approximately $80,000.
On 1 February 2010, the applicant received an (omitted) ancillary retirement benefit being a lump sum amount of $97,910. On 2 February 2010 he received an (omitted) aged retirement benefit in the sum of $124,806.
By December 2010, he paid a further $183,622 off the mortgage being the balance of the (omitted) lump-sum payments together with additional sums from his savings, effectively discharging the mortgage.
In June 2012, the applicant was posted back to the (employer omitted) in South Australia and commenced residing with the respondent at the property at Property A.
In (omitted) 2013, the respondent received an inheritance from her mother’s estate in the sum of $154,000.
On 26 September 2013, the applicant moved out of the parties’ residence.
In November 2013, the applicant sold a portion of his share portfolio receiving $365,041.33. The funds were used to purchase Property R with his present partner Ms C. Ms C made no contribution to the purchase of the property and for the purposes of these proceedings the parties acknowledge that the entire amount should be brought to account against the applicant’s side of the ledger.
There is controversy between the parties in respect of amongst other things:
a)the length of the relationship;
b)the contributions made to the acquisition, conservation and improvement of the assets; and
c)the amount that should be adjusted in respect of the financial resources and needs of the parties.
I will set out the relevant details in respect of the asset pool in due course. Whilst there is significant agreement, counsel failed despite repeated requests, to present a sheet of agreed assets and liabilities, showing those items that remained in dispute. As a consequence I attempted to keep a record of what was agreed when the issue was finally addressed in the closing submissions.
Mr Wylie
The applicant gave his evidence in a forthright manner. He presented as someone who had worked hard and carefully managed his savings to enable him to accumulate the assets currently in his possession and that of the respondent.
He presented a picture of a relationship where the parties had to an extent maintained separate finances. It could not be ignored however that the expenses they each met enabled the other to accumulate the assets in their possession.
Save for those matters I have specifically mentioned in these Reasons, I did not have a great deal of difficulty with his evidence.
Ms Russo
The respondent in turn attempted to give her evidence to the best of her ability. She too presented as someone who had worked hard and carefully managed her savings to enable her to accumulate the assets currently in her possession and that of the applicant.
She corroborated the applicant’s evidence that they tended not to mix their finances however they were each responsible for separate expenses.
Her reaction to the suggestion that the relationship had concluded in 2000 was one of some astonishment. I will refer to that when considering the period of the relationship.
The relationship period
There is no dispute that the parties commenced cohabiting in (omitted) 1987. It is conceded that not a lot turns on which month they commenced living under the one roof.
It is also conceded that the applicant was posted by the (employer omitted) to Perth in (omitted) 2000.
The respondent remained living in the married quarters provided by the (employer omitted) in Adelaide.
I suggested to counsel for the applicant that it would be reasonable to assume in those circumstances that the parties presented to the (employer omitted) as a couple in a relationship, the suggestion being that this was how the applicant was able to reside in Perth and the respondent was able to reside on (employer omitted) property in Adelaide.
Strangely enough this point was not conceded. Counsel suggested that without the appropriate documents this was not a conclusion that could be drawn. I do not accept that submission.
The applicant paid the rent on the (employer omitted) married quarters during the period of time that the respondent remained residing there.
She vacated those premises when the parties purchased a property at Property A in 2009 in their joint names. The applicant notes that he was entitled to a complete home furniture removal in respect of moving from the married quarters at (employer omitted) to his own home at Property A.[2]
[2] See applicant’s trial affidavit filed on 17 June 2015, 73.
There is controversy over the amount of time the parties spent together, pending the applicant’s return to reside in South Australia. The applicant providing evidence that they spent little if any time together with the respondent saying that they spent up to 14 weeks per year.
There is no evidence explaining why if the relationship was over, the applicant continued to amongst other things, represent to the (employer omitted) that he was in a relationship with the respondent, pay the rent on the respondent’s accommodation, and then subsequently spend over $400,000 on purchasing the Property A property, in their joint names.
Furthermore, following the purchase of the property, his evidence was that he spent $80,000 on improvements and purchase of appliances for the premises.
I asked the applicant’s counsel about the authorities pertaining to the breakdown of relationships which would suggest there is a need to form the intention the relationship is over, communicate that intention, and act on it. Her response was that whether the parties believed the relationship is over or not was not relevant, it was what the law decreed that mattered.
There is no dispute that the parties were in a de facto relationship until the applicant was transferred to Western Australia. Counsel referred me to s.4AA of the Family Law Act 1975 (“the Act”). The submission appears to be that after 2000, the relationship of the parties did not fit within the parameters of a couple living together on a genuine domestic basis.
In the course of closing submissions, I was referred to a number of authorities by counsel for the applicant.
A copy of Moby v Schulter [2010] FamCA 748, a decision of Mushin J was tendered. In that matter, the parties to the proceedings sought a declaration as to whether a de facto relationship existed between them at any time, and if so for what periods. The applicant asserted that a de facto relationship existed between herself and the respondent for a seven year period (from 2002 to 2009) whilst the respondent asserted that no de facto relationship existed at all. In the alternative, the respondent submitted that the relationship had ended by no later than February 2008.
In considering whether the relationship ended in 2008, Mushin J noted the respondent continued to pay the rent and outgoings on the property for approximately 18 months. He also noted the parties continued to hold themselves out as a couple and he therefore found that the parties finally separated in October 2009.[3] The payment of outgoings and the holding out as a couple (for example the (employer omitted) married quarters) have some parallels with this matter.
[3] Moby v Schulter [2010] FamCA 748, 182-183.
Counsel also provided me with a copy of Jonah v White [2011] FamCA 221. This is a decision of Murphy J. Again in that matter the applicant sought a declaration that there was a de facto relationship whereas the respondent denied any such relationship existed. Justice Murphy accepted that the parties had a long-standing relationship but did not accept that it was a de facto relationship. He was not required to determine if and when the parties separated.
The third authority was Jacob v Lawrence [2013] FamCA 188, a decision of Macmillan J.
The issues for the Court in that matter were:
a)whether the parties had commenced a relationship as a couple living together on a genuine domestic basis by 14 October 2009; and
b)if the Court found that they were living together on a genuine domestic basis but was not satisfied that the period of the relationship was at least two years, then whether the applicant had made such substantial contributions to the relationship that failure to make the orders sought by her would result in a serious injustice.
The Court after considering the evidence came to the conclusion that the parties in that case had lived together and merged their individual lives into life as a couple, however it was not satisfied that this had occurred by October 2009, being a date critical to the issue of whether or not the Court had jurisdiction.
The Court was not asked to determine the date of separation, the parties agreeing it was 14 October 2011. The parties in this matter were in a de facto relationship. In view of events that occurred subsequent to the alleged date of separation, such as the ongoing occupation of the (employer omitted) married quarters I consider the relevant issue is, when they separated.
I also refer to Sinclair v Whittaker [2013] FamCAFC 129, a decision involving an appeal from a determination that the parties had lived in a de facto relationship from August 2004 until September 2010. The appeal involved a number of grounds including:
a)that the primary Judge had erred in rejecting the contemporaneous representations of the applicant that she was single and not in a de facto relationship, those representations having been made to amongst other things the ATO, Commissioner of State Revenue, and a mortgage provider; and
b)that the primary Judge had erred in failing to give adequate consideration to the respondent's evidence that he maintained relationships with other women during the time of the alleged de facto relationship.
There did not appear to be any dispute as to when the relationship broke down namely 21 September 2010.
The primary issue was whether or not a de facto relationship existed. Justice Loughnan found that one did, his decision was upheld, and the appeal dismissed.
The Full Court of the Family Court of Australia in Cadman v Hallett (2014) 52 Fam LR 149 considered an appeal against the trial Judge’s decision that the appellant had formed an intention to end the relationship in mid-2010 when he changed his will. The appeal was dismissed.
In this matter, it was not in dispute that from 1991 until 2000 the parties lived in a de facto relationship. The parties underwent some periods of physical separation when required to work away. In July 2010 the appellant revoked his will which left a life interest to the respondent and made a new will leaving only a bequest of $20,000 to him. The issue for the trial Judge was whether the relationship between the parties ended on the appellant’s case in January 2000 or on the respondent’s case in October 2010.
Justice Rees considered the authorities dealing with the issue of when a relationship ends or breaks down concluding that:
a)it is important that one party communicates to the other their intention to end the relationship; and
b)the authorities establish that in order to establish that a relationship has “broken down” for the purpose of the legislation, it is necessary that one party forms an intention to end the relationship, the party acts upon the intention and the intention is communicated to the other party.
Justice Rees found that the appellant had formed the intention to end the relationship in mid-2010 when he changed his will and communicated that in October 2010.
Neither the finding nor the discussion of the authorities were the subject of criticism by the Full Court of the Family Court of Australia.
The definition of a de facto relationship is found in s.4AA of the Act which sets out a number of factors for the Court to consider when determining if the persons have a relationship as a couple.
These include:
a)the duration of the relationship;
b)the nature and extent of their common residence;
c)whether a sexual relationship exists;
d)the degree of financial dependence or interdependence, and any arrangements for the financial support, between them;
e)the ownership, use and acquisition of their property;
f)the degree of mutual commitment to a shared life;
g)whether the relationship is or was registered under a prescribed law of the State or Territory as a prescribed kind of relationship;
h)the care and support of children; and
i)the reputation and public aspects of the relationship.
No particular finding in relation to any circumstances is to be regarded as necessary in deciding whether the persons have a de facto relationship pursuant to s.4AA(3) of the Act.
A Court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the Court in the circumstances of the case, pursuant to s.4AA(4) of the Act.
It is common ground between the parties and I accept that position that they were in a de facto relationship until the applicant was transferred to Perth.
I also note the submission of counsel for the respondent that the applicant in his affidavit filed in support of his application stated that:
The respondent and I have not married but continued to live in a de facto relationship until 26 September 2013 when final separation occurred. The relationship is therefore of a duration of approximately 26 years.[4]
[4] See applicant’s affidavit filed on 26 September 2013, 6.
In that same affidavit he states that:
A de facto relationship continued during the time when I was posted to the various (employer omitted) bases. I travelled back to Adelaide as often as I could.[5]
[5] Ibid, 23.
There is no dispute that the applicant did not communicate his intention to sever the relationship until he left the parties’ home in 2013.
In the period from 2000 until 2012, as previously set out in these Reasons, he worked away leaving the respondent residing in married quarters with the (employer omitted) in South Australia, and then moving her into a house that he had purchased and placed in their joint names in 2009.
The argument put forward by counsel for the applicant is that during that time, the parties’ relationship disintegrated to the point where it failed to meet the criteria set out in s.4AA(2) of the Act.
It is conceded that there is no evidence as to when the intention was formed by the applicant to sever the relationship. The evidence as to when it was communicated was when the applicant left the home in 2013. At the same time, the actions in departing the property constituted the applicant acting upon that intention.
The argument is that it is not whether the parties believed they were in a de facto relationship or not, it is what the law says is the position. I do not accept this submission, which amongst other things does not address the authorities requiring the formation of an intention to separate.
This argument can mean that a couple who for reasons of employment for example are living separately and apart, and (as a consequence of their living arrangements) are maintaining separate finances, and who considered themselves to be in a de facto relationship may not be. It ignores amongst other things the degree of mutual commitment to a shared life.
In Aitken v Deakin [2010] FMCAfam 35, McGuire FM (as he then was) put it succinctly when he stated:
The concept of separation in both a legal and emotional sense is sometimes one difficult to isolate in time and definition. In most cases the point of time is determined by physical separation. There is public recognition and mutual acknowledgement of the separation often emphasised by manifestations of behaviour and statement consistent with the breakdown of the relationship. However, in other factual situations such manifestations are not so obvious. The fact is that the parties in a relationship do not always separate in dramatic and defined circumstances. It can be a gradual process towards physical separation. The law assists in requiring the development by one of the parties of a definitive intention to separate. That intention must be communicated to the other party in terms without ambiguity or conditions attached. There would normally be a requirement for a contemporaneous change in the nature of the relationship such as cessation of sexual relations or public socialising as a couple.[6]
[6] Aitken v Deakin [2010] FMCAfam 35, 38.
The applicant gave evidence that his visits to Adelaide were infrequent. The respondent denied this and said he returned home on a regular basis (and I note the applicant’s statement in his first affidavit, “as often as I could”). Where the parties differ in respect of their evidence of the period that the applicant was transferred to work away from Adelaide and the frequency of his visits back to South Australia, I accept the evidence of the respondent.
The applicant:
a)Failed to satisfactorily explain the discrepancies between his current evidence and that of his first affidavit filed with this Court;
b)In the face of continuing use of the (employer omitted) married quarters and subsequent purchase of a house in joint names, failed to show anything to suggest that he considered himself a single man; and
c)Continued to provide significant financial support for the respondent including payment of the rent for the married quarters and the contributions set out in annexure 7 of his affidavit being subsequent expenditure of significant funds (on his evidence) on the property at Property A and household goods and chattels.
I accept the respondent’s evidence that she had planned to live with the applicant in Perth when he was posted there in (omitted) 2000, however her mother had her first heart attack that year and a hip replacement and bowel cancer operation followed. As the sole carer, it became too difficult for the respondent to move to Perth.
I also accept the respondent’s evidence that the applicant had six weeks reunion leave each year and four weeks at Christmas which the parties spent together.
Furthermore, I accept the submission that the applicant fails to explain why if the relationship was over, the parties purchased a house together at Property A, which he subsequently returned to prior to separating in September 2013 amongst other things.
I therefore do not consider the parties relationship to have concluded until the applicant left their home in September 2013.
The steps to take when considering the division of the assets
The High Court recently had cause to revisit the provisions of Part VIII of the Act and in particular the operation of s.79, in respect of the division of the matrimonial assets in the matter of Stanford (2012) FLC 93-518.
The majority of the Court stated:
…In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order. [7]
… it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.[8]
…In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife.[9]
[7] Stanford (2012) FLC 93-518, 35.
[8] Ibid, 37.
[9] Ibid, 42.
Counsel accept that the authority of Stanford has relevance in the context of these proceedings and refer me to amongst other things, the decision of Watson v Ling (2013) 49 Fam LR 303.
There is no dispute that this is a matter that fits within the confines of the Reasons of the High Court[10] referred to in Watson v Ling[11] and they would submit that it is just and equitable to make an order.
[10] Ibid, 42.
[11] Watson v Ling (2013) 49 Fam LR 303, 11.
I have had regard to the asset pool accumulated by the parties during the period of the relationship and set it out below, noting its current ownership, and any dispute as to value.
The pool
| Item | Ownership | Value |
| Property A | Joint | $397,500 |
| Property C | Respondent | $245,000 |
| Property P | Respondent | $240,000 |
| Property T | Respondent | $240,000 |
| Property R | Applicant and Ms C | $392,000 |
| Mercedes-Benz (omitted) | Applicant | $45,000 |
| Share portfolio | Applicant | $310,048 |
| Applicant’s savings ((omitted) bank) | Applicant | $23,400 (at trial) |
| Respondent’s savings | Respondent | $-10,555 (at trial) |
| Burial plot | Joint | $6,600 |
| Liabilities | ||
| (omitted) Bank loan re Property P | Respondent | $86,559 |
| (omitted) Bank loan re Property C | Respondent | $128,505 |
| Residential investment property loan | Respondent | $66,705 |
| (omitted) Bank account | Respondent | $16,595 |
| Superannuation | ||
| (omitted) defined benefit | Applicant | $416,804 |
| (omitted) Super scheme | Respondent | $51,221 (at trial) |
| (omitted) Super wholesale allocated pension as at July 2015 | Respondent | $18,253 (at trial) |
| Current savings of respondent from balance of inherited monies | $30,004 |
Issues arising
The parties agreed that the applicant sold a parcel of shares and placed the proceeds of that sale into the purchase of the Property R property. The capital gains tax liability has been met and they therefore accept that for the purposes of this exercise the agreed equity in the property is brought to account together with the remaining equity in the share portfolio.
Whilst it is acknowledged that Ms C is on the Certificate of Title to the property it is also acknowledged that she made no contribution toward the acquisition of the asset.
With respect to the burial plot, after some further discussions it was agreed that the respondent would take that asset and would be credited with the agreed value of $6,600.
Whilst counsel for the applicant did not concede the negative balance of the respondent’s bank accounts (excluding the respondent’s inheritance), she was unable to proffer an alternative figure. I therefore accept the respondent’s figure.
I will discuss the bank accounts further when considering the submissions in respect of addbacks.
With respect to the Mazda motor vehicle, the respondent’s position is that the motor vehicle is worth $12,150 based on the red book value. The vehicle is now some three years old. The applicant to his credit conceded during the course of closing submissions that the vehicle is worth $12,150.
The respondent submits that the inheritance of $154,000 that she received in August 2013 approximately one month prior to separation should be excluded from the asset pool. In the alternative it should be regarded as a significant late contribution.
The funds do not appear to have been merged with the pool and would appear to have been used by the applicant for her own purposes including amongst other things placing a sum into a joint account with her son.
I therefore accept the submission to exclude it from the pool and would bring it into account when considering the financial resources and needs of the parties.
Add backs
The applicant submits his bank account should be set at $23,400 being its balance at trial. He acknowledged that it was approximately $46,000 when proceedings were commenced. He argues that if the respondent’s bank account is to be taken at the present date as negative $10,555, then it is appropriate to consider his account at the same date. He asks the Court to note that while he has spent his funds, the respondent in turn reduced her inheritance of $154,000 to $30,000 and savings to negative $10,555.
The evidence in respect of the expenditure of the parties that led to the reduction of their bank accounts post separation is unsatisfactory. Each has incurred legal fees, provided loans to their children and paid off debt.
I have a concern that any attempt to take the balance of the accounts at the date of separation may include money that has been properly spent on the parties’ living expenses or money that has been accounted for in the value of the assets. I therefore consider the most appropriate solution to be to take the accounts as they stood at the date of trial.
Counsel refers me to Bevan v Bevan (2013) 279 FLR 1, where the majority stated:
We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage — and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.[12]
[12] Bevan v Bevan (2013) 279 FLR 1, 79.
There was a suggestion in the submissions that following that decision, add backs were no longer a relevant consideration. I note however the comments of the Full Court in Vass v Vass [2015] FamCAFC 51 wherein:
There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan (2013) FLC 93–545 — or, more particularly, the decision of the High Court in Stanford & Stanford(2012) 247 CLR 108 — is authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered.[13]
The decisions referred to seek to remind the court that, however the exercise of discretion might seek to deal with property that is said to be the subject of “add back“, proper consideration must be given to existing interests in property, and the question posed by s 79(2) as a separate inquiry from any adjustment to property interests by reference to s 79(4) if a consideration of s 79(2) reveals that it is just and equitable to alter existing interests in property.[14]
[13] Vass v Vass [2015] FamCAFC 51, 138.
[14] Ibid, 139.
The evidence in respect of how those monies were spent is not clear and it does not, I consider, support the conclusion urged by the respondent’s counsel. Further consideration will be given to this when considering whether any adjustment should be made under s.90SF(3)(r) of the Act (being the section that mirrors s.75(2)(o) of the Act in respect of de facto relationships).
The applicant’s counsel also refers to the loans to the respondent’s children and the bank account that she maintains with her son. Counsel concedes that the evidence in respect of that is unclear however requests that this be brought to account when considering the financial resources and needs of the parties. I accept that submission.
With respect to the loan to the applicant’s son, this was the subject of evidence from the applicant when asked about a withdrawal from the Westpac account number ending 5447 on 6 October 2014. The amount remains outstanding. However, if the loan to the respondent’s children is to be addressed when considering s.90SF(3)(r) of the Act then I consider the same should apply here.
The respondent would also seek to argue that there should be an amount added back to the pool being the difference between the savings held by the applicant noting that at the date of separation he had savings of some $106,657 as opposed to the savings he currently holds of $23,400. (I note however that amongst other things the Property R property was purchased in this time and is accounted for).
It is conceded that the savings held by the respondent have been substantially diminished however no concession is made on her behalf on that issue.
The argument is that:
a)the applicant in his evidence conceded that on 6 October 2014 he paid by way of loan to his son a sum of $10,000;
b)in (omitted) 2015 he paid $5,000 towards his son’s wedding;
c)he paid, using his Gold MasterCard, expenses of some $27,496 to furnish his current abode; and
d)he has spent $40,000 on legal fees.
Save for the ambit request, I am not taken to any authorities in respect of this nor am I led through the evidence in any detailed manner. I refer to the quote from Bevan referred to above. These matters can be addressed when considering the provisions of s.90SF(3)(r) of the Act.
With respect to the legal fees, I note the submission of the applicant’s counsel that the funds were paid from income. There is no dispute that the applicant post separation has continued to earn an income far in excess of that earned by the respondent. I consider that explanation to be more likely than not and would not add back the legal fees again and will have regard to this when considering the provisions of s.90SF(3)(r) of the Act.
Applicant’s superannuation benefit
While the parties have agreed the value of the fund and no order is sought to split it, they cannot agree on how it should be brought to account.
Counsel for the applicant argues that the applicant’s superannuation benefit should be excluded from the asset pool. While counsel for the respondent submits it should be included at full value in the pool and the appropriate division made.
Neither party takes issue with the fact that the authorities refer to the (omitted) Fund benefit whereas the applicant’s benefit is now referred to as an (employer omitted) benefit being a similar scheme arising from his (employment omitted), and no issue or point of distinction is raised.
The applicant’s counsel refers to Semperton v Semperton (2012) 47 Fam LR 626 and B v B [2005] FamCA 1034 and submits the valuation agreed by the parties is a valuation of an income stream. That it cannot be split and should when considering this matter be regarded as a financial resource.
Semperton was a decision of the Full Court comprising May, Thackray and Ryan JJ. The parties in that matter did not seek and in fact opposed a splitting order for the husband’s (omitted) Fund entitlement. Justice May in her Reasons noted the decision of Coleman J in PJM & STM (2005) FLC 93-242 and in particular (with which she agreed) where he said that:
The reasons the Court prefers this approach are essentially that the evidence establishes that the husband’s (omitted) Fund pension is and will in future continue to be a fortnightly pension benefit which can never be commuted or otherwise converted to a lump sum, either of $248,774.00 or any other amount. Thus, whilst undoubtedly, in accordance with the regulations, the value of the superannuation interest is as found by the learned Federal Magistrate, consistent with the judgment of the majority in [Coghlan and Coghlan], this Court considers the preferable approach in terms of achieving a just and equitable resolution of the proceedings between the parties to be to consider the superannuation interest separately from the remaining assets of the parties.[15]
[15] PJM v STM (2005) FLC 93-242, 5.
Further, Thackray and Ryan JJ in a separate Judgment noted:
While examination of these decisions will show that Coleman J places much emphasis on the fact that a (omitted) Fund pension “is not and never will be capital”, and considers valuations of them to have an “air of artificiality”, it must also be recognised that other judges have emphasised that guaranteed income streams are of considerable value.[16]
[16] Semperton v Semperton (2012) 47 Fam LR 626, 170.
Justice Thackray and Justice Ryan went on to discuss a number of other authorities including the decision of Murphy J in Hayton v Bendle (2010) 43 Fam LR 602, noting with approval the summary of the position where he said:
The discussion just ended does not mean that the nature, form and characteristics of property, or of a particular superannuation interest, do not have the potential to impact significantly upon the assessment required by s 79 and the expression of ultimate determinations of justice and equity expressed as orders. Clearly, those matters are likely to have an impact.[17]
But, I am not persuaded that the approach urged on behalf of the husband is justified either by the FLA (the Family Law Act) or by principle. Further, even if so justified, I am not persuaded that such an approach better leads to a just and equitable outcome.[18]
The characteristics of the pension — which see it as starkly different from, say, the cash proceeds from the sale of the former matrimonial home — need to be taken into account within the broad-based discretion provided for by s 79 in general and the assessment of contributions in particular (difficult though that may be).[19]
That approach is, in my view, consistent with treating the pension (and, indeed, the other superannuation interests) “as property” as the FLA demands whether that expression is interpreted as the Full Court in Hickey would have it, or as the majority in Coghlan views it.[20]
[17] Hayton v Bendle (2010) 43 Fam LR 602, 115.
[18] Ibid, 116.
[19] Ibid, 117.
[20] Ibid, 118.
Justice Thackray and Justice Ryan noted:
Preliminary analysis of these authorities might suggest that Coleman J’s approach tends to place less weight on the value of pension payments than does the approach adopted by some other judges. Whether or not that is true is a question that would require a more careful evaluation.[21]
[21] Semperton v Semperton (2012) 47 Fam LR 626, 186.
Further noting:
Experience teaches that no case is the same as another. Each not only has its own facts, but also individual nuances that often defy description. By way of example, and subject to the proviso mentioned about tax, it would be surprising to see any complaint about the approach adopted by the Federal Magistrate here if both parties had more than ample assets and income to accommodate and support themselves without resort to social security. If that had been the position, the (omitted) Fund would properly have been seen as no different from an annuity acquired as part of prudent retirement planning.[22]
[22] Ibid, 188.
Further noting:
The (omitted) Fund was valued by reference to a formula that pays no regard to the fact that the payments are taxable in the hands of the veteran. In some circumstances, the pension will be taxed at the highest marginal rate, while in other circumstances it will be tax-free. No formula can determine the real value to an individual recipient because of the myriad factors that would impact on the tax treatment of the benefit. But the fact remains that for so long as the husband continues to enjoy a high income, a proportion of his (omitted) Fund will be lost to tax, albeit the burden should be reduced when he turns 60.[23]
[23] Ibid, 159.
Subsequently in Craig v Rowlands (2013) 49 Fam LR 136 the Court again considered a matter involving a significant (omitted) Fund benefit.
Justice Strickland considered that the Federal Magistrate :
in treating what was in reality an income stream, and a benefit that could not be commuted as a capital sum available for distribution between the parties, … was in error.[24]
[24] Craig v Rowlands (2013) 49 Fam LR 136, 125.
Justice May and Justice Forrest noted that:
…Though the entitlement itself was not split (this was not sought by either party), the value ascribed to it under the Superannuation Regulations was in effect split, by way of adjustment to the property to be received by each party within Pool 1.[25]
[25] Ibid, 36.
Further noting that:
Notwithstanding debate about the real or artificial results of the valuation process of (omitted) Fund entitlements, we do not consider valuation itself to be problematic in (omitted) Fund cases. Valuation is clearly required, and conclusively provided for, under the Superannuation Regulations.[26]
Instead, it is the treatment and use made of that value at the later stages of the process, which may more likely lead to error. However, whether or not error arises can only be determined on a case by case basis. The requirements that regard be had to the nature of the entitlement, and the just and equitable effect of the proposed orders, clearly require consideration of the specific (omitted) Fund entitlement at hand, and the practical consequences of orders in the context of the parties’ other assets, liabilities and financial circumstances.[27]
[26] Ibid, 50.
[27] Ibid, 51.
The Full Court concluded:
The Federal Magistrate correctly used the capital “value” of the (omitted) Fund and then discretely decided the entitlement to it by each party and the s 75(2) impact of such a finding in isolation. The Federal Magistrate then took the husband’s (omitted) Fund into account in deciding the s 75(2) considerations which might apply flowing from the property division of the other pool. There was a double count. As importantly, the Federal Magistrate failed to demonstrate an appreciation of the “different character” of the (omitted) Fund in the final stage, together with the necessary assessment of whether the orders were just and equitable.[28]
[28] Ibid, 70.
The danger of double dipping is ever present and is the common theme in the discussion undertaken in the authorities.
So is the discussion regarding the appreciation of the different character of a fund such as the (omitted) Fund in the final stage.
There would appear to be ongoing controversy as to whether the (omitted) benefit should be included in consideration of the pool, if so whether it should be considered separately in a second pool, and how it is to be brought to account if it is not to be split.
The criticism that while the fund was not split when considered as part of a separate pool it was in effect split by the adjustment to the property to be received within the first pool is acknowledged, particularly taking into account the fact that it is an income stream.
In the alternative should it be excluded from the pool and considered as a financial resource of one of the parties with an appropriate adjustment to be made?
The parties do not dispute that the applicant has an entitlement to a defence force benefit from the (omitted) fund that is a pension in the payment phase.
The applicant’s entitlement cannot be commuted to a lump sum and he has received such lump sums from the fund as he is entitled to which have been brought to account.
He cannot assign his pension entitlement. His interest in receiving future payments is contingent upon his survival, he has no control over it, and his entitlement terminates upon death.
The value of the current fund of $416,804 is agreed and a splitting order is not sought.
Due to the characteristics of the fund however, I have the concern that bringing it to account in the pool has a “degree of artificiality” about it, as discussed by Coleman J.[29]
[29] Semperton v Semperton (2012) 47 Fam LR 626, 170.
At the same time, I am conscious of the decisions such as Craig v Rowlands, and that of Watts J in T v T (2006) 35 Fam LR 181 which did not accept that a lump-sum value for a pension had an air of artificiality and considered that it was reasonable to conclude that a similar purchase price was required to obtain an annuity with the income streams to which the husband was entitled.[30] In that matter however he found that much of the debate as to whether the valuation methodology can lead to an artificial exercise can be eliminated if the fund can be split.[31] This however is not one of those cases.
[30] T v T (2006) 35 Fam LR 181, 109.
[31] Ibid, 197.
To consider the superannuation benefit received by the applicant as part of the pool is difficult without consideration of the special characteristics of the fund. The exercise is more one of reviewing the assets, liabilities and financial resources controlled by each party noting that it is an annuity for life and there are ongoing benefits for his surviving spouse. It is able to be valued pursuant to the legislation.
It does not however have the same characteristics as the other assets, in that the applicant is unable to access the benefits of a lump sum of $416,000.00. I am unable to allow for that by for example discounting that figure as there is no evidence on which I could properly rely to enable me to reach a conclusion as to what that discount should be.
It may be that when reviewing the orders to consider the justice and equity of the proposed division an adjustment could be made then. I will consider this in due course.
In the alternative, I will take the approach as submitted by counsel that the value of the fund be excluded from the pool with the applicant’s entitlement to that fund to be considered as a “powerful” s.90SF(3)(r) of the Act factor.
I will also consider it as part of a separate pool.
I accept that it cannot be considered when dividing the pool and then subsequently brought to account when considering the financial resources and needs of the parties.
I will address the issue of contributions to the fund when considering the contributions toward the assets and resources accumulated by the parties.
Steps to be taken
In determining what orders should be made for the division of the matrimonial assets, I would adopt the approach set out in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 that involves four inter-related steps, namely to:
a)identify and value the property, liabilities and financial resources of the parties at the date of the hearing (“the asset pool”);
b)identify and assess the contributions of the parties within the meaning of s.79(4)(a), (b) and (c) or in this case the relevant sections under s.90SM(4)(a), (b) and (c) of the Family Law Act 1975 (“the Act”), and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties (“the contributions”);
c)identify and assess the relevant matters referred to in s.90SM(4)(d), (e), (f) and (g), including the matters referred to in s.90SF(3) of the Act so far as they are relevant and determine the adjustment (if any) that should be made to the contributions-based entitlements the parties established at step two (“financial resources and needs”); and
d)consider the effect of these findings and determination and resolve what order is just and equitable in all the circumstances of the case.[32]
[32] Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener)(2003) FLC 93-143, 39.
The assets and resources of the parties have been identified and valued earlier in these Reasons. I adopt those tables for the purposes of this exercise.
Contributions
Counsel for the applicant contends that taking into account the contributions of the parties the net asset split should be 55/45 in his favour. However once the value of the income stream is brought to account as a s.90SF(3) factor, then the division of the available assets, with the applicant retaining the superannuation, would be 60/40 in the respondent’s favour (excluding his superannuation from that calculation). This would equate to the respondent retaining her property and the Property A home she submits.
Counsel for the respondent submits that taking into account all of the factors and evidence set out before the Court, the Court should reach a conclusion that based on contributions there should be an equal division of the assets (inclusive of the value of the applicant’s superannuation benefit). This differs from her opening position. This would mean she would receive a payment of over $200,000 in addition to retaining Property A. The difference lies in what they say is in the pool and what they submit should be included as part of the pool which I have addressed above.
This is a matter where the parties commenced cohabiting in or about 1987 and separated in 2013. It is a 26 year relationship.
I have previously mentioned how each party refers to the assets they brought into the relationship. Each was working at the time and each of them was engaged in resolving the issues from their first marriage.
The applicant submits that the respondent was struggling with significant debt. This is not conceded by her and I do not consider that her debt, if any, affects the outcome of my consideration of the parties’ contributions.
The respondent’s children remained with her and formed part of the parties’ household.
The applicant paid child support for his children of his first marriage and had them in his care from time to time.
Each party attempted to make an issue of the support they provided or the income that was diverted to the other party’s children. I have difficulty accepting that the evidence clearly supports either party. I note that this relationship was a partnership that was entered into with each party being fully aware of the other’s commitments to their respective children. I therefore do not consider they have made out their case on this point other than to note they each contributed as and when they could.
I am not convinced that it greatly affects the outcome of this matter in that this was a house where joint expenses were met by one or the other party in accordance with their agreement.
Each party worked throughout the period of the relationship. Each contributed to the various household debts in accordance with the agreement that they had reached between them.
The parties maintained to some degree separate finances, and this is particularly evident in the way that the respondent whilst the applicant was away accumulated the three houses currently registered in her name, and the applicant managed to accumulate a significant share portfolio. Nevertheless, the relationship operated as a domestic partnership.
I do not accept that the relationship ended when the applicant moved to work in Perth. There is no suggestion that he in any way acted as if he was not engaged in that relationship. Neither is there any suggestion in respect of the respondent’s conduct.
The applicant earnt a significant income whilst working away, often in difficult circumstances. At the same time the respondent remained in Adelaide without his day to day support and as her counsel points out managed to accumulate three properties which are included as part of the pool.
The applicant attempts to argue a superior financial contribution and he may be right. However for reasons set out below I consider this is set off against the contribution of the respondent over the 26 year relationship. He provides evidence that in addition to funds contributed from savings and income, he received $124,806.50 on 2 February 2010 and $97,910 on 1 February 2010. These amounts are significant however they are also funds which were accumulated during the period of the relationship.
The applicant’s contribution was accumulated from funds or contributions that he was not putting toward the household. The same appears to be the case in respect of the respondent in respect of the assets accumulated by her (in that they were accumulated during the period of the relationship).
I do not consider the initial contributions of the parties to have a significant impact on my assessment of the parties’ contributions.
For a significant period of the relationship the applicant was living away from the respondent, she was residing in married quarters, and she was maintaining the parties’ residence in Adelaide without him. While one part of the partnership was away earning money, the other was at home making ends meet. In addition she was applying her funds to the purchase of the three houses she now owns.
A property was purchased in their joint names in 2009. The debt in respect of that property was paid off over the next couple of years. The property is now unencumbered and the respondent is in occupation of the property.
Separation occurred in September 2013 when the applicant left the property. He subsequently purchased property at Property R and Property A and spent funds on furnishing and equipping the premises.
Post separation the respondent remained residing in and maintaining the Property A property.
This is a 26 year relationship, with no children of the relationship, (noting the submissions of the parties in respect of their support for the children and that of their partners).
I therefore have difficulty accepting any conclusion other than an acknowledgement that the parties contributed equally to the acquisition, conservation, and improvement of their assets.
The (omitted) Superannuation Benefit
The applicant continues to receive a pension from the defence force through his membership of the (omitted) Superannuation (“(omitted)”) defined benefit. There is no dispute that:
a)the entitlement is being paid as a non-commutable indexed pension;
b)that his defined benefit amount was accrued as a result of his years of service;
c)that his entitlement is to an annual pension of $33,232 adjusted annually in accordance with the CPI; and
d)Neither party seeks to split the fund.
This makes a significant difference to the outcomes of the parties. In effect, the applicant will on his evidence receive an income of $33,531.16 per annum regardless of what he earns through his employment.
The fund remains with the applicant. There is no suggestion that the respondent will receive any benefit. Any surviving benefit may well now go to Ms C.
Any adjustment made will mean that the respondent will receive a cash amount as opposed to an annuity. At the same time, the applicant is unable to convert the benefit to a lump sum.
The applicant’s significant superannuation appears to have been accumulated through the period of the party’s relationship. Annexure W1 of the applicant’s trial affidavit is a letter from the solicitors who represented him in the negotiations regarding the division of assets with his first wife which would appear to suggest that the applicant had accumulated superannuation of what appears to be approximately $8,000 (in that the parties had agreed on an equal division of the assets and calculated that the husband owed the wife $4,000 being half of his superannuation credit). This would accord with the fact that the applicant commenced employment with the (employer omitted) in (omitted) 1996 as an (occupation omitted) of the (employer omitted).[33]
[33] See applicant’s trial affidavit, 6.4.
For reasons similar to those set out above I consider these were in effect funds that were not applied to the parties’ day to day expenses and were earned during years of service that occurred during the period of the parties’ relationship involving amongst other things significant periods of living apart.
A number of the authorities referred to herein involve relationships where the partner had served some time with the (employer omitted) and accumulated (omitted) Fund entitlements before the parties commenced cohabitation. This was not the case here. The applicant’s service commenced in 1996, subsequent to the parties cohabiting.
I therefore accept the submission that the parties contributed equally to the acquisition of this asset.
Financial Resources and Needs
Each party, as can be expected for persons of their age, gives evidence of a number of medical ailments.
The applicant’s evidence is that he has lumbar spondylosis which causes low back pain and sciatica as a result of spinal stenosis or L4/5. He also has arthritic changes affecting his lower back and worsening right leg pain and weakness.
The applicant has a solar keratosis condition and bilateral sensor neural hearing loss. Some of his medical expenses are covered by his Veteran Affairs White Card.
Each continues to work although it is fair to say that their capacity to work over the next three to five years is questionable. The applicant receives some income from additional work with the (employer omitted) which in recent years has been significant whilst the respondent continues to work, however I am not optimistic for either party due to the constraints of age.
The applicant will have to undergo a fitness test with the (employer omitted) and I accept that even should he pass this, his days of working for the (employer omitted) remain limited.
The applicant is continuing to receive the pension from the (omitted) Superannuation and a Veterans Affairs pension.
The commitments of each of the parties have been set out in their Financial Statements.
Neither party submits that they are responsible to support any other person.
Neither party pressed the issue of spousal maintenance or their respective standard of living.
The respondent’s evidence is that she suffers from keratoconus, a degenerative eye condition. This means that she will gradually lose vision until she becomes legally blind. She also suffers from back pain and vertigo.
While the parties did not call any medical evidence in respect of their respective conditions. I accept that the likelihood of either of them working in two or three years’ time is remote.
The applicant’s partner Ms C is aged 64 years and there is no evidence that save for a sharing of expenses she is able to bring significant financial support to the table.
I also accept that while the parties remain working, the applicant has demonstrated capacity to earn more income. This is however subject to the absolute discretion of the (employer omitted) and is not guaranteed.
The applicant submits that I should consider his (omitted) Superannuation when considering the financial resources and needs of the parties. The respondent having originally sought that it be split, now supports that position.[34]
[34] See transcript of proceedings dated 13 August 2015, page 15, paragraph 35.
s.90SF(3)(r) of the Family Law Act 1975
I noted previously in these proceedings that there were a number of matters that I would have regard to under s.90SF(3)(r) of the Act.
With respect to the applicant:
a)He concedes he had $46,000 in his bank accounts at the commencement of the proceedings and although this is the subject of controversy as it was noted in cross-examination that he had $86,219 in account ending 5447 and $19,438 in account ending 5439. His argument appeared to be that some of these monies were accounted for such as $40,000 deposit for the Property R property. There is no dispute however that at trial he had $23,400.
b)In addition, he has he submits paid in excess of $40,000 in legal fees. These have he submits been paid from income.
c)He has lent money to his son ($10,000) although the terms and conditions of the loan and the method of repayment are unclear.
d)In (omitted) 2015 he paid $5000 toward his son’s wedding.
e)He paid expenses of some $27,496 to furnish his current abode.
With respect to the respondent:
a)she has divested herself of some $124,000 received by way of an inheritance from her mother. She concedes that:
i)$2,000 was given to each of her children.
ii)$35,000 is in the bank account in the joint names with her son Mr E.
iii)$1,500 is put into a bank account in her name on trust for Ms J.
iv)$1,000 was put into an account in the names of each of her grandsons, Mr R and Mr C.
b)In addition, her bank accounts have diminished considerably since these proceedings commenced, to a negative balance of $10,500 at trial.
I have therefore taken note of the fact that each party has had the benefit of a significant amount of funds. Each party has taken the opportunity to make contributions toward their children. Neither party provides clear evidence of the terms and conditions upon which those advances were made.
In addition, there is the remainder of the respondent’s inheritance held by her of some $30,000.
Having regard to the above I do not consider there should be any further adjustment following my consideration of the parties’ financial resources and needs.
Respondent’s proposed method
If the superannuation is to be considered as submitted by counsel for the respondent then the net value of those assets and resources would be $1,971,040; 50% of that would be $985,520 being the amount to which the respondent is entitled. The respondent currently holds $783,788. This would then mean that the applicant would be required to pay her $201,732.
The applicant is retaining:
Property R
$392,000
Mercedes
$45,000
Shares
$310,048
Savings
$23,400
Subtotal
$770,448
(omitted) Superannuation
$416,804
Subtotal
$1,187,252
Less entitlement (50% of $1,971,040)
$985,520
Amount owing to respondent
$201,732
Is the proposed division just and equitable?
This would mean that inclusive of super the applicant would have $1,187,252 less the payment of $201,732 leaving him with $985,520 of which $416,804 represents the value of his super fund. A value which he is unable to access other than by weekly payments. The respondent on the other hand will have control of an asset pool which is readily accessible.
When 42.3% of the “assets” held by the applicant are not available to him, I do not consider an equal division or that originally proposed to be just and equitable.
The Full Court in Keehan v Keehan [2015] FamCAFC 122 stated:
The court’s power is not confined by any “steps“ or “stages“, nor is it exhausted by reason of the consideration of any or all of the so-called “steps“ or “stages“. Having without error determined that it is just and equitable to make some orders altering existing interests in property, and having considered the matters required to be considered by reason of s 79(4), the court has a “very wide“ discretion to make such orders as are considered appropriate provided that any such order is just and equitable.[35]
[35] Keehan v Keehan [2015] FAMCAFC 122, 118.
This is an appropriate case and I consider there should be an adjustment of 5% in his favour. This would mean that the respondent is entitled to 45% of that pool of resources and assets or $886,968. That would require the applicant to pay the respondent, (allowing for the $783,448 in her control), $103,180 which I would round down to $103,000.
Superannuation in a separate pool
Placing the parties’ superannuation in a separate pool, the applicant has a fund worth $416,804 and the respondent $69,474. I have concluded the parties made equal contributions to the accumulation of these funds and note that they are not to be split.
The remaining assets have a net worth of $1,484,762. Half of that is $742,481 and the respondent has net assets of $714,316. Each party however is retaining their superannuation as set out above, leaving the applicant at a significant advantage. In the circumstances, I would conclude having regard to finding an equal contribution and the special nature of the (omitted) fund that it would be just and equitable to adjust the respondent’s portion of the pool to 55%. This equates to an entitlement to assets with a net worth of $816,619 (of which she has $714,316) which would require a payment to her of $102,303 which I would round up to $103,000.
The issue remains however, that the husband’s benefit is not to be split. If the wife’s superannuation was included in the pool (and the husband’s excluded), then I consider there would have to be an adjustment of 5-7% when considering the justice and equity of the division.
The applicant’s proposed alternative of the applicant’s fund excluded from the pool
If I am not to include the applicant’s superannuation benefit in the pool available for division, then I do not consider I can ignore the special characteristics of that asset. Its value is a quantification of the value of the applicant’s access to an income stream for life. Unlike the respondent, he will not be able to convert that to a lump sum.
It is of significant value and is a significant financial resource. I note there will be an effect on his entitlement to an income tested pension or benefit.
The orders proposed will mean that he will have available assets of $770,448 and his superannuation of $416,804 (totalling $1,187,252) whilst the respondent will have available assets inclusive of the agreed value for her accumulation superannuation benefits of $783,788.
I have previously discussed the financial resources and needs of the parties and adopt that discussion here, save that on this scenario, the applicant would in addition to the above, have access to a pension that has been valued at $416,804. It is a significant factor when considering the financial resources and needs of the parties.
The net value of the resources and assets available for distribution, noting the applicant’s pension fund is excluded (and the respondent’s is not) is $1,554,236. I consider the parties made equal contributions over the 26 years of the relationship. The respondent would not however have the benefit of the (omitted) fund. If the entitlement of the respondent was adjusted by 7%, then she would receive $885,914.52 (rounded down to $885,914). This would mean that the applicant would pay her $102,124. I would for the purposes of this exercise round this up to $103,000. This would mean she will receive approximately $200,000 more of the available assets than the applicant.
If the parties had elected to have split the applicant’s super, then it is likely there would have been little or no adjustment for the financial resources and needs of the parties. That however is not an option they have taken and an adjustment should be made accordingly.
Conclusion
The parties agree that they should retain the items set out in the table below. I have included for the purpose of the review the amount that should be paid to the respondent.
The applicant will retain the following including the payment to the respondent:
| Item | Ownership | Value |
| Property R | Applicant and Ms C | $392,000 |
| Mercedes-Benz | Applicant | $45,000 |
| Share portfolio | Applicant | $310,048 |
| Applicants savings ((omitted) bank) | Applicant | $23,400 (at trial) |
| Subtotal | $770,448 | |
| Liabilities-Amount to respondent | $103,000 | $667,448 |
| Superannuation | ||
| (omitted) defined benefit | applicant | $416,804 |
The respondent will retain the following including the amount received from the applicant:
| Item | Ownership | Value |
| Property A | Joint | $397,500 |
| Property C | Respondent | $245,000 |
| Property P | Respondent | $240,000 |
| Property T | Respondent | $240,000 |
| Mazda motor vehicle | Applicant | $12,150 (app) |
| Respondent savings | Respondent | $-10,555 (at trial) |
| Burial plot | Applicant | $6,600 |
| Subtotal | $1,130,695 | |
| Amount received from Applicant | $103,000 | |
| Subtotal | $1,233,695 | |
| Liabilities | ||
| (omitted) Bank loan re Property P | Respondent | $86,559 |
| (omitted) Bank Loan re Property T property | Respondent | $128,505 |
| (omitted) Bank loan re Property C | Respondent | $118,017 |
| Residential investment property loan | Respondent | $66,705 |
| (omitted) Bank account | Respondent | $16,595 |
| Subtotal | $416,381 | |
| Net | $817,314 | |
| Superannuation | ||
| (omitted) Super scheme | Respondent | $51,221 (at trial) |
| (omitted) Super wholesale allocated pension as at July 2015 | Respondent | $18,253 (at trial) |
| Subtotal | $69,474 | |
| Net | $886,788 | |
| Current savings of respondent from balance of inherited monies | $30,004 |
The above table shows that the applicant is retaining assets with a net value of $770,448. The respondent is retaining assets with a net value of $714,314.
When payment of the sum of $103,000 is brought to account the respondent will have assets inclusive of superannuation of $886,788 whilst the applicant will have $667,448, a difference of just over $200,000.
This will mean that she will have 57% of the available assets. Noting the respondent’s superannuation is included on this calculation as part of the assets and financial resources. The respondent however will continue to access an annuity worth $416,604.
In the circumstance and for the Reasons set out above I consider the orders to be just and equitable.
I therefore make the orders as set out at the commencement of these Reasons.
I certify that the preceding two hundred and twenty nine (229) paragraphs are a true copy of the reasons for judgment of Judge Cole
Associate:
Date: 11 December 2015
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