Yeates (as executor for Mr Yeates) & Yeates

[2013] FCWA 117

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: YEATES (as executor for Mr Yeates) and YEATES [2013] FCWA 117

CORAM: THACKRAY CJ

HEARD: 14-16 MAY 2013 & WRITTEN SUBMISSIONS

DELIVERED : 20 DECEMBER 2013

FILE NO/S: PTW 6922 of 2010

BETWEEN: DAVID YEATES (as executor for Dennis Yeates)

Applicant

AND

JANE YEATES
First Respondent

AND

TRISTAN YEATES
Second Respondent

Catchwords:

PROPERTY – Where the husband died after separation and before the parties’ property had been divided – Where the husband executed a new will and nominated his son as the beneficiary of his superannuation and insurance policies – Where the husband received an insurance payment before his death and gave part of the funds to his son – Where the son received payments from the husband’s insurance policies and superannuation funds after the husband’s death – Where the wife seeks these payments be “added back” – The superannuation and remaining insurance proceeds should be notionally included in the asset pool – Where the asset pool was otherwise largely agreed but there was some dispute about various items – Where the parties agreed contributions were equal up to separation – The wife’s claim that she made a greater contribution post-separation because of payment of joint expenses fails – The wife made a slightly greater post-separation contribution in the form of superannuation – Where it was the husband’s illness and death which resulted in the insurance proceeds becoming available – Where the insurance policies were obtained on the advice of a financial planner engaged jointly by the husband and wife – The husband made the greater contribution to the insurance proceeds – The s 75(2) factors warrant an adjustment to the wife – Just and equitable outcome identified – Orders not made pending receipt of further submissions about findings made contrary to the position put at trial by both parties.

Legislation:

Family Law Act 1975 (Cth), s 75(2), s 79, s 80(1), s 85A, s 90AE, s 90MT(1), s 106B

Category: Reportable

Representation:

Counsel:

Applicant: Dr Dickey QC

First Respondent : Mr Hedges

Second Respondent : Dr Dickey QC

Solicitors:

Applicant: Hearty & Tam

First Respondent : Klimek & Co

Second Respondent : James Legal Consultants

Case(s) referred to in judgment(s):

Bevan & Bevan (2013) FLC 93-545

Erdem & Ozsoy (2012) 272 FLR 16

Ferguson and Ferguson (1978) FLC 90-500

Hickey & Hickey and Attorney-General of Australia (2003) FLC 93-143

Khademollah v Khademollah (2000) 159 FLR 42

Martin & Newton (2011) FLC 93-490

Miller & Miller [2009] FamCAFC 121

Norman & Norman [2010] FamCAFC 66

Omacini & Omacini (2005) FLC 93-218

Stanford v Stanford (2012) 247 CLR 108

Tasmanian Trustees Ltd and Gleeson (1990) FLC 92-156

Van der Linden & Kordell [2010] FamCAFC 157

Yates & Yates [2012] FamCAFC 138

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

Introduction

1[Dennis Yeates] (“the husband”) and [Jane Yeates] (“the wife”) lived together for nearly 16 years. Two months after they separated in October 2009, the husband was diagnosed with cancer and died just over a year later.

2As a result of the husband’s illness and subsequent death, moneys were paid out under insurance and superannuation policies which had been funded during the marriage. The wife was originally the beneficiary of the policies but, after receiving his diagnosis, the husband signed nominations making his adult son, [Tristan], the sole beneficiary.

3The husband received part of the proceeds of the insurance policies prior to his death. He disbursed some and gave the rest to Tristan. After the husband passed away, the rest of the insurance and superannuation entitlements were paid to Tristan, save for a few thousand dollars which the wife received. Tristan was also the sole beneficiary of the husband’s will, subject to a bequest of a boat to two of the husband’s friends.

4The wife now seeks to set aside the nominations made by the husband and the determinations made by the superannuation/insurance providers which resulted in funds being paid to Tristan. She wants almost all of the insurance and superannuation to be taken into account as joint property in these proceedings, which the husband commenced before his death. She also seeks reimbursement of various payments she made following the husband’s death. Overall, she proposes a division of assets in proportions 59:41 in her favour.

5The wife’s application is opposed by Tristan and by the executor of the husband’s estate. They say Tristan should retain the insurance and superannuation he has received, and the wife should retain the balance of the assets and be responsible for the debts.

6Although Tristan and the executor retained separate solicitors, they were represented by the same counsel. When I refer to submissions made by counsel for the estate, it will be understood that the submissions were also made on behalf of Tristan.

The parties and their relationship

7The wife, aged 49, is the state manager of a business. Had the husband lived, he would now be 62. He was in well paid employment prior to his death in January 2011.

8The husband and wife commenced living together in early 1994 and were married [in] 1997. They separated [in] October 2009. [In] December 2009, the husband was diagnosed with inoperable cancer.

9The wife has no children. The husband had one child from a previous marriage, Tristan, now aged 33. He lived with the husband and wife for a few years as a teenager.

Brief financial history

10Shortly after the parties commenced cohabiting in 1994, the wife purchased a property in [Suburb P]. It cost $51,500 and was encumbered by a mortgage securing a loan of $45,900. The balance required for the purchase came from the sale of a property the wife owned before commencement of cohabitation. She sold the Suburb P property in August 1999.

11The husband owned a property in [Suburb R] prior to the relationship. He sold it for $185,000 at around the time the parties started living together. Shortly afterwards, he bought a home in [Suburb M] for $154,000, which the parties renovated and later sold in April 2001 for $336,000. In April 1996, the husband bought a property in [Suburb S] for $143,000, which was sold in January 2003 for $335,000.

12In April 2001, the husband and wife purchased a canal home in [Suburb D]. It was acquired in the wife’s name at a cost of $425,000, with a mortgage originally securing a loan of $214,000. The wife remained in this property after the parties separated.

13In May 2006, the husband and wife, as joint tenants, acquired a unit in [Suburb U], at a cost of $255,000. The husband moved into this property following separation. After his death, the property was let. The rent of $350 per week was applied to the mortgage.

14The husband and wife also made other investments. In doing so, they acted on advice from a financial planner who put together a portfolio on their behalf, using borrowings from Westpac and a margin loan from Macquarie. The portfolio dropped significantly in value during the Global Financial Crisis. Consent orders were made on 10 September 2012 allowing the wife to liquidate the portfolio. The proceeds ($461,192) were consumed in payment of the margin loan ($313,757) and portion of the associated investment loans. The balance of the loans remained secured against the Suburb D and Suburb U properties.

15During their relationship, acting on the advice of their financial planner, the husband and wife built up superannuation and took out life/trauma insurance policies with Westpac, Macquarie and OnePath (the latter formerly known as ING). They each nominated the other as the beneficiary of their superannuation and life insurance entitlements.

16On 15 June 2010, as a consequence of having contracted cancer, the husband received $246,121 from his Westpac Living Benefits policy (a balance of $7,493 remained to be paid out upon his death).

17On 26 August 2010, the husband met alone with a representative of the firm of financial planners that had advised both parties during the marriage. The details will be discussed below, it being sufficient to note at this point that the husband was rearranging his financial affairs in a way far removed from the plans developed when the marriage was intact.

18On 13 November 2010, the husband signed a “non-lapsing death benefit nomination” in favour of Tristan in relation to his entitlements with Macquarie. On 28 November 2010, he also executed a document naming Tristan as the beneficiary of his OnePath entitlements.

19On 9 December 2010, the husband filed his application for property settlement which I am required to determine. At the same time he filed for a divorce.

20On 15 December 2010, the husband executed his last will and testament, leaving his entire estate (apart from the boat) to Tristan. The husband and the wife had previously executed “mirror wills” in contemplation of marriage, in which each had named the other as sole beneficiary of their estates (with Tristan to be the beneficiary of the husband’s estate if the wife did not survive him by 28 days).

21On 17 December 2010, there was an expedited hearing of the husband’s application for divorce, but the wife would not consent to the application proceeding on that date.

22On 22 December 2010, the husband gave Tristan $130,615 from the payout he had received from his Westpac Living Benefits insurance policy.

23On 21 January 2011, after the husband’s death, the wife filed a response to the property settlement application.

24On 5 April 2011, the husband’s brother was substituted for the husband in these proceedings. He had been named as the executor of the husband’s will, although it appears probate was not granted until November 2011 (after the wife decided not to renew a caveat she had lodged in the Supreme Court).

25In November 2011, the wife sold the Suburb U property for $408,000 as she was unable to keep up the payments required by Westpac. The proceeds were paid to Westpac in reduction of the parties’ loans.

26In December 2011, the wife left the Suburb D home and moved to [Sydney] where she had obtained better paid work. She later returned to Perth, and resumed work here in January 2013. She did not return to the Suburb D home, which was let.

Disbursement of superannuation and insurance monies

27The disbursement of the husband’s insurance and superannuation entitlements is of central importance in these proceedings and the details are therefore set out below.

Westpac

28The husband received $246,121 from his Westpac Living Benefits policy on 15 June 2010. He disbursed the funds on or about 25 June 2010 as follows:

•$30,000 by way of loan to the wife;

•$7,305 to discharge a credit card debt;

•$6,816 deposited in his Westpac account;

•$202,000 invested in a Westpac term deposit maturing on 25 September 2010.

29The monies invested in the Westpac term deposit were duly applied as follows:

•$50,000 lent on 22 October 2010 to a friend of the husband who operated [C Pty Ltd];

•$20,000 advanced to the husband’s brother to cover funeral expenses and legal costs;

•$130,615 given to Tristan on or about 23 December 2010.

30Tristan disbursed the money he received as follows:

•$10,000 on 15 July 2011 to discharge a loan on a Landcruiser, which Tristan received under the husband’s will. The total payout was $10,329. Tristan met the small shortfall and also met other expenses associated with the transfer of the vehicle;

•$50,000 on 20 July 2012 to the solicitors representing the husband’s estate by way of a loan to the estate to cover legal costs associated with these proceedings;

•$84,620 was placed in a term deposit in Tristan’s name with National Australia Bank.

31After the husband’s death, $7,493 became payable under the Westpac policy. The wife asserted that she was, at all times, a joint owner of the policy and therefore entitled to this money “by way of survivorship”. The means by which she persuaded Westpac to give her the money is not clear, save for what is said in a letter from Westpac to her, advising that the payment had been authorised after receipt of information she had provided.

Macquarie

32The husband had a mixture of superannuation and insurance with Macquarie. The wife believes the husband could have requested a payout of the insurance prior to his death, although he did not do so.

33The following amounts were paid by Macquarie to Tristan after the husband’s death:

•$398,576 on 17 September 2012 (the gross figure was $477,337, but $78,761 was withheld for tax);

•$22,370 on 2 November 2013 (the gross figure was $26,790, but $4,420 was withheld for tax);

•$1,003, on 21 December 2012, on which no tax was withheld.

34The Papers for the Judge provided by the estate and Tristan described the payment of $477,337 made on 17 September 2012 as superannuation and the other two payments as life insurance. After the trial, and on closer examination of the evidence, I formed the view that this was unlikely to be correct. I therefore sought clarification from the parties’ solicitors but, after more than two months’ delay, this was not forthcoming. Accordingly, I intend to proceed on the basis of my own analysis of the evidence, but I will not pronounce orders until the parties have had an opportunity to make submissions on what is a most important issue.

35I have formed the view that the husband’s superannuation with Macquarie could not have been worth anywhere near as much as $477,337 because:

•at paragraph 194 of the executor’s affidavit it was said that the husband’s Macquarie superannuation was worth only about $122,000 (and his Macquarie life insurance was worth $343,575);

•in a letter to Tristan’s solicitors dated 8 May 2012 (i.e. prior to the payments being made) these same figures – $122,000 and $343,575 – were used by the wife’s solicitors;

•the report sent to the husband by the financial planner after his meeting with them on 26 August 2010 records that his Macquarie superannuation entitlements at the time were worth only $106,381 and his death/TPD (Total Permanent Disability) cover with Macquarie was worth $333,568;

•the report from the financial planner dated 14 June 2011 showed the husband’s superannuation was then worth $120,091 (see page 721 of wife’s trial affidavit).

36The confusion about the makeup of the payments received from Macquarie probably arose from Tristan’s affidavit of 15 November 2012, where he described the entire payment of $398,576 as “superannuation”. Having viewed the documents Tristan received from Macquarie it is understandable why he thought this (see Exhibit 41 to the wife’s affidavit). The documents from Macquarie relating to the two smaller amounts received by Tristan also do not make clear whether those payments represented superannuation or life insurance.

37It will be observed that the payments made to Tristan by Macquarie totalled $505,130 gross and $421,949 net. Doing the best I can, it seems the superannuation component constituted only about 25% of the entitlement. I therefore intend to proceed on the basis that when the superannuation fund was wound up it was worth $126,282 gross ($105,487 net) and the life insurance was worth $378,847 gross ($316,461 net).

38The Macquarie funds can be largely traced to the following assets held by Tristan:

•$334,679 in an HSBC account;

•95,501 shares in Prairie Downs Metals Limited with a value of $32,470 (original cost $70,000);

•cheque for $1,003, which has not been deposited.

OnePath

39The husband’s entitlements with OnePath were all paid to Tristan after the husband’s death. According to the Papers for the Judge provided by Tristan and the estate, the amounts Tristan received were as follows:

•$81,404 by way of life insurance on 14 September 2012 (the gross figure was $100,033, from which $18,629 was withheld for tax);

•$1,024 by way of superannuation on 14 September 2012 (the gross figure was $1,717, from which $693 was withheld for tax).

40I am also now not satisfied this information is accurate. The amounts are right but the breakdown appears likely to be incorrect. On this occasion, the source of the error would appear to be paragraph 195 of the executor’s affidavit of 5 November 2012 where he said the anticipated death benefit on the husband’s OnePath life insurance policy was $100,922 and that his accumulated OnePath superannuation benefit was approximately $1,000. On the other hand, paragraph 7 of Tristan’s affidavit of 24 April 2013 says the $82,428 he received from OnePath was a “superannuation lump sum”. Further confusion arises from paragraphs 130(a) and 132 of the wife’s trial affidavit, which suggest that the husband retained $100,000 in life cover with OnePath after he rolled over some of his entitlements to Macquarie.

41Examination of the following documents suggests to me that the amount received from OnePath was likely to have been superannuation, not life insurance:

•The document from OnePath at page 9 of the attachments to Tristan’s affidavit refers to the payment as being a “superannuation lump sum” and the content of the document is arguably redolent of the amount being superannuation payable following death, rather than life insurance;

•Page 533 of the wife’s trial affidavit records a recommendation from the financial planner in February 2006 to cancel the existing death cover with ING. Later reports from the financial planner refer to life cover with Westpac and Macquarie, but no longer make reference to any death cover with ING;

•Page 678 of the wife’s affidavit, where reference is made to advice from the husband that the plan to rollover all of his ING superannuation policies would not be implemented because of a high exit penalty;

•The report from the financial planner dated 26 August 2010 refers to the husband having $39,599 in superannuation with ING;

•The husband’s tax returns show that his employer had paid $24,000 by way of superannuation on his behalf in 2009/10 and a further $12,000 in 2010/11. The report from the financial planner of 26 August 2010 also referred to the husband “currently salary sacrificing $2,000 per month to superannuation”. There is no indication of where any of these payments were deposited, but the extent of growth in the husband’s other superannuation fund (Macquarie) and the nature of that fund do not suggest to me that the payments were being paid there. It seems more likely the payments were made to OnePath.

42I accept that one difficulty with the proposition that the OnePath funds were entirely superannuation is that there is reference in a OnePath document to payment of an insurance premium (see page 11 of the attachments to Tristan’s affidavit of 24 April 2013). It would be reasonable to assume that an insurance premium being deducted from funds held by a superannuation fund would be a premium on the life of the member, but the odd thing here is that the premium (admittedly only for $74.62) was paid for the period from 1 July 2012 to 14 September 2012, and the husband, by that time, had been dead for more than a year.

43In any event, I intend to proceed on the basis that the payment from OnePath was entirely superannuation, not life insurance. The parties can disabuse me if I am wrong, prior to final orders being made.

44The OnePath funds can be traced to the following assets now held by Tristan:

•$16,378 in an HSBC account;

•46,500 shares in Prairie Downs Metals Limited worth $15,810 (original cost $30,034).

45Tristan also used $30,389 from the OnePath monies to reimburse legal costs he has incurred in these proceedings. No accounting was provided for the balance of $5,626.

Orders sought by Tristan and the estate

46When the husband commenced these proceedings in December 2010, he sought an equal division of what his Form 1 application called the “assets of the marriage, excluding the post separation insurance payment”.

47When Tristan filed his Form 1B in April 2013, he proposed no adjustment to existing property interests, save for the delivery to him of specified chattels.

48The orders sought at trial by Tristan and the estate were described, but not spelled out, in their joint Papers for the Judge. The proposal essentially was that Tristan should retain all the insurance and superannuation payments. On this basis, it was proposed the wife keep the assets in her possession or control, save for specified chattels.

49Although not expressly stated in their Papers for the Judge, I presume Tristan and the estate intend that the boat will pass in accordance with the terms of the husband’s will. This leaves a question, which was not squarely addressed at trial, concerning responsibility for the loan taken out to acquire the boat. The way in which Tristan and the estate formulated their claim would indicate they anticipate the wife will remain responsible for the debt, since it is secured against the home, which they propose the wife will keep as part of her settlement.

50If Tristan and the estate are unsuccessful in defending the wife’s claim to set aside the transactions relating to the superannuation and insurance, they propose an equal division of the entire asset pool, including the superannuation of both parties. Whatever happens, they propose that Tristan keep the Landcruiser. They also propose that he receive the chattels mentioned in his Form 1B, which were said to be largely the property of the husband’s father.

51Tristan and the estate propose that if the controversial transactions are set aside, then the superannuation and insurance should be brought to account by reference to the current (lesser) value of the assets held by Tristan which are traceable to them, and that all other assets should also be brought in at their current value.

Orders sought by the wife

52The orders formally sought by the wife were those in her Amended Form 1A filed in December 2012, as amended by her Papers for the Judge. The (very lengthy) orders seek identical relief by reference to a variety of provisions in the Family Law Act 1975 (Cth) (“the Act”). However, counsel for the wife had said at an interlocutory hearing that the wife primarily relies on s 106B (the power to set aside transactions) and on s 79 (the property division power), read together with s 90AE (the power to make orders affecting third parties).

53The main elements of the relief sought by the wife are:

•the setting aside of:

•the payment to Tristan of the funds the husband received, prior to his death, from Westpac; and

•the nominations made by the husband in favour of Tristan relating to his Macquarie entitlements and the subsequent determination made by the trustee of the Macquarie Fund to make payments to Tristan.

•payment to the wife of:

• all the funds Tristan received from Westpac, Macquarie and OnePath;

•an amount equivalent to all tax paid as a consequence of Tristan having received funds from Westpac, Macquarie and OnePath;

•all costs and liabilities the wife has incurred as a result of the sale of the Suburb U unit, including capital gains tax; and

• interest on the above.

•the wife to retain:

• her superannuation;

• the Suburb D property;

• all other property in her name or possession.

•the husband’s estate to transfer to the wife various assets including:

• the husband’s boat,

• the Landcruiser; and

• a pontoon boat.

•the husband’s estate to discharge the loans secured against the Suburb D property;

•the husband’s estate to pay the wife an amount which would bring about a division of assets 80:20 in her favour (on the basis that the asset pool includes all the superannuation and insurance).

54The wife’s counsel modified this position at trial. He said the wife did not really want the boat, the Landcruiser and the pontoon unless she failed in her claim to set aside the transactions relating to the insurance and superannuation, in which case she would want all the assets she could get.

55In considering the relief sought concerning the boat, it should be observed that:

•the wife does not challenge the husband’s will (having not pursued her earlier claim that the husband lacked testamentary capacity at the relevant time);

•the boat was held in the husband’s name at the time of his death; and

•the specified beneficiaries of the boat are not parties, and, so far as I am aware, were never put on notice about these proceedings.

56During the hearing, counsel for the wife provided a (short form) minute of proposed orders, framed on the assumption that the wife would succeed with her application to set aside the controversial transactions. Counsel for the wife asserted that if the transactions were set aside, and the superannuation and insurance monies were instead paid to the wife, an amount of $100,000 in tax would be refunded, as the payments would be tax-free in her hands.

57The wife’s new minute of proposed orders sought that:

•she retain all the assets in her possession, custody or control with the exception of “[Jim’s] furniture” (Jim is the elderly father of the husband);

•the parties remain jointly responsible for the existing secured debts and that the estate and Tristan discharge half of those before 31 December 2013; and

•the estate and Tristan pay the wife $75,000.

58Counsel for the wife calculated that these proposed orders would result in a 59:41 division in the wife’s favour. The $75,000 payment was said to be justified because of post-separation payments made by the wife, for which she had not been reimbursed by the estate.

Credibility

59The executor, [David Yeates], presented as an entirely credible witness and I had no hesitation in accepting his testimony. In any event, most of his evidence was uncontentious, since it was given on the basis of documents that he had obtained in his capacity as executor.

60There were factual differences in the evidence given by Tristan and that given by the wife, but neither was challenged. The matters about which there was a discrepancy did not ultimately assume importance, but I should record that I found Tristan to be a credible witness.

61The wife explained that her affidavit had been prepared in unsatisfactory circumstances, in that she was living in Sydney, did not have access to all of her papers and was quite stressed. Whatever the reason, cross-examination revealed factual errors in the affidavit, which the wife had to acknowledge. I also gained the impression that the wife made at least some assertions because she considered they would assist her case, rather than because they were her real recollection. Ultimately, however, the doubts I had about her credibility were mainly of significance in assessing her claim about payments made after the husband’s death. My reservations about her credibility meant that this claim required careful scrutiny.

Property settlement approach

62Section 79 of the Act, which governs these proceedings, relevantly provides that:

79Alteration of property interests

(1)In property settlement proceedings, the court may make such order as it considers appropriate:

(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them — altering the interests of the parties to the marriage in the property; or

(b)…

including:

(c)…

(d)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 … such settlement or transfer of property as the court determines.

(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:

(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage … 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 … 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.

63It will be noted that s 79(4)(e) incorporates, by reference, the factors in s 75(2) “so far as they are relevant”. It is unnecessary to set out all of the s 75(2) factors here, but later in these reasons I will refer to those that appear relevant.

64Subsection 79(8) assumes importance here because it deals with cases where one of the parties dies before the proceedings are completed. The subsection provides as follows:

(8)Where, before property settlement proceedings are completed, a party to the marriage dies:

(a)the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;

(b) if the court is of the opinion:

(i)that it would have made an order with respect to property if the deceased party had not died; and

(ii)that it is still appropriate to make an order with respect to property;

the court may make such order as it considers appropriate with respect to:

(iii)any of the property of the parties to the marriage or either of them …

65The plurality of the High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) referred to s 79(8) in these terms (original emphasis):

24.Section 79(8)(b) thus requires a court considering an application for a property settlement order which is continued by or against the legal personal representative of a deceased party to determine first, whether it would have made an order with respect to property if the deceased party had not died and second, whether, despite the death, it is still appropriate to make an order. Both of those inquiries require consideration of s 79(2) and its direction that the court not make an order unless “satisfied that, in all the circumstances, it is just and equitable” to do so. It follows that, in cases where s 79(8) applies, a court must consider whether, had the party not died, it would have been just and equitable to make an order and whether, the party having died, it is still just and equitable to make an order.

66Prior to the decision in Stanford, property settlement applications were commonly dealt with by means of what was called a four step process. This required a trial judge to:

•identify and value the assets and liabilities of the parties;

•assess each party’s contributions to the assets;

•assess a range of factors set out in s 79(4)(d) to (g) of the Act; and then

•consider whether the proposed orders are just and equitable.

67The jurisprudential basis for the process was well established – see the line of cases cited in Hickey & Hickey and Attorney-General of Australia (2003) FLC 93-143 at [39].

68Although the four step process has been regularly followed, the Full Court has stressed it is no more than a means to an end, since the statute permits alteration of existing interests only when it is just and equitable to do so. See Norman & Norman [2010] FamCAFC 66 at [60] and Martin & Newton (2011) FLC 93-490 at [305] and [306].

69Although the four step process was not disapproved in Stanford, it was not approved either. Given how the High Court resolved the dispute, there was no need for a pronouncement either way. But the decision does focus attention on the importance of not making an order adjusting property interests unless it is just and equitable to do so.

70In many cases it will be readily established it is just and equitable to adjust existing interests in property. The reasons for this appear in Stanford, where it was said:

42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order …

71Although Tristan and the estate are content not to disturb the existing interests in property, their satisfaction with the current arrangements is not based on any assertion that those interests should be regarded as inviolate by virtue of any legal or equitable principle, but rather because, serendipitously, the current distribution of assets and liabilities approximates a just and equitable outcome, taking account of the respective contributions and the matters in s 75(2). As I understand their case, Tristan and the estate accept that if the Court takes a different view of contributions and the s 75(2) factors, then it would be just and equitable to adjust existing property interests. The wife clearly contends that a just and equitable outcome can only be achieved if there is an adjustment of the existing interests in property.

72The High Court in Stanford had laid down three “fundamental propositions” to guide trial judges in arriving at a just and equitable outcome. These were summarised in Bevan & Bevan (2013) FLC 93-545 at [73] in these terms (original emphasis):

1.Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);

2.The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;

3.A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.

73The third proposition demands separate consideration of the question of whether it is just and equitable to make any order altering property interests before the need arises to consider the extent to which existing interests are to be altered and the manner in which that is to be done. However, as Bryant CJ and I said in our judgment in Bevan & Bevan (supra at [84], original emphasis):

it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79(4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s 79(4), which make clear that in considering “what order (if any)” to make, the court must take into account the matters referred to in that subsection.

74Although Finn J delivered a separate judgment in Bevan & Bevan, her Honour said, at [152] that she was “largely in agreement” with what Bryant CJ and I had said concerning Stanford. In particular, Finn J made clear, at [169], that she considered it will be appropriate to have some regard to the matters referred to in s 79(4) in determining whether it is just and equitable to make any order altering existing property interests, although of course, as her Honour said, these matters will not be conclusive.

75There are thus two distinct issues to be determined in every property settlement case. In my view, consideration of those issues should proceed on the basis of acceptance of the proposition that “s 79(2) is directed to both the questions whether an order should be made at all, and what the order should be, if one is made”: Ferguson and Ferguson (1978) FLC 90-500 per Strauss J at 77,615. Similarly, reference to the matters in s 79(4) will serve a dual purpose, since self-evidently they are the matters the legislature considered would inform the Court in determining what would be a just and equitable outcome. However, before the Court alters existing interests on the basis of evaluation of the matters in s 79(4), it must have a principled reason for doing so, keeping in mind that community of property arising from marriage has no place in the common law, and remembering that an order adjusting property interests cannot be made on the basis of an assumption that a party has the right to an interest in property which is fixed by reference only to s 79(4): Stanford (supra) at [39] and [40].

76It is in this legal context that I now proceed to determine this dispute.

Should the transactions be set aside?

77Before considering the existing interests in property, I propose to discuss whether or not to set aside the transactions which have led to Tristan receiving almost all of the superannuation and insurance monies. The outcome of this part of the proceedings clearly has major ramifications for the asset pool.

78It was contended by the wife that I could achieve the result she wished to achieve in relation to the superannuation and insurance by resort to s 78 (which gives power to make declarations in relation to exiting title or rights), s 80(1) (which deals with general powers of the Court, s 85A (which deals with ante-nuptial and post‑nuptial settlements), s 90AE (which deals with orders against third parties), s 90MT(1) (which deals with superannuation splitting) and s 106B (which deals with transactions to defeat claims). I propose to discuss only s 106B, since, first, it seems to me that it can achieve all that the wife requires, and secondly, because I accept the submissions made by senior counsel for the estate about the difficulties associated with application of the other three provisions.

79Section 106B of the Act provides that:

In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

80The nominations and payments made by the husband have had the effect of potentially defeating an order in these proceedings and may have been designed to do so, albeit intention does not need to be proven. It is important to stress, however, that the power conferred by s 106B is discretionary and I am not obliged to set aside the transactions if I consider there is a reason not to do so.

81The rationale for setting aside the transactions relating to the superannuation is obvious – these entitlements were built up by significant contributions made during the marriage, and the wife’s superannuation is to be included in the “pool”. A just and equitable result can only be achieved by having regard to the superannuation entitlements of both parties. The argument in relation to the life insurance benefits is not as strong, for reasons that will become clearer when I come to discuss contributions to that part of the entitlements. Nevertheless, the wife did make some contribution to the life insurance and these must, in my view, be taken into account in arriving at a just outcome.

82Setting aside the transactions could result in a large financial benefit if the wife is correct in asserting that the significant tax withheld from the various entitlements may be able to be refunded if those entitlements are paid to her, rather than to Tristan. It did not seem to be disputed that this was a possibility, but in the absence of expert testimony I was nevertheless left in some doubt on this topic. Furthermore, as senior counsel for the estate noted in his closing address, setting aside the transactions may not necessarily achieve the result intended, given the potential for the trustees of the superannuation/insurance funds to retain a discretion as to how the entitlements are to be distributed. These difficulties may, however, be able to be overcome by making orders against the executor and Tristan to join with the wife in requesting the trustees to exercise any discretion they have in such a way as would result in the payments being made to the wife, so as to bring all of the money back into the pool available for distribution.

83There is less complexity associated with setting aside the transaction related to the payment of $130,615 of the Westpac insurance to Tristan than there is with the other transactions. If I made an order setting aside the payment, that sum would undoubtedly come back into the “pool”. There are no tax issues associated with the payment and the trustees of the Westpac insurance fund would have no involvement.

84In determining whether to set aside the transactions, I would not be influenced by the submissions of senior counsel for the estate who spoke of Tristan as being an innocent third party who had received inadequate notice of the wife’s intention to apply to set aside the transactions. While I accept Tristan is an innocent third party, that is not a defence to the claim, given he is a volunteer. Furthermore, as the great majority of the funds Tristan received have been preserved, I do not consider such delay as there was in giving notice of the claim should prevent it succeeding if the wife would otherwise not receive a fair settlement.

85I propose to postpone further discussion of the issues associated with setting aside the various transactions until I have assessed the contributions and considered the s 75(2) factors. Putting to one side the tantalising prospect that a large amount of tax could be refunded, there would strictly be no necessity to set aside the transactions if the wife’s entitlement can be met without resort to funds now held by Tristan.

86Although I have yet to determine whether to set aside the transactions (or at least some of them), I propose to proceed as if all of the funds in question are available for distribution. Put another way, the disputed funds will be “added back” into the “pool”, since in my view that provides the most convenient and transparent basis for assessing contributions and the s 75(2) factors.

87Senior counsel for the estate submitted that I lacked power to deal with property held by Tristan. That much may be accepted for present purposes, however, issues concerning the scope of the power conferred by the Act strictly arise only at the point at which I make orders. The orders will be within power provided they seek only to alter existing interests in property held by the wife or by the husband’s estate. However, it must be understood that this will include any property currently held by Tristan which is the subject of a successful application under s 106B.

The existing interests in property

88I am satisfied that a just and equitable outcome can be achieved by dealing with the property as it existed at the time of trial. Subject to comments made later, I find the assets and liabilities at the time of trial to be as follows:

Assets (excluding insurance)	Wife	Estate	Tristan
Suburb D	925,000
Jet ski	3,000
Furniture and chattels	3,000	3,000
Boat	77,000
Landcruiser	32,500
Pontoon (half interest)	7,500
Macquarie superannuation	255,506	105,487
OnePath superannuation	82,428
Money withdrawn from Westpac added back	40,000
Total Assets	1,226,506	120,000	187,915
Liability
[Westpac investment loan A]	244,928
[Westpac boat loan]	99,171
[Westpac investment loan B]	186,611
Westpac investment loan…relating to [Suburb D property]	43,777
[Westpac loan A]	116,541
Total liabilities	691,028
Net assets	535,478	120,000	187,915

89The net assets (including the superannuation) are therefore worth $843,393. In addition, there are the insurance payments, which I have said will be treated as having come back into the pool. However, given the different contribution issues associated with the insurance, I propose to treat them separately. They comprise $120,615 from Westpac (after allowing for the $10,000 paid to discharge the Landcruiser loan) and $316,461 from Macquarie – a total of $437,076.

90The table above is otherwise based on MFI “E”, in relation to which there was a fair measure of agreement. The matters requiring some explanation are discussed below.

Jet ski

91The estate asserted the jet ski was worth $7,500, whereas the wife said it was worth only $3,000. Senior counsel for the estate submitted that the wife had an obligation to value assets in her possession, such as the jet ski, and submitted that Finn J had been wrong in the approach she adopted in Khademollah v Khademollah (2000) 159 FLR 42, where her Honour said:

32. There is a view in this Court that in property settlement proceedings, the Court should not concern itself unduly with issues relating to chattels. I do not necessarily share that view, particularly in cases where the chattels are valuable or have significance for the parties. However, the onus lies on the party who is concerned about the disposition of chattels, or at least concerned to see that an adjustment be made for the value of the chattels in the overall property settlement, to put evidence before the Court of the value of the chattels in order that the Court may satisfy itself that it is not devoting its scarce resources to the resolution of disputes about assets of no or relatively minimal value …

92I have consistently applied Finn J’s remarks as a practical and principled means of dealing with such disputes. Absent refusal on the part of the party in possession to make the item available for valuation, I consider the party who asserts the higher value should bear the onus of proving it. Without such proof, the matter can only be resolved on the basis of the admission against interest made by the party who asserts (without proof) the lower value.

Furniture

93The executor accepted that the estate might hold $3,000 worth of furniture from the Suburb U property, as claimed in MFI “E”. The furniture is in Tristan’s possession.

Pontoon

94The husband’s half interest in the pontoon, which was Item 9 on MFI “E”, was said by the wife to be worth $10,000. While at some stages it appeared there was controversy about it, senior counsel for the estate informed me that all items numbered from 1 to 24 in MFI “E” were agreed (save for item 8). However, in his closing address, counsel for the wife conceded that the pontoon had not been valued. The wife’s evidence in her affidavit, which was the only sworn evidence on the topic, indicated that the husband’s interest in the pontoon was worth $7,500 at the date of separation. No evidence having been given as to why the item would have increased in value, and noting there was no valuation, I have taken the husband’s interest in the pontoon into account at $7,500.

95The other half interest in the pontoon is held by [Mr Fairley]. The wife has no objection to an order being made to ensure his half interest is recognised and protected.

Superannuation and insurance received by Tristan

96The funds received by Tristan have been included at the amount he actually received, rather than by reference to the assets he currently holds which represent those funds. Tristan has largely preserved the funds, save for a couple of investments that have deteriorated in value. In my view, arriving at a just and equitable result does not require me to undertake an examination of what Tristan has done with the funds he received.

$40,000 received by the wife from Westpac

97Funds from the sale of the investment portfolio were used to discharge fully one of the Westpac loans in accordance with a consent order made on 10 September 2012. However, the wife then immediately drew $40,000 (not $45,000 as was put to her in cross-examination) from the same loan facility. It seems the wife used at least $25,000 of this money to pay her legal fees. The wife said she accepted the $40,000 was “an advancement of funds” and also said she intended “to take sole responsibility of the repayments for that drawdown”. Given this concession, I have notionally added the $40,000 back into the “pool”, while recognising it is no longer available to the wife.

Boat loan

98[The husband’s boat] has an agreed value of $77,000; however the balance on the loan obtained to acquire it still stands at $99,171.

Wife’s car loan

99The wife acquired a new Mercedes at a cost of $65,000 when she moved to Sydney. The estate and Tristan argued that the Mercedes should be brought to account at its cost price, whereas the wife proposed a figure of $36,800, which I gather is the “Red Book” value. The wife has a finance liability in relation to the Mercedes on which she currently owes $54,609. At the time of separation, the wife owned a Peugeot which she said she sold for $13,700, being the same amount as the associated liability.

100Given the Mercedes was acquired after separation and given the unsatisfactory evidence concerning its current value, I have ignored both the asset and the liability.

Savings and credit cards

101MFI “E” recorded that the estate held some modest bank accounts. It also recorded that the wife had a few thousand dollars in bank accounts and that she owed nearly $6,000 on credit cards. In the overall scheme of things, these items are not of great significance and some would balance out others. The amount of funds held in bank accounts and the amounts outstanding on credit cards would also be related to income the wife earned after the husband’s death and also would potentially be related to funds she has spent on legal costs. In my view, it is just and equitable for none of these items to be taken into account.

Liabilities of the estate

102MFI “E” recorded $60,000 as owed by the estate to Tristan, of which $50,000 was money he had lent to cover legal costs and $10,000 was money he had expended to discharge the debt owing on his father’s Landcruiser.

103The source of the monies used by Tristan to make these payments was the superannuation/insurance he received as a result of his father’s death. As I have taken those items into account at their value at the date of receipt it would be wrong to take into account the liabilities the estate has to Tristan arising out of the disbursement of some of those funds.

104Similarly, I have not included the $3,999 held in trust by the estate’s solicitors, as there is no evidence of the source of the funds. (Tristan advanced $50,000 to cover fees, but the total fees paid as at 14 May 2013 were $60,466, not including the $3,999 held in trust). In any event, it is a small amount which, like the others I have mentioned, does not need not be taken into account in arriving at a just and equitable outcome.

Strike Energy shares

105The wife contends that the estate should own $5,000 worth of Strike Energy shares, but I accept the assurance of the executor that he knows nothing about them. I note also that in her cross-examination, the wife acknowledged she too had owned shares in Strike Energy and had sold these for $5,000. She also acknowledged she had sold shares in Breakaway African Minerals, which she valued at $15,000 as at the date of separation.

106I accept there is evidence that the husband had shares in Strike Energy and that they would have formed part of his estate had they still been owned at the date of his death (see page 720 of the wife’s affidavit and Annexure “AW” to the executor’s affidavit). I also accept no evidence was provided to show these shares had been sold. Nevertheless, the executor presented as a diligent person and, notwithstanding he had been put on notice about the Strike Energy shares, he has not been able to obtain any confirmation they are still held.

107In concluding that the shares should not be brought to account, I am fortified by the concession of counsel for the wife that the shares would now be worth as little as $2,400.

C Pty Ltd

108The wife sought to have added back into the asset pool the $50,000 the husband lent to a friend on 22 October 2010, using portion of the funds received from his Westpac Living Benefits policy in June 2010. The friend’s company, C Pty Ltd, promptly went into liquidation on 31 October 2010. The loan was not included in the company’s list of creditors, and the husband’s friend has failed to make repayment of the debt personally.

109Senior counsel for the estate submitted that there was no basis upon which the $50,000 should be notionally added back into the asset pool, as the advance of the funds to the husband’s friend could not be described as “wastage” (which was the basis upon which the wife was making her claim). I accept that submission and I am also not satisfied there is any likelihood of the $50,000 being repaid.

110In declining to add the money back into the pool I have also had regard to the fact that the husband only had the money because he had been diagnosed with a terminal illness.

Westpac loan for P Enterprises

111The wife submitted that an amount of $21,665 should be notionally added back into the pool, representing the balance on a loan relating to [P Enterprises], which was repaid when the parties’ investment portfolio was liquidated after the husband’s death.

112P Enterprises was a [hobby business] in which the husband and wife became involved with others in about 1998/99. The wife claims that the husband always wanted to have such a business and that she was a reluctant partner. Nevertheless, the wife had agreed to sell her Suburb P property to finance her share of the investment. The wife disposed of her interest in about 2003, although continuing to do some work in the business prior to it being wound up in 2005. The wife’s evidence that the husband thereafter always met the payments relating to the outstanding debt was not challenged.

113While I accept the wife may have been opposed to involvement in the business, or not been as keen as the husband was, nothing she said in evidence persuaded me that the husband’s conduct in taking part in this enterprise was wastage or of such a nature that it would be appropriate to add back the money used to discharge the debt.

The $30,000 loan

114I have not included the liability of the wife to the husband’s estate relating to the $30,000 lent to her from the husband’s Westpac insurance payment. According to advice given by the husband to the financial planner, the arrangement was that the loan would be repaid from the wife’s share of the Suburb U property. If this was the arrangement, it did not end up happening as the proceeds all went in discharge of debts to Westpac. In any event, I propose to have regard to the receipt by the wife of the $30,000 when I come to consider her claim for reimbursement of expenses.

The $20,000 paid to the executor

115The wife did not seek to add back the $20,000 paid by the husband to his brother to cover his funeral expenses, even though the evidence indicates that the money was partly used to meet legal expenses. At least $4,544 was paid towards legal expenses from this fund, and possibly more (see paragraph 88 of the executor’s affidavit).

116I have not taken these funds into account, not only because the wife does not suggest I do so, but also because of the view I have taken in relation to the insurance monies.

Westpac insurance money received by the wife

117The wife conceded that the $7,493 she received from the Westpac insurance policy should be added back into the pool if the amounts Tristan received are also added back. Although I have added back the insurance monies Tristan received, I do not propose to add back the $7,493, given that I propose to take it into account when I come to consider the wife’s claim for reimbursement of expenses.

TM Pty Ltd debt

118The wife proposed an “add back” of $54,000 relating to [TM], which was a business the husband conducted during the relationship.

119I accept that the wife lent the company $165,000, interest free, in June 2003 in order to provide working capital. I accept the wife’s evidence that she was unhappy about making the payment and insisted on the husband documenting his promise to repay it. This was done by way of an unstamped document that both parties signed and which carried a notation of the wife’s “request” for repayment in full by March 2004. The loan document refers to the funds being lent to the company and not to the husband personally, and the liability was duly recorded in the accounts of the company as a debt owed by the business to the wife.

120The company paid the wife some money in reduction of the debt – although clearly not as much, or as quickly, as she originally requested. By 30 June 2007, the debt had been reduced to $53,669 (see wife’s affidavit page 702). The 2010/11 accounts of the company were put to the wife. These showed there was only $39,419 owing on the debt. The wife said that, in using the figure of $54,000, she had been “referring back to 2010” (the accounts showed there was $55,119 owing at 30 June 2010). She said she had not received any further payments since then. The husband was, of course, not available to explain why the accounts showed the debt had been reduced. Given my concerns about the wife’s credibility, I would not be prepared to look behind the accounts.

121In cross-examination, it was put to the wife that the alleged debt was in reality an interfamily loan, but she disagreed and said it was lent on strict condition it was to be repaid. Senior counsel for the estate submitted the loan was statute barred, however I do not accept this proposition as the company had been performing its obligations under the arrangement by making repayments, and the loan was recorded in the accounts as a current debt, albeit the company itself had no funds to repay.

122I have not included the loan in the table of assets and liabilities. If the loan was included as an asset of the wife, it would need to be shown as a liability of the estate. If the advance was to be taken into account at all, in my view it would be relevant to the assessment of contributions. However, I am not persuaded there is any basis for this one transaction to impact on the assessment of contributions in a relationship where it is apparent both parties were working to achieve a common goal of building up wealth to provide future security.

Macquarie Cash Management Account

123Although the executor of the husband’s estate was unable to fathom significant movements that occurred in the Macquarie Cash Management Account from the time of separation to the time of the husband’s death, and then from the time of his death to the time the executor made his trial affidavit, there is insufficient evidence to support any conclusion that the wife operated the account in a way detrimental to the interests of the husband or his estate.

Capital Gains Tax and costs associated with sale of the Suburb U property

124The wife seeks that Tristan reimburse her for all costs associated with the sale of the Suburb U property, including anticipated capital gains tax which she says has been estimated at $43,886. As I understand her case, the wife says she was forced to sell the Suburb U property because Tristan and/or the estate did not assist her when she was having trouble meeting the mortgage payments, and the consequential sale of the property has caused her loss.

125Although not drawn to my attention at trial, examination of page 728 of the wife’s affidavit shows that the amount of $43,886 capital gains tax claimed by the wife is not, in fact, an estimate of the tax payable, but rather an estimate of the capital gain. I therefore have no estimate of the amount of additional taxation the wife will incur when she lodges her tax return for the year in which the property was sold, but even if she is required to pay at the highest marginal rate the liability will only be in the region of half the figure she claimed.

126Although there is some basis for the capital gains tax to be taken into account, I am unable to make an estimate of the extent of the liability on the limited information available to me. However, I am not persuaded that Tristan should be made responsible for the entire liability, whatever it might be, nor am I persuaded that Tristan or the estate should be responsible for the entire costs of sale. The wife received what she said was a good price for the property, and I am not satisfied that she would have been able to retain the property in the long run even if Tristan and/or the estate had met additional payments for the property.

Contributions to the date of separation

127It was common ground that the contributions of the husband and the wife to the date of separation were of equal value, which in any event would have been my finding. Those contributions should be seen as encompassing the various contributions made by both parties to their superannuation funds and to the premiums paid on their insurance policies.

128Although senior counsel for the estate did not seek to make much of it, the husband made a much greater initial contribution than did the wife. At the time of commencement of cohabitation, the husband had equity of about $90,000 in the Suburb R home, whereas the wife had only very modest equity in the Suburb P property, together with some funds in Bankers Trust and a car which she later sold. The wife’s recollection about the extent of her equity in the Suburb P property was shown to be incorrect and therefore there has to be doubt whether she was correct in asserting she also had $15,000 in Bankers Trust and that she received $5,000 from the sale of the car. I am nevertheless prepared to accept she had some funds in Bankers Trust and that she had a car.

129Both parties worked for most of the relationship, although it was accepted the husband had periods of unemployment. It was argued that the wife earned more than the husband, however the evidence did not support a finding that there was a great dissimilarity overall. Furthermore, comparing taxable incomes (in the way the wife’s case sought to do) is a somewhat crude way of comparing the parties’ incomes, given that their investment strategy involved negative gearing and not all of their investments were held jointly.

130Conflicts in the evidence about various non-financial/homemaker contributions were not explored at trial. This was appropriate, given the concession that contributions should be treated as being of equal value.

131Similarly, the wife’s complaints about the money spent on the boat were not explored in cross-examination. While I accept the wife would have preferred the husband not to have bought a boat, or to have spent less on it than he did, she was a party to the arrangements. Apart from the fact she must have signed the necessary loan documents, it was also an issue that was discussed more than once with their financial planner – to the extent that it was identified in the reports prepared by the planner as a key “future goal”, albeit the planner was disappointed they were borrowing funds for a frivolous purpose.

Contributions after separation and wife’s claims for reimbursement

132The wife’s case about post-separation contributions was very difficult to follow. At times, it appeared even she did not know what she was seeking, although attempts were made as the trial progressed to provide schedules which, it was hoped, might clarify her position.

133The wife has been in well-paid employment since separation, save for about three months after her resignation from her position in Sydney in October 2012. During the period of about ten months she was in Sydney, the wife was earning $120,000 per annum. After she recommenced working in Perth in January 2013, the wife had a salary of $95,000 per annum. She also had employer funded superannuation and a car allowance of $15,000 per annum.

134While the wife was living in Sydney, she let the Suburb D property at $730 per week, until 1 July 2012 when the rent was reduced to $700 per week. It appears the property may have been vacant for a month in about June 2012. While living in Sydney, she paid rent of $620 per week. Upon returning to Perth, she rented accommodation, rather than moving back into the Suburb D home.

135I have mentioned earlier that the wife contends that the estate should reimburse her to the extent of $75,000 for payments she has made since the husband’s death. Exhibit 11 records those payments the wife considers the executor should have paid pursuant to a consent order made on 16 August 2011. They are not, by any means, a total of all payments she made after separation since, for example, she was making regular payments to the financial planning firm which are not included. These payments to the financial planners included what the wife called her “tax returns”, by which I assume she meant her tax refunds. As best I understood the evidence, the husband and/or the estate were also making payments to the financial planners (see inter alia Attachment “AW” to the executor’s affidavit), but such payments did not include any taxation refunds that might otherwise have been paid as part of the joint investment strategy (see page 662 of the wife’s affidavit).

136Senior counsel for the estate accepted that the wife may have made the payments referred to in Exhibit 11, but asked me to take into account various lump sums the wife had received and which could have been the source of the funds she used to make the payments. Counsel for the wife acknowledged that the wife had made at least portion of the payments in question from capital that was available to her. The executor’s position was that he accepted that if payments had been made by the wife from her own resources (i.e. not from the lump sums) to meet joint liabilities, then the estate should reimburse her for one half.

137I will discuss, under the various headings below, matters which it was suggested may be of relevance in determining whether the wife should receive reimbursement of monies she has paid since the husband’s death.

Balance of Suburb U property proceeds

138Senior counsel for the estate suggested that the wife may have, herself, received some of the proceeds of sale of the Suburb U property. The executor was unaware of precisely what had happened to the proceeds, since he only found out about the sale after the event. The wife’s evidence was that Westpac had retained all the proceeds of sale.

139The proceeds from the sale of the Suburb U property amounted to $396,484 net, of which $385,877 was applied to one Westpac loan. I find that the balance of the money was applied to another Westpac loan and in payment of other costs associated with the discharge of liabilities to Westpac.

Balance of Westpac Death Benefits

140When the executor consented to the order on 16 August 2011 requiring him to make various payments on behalf of the estate in discharge of portion of some of the joint liabilities relating to the Suburb U property, he anticipated that he would be able to utilise the residue of the monies due under the husband’s Westpac insurance policy. But as has been earlier recorded, the wife received these funds amounting to $7,493. The wife was unsure how she had expended the money, but said it could have been used to meet personal expenses, pay legal fees or make payments on the Westpac loans.

141As I have not included the $7,493 in the table of assets, I accept there is merit in the argument advanced by the estate that this amount should be taken into account when assessing the claimed disparity in post-separation payments to joint debt.

Disposal of shares

142The wife acknowledged that at the date of separation she owned Breakaway shares. I have not included these in the table of assets. In assessing the wife’s claim for reimbursement of expenses, I consider it proper to take account of the fact she received $15,000 on sale of the Breakaway shares. She also received funds on the sale of the Strike shares.

Monies lent to the wife after separation

143As already recorded, the husband lent the wife $30,000 from monies he had received from his Westpac insurance after the separation. The $30,000 was placed in the wife’s account from which she said she had drawn the funds needed to make the payments for which she now seeks reimbursement (see Exhibit 11).

144As I do not propose to take the wife’s $30,000 liability to the husband’s estate into account in the “pool” available for distribution, it is appropriate I take account of the fact that she had the use of these funds when considering her claim for reimbursement of monies she expended on joint debts after separation.

Rents received by the wife

145The wife had the benefit of rent from the Suburb U and Suburb D properties for part of the time since separation. The income from the Suburb U property ($350 per week) was not quite sufficient to cover the associated expenses. However, as best I could ascertain, the rent received from the Suburb D property would have been much greater than the sum of the outgoings and the payments on the loan which related to the purchase of that property.

146Exhibit 10 shows that in 2011/12 the wife received net income after outgoings of $12,576, and in the first nine months of 2012/13 she received net income of $21,195 from the Suburb D property. These figures do not include interest on the Westpac loan referrable to the purchase of the Suburb D property, but as the balance on that loan seems now to be only $43,777, the interest would certainly not be such as to make the property negatively geared. In this context it is worth recording that the executor was not challenged on his assertion that the wife had not agreed with his proposal that the Suburb D property rent be used in payment of the Westpac loans.

147Counsel for the wife submitted, in his closing address, that Exhibit 11 represented only payments the wife made from “her purse” and that all the rent monies she had received “went to debt”. I accept that paragraph 238 of the wife’s trial affidavit provided an evidentiary basis for that submission so far as the Suburb U property is concerned, but it did not provide a basis for such a submission in relation to the Suburb D property.

148Although the wife obviously did not receive any rental income when she was herself living in the Suburb D property, it should not be overlooked that she had the benefit of the sole use of a property which she accepts should be treated as if it were jointly owned.

Cost claimed for valuation of the Suburb D property

149I accept the submission of senior counsel for the estate that item 34 in Exhibit 11 (by which the wife seeks reimbursement of the cost of the valuation of the Suburb D property), should be ignored for present purposes as it represents part of the wife’s costs of these proceedings. Whether the wife should receive reimbursement of some or all of this expense ($1,000) will need to be determined if and when I am asked to consider any applications for costs.

Tax deductibility of payments

150Senior counsel for the estate submitted that the wife was seeking to “double dip” because she wanted the estate to reimburse her for portion of the outgoings she had paid on the Suburb D and Suburb U properties, while she alone would receive the taxation deduction associated with having made the payments. With respect to senior counsel, I am not persuaded there is a sufficient foundation for the proposition. A proper appreciation of the extent to which the payments in question will result in any reduction in the wife’s tax would require analysis of the person for whose benefit the payment was made (thus, if the property was jointly owned at the time, the deduction would be claimed by both owners, even if one only of them had physically made the payment). There would also need to be an analysis of income earned from the property in relation to which the expenses were incurred. For example, in the case of the Suburb D property, it would appear likely the wife would be paying tax on the surplus of rent over deductible expenses.

Monies already reimbursed to the wife

151The estate did pay the wife $5,000 on or about 26 January 2012 by way of reimbursement of some of the payments she had made. This is recorded by the wife on Exhibit 11 as if it were a payment of expenses made by the estate, whereas I consider it should have been shown as a reimbursement of the wife for expenses she had already paid. The way in which the wife has treated the payment in Exhibit 11 results in an overstatement of the disparity between expenses paid by her and those paid by the estate.

152Similarly, on 4 January 2012, the estate paid the wife $4,760 by way of reimbursement of the estate’s share of a variety of joint expenses paid by the wife. Once again, the wife’s treatment of this in Exhibit 11 results in an overstatement of the disparity between expenses paid by her and those paid by the estate.

Other monies paid by the estate

153Senior counsel for the estate submitted, in effect, that the payments referred to in Exhibit 11 provided only part of the picture of payments that were made in relation to joint liabilities. In support of this submission, he drew attention to Exhibit 7, which identifies a total of $31,622 that the estate had paid toward joint liabilities.

154The assistance for which I pleaded at trial to “marry up” the figures in Exhibit 7 with those in Exhibit 11 was not forthcoming. However, doing the best I can, I note the following:

•$2,197 shown on Exhibit 7 related to the executor’s expenses in connection with these proceedings, and it was agreed these could be ignored;

•some of the figures related to the husband’s business (TM) and his own expenses – for example the $3,630 paid to his accountant;

•included in the total were the $4,760 and $5,000 paid by the estate to the wife, which I earlier noted were not payments of joint expenses, but rather reimbursement to the wife of joint expenses she had paid.

Conclusions relating to claim for reimbursement

155Assuming Exhibit 11 is accurate, but removing the $9,760 representing the sum of the two payments already made to the wife in reimbursement of expenses paid, it can be concluded that the wife paid $68,655.36 in joint expenses, whereas the estate paid only $9,814.92. This leaves a disparity of $58,840.44. Taking account of the $9,760 already paid, the amount that would now need to be paid by the estate to the wife to equalise the payments would be only $19,660.

156This calculation is simplistic, since not only does it ignore the likelihood that the wife paid many of these expenses from the sources earlier mentioned, it also assumes that the wife and the husband/estate paid equivalent amounts toward other joint expenses. There is no doubt there were such other expenses. Thus, for example, the executor, at paragraph 60 of his affidavit, referred to regular payments totalling more than $33,000 which the husband had himself made from December 2009 to January 2011 and which were described in the husband’s records as “monthly dues”. The executor was unable to identify with certainty how those funds were applied, but by reference to other documents he was able to say that at least portion of the husband’s payments appeared to have been to Macquarie.

157The wife acknowledged she had not taken these payments into account in preparing Exhibit 11, noting that she was unaware of what the “monthly dues” were. However, as senior counsel for the estate observed in his closing address, items 47, 48 and 49 in Exhibit 11 were said by the wife to be payments totalling $7,686 which she made in February to April 2010 from one of the Westpac accounts, described as being for “[the husband’s] Ins, MBF and car loan”. These payments were made prior to the husband’s death and senior counsel for the husband submitted that it was impossible to determine what amounts the husband may have contributed to the Westpac account from which these payments were drawn – and whether his contributions were greater or less than those of the wife. This proposition was not put to the wife in cross-examination, but nevertheless I find merit in the argument that the significance of the payments referred to in Exhibit 11, when considered with other payments made by the husband and the estate, is “altogether uncertain”.

Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.”

189Importantly, Strickland J went on to say:

73.There is no doubt that if all of the proceeds of the insurance policy were still intact they would have been included in the asset pool, and the fact that the money was received after separation does not change this consequence (e.g. see FARMER and BRAMLEY (2000) FLC 93-060 and CAVANAUGH and THRUM (2002) FamCA 196). That fact though becomes highly relevant when assessing the respective contributions of the parties. Here the money had all been spent and thus the initial question for the Federal Magistrate was should any of that money be added back?

74.The husband of course chose to use some of that money to pay off certain debts of the parties in existence at separation, and the Federal Magistrate determined to add back the amount paid out as a notional asset and include the liabilities paid out. Now in fact the Federal Magistrate did not need to do this. In assessing the net asset pool for the purposes of the hearing the Federal Magistrate could have simply proceeded on the basis that the husband used money received by him after separation to pay out debts of the parties and left out both amounts from the calculation. However, the wife does not quibble with the approach in fact taken by the Federal Magistrate in this regard, and nor does the husband.

75.The real issue though relates to the balance of the money received, whether that was $26,000 or $36,221, and the question is should that amount be added back as a notional asset?

76.Although it is not entirely clear from the reasons of the Federal Magistrate, it seems to me that in the end result her Honour did not add back that amount because she did not consider that it was an amount that it was appropriate to add back under the principles referred to by the Full Court in OMACINI. Her Honour treated the insurance as “a ‘recovery insurance policy’ designed to assist the husband after a serious health incident” and considered “that the husband was entitled to utilise those funds to assist with his recovery and to assist with his living expenses across that time”. Thus, for her Honour’s purposes the husband’s failure to present documentary evidence of how he spent the money was not to the point.

77.However, in my view, the Federal Magistrate has erred in this regard. I consider that given that if that money had still been there it would have been included in the net asset pool, the husband’s use of it was a “premature distribution” of an asset of the parties (OMACINI, supra). It is in that category because both parties have contributed to it and it would have otherwise been available for distribution and it is not to the point for this purpose that the event which actually led to the amount was the husband’s heart attack suffered after separation.

78.Thus the amount should have notionally been added back to the asset pool unless the husband could satisfy the Federal Magistrate that it was spent for example “on meeting reasonably incurred necessary living expenses”. However, the husband clearly did not satisfy that onus and in effect the Federal Magistrate so found. Thus instead of making assumptions about what the money could have been used for in the absence of proper evidence the Federal Magistrate should have proceeded to notionally add it back.

79.Accordingly I find that there is merit in this ground of appeal.

190Strickland J, later in his reasons, turned to consider the wife’s complaints relating to the assessment of contributions. His Honour said:

98.The wife’s counsel initially submitted that the Federal Magistrate erred in that:

iThe learned Federal Magistrate treated the receipt of the insurance payment as a contribution;

iiThe learned Federal Magistrate did not properly take into account that the payment was the result of a contractual relationship contributed to equally by the parties rather than by the husband;

iiiThe learned Federal Magistrate treated the insurance payment as though it were damages or compensation payment received by the husband on account of some loss or damage rather than as a windfall;

ivThe learned Federal Magistrate failed to characterise such payment as a windfall given the husband’s prompt return to work and recovery.

99.In relation to “i” there was nothing in the reasons for judgment of either 19 February 2008 or 27 February 2008 that indicates that this was the case. Indeed, the Federal Magistrate made it quite clear in paragraph 49 for example that the contribution was a direct financial contribution by way of the payment of debts.

100.In relation to “ii” there is no doubt that the Federal Magistrate was alive to this issue and that is apparent from paragraph 47. Thus the complaint can only be framed as the Federal Magistrate did not “properly take this into account”. However, as is apparent from what Stephen J said in GRONOW (supra) it is extremely difficult to succeed “in overturning a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight”. Here, I do not consider that the wife has done enough to succeed. The Federal Magistrate indicated that she reduced the “weight to be allocated” to the husband’s post-separation contributions “on account of the other factors” outlined in her reasons. These other factors included what her Honour recognised in paragraph 47. Thus there is no error in this regard.

101.In relation to “iii” and “iv”, this indicates the misguided premise on which the wife has pursued this ground of appeal. This payment was not a windfall. It was a payment received by the husband because he suffered a heart attack. It matters not that it was a minor attack from which he recovered. Despite the husband’s good fortune in this regard, his health into the future is “significantly compromised” as a result according to the evidence of his cardiologist. Thus, although the fact that it was a joint decision to take out the insurance and the fact that the premiums were maintained out of the parties’ joint funds can be treated as contributions by each of the parties, there still needed to be a life-threatening event before a payment could be made. It is simply not open to the wife to argue that the parties have contributed equally to this payout. It is the husband’s money to which the wife has made an indirect contribution of a relatively minor nature. Thus again there is no error by the Federal Magistrate here.

191It will thus be seen that Strickland J placed much weight on the fact that it was the husband whose health had been threatened. His Honour considered the proceeds of the insurance policy were “the husband’s money to which the wife had made an indirection contribution of a relatively minor nature”, notwithstanding the premiums were paid jointly.

Yates & Yates [2012] FamCAFC 138

192Miller & Miller was considered by a Full Court (Finn, Strickland and Johnston JJ) in Yates & Yates, where the parties had married in September 1989 and separated in February 2009. In March 2007, the wife had been diagnosed with Hodgkin’s Lymphoma for which she was treated and went into remission in early 2008. After being diagnosed, the wife received $190,000 from her insurance policy, of which $120,000 was used to pay the mortgage on the home. One of the grounds of appeal raised the issue of whether or not the proceeds of the insurance policy should be treated as a contribution made by the wife or by the parties jointly.

193The Full Court summarised the husband’s submissions on appeal as follows:

a)The lump sum was paid, not as compensation for the cancer, but pursuant to a contractual obligation on the part of the insurance company.

b)The policy was probably taken out during the marriage.

c)The parties pooled their income and it was likely that the premiums for the policy were paid out of the husband’s business in which the wife participated.

d)The parties were still cohabitating when the wife was diagnosed with cancer.

e)In these circumstances it was a joint contribution.

194The wife’s submissions on appeal were then summarised as follows:

a)The proceeds of the insurance policy were received because the wife suffered cancer.

b)Even if the policy may have been maintained out of joint funds (about which there was no evidence) there needed to be a diagnosis of cancer before the payment could be made.

c)In these circumstances it cannot be argued that the parties contributed equally to this payout.

195In considering these competing submissions, the Full Court said:

97.As was explained by the Full Court in the case of Zyk, RM & Zyk, D (1995) FLC 92-644 when faced with how to treat a lottery win, “the critical question in such cases is – by whom is that contribution made?” (at 82,515). We consider that that is also the question to be asked here.

98.In the case of Miller & Miller [2009] Fam CAFC 121, which is relied on by the wife before us, Strickland J found that where the husband had received a lump sum payment from an insurance policy after separation as a result of suffering a heart attack the amount that he contributed therefrom to meet joint debts of the parties was primarily a contribution by him, but there was a contribution by the wife as well represented by the maintenance of the policy from joint funds both prior to and subsequent to separation. At paragraph 101 his Honour said this:

… This payment was not a windfall. It was a payment received by the husband because he suffered a heart attack. It matters not that it was a minor attack from which he recovered. Despite the husband’s good fortune in this regard, his health into the future is “significantly compromised” as a result according to the evidence of his cardiologist. Thus, although the fact that it was a joint decision to take out the insurance and the fact that the premiums were maintained out of the parties’ joint funds can be treated as contributions by each of the parties, there still needed to be a life-threatening event before a payment could be made. It is simply not open to the wife to argue that the parties have contributed equally to this payout. It is the husband’s money to which the wife has made an indirect contribution of a relatively minor nature.

99.However, we consider that this case is distinguishable from the decision in Miller because there the heart attack occurred and the proceeds were paid out to the husband after separation, and the issue was how to treat the use made by the husband of those proceeds. Here, all the relevant events including the circumstances surrounding the taking out and the maintenance of the insurance policy as well as the use of the funds during the marriage, but more particularly their use as an aspect of the parties’ ongoing financial relationship, occurred prior to separation.

100.In any event, it is still a matter of determining whose contribution it is, and there may be many permutations of that. In other words, it may be a sole contribution by the party whose insurance policy it is, it may be an equal contribution by both parties, or it may be that it is a joint contribution but with one party making a greater contribution than the other. Importantly that decision as to whose contribution it is will depend very much on the evidence that is before the judicial officer, and the difficulty in this case is the paucity of evidence in relation to the policy. Indeed, the policy was not even before the Court and the only evidence was comprised in paragraph 82 of the wife’s affidavit where she deposed as follows:

In March 2007, I was diagnosed with cancer … I had an insurance policy and I received a lump sum payment of about $190,000. We used the sum of $120,000 to pay towards our home mortgage.

101.There was no evidence of when the policy was taken out, the circumstances in which it was taken out, who paid the premiums, how those premiums were paid, or what the financial or other arrangements were in relation to the policy.

102.In these circumstances, and also given that the husband, unlike the wife, made no submissions to the trial judge about how his Honour should treat these proceeds, it does not behove the husband to now complain that his Honour erred in how his Honour did treat those proceeds. His Honour plainly proceeded on the basis of the only evidence that was before him, namely paragraph 82 of the wife’s affidavit, unchallenged by the husband. There was also the submission by the wife’s counsel in his final address that the proceeds of the insurance policy could be treated as a contribution made by the wife and that contribution could offset to a great extent the significant initial contributions made by the husband.

103.The husband had the opportunity to provide evidence to the trial judge which might have caused his Honour to come to a different view than he did, but that is a difficulty for the husband and does not demonstrate any error on the part of the trial judge. Thus, we find no merit in this ground of appeal.

196The trial Judge’s treatment of the insurance policy in Yates & Yates had been very brief. As the Full Court recorded at [94], he had “simply recorded that the wife had an insurance policy and after being diagnosed with cancer she received a lump sum payment of $190,000, $120,000 of which was paid to the parties’ home mortgage”. The trial Judge later said, at [289]:

I have had regard to the significant initial contributions of the husband and contributions since separation. I have had regard to the contribution by the wife in terms of her insurance when she was unwell.

197It is sufficiently clear, therefore, that the trial Judge treated the contribution of the money from the insurance policy as the wife’s contribution. While no error was found in this approach, the remarks made by the Full Court indicate that there may have been a different outcome had the matter been agitated differently at first instance.

Van der Linden & Kordell [2010] FamCAFC 157

198The husband and wife were married in 1992. The wife was first diagnosed with cancer in 2001 and her illness recurred in 2004. The husband and wife separated under the one roof in 2002 and continued living in the former matrimonial home until the wife moved out shortly before her death in 2005. The wife commenced property settlement proceedings in 2003. Prior to her death, the wife arranged for her adult daughter from a previous relationship to be paid the whole of her superannuation entitlements, which resulted in the daughter receiving $71,433. She also made a will, leaving her estate to the adult daughter and the two (infant) children of her marriage to the husband.

199The trial Judge had declined to add the superannuation back into the asset pool, finding that the wife was aware of her options with respect of her superannuation and chose to assist her adult daughter over her two other children in the knowledge they would have ongoing financial support from their father. The trial Judge found that the superannuation entitlements of both the husband and the wife had accrued to a large extent during their cohabitation.

200The trial Judge dealt with the superannuation issue in the following paragraphs of her reasons:

34.On behalf of [the husband] it was contended that the sum of $71,433 should be added back to the list of assets. One suggested reason was that the late [wife] gave evidence in the first trial that she intended to bring about an equal distribution of her estate to all three of her children.

35.On behalf of Ms [Kordell] it was submitted that the late [wife’s] superannuation should not be added back, because this money never formed part of her estate. It was said that she understood her options in relation to her superannuation and elected that her daughter [R] should receive this money.

36.It is correct that [the wife’s] superannuation never formed part of her estate. It is also the case that the benefit did not vest in her, prior to her death. It seemed to be agreed in the first trial that she could have accessed her superannuation prior to her death, as there was no doubt that she was terminally ill. The transcript of her evidence indicates that she considered withdrawing the money in her two superannuation funds but, obviously, she later changed her mind.

37.I am not persuaded that the late [wife’s] superannuation should be added back to the list of assets. Clearly, she was aware of her options and chose to assist her daughter [R]. [C] and [J], to the knowledge of their terminally ill mother, would have the ongoing financial support of their father. The fact is that the superannuation never vested in [the wife] and never formed part of her estate. I will, however, take into account the fact of this payment to [R] pursuant to s 75(2).

201In dealing with s 75(2)(o), the trial Judge found that it was the wife’s right to elect for her adult daughter to receive the superannuation benefit.

202The Full Court, in determining the appeal, observed that although it was apparent the trial Judge took into account the payment of the superannuation to the wife’s daughter, her Honour had not detailed how this had impacted on her assessment of the s 75(2) factors. Nevertheless the Full Court did not consider this was an error and overall found the exercise of the discretion relating to s 75(2) was not such as to constitute appellable error.

203However, in another ground of appeal, the appellant argued that the trial Judge had erred in not adding the superannuation back into the asset pool on the basis that the wife had made a premature distribution of property to her daughter. The Full Court held that the law with respect to the notational inclusion of assets for the purposes of proceedings under s 79 is well settled and quoted from the decision in Omacini (supra). The Full Court said:

102. Before us counsel for the wife maintained the position taken at trial that the monies received by the wife’s daughter never formed part of the property of the parties and did not form part of the wife’s estate (See Casey and Braione-Howard and Defence Force Retirement and Death Benefits Authority (2005) FLC 93-219) and thus could not be added back to the asset pool.

103. In the course of oral submissions before us counsel for the husband conceded that the wife's superannuation interest may have never been property, but said that it was not clear whether the wife had received the interest and given it to R, or whether she assigned the interest to her. It was submitted that in any event it does not matter, and given that the wife was able to access that superannuation and she elected not to, that cannot prejudice the husband. It is no different than any other premature disposition of property and the amount should be notionally added back. It was submitted that underpinning the relevant authorities with respect to add backs is an issue of fairness.

104. Counsel for the Estate conceded that the evidence was not clear as to how the superannuation interest was received by R, but that the inference was that she received it directly. Counsel for the Estate maintained that her Honour was correct in not adding the monies received by R back to the asset pool, but that in the event her Honour was incorrect with respect to this finding, that her Honour instead took the monies received into account pursuant to s 75(2)(o), which was a matter within her Honour’s discretion.

105. We do not consider the trial judge erred in failing to notionally include the value of the wife’s superannuation interest in the asset pool, and nor do we accept that her Honour failed to provide adequate reasons for this conclusion. Her Honour clearly explained her findings in paragraphs 34-37 of her reasons, set out above.

106 We observe that her Honour could have found that the disbursement by the wife of her superannuation interest to her daughter was reasonable and done nothing about it. However, ultimately, she did make allowance for it and she had a discretion as to whether she would notionally include the amount in the list of assets or take it into account when considering the matters in s 75(2). Her Honour resolved that, in the circumstances, she would take it into account when considering the matters in s 75(2). Her Honour was clearly of the view that this was the just way of dealing with it (Townsend and Townsend) and this approach was well within her discretion. Nothing has been put that persuades us that her Honour was in error in so doing. There is thus no merit in these grounds of appeal.

204It will, of course, be seen that while the payment in this matter came about after the wife was diagnosed with cancer, the payment represented superannuation, rather than life or trauma insurance.

Erdem & Ozsoy (2012) 272 FLR 16

205After 12 to 13 years of marriage, the parties separated in 2008, although continuing to live under the one roof. The wife died of cancer in 2011, after commencing proceedings for property settlement in November 2009. Shortly prior to commencing proceedings, the wife signed a will in which she made no provision for the husband and gave most of her estate to her mother. It was not in dispute that the wife’s superannuation and death benefits should be included in the property schedules. The superannuation component amounted to $21,535 and the death benefits amounted to $370,098. In explaining why he had determined that contributions to the wife’s superannuation and death benefits should be assessed at 97.5% by the wife and 2.5% by the husband, Walters FM (as his Honour then was) said:

181.In relation to the wife’s superannuation and death benefits, [counsel for the husband] endeavoured to argue that the parties’ contribution should be treated as being equal. He argued that the death benefits were something similar to a windfall or an insurance payout with the parties [sic] had contributed equally, or something close to equally, to the acquisition which gave rise to the windfall or to the policy which generated the insurance payout. I reject that submission. While I accept that the husband may have made a contribution (directly or indirectly) to the policies or arrangements which gave rise to the wife's superannuation entitlements and, ultimately, her death benefits, there can be no doubt that it was the wife’s death that generated the substantial lump sum payments. I do not know whether death can be regarded as the quintessential contribution in such circumstances, but it is difficult to conceive of a more “direct” contribution. But for the wife’s death, the lump sums would not have been paid.

Assessment of contributions to the insurance monies

206Had the husband not been diagnosed with cancer, the potential entitlements under the insurance policies would have been entirely ignored in any property settlement effected between the parties, since they would have had no value. Had the parties quickly divided their assets and liabilities following separation, I doubt there would have been any expectation that they would thereafter retain their estranged spouse as the beneficiary of their insurance policies. Why then should the wife be entitled to a larger settlement than she would otherwise have been received merely because her estranged spouse was diagnosed with a terminal illness after their separation?

207The answer to these questions might be thought to lie in the fact that the wife had made a financial contribution to the cost of the premiums that needed to be paid to ensure there were insurance monies available in such unfortunate circumstances. However, the husband too had made a contribution to the wife’s insurance and, had she maintained all her insurance entitlements and contracted a terminal illness after separation, she would have had the satisfaction of ensuring the money from her policy went to her then preferred beneficiary.

208It is also important to recognise that life insurance payments are quite unlike superannuation contributions. The latter are paid in the expectation that the funds will be available for later use. The former are paid, hoping the benefit will never be collected. Furthermore, as previously noted, it is only the last premium that results in the entitlement being available. All of the earlier payments are lost, once they have fulfilled their function of providing cover for the period of the premium.

209The sad reality is that the money became available only because the husband was diagnosed with a terminal illness and then died. A large portion of the money is still available for distribution because he did not, for example, seek to expend it all on finding a “miracle cure” or “blow it” on luxuries prior to his death.

210Yet, I find it difficult to ignore the fact that the insurance monies here become available because the husband and wife consulted, and jointly paid for, a financial planner who recommended they take out insurance and trauma policies. This turned out to be sound advice, even if the other investments made on the recommendation of the financial planner appear to have resulted in a significant loss of funds. The motivation in taking out the entitlements, at a time when the marriage was happy, was to provide security for the other party in the event of death or serious illness.

211Attempting to reconcile what at times has appeared to me in preparation of these reasons to be the irreconcilable, I have determined that contributions to the remaining insurance monies (i.e. those worth in total $437,076) should be assessed at 75% by the husband and 25% by the wife. In fixing on that percentage I have taken into account the fact that there were more insurance funds, but these are no longer available for division.

Overall assessment of contributions (including the insurance monies)

212On my assessment of contributions, the wife would therefore receive $556,267 ($109,269 + $446,998) and the husband (or his estate) would receive $724,202 ($327,807 + $396,395). Although it is not the basis upon which I have arrived at this result, I observe that such an outcome would see the wife receiving almost precisely two-thirds of the asset pool that would have been available had the husband not been diagnosed with cancer.

213Before passing from the topic of contributions, I should record that I accept it may be thought (absent a finding that the controversial transactions should be set aside) that I have erred in assessing contributions to property that does not meet the description contained in s 79(4)(a). That being the case, it is important to record that I would have reached the same result by reliance on s 75(2)(o) since it would, in my view, not be just and equitable to ignore the direct and indirect contributions the wife has made to the assets currently held by Tristan.

Section 75(2) and other factors

214Senior counsel for the estate and Tristan did not propose any s 75(2) adjustment. The wife’s position on s 75(2) was less clear. Essentially, she wanted a 59:41 division of all assets and did not mind how the Court arrived at that result.

215To the extent that s 75(2) is concerned with prospective matters, it can only be of relevance in considering the position of the wife, since the husband is deceased: Tasmanian Trustees Ltd and Gleeson (1990) FLC 92-156. But, as the Full Court said in Van der Linden & Kordell (supra):

83.… although it is clear that when a spouse dies there are generally no s 75(2) factors that can be taken into account in favour of the estate, and that that should highlight the needs of the surviving spouse and the fact that they have to be met, it is equally apparent that that should not detract from the need to recognise the entitlement of the deceased spouse (which devolves onto that spouse’s estate) arising from a consideration of the respective contributions of the parties.

216The wife is 49 years of age. I accept she has suffered from depression since the husband’s death. I accept she has also experienced panic and anxiety attacks and has found these proceedings stressful. She is nevertheless in good physical health and is in well paid employment. She has been able to accrue significant superannuation since the separation, and is likely to be able to continue to do so for some years to come.

217I have considered the various matters relating to s 75(2) to which the wife referred in her affidavit (at paragraphs 307 and following). On the wife’s own admission, many of the s 75(2) factors are not relevant or are clearly not such as to warrant any “adjustment”.

218I do not propose to take into account what the wife claims to be a “strong moral obligation” in relation to visiting the husband’s father. Nor do I propose to take account of her complaints in paragraph 328 to 330 of her trial affidavit, which are to some extent speculative and otherwise, in my view, not matters that ought to impact on the distribution. (The wife complained that the proceedings have been difficult for her as the executor has no financial interest in the proceedings and Tristan “does not feel that he has anything to lose”). Finally, I do not propose to have regard to the fact that Tristan spent a few years living with the parties.

219I do propose to take account of the fact that the wife is likely to incur a capital gains tax liability on the sale of the Suburb U property. As I have said, the amount of that tax is unclear, but I accept it will be far more than a nominal liability.

220The only other factor I propose to take into account is s 75(2)(g) which refers to a party having a “standard of living that in all the circumstances is reasonable”. Regrettably, much of the effort made by the husband and wife to ensure they had a good standard of living has been wasted as a result of the investment strategy they pursued. Their portfolio of investments has been liquidated, leaving behind a swag of debt. While they did not anticipate this state of affairs when they took out their insurance policies, it is the case that the policies were originally intended to pay off debt associated with their investments in the event one of them predeceased the other. The wife is now left with the remaining debt, albeit this would all be cleared in the event she was to liquidate her remaining real estate. In my view, some adjustment is required to take account of the fact that the parties anticipated maintaining a reasonable standard of living.

221Exercising the wide discretion conferred by the legislation, I have determined that an adjustment of 6% in favour of the wife applied across the entire asset pool of $1,280,469 would be appropriate. Such an adjustment results in the wife receiving $76,828 more than what she would otherwise have received, but creates an additional disparity of $153,656 between what she will retain and what will be retained by the estate and Tristan.

Should an order be made and is the outcome just and equitable?

222There can be no doubt that, if the husband had lived, it would have been just and equitable to make an order adjusting the existing interests in property. The reasons for this are those identified in Stanford at [42]. I am also satisfied it is still just and equitable (and therefore “appropriate”) for an order to be made with respect to property, notwithstanding the husband’s death. The marriage of the husband and wife had ended before the husband died and he at least wished it to be formally dissolved. The wife was aware the husband was no longer content with the arrangements they made when they executed mirror wills and there were discussions between them about the way in which their joint assets were to be distributed. It should also be recorded that neither party at trial put in issue the question of whether it was just and equitable (and still “appropriate”) to make an order adjusting property interests. For these reasons, the requirements of s 79(8) are satisfied.

223On the basis of my assessment of contributions and the s 75(2) factors, the wife would receive $633,095 ($556,267 + $76,828) and the husband (or his estate) would receive $647,374 ($724,202 - $76,828).

224I recognise that included in the wife’s entitlement is the $40,000 which has notionally been added back into the asset pool, and that I have not included in the asset pool her personal loans of $40,000. I also recognise that the assets to be retained by the estate (and hence retained by Tristan, apart from the boat) are now not quite as valuable as the table of assets set out above would suggest.

225The outcome I have found to be appropriate will require the wife to receive an amount of $97,617 over and above the assets she has in her possession (on the basis she will remain responsible for the liabilities). In the exercise of my discretion I intend to round up the payment to be made to $100,000, which I note is roughly the amount outstanding on the boat loan. I recognise the wife will still be left with substantial liabilities; however, I do not consider it appropriate to proceed on the basis that it should be assumed the wife must keep a property worth $925,000, especially as she is not currently living in it.

226In my view, this is a just and equitable outcome.

Orders

227The question now becomes, how does the wife receive the additional $100,000 which I have determined she should have to bring about a just and equitable outcome. In my view, the appropriate way would be to set aside, to the extent of $100,000, the transaction by which the husband paid Tristan $130,615 from his Westpac entitlements. On this basis there would be strictly no need to set aside any of the other transactions.

228I do not propose to give further consideration to setting aside the balance of the transactions until such time as I have heard from counsel about the assumptions I have made in relation to the breakup of the superannuation and the insurance. If those assumptions prove to be incorrect I will first need to revisit all of the assessments and calculations made above, including the adjustment for s 75(2). I would then need to give further consideration to the application to set aside the transactions.

229In the event that I was persuaded to set aside the balance of the transactions, another issue would arise as to who receives the benefit of the anticipated tax reimbursement. As the wife would presumably have to do the “leg work” to achieve this, and as the refund would only be available because of her status, it would seem to me that the wife should receive the benefit, provided of course that any costs Tristan and the estate incur in assisting in the process are reimbursed. This has the potential, however, to become extremely “messy” and I would not be inclined to consider going down that path without at least some expert evidence to satisfy me that there is indeed likely to be a refund. More attention may also be needed to the form of any order to maximise the prospects of the superannuation/insurance trustees cooperating in the way the wife hopes they will.

230Once the parties have considered these reasons and conferred on appropriate next steps, they can seek to relist the matter before me for directions.

Postscript

231Since completing my reasons, my chambers have received a communication from the wife’s solicitors in response to my request for clarification of matters pertaining to the breakdown of insurance and superannuation entitlements. The content of that correspondence has not persuaded me that my tentative views relating to the Macquarie payments are incorrect, but I will give counsel an opportunity to argue the matter further if required.

232My chambers have been informed that the estate’s solicitors have had difficulty obtaining clarification from Macquarie. Hopefully this will be forthcoming, but in the meantime it would appear to me that the financial advisers may be best placed to provide advice on this topic, albeit they may now be seen as aligned with the interests of their ongoing client.

I certify that the preceding [232] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate