Ziska and Ziska
[2013] FamCA 789
•30 August 2013
FAMILY COURT OF AUSTRALIA
| ZISKA & ZISKA | [2013] FamCA 789 |
| FAMILY LAW – PROPERTY SETTLEMENT – Where the husband and wife to a marriage of 36 years seek orders altering their interests in property under s 79 of the Family Law Act 1975 (Cth) (“the Act”) – Assessment of what constitutes the property of the parties or either of them – Consideration of whether it is just and equitable to make an order altering the parties’ interests in property in accordance with the principles expressed in Stanford v Stanford [2012] HCA 52 – Determination of the respective contributions of the parties’ by reference to the matters set out in s 79(4) of the Act – Consideration of whether an adjustment should be made to the contribution-based finding by reference to relevant matters under s 75(2) of the Act – Consideration of whether the orders to be made will produce a just and equitable result overall. |
FAMILY LAW – PROPERTY – SUPERANNUATION – Whether to include the parties’ superannuation interests in the same pool of assets as other property or in a separate pool – Where the court determined that it would consider the parties’ superannuation interests and property in the same pool
FAMILY LAW – SPOUSE MAINTENANCE – Where the wife seeks an order for spouse maintenance on a periodic basis or in the alternative as a lump sum payment of $200,000 – Where the threshold finding under s 72 was satisfied because the wife is unable to support herself adequately and the husband is able to support the wife – Consideration of how the property settlement orders to be made under s 79 will affect the wife’s need for maintenance – Discussion of the wife’s ability to generate income through the capital value of the assets she will receive following the property settlement – Assessment of the quantum of maintenance that would be “proper” in accordance with s 74 of the Act – Consideration of the form that spouse maintenance orders may take pursuant to s 80 of the Act – Where the orders made allow for the husband to elect whether to pay maintenance on a periodic or a lump sum basis.
| Family Law Act 1975 (Cth) |
| Benjamin & Bardot [2010] FamCAFC 252 |
| APPLICANT: | Ms Ziska |
| RESPONDENT: | Mr Ziska |
| FILE NUMBER: | SYC | 3741 | of | 2010 |
| DATE DELIVERED: | 30 August 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Le Poer Trench J |
| HEARING DATE: | 15–18 October 2012; 21–22 March 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Judge |
| SOLICITOR FOR THE APPLICANT: | Demaine & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Levy |
| SOLICITOR FOR THE RESPONDENT: | Lees & Givney |
Orders
(1)With the exception of order 7 (sub-order 15) made in the Federal Magistrates Court on 12 October 2011 all prior orders are discharged to the date they stand paid.
Orders consented to by the parties.
(2)Within fourteen (14) days of these Orders, the Wife transfer her shares in Ziska Pty Ltd (the company) to the Husband.
(3)Within fourteen (14) days of the date of the Orders the Wife resign as a Director of the company and any other position held.
(4)Within fourteen (14) days of the date of the Orders the Wife sign all documents necessary to remove herself as a signatory and authorised person to act and operate the account held by the company with St George Bank account no. … and any other documents relating to the company.
(5)The husband indemnify the Wife for her liability in the loan accounts with the company and any other liability she has to the company and any other liability arising in her as a result of her shareholding or office holding in the company.
Orders made at the determination of the court
Suburb B property
(6)Within fourteen (14) days the Husband sign all documents presented to him by or on behalf of the wife as may be necessary to transfer to the Wife the whole of his right title and interest in the property situated at and known as C Street, Suburb B, NSW being the whole of the land contained in Certificate of Title folio identifier … (“Suburb B Property”).
Suburb D Property
(7)The Husband is declared to be solely and absolutely entitled, to the exclusion of the wife, to the property at E Street, Suburb D in the state of New South Wales subject to the Husband’s NAB loan secured on that property.
(8)The parties are to cause the balance of the St George Account … account and any interest accrued thereon, to be distributed so that the wife receives 77.42 per cent of same and the husband receives the balance.
Superannuation
(9)In accordance with s90MT(1)(a) of the Family Law Act 1975 (“the Act”) whenever a splittable payment becomes payable to or on behalf of the Husband, Mr Ziska, from his interest in State Authorities Non-contributory Superannuation Scheme (“the SANCS Fund”) the Wife, Ms Ziska, is entitled to be paid by the Trustee of the Fund the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $173,429 there being a corresponding reduction in the entitlement the Husband, Mr Ziska, would have had in the said Superannuation Fund but for these Orders.
(10)Order (9) herein binds the Trustee of the Fund and the Order takes effect from the operative time being the seventh business day after the date of service of these Orders on the Trustee.
(11)The Wife is to retain all of her right title an interest in her existing member's account in the Ziska Pty Ltd Superannuation Fund (Ziska Superannuation Fund) and the Husband is to call all necessary meetings of the trustee of the Ziska Superannuation Fund and cause the trustee to pass all such resolutions and do all acts as are necessary by law to facilitate the rollover or transfer of the Wife’s existing interest in the Ziska Superannuation Fund to another complying fund, nominated by the Wife, as soon as practicable.
(12)The Wife is to nominate to the Husband within 28 days the name of a complying superannuation fund into which she requires her entitlement in the Ziska Superannuation Fund to be rolled into pursuant to order (11) hereof.
(13)In the event that either the Husband or Wife refuses or neglects to execute any document, deed or instrument required to give effect to these orders within fourteen (14) days after service of the document upon him or her, the Registrar of the Court is appointed and is empowered and authorized to execute any such document, deed or instrument in his or her name and to do all acts necessary to give validity and effect to such document, deed or instrument.
Spouse Maintenance.
(14)Subject to the order following immediately hereunder, the Husband is to pay spouse maintenance to the Wife in the sum of $500 per week until the expiration of three (3) years from the date hereof.
(15)As an alternative to the payment of periodic spouse maintenance, as provided for in the previous order, the Husband may, at his option, pay to the Wife within 90 days from the date hereof the sum of $70,000 as lump sum spouse maintenance. Until such payment is made the Husband is to meet the periodic maintenance order specified above.
Wife’s Motor Vehicle
(16)The Wife is declared to be the legal and beneficial owner of the … motor vehicle Registration No. ....
(17)The Husband is to be the owner of St George joint account … (being the account of Ziska) and St George Freedom account ... The Wife is to forthwith sign all documents presented to her by the Husband as will effect transfer of those two accounts to his name solely or alternately close the accounts (should he so desire) and pay the funds therein to the Husband.
(18)Other than as provided in these Orders and as between the parties, the Husband and Wife each be declared to be the legal and beneficial owners of all other property and all other financial entitlements (not hereinbefore provided for) in their names, possession or under their control or to which each party is presently legally or beneficially entitled including furniture and furnishings, monies in bank accounts, real estate, motor vehicles, shares, superannuation entitlements and insurance policies.
(19)Other than as provided in these Orders, and as between the parties, the Husband and Wife each be responsible for payment of all debts and liabilities standing in their name and indemnify the other in respect thereof.
(20)The payments made to the Wife pursuant to the orders of 17 April 2012 providing for her withdrawal of $800 per week from the St George account number … are designated as to one half as spouse maintenance from the Husband to the Wife. Further the requirement in those orders for the Husband to pay to the Wife $2000 is designated as spouse maintenance.
(21)All outstanding applications are otherwise dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Ziska & Ziska has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC
| Ms Ziska |
Applicant
And
| Mr Ziska |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings before the Court are property proceedings between the husband and wife to a marriage of approximately 36 years.
There are two children of the relationship, who at the conclusion of the trial were aged 31 and 29.
The matter was listed for final hearing in the Federal Magistrates Court of Australia (as it then was) on 19 March 2012; however, it was then transferred to the Family Court of Australia.
The matter was heard for four days in October 2012 and, at the conclusion of those four days, it was stood over part-heard until March 2013, when it was then heard for an additional two days. Thereafter, written submissions were directed to be provided by the husband on one matter, and those submissions were received on 7 May 2013.
The case has some unusual features to it, one being that the parties agree that their contributions to the marriage until the date of separation should be assessed as equal.
In an endeavour to have the parties narrow the ambit of their dispute and ensure that the case could conclude in the further time allocated for its hearing, I directed the parties to prepare a number of documents following the hearing becoming part heard. Those documents were as follows:-a) the agreed financial contributions made by the parties post-separation;
b) the balance of liabilities and/or bank accounts held by or on behalf of the parties as at 31 January 2010 (the agreed date of separation);
c) a schedule setting out details of the sale of assets and application of funds by the husband on or since 31 January 2010;
d) a schedule setting out details of the sale of assets and application of funds by the wife on or since 31 January 2010; and
e) a schedule setting out what funds have been paid by the husband post-separation from his income or from the income of Ziska Pty Ltd (“Ziska”) for the benefit of either the wife solely or for the benefit of husband and the wife jointly.
On the final day of the hearing, I made the following order after a submission was made on behalf of the husband in relation to the income he earned for the company Ziska:-
The husband is directed to send to my Associate a case citation, and a copy of the relevant judgment, detailing a circumstance in which one party was earning money for a company where the shares in that company are owned in each of the parties’ names, and where the use of that money was ultimately characterised as a contribution on the earners account (i.e. only one of the parties).
On 7 May 2013 the following submission was received from Counsel for the husband:-
1. The submission made at trial was that the court should regard the fact of the husband earning income through the company via his personal labour, without assistance from the wife, after separation, as a post-separation contribution made by him.
2. In this respect, it was submitted, it is irrelevant that that income was earned through the private company of the parties as opposed to an employee of the hospital at which he also works (for example).
3. No reported authority with exactly the present factual scenario has been able to be found. However there are numerous authorities where the court has found a company or trust to be the alter ego of a party albeit the context in those cases and the point being made here are entirely different. (It was noted here that Gould (1993) FLC 92-434 and Stephens (2007) FLC 93-336 were but two examples).
Background Facts
Where in this judgment I make statements of fact they are, unless otherwise specified, my findings of fact.
Short chronology
The wife was born in 1951 and is 62 years of age this year. The husband was born in 1952 and will turn 61 years of age this year.
In 1973, the parties commenced cohabitation. Both the wife and the husband were students at that time and neither had any significant assets.
In 1974, the parties married.
In 1982, the parties’ first child was born.
In 1984, the parties’ second child was born.
On 31 January 2010, the husband left the former matrimonial home. Although there was an initial disagreement between the parties about the date of separation, that was ultimately agreed to be 31 January 2010.
On 13 October 2011, the parties divorced.
On 19 December 2011, interim property orders were made by consent.
On 15 June 2010, the wife filed an Initiating Application.
On 17 April 2012, the matter came before Registrar Cameron and interim property orders were made, by consent, with the effect that several of the parties’ assets were sold and the proceeds invested into a bank account established for that purpose. The balance of that account following the sale of assets was $873,572 being item 2 on the balance sheet set out later in these reasons. The assets sold were:a) The wife’s property at F Street, Suburb G (“the Suburb G property”).
b) The wife’s property at H Street, Suburb I (“the Suburb I property”).
c) The husband’s property at J Street, Suburb K (“the Suburb K property”).
d) The husband’s property at L Street, Suburb M, Queensland (“the Suburb M property”).
e) The wife’s shares and stocks as described in her St George Loan account and with Commsec.
f) The husband’s shares and stocks with Macquarie Private Wealth.
g) The wife’s other stocks and shares.
The order provided for the wife to receive the income from the interest bearing deposit into which the net sale proceeds of all the assets referred to in the order were paid. The wife was to be paid a minimum of $800 per week from the proceeds of the first asset sold. The orders further required the husband and Ziska to pay certain expenses for the benefit of the wife.
Assets acquired during the marriage
Given that the parties’ agreed that their contributions should be assessed as equal at the date of separation, it is only necessary to consider this history briefly.
During the course of the marriage the parties purchased a number of properties, the details of which are as follows:a) In November 1978, the matrimonial home at Suburb B, NSW (“the Suburb B property”) was purchased for $57,000. This property was funded by way of a $25,000 mortgage and funds that the husband had received in damages following a successful personal injury claim in 1978.
b) In November 1986, the wife purchased the Suburb I property for $60,000, funded by way of a $43,000 mortgage and savings.
c) In August 1989, the husband purchased the Suburb M property for $82,000, funded by way of a $69,700 loan from St George Bank and savings.
d) In July 1993, the husband purchased the Suburb K property for $162,000, funded by way of a mortgage from Advance Bank.
e) In October 1996, the wife purchased the Suburb G property for $337,000, funded by way of a loan from St George Bank.
f) In May 2007, the wife purchased a $708,000 property at Suburb N, NSW (“the Suburb N property”) funded by way of a mortgage from St George Bank.
In 1993, the husband and wife acquired the company Ziska. The parties have at all times been equal shareholders and directors of this company.
In around 2001, the parties through Ziska acquired an interest for $150,000 in the O Pty Ltd (“OPL”), a practice which provides services in workers compensation matters. The husband became a director of OPL in 2001.
The husband’s education and work history
The husband works in health services with a specialisation in rehabilitation. He commenced working at the P Hospital in Suburb Q in 1977.
Between 1980 and 1984, the husband trained to specialise. In 1984, he began working at the R Centre (“RC”) in Suburb S. The husband has worked at RC since this time and it remains his current place of employment.
In around 1985 or 1986, the husband began engaging in private consulting work. In 1993, he began conducting assessments through OPL. The fees generated by the husband from his consulting work were paid into the company Ziska. The husband does have another source of private employment, once a fortnight.
In 2009, the husband appeared before the relevant professional standards association in New South Wales following a drink-driving conviction. He was subsequently placed on a Health Program. At paragraph 61 of the husband’s affidavit sworn on 21 February 2012, the husband states that he “reduced [his] drinking substantially” following this incident. During cross-examination the husband asserted that he cut back on his workload around this time in order to achieve a better work-life balance, and that this was one of the reasons why he was able to leave the program. It had further been a recommendation from the persons administering the Impaired Registrants Health Program.
The wife’s education and work history
The wife is a scientist and a housewife. She is not currently employed and has not worked on a full-time basis since around 1982.
The wife completed a Bachelor of Science in 1976 and a Master of Science in 1982. At around this time, the wife was working as a scientific officer at T Hospital. Upon having children, the wife and the husband made a joint decision that she would not seek further employment until the children commenced school.
In 1989, once both of the children were at school, the wife commenced a PhD in Science and began tutoring part-time. She completed her PhD in around 1992. At paragraph 35 of his affidavit sworn on 21 February 2012, the husband asserts that for the next few years the wife undertook some casual scientific work but “did not settle down to any career path”.
Between 1995 and 2011, the wife completed a number of vocational training courses and attained a range of certificates. Details of the studies said to have been undertaken by the wife during this period were set out in the husband’s affidavit material and put to the wife during cross-examination. Based on that evidence, the Court understands the history of the wife’s studies and training since 1995 to be as follows:
a) In 1995, the wife completed a Diploma of Freelance Journalism.
b) In 2001, the wife became a Justice of the Peace.
c) In 2006, the wife completed:
i)a Level II First Aid Certificate;
ii)a Certificate of Attainment as a Barista;
iii)Certificates in the Responsible Service of Alcohol and the Responsible Conduct of Gambling;
iv)Certificates I and II in French;
v)a Certificate III in Hospitality (Commercial Cookery); and
vi)a Barmax Bar Course.
d) In 2008, the wife completed a Certificate III in French.
e) In 2009, the wife completed a Certificate III in Food Processing.
f) In 2011, the wife studied for a Certificate II in Spanish.
During cross-examination of the wife, counsel for the husband questioned the wife as to her motives for undertaking the above studies. The wife asserted that the studies were not undertaken with a view to her gaining employment, but rather for personal interest.
On the evidence before the court, the only work (paid or unpaid) that the wife has undertaken since the early 1990s has been:a) some accounting work for OPL and Ziska;
b) volunteer interpreting work at the Sydney 2000 Olympics; and
c) volunteer work at World Youth Day in 2008.
The Orders Sought
The wife seeks the following orders, as set out in her amended minute of proposed orders:
1.That Final Orders are made in accordance with orders 1.1 to 1.6 inclusive, 2.1 to 2.6 inclusive, 3.1 to 3.7 inclusive, 4.1 to 4.7 inclusive, 5, 6, 7, 8.1, 8.2, 9.1, 9.2,10.1,10.2,11.1,11.2,11.3,12,13 (deleting the words in that order "and such payments to be characterized by the trial judge"),14,16,17,19,(provided that the six month time period in that order runs from 17 April 2012),20,21,22,23,24,25,26,27and 28 of the interim orders made 17 April 2012.
2.That Final Orders are made in terms of orders 15.1 (as amended by deleting the words, “such payments to be characterized by the trial judge”) and 15.2 of the interim orders made 17 April 2012, provided that the payments pursuant to those orders to the wife are to cease upon full compliance with the husband in the relation to orders 6 and 15 herein.
3.That Orders 15.3 and 29 made 17 April 2012 are discharged.
4.In accordance with s90MT(1)(a) of the Family Law Act 1975 (“the Act”) whenever a splittable payment becomes payable to or on behalf of the respondent husband, [Mr Ziska] from his interest in State Authorities Superannuation Scheme (“the Fund”) the applicant wife [Ms Ziska] is entitled to be paid by the Trustee of the Fund the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $950,000 there being a corresponding reduction in the entitlement the respondent husband [Mr Ziska] would have had in the said Superannuation Fund but for these Orders.
5.Order 4 herein binds the Trustee of the Fund and these Orders takes effect from the operative time being the fourth business day after the date of service of these Orders on the Trustee.
6.That the Husband is to forthwith do all acts and things and sign all documents necessary to transfer to the wife all his right title and interest in the [Suburb B] property (Folio Identifier …) unencumbered.
7.That the Court notes that the encumbrance in relation to the [Suburb B] property is to be fully discharged pursuant the interim orders rendered final by virtue of the provisions of order 1 herein.
8.That within 14 days of the date of these orders the wife is ordered to do all acts and things necessary to resign her directorship and any office holding in [Ziska Pty Ltd] and transfer all of her shareholding to the husband.
9.That the husband is to indemnify and keep indemnified the wife in relation to any loss or liability, including costs liability, arising in her by virtue of any:
a.shareholding or office holding in [Ziska Pty Ltd], including but not limited to tax liabilities
b.and in respect of any loan account in [Ziska Pty Ltd], including but not limited to tax liabilities;
and the wife is at liberty to rely upon and plead these indemnities in any action or proceeding brought against her in respect of the matters dealt with by this order.
[Order 10 missing]11.In accordance with s90MT(1)(a) of the Family Law Act 1975 (“the Act”) whenever a splittable payment becomes payable to or on behalf of the respondent husband, Mr Ziska from his interest in [Ziska Super Fund] (“[the Ziska Fund]”) the applicant wife [Ms Ziska] is entitled to be paid by the Trustee of the [Ziska] Fund the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a base amount of $75,000 there being a corresponding reduction in the entitlement the respondent husband [Mr Ziska] would have had in the [Ziska] Fund but for these Orders.
12.Order 11 binds the Trustee of the [Ziska Fund] and these Orders take effect from the operative time being the fourth business day after the date of service of these Orders on the Trustee.
13.
a.That the parties are to give such notice in writing as is reasonably necessary in all the circumstances to the Trustee of the [Ziska] fund as required by the Family Law Act 1975 (as amended) notifying any necessary splitting or flagging relation to such fund as is the subject of Orders 11 and 12 herein.
b.That the husband is to forthwith to do all acts and things necessary and call all necessary meetings of the trustee of the [Ziska] Fund and cause the trustee to pass all such resolutions and to do all such acts (including if necessary the amendment of the trust deed), as are necessary and required by law to ensure compliance by the Trustee with all obligations pursuant to order 11 and the legislation governing the implementation of these orders, including the issuing of all notices to the wife required by statute and regulations.
c.That the husband is to forthwith to do all acts and things necessary and call all necessary meetings of the trustee of the [Ziska] Fund and cause the trustee to pass all such resolutions as are necessary or required by the wife to enable order 11 herein to be put into effect (including if necessary amendment of the trust deed), and in particular to facilitate if required by the wife, the rollover or transfer of the wife’s interest created by order 11 to another fund.
d.That the husband is to pay on behalf of the wife the costs and disbursements arising from compliance with this order and order 11 herein and is to indemnify and keep indemnified the wife in relation to such costs and any liability (including any liability to the trustee), loss or damage incurred by the wife whatsoever (including any tax liability) arising as a result of compliance with the said orders, and the wife is at liberty to rely upon and plead this indemnity in any action or proceeding brought against her in respect of the matters dealt with by this order.
e.That the husband is to indemnify and keep indemnified the wife in relation to any liability loss or damage arising in her, including tax liability, as a result of a breach of the SRS Regulations, SISA Regulations or any other statutory regulation or requirement relating to the Ziska fund either before or after the making of these orders and the wife is at liberty to rely upon and plead this indemnity in any action or proceeding brought against her in respect of the matters dealt with by this order.
f.That the husband is to pay to the wife any sum deducted from the interest acquired by the wife pursuant to the orders herein relating to the [Ziska] Fund, by the trustee by way of fee or reimbursement, within 28 days of such deduction being made and is to indemnify and keep indemnified the wife in respect of any amount deducted by the trustee from the base amount allocated to the wife and this indemnity is to apply in the event that the wife’s interest remains in the fund and administered by the trustee or in the event that the wife’s interest is at her request or the husband’s request rolled over or transferred to another fund and applies to any deduction made by the trustee in association with that rollover or transfer and the wife is at liberty to rely upon and plead this indemnity in any action or proceeding brought against her in respect of the matters dealt with by this order.
14.That the wife is to retain all of her right title an interest in her existing member's account in the [Ziska] fund and the husband is to call all necessary meetings of the trustee of the [Ziska] Fund and cause the trustee to pass all such resolutions and do all acts as are necessary by law to facilitate if required by the wife, the rollover or transfer of the wife’s existing interest in the [Ziska] Fund to another fund, forthwith upon the wife requesting that he do same and giving all appropriate notices to the Trustee.
15.That the parties are to forthwith, upon full compliance with the regime of orders provided for in order 1 herein, sign all documents and do all acts necessary to cause to be paid to the wife the sum of $450,000.00 from the joint St. George Account No. … set up pursuant to order 13 made 17 April 2012 or such other account set up in substitution for same by agreement between the parties.
16.That following payment to the wife of the sum of $450,000.00 as provided for in order 15 herein, the husband is to retain as his sole property in law and equity the balance of funds in St. George Account No. …, or such other account set up in substitution for same by agreement between the parties and is declared as from the date of the said payment pursuant to order 15, the sole owner in law and equity of the said balance of funds in such account.
17.That subject to the orders herein, the Husband and Wife are to retain as their sole property in law and equity and are declared the sole owner in law and equity of all other assets in their respective names, including motor vehicles and their superannuation interests.
18.That the husband is ordered to pay the Wife by way of Spousal maintenance the sum of $1,428.00 per week.
19.Further and in the alternative to order 16 that the husband is ordered to pay to the wife the sum of $200,000.00 lump sum spousal maintenance, such payment to be made within 28 days of this order.
20.That in the event that either the husband or wife refuses or neglects to execute any document, deed or instrument required to give effect to these orders within fourteen (14) days after service of the document upon him or her, the Registrar of the Court appointed and is empowered and authorized to execute any such document, deed or instrument in his or her name and to do all acts necessary to give validity and effect to such document, deed or instrument
21.Any order not complied with be dispensed with.
22.That the Husband pay the Wife’s costs of this application.
The husband provided to the Court a document titled “Husband’s Minute of Orders – 21 March 2013” in which he seeks the following orders:
NOTATION: The purpose and intent of these orders is to bring about an equal division of all property held by the parties.
NOTATION: Pursuant to Orders dated 17 April 2012 the parties have sold their shares and investment properties. The net proceeds of sale have been paid into the parties’ joint St George Maxi Account ...
[Suburb B] Property1.THAT within fourteen (14) days the Husband do all acts and things and sign all documents necessary to transfer to the Wife the whole of his right title and interest in the property situated at and known as [C Street, Suburb B], NSW being the whole of the land contained in Certificate of Title folio identifier … (“[Suburb B] Property”).
Suburb D Property
2.THAT the Husband be declared to be solely and absolutely entitled to the property at [E Street, Suburb D] in the state of New South Wales subject to the Husband’s NAB loan secured on that property.
[Ziska] Pty Limited
3.1 THAT simultaneous with the transfer of the [Suburb B] property, the Wife shall do all acts and things necessary to:
(a) Transfer all her shares in [Ziska] Pty Limited (ABN: (“Z”) to the Husband; and
(b) Resign as a Director and Officer of [Ziska] Pty Limited; and
(c) To remove herself as a signatory and authorised person to act and operate [Ziska] Pty Limited’s account held with St George Bank account no. … and any other accounts relating to the company.
3.2THAT the Husband indemnify the Wife for her liabilities in the loan accounts with [Ziska] Pty Limited and any other liability she has to [Ziska] Pty Limited and any other liability arising as a result of her shareholding or office holding in the Company.
3.3THAT the Wife is hereby restrained from making any withdrawals from any account operated by or held in the name of [Ziska] Pty Ltd ABN ...
Wife’s Motor Vehicle
4.THAT the Wife be declared to be the legal and beneficial owner of the … motor vehicle Registration No. ...
Joint Accounts
5.THAT within seven (7) days from the date of this Order the Husband and Wife shall do all acts and things and sign all documents necessary to close St George joint account … and St George Freedom account … and divide all monies held to the credit of those accounts equally.
Maxi Account
6.THAT within seven (7) days the parties do all acts and things and sign all documents necessary to cause the funds in the Maxi Account be paid in the following order & priority:
(i)The sum of $21,353.20 to the Husband (being the single expert’s fees paid by him of $5,183.20 and $16,170.00);
(ii)The sums of $94,403 to the Wife (being for 2012 tax ($4,034), CGT on [Suburb I] ($45,886) and CGT on [F Street] and shares ($44,483))
(iii)The sum of $133,822 to the Husband (being his 2012 tax, CGT on [Suburb K], CGT on [Suburb M] and BAS/GST 29.10.12 ($5,828, $50,847, $42,573 and $34,574).
(iv)Any fees outstanding to [Mr U].
(v)In payment of the balance in accordance with the formula in Order 8.
7.OTHER than as provided in these orders or as agreed between the parties in writing, the parties are each hereby restrained from withdrawing or dealing with the funds held to the credit of the Maxi Account.
8.1THAT within fourteen (14) days of the date of these Orders the balance of monies held to the credit of the Maxi Account be divided between the parties in accordance with the following formula in Order 8.2 PROVIDED THAT such division does not occur until the payments as provided for in Order 6 have been paid.
8.2IN accordance with the following formula where:
(i)A is $1,100,000 (being the agreed value of [Suburb B] property)
(ii)B is $69,847 (being the equity in the [Suburb D] property $635,000 - $565,153).
(iii)C is $286,420 (being the agreed value of [Ziska Pty Limited] including the Husband’s loan account owed and the Wife’s loan account owing)[ie 282,000 + 26,332 – 21,912].
(iv)D is $64,010 (being the Wife’s retained assets described in Note B)
(v)E is $26,542 (being the Husband’s retained assets described in Note C).
(vi)F is the balance of funds held in the Maxi Account after all payments are made as aforesaid in Order 6.
(vii)G is the Add back of the Wife’s paid legal costs as described in Note D.
The Wife shall receive 50 per cent of the sum equivalent to (A + B + C + D + E +F + G) then less the sum of (A + D + G).
And the Husband shall receive the balance.8.3 AND further provided that in the event that there are insufficient funds to pay the Husband’s entitlement from the Maxi Account then the Husband’s payment to the Wife pursuant to Order 9 hereof shall be reduced by that shortfall amount.
8.4 THE parties shall do all acts and things to close the Maxi account and make the distributions referred to in Order 8.2 within fourteen (14) days of these Orders.
9.THAT the Husband pay to the Wife simultaneously with the division of the Maxi Account pursuant to the immediately preceding Order, the sum of $450,000.00.
[Ziska] Super Fund
10.1IN accordance with s90MT (1)(b) of the Family Law Act 1975:
a.the Wife is entitled to the specified percentage being 100 per cent of each splittable payment made out of the Husband’s interest in the self-managed superannuation fund [Ziska] Super Fund (“the Fund”).
b.The Husband’s entitlement is correspondingly reduced.
10.2 THAT Order 10.1 has effect from the operative time.
10.3 THE operative time is seven (7) days from the date of these Orders.
10.4[Ziska] Pty Limited being the Trustee of the Fund (“the Trustee”) do all such acts and things and sign all such documents as may be necessary to:
a.calculate, in accordance with the requirements of the Family Law Act 1975, the entitlement created in Order 21.1 of these Orders; and
b.pay the entitlements whenever a splittable payment becomes payable.
10.5AFTER service of the payment split notice pursuant to reg 7A.03 of the Superannuation Industry (Supervision) Regulations 1994 the Wife do all such acts and things and sign all such documents as are necessary, including but not limited to exercising the request pursuant to reg 7A.05 of the Superannuation Industry (Supervision) Regulations 1994, to create a new interest in her name in the Fund.
10.6THE Husband be and is restrained from requesting the Trustee, in accordance with reg 7A.06(2) of the Superannuation Industry (Supervision) Regulations 1994, to rollover or transfer the transferable benefits to another superannuation fund.
10.7SUBJECT to the Trustee giving effect to the request by the Wife in accordance with Order 10.5 of these Orders, the Husband will cease to be a member of the Fund.
10.8THAT within fourteen (14) days of the date of these Orders each of the Husband and the Wife shall do all acts and things and sign all documents and vote in favour of all resolutions to cause [Ziska] Pty Limited (and any new Trustee) to appoint a new Trustee of the Fund (as nominated by the Wife).
10.9THAT as and from the making of these Orders, the Wife be responsible for and indemnify the Husband in relation to the Fund, and any liability of the Husband personally arising out of his involvement in the Fund, past, present or future as follows:
(a) any and all liability for payment of tax to the Deputy Commissioner of Taxation past, present or future, and howsoever arising including but not limited to capital gains tax
(b)
(i)any and all liability of the Husband for individual income tax in respect of the Fund past, present or future, and howsoever arising including but not limited to capital gains tax.
(ii)any and all creditors of the Fund
(iii)any and all borrowings of the Fund
10.10THAT this Order binds the Trustee of the Ziska Superannuation Fund.
SASS and SANCS Super Split
11.1[Order 11.1 struck out]
11.2THAT in accordance with paragraph 90MT (1)(a) of the Family Law Act 1975:
(a) [Ms Ziska] is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulation 2001; and
(b) [Mr Ziska’s] entitlement to payments out of his interest in the State Authorities Superannuation Scheme and State Authorities Non-contributory Scheme, and the entitlement of such other person to whom a splittable payment may be payable, is correspondingly reduced by force of this order.
11.3THAT the Trustee of the SAS Trustee Corporation Pooled Fund (“the Trustee”) shall do all such acts and things and sign all such documents as may be necessary to:
(a) calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement created for [Ms Ziska] by clause(s) 11.1 and 11.2 of this order; and
(b) Pay the entitmenet whenever the Trustee makes a splittable payment out of [Mr Ziska’s] interest in the State Authorities Superannuation Scheme and State Authorities Non-contributory Scheme.
11.4THAT these orders have effect from the operative time and the operative time for this order is four (4) days after service of these Orders on the Trustee.
11.5THAT this order binds the Trustee of the State Authorities Superannuation Scheme and the State Authorities Non-contributory Scheme.
Other Orders
12.THAT other than as provided in these Orders that as between the parties, the Husband and Wife each be declared to be the legal and beneficial owners of all other property and all other financial entitlements (not hereinbefore provided for) in their names, possession or under their control or to which each party is presently legally or beneficially entitled including furniture and furnishings, monies in bank accounts, real estate, motor vehicles, shares, superannuation entitlements and insurance policies.
13.THAT other than as provided in these Orders, that as between the parties the Husband and Wife each be responsible for all debts and liabilities standing in their name and indemnify the other in respect thereof.
14.IN the event that either party refuses or neglects to sign (within 14 days of a reasonable request to do so) any documents necessary to give effect to these Orders the Registrar or a Deputy Registrar of the Family Court of Australia is hereby appointed pursuant to the provisions of Section 106A of the Family Law Act to execute all deeds and documents on behalf of such party.
15.THAT all Orders made 17 April 2012 be discharged.
16.That the wife pay the husband’s costs.
17.THAT all outstanding applications be dismissed.
NOTE:
A.The payment at
(a)Order 6(i) is the fees paid by the Husband for expert’s reports to date for [Mr V] and [Mr U] previously ordered.
(b)Order 6(ii) is the Wife’s 2012 tax liability, the Wife’s CGT on Suburb I and sale of shares and CTG on [F Street].
(c)Order 6(iii) is the Husband’s 2102 tax liability, CGT on [Suburb K] and [Suburb M] and BAS/GST 29.10.12
B.The Wife also retains the following assets and liabilities as at October 2012:
1. Jewellery, furniture, coins and notes $26,472.00
2. St George Freedom account … 8.00
3. Macquarie account 706795 5.00
4.Bendigo bank account … 71.00
5.Deutsche Bank €2,089 2,584.00
6.Post Bank €2,736 3,392.00
7.Colonial First State Account… 1,978.00
8.[Motor vehicle 1] 1,675.00
9. [Motor vehicle 2] $27,825.00
$64,010.00
C.The Husband also retains the following assets and liabilities as at October 2012:
1. [Motor vehicle 3] $29,750.00
2.NAB Classic Account … 8,344.00
3.St George Freedom Account… 9,163.00
4.Macquarie Bank account … 3,137.00
5.Furniture 2,951.00
$53,345.00
Less
6. Esanda Car loan $26,803.00
$26,542.00
D.The Wife’s paid legal costs as an add back of $62,671.00
On 23 March 2013 the parties tendered an agreement which was marked as Exhibit X4. That document recited as follows:
Agreed Orders in respect of [Ziska] Pty Limited 21.03.13
The parties agree that for the purpose of the trial, the valuation of the parties’ shares in [Ziska] Pty Limited be $282,000 on the following basis:1. That within fourteen (14) days of Orders, the Wife transfer her shares in [Ziska] Pty Ltd to the Husband.
2. That within fourteen (14) days of the date of the Orders the Wife resigns as a Director of the company and any other position held.
3. That within fourteen (14) days of the date of the Orders the Wife sign all documents necessary to remove herself as a signatory and authorised person to act and operate the account held by the company with St George Bank account no. … and any other documents relating to the company.
4. The husband will indemnify the Wife for her liability in the loan accounts with the company and any other liability she has to the company and any other liability arising in her as a result of her shareholding or office holding in the company.
It is further noted and agreed that:
a. That item 6, 19, and 26 remain in the balance sheet with those agreed figured, namely:
6. Wife’s motor vehicle value - $27,825.00
19. Husband’s loan to the company - $26,332.00
26. Wife’s loan from the company - $21,912.00
b. The wife will receive the motor vehicle 2; and
c. It is noted that the Wife’s loan for the motor vehicle 2 has been repaid.
d. The husband will not press for costs of a member’s voluntary winding up and tax incurred on winding up the company which is set out in Item 21 of the Balance Sheet (in the sum of $35,458.00).
The Issues
By the time the matter came back before the Court in March 2013, the parties had resolved a number of issues arising from the balance sheet. They had earlier agreed that their contributions to the date of separation should be assessed as equal.
The issues for determination which remain are as follows:a) differences on the balance sheet;
b) the date at which the valuations of assets, superannuation, resources and liabilities on the balance sheet should be taken (October 2012 or March 2013);
c) post separation contributions;
d) section 75(2) factors (in particular, the future earning capacities of each party;
e) whether the husband’s long service leave and accumulated annual leave should be treated as an asset or resource;
f) how the husband’s superannuation entitlements should be split between the parties; and
g) the structure of any Orders which the court makes, specifically superannuation splitting issues.
Credit
Husband
The husband presented as an apparently straight forward and honest witness. He did occasionally descend to verbosity, however, I did not consider it was designed to mask the truth. I accept that he did his best to provide his evidence honestly and did not by his evidence seek to mislead the Court. The husband appeared to have a better memory of relevant financial history than the wife and had a greater understanding of the business of Ziska and of the OPL than the wife.
Wife
The wife gave her evidence in an apparently honest manner. She was uncertain about dates and her recollection of expenditure was not good, however, I did not think she was seeking to mislead the Court at any time.
Overall I consider the accuracy of the husband’s evidence should be preferred to that of the wife where there is a conflict, unless I specifically say otherwise in relation to a particular fact in the body of this judgment.
Evidence
Documents
The wife relied on the following documents:
a) Wife’s affidavit sworn 24 February 2012;
b) Wife’s Financial Statement sworn 17 February 2012;
c) Wife’s Financial Statement sworn 27 September 2012;
d) Wife’s affidavit sworn 16 August 2012;
e) Wife’s affidavit sworn 28 September 2012;
f) Affidavit of Ms W sworn 23 February 2012;
g) Affidavit of Dr X sworn 25 February 2012;
h) Affidavit of Dr Y sworn 26 February 2012;
i) Affidavit of Dr Y sworn 11 October 2012;
j) Affidavit of Dr Z sworn 8 October 2012;
k) Affidavit of Mr AA sworn 9 March 2012.
The husband relied on the following documents:
a) Husband’s affidavit sworn 21 February 2012;
b) Husband’s affidavit sworn 28 September 2012;
c) Husband’s Financial Statements sworn 6 September 2010, 21 February 2012 and 8 October 2012;
d) Affidavit of Prof. BB sworn 5 October 2012;
e) Affidavits of Mr CC both sworn 5 October 2012.
There were affidavits filed by joint experts. The evidence of Mr CC and Mr AA relates to the husband’s superannuation. Both provided affidavits and there were two joint statements exhibited and marked X6 and X8.
There were also affidavits by Mr U and Mr DD relative to the value of specific assets. Ultimately the evidence was not relied upon as the parties reached agreement as to the value of those assets as illustrated in Exhibit X5, being the final agreed balance sheet.
Oral evidence
In addition to the wife and the husband, the following people gave oral evidence:
a) Dr. X;
b) Dr. Y;
c) Dr. Z;
d) Ms W;
e) Prof. BB.
Exhibits
The wife’s costs letter was marked Exhibit W1.
The wife’s amended minute of proposed order was marked Exhibit W2.
The wife’s list of objections was marked Exhibit W3.
Annexures 4, 5 and 6 to the wife’s affidavit dated 24 February 2012 were together marked Exhibit W4.
Copies of invoices received and paid for by the wife in 2011 were tendered as a bundle and marked Exhibit W5.
A bundle of credit card statements as at 31 January 2010 was marked Exhibit W6.
A schedule of the wife’s personal account with St George Bank (…) for the period 27 January 2010 until 29 September 2012 was marked Exhibit W7.
A bundle of documents comprising the ledger and statements for the Lowdoc loan account with CBA (…) and other miscellaneous ledgers and notes was marked Exhibit W8.
Documents establishing funds advanced by Ms EE to the wife were marked Exhibit W9.
A schedule containing details of the wife’s post separation financial contributions was marked Exhibit W10. This schedule is set out below under the heading “Schedules tendered pursuant to the court’s directions”.
Documents supporting Item 5 in the schedule which became Exhibit W10 were marked Exhibit W11.
Documents relevant to Item 2 in the schedule which became Exhibit W10 were marked Exhibit W12.
A schedule containing details of the sale of assets and application of funds by the wife post separation was marked Exhibit W13. This schedule is set out below under the heading “Schedules tendered pursuant to the court’s directions”.
A land tax assessment notice with an ANZ credit card statement attached, together with a quarterly electricity notice and receipt, was marked Exhibit W14.
The wife’s statement of position regarding the orders sought by her was marked Exhibit W15.
The husband’s costs letter was tendered and marked Exhibit H1.
The husband’s minute of proposed order was tendered and marked Exhibit H2. The Court notes that this document was subsequently replaced by Exhibit H14.
The husband’s list of objections was marked Exhibit H3.
Two general ledgers compiled by the wife’s bookkeeper were tendered and marked Exhibit H4.
A letter dated 17 October 2012 to the husband’s solicitors from Mr. FF, HR Business Analyst at the R Centre, was tendered and marked Exhibit H5.
A document dated 27 March 2012 regarding the R Centre Upgrade addressed to staff was tendered and marked Exhibit H6.
A schedule containing details of the sale of assets and application of funds by the husband post separation was marked Exhibit H7. This schedule is set out below under the heading “Schedules tendered pursuant to the court’s directions”.
A schedule containing details of the husband’s post separation financial contributions was marked Exhibit H8. This schedule is set out below under the heading “Schedules tendered pursuant to the court’s directions”.
A schedule containing details of post separation contributions by the husband for the benefit of the wife solely or for the benefit of the parties jointly was marked Exhibit H9. This schedule is set out below under the heading “Schedules tendered pursuant to the court’s directions”.
A copy of the wife’s general ledger with respect to payment of legal costs was marked Exhibit H10.
A copy of credit card statements of the husband for 3,4 and 5 October (as highlighted), was marked Exhibit H11.
The husband’s individual tax return for the year ending 30 June 2012 was marked Exhibit H12.
A letter from the HH Centre was marked Exhibit H13.
The husband’s proposed minute of orders dated 31 March 2013 together with an aide memoire regarding the effect of the orders sought was marked Exhibit H14. The Court notes that these documents replaced Exhibit H2.
A jointly prepared balance sheet was marked Exhibit X1. The Court notes that an updated jointly prepared balance sheet was subsequently tendered and marked Exhibit X5.
A jointly prepared chronology was marked Exhibit X2. The Court notes that to the extent that the wife’s entries were not denied in blue marking, they were either admitted or said to be of marginal relevance.
Orders of the Court dated 18 April 2012 were marked Exhibit X3.
A set of agreed orders in respect of Ziska was marked Exhibit X4.
A jointly prepared balance sheet as at 21 March 2013 was marked Exhibit X5. This version of the balance sheet replaced Exhibit X1 and is set out below.
A joint statement regarding the valuation of superannuation (with compromised values marked in blue pen) was marked Exhibit X6.
An agreed schedule of bank accounts and/or liabilities on behalf of the parties dated 31 January 2010 was marked Exhibit X7. This schedule is set out below under the heading “Schedules tendered pursuant to the court’s directions”.
A joint statement of valuers regarding two questions on superannuation (with the date 16 October 2012 underlined) was marked Exhibit X8.
Schedules tendered pursuant to the court’s directions
On 18 October 2012, the Court directed the parties to prepare six schedules before the recommencement of the hearing in March 2013.
Those six schedules were tendered and became exhibits at the hearing. They are set out at sub-paragraphs (a) to (f) below.
I have not included the footnotes to each schedule, however, they did form part of the tendered schedules.a)“Draft schedule of post separation financial contributions served on behalf of the applicant wife pursuant to Order 5(a) dated 18 October 2012”
| Date | Nature and Source of Contribution | Value of Contribution - (payments which were not her personal expenditure) | Husband’s comments on Wife’s post separation contribution | |
| 1 | 15.01.2010 | Wife sold shares (ITO) for the sum of $26,000.00. She paid $17,500.00 into the Low Doc Loan and balance into Wife’s personal Freedom Account AB. | $17,500.00 | Not agreed as a post separation contribution. This is a sale of pre-separation asset. |
| 31.01.2010 | Separation. | Agreed | ||
| 2 | 12.02.2010 | A sum of $25,000.00 was paid from the F Street Home Loan redraw facility to account AB and was subsequently applied to the payment of pre separation Credit Cards as set out below. | a. Not agreed that a loan drawdown of $25,000.00 represents a post separation contribution. b. Agreed that on 12.2.10 the Wife redrew on the St George loan account …, increasing the separation debt by $25,000.00 | |
| 3 | 18.02. 2010 | An amount of $10,705.29 was transferred from the wife’s Colonial First State Managed Fund Account … to account AB and then applied to the payment of pre separation Credit cards as set out below. | a. Not agreed that the cashing in of Colonial First State Managed Fund is a post separation contribution. This realisation of matrimonial asset. b. Agreed that on 18.2.10, the Wife withdrew funds from the Colonial Managed fund in the sum of $10,705.29 and deposited it into her St George Freedom Account AB. | |
| 4 | Total pre separation Credit cards paid from account AB between 12.02.2010 and 8.03.2010 | Citibank Credit Card $7,878.68 ANZ Credit Card $6,000.00 NAB Credit Card $2,200.00 | $29,078.68 | a. Not agreed as a post separation contribution. b. Agreed that Wife deposited the following amounts into her credit card: Citibank bal 31.1.10 $7,876 c. Disputed that Wife deposited $8,000 into NAB credit card but Husband concedes Wife deposited into St George Visa Card the following deposits: Balance 31.1.10 $8,875 |
| 5 | 31.01.2010 to Interim orders | Wife’s net income from rent, dividends and shares totalling $113,171.38 was applied to: - Paid from Low Doc Portfolio Loan $12,548.18 - Paid from Macquarie Bank $1,808.00 House repair and maintenance (from Low Doc Loan) $2,677.00 Payment of Portfolio loan … from Macquarie Bank $300.00 cheque Payment of Portfolio loan cash from dividends $1,230.00 | $113,171.38 | a. Not agreed b. Husband does not agree that sale of post separation matrimonial shares is a post separation contribution – it is capital realisation. c. For the 3 financial years ended 30.6.12 (including pre separation), the Wife’s net income from rent and dividends was $13,294 (see note 1 for particulars). d. Wife’s figures claim net income from rent etc, and therefore Wife claiming a contribution from her net income towards Suburb II home loan, Suburb I/ F Street loan and interest payments is claiming those deductions twice as a contribution. e. Husband cannot verify Wife’s figures. Any contribution by Wife to the house repair and maintenance could only have come from capital (realisation of assets or increase in debts by draw down) and not from income. f. If Wife used her net income as a contribution, where did her living expenses come from? |
| 6 | Separation to date. | Repairs to the Suburb B property $18,873.38 paid from .. $2,677.00 from Low Doc Loan (Rental and Dividends income) - Paving | $18,873.38 | a. Not agreed. b. Any repairs to Suburb B can only have come from capital (or drawing on loans), not from income. c. Wife’s figures do not provide sufficient particulars for Husband to agree to the amount spent on Suburb B, nor the source of the contribution. d. Husband agrees Wife spent some money on Suburb B but Husband cannot quantify the amount from the discovered material. |
| 7 | Separation to date | Repairs to F Street and Suburb I Deducted from the rental income by the agents | $2,334.00 | a. Not agreed. b. Claiming repairs to F Street and Suburb I are already included in the deductions of net rent received by the Wife (refer item 5 above) and is claiming this twice. c. Not agreed as repairs to F Street and Suburb I was included in item 5. |
| 8 | 9.04. 2010 | The wife sold JJ Street, Suburb II in the sum of $748,000.00. The mortgage of $715,153.77 was discharged and the surplus of $13,189.24 was applied to joint debts (after transfer of the money to the wife’s Freedom Account AB) particularised as follows: 25/5/10 $1,000 Ms MM | $715,153.77 $13,189.24 | a. Not agreed that the discharge of the Suburb II mortgage from sale proceeds is a post separation contribution. It is payment of a matrimonial debt from a pre separation asset. b. Agreed that Wife received Suburb II net proceeds of sale $13,189.24, paid into Wife’s Freedom account on 24.05.10 but it is denied this was used as listed by the Wife in this item. c. Payment of Suburb I and F Street levies/rates has already been included in the net rent received by the Wife in item 5 and claimed by her as a contribution at that item. d. It is impossible for the Husband to concede the Suburb II net proceeds of sale were applied by the Wife to anything other than for living expenses from the documents provided. |
| 9 | 23.06.2010 | Sale of MAN shares - $21,709. Paid credit card debts and living expenses Payment to Citibank card is for pre-separation debts as Citibank card was used to pay Westpac $7,000 and ANZ $9,000 of pre-separation debt. City Bank Credit card $5,000.00 Council Rates F Street $765.35 ATO $904.00 Citibank Credit Card $5,010.00 Ashfield Taxation $95.00 |
| a. Not agreed. The Husband does not concede that sale of a pre-separation asset is a post separation contribution. b. Husband agrees Wife received proceeds of MAN shares of $21,709. c. Husband disputes share proceeds used to pay Citibank pre separation debt. That debt was repaid on 19.2.10 (see item 4(c) above), and the debt was then $0. d. F Street rates have been included in the Wife’s net income in item 5 and is counted twice as a contribution. e. Husband agrees Wife paid $5,000 on Citibank card on 07.06.10 (which predates the receipt of sale of MAN shares) and $5,000 on 25.6.10, but does not concede the source is from the MAN sale of shares. f. MAN share sale deposited into Wife’s Freedom account #AB on 23 and 24.06.10 and on 25.06.10 Citibank was paid $5,000, ANZ Bank was paid $3,241, cash withdrawn $5,300, but otherwise Husband does not know how the balance was applied. |
| 10 | 19.12.2011 | Wife sold Foster shares for $5,405.40. This amount was paid into her AB account and paid living expenses plus $1,200 to Low Doc Loan and $300 to Portfolio Loan | $1,200.00 $300.00 | a. Wife received $5,405 from sale of Foster shares but not agreed to the contribution asserted by the Wife. Husband does not concede that sale of pre separation matrimonial shares is a post separation contribution. |
| Total to date of Consent Orders | $910,774.80 | Not agreed | ||
| 11 | 17.04.2012 | Date of Interim Consent Orders providing inter alia for the sale of various assets and the investment of the proceeds subsequently the parties set up Joint Maxi Account (…) (“joint maxi account”) to receive sale proceeds. | Post Interim Orders | Agreed. |
| 12 | 18.05.2012 | Sale of shares pursuant to the orders by the wife – miscellaneous $19,919.60 paid into joint maxi account on 7.06.2012. | $19,919.60 | a. Not agreed as a post separation contribution. This is the sale of a matrimonial asset and is capital. b. Agreed to the figures and amount paid to Maxi Account |
| 13 | 18.05.2012 | Sale of mixed shares by the wife (Miscellaneous, St George and Comm Sec) $169,056.21 and Australian Unity $610.61 paid into joint maxi account. | $169,056.21 $610.61 | a. Not agreed as a post separation contribution. This is the sale of a matrimonial asset and is capital. b. Agreed to the figures and amount paid to Maxi Account. |
| 14 | 28.06.2012 | Australian Unity $722.73 paid into joint maxi account on 11 July 2012. | $722.73 | a. Not agreed as a post separation contribution. This is the sale of a matrimonial asset and is capital. b. Agreed to the figures and amount paid into Maxi Account. |
| 15 | 7.08.2012 | The sale of the Suburb I investment property (in the wife’s name) was settled at $371,000. The Suburb I and F Street mortgages were discharged in the sum of $203,675.78. An amount of $48,890.01 was paid to discharge and close the Portfolio Loan 118437961. The net proceeds of sale being $108,028.80 were paid into the joint maxi account. | $203,675.78. $48,890.01 | a. Not agreed as a post separation contribution. This is the sale of a matrimonial asset and is capital. b. Agreed to the figures and amount paid into Maxi Account. |
| 16 | 5.12.2012 | The F Street property was sold and the proceeds paid as follows: Discharge of Low Doc Loan (2071) in the sum of $181,150.00. Discharge of Wife’s Credit Cards: Payment of rates and levies: $4,791.00 Balance of $397,668.00 was paid to the joint maxi account. | $181,150.00 $4,791.00 | a. Not agreed as a post separation contribution. This is the sale of a matrimonial asset and is capital. b. Agreed as to the figures and payment on Wife’s Credit Cards and into Maxi Account. |
| Total Post Interim Orders | $1,134,512.74 | Not agreed. The Wife’s asserted contributions are in the majority disposal/sale of pre separation matrimonial assets held by the Wife. The Husband concedes that the Wife received some modest net income from rent and dividends and made some modest contributions to the Suburb B home repairs and maintenance (which cannot be ascertained by the Husband) but otherwise does not agree to the Wife’s asserted contributions post separation. |
More recently, the court’s power to order lump sum maintenance in lieu of periodic maintenance was examined in Brown & Brown (2007) FLC 93-316 (“Brown”), where the process for calculating lump sum payments was also considered.
In Brown, the Full Court heard an appeal against a first instance decision of O’Ryan J where his Honour made an order for lump sum rather than periodic maintenance. The appeal centred on the adequacy or not of his Honour’s reasons in arriving at a lump sum figure of $3,750,000; however, the Full Court also provided some valuable insight into the court’s ability to elect the form of maintenance to be paid. Their Honours Kay, Warnick and Boland JJ commented at [61]:
61. O’Ryan J had a discretion to choose the form of maintenance, as was recognised in In the Marriage of Vautin(1998) 23 Fam LR 627 ; (1998) FLC 92-827 at [42]–[43] by Fogarty and Burton JJ:
[42] Maintenance is a term of wide meaning directed to various forms of provision for the support of a spouse or child … In making the order which is appropriate in that context, the Court may make a periodic order or lump sum order or a combination of both and/or make any other orders of the kind referred to in s 80(1).
Their Honours went on to address the appellant’s submission that, by ordering a lump sum to be paid, O’Ryan J had effectively provided to the wife (the subject of the maintenance order) a buffer against “adverse vicissitudes”. On this point, the Full Court suggested that caution should be exercised when ordering lump sum maintenance owing to its final nature. Their Honours also remarked that some consideration of potential future disadvantage to the person paying maintenance should be disclosed in the judge’s reasoning. The following was said at [70]–[72]:
70. Senior counsel for the husband also submitted that when the trial judge concluded that the wife should receive an amount that was not dependent on the future vicissitudes of either party, he effectively buffered the wife against adverse vicissitudes, whether for herself or for the husband, but unfairly took no account in the husband’s favour of vicissitudes disadvantageous to him.
71. We accept that when a trial judge assesses capitalisation of a periodic sum it is common and generally proper to take account of vicissitudes that might “cut” either way. That course is simply a reflection of what Fogarty and Burton JJ observed in Vautin at [43]:
[43] … that in the exercise of the power to order lump sum maintenance caution is usually appropriate because of the apparent finality of lump sum orders and the difficulties in making predictions into the future …
72. However, given that the husband already had the capacity to pay the lump sum, probably the only vicissitude which might have affected the assessment would be the prospect of a massive loss of fortune for the husband. That might have been thought of as so unlikely to occur, at least to the degree where the contemplated award to the wife would be inappropriate, as to be effectively ignored. Nonetheless, while we think that the range of vicissitude in this case is certainly less than in many other cases where a capitalisation exercise is carried out, we conclude that the failure of O’Ryan J to disclose in his assessment process any consideration of prospective disadvantage to the husband constitutes at least a failure of reasons.
In the circumstance I consider the husband should have the option to pay spouse maintenance for a fixed period of three years from the date of the orders, where that payment would be $500 per week or, alternatively, a lump sum of $70,000 (rounding up) being the equivalent of 2.7 years payment in advance. Such orders would fulfil the requirement of s 81.
The formula for calculating the figure of $70,000 has no accounting or scientific foundation. It is derived solely from the formula chosen by the wife herself. The wife sought a maintenance payment of $1,428 per week or in the alternative $200,000 by way of lump sum. The lump sum chosen by the wife represents just on 2.7 years of weekly payments of $1,428. Given the wife created the formula she was prepared to accept she could not be heard to complain should the court adopt her formula for the purpose of calculating an alternate lump sum figure to a periodic figure should the husband prefer same.
I raised this issue of the calculation of a lump sum alternative with the parties on 30 August 2013. Neither opposed the husband being given an opportunity to pay out the periodic payment of spouse maintenance by a periodic sum calculated as above set out. The wife submitted that the calculation she had made was based on actuarial advice.
Other Determinations
The orders of 17 April 2012 provide for the wife to receive the whole of any interest accruing on the St George Account into which the parties deposited the net sale proceeds of the assets specified in the order. The orders provided for the Court to determine how the payment to the wife from the account is to be characterised. The final submissions of the parties did not address this issue. I therefore relisted the matter on 30 August 2013 and sought submissions on this point.
The wife submitted that the whole of the $800 should be designated as spouse maintenance. If that was to be the case then the husband would probably need to pay the income tax on that sum as it is almost totally composed of the interest earned on the fund. I say “probably” because there is no evidence as to how the tax burden would fall. The account is in the joint names of the parties. It may be that each would need to account for half the interest earned in their individual tax returns.
The husband submitted the payment should be treated as a partial property order.
The fund was created by the sale of assets, some of which were in the wife’s name and some in the husband’s name. The properties had generated incomes for the parties prior to the sale of same. Each paid tax on the income earned from the properties standing in their name.
The wife submits that the husband’s ability to pay the tax on the $800 per week is greater than the wife’s given his vastly superior income.
I consider the most likely result is that each will be required to include half of the income earned from the St George Maxi account as part of their income for the purpose of calculating tax payable. The amount the wife will receive, if it be her only income for the year, will accrue a tax liability of less than $100 for the year, as stated in public government publications.
I consider it is appropriate in the circumstances of this case to designate the payments made to the wife to be 50 per cent spouse maintenance and 50 per cent her own entitlement to income.
The effect of that determination will be to accrue to the husband the liability to return in his income tax return half of all interest accruing to the account and paid to the wife. The wife will likewise have a tax liability for the part which she received as her entitlement to the interest, namely 50 per cent.
In addition to the payments to be made to the wife of $800 per week, the orders of 17 April 2012 provided for the husband to pay the wife a further $2,000. That payment also required the trial judge to designate it with a label which could be considered in this trial.
The wife submitted that the sum should be designated as spouse maintenance because it was clearly to meet an immediate need of the wife. The husband submits it should be a partial property payment.
I take into account the husband’s superior income and I propose to designate the payment as spouse maintenance.
The wife sought the discharge of all outstanding orders as part of the orders the Court should make. The husband reminded the Court that there were orders made on 12 October 2011 in the Federal Magistrates Court which were consent orders and provided for the husband to be reimbursed for one half of the experts fees which he paid on behalf of both parties. I propose to preserve that order while discharging all others.
I certify that the preceding three hundred and thirty-seven (337) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench delivered on 3 September 2013.
Associate:
Date: 3 September 2013
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