Court Rules $90,000 Withdrawal Not be a “Add Back” as Wife Naive Rather than Reckless

In the recent case of Martin & Wilson [2016] FCCA 235 (11 February 2016), Judge Phipps dealt with an 11 year de facto relationship where the respondent (Ms Wilson) withdrew $90,000 of superannuation at the commencement of the litigation but lost it as part of a failed business venture. The remaining asset pool included a block of land ($80,000) and Mr Martin’s superannuation ($50,000).

After citing case law, Judge Phipps considered in this case that …

“ … as a general rule funds reasonably expended on living expenses are not added back.

The applicant’s argument that the respondent’s withdrawal of her superannuation and spending on the establishment of a (business omitted) should be added back into the property pool is twofold. It is either premature distribution of a de facto relationship asset, or the money was lost through conduct of the respondent which was reckless, negligent or wanton.

The unrepresented respondent’s approach was that this was her money and she was entitled to use it. The arguments for her case are two. One is that, while at the time of separation superannuation was part of the property available for distribution as an asset of the de facto relationship, this was an attempt by her to establish for herself a means of earning an income and so it should be treated as analogous to reasonable living expenses. The other argument is that the court has the discretion to consider all the circumstances and that in all the circumstances it should not be added back.

… The respondent had no experience in running a (business omitted). On the other hand there is no evidence, one way or the other, about its likely prospects for success. For instance, there is no evidence about whether it was in a location where there would be a demand for (omitted). There is no evidence one way or the other about any attempts by the respondent to promote the (business omitted).

There is no evidence that the respondent embarked on a course of conduct which was designed to reduce or minimise the value of the de facto relationship property. She believed she could successfully conduct a (business omitted). She was attempting to enhance the value of her superannuation, not reduce it or minimise it.

The evidence does not show that the expenditure on the (business omitted) was reckless, negligent or wanton. The respondent may have been naïve in thinking that she could successfully conduct a (business omitted), but the evidence does not show that the success of the venture was impossible or even improbable. It may have been successful in which case the applicant would have benefited.
The Court assessed contributions as 60:40 in favour of Ms Wilson due to her initial contribution of $70,000. No adjustment was made under s 90SF(3) (matters to take into account when determining whether to grant maintenance). The Court noted that:

“ ( … ) Given the uncertainty about the respondent’s employment and that she is six years older a small adjustment in her favour, perhaps 5%, would be appropriate. However, I intend taking into account the loss of her superannuation as a circumstance which the justice of the case requires to be taken into account.

If the respondent had remained in her employment she would still have that income and would have $90,000 superannuation. If that was the case then no adjustment would be appropriate. Given that the applicant has more working years left than the respondent an adjustment to the superannuation would not have been appropriate.”

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