AHOKAS & AHOKAS
[2013] FamCA 983
•17 December 2013
FAMILY COURT OF AUSTRALIA
| AHOKAS & AHOKAS | [2013] FamCA 983 |
| FAMILY LAW – CHILDREN – Best interests – presumption of equal shared parental responsibility applies – not in children’s best interests to live for equal time with parents – children to live with mother and spend substantial and significant time with father. FAMILY LAW – PROPERTY – Contributions and adjustments – mother’s initial contributions greater – contributions during relationship equivalent – parties’ company shareholdings not valued and therefore retained in specie – contribution-based entitlements in other assets and superannuation interests assessed at 55/45 in favour of the mother – father has significantly greater earning capacity – adjustment made in favour of mother by way of lump sum rather than percentage proportion of property. |
Child Support (Assessment) Act 1989 (Cth)
Corporations Act 2001 (Cth)
Fair Work Act 2009 (Cth)
Family Law Act 1975 (Cth) ss 60B, 60CA, 60CC, 61B, 61DA, 64B, 65D, 65AA, 65DAA, 65DAC, 65DAE, 68B, 75, 79, 81, 106A
| Family Law Legislation Amendment (Family Violence and Other Measures) Act 2011 (Cth) AMS v AIF (1999) 199 CLR 160 Cales & Cales (2010) FLC 93-459 |
Goode & Goode (2006) FLC 93-286
Marriage of Clauson (1995) 18 Fam LR 693
Marriage of Coghlan (2005) 33 Fam LR 414
Marriage of Phillips (2002) 29 Fam LR 128
MRR v GR (2010) 240 CLR 461
Parrott v Public Trustee of NSW (1993) 17 Fam LR
Sampson v Hartnett (No.10) (2007) FLC 93-350
Stanford v Stanford (2012) FLC 93-518
U v U (2002) 211 CLR 238
| APPLICANT: | Ms Ahokas |
| RESPONDENT: | Mr Ahokas |
| FILE NUMBER: | SYC | 1304 | of | 2012 |
| DATE DELIVERED: | 17 December 2013 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Justice Austin |
| HEARING DATE: | 25 & 26 November 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Simpson SC & Ms Dart |
| SOLICITOR FOR THE APPLICANT: | KDB Holmes Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr T Hodgson |
| SOLICITOR FOR THE RESPONDENT: | Aitken Lawyers Pty Ltd |
Orders
Parenting Orders
Any and all former orders relating to the following children (“the children”) are discharged:
(a)B, born … 2003;
(b)C, born … 2005; and
(c)X, born … 2009.
The parties shall have equal shared parental responsibility for the children.
The children shall live with the mother.
Each of the parties shall take all reasonable steps to ensure that the children spend time with the father as follows, or as otherwise agreed:
(a)During school terms:
(i)Each alternate week from the conclusion of school on Thursday until the commencement of school on the following Monday (or Tuesday if Monday is a public holiday), commencing on the first Thursday of each term; and
(ii)Each alternate week from the conclusion of school on Thursday until the commencement of school the next day, commencing on the second Thursday of each term; and
(b)During school holidays, except the Christmas school holidays, for the second half of such holidays in every even numbered year, and for the first half of such holidays in every odd numbered year.
(c)During the Christmas school holidays, for the second half of such holidays in the years when the holidays commence in an even numbered year, and for the first half of such holidays in the years when the holidays commence in an odd numbered year.
For the purposes of implementation of Order 4 hereof, the school holidays are deemed to commence at the conclusion of school on the last day of the school term, the holidays are deemed to end at 6.00 pm on the last day preceding the day upon which the children are due to return to school, and the mid point is the day and time halfway between those points.
Unless otherwise agreed, Order 4 hereof is suspended during the following periods:
(a)From 3.00 pm on Christmas Eve until 3.00 pm on Boxing Day each year, during which period the children will spend time with the father from 3.00 pm on Christmas Eve until 3.00 pm on Christmas Day, and with the mother from 3.00 pm on Christmas Day until 3.00 pm on Boxing Day in odd numbered years, with the same arrangements in reverse in even numbered years.
(b)From 6.00 pm Saturday until the commencement of school on the following Monday on each Mother’s Day and Father’s Day weekends, during which periods the children shall spend time with the mother on the Mother’s Day weekend and with the father on Father’s Day weekend.
Unless otherwise agreed, for the purposes of implementing Orders 4 and 6 hereof, the parties shall respectively ensure the children’s:
(a)Collection from school, whenever the children’s residence or expenditure of time with a party is to commence at or about the conclusion of school during school term;
(b)Return to school, whenever the child’s residence or expenditure of time with a party is to conclude at or about the commencement of school during school term; and otherwise
(c)The party who has the care of the children will deliver the children to the other party at the other party’s home at the commencement of the children’s residence with or visits to the other party.
Unless otherwise agreed, the parties shall take all reasonable steps to ensure that the children communicate privately by telephone with:
(a)The father each Tuesday when the children are living with the mother, between 6.00 pm and 6.30 pm, and for that purpose the father shall telephone the children on the telephone number provided to him by the mother, and the mother shall ensure that the children are able to receive the father’s calls on that number at that time.
(b)The mother each Saturday when the children are spending time with the father pursuant to Order 4(a)(i) and each Wednesday when the children are spending time with the father pursuant to Orders 4(b) and 4(c), between 6.00 pm and 6.30 pm, and for that purpose the mother shall telephone the children on the telephone number provided to her by the father, and the father shall ensure that the children are able to receive the mother’s calls on that number at that time.
(c)The parent with whom they are not then staying, on the children’s birthdays, between 6.00 pm and 6.30 pm, and for that purpose the parent with whom the children are not staying shall telephone the children on the telephone number provided by the other parent for that purpose, and the parent with whom the children are staying shall ensure that the children are able to receive the other parent’s calls on that number at that time.
Each party shall forthwith inform the other, and keep the other informed, in writing of their respective current residential address, landline telephone number, mobile telephone number, and email address.
Pursuant to s 65DA(2) and s 62B of the Family Law Act, particulars of the obligations that these orders create, particulars of the consequences that may follow contravention of these orders, and details of assistance to comply with these orders are set out in the attached Fact Sheet, which forms part of these orders.
Any and all outstanding applications for orders pursuant to Part VII of the Family Law Act are dismissed.
Property Settlement Orders
The mother is declared the sole legal and beneficial owner (as between the parties) of the real property and improvements comprising Folio Identifier …, being the property more commonly known as O Street, Suburb T, NSW (“the property”), and the father shall do all such things and sign all such documents as may be necessary to transfer all his right, title, and interest in the property to the mother.
The mother shall indemnify and keep indemnified the father against all rates, taxes, statutory charges, mortgage repayments, and other outgoings and liabilities affecting or relating to the property.
The father is declared the sole legal and beneficial owner (as between the parties) of his shareholding in V Pty Ltd.
The mother is declared the sole legal and beneficial owner (as between the parties) of her shareholding in V Pty Ltd.
The father is declared the sole legal and beneficial owner (as between the parties) of his shareholding in H Investments Pty Ltd.
The mother is declared the sole legal and beneficial owner (as between the parties) of her shareholding in H Investments Pty Ltd.
Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder and superannuation entitlements are deemed in the possession of the superannuant; and
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession and any debts in their respective sole names.
Any and all outstanding applications for orders pursuant to Part VIII of the Family Law Act are dismissed.
Miscellaneous Orders
In the event of either party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s.106A of the Family Law Act.
Costs are reserved for 28 days.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Ahokas & Ahokas 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 1304 of 2012
| Ms Ahokas |
Applicant
And
| Mr Ahokas |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant mother and respondent father separated in November 2011 and these proceedings were commenced in March 2012.
They have a very narrow dispute over the parenting orders that should govern arrangements for their three young children, it being confined to whether the children should spend five, six, or seven nights per fortnight with the father during school terms.
Their dispute over the alteration of their property interests is just as narrow, since there were no significant factual disputes about the nature of their past contributions or future needs and their perceptions about their respective entitlements differed by only ten per cent.
In isolation, such circumstances would render the parties’ engagement in lengthy and expensive litigation deeply puzzling, but there was a complicating feature about their property interests. Their shareholdings in a private corporation are the most valuable assets they own but, since they cannot either individually or collectively exercise dominion over the corporation, the parties regarded the extraction of their equity from the corporation as an enigma.
History
The parties first met in late 1995.[1]
[1] Father’s affidavit, para 4
They did not marry until 2002, but the parties had completely different views about when they began cohabitation. The father alleged they began cohabitation in early 1996,[2] but the mother alleged cohabitation did not start until February 2001.[3]
[2] Father’s affidavit, paras 5, 7
[3] Mother’s first affidavit, para 7
The substantial difference between their perceptions is curious to say the least, but nothing really turns on the discrepancy because neither alleged any meaningful contribution before February 2001. In any event, even if they did, any pre-cohabitation contributions would still be relevant to the alteration of their property interests.
Three children were born to the parties’ relationship in 2003, 2005, and 2009. The children are now aged ten, eight, and four years respectively.
The parties finally separated in November 2011, but they remained living in the former matrimonial home until January 2012 when the father vacated it.[4] The children have lived with the mother in the former matrimonial home ever since, but they have spent substantial amounts of time with the father.
[4] Mother’s first affidavit, paras 10-11
The parties consensually implemented a regime under which the children spend time with the father for four nights each alternate week (Thursday afternoon until Monday morning) and for one night in intervening weeks (Thursday afternoon until Friday morning), which scheme has been working well for nearly two years.
Despite their matrimonial separation, the parties have necessarily maintained close contact with one another for financial reasons.
In about September 2004, in association with another domestic couple, the parties conceived a corporation named V Pty Ltd, which trades in a specialised property service industry. Both parties were and remain shareholders and employees of the corporation and it is still the sole source of their income. The parties each have a one-quarter shareholding in V Pty Ltd, as do the other couple.
The parties and their fellow shareholders have been actively involved in attempts to sell V Pty Ltd, or at least the business it conducts, since early 2013. Both parties desire the sale since the value of the corporation is too difficult to establish. Unfortunately, no purchaser has yet been found.[5]
[5] Notation B made on 5 August 2013; Father’s affidavit, paras 175-180
In 2008 the parties and their fellow shareholders in V Pty Ltd established a self-managed superannuation fund named H Superannuation Fund, of which H Investments Pty Ltd (“H Investments”) is the corporate trustee. The parties and their colleagues also have equal shareholdings in H Investments.
The evidence
The mother relied upon her affidavit and financial statement, both of which were filed on 18 October 2013, together with her affidavit filed in Court at the commencement of trial on 25 November 2013. The mother also relied upon the affidavit of her father, Mr L, filed on 19 November 2013.
The father relied upon his affidavit and financial statement, both of which were filed on 18 October 2013.
Swathes of the parties’ evidence did not survive objection.
In relation to the parenting dispute, the parties also relied upon the Family Report dated 22 July 2013. The Family Consultant was cross-examined.
Parenting dispute
Applicable legal principles
Orders in respect of children are regulated under Part VII of the Family Law Act1975 (Cth) (“the Act”). The Act defines the meaning of a “parenting order” (s 64B).
When called upon to make a parenting order, the Court is enjoined to bear in mind both the objects of the legislation and the principles which underpin those objects (s 60B) in determining the nature of the parenting orders which ought properly be made (s 65D).
When making parenting orders the Court is mandated to regard the child’s best interests as the paramount consideration (ss 60CA, 65AA). The Act specifies with precision the criteria which the Court must contemplate in arriving at a conclusion as to what is in the best interests of the child (s 60CC).
The Court is required to apply a rebuttable presumption that it is in the best interests of a child for the child’s parents to be allocated equal shared parental responsibility for the child (s 61DA). Parental responsibility is defined to encompass all duties, powers, responsibilities and authority conferred by law upon parents (s 61B). The legislation dictates the manner in which shared parental responsibility is to be exercised in respect of decisions relating to major long-term issues concerning the child (s 65DAC), being matters such as education, religion, culture, health, name, and changed living arrangements (s 4), and also in respect of decisions which do not relate to such major long-term issues (s 65DAE).
However, the presumption of equal shared parental responsibility does not apply in certain circumstances, including in instances of child abuse and family violence (s 61DA(2)), and the presumption may be rebutted if the Court is satisfied it would not be in the best interests of the child for the parents to have equal shared parental responsibility for the child (s 61DA(4)). The presumption applies to the allocation of parental responsibility and not to the amount of time the child should spend with each parent.
In the event an order is made allocating equal shared parental responsibility, either presumptively or otherwise, the Court is then obliged to consider both the advisability and practicability of the child living for equal time with both parents, or alternatively, living primarily with one and spending substantial and significant time with the other (s 65DAA).
If the presumption of equal shared parental responsibility does not apply, or is successfully rebutted, and a different form of parental responsibility order is made, then the Court’s discretion is at large in the determination of the parenting orders warranted, although that discretion must still be exercised within the parameters of the prevailing legislative provisions.
The principles outlined above have been authoritatively examined in Goode & Goode (2006) FLC 93-286 and MRR v GR (2010) 240 CLR 461.
These proceedings were commenced on 8 March 2012 and so the amendments to the Act, and in particular to the provisions concerning the considerations relevant to findings about the children’s best interests (s 60CC), wrought by the Family Law Legislation Amendment (Family Violence and Other Measures) Act 2011 (Cth) do not apply (see Schedule 1, items 44 and 45).
The parenting issue
When procedural orders were made fixing the proceedings for trial, the parties informed the Court about the ambit of their dispute over parenting orders.
The parties agreed they should have equal shared parental responsibility for the children. They also agreed the children should continue to live with the mother and that they should spend time with the father, including five nights per fortnight during school terms and for parts of school holidays. The only issue between them was whether that regime should remain permanent or whether it should progress to the children living with the parties for equal time once the youngest child begins school.[6]
[6] Notation A made on 5 August 2013
Self-evidently, very little evidence was capable of rationally affecting the determination of such a narrow dispute, since several inferences necessarily arise from the parties’ stated positions.
Firstly, both parties are sufficiently confident in the other’s intelligence, emotional stability, and co-operation to warrant their equal participation in the exercise of parental responsibility for the children.
Secondly, the father considers the mother’s parenting capacity is sufficiently developed to enable her to properly care for the children for not less than seven nights each fortnight.
Thirdly, the mother considers the father’s parenting capacity is sufficiently developed to enable him to properly care for the children for not less than five nights each fortnight, and for even longer periods during school holidays.
Best interests of children – primary considerations (s 60CC(2))
Unsurprisingly, the case was conducted on the basis that the children each had meaningful relationships with both parties from which they derived benefit.
No evidence was adduced about any risk of physical or psychological harm to the children by reason of their exposure or subjection to abuse, neglect, or family violence.
Best interests of children – additional considerations (s 60CC(3),(4),(6))
The two eldest children both told the Family Consultant they wanted to live with the parties for equal time. Curiously, they used an identical description of that arrangement, being “week, week”.[7] Although the eldest child could offer no reason for why she expressed that view, the second child’s only explanation was that the arrangement would then “be even”.[8]
[7] Family Report, paras 42, 45
[8] Family Report, para 45
The Family Consultant opined that the expressed preference of the two eldest children for an “equal time” parenting regime was likely to have been influenced, perhaps only inadvertently, and also likely to be informed by their perception about the equity of such an arrangement.[9] I accept that evidence, the validity of which was the subject of only faint challenge.
[9] Family Report, para 65
The two eldest children are currently aged ten and eight years respectively. They do not have the maturity to warrant any significant weight being reposed in their views.
Although the current consensual parenting regime has been implemented unexceptionally for nearly two years, the Family Consultant expressed some reservations about the children’s ability to cope with the family dynamics, which she described in cross-examination as “quite complicated”. The father lives with his partner Ms Meyer and her two children, N and K, and apparently intends to continue doing so, despite a recent brief separation.[10]
[10] Family Report, paras 20, 35, 43
According to the Family Consultant, the middle child is “emotionally sensitive” and is “struggling” with the parties’ separation and the father’s new family unit, feeling as though he does not have his own space and wanting more of the father’s attention.[11] The middle child clashes with K,[12] but notwithstanding, the father still changed arrangements in his household so that the two boys now share a bedroom. The middle child also feels victimised by both the eldest child and N, who are apparently allies in that process.[13] Although the middle child has been receiving counselling and his condition may have improved, the evidence does not permit any finding that his emotional problems have resolved.
[11] Family Report, paras 52, 61
[12] Family Report, para 43
[13] Family Report, paras 52, 60
The eldest child, who presents as irritated and aggravated,[14] is soon to begin counselling at the suggestion of the middle child’s psychologist. The Family Consultant said in cross-examination the middle child is “internalising” his emotional disturbance while the eldest child is “externalising” hers.
[14] Family Report, para 39
The father is not as attuned to the children’s emotional disturbance as the mother. Several examples of his conduct illustrate that fact.
When the father first met with the Family Consultant in September 2012, he was informed of the children’s “emotional difficulties” and advised to “take a step back” in his relationship with Ms M.[15] Not only did the father not step back from that relationship, he commenced cohabitation with Ms M and her children only a few months later in January 2013.[16] Of course, the father is free to lead his life as he chooses, but clearly that decision was made by him in his best interests, not the children’s.
[15] Family Report, para 58
[16] Family Report, para 3; Father’s affidavit, para 88
Despite his own cohabitation with Ms M, the father audaciously deposed to the middle child being worried about the mother allowing a man to stay overnight with her at the former matrimonial home.[17] When challenged in cross-examination about the accuracy of his perception and the availability of other rational explanations for the child’s reserved demeanour, the father stoutly rejected the challenge, but his attitude was likely misconceived. The middle child’s changed demeanour correlated with the father’s brief separation from Ms M and the departure from his household of both Ms M and her two children. Even though the middle child is not enamoured of either N or K, their sudden departure from the father’s home was but another serious ruction in the child’s life.
[17] Father’s affidavit, para 103
The need for the eldest child to participate in therapy to help overcome the tension between her and the middle child has been mooted with the parties by the middle child’s psychologist for some time. The mother alleged, without challenge, that the father was designated with responsibility to procure a mental health care plan from a general practitioner referring the eldest child for counselling. The father did not procure the plan, or at least unreasonably delayed its procurement, compelling the mother to do it. Consequently, the eldest child’s participation in counselling has been delayed, but the mother has arranged for it to commence soon. The father’s delay implies ambivalence on his part about the need for the eldest child’s engagement in therapy, which attitude is difficult to justify in the face of the advice from the middle child’s psychologist and the contents of the Family Report.
The Family Consultant considered the father presents with “little insight” into the children’s needs and that he “appears to put his own needs before his children’s needs”, which endorsed the mother’s opinion about him.[18] I accept their mutual opinion as correct.
[18] Family Report, paras 20, 59
The youngest child, according to the Family Consultant, is primarily attached to the mother and would benefit from a “home base” with her, rather than weekly rotations between the parties’ households.[19] She adhered to that opinion under cross-examination and I accept her evidence.
[19] Family Report, para 62
A primary residence for the children is all the more important given the middle child’s psychologist’s report to the Family Consultant that the parties have “different personalities and parenting styles”.[20] Living with both parties for equal time on weekly rotations is not likely to be an easy and seamless residential regime for the children if they encounter quite different parenting experiences in each household.
[20] Family Report, para 55
The father admitted to the Family Consultant that the children are now in a routine.[21] In fact, it has been a settled routine for nearly two years. The parties regard the current arrangement to have worked well. At least the middle child agrees with their sentiments and he perceives the parties will be content with continuation of the current arrangement.[22]
[21] Family Report, para 33
[22] Family Report, para 45
Since the father acknowledges the success of the existing arrangement, his motivation for its change begs inquiry. According to the father’s comments to the Family Consultant, his only motivation for change is his belief the mother “leaves the children with babysitters and because she has financial constraints”,[23] but such reasoning is facile and unpersuasive.
[23] Family Report, para 33
The mother’s employment at V Pty Ltd is structured around her child-care responsibilities so that she is generally available for the children when they are not either at school or day-care. The evidence revealed the mother used a babysitter to take the children to school on Tuesday and Wednesday mornings when she begins work early, but that is unremarkable. There is nothing wrong with such occasional reliance on babysitters.
The father asserted he could structure his own work-related commitments to accommodate his proposed child-care responsibilities without the need for outside assistance,[24] but he admitted he used after-school care on a couple of occasions[25] and he also conceded the youngest child is regularly cared for by the paternal grandmother and paternal aunt when the child might otherwise be with him.[26] In cross-examination he sought to explain how that arrangement occurs on Fridays and is not for the express purpose of enabling his attendance to work-related duties. Even if the father could care for the youngest child every Friday without assistance, his willingness to accept such support makes his criticism of the mother’s reliance on similar assistance hollow.
[24] Family Report, para 6
[25] Father’s affidavit, para 81
[26] Family Report, para 24
The mother is doubtful about the father’s availability to indefinitely care for the children for equal time whilst he maintains his current position with V Pty Ltd.[27] Her doubts were shown to have a reasonable basis. In cross-examination the father was forced to concede the extent of his obligations to entertain business associates at times falling outside school hours when, under his proposal, he would need to be available for the children each alternate week. His business obligations seem rather significant and his attempts to minimise the prospective clash between his business and child-care commitments were unconvincing. That is not to say the father is not handling his current child-care responsibilities well, but rather is a reason to baulk at extending the time the children already spend with him.
[27] Family Report, para 20
As for the “financial constraints” by which the mother is afflicted, such are easily mollified by appropriate property settlement orders.
The mother asserted concern, both to the Family Consultant[28] and throughout her affidavit, about the father’s propensity to excessively consume liquor. She was apparently worried he would intoxicate himself and impair his capacity to properly care for the children.
[28] Family Report, paras 18-19
The father does have a history of alcohol consumption that could easily be construed as “heavy”,[29] or even excessive, but there is not the slightest hint he has ever compromised the children’s safety. The best evidence is that he was recently abstinent for about two years,[30] he now drinks much more moderately than before, and only rarely when the children are with him. The Family Consultant was independently satisfied as to those facts.[31]
[29] Family Report, para 32; Exhibits W1 and W2
[30] Family Report, para 32
[31] Family Report, para 64
The evidence does not justify any conclusion that the amount of time spent by the children with the father should be limited on account of the father’s alcohol consumption.
The mother sought the imposition of an injunction precluding the father from consuming any alcohol at or about the times of the children’s visits with him, even if the parenting regime remains as it is.[32] Her application is rejected. No such injunction presently applies and there is no proper evidentiary basis for its imposition now.
[32] Further Amended Application 21/11/13, Order 27
While the imposition of such an injunction may settle the mother’s genuine anxiety, it is more likely to foul than serve the children’s best interests. There is every chance the mother would, as a consequence of her concerns, interrogate the children upon their return from the father about the father’s compliance with the embargo. That would surely alert the children to the mother’s concerns and perpetuate their involvement in conflict between the parties.
No other feature of the evidence excited the parties’ interest in application of the statutory considerations found within ss 60CC(3),(4), and (6) of the Act.
Conclusions and orders
The presumption of equal shared parental responsibility applies (s 61DA). It was not argued to the contrary.
Consequently, consideration of orders providing for the children to live with the parties for “equal time” is mandated (s 65DAA(1)).
There is no dispute that orders of that ilk are reasonably practicable to implement (s 65DAA(1)(b)), since the parties’ homes are situated only about two kilometres apart in close proximity to the children’s school. Rather, the debate was about whether an equal time arrangement was in the children’s best interests (s 65DAA(1)(a)).
It is not in the best interests of the children to live with the parties for equal time for several reasons: the father is not as attuned as the mother to the children’s emotional needs; it will be easier for the children to cope with the parties’ different parenting styles if they spend less than equal time with the father; extension of the children’s time in the father’s household may exacerbate the middle child’s emotional disturbance; the youngest child would be better served by having a primary residential base; a degree of uncertainty remains about the father’s ability to re-allocate more time away from his work commitments to care for the children for extra time on an indefinite basis; and the current consensual regime is working satisfactorily, suggesting no need to compromise its success by change.
Although the parties are sufficiently co-operative to share equally in the exercise of the children’s parental responsibility, an altogether different and higher level of co-operation would be required to support an “equal time” residential regime for the children. The parties’ distrust of, and disaffection with, one another simmers just below the thin veneer of civility they are able to maintain for the children’s benefit. It is not too much to expect their occasional convivial consultation and negotiation over issues relevant to their exercise of parental responsibility for the children in compliance with their legal obligations (s 65DAC), but it is too much to expect their constant harmony and mutual support on an indefinite week-to-week basis as would be required to successfully implement an equal time residential regime.
Given the conclusion that an equal time arrangement is not in the children’s best interests, consideration must then be given to an arrangement under which the children live predominantly with one parent and spend “substantial and significant time” with the other (s 65DAA(2)).
Unquestionably, the children should continue to live primarily with the mother. Historically, she has always fulfilled the role of primary carer for the children.
The current regime under which the children spend time with the father falls comfortably within the definition of “substantial and significant time” (s 65DAA(3)). The regime has a proven track-record of being both reasonably practicable to implement and serving the children’s best interests. The children see plenty of the father and are thereby able to enjoy the full panoply of benefits that accrue from the meaningful relationships they have with him.
Such an outcome accords with the recommendations of the Family Consultant,[33] whose evidence was reasoned and generally convincing.
[33] Family Report, paras 65, 68, 69, 70, 71
The orders make provision for special occasions such as the Christmas period, Mother’s Day, and Father’s Day, but not Easter and birthdays.
The cycles of residence in school holidays generally conforms to the parties’ similar proposals. The arrangements for Christmas, Mother’s Day and Father’s Day also generally accords with the parties’ similar proposals.[34]
[34] Further Amended Application 21/11/13, Orders 22-23; Exhibit H1, Orders 14-15
The parties sought orders regulating arrangements at Easter and on birthdays,[35] but the proposed orders were different. No evidence, cross-examination, or submission was directed to the proposals for Easter and birthdays so, in the absence of overt consent and so as to avoid over-complication, no orders are made. The parties may agree otherwise if they wish.
[35] Further Amended Application 21/11/13, Order 23; Exhibit H1, Order 14
The children will principally be exchanged between the parties by delivery to and collection from school, as the parties desired.[36] It is expected the youngest child will commence attendance at the same public school as the other two children at the beginning of the 2014 academic year. Otherwise, the parties are required to deliver the children to the other’s home to commence the children’s visits to or residence with the other party, which arrangement also conforms with the parties’ desire.
[36] Further Amended Application 21/11/13, Order 24; Exhibit H1, Order 17
No special order is made requiring the wife to convey the eldest child to dance lessons on Friday mornings when she is otherwise in the care of the father, as the father proposed.[37] The mother did not consent to it, nor was there any good reason for her to do so.
[37] Exhibit H1, Order 16
The orders make provision for occasional telephone communication between the children and the parties at regular times. The mother understandably finds the father’s much more frequent telephone calls to her home burdensome. The extensive amount of time the children spend with each parent makes more frequent telephone communication unnecessary.
Both parties sought an injunction prohibiting the children’s exposure to denigration of the parties.[38] An order to that effect is made.
[38] Further Amended Application 21/11/13, Order 30; Exhibit H1, Order 25
The parties sought a raft of other orders that either qualified or supplemented the allocation of equal shared parental responsibility to them.[39] Such orders are entirely unnecessary and are not made.
[39] Further Amended Application 21/11/13, Orders 25, 26, 29; Exhibit H1, Orders 20-22, 24
No order is made restricting the parties’ location of residence, as the father proposed.[40] Although the Court has power to make injunctive orders in respect of children (s 68B), including as to the place where the children must live, the Court should only make such an order cautiously (see Cales & Cales (2010) FLC 93-459 at [74]-[91]). That is because parents enjoy a high measure of freedom of movement which is not lost by reason only of their parental responsibility for their children (see AMS v AIF (1999) 199 CLR 160 at 196, 206, 207-208, 210). Parents have as much residential freedom as is compatible with their obligations pertaining to their children (see AMS v AIF at 223-224, 231-232; Sampson v Hartnett (No.10) (2007) FLC 93-350). Only when the welfare of the children would be adversely affected should a parent’s right of freedom of mobility defer to the paramount consideration of the children’s best interests (see U v U (2002) 211 CLR 238 at 262). That is not the case here.
[40] Exhibit H1, Order 26
Property dispute
Although a procedural order required it to occur much earlier,[41] during final submissions the mother tendered a balance sheet which purported to set out the existing property of the parties.[42] The father indicated there was very little dispute about the accuracy of the exhibit and that which did exist quickly dissipated during submissions. The exhibit only serves to supplement rather than supplant the parties’ other evidence contained within their affidavits and financial statements.
[41] Order 4 made on 5 August 2013
[42] Exhibit W4
The exhibit made no reference to the existence of the parties’ respective shareholdings in H Investments, nor was there any evidence as to the value of those shareholdings. In final submissions it was agreed the shareholdings had no value, since it holds assets only as trustee for the superannuation fund.
There was no reliable evidence about the value of the parties’ respective shareholdings in V Pty Ltd, which the parties intend to crystallise by sale, so the following calculations do not include those values.
Existing property interests of the mother
The mother’s existing property interests are as follows:
No.
Assets
Value
Total
1
Realty at Suburb T
950,000
2
Shareholding in V Pty Ltd
NK
3
Shareholding in H Investments
nil
4
ANZ bank acc #846
49
5
ANZ bank acc #244
nil
6
ANZ bank acc #825
nil
7
ANZ e-trade acc #644
nil
8
ANZ bank acc #893 (in trust)
nil
9
ANZ bank acc #416 (in trust)
nil
10
ING acc
8
11
Household contents
nil
950,057+
Liabilities
12
Mortgage (Suburb T)
532,670
13
ANZ credit card
6,123
14
Shareholders loan (V Pty Ltd)
27,789
15
Debt to mother
8,300
574,882
Superannuation
16
H Super Fund
108,136
17
Commsec
60
18
One Path
9
108,205
Net assets and resources
483,380+
The mother is the sole legal and equitable owner of the real property at Suburb T (item 1). However, the mortgage registered over the property (item 12) secures the parties’ own loans and also loans owed by V Pty Ltd to the mortgagee.[43] The parties are apparently jointly and severally liable for the totality of the debt secured over the former matrimonial home.
[43] Mother’s first affidavit, paras 157-158
The father alleged the mother’s household contents (item 11) had a collective value of $30,000,[44] but he did not have the expertise to reliably offer that opinion evidence. The mother made no admission as to their value, other than to say the value was nominal, and so the father ultimately accepted there was no option but to treat them as worthless.
[44] Father’s affidavit, para 188.6
The parties both have significant personal debt in the form of unpaid legal fees but they agreed to conduct the litigation on the basis that such debt would be expunged from the schedules of their property interests.
Existing property interests of the father
The father’s existing property interests are as follows:
No.
Assets
Value
Total
19
Shareholding in V Pty Ltd
NK
20
Shareholding in H Investments
nil
21
ANZ bank acc # 209
22
22
Household contents
20,000
20,022+
Liabilities
23
ANZ personal loan
27,000
24
American Express credit card
5,600
32,600
Superannuation
25
H Super Fund
128,222
26
One Path
65
128,287
Net assets and resources
115,709+
The Court is generally exhorted to treat the parties’ superannuation entitlements separately from assets, but that need not necessarily be the case (see Marriage of Coghlan (2005) 33 Fam LR 414 at 428-429). The mother did not directly address the issue, but the father submitted the superannuation interests should be considered separately from the assets, even though no explanation was advanced as to why that should be the case.
It is appropriate in the circumstances of this case to treat the superannuation entitlements of the parties as property for several reasons: the parties’ superannuation interests with Commsec and One Path are insignificant; the parties’ superannuation interests with the H Superannuation Fund were accumulated entirely after their cohabitation began; the financial deposits to the parties’ superannuation interests in the H Superannuation Fund were affected by exactly the same direct and indirect contributions made by the parties to the accumulation of their assets; their superannuation interests with the H Superannuation Fund are approximately equivalent; and neither party proposed superannuation-splitting orders in respect of those interests.
Justness and equity of property settlement
Orders under s 79 of the Act altering the property interests of parties may only be made if the Court is first satisfied, pursuant to s 79(2), it is just and equitable to make such orders. The Act then identifies in s 79(4) the matters the Court must take into account in considering what order, if any, should be made (see Stanford v Stanford (2012) FLC 93-518 at [22], [35]). It must not be assumed that the parties’ rights to or interests in marital property are or should be different from those that then exist or that a party has the right to have the parties’ property divided by reference to considerations set out in s 79(4) of the Act (see Stanford at [37]-[40], [50]).
Both parties asserted it was necessary to make property settlement orders in order to attain a just and equitable outcome. Their joint position is necessarily correct because the parties remain fiscally bound by their joint and several liability under the mortgage secured over the former matrimonial home, even though the father has no legal or equitable interest in the home. The parties also used the former matrimonial home as collateral security for the bank debts of V Pty Ltd.
Shareholdings in V Pty Ltd
There are four shares issued in V Pty Ltd. The mother holds one “A” class share and the father holds one ordinary share.[45]
[45] Exhibit W3; Mother’s first affidavit, para 151
The difference in classification of the parties’ shares makes no difference to their voting or other rights in respect of V Pty Ltd,[46] but the directors do have control over the dividends paid to different classes of shares.[47]
[46] Exhibit W3 (Constitution, clauses 159-163)
[47] Exhibit W3 (Constitution, clause 135); Mother’s first aff, para 152; Father’s aff, para 147
The father is a director of V Pty Ltd, but the mother is not.[48]
[48] Exhibit W3
Even if the parties acted in harmony they could not exercise dominion over V Pty Ltd. The other two shareholders, who hold one ordinary share and one “B” class share, exercise an identical level of control.
While all four shareholders presently seek a sale of the corporation or its assets, that may not remain the case indefinitely. The sale has been marketed through a broker for nearly 12 months, but as yet no prospective purchaser has been identified. Even if a purchaser is found, the mother and father are unable to press ahead with the sale without the concurrence of the other two shareholders.
The most salient considerations in the prospective sale of V Pty Ltd are the sale price and how quickly a purchaser can be secured. As time passes, the parties and the other shareholders may diverge in their views about the price at which any sale should proceed. Views may even change about whether they should even press ahead with the proposed sale. The corporation represents a handsome income stream and retention of that income stream may be perceived by one or more to be preferable to a discounted sale price.
There is already considerable disparity between views about the value of V Pty Ltd and its business. The father circularised the other shareholders in March 2013 seeking clarification that the advertised price should be $6 million, but acknowledged they were “realistically expecting offers below this figure”.[49] The other director confirmed that was “the price to go to market with”.[50] The broker apparently told the directors he considered the price range was “$5.4 million at the lower end”.[51] However, some seven months later in October 2013, the husband deposed to his opinion that his one-quarter share in V Pty Ltd is worth only $500,000.[52] Clearly, the passage of time without any buyer interest is affecting his opinion about the value of the corporation and its business, for reasons he explained.[53]
[49] Father’s affidavit, Annexure K (page 000086)
[50] Father’s affidavit, Annexure K (page 000087)
[51] Father’s affidavit, Annexure K (page 000087)
[52] Father’s financial statement, para 41
[53] Father’s affidavit, paras 178-180
Neither V Pty Ltd nor the other two shareholders were joined to the proceedings as parties, so no orders can be made which bind them to the sale of the corporation, or its assets, or transfers of shareholdings in the corporation.
The parties were therefore forced to confront the problem of how to deal with their separate interests in V Pty Ltd in circumstances where they were not masters of their own destiny.
One mooted solution to the problem was adjournment of that part of these proceedings related to Part VIII of the Act for an arbitrary period in the hope that the proposed sale of the corporation or its assets could be successfully achieved, perhaps subject to the imposition of orders dictating interim commercial arrangements, much like those agreed in May 2012.
That, however, is not a satisfactory solution. Firstly and most importantly, neither party wanted the litigation prolonged. Even if the proceedings were adjourned, there was no guarantee the situation would be any further advanced during the adjournment. No purchaser of V Pty Ltd may be secured on acceptable terms and the delay would only then have served to perpetuate the parties’ anxiety and the financial impost upon them. Left unchecked, the current uncertainty may endure indefinitely. Both parties therefore sought a final resolution on the available evidence.
In those circumstances, the parties each proposed quite different strategies to determine the proceedings finally.
The mother proposed an intricate and complicated regime,[54] under which the father held his shareholding in V Pty Ltd upon trust for both parties in certain proportions, the status quo otherwise be maintained, and the parties continue to do their best to sell V Pty Ltd. In the event of sale, the proportion of the sale proceeds paid in respect of the father’s shareholding should be allocated to the parties in accordance with the declared trust. In the event of no sale within 18 months, a single expert should be appointed to offer a binding opinion about the value of V Pty Ltd and the father would be compelled to pay to the wife an amount representing the value of her shareholding plus the value of her beneficial proportion of his shareholding. In either case, the mother would allow an adjustment to the father so as to enable her to retain sole legal and beneficial ownership of the former matrimonial home and avoid its sale, and the parties would be obliged to use their funds from V Pty Ltd to discharge the mortgage registered over the former matrimonial home.
[54] Further Amended Application 21/11/13, Orders 2-13
The father proposed an alternative approach,[55] under which the parties would be required to continue doing their best to sell V Pty Ltd and to divide their share of the sale proceeds in unequal proportions, but in the event the sale could not be achieved within the next 10 months, the parties would simply retain their existing equal shareholdings. In any event, he proposed the immediate sale of the former matrimonial home and the division of the net sale proceeds in the same unequal proportions as the proceeds of any sale of their interests in V Pty Ltd.
[55] Exhibit H1, Orders 1-5
Neither proposal comes to grips with numerous pragmatic considerations and problems.
The Act (s 81) obliges the Court to aspire to a result which, as far as practicable, finally determines their financial relationships and avoids further proceedings between them. The mother’s proposal entails the exact opposite, as she proposes she acquire a proportional beneficial interest in the father’s shareholding in V Pty Ltd, which he would then be obliged to hold on trust for her. Far from severing their financial interests, their interests would be further entangled.
The mother’s idea to procure a single expert report proffering an unimpeachable opinion about the value of V Pty Ltd in the event it cannot be sold is an unpalatable paradox. It was open to the parties to procure such valuation evidence within the context of this litigation, but they chose not to do so because neither could afford the cost of the report and both wanted the corporation sold.[56] They instead chose to conduct the final hearing in the absence of such evidence and must, therefore, have been alive to the ramifications. The parties’ financial positions will not likely improve to permit procurement of the single expert evidence if the corporation is not sold. In fact, they will likely be in worse financial predicaments. They each owe large amounts in legal fees which remain outstanding[57] and, apart from the income derived from their employment with V Pty Ltd, neither has any resource with which to pay either the legal fees or extra single expert’s fees. The father was not challenged about his asserted inability to afford such fees.[58]
[56] Notation B made on 5 August 2013
[57] Exhibit W4, item 23
[58] Father’s affidavit, para 177
Even if the mother’s scheme was adopted, the father could not pay the sum owed by him to the mother in accordance with calculations based on the valuation evidence. The father has no asset or resource under his unfettered control which he is able to alienate and crystallise as cash. That is the very reason for the current imbroglio. The parties’ interests in V Pty Ltd are difficult to unlock. There is no evidence from which an inference can legitimately be drawn that the father will be able to raise a loan against the security of his interest in the corporation to pay-out the mother.
Moreover, there is no logical basis upon which any such future single expert opinion should be deemed unimpeachable. If procured during the currency of these proceedings, the single expert evidence would have been susceptible to challenge, so depriving the parties of that right of challenge merely as part of a convenient mechanism to implement final orders would be a serious infringement of the parties’ rights. It is all the more serious in circumstances where it is already known the value of V Pty Ltd is highly contentious.
The parties both envisaged that, pending sale of V Pty Ltd, they could maintain the financial status quo by both of them retaining their employment with the corporation and the father continuing the arrangement under which he splits his income with the mother and pays her an amount to defray the cost of maintaining the children. They may choose to do so voluntarily, but they should not be bound by orders to do so for several reasons.
Firstly, it is unknown when and if V Pty Ltd will be sold, meaning the parties would be indefinitely locked in to artificial interim financial arrangements they may later find unduly constrictive, even if they have not until this point in time.
Even if the parties remain perfectly content with the status quo pending sale of V Pty Ltd, it is not appropriate for the Court to order the father to continue splitting his own income by paying a proportion of it to the mother in circumstances where no application has been made for spousal maintenance. Nor, for that matter, does the Court have the power to compel the father to pay a regular monetary sum to the mother by way of child support. The assessment and payment of child support at first instance is governed by the Child Support (Assessment) Act 1989 (Cth) and no application was made in these proceedings for an order pursuant to Parts 6, 6A, or 7 of that Act.
Subsequent events could also make their mutual employment with V Pty Ltd untenable. A workplace irregularity might occur which renders it legally or practicably impossible for one or both of the parties to maintain their employment. For example, there may be some dissatisfaction with the mother’s work performance,[59] or their disaffection with one another might result in an incident which gives rise to the grant of an apprehended violence order against one of them precluding proximity to the other at their place of work.
[59] Father’s affidavit, paras 181-184
In any event, any interim financial orders would only bind the parties. No order could prevent the other director from, for example, terminating the mother’s employment.
The parties chose to arrange their affairs in V Pty Ltd on a commercial basis, with only the father being a director but both of them holding equal shareholdings of different classes. They intended to conduct an arms-length commercial enterprise. There is no sound reason why they should not be permitted to do so. Provided the parties’ rights under Part VIII of the Act can be adequately accommodated by adjustment of their interests in their remaining assets, the most compelling way to deal with the problem is to allow the parties to retain their own shareholdings in V Pty Ltd, irrespective of whether the corporation or its assets are sold.
The parties’ shareholdings in V Pty Ltd are quite separate and distinct. Neither has a legal or equitable interest in the shareholding of the other. If one later misuses their power in the conduct of the corporation’s affairs, remedies are available under the Corporations Act 2001 (Cth). If their employment is unfairly or unlawfully terminated or their employment conditions curtailed, their rights remain intact under the Fair Work Act 2009 (Cth), comparable State industrial legislation, and at common law.
Assessment of statutory criteria (ss 79(4), 75(2))
The father contended the parties’ relationship began in September 1995 and that they commenced cohabitation in early 1996.[60] He conceded he had no assets of any significant value at the commencement of the parties’ relationship[61] and he also alleged the mother had no assets of significant value at that time.[62] The mother did not assert to the contrary, given her contention the parties did not begin cohabitation until about February 2001.[63]
[60] Father’s affidavit, paras 4-5
[61] Father’s affidavit, para 113
[62] Father’s affidavit, para 113
[63] Mother’s first affidavit, para 7
While the father alleged the parties’ cohabitation began five years before the mother asserted it began, he adduced no evidence of any material contribution made by him during that period. He simply deposed to the parties sharing their rent and living expenses.[64]
[64] Father’s affidavit, para 117
In February 2001, quite separately from the father, the mother purchased in her sole name the apartment at Suburb E in which she was then living. The purchase was funded by the combination of money from various sources – some borrowed from a bank and secured by mortgage over the property, some given to the mother by her mother, and some loaned to the mother by her mother. The father wanted the property purchased in both names but the mother refused.[65] Clearly, the mother deliberately intended to acquire sole legal and equitable title in the property. The realty was not transferred into the joint names of the parties until after their marriage in 2002.[66]
[65] Father’s affidavit, paras 118-119
[66] Mother’s first affidavit, paras 132-133; Father’s affidavit, para 121
The mother had equity in that property worth some $20,000 as a result of her mother’s gift and she received further financial accommodation from her mother amounting to some $30,000, which debt was later commercially refinanced.[67] The mother also owned the furniture and contents within the apartment and a car she had recently purchased for $14,000 using all of her savings.[68]
[67] Mother’s first affidavit, para 126; Father’s affidavit, para 118
[68] Mother’s first affidavit, paras 128-129
By comparison, the father had no assets of significance in early 2001. He was supplied with a company car by his then employer.[69]
[69] Mother’s first affidavit, para 130
In final submissions, the father argued that the mother’s greater initial contribution of assets was off-set by his sole acquisition of furniture after separation, used to furnish his new accommodation, which furniture is now valued at $20,000.[70] I reject that argument. The father did not acquire that furniture with his own post-separation income. Either he used borrowed funds and he retains the debt, to which he deposed,[71] or he used money from his corporate loan account, which he admitted during cross-examination. In either case, he still expects the debt associated with the expenditure to be taken into account.
[70] Exhibit W4, item 11
[71] Father’s affidavit, para 155; Exhibit W4, item 17
The mother’s ownership of the E apartment was integral to the parties’ accumulation of assets. It was used as collateral security to enable the parties’ purchase of an investment property at Suburb W in late 2002.[72]
[72] Mother’s first affidavit, para 134; Father’s affidavit, paras 122-123
After V Pty Ltd was incorporated in late 2004, the E apartment was used as the business premises for V Pty Ltd until 2008, when separate commercial premises were purchased for V Pty Ltd by H Investments.[73]
[73] Mother’s first affidavit, paras 135-136, 153-154; Father’s affidavit, paras 128, 148-149
The incorporation of V Pty Ltd was funded in part by the parties borrowing money secured by mortgage against the W property.[74]
[74] Father’s affidavit, para 127
During 2008 the E apartment and W investment property were sold and the net proceeds of sale used to purchase, or reduce debt secured over, the former matrimonial home at Suburb T.[75]
[75] Mother’s first affidavit, paras 139-141; Father’s affidavit, paras 129-133
There was really no dispute that, throughout their relationship, the parties attributed all of their effort to the financial advancement and emotional security of their family. Aside from the wife’s initial contribution of assets in early 2001, there was nothing to differentiate their later contributions, even though the nature of their contributions differed.
The father worked in the specialised property service industry as a service technician or service manager up until V Pty Ltd was started.[76] The father thereafter worked for V Pty Ltd and received handsome income, together with payment of other expenses on his behalf. When not otherwise engaged in work-related activities, the father contributed to the care and supervision of the children.
[76] Father’s affidavit, paras 135-138
The mother worked casually for V Pty Ltd. Her employment duties entailed office and accounts administration.[77] Even now, the mother still works at V Pty Ltd, although her duties have changed to accommodate the parties’ separation.[78] The mother was, and remains, the children’s primary carer and so her employment is arranged around her child-care responsibilities.[79]
[77] Mother’s first affidavit, para 101-102, 148-150; Father’s affidavit, paras 141, 142, 144, 167
[78] Mother’s first affidavit, para 156
[79] Mother’s first affidavit, paras 102, 161
Casting the father as principal breadwinner and the mother as principal homemaker was simply the allocation of roles by which the parties agreed, expressly or implicitly, to conduct their family affairs. Those roles have simply continued beyond separation.
Since final separation in November 2011 the mother has had sole and exclusive occupation of the former matrimonial home and she has been responsible for payment of the mortgage repayments.[80] However, it is uncontroversial the father has split his income with the wife since early 2012 so that she receives income inflated by an extra gross amount of $807 per week. In addition, the father paid to the wife a lump sum of $3,000 pursuant to interim orders made in May 2012, which sum the mother used to retire debt.[81]
[80] Mother’s first affidavit, paras 174, 176
[81] Father’s affidavit, para 165; Order 2 made on 7 May 2012
In May 2012, the Court noted the father’s undertaking to pay $250 per week to the mother to defray the cost of support of the children and ordered him to cause V Pty Ltd to provide the mother with a car and to continue meeting expenses on her behalf, which apparently occurred. The mother has not yet obtained a child support assessment from the Child Support Agency.[82]
[82] Mother’s first affidavit, para 99
Further interim orders were made in December 2012 permitting the father to borrow monies from V Pty Ltd on condition that the borrowed funds be disbursed to the parties equally, but there was no evidence that any funds were borrowed in the manner envisaged by those orders.
Allowing for the mother’s greater initial contribution of assets at the commencement of cohabitation, the general equivalence of their contributions thereafter, and the desirability in the circumstances of this case of allowing the parties to retain their individual shareholdings in V Pty Ltd, a proper measurement of the parties’ entitlements to the remaining assets and resources by application of the factors prescribed by ss 79(4)(a)-(c) of the Act is 55 per cent to the mother and 45 per cent to the father.
Excluding the shareholdings in V Pty Ltd, the residual assets and superannuation interests have a net value of $599,089, of which 55 per cent equates to $329,499 and 45 per cent equates to $269,590.
The mother already has legal interests in assets and resources with a net value of $483,380, which means her existing property interests are valued at $153,881 more than her contribution-based entitlement.
It was uncontroversial an adjustment of the parties’ entitlements in the mother’s favour was warranted in light of the factors prescribed by ss 79(4)(d)-(g) and 75(2) of the Act, although there was disagreement about the quantum of the adjustment and how it should be achieved.
Rather than increase the mother’s property interests by a percentage adjustment, it is appropriate in this instance to make the adjustment in monetary terms.
When considering an adjustment of interests pursuant to ss 79(4)(d)-(g) and 75(2) of the Act, ultimately, the critical issue is the real monetary effect upon the parties (see Marriage of Clauson (1995) 18 Fam LR 693 at 710). The overall property adjustment between the parties must be just and equitable, not just the underlying percentage division of the net value of the parties’ assets (see Marriage of Phillips (2002) 29 Fam LR 128 at 140-141). In cases where the parties’ assets are relatively modest it is often preferable to express the adjustment as a lump sum rather than as a percentage (see Parrott v Public Trustee of NSW (1993) 17 Fam LR 785 at 790-791).
Those principles have poignant operation in the current circumstances, since the parties’ assets and superannuation interests, excluding their unvalued shareholdings in V Pty Ltd, are relatively modest.
It is necessary, therefore, to consider and determine the monetary quantum of the adjustment which the parties agree must be made in the mother’s favour.
The mother is 38 years of age and keeps good health. She has not yet re-partnered and will remain principally responsible for the care and supervision of the children, the youngest of whom is still only four years of age. She will therefore have principal care of at least one school-age child for the next 14 years.
The father is 44 years of age and he also keeps good health. He is re-partnered but deposed to not having thoroughly considered his “future arrangements” with his partner.[83] He made no suggestion in either his affidavit or his financial statement that his partner is financially dependent upon him. The father does not have any other dependent children.
[83] Father’s affidavit, para 88
The father has voluntarily paid to the mother $250 per week towards the cost of maintaining the children. In all likelihood, come the end of this litigation, the payment of child support will be formalised by the mother obtaining an assessment from the Child Support Agency, which the father will pay.
Despite the tension that has existed between the parties in the V Pty Ltd workplace,[84] the mother intends to retain her employment with V Pty Ltd until it, or its business, is sold.[85]
[84] Mother’s first affidavit, paras 85-94
[85] Mother’s first affidavit, paras 106, 182
The father has a similar intention. Although he deposed to retention of the mother’s employment with V Pty Ltd only until the finalisation of these proceedings,[86] in cross-examination he confirmed he was content for the mother’s employment with V Pty Ltd to endure until it or its business is sold. Of course, the father may change his mind. As a director of V Pty Ltd, he has a greater capacity to influence the financial affairs of the corporation. During cross-examination the mother professed some concern about at least the reduction of her income following completion of these proceedings.
[86] Father’s affidavit, para 170
There is no reason to suspect that the father’s employment with V Pty Ltd will not continue, at least until the time of any sale. Even if V Pty Ltd is sold, the father contemplates the possibility of the continuity of his employment with the corporation.[87] A prospective purchaser may desire the retention of his undoubted skill in the industry. His income, therefore, may continue unabated even if he successfully disposes of his proprietary interest in the corporation. Conversely, it is possible a purchaser will terminate his employment and restrain his trade in competition as a condition of the sale. In the absence of evidence it is really pure speculation.
[87] Father’s affidavit, para 187
Presently, the father is still employed by V Pty Ltd. Historically he has drawn an annual salary of about $80,000, together with other miscellaneous paid expenses. However, the father confirmed in cross-examination that he received a salary increase of about 50 per cent in December 2012, so he is now paid about $135,000 gross per annum and the corporation still pays expenses for him, saving him an additional $400 per week.[88] It is likely he will continue to receive that income and those benefits for the foreseeable future. The gross value of his income and attendant benefits approximates $155,000 per annum.
[88] Father’s affidavit, paras 140, 152-154, 158
If the V Pty Ltd sale eventuates and he loses his employment, his capacity for other paid employment is restricted because his skills are best suited to the particular industry, but I do not accept there is a valid evidentiary basis to find he has no working capacity at all, or “no industry to work in” as he contended.[89] In all probability, the father’s income-earning capacity will remain indefinitely superior to the mother’s, even if his employment at V Pty Ltd ceases. His mechanical and managerial skills will probably be transportable to a different industry if necessary.
[89] Father’s affidavit, para 187
The mother’s current income apparently comprises her actual wage ($960 per week), the proportion of the father’s wage which is split and paid to her ($807 per week), money paid to her by the father in the guise of child support ($250 per week),[90] and any dividends she receives from V Pty Ltd as a shareholder. The father does not anticipate the shareholders receiving any dividends this financial year,[91] and historically, any dividends paid have not been extravagant.[92]
[90] Father’s affidavit, para 170
[91] Father’s affidavit, para 172
[92] Father’s affidavit, para 154
Given the future absence of any necessity for the father to split his income in that way or to voluntarily pay an arbitrary amount for child support, and the improbability of the mother’s receipt of any declared dividends, it is reasonable to conclude the mother’s income will probably soon diminish to an amount commensurate with the work she actually performs for V Pty Ltd. That is $960 gross per week, which equates to about $50,000 per annum.
The mother’s greater responsibility for the care of the children limits the hours she is and can be available for work,[93] and in any event, her employment skills are not as remunerative as the father’s. Her recent working history has been entirely confined to clerical and administrative duties for V Pty Ltd, which will likely confine her capacity for alternate work to duties of that type. She is studying another course to open up another career path,[94] but she said in cross-examination she will not likely complete it for another five or six years.
[93] Mother’s affidavit, para 109
[94] Mother’s first affidavit, paras 106-107
The father probably has the capacity to work for another 20 years. Over that period, the differential in the parties’ income-earning capacity would reflect in a substantial sum of money.
No other aspect of the evidence was submitted by the parties to be material to the adjustment of their property interests.
It is not unreasonable to adjust the mother’s entitlements in the parties’ property interests by allocating to her the extra sum of $153,881, which equity rests in the assets already in her possession. That will enable her to retain sole ownership of the former matrimonial home, subject to its encumbrance.
The figure of $153,881 is certainly a significant capital sum, but an adjustment of that size is not disproportionate when considered in proper context. It approximates the father’s gross income and emoluments for only one year. Alternatively, it represents the differential between the parties’ present incomes for only 18 months.
It should also be observed that the father conducted his case on the basis that the mother should receive 55 per cent of all assets, including their shareholdings in V Pty Ltd. If, for example, V Pty Ltd is actually worth around $3 million (which is only little more than half the value opined by the business broker), the sum of $153,881 approximates the extra five per cent the mother would otherwise acquire in their shareholdings (being 55 per cent in lieu of 50 per cent of the two shareholdings), which the father envisaged the mother receiving.
If V Pty Ltd is worth less than $3 million, then the adjustment of $153,881 to the mother is generous, but still reasonably proportionate.
If V Pty Ltd is worth more than $3 million, then the adjustment to the mother of $153,881 is less than the father contemplated and should be regarded by him as a boon. The corporation may be regarded as being worth more to the parties even if not sold, because its retention by the parties would mean at least the father would retain a reliable and valuable income stream.
Conclusions and orders
The father has no interest in the former matrimonial home. He wants it sold.
The mother was keen to retain the former matrimonial home as the children are settled in it, they attend a local school, members of the maternal family live nearby, and she is assisted by neighbours.[95] The mother expected trouble finding substitute accommodation in the same area if forced to sell the home.
[95] Mother’s first affidavit, para 113
The collective debt of $532,670 secured over the former matrimonial home comprises three loans of the parties. That sum does not apparently include the debts of V Pty Ltd, which are also secured by the mortgage registered over both the former matrimonial home and the home of the parties’ fellow shareholders.[96]
[96] Mother’s first affidavit, paras 157-159
The mother presently makes repayments of $778 per week to satisfy that debt. She may encounter difficulty indefinitely bearing sole responsibility for mortgage repayments of that quantum, but she was alert to that problem. She plans to explore the prospect of converting the loan repayments to “interest-only” for a period, she expects to save about $200 per week in child-care fees when the youngest child begins school next year, and she is hopeful she will then have a little more time to work and modestly increase her income.
There is no valid reason why the mother cannot retain sole title in the former matrimonial home. If she fails to maintain the loans and her default causes the mortgagee to foreclose then the home would likely be sold pursuant to the mortgagee’s power of sale. In such circumstances the mother will be obliged to indemnify the father against the debt.
The parties will retain their own separate and divisible shareholdings in both V Pty Ltd and H Investments.
The mother did not seek any superannuation splitting orders, but she did seek orders regulating the extraction of her superannuation interest from the H Superannuation Fund.[97] There is no need for such orders. The mother’s superannuation interest in that fund is separately designated from the father’s interest. If she is desirous of rolling-out her superannuation interest to another compliant superannuation fund then her rights to insist upon that outcome still exist independently of any order made under the Act which merely serves to endorse those rights.
[97] Further Amended Application 21/11/13, Orders 14-16
The father sought an order for the surrender to him of certain vaguely described items of personal property.[98] He ultimately conceded no such order could rationally be made since the mother did not concede her retention of those items of property when cross-examined. It would be a recipe for disaster to order the mother’s production to the father of items of property she may not possess, since it may well lead to enforcement proceedings and an inquiry then about whether the mother ever possessed the items. The parties previously agreed on the surrender of certain items of personal property to the father in any event,[99] about which there was no controversy.
[98] Exhibit H1, Order 2.2
[99] Orders 10, 10(a) made on 7 May 2012
The result of making orders to that effect is that the mother will retain her existing property interests, subject to her assuming sole liability for and indemnifying the father against their personal liabilities to the bank which are secured by mortgage over the former matrimonial home (items 1-18) and the father will retain his existing property interests (items 19-26).
The father sought costs against the mother[100] and the mother sought reimbursement of some disbursements from the father.[101] No submissions were made about the issue of costs and so costs are reserved for 28 days in accordance with the Family Law Rules.
[100] Exhibit H1, Order 11
[101] Further Amended Application 21/11/13, Order 13
I certify that the preceding one-hundred and sixty-nine (169) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 17 December 2013.
Associate:
Date: 17 December 2013
Key Legal Topics
Areas of Law
-
Family Law
Legal Concepts
-
Costs
0
6
4