Albray & Albray
[2021] FCCA 1402
•7 July 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Albray & Albray [2021] FCCA 1402
File number(s): NCC 2717 of 2018 Judgment of: JUDGE TERRY Date of judgment: 7 July 2021 Catchwords: FAMILY LAW – Parenting – all matters agreed save for whether the wife should have sole parental responsibility for decisions about medical matters and whether the children should spend four or five nights per fortnight with the husband during school terms.
Property – modest pool – major issue in dispute the weight to be given to damages awards received by the wife as a result of motor vehicle accidents during the relationship.
Legislation: Family Law Act 1975 (Cth) ss 60CC, 61DA, 75, 79 Cases cited: Aleksovski & Aleksovski (1996) FLC 92-705
Danford & Danford (2011) FamCAFC 54Stanford & Stanford (2012) FLC 93-495
Number of paragraphs: 158 Date of last submission/s: 29 March 2021 Date of hearing: 10, 11 & 12 November 2020 & 29 March 2021 Place: Newcastle Counsel for the Applicant: Mr Bithrey Solicitor for the Applicant: Powe & White Family Lawyers Counsel for the Respondent: Mr Rugendyke Solicitor for the Respondent: MRM Lawyers ORDERS
NCC 2717 of 2018 BETWEEN: MR ALBRAY
Applicant
AND: MS ALBRAY
Respondent
ORDER MADE BY:
JUDGE TERRY
DATE OF ORDER:
7 JULY 2021
THE COURT ORDERS THAT:
Parenting
1.Subject to Order 2 the wife shall have sole parental responsibility for decisions about medical and dental treatment for the children X born in 2005 and Y born in 2010 “the children”).
2.In respect of any non-urgent or non-emergency decisions the wife shall give the husband at least seven days’ notice of any appointment she has made for the children to see a doctor or dentist and the reason for the appointment. The husband may raise with the wife any concerns he has about the proposed appointment but if no agreement is reached about whether the children should attend the appointment and following the recommendations of the doctor or dentist the wife’s decisions shall prevail.
3.The parents shall otherwise share parental responsibility for the children.
4.The children shall spend time with the husband each fortnight during school terms:
(a)In Week 1 from the conclusion of school on Friday (or from 3.00pm if Friday is a non-school day) until the conclusion of school on Tuesday.
(b)In Week 2 from the conclusion of school on Tuesday until 8.00pm.
Property
5.Within 56 days of the date of these orders the wife shall:
(a)Pay the husband the sum of $283,980.00.
(b)Refinance into her sole name the loans, debts and encumbrances secured over B Street, Suburb C in the State of New South Wales Title Folio Identifier … (“the property”).
6.Contemporaneously with the wife complying with Order (5) the husband shall sign all documents and do all acts and things required to transfer to the wife at the expense of the wife the whole of his right title and interest in the property.
7.Upon transfer of the property to the wife the wife shall indemnify the husband and keep him indemnified from any past or future obligations for all outgoings in respect of the property and for all liabilities arising under such debts, mortgage sand encumbrances.
8.If the wife fails to comply with Order (5) the parties shall promptly take all necessary steps and execute all necessary documents to cause the property to be sold by private treaty by a Real Estate Agent at a price to be agreed upon between the parties and failing agreement to be determined by the proper officer of the Real Estate Institute or their nominee.
9.The proceeds of sale shall be distributed as follows:
(a)In payment of reasonable expenses of the sale including agent’s commission, advertising expenses and legal and conveyancing costs and disbursements.
(b)In payment of any money due and owing to the mortgagee so as to cause the discharge of the mortgage.
(c)In payment of any money due on council and water rates (save that the water usage rates are to be paid by the wife).
(d)The balance as to
(i)60% less $110,220.00 to the wife; and
(ii)40% plus $110,220.00 to the husband.
10.Until the completion of the sale of the property the wife shall have the sole right to occupy the property subject to:
(a)Paying all outgoings as they fall due including loan repayments for the mortgage secured on the property, Council and Water Rates and household building and contents insurance.
(b)Keeping the property tidy, clean and in good repair.
(c)Permitting inspection by prospective Real Estate Agents and purchasers at all reasonable times.
11.Within 28 days of the date of these orders the wife in her capacity as sole director of D Pty Ltd shall cause the transfer to the husband the whole of his right title and interest in the Motor Vehicle 1 registration no. ….
12.The husband shall be solely responsible for all liabilities and outgoings associated with the Motor Vehicle 1 including any loan, lease finance, chattel mortgage or other liability and shall pay the same as and when they fall due.
13.Within 28 days the parties shall do all acts and things and execute all documents necessary to transfer to the wife the husband’s shares in E Pty Ltd and D Pty Ltd and his interest in the business Company F and shall thereafter resign from any capacity in each entity which includes but is not limited to the role of secretary, director, public officer and/or employee.
14.Upon the parties’ compliance with the aforesaid order the wife shall indemnify the husband against any and all liability incurred by those entities which includes but is not limited to any liability that the husband may have had to either or both of those entities pursuant to:
(a)Loan accounts as between the entities.
(b)Loan accounts as between the husband and either of those entities.
(c)Loan accounts between the husband and the Albray Family Trust or its trustee.
(d)Company taxation liability in relation to either entity.
(e)Any liability owed to any third party in the name of either entity.
15.Contemporaneously with Order 13 the parties shall do all acts and things and sign all documents necessary to cause the husband to be removed as a beneficiary under the Albray Family Trust.
16.Within 14 days the wife shall make available for collection by the husband the following items:
(a)Acoustic guitar;
(b)Ukulele;
(c)Tent and accessories;
(d)Sleeping bag received by the husband for his 21st birthday;
(e)Cutlery set being from the Estate of the husband’s late grandparents;
(f)1 Artwork by Ms G;
(g)2 Artworks by Mr H; and
(h)Canoe and accessories.
17.The wife is declared the owner to the exclusion of the husband of the money in the J Bank UK account …37.
18.Otherwise than as provided in these Orders the parties shall have the sole right, title and interest in any other property which is at the date of these Orders in their possession, title or name or under their control.
19.If either party refuses or neglects to comply with any provision of these Orders a Registrar of the Federal Circuit Court of Australia is hereby appointed pursuant to section 106A of the Family Law Act 1975 to execute all deeds and documents in the name of the party in default and do all things and acts necessary to give validity and operation to these Orders.
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Albray & Albray is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE TERRY
Introduction
This matter involves a dispute about parenting and property matters following the end of a 17 year cohabitation/marriage.
Most of the parenting issues were resolved after some evidence was taken. The parties agreed that the children, who are 15 and 11, would continue to live with the wife and spend time with the husband and that the time would be for at least four nights a fortnight and for half of the school holidays. They also agreed that they would share parental responsibility for most matters.
The issues which remained in dispute were:
(i)Whether the parties should have equal shared parental responsibility for the children or whether the wife should have sole parental responsibility for decisions about medical matters and the parties should otherwise share parental responsibility.
(ii)Whether the time the children spent with the husband during school terms should be from Friday to Wednesday each alternate week as the husband proposed, or from Friday to Tuesday in Week 1 and from after school until 8.00pm on Monday in Week 2 as the wife proposed.
By the time of final submissions the property pool was agreed. It consists of non-superannuation assets worth $640,380.00 and superannuation worth $175,563.00.
The parties have about the same amount of superannuation and during closing submissions their counsel said that it was agreed that they would each retain their superannuation and that the issue which remained in dispute was how the non-superannuation pool should be divided.
The dispute on which that largely turns is the weight to be given to damages awards totalling $455,196.86 which the wife received following two separate motor vehicle accidents during the relationship.
The husband’s counsel submitted that when all contributions, including but not limited to the damages awards, were taken into account contributions to the non-superannuation pool should be assessed as 58% by the wife and 42% by the husband. He submitted that there should be an adjustment in the husband’s favour for s. 75(2) matters because he was a modest income earner and the wife would retain the business which he had helped to build up and which delivered significant financial benefits to her.
The husband proposed that in exchange for the wife retaining the former matrimonial home and the business she pay him $337,123.00. His counsel said that this would result in a division of the non-superannuation pool as to 48.7% to the husband and 51.3% to the wife.
The wife’s counsel submitted that contributions should be assessed as 72.5 to 77.5% by the wife and 27.5 to 22.5% by the husband as a result of her receipt of the damages award and some post-separation matters which he said favoured the wife.
He submitted that there should be an adjustment of up to 10% in the wife’s favour for s. 75(2) matters as she had the primary care of the children and did not receive child support. His proposed final outcome was that the wife should receive between 82.5% to 87.5% of the non-superannuation pool and the husband 12.5% to17.5%.
The wife proposed that she pay the husband $124,000.00 if she retained the business and the former matrimonial home, which would result in him receiving 15% of the non-superannuation pool.
The evidence
The husband relied on his affidavits filed on 4 November 2020 and 15 March 2021, his financial statement filed on 4 November 2020, the affidavit of his partner Ms K filed on 3 November 2020 and the affidavit of Mr L, an accountant, filed on 16 March 2021.
The wife relied on her affidavits filed on 5 November 2020 and 5 February 2021, her financial statement filed on 3 November 2020, the affidavit of Mr M, a property valuer, filed on 6 November 2020 and the affidavit of Ms N, an accountant, filed on 5 February 2021.
The wife also relied on an affidavit by Dr O filed on 3 November 2020 but it went to the interpretation of CDT Tests done by the wife and it is not relevant now that most of the parenting issues have been resolved.
A private family report was prepared by Dr P, a Clinical Psychologist. She was cross-examined prior to the parties agreeing to settle most of the parenting dispute.
Background
The parties met and commenced a relationship in Tasmania in 2000. The wife was visiting Australia from Britain and later that year she returned to Britain. The husband followed her and in 2001 the parties commenced cohabitation in City Q. They married later that year.
The parties have two children, X born in 2005 and Y born in 2010.
The parties both worked in Britain and in 2001 they purchased an apartment in City Q. However in 2005, shortly after X’s birth, they sold the apartment and moved to Australia.
The husband obtained employment as an allied health worker in his father’s business in City R. The wife initially stayed at home caring for X but in mid-2005 she began working part time as an allied health worker, which is her area of expertise and training. Once this happened the husband dropped his hours back to part time and the parties shared the care of X.
In or about 2008 the parties commenced an allied health business called Company F which they operated through a company, D Pty Ltd (“D Pty Ltd”).
The wife continued to do some work in private practice while the business was being built up but in due course she commenced working full time in the business and she continued to do so until separation, save for a few weeks in 2008 after her first motor vehicle accident and a period of time after Y’s birth in 2010.
The husband worked largely full time as the practice manager for the business until 2012 when he began devoting his time to the renovations of a property the parties had purchased at B Street, Suburb C. In the last few years of the marriage he was looking for other opportunities to earn income, and in 2017 he began studying while continuing to do some work for the business.
The parties purchased three real properties in Australia. In 2006 they purchased S Street, Suburb C, which has since been sold, and in 2012 they purchased B Street, Suburb C which was their home at the time of separation. For asset protection reasons the B Street, Suburb C property was purchased as to 99% in the husband’s name and 1% in the wife’s name.
In 2012 the parties purchased T Street, City R, the premises from which Company F operated. This property was purchased by a company, E Pty Ltd, and at this time the Albray Family Trust was established.
The wife had two motor vehicle accidents during the relationship. The first was in 2008 in the City R area and the second was in 2015 while she was travelling in Britain. In 2012 she received a damages award of $405,581.80 in respect of the 2008 accident and in 2015 she received $49,615.06 in respect of the 2012 accident.
The money the wife received went into the B Street, Suburb C property and general living expenses.
The parties separated on 5 April 2018 after a relationship of about 17 years. The wife remained in the B Street, Suburb C property with the children and the husband obtained accommodation elsewhere.
On 14 August 2018 the wife terminated the husband’s employment as practice manager of Company F. Money from the business was nevertheless used to pay his rent of $480.00 per week until early 2019 and he has retained the use of one of the vehicles owned by the company since separation.
On 31 August 2018 the husband filed an application seeking property and parenting orders.
On 5 November 2018 interim orders were made by consent for the children to spend time with the husband each alternate weekend from Friday to Monday and each Monday and Tuesday from after school until 8.00pm. However both parties were seeking orders that the children live with them and they agreed to obtain a private family from Dr P, a Clinical Psychologist.
The report was released on 2 September 2019. The parties could not agree on final parenting orders after it was released. They had also been unsuccessful in settling the property matter and the matter was listed for trial for three days commencing on 10 November 2020.
A Division 7A issue arose during the trial.
Since separation the husband had been using one of the vehicles owned by D Pty Ltd. D Pty Ltd continued to make the finance payments for the vehicle and it emerged during evidence that the wife had been debiting the payments to the husband’s loan account with D Pty Ltd. This had not been dealt with appropriately at the end of the 2020 financial year, giving rise to a Division 7A liability.
The parties sought an adjournment of the trial to obtain expert advice about the implications of this. The matter was adjourned to 29 March 2021 and on that day some further evidence was taken, submissions were made and judgment was reserved.
The Parenting Dispute
On 29 March 2021 comprehensive parenting orders made about all matters which the parties had agreed on. In addition to those orders the husband sought the following orders:
(i)That the parties have equal shared parental responsibility for X born in 2005 and Y born in 2010.
(ii)That the children spend time with the husband each alternate weekend during school terms from the conclusion of school on Friday (or from 3.00pm if a non-school day) until the commencement of school on Wednesday (or 9.00am if a non-school day).
The wife sought the following orders:
(i)That the wife have sole parental responsibility for decisions about medical and dental issues, subject to a notice provision.
(ii)That the parents otherwise share parental responsibility for the children.
(iii)That the children spend time with the husband each fortnight during school terms:
(a) In Week 1 from the conclusion of school on Friday (or from 3.00pm if Friday is a non-school day) until the commencement of school on Tuesday.
(b) In Week 2 from the conclusion of school until 8.00pm on Tuesday.
The husband’s case
The husband noted that the wife had agreed to share parental responsibility for all issues except medical, which indicated an acceptance that the parties were able to communicate and reach agreement. He acknowledged that there had been some disputes about medical issues since separation but said that the court should look to the future and accept that once proceedings were over things were likely to settle down and the parties should be able to share parental responsibility for those issues as well.
The husband said that on any view he would be spending substantial time with the children and would have knowledge of them and it would be beneficial for the children if he had input into all areas of their life, including any medical decisions which needed to be made.
The husband said that an order that he spend a block of five nights a fortnight with the children would also be in their best interests.
He said that the evidence supported a finding that the children had adjusted to the parties’ separation. He had re-partnered in 2019 and he was now living with Ms K and her two children aged 12 and 10. He said that the children had adjusted to spending time in his home with his partner and her children.
The husband said that Y had asked him about spending more time with him.
The husband noted that the children had declined to express a view about parenting arrangements to the family consultant but had said that they loved both their parents. There was no reason why they would not adjust to spending five nights per fortnight with him and there was no logic in the wife’s proposal that the time be four nights plus one afternoon after school. What was point, the husband asked, of the children going home at 8.00pm on Monday night? If they remained with him they would only spend a couple of extra hours with him before bedtime and he could get them to school in the morning.
Finally the husband noted that the children faced a change no matter which option the court decided on and they could adjust to the change he proposed.
The wife’s case
The wife said that she sought sole parental responsibility for medical decisions because post-separation the husband had caused difficulties about these matters. It took him twelve months to agree to one of the children seeing an ENT specialist. He had also acted unilaterally in taking Y to a doctor and having melatonin prescribed for her.
The wife said that shared parental responsibility for anything was problematic given the nature of the parties’ relationship, but she was willing for the most part to look to the future and give it a go. However medical and dental decisions were too important to leave to chance and she did not want to risk decisions about such matters not being made. She said that she had always made good decisions for the children and could be trusted to do so in the future.
The wife said that in agreeing to four nights in one week and an afternoon in the other week she was already agreeing to an extension of time, and an extra night was pushing it too far. She said that the children were settled in a routine in her home with homework and other matters. She also said that it was preferable if the time was broken up over a fortnight so that they saw their father each week rather than saw him for one block followed by a considerable gap, and that an afternoon rather than an overnight in the other week suited the children’s routine.
The wife said that the existing interim order provided for time from after school until 8.00pm and that X was used to that and liked to debrief with the mother about his day when he got home and sometimes do some homework before going to bed.
Discussion
Parental responsibility
Pursuant to s. 61DA (2) of the Family Law Act I am required to apply a presumption that the parties should have equal shared parental responsibility for the children absent a finding that one of the parents or a person living with them has perpetrated family violence or abused the children.
Neither party argued that the court should find that there had been any family violence or abuse of the children and the presumption applies unless I am satisfied that it would not be in the children best interests for it to apply.
The wife submitted that equal shared parental responsibility for medical decisions would not be in the children’s best interests.
Children usually benefit from both parents having an input into medical decisions. Even medical practitioners do not always agree about the appropriate treatment for children and it can be useful if different perspectives are taken into account before a decision is made.
However there is merit in the wife’s submission that this is an area where conflict and delay is particularly likely to impact adversely on the children. She gave concrete examples of the difficulties which had arisen since separation in the parties reaching agreement about medical matters. She had difficulty securing the husband’s agreement to necessary treatment and in respect of one matter the husband acted unilaterally of her.
I accept the wife’s submission that there is a risk that this could happen in future. It is good that the parties reached agreement about so many parenting matters during the hearing in November 2020 but it is clear from their affidavits that they have ongoing grievances about each other. The difficulty they have relating to each other and the belief that they are right and the other party wrong about so many things has not gone away simply because they reached that agreement.
The parties did reach agreement about one medical issue in the end but it took a long time and in light of the importance of medical decisions being made in a timely fashion I consider that it would in the children’s best interests if the wife had sole responsibility for making decisions about medical matters.
The parties will otherwise share parental responsibility.
The children’s time with each parent during school terms
Because I do not intend to make an order for equal shared parental responsibility I am not obliged to follow the pathway in s. 65DAA of the Family Law Act which requires me to consider whether equal time, or in the alternative substantial and significant time, would be in the children’s best interests and reasonably practicable and if so to consider making an order of that kind.
However it would not make any difference to the outcome in respect of the dispute about time if the pathway had to be followed. Neither party asked me to consider equal time and both proposed that the children to spend substantial and significant time with the husband. It is just a question of which proposal should be preferred.
The wife’s counsel submitted that the dispute about the configuration of time was an almost a non-justiciable one but I do not accept that. It is capable of being resolved by applying legal principles, so it is a justiciable dispute, but it is a discretionary decision and it is a very finely balanced matter. Strong arguments can be made to justify either outcome and it is a matter in which different judges could well come to a different conclusion.
I must treat the children’s best interests as the paramount consideration in determining the issue and to determine their best interests I must have regard to the matters in s. 60CC (2) & (3) of the Family Law Act. However am not however going to make discrete findings about each of those considerations as I sometimes do. I intend to discuss the matter holistically bearing those considerations in mind.
As I indicated during submissions I strongly suspect that child support considerations may be behind the dispute. I often hear that 5 nights a fortnight has some magic, so that may be motivating husband, and the wife earns considerable more than husband and may be at risk of being assessed to pay him child support if I make the order he proposes. When I mentioned that possibility to counsel neither leapt to their feet to protest, but they made no admissions either so I have to put that out of my mind and determine the dispute based on submissions and evidence.
In support of the husband’s proposal, the children have a good relationship with the husband. They are compliant children and there were no issues with them fitting in with the regime their parents agreed to in 2018. There is no evidence that they have views one way or another about the issue in dispute and given that they have a good relationship with both parents and a desire not to hurt either of them they may adjust well enough if an order is made for the time proposed by the husband.
However as the wife’s counsel submitted, what is the benefit to the children of the extra night? They already have a good relationship with the husband. There was no evidence that he was closely involved in their homework or extra-curricular activities which meant that they would gain added value from spending an extra night with him.
The children have lived with wife since separation over 2 ½ years ago. They have spent time with the husband but his circumstances have changed and he has lived in different locations.
When the children spend time with him now they are part of a blended family. X is a bit lukewarm about Ms K and cool about her children. The father’s home is not their home in the same sense that the wife’s is, and they are more likely to settle and do homework in their comfortable home environment.
I therefore intend to make the orders sought by the wife and not go the extra step. It is the outcome which I consider is in the children’s best interests.
Both of the parenting disputes have been decided in the wife’s favour but it is not my job to give each parent a win. I have to do the best I can to determine what is best for the children and as it happens the factors in both matters stack up in favour of the wife’s proposals.
The concessions each party made about the children’s living arrangements during the trial mean that orders were agreed to which involve change for the children. The parties’ relationship remains poor and I hope that for the children’s sake that they make an effort to put their issues with each other behind them and focus on enjoying time they have with children and making it work.
The property matter
The assets and liabilities
The balance sheet was originally a matter of contention but by the time of closing submissions the parties agreed that they had the following assets:
Description Ownership Value B Street, Suburb C NSW Husband 99% Wife 1% $880,000.00 The Albray Family Trust Joint $204,000.00 D Pty Ltd Joint $63,000.00 E Pty Ltd Joint NIL Household contents in wife’s possession Joint $8,000.00 National Australia Bank (account no. …64) Joint NIL City R Bank (account no. …01) Joint NIL J Bank UK (account no. …37) Joint $500.00 Motorbike Husband $2,500.00 Engagement ring Wife $1,000.00 Total $1,159,000.00
The B Street, Suburb C property was valued by Mr M, a licensed valuer and he was briefly cross-examined.
Mr M noted in his report that he had valued the property on the basis that all the work done to it had been carried out to the standard required by the council. He also noted that some finishing off work was required.
The wife, who wishes to retain the home, was concerned about the potential cost of the finishing off work and the work which might be required to obtain council approval. However in the end the parties agreed that the house should be placed in the pool at a value of $880,000.00. Mr M noted when he gave evidence on 29 March 2021 that there had been movement in the market and that the house could be worth more than $880,000.00, and presumably the wife decided that when this was balanced against her concern about the cost of the work it was reasonable not to argue about the value of the home.
If of course the home has to be sold because the wife cannot refinance the parties will receive a share of the sale proceeds, which will be based on a figure different to the figure included in the pool.
The parties agreed that they had the following liabilities:
Description Ownership Value Mortgage secured over B Street, Suburb C property Joint $445,600.00 Loan from D Pty Ltd Joint $42,692.00 Loan secured over Motor Vehicle 1 Company $27,737.00 2019 Individual Tax Liability Husband $2,591.00[1] Total $518,620.00 [1] Included in the balance sheet at $2,950.50 but rounded up to $2,591.00 by the parties to give a net liabilities total of $518,620.00.
The parties originally sought to have credit card debts and in the case of the husband money advanced to him by his parents included as relevant liabilities. This would not have been appropriate. These debts all involved post-separation spending choices and these debts were omitted from the final balance sheet handed up by the parties. .
The liability of $2,590.50 is the additional tax the husband was/is required to pay because the finance repayments for the Motor Vehicle 1 he is driving were debited to his loan account in the 2019 financial year. No minimum repayment was made within the required time frame and as a result the husband was deemed to have received a dividend which he had to declare in his tax return and which resulted him being required to pay additional tax.
A similar problem will arise for the 2020 financial year and presumably for the 2021 financial year. In 2020 and 2021 the wife continued to debit the loan repayments for the vehicle to the husband’s loan account. No minimum payment was made at the end of the 2020 financial year and as the evidence stood at trial a similar problem was likely to arise at the end of the 2021 financial year.
Those liabilities cannot be included in the balance sheet as they are not known and the appropriate place to deal with this issue is in considering s. 75(2) matters.
The parties have the following superannuation:
Description Ownership Value Super Fund W Husband $53,132.00 Super Fund Z Wife $95,390.00 Super Fund AA Husband $27,041.00 Total $175,563.00
The parties thus have non-superannuation assets worth $640,380.00 and superannuation worth $175,563.00, a total of $815,943.00.
The applicable law
S.79 (1) of the Family Law Act1975 empowers the court to make such orders as it considers appropriate altering the parties’ interests in property.
S.79 (2) provides that the court shall not make an order under this section unless it considers that it would be just and equitable to do so.
In Stanford & Stanford[2] the High Court stressed that when an application for a property settlement was made the court must first identify the parties interests in property and then consider whether it was just and equitable to make an order altering those interests. It stressed that this question could not be answered simply by considering whether a party had made contributions as set out in s. 79(4) of the Family Law Act.
[2] Stanford & Stanford (2012) FLC 93-495.
Both parties sought an alternation of interests in property and I am satisfied that it is appropriate to consider making property settlement orders in this case. The parties are separated and cannot continue to jointly manage and enjoy the property they built up during the relationship.
I intend to take the usual steps to resolve the question of what particular alteration of interests would be just and equitable and those steps are:
(i)To assess the contributions of the parties under s.79 (4) (a), (b) and (c) and to express those contributions as a percentage.
(ii)To consider the matters in s.79(4)(d), (e), (f) and (g), which includes the matters in s.75(2) so far as they are relevant, and determine whether any adjustment should be made as a result to the contribution based entitlements
(iii)To consider the effect of those findings and determine which orders are just and equitable.
Contributions
The parties have an almost equal amount of superannuation. The husband’s counsel said during submissions that they had agreed that they should each keep their own superannuation and both counsel made submissions only about how the court should divide up the non-superannuation pool.
Counsel agreed that absent the damages awards the wife had received contributions during their 17 year relationship would have been assessed as equal, and this is consistent with the evidence.
Neither party had any significant assets at the commencement of cohabitation. In her affidavit the wife said that the husband had credit card debt of $20,000.00 when the relationship commenced and a HECS debt of an unspecified amount. She said that with the assistance of her income and a personal loan she took out these debts were repaid in the early years of the relationship. The husband disputed these assertions.
These matters were not referred to during final submissions and it would not have been possible for me to make a finding about them given the way the hearing was run.
During the relationship the parties both worked in paid employment or in operating Company F and they were both involved in parenting and household duties.
The husband took time out of the business during the last few years of the relationship and devoted himself to renovating B Street, Suburb C, and in the last year of the relationship he engaged in study and did not spend much time at the business. However people’s roles vary during a relationship, and trying to obtain a qualification which would equip him to do a different kind of work was seen as valuable by the husband, and the wife did not object to him doing this at the time.
The parties each made complaints in their affidavits about the conduct of the other party. The wife complained about the husband’s performance in business and the husband complained about the wife’s alcohol consumption and its impact on her parenting capacity. However none of this was referred to in closing submissions and I agree with assessment of counsel that the evidence about the parties’ efforts during the relationship supports a finding of equality of contributions.
The focus of submissions was on how the wife’s contribution of the damages awards should be factored in.
The wife’s first motor vehicle accident was in 2008, and in 2012 she received a damages award of $405,581.80 net. The husband said that it was used to pay down the mortgage secured over the S Street, Suburb C property, support the business and pay day to day living expenses, and that is not contentious.
The husband said that after the wife’s 2008 accident he undertook the majority of the day to day care of the children and did the homemaker tasks while she recovered. However he said that her recovery was quick and that this occurred for no more than a few months. It was common ground that the wife was only unable to work in the business for a few weeks and there was no evidence that the accident cast a significant additional burden on the husband or impacted to any great degree, if at all, on the income derived from the business.
The accident in the UK in 2012 resulted in the wife receiving $49,615.06 in 2015. The accident happened when the wife was on holiday and the injuries she sustained had no impact on her capacity to carry out her role in the marriage.
Counsel agreed that the receipt of the damages awards should attract a weighting in the wife’s favour and the disagreement was about the extent of it. However before turning to their arguments about that I will refer to post-separation matters, because both counsel submitted that there were post-separation matters which favoured their client.
The husband’s counsel asked the court to take into account that after separation the wife had the use of the entirety of the business income and was able to derive some additional benefits from the existence of the company. He acknowledged that the husband had the use of a motor vehicle which was paid for by the company but ask the court to take into account that this had created a Division 7A problem which the husband was being asked to assume responsibility for.
I do not accept that the husband should receive credit because the wife had the use of the business income post-separation. The wife solely operated the business, and the husband received some benefits from it. In particular he had the use one of the motor vehicles owned by the company without being required to pay the finance costs.
The extra tax he was assessed to pay for the 2019 year as a result of the finance costs for the vehicle being debited to his loan account is included in the pool as a relevant liability, so the wife is sharing in it and it is impossible for me to know what his taxation liability for 2020 and 2021 will be arising out of the same issue if he is required to meet that cost but if it is comparable to the 2019 liability it will be modest.
The wife’s counsel asked the court to take into account in her favour the fact that the husband had the use of a motor vehicle after separation and that the company had made the finance payments.
He also asked the court to take into account that the wife had the primary care of the children and the husband had paid no child support.
He finally asked the court to take into account that the wife had paid for all the valuation evidence for the trial including the valuation of the company and the B Street, Suburb C property.
The payment for the valuations is a costs issue, and I do not accept that the other matters warrant an adjustment in the wife’s favour.
After separation the wife solely controlled the company and as a result was in a much stronger financial position than the husband. The fact that the husband continued to receive some benefits from the company which he had helped to build up, mainly in the form of the use of the Motor Vehicle 2 and later the Motor Vehicle 1 free of the requirement to make the finance payments, does not mean that the wife should receive an adjustment in her favour.
The husband did not refuse to pay child support. The wife’s higher income meant that he would probably not have been obliged to pay child support had the wife sought an assessment and he did not shirk his responsibilities for the children. He spent as much time with them as he could, and this matter also does not mean that the wife should receive an adjustment in her favour.
Assessment of contributions
There are no relevant post-separation matters. The only things which tips the matter away from a 50/50 assessment of contributions is the receipt of the damages awards.
Both counsel referred me to Aleksovski & Aleksovski, in which Baker & Rowland JJ said as follows:
In our view, having regard to the facts of this case, his Honour was entirely correct in that the wife’s damages award and, in particular, that portion of it which related to pain and suffering, should be regarded as a contribution by her to the marriage and to the family.
Similarly, that portion of a damages award which relates to economic loss, representing income lost during the marriage or period of cohabitation, may also be regarded as a contribution by the party who has suffered the loss.[3]
[3] Aleksovski & Aleksovski (1996) FLC 92-705.
Although each case turns on its own facts, it is instructive to start by considering what the Full Court found to be a just and equitable outcome in Aleksovski & Aleksovski, a case which involved a relationship/marriage of 18 years in length, a similar length to the relationship/marriage in the case before me, and a damages award which was also large in proportion to the pool as a whole.
The pool in Aleksovski was worth $241,300.00 and one of the assets in the pool was a property which the wife had purchased following the receipt of a damages award of $143,000.00 arising out of a motor vehicle accident.
The trial judge made orders which effectively divided the pool 82.5% to the wife and 17.5% to the husband. The Full Court allowed the husband’s appeal from the decision and in a re-exercise of discretion they assessed contributions as 62/38 in the wife’s favour because of the damages award. They awarded her an additional 5% for s. 75(2) matters, resulting in an overall 67/33 division of the property.
The husband’s counsel submitted that in the case before me contributions should be assessed as 58% by the wife and 42% by the husband. He submitted that the court must have regard to the fact that the husband had worked hard throughout the parties 17 year relationship. He had earned income, worked in the business, done his share as homemaker and parent and worked hard to renovate the B Street, Suburb C property. His contributions had to be given proper weight and not be lost sight of by, as Kay J said in Aleksovski & Aleksovski said:
…eyes dazzled by the magnitude of recently acquired capital.
The husband’s counsel also referred me to Danford & Danford[4] where the non-superannuation pool was worth about $2.45 m and the husband had received a damages award of $1.4m shortly before separation. The trial judge assessed contributions as 55/45 in the husband’s favour and this was upheld on appeal.
[4] Danford & Danford (2011) FamCAFC 541.
However factored into the percentage proposed by the husband’s counsel was an allowance for post-separation matters which he said favoured the husband and I do not accept that post-separation matters do favour the husband.
The wife’s counsel submitted that contributions should be assessed as 65% to 70% by the wife and 30% to 35% by the husband to the date of separation. He submitted that the court should have regard to the fact that the compensation payments represented a significant proportion of the pool, they were received in the last six years of the 17 year relationship and they were used in part to assist in gaining equity in a real property. He submitted that Danford & Danford was not a comparable case because the wife in that case had to bear significant financial and non-financial burden over a lengthy period as a result of the husband’s injuries.
The wife’s counsel’s argument that some special magic arises from the date on which the money was received or the use to which it was put is inconsistent with the approach in Aleksovski, and a difference between Aleksovski and the case before me is that I do not have evidence of the components of the damages award and the extent to which they turned on the wife’s pain and suffering.
The husband’s counsel’s submission is within a range of just and equitable outcomes but it included something for post separation matters which I have found are not relevant and in the circumstances I assess contributions as 60% by the wife and 40% by the husband. This would entitle the wife to $384,228.00 and the husband to $256,152.00 and create a differential of $128,076.00 between the parties’ entitlements.
S. 79(4) (d) (e) (f) and (g) matters
I am required to consider the matters in s. 79(4) (d) (e) (f) and (g) of the Family Law Act. The only relevant subsection is (e) which requires the court to have regard to the matters in s. 75(2) of the Act.
S. 75(2) matters
The husband is 46. He was unemployed from separation between March 2018 and 29 June 2020, when he obtained permanent part time employment with Employer BB as an allied health worker. He currently earns $48,048.00 per annum.
The husband has a TAFE qualification as an allied health worker. In 2018 he completed a Diploma with a view to finding work in fields other than managing the business. This would enable him to work as a professional.
The husband said that he had intentions of studying a degree course but had not yet commenced due to the strain of separation from the wife and the unresolved legal proceedings.
It is unclear why the husband was not able to obtain any employment until June 2020. He maintained that his current income was the best he could achieve with his present qualifications. By implication he said that he had obtained the best job he could as an allied health worker and he said that he had no experience as a professional and even if he obtained a job in this field it would not pay more than his current employment. He said he still had thoughts of completing a degree but it would require three or four year’s full time study.
The husband does not have the qualifications the wife does and unless he did years of study, and perhaps even then, his income will be less than hers in the future. There was no evidence however that the husband needed to work part time or that full time work would not be available to him if he looked for it and I do not accept that $48,000.00 represents the upper limit of his income earning capacity.
The husband formed a relationship with Ms K in 2018 and they commenced living together in 2020. Ms K is a health care worker who earns about $67,600.00 per annum.
On the basis of contributions the husband is entitled to $256,152.00.
The husband has debts which have not been taken into account in calculating the pool. In his November 2020 financial statement he said that he had Visa Card debt of $19,734.00 and that he owed $2,000.00 to his parents and $5,500.00 to his partner. There was no evidence that he would be obliged to repay any of these amounts in lump sum.
A complicating factor in this matter is that both parties in their minutes of order envisaged that the husband would retain the Motor Vehicle 1. It has a debt attached to it which was included as a liability and which has been taken into account in calculating the husband’s share of the pool, but it is owned by D Pty Ltd and while the company is included in the pool at a value of $63,000.00 no evidence was given about the value of the Motor Vehicle 1.
During submissions the wife’s counsel said that the vehicle would not be worth less than the loan. Whether that is true or not I cannot say, but it is a high end motor vehicle and must have a reasonable value, and if the husband receives a percentage of the pool plus the Motor Vehicle 1 he will be receiving a greater percentage of the assets than he is entitled to pursuant to my assessment of contributions.
The wife is 49. She qualified as an allied health worker in 1995 and is an allied health worker. She worked as an allied health worker throughout the marriage and said that she had practice qualifications in many countries.
The wife earns considerably more than the husband and was able to maintain her skills and gain experience throughout the marriage. Even if she ceased to operate the business she has the capacity to earn more than the husband in the long term.
The wife is entitled to $384,228.00 on the basis of contributions. If she retains B Street, Suburb C, the trust and the business and the other assets in her possession she will be required to pay the husband $283,980.00.
The parties have significant debts and there is a possibility that the wife will not be able to retain all of those assets and that B Street, Suburb C will have to be sold. However if this occurs the wife will receive a capital sum to assist her to rehouse.
The wife has the primary care of X and Y. She is unlikely to be entitled to child support in the future because of the difference in the parties’ incomes.
If the company transfers the Motor Vehicle 1 to the husband rather than sells it and pays out the finance, this could have financial consequences for the company and because the wife wishes to retain the company, for the wife. This was referred to in the affidavit filed by the wife’s accountant on 5 February 2021 but the wife did not change her position about the vehicle being transferred to the husband.
The final matter I need to consider before making a decision about whether there should be an s. 75(2) adjustment in favour of either party is the issue of who should bear the responsibility for the additional income tax payable which the husband is likely to be assessed to pay for the 2020 and 2021 financial years as a result of the loan repayments for the Motor Vehicle 1 being debited to his loan account with D Pty Ltd.
The husband sought an order that the wife indemnify him from liability for any additional taxation he incurred as a result of the finance payments for the Motor Vehicle 1 being debited to his loan account. To justify this he relied on the evidence of Mr L. Mr L said that at the end of the 2020 year there had been sufficient money in the company to allow it to declare a franked divided in the amount required to extinguish the husband’s loan account. The wife had chosen not to do this and as a result she should bear responsibility for the additional amount the husband would have to pay the ATO because of the Division 7A issue.
By implication the same argument would apply to the 2021 financial year.
The wife’s counsel said that it was unreasonable to expect the wife to indemnify the husband for the additional income tax assessed for 2020. The husband had been alerted well prior to the end of extension period for the 2020 financial year which was available because of Covid-19 that he needed to deal with the issue and he had buried his head in the sand and had not done so. In those circumstances it was not the wife’s problem and the husband should pay any additional tax he incurred as a result of the Division 7A issue.
The wife’s counsel submitted that the husband should also be responsible for any issues in the 2021 financial year.
The additional tax the husband had to pay in 2019 arising out of this issue was $2,591.00. He is a low income earner and if he is assessed to pay additional tax because of this issue in the 2020 and 2021 financial years it is reasonable to assume that he will have to pay something similar. It could be argued that because he is a low income earner a requirement to pay this additional tax will be a significant impost on him, but on the other hand he will be receiving a cash payment from the property settlement which can be used partially for this purpose.
The husband has had the use of the vehicle and the company has been making the repayments and he buried his head in the sand about the Division 7A issue. I do not consider that the wife should have to indemnify him for this potential income tax liability.
Conclusion about s. 75(2) matters
Both parties submitted that there should be an s. 75(2) adjustment in their favour.
The husband’s counsel submitted that the court should take into account that the husband had helped to establish the business and that the wife would solely benefit of the income from the business going forward.
I observed to the husband’s counsel during submissions that this seemed to me to be double dipping, because the business had been valued, and I remain of that view.
I accept that the husband does not have the same qualifications as the wife and that it is likely that the wife will continue to earn a superior income. However he did not provide any compelling evidence that he had no option but to work part time. He does not have the primary care of the children. He is 46 and has many years as an income earner ahead of him.
Added to that the husband is already receiving a de facto adjustment in his favour because he will be retaining the Motor Vehicle 1 subject to making the loan repayments going forward and tempered by any amount he has to pay to the ATO for 2020 and 2021.
The wife’s counsel submitted that the wife should receive an adjustment for s. 75(2) matters because the children lived with her and she could not expect to receive child support from the husband in the future. However the wife earns considerably more than the husband and was able to maintain her skills and gain experience throughout the marriage.
The s.75(2) matters favouring each party balance themselves out and I do not intend to make an adjustment in favour of either party for s.75 (2) matters.
Conclusion
The husband remains entitled to $256,152.00 and in terms of the items on the balance sheet he will receive:
Description Value Motorbike $2,500.00 Payment from the wife $283,980.00 2019 Individual Taxation Liability ($2,591.00) Loan for Motor Vehicle 1 ($27,737.00) Total $256,152.00
The wife remains entitled to $384,228.00 and in terms of the items on the balance sheet she will receive:
Description Value B Street, Suburb C NSW $880,000.00 The Albray Family Trust $204,000.00 D Pty Ltd $63,000.00 E Pty Ltd NIL Household contents in wife’s possession $8,000.00 J Bank UK account (account no. …37) $500.00 Engagement ring $1,000.00 Payment to husband ($283,980.00) Mortgage secured over B Street, Suburb C ($445,600.00) Loan from D Pty Ltd ($42,692.00) Total $384,228.00
For reasons given earlier these tables do not entirely reflect the outcome, because the Minutes of Order prepared by both parties envisage the Motor Vehicle 1 being transferred to the husband.
Both parties proposed an order that the husband make the loan repayments for the Motor Vehicle 1 as they fall due. I am uncomfortable about making that order. There is a risk of default and the necessity for enforcement proceedings, which is the last things parties need. A neater and cleaner way to deal with this would have been for the husband to receive a reduced cash payment. However both parties made the same proposal and I will deal with the Motor Vehicle 1 debt in that way.
I intend to make orders which will enable the wife to retain B Street, Suburb C, the business and the trust if she is able to refinance the necessary loans. It will require the wife to take on a high level of debt and she may not be able to refinance. If that happens then B Street, Suburb C will have to be sold, and I have included a default sale clause.
In that event the proceeds of sale will be divided on a percentage basis with an adjustment for the value of the other assets in their possession.
The wife proposed an order that a number of items in addition to the Motor Vehicle 1 be transferred by the company to the husband. To the best of my knowledge some of them, such as an Apple MacBook, have been in his possession since shortly after separation. The husband did not ask for such orders and presumably believes that the wife will not try to recover these items from him and I have not made that order.
The husband sought sweeping orders indemnifying him from liability for a range of matters connected with the companies including his conduct as a director. The wife sought sweeping orders making him liable for a number of possible debts including income tax debts arising out of any act or omission on his behalf including his failure to comply with taxation legislation.
Neither counsel addressed the court on the necessity for such sweeping orders. I will however do the best I can to make orders requiring the wife to indemnify the husband from liability for any personal indemnities and guarantees he may have given and to ensure that he is not liable for any inter-company loans.
The parties will each retain their superannuation which is about equal. Neither party wished to disturb that.
I am satisfied that the outcome is just and equitable.
I certify that the preceding one hundred and fifty-eight (158) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Terry. Associate:
Dated: 7 July 2021
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