AM & SO
[2005] FMCAfam 547
•13 October 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AM & SO | [2005] FMCAfam 547 |
| FAMILY LAW – Property – where parties cohabit for 8 months – asset by asset or global approach discussed – paid legal expenses – child born after separation – post separation parenting contributions – where wife’s income greater than husbands notwithstanding he continues to improve his capital asset position – focussing on income alone leads to an unduly narrow application of s.75(2)(b) – pursuant to s.116(1B) court determines child support applications with property hearing – agreed departure order – application for capitalised child support refused. |
| Family Law Act 1975, ss.75, 79 Child Support (Assessment) Act 1989 |
| Lightfoot & Hampson (1996) FLC 92-663 In the Marriage of Clauson (1995) FLC 92-595 Tuck and Tuck (1981) FLC 91-02 Farmer & Bramley (2000) FLC 93-060 Weir v Weir (1993) FLC 92-338 |
| Applicant: | AM |
| Respondent: | SO |
| File Number: | PAM315 of 2004 |
| Judgment of: | Ryan FM |
| Hearing dates: | 4 & 5 October 2005 |
| Delivered at: | Parramatta |
| Delivered on: | 13 October 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr P. Sansom |
| Solicitors for the Applicant: | Harman & Co. |
| Counsel for the Respondent: | Mr N. Macpherson |
| Solicitors for the Respondent: | Adams & Partners |
ORDERS
Pursuant to s.116(1B) of the Child Support (Assessment) Act 1989 the applicant wife is granted leave to proceed with her child support departure application filed 8 April 2005, which application shall be heard concurrently with the her property application commenced the same day.
By way of departure order from the administrative assessment of child support payable by SO “the liable parent” in relation to the child PM-O born in 2002 from 1 January 2005 until 31 December 2015, the liable parent shall pay child support at an annual rate of $5,200.
Within three (3) months of the date of these orders the husband pay to the wife the sum of one hundred and fifty thousand dollars ($150,000).
In the event the husband fails to comply with Order (3) the parties do all such acts and execute all such documents as may be required to effect a sale of the former matrimonial home situate in Macquarie Fields in the State of New South Wales to be sold by private treaty at a price agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee.
Upon the completion of the sale proceeds of the sale be applied as follows:
(a)To pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the matrimonial home.
(b)Discharge any mortgage secured against the property
(c)Forty four percent to the wife.
(d)Balance then remaining to the husband who shall immediately pay the wife $36,448.
In the event that the matrimonial home has not been sold by or before a date three (3) months from the date Order (4) becomes operative then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction of the matrimonial home upon the following terms:
(a)The auctioneer shall be a real estate agent;
(b)The reserve price shall, unless agreed upon by the parties, be as proposed by the Auctioneer.
(c)That auction will take place within two months of this order becoming operative.
Each party has the right to bid at the auction.
Subject to Orders (4), (5) and (6) above until 13 October 2007 the husband is restrained from transferring, encumbering, mortgaging, or otherwise dealing with his interest in the Macquarie Fields property.. In the event these orders require the husband to sell the Macquarie Fields property from the husband’s share of its sale proceeds, the husband shall pay an amount calculated by multiplying $100 by the number of weeks between the sale date and 13 October 2007, into an interest bearing account in the parties’ joint names. Other than to pay child support, the husband is restrained from reducing the amount held pursuant to these orders until 13 October 2007.
In the event that either party fails, refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, then pursuant to s.106A, a Registrar of the Federal Magistrates Court of Australia is hereby appointed to execute all deeds, documents and instruments in the name of the defaulting party and to do all such acts and things necessary to give validity and operation to such deeds, documents and instruments.
All exhibits tendered in these proceedings shall be returned at the expiration of one (1) calendar month unless an appeal is lodged.
The solicitor who issued any subpoena collects that subpoenaed material and returns it to the owner within seven (7) days.
Subject to any applications for costs all outstanding applications are dismissed.
Any costs application must be made within twenty-eight (28) days by arrangement with my Associate.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT Parramatta |
PAM315 of 2004
| AM |
Applicant
And
| SO |
Respondent
REASONS FOR JUDGMENT
The proceedings
These are proceedings for the adjustment of property pursuant to section 79 of The Family Law Act 1975 and for capitalised child support.
The applications
AM, “the wife” filed an application for final orders and child support on 8 April 2005. On 4 October 2005 she filed an amended application that sets out the s 79 orders sought at the hearing. In essence, the orders sought are:
·The husband pays her $150,000 by way of property adjustment within two months.
·In the event the husband fails to make the payment referred to above, he sells the Macquarie Fields property with the wife taking her s.79 adjustment from its sale proceeds.
In her child support application the wife seeks an order pursuant to s.116(1)(B) that the court determines her departure and capitalisation applications at the same time as her property application. By way of departure, the wife seeks the husband pays her $100 per week for the period 1 January 2005 until 31 December 2015. Upon the court being satisfied the wife is entitled to a departure order, she seeks an order pursuant to s.124 capitalising the husband’s liability, with the husband ordered to pay $50,000 lump sum child support for the period 1 January 2005 to 31 December 2015.
The wife did not make application to the Child Support Agency for a change of assessment before filing her child support departure application. However, there is an obvious nexus between the issues the court must determine in the property proceedings and those which underpin the child support dispute. A considerable focus of each application is the husband’s income and earning capacity. Sensibly, the husband took no issue with the court determining the child support application and he seemed as motivated as the wife is to finalise all outstanding matters between them in the most cost effective way. I agree with this approach and am satisfied it is in both parties interests that I exercise my discretion pursuant to s.116(1B) of the Child Support (Assessment) Act 1989 to entertain the wife’s child support applications. See Lightfoot & Hampson (1996) FLC 92-663.
SO, “the husband” filed his Response to the wife’s applications on 13 May 2005. Simply put, the husband sought dismissal of the wife’s applications and that she pays his costs on an indemnity basis. At the end of the hearing, the husband reluctantly conceded the wife is entitled to an overall $10,000 adjustment in her favour. Basically, $5,000 for post separation parenting contributions and $5,000 pursuant to s.79(4). Concerning child support, he agrees there should be a departure order for the period 1 January 2005 until
31 December 2015 requiring him to pay $100 per week for the parties’ son. At the court’s prompting, the husband conceded an injunction in the wife’s/child support agency’s favour against his Macquarie Fields property providing security for payment for child support payments for the forthcoming two years.
At the parties request, pursuant to s.45A(b) the court agreed to exercise its extended jurisdiction to determine the property applications.
Short history
The husband was born in 1966 and is 39 years old.
The wife was born in 1966 and is 39 years old.
The parties married in April 2001. They did not cohabit prior to their marriage.
After two short separations, the parties finally separated on
7 December 2001. In total, cohabitation lasted eight months.
Although separated, the parties continued an irregular intimate relationship. On 10 December 2002 their son PM-O was born. Since his birth, the child has resided with the wife.
On 10 March 2004 a Decree Nisi was ordered which decree became absolute one month later.
On 6 December 2004 by agreement, this court made a complex array of parenting orders. Commencing 11 March 2006 the husband commences weekly overnight contact which graduates from June 2006 into contact three nights each fourteen. Block holiday contact commences in July 2006 gradually extending into contact for one-half of each school holiday. Provision is made for contact on special occasions. Other than during contact, the child will continue to reside with the wife. The orders include a suite of specific issues orders which facilitate joint parental responsibility.
Neither party has re-partnered.
The issues
The primary issues are these:
·Whether the parties’ contributions should be evaluated using a global or asset by asset approach.
·The significance of the parties’ initial contributions.
·Treatment of the parties’ paid legal expenses.
·What adjustment should be made in the wife’s favour pursuant to s.75(2).
·Whether the wife established entitlement to capitalised child support.
Relevant law – property
The approach to the determination of an application under section 79 is well established by authority. In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595. The process ordinarily involves a multiple part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in section 79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in section 75(2) insofar as they are relevant, any other order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child to the marriage.
In determining what order the court should make under section 79, the court must be satisfied in all the circumstances that it is just and equitable to do so [Section 79(2)]. It is the justice and equity of the actual orders that the court must consider. Russell v Russell (1999) FLC 92-877.
In Coghlan (2005) FLC 93-220 the Full Court discusses the relevant provisions of Part VIIB including the manner in which a court should formulate the asset pool. Specifically, whether the court should effectively adopt a two pools approach, one for s.4(1) property and a separate pool for superannuation. The majority held “we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise).”
It has been necessary to consider whether the court should approach its assessment of the parties’ entitlement using a global or an
asset-by-asset approach. The global approach involves the division of the parties’ assets on an overall proportion of the global view of the assets. Tuck and Tuck (1981) FLC 91-021. The asset by asset approach involves a determination of the parties’ interests in individual items of property. McMahon and McMahon (1995) FLC 92-606. In Norbis v Norbis (1986) 161 CLR 513 the High Court held that either approach is legitimate, and that in some cases either approach may be adopted in part or in whole. An examination of the reported case reveals the global approach is the generally preferred approach and the approach most frequently applied. Zyk v Zyk (1995) FLC 92-644. The rationale for its predominance is identified in the following passage taken from Norbis v. Norbis[1].
"Although it is natural to assess financial contributions under sec. 79(4)(a) by reference to individual assets, it is also natural to assess the contribution of a spouse as home maker and parent either by reference to the whole of the parties’ property or to some part of that property. For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, i.e. on a global or, alternatively, on an “asset-by-asset” basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient.”
[1] Per Mason and Deane JJ at p.75,168
The asset by asset approach has been adopted in those matters where the marriage is of short duration and during which the parties have strictly divided and kept their own assets separate from each other. McMahon. An apparent distinction, even when these two features apply, is the importance of s.75(2) factors, including the presence or absence of children of the marriage. See Quinn (1979) FLC 90-677 and Kerr (Full Court of the Family Court) 11 August 1995 (unreported).
This issue arose recently in Danielan v Danielan [2003] FamCA 473, a case concerning a two year marriage. At the time of marriage the wife had a share portfolio and the husband an investment apartment. The wife contributed $304,000 and the husband contributed $254,000 towards their home. As well as being responsible for her own mortgage the wife contributed a significant sum of money towards meeting the husband’s obligations under his loan for the purchase. She had also provided him with money prior to the marriage for various expenses. By the end of cohabitation the wife’s share portfolio had significantly depreciated, whilst the husband’s apartment had appreciated. Justice Le Poer Trench assessed the parties’ contributions on a global basis, ordering that the home be transferred to the wife and that she take responsibility for the mortgage. As the home had increased in value by approximately $300,000 the wife was left with assets worth around $600,000. Against this decision the husband appealed. The husband’s counsel contended that an asset by asset approach was the proper approach. It was submitted that justice would be best served by looking at the parties’ contributions to their joint ventures and that otherwise the profits and losses of their separate investments should lie where they fall. In contrast the wife’s counsel submitted that the court should adopt a global approach and that, the wife having contributed more to the marriage, she should receive about 75% of the pool.
The Full Court stated that the distinguishing feature in this case was that the losses incurred by the wife happened entirely within the course of the marriage, and there was no finding that she had deliberately contrived to dissipate or minimise her assets. Their Honours referred the decision of the Full Court in Brown v Green (1999) 25 Fam LR 483 where it was noted that absent the application of waste principles, it would be just and equitable to expect spouses to share the brunt of a loss that befell only one of them during a short marriage. Their Honours then cited the cases of Harris (1991) FLC 92-698 and Neneke (1996) FLC 92-698 and stated:
“…the task of the court in proceedings under s79 is not akin to an accounting exercise. The task is to examine the facts of each carefully to decide what is appropriate and just and equitable in the circumstances. There cannot be expected to be a universal answer to that question on any given set of facts. It is of the essence of judicial discretion that different minds may comfortably arrive at different conclusions. By and large marriage is a joint venture where parties can expect to buffer each other from the winds of misfortune that blow during the course of their relationship. The degree of the buffer may depend on how much individual sailing they do without consultation or indeed contrary wishes of the other. But there can be no certain answer to how much that should be when applying s79 principles.”
The Full Court stated that in this case it was appropriate to make a preliminary assessment on an asset by asset basis and then make a global check to ensure any proposed distribution attributed appropriate weight to the various contributions.
A short marriage does not mandate the adoption of the asset by asset approach. This was shown in the case of Judkins and Santamaria [2003] FamCA 618, which involved a marriage of almost five years. There were no children of the marriage; however, both parties had adult children from prior marriages. The federal magistrate adopted an asset by asset approach and concluded that the contributions of the parties to the former matrimonial home were 90% in favour of the wife and 10% in favour of the husband. It was not considered appropriate to make any adjustment pursuant to s.75(2). He held:
“This is a short marriage in which the parties have kept their finances separate. The husband has made minimal contributions to his and his daughters’ upkeep, although he has provided a clearly defined contribution to one asset of the parties by virtue of the renovations to the property. I am satisfied that it is therefore appropriate to adopt the asset by asset approach rather than a global approach.”
The decision was appealed on several grounds one being that his Honour had erred in finding the marriage was of short duration. Counsel referred to Dickey A, “Family Law” (Lawbook Co 4th edition, 2002) at 712, and submitted:-
“The significance of a short marriage is that whilst every case depends on its own facts, ‘… the court always considers it appropriate to examine the respective contributions of both parties to a marriage more closely in the case of a comparatively short period of cohabitation than in the case of a longer period of cohabitation”.
The Full Court stated that the expression short marriage as used by the federal magistrate had no particular legal meaning and was merely used to describe the period for which the marriage lasted. However, they considered it had been open to describe the marriage as “short”. They considered that he had undertaken the required evaluation of the parties’ financial, non-financial, direct and indirect contributions and in their respective capacities as homemaker and parent. However, the appeal was upheld as the order made was seen as being outside a reasonable exercise of his discretion and was not just and equitable within the meaning of s.79(2). When re-exercising its discretion the Full Court adopted a global rather than an asset by asset approach.
Assets and liabilities as at the date of hearing
The parties reached agreement as to the value of most assets and the quantum of liabilities.
I find that the assets, liabilities and financial resources of the parties as at the date of hearing are as identified in the following table:
| Non-superannuation assets | $ |
| Macquarie Fields Property (H) (Agreed) | 350,000 |
| Miller Property (H) (Agreed) | 350,000 |
| Bow Bowing Property (H) (Agreed) | 325,000 |
| Land at Wrights Beach (H) (Agreed) | 0 |
| Three Torana cars (H) (Agreed) | 4,200 |
| Falcon Utility (H) (Agreed) | 31,000 |
| Jet ski and trailer (H) (Agreed) | 3,000 |
| Caravan (H) (Agreed) | 0 |
| Currans Hill Property (W) (Agreed) | 270,000 |
| Daihatsu Charade (W) (Agreed) | 2,000 |
| 100 IAG shares (W) (Agreed) | 544 |
| 1100 IAG shares (H) (Agreed) | 5,984 |
| Total non-superannuation assets | 1,341,728 |
| Liabilities | |
| Macquarie Fields CBA mortgage (H)[2] | 81,465 |
| Miller Wizard mortgage (H) (Agreed) | 245,182 |
| Mastercard (W) (Agreed) | 2,000 |
| Total liabilities | 328,647 |
| Nett non superannuation assets | 1,013,081 |
| Superannuation | |
| First State Super (W) (Agreed) | 55,332.18 |
| MLC Master Key Business Super (H) (Agreed) | 19,040.00 |
| Total superannuation assets | 74,372.18 |
| TOTAL NETT ASSETS | 1,087,453.10 |
[2] Exhibit J
The wife contended the court would notionally add back the parties paid legal fees incurred in these proceedings. For her part, the wife has paid legal expenses totalling $8,822.70 while the husband has paid $20,265. These legal expenses have arisen since April 2005. The source of the wife’s funds used to pay her legal expenses appears to be income earned and saved since separation. The husband has drawn down on his CSB mortgage and also used income earned since separation. Recently, the husband drew down $15,000 on the Macquarie Fields mortgage which supplemented $5,265 previously paid. Relying on Farnell & Farnell (1996) FLC 92-681 the wife’s counsel submitted the court should notionally add back these paid legal expenses. This issue was recently considered by the Full Court in Chorn & Hopkins (2004) FLC 93-204. The principles which emerge from the Full Court’s review of previous decisions (including Farnell) can be summarised as follows:
·The treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial judge.
·In determining how to exercise that discretion, regard should be had to the source of funds.
·If the funds used existed at separation and are such that both parties can be seen as having an interest in them (on account of contributions), then such funds should be added back as a notional asset of the party who has had the benefit of them.
·If the funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be notionally added back, nor would any borrowing undertaken by a party post-separation for payment as fees be taken into account as a liability in the calculation of the asset pool.
·Funds generated from assets or businesses to which the other party has made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.
·Outstanding legal fees are generally not taken into account as a liability.
·If in the exercise of discretion it is determined that legal fees already paid should be taken into account as a notional asset, then normally any liability incurred to pay the legal fees should also be taken into account.
A key factor that appears to have general application is the emphasis on the source of funds. That is were the funds received through one parties effort alone or came from assets in which both parties had an interest. Underpinning all of this is the general notion that paying legal fees is reasonable. The husband makes no claim that he contributed significantly to the wife’s Currans Hill property or her savings, which existed at separation. Not long after separation the wife made a capital payment onto her mortgage and it is almost certain that the source of funds she used to pay her legal expenses has been from post-separation income to which the husband has made no contribution. When the husband purchased Macquarie Fields he borrowed $115,000 from the Commonwealth Bank. At the time of marriage the balance outstanding on his mortgage was $80,000. I do not have evidence concerning the amount due to the Commonwealth Bank pursuant to this mortgage at the date of separation. By 9 April 2003 the husband had a redraw facility of $85,868 on the CBA mortgage which suggests that he made significant capital inroads post-separation. However, there is no evidence that during cohabitation the husband made any lump sum or additional payments in reduction of the Macquarie Fields mortgage. Such redraw facility which accrued on the Commonwealth Bank mortgage appears to have accrued prior to or since separation. On the available evidence, I am not satisfied that the wife made a significant contribution to the CBA mortgage or Macquarie Fields property. The husband’s approach accords with the discussion in Chorn and Hopkins and accordingly, I have not notionally included the parties’ paid legal expenses in the asset pool. Consequently $15,000 of the CBA mortgage must also be excluded.
Section 79(4) contributions and other factors
Section 79(4) requires that the court look at the entirety of the contributions both financial and non-financial to the welfare of the family, as well as the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense. Farmer & Bramley (2000) FLC 93-060.
Both parties made financial contributions to the acquisition of assets prior to their marriage, which are reflected in their initial contributions. Because this is a short marriage, the parties properly emphasise financial contributions, which must be examined closely.
The Miller Property
The husband purchased Miller in September 1990 for $57,000. He had $26,000 savings and borrowed the balance needed to complete the purchase from the Commonwealth Bank. Within two years he paid out the Commonwealth Bank loan before borrowing a further $60,000 from the same lender for construction of a home. When the parties married the amount outstanding under the Commonwealth Bank loan had reduced to $21,000. I do not have evidence concerning Miller’s value at the commencement of cohabitation. Given the passage of time between acquisition and significant improvements made to the property, coupled with general upward movements in the Sydney property market, I am satisfied that at cohabitation Miller was worth considerably more than its purchase price. Miller has been tenanted since 2000. During cohabitation the husband received $210 per week rental which covered most of the property’s outgoings. The wife does not contend that she made any direct or indirect contributions to Miller. I am satisfied that as at the date of separation the husband alone contributed to Miller. It appears that since separation Miller has at least maintained its value and in all probability its value has continued to increase. In April 2003, the husband discharged the Commonwealth Bank mortgage, which then stood at $45,000 when he borrowed $250,000 from Wizard Home Loans. Of the $250,000, $45,000 was used to pay out the Miller CBA mortgage and the remaining $205,000 to purchase a factory unit at Bow Bowing. The husband alone has met all costs associated with the Wizard home loan and I am satisfied that post-separation the husband alone contributed to Miller. When considered totally, the wife made no contributions to Miller.
Land at Wrights Beach
The parties identified this property as being a “block of land at Wrights Beach”. The husband purchased this property in 1988 for $11,750. The funds used for its purchase came solely from the husband’s savings. The husband retained Ray White Real Estate to provide a market appraisal of the land. Don McGrath, principal of the agency, reported on 24 February 2005 .. “It is our opinion that the market value of the above block of land would be $1 to $???. This land is in an area that is not zoned for residential purposes and as per the attached article from our local paper 11/2/04 it may never be rezoned… The question is what would somebody pay for a block of land that at the moment they don’t have access to, and may never be allowed to build on? This is an unknown.” For obvious reasons the parties agree that presently the land has no value. There is no evidence which suggests changes in zoning or planning provisions since cohabitation. I infer there have been none. Consequently, although the husband paid considerably more for the land in 1988, I am satisfied that as at the commencement of cohabitation the land had no value. The wife does not contend that she made any contributions to the land.
The Macquarie Fields Property
The husband purchased this property in December 1993 for $115,000. He borrowed the entire purchase price from the Commonwealth Bank. At the commencement of cohabitation the balance outstanding to the Commonwealth Bank was $80,000. At about the time they married, the wife’s father spent seven weeks working on the Macquarie Fields property. Working 9.00 am until 5.00 pm Monday to Friday for approximately seven weeks, Mr M painted the interior of the Macquarie Fields property and polished its floorboards. The parties gave the wife’s father approximately $1,500 at least $880 of which the wife contributed. Including materials used to improve the property, the husband paid about $1,500 towards the cost of the improvements. Mr M’s work was provided at considerably less than they would have paid professionally. Mr M’s work is a contribution made on the wife’s behalf. Towards the end of Mr M’s work the husband and his mother performed at most a few days work. Comparatively, the husband and his mother’s contribution to these improvements is far less than those made on the wife’s behalf.
During cohabitation the husband spent $3,000 on air conditioning, insulation and an aerial for Macquarie Fields. At about the same time, the wife purchased fabric from which she sewed curtains for the house. In terms of effort it is likely that her non-financial contributions towards the curtains is at least the equivalent performed by the husband and his mother renovating Macquarie Fields. The wife paid for the curtains on her MasterCard and as this coincided with a period during which the husband was unemployed, I am not satisfied he reimbursed this expenditure.
I do not have evidence of Macquarie Fields value as at the commencement of cohabitation. However, I take judicial notice that during the period since its acquisition, there has been a general upwards movement in the Sydney property market. By reference to its agreed value for this hearing, I am satisfied that as at the commencement of cohabitation, Macquarie Fields was worth considerably more than its purchase price. While painting the property and sanding its floors will have increased the property’s amenity during cohabitation, it is difficult to see how these contributions have enhanced the property’s value at the date of hearing. When all contributions to Macquarie Fields are considered, as at the date of separation the wife’s contribution to Macquarie Fields are miniscule and by virtue of the husband’s contributions to it post-separation, all but irrelevant at hearing.
The Bow Bowing Property
In April 2003 the husband completed the purchase of the Bow Bowing property. Using monies borrowed from Wizard Home Loans, the husband paid $205,000 for Bow Bowing. This is a factory unit from which the husband conducts his mower servicing business. Without needing to improve the property its capital value has increased by $120,000 in two years. The wife has played no role in this properties acquisition, conservation or improvement. Although its increased value is a windfall, as this property is solely contributed by the husband post separation, the increased capital value is solely his contribution. Overall the husband alone contributed to Bow Bowing.
The Currans Hill Property
Prior to cohabitation, the wife purchased the Currans Hill property. At cohabitation, the property was encumbered by a mortgage with the Commonwealth Bank, in relation to which $30,270 was outstanding[3]. The husband does not contend that he made any contribution towards Currans Hill. Upon their marriage, the parties lived in Currans Hill briefly, basically whilst the improvements to Macquarie Fields were completed. Upon the work at Macquarie Fields finishing, the parties moved to Macquarie Fields. Although the parties contemplated renting out Currans Hill, within a short period their marriage was in trouble. As they worked through their difficulties, by agreement, Currans Hill remained vacant so that if necessary, the wife could return to her home. During cohabitation the wife paid the Currans Hill mortgage without contribution from the husband. As at separation, the husband made no contribution to Currans Hill. Since separation, the wife has resided at Currans Hill and upon discovering her pregnancy, saved diligently to pay out its mortgage. Using $5,000 savings held at separation on 2 May 2002[4] the wife made a capital contribution to the mortgage. On 16 May 2002 she increased her fortnightly mortgage repayments from $310 to $500. Since separation the wife discharged the mortgage. Whether assessed at the commencement of cohabitation, separation or date of hearing, I am satisfied the wife alone contributed to Currans Hill.
[3] Exhibit A
[4] Exhibit A
Superannuation and other property
The husband was employed as a salaried worker and contributed to superannuation for many years prior to cohabitation. He left his employment with Torro Australia in July 2000. Since then, the husband has not made any superannuation contributions. Accordingly, the husband alone contributed to his superannuation. When the parties commenced cohabitation the wife worked as a midwife employed by the local Area Health Service. As a registered nurse, the wife contributed to superannuation directly, or via employer contributions prior to cohabitation. The husband makes no claim that he contributed directly or indirectly to the wife’s superannuation. Given the period and circumstances of cohabitation, I agree. Thus, the wife alone has contributed her superannuation.
At cohabitation the wife had savings of about $10,000, of which approximately $5,000 remained at separation. It appears the husband had a few thousand dollars in savings, none of which remained at separation. Upon his resignation from Torro Australia, the husband received $11,656.55 final pay, including unquantified holiday and long service leave. Torro Australia paid $11,656.55 final pay into the husband’s Commonwealth Bank account[5]. Other than his rental from Miller, between mid-July 2000 and November 2000 the husband had no other income. In November 2000 the husband commenced his mower repairs business. Understandably, the business has taken a while to establish itself and between mid-July 2000 and the commencement of cohabitation the husband used his Torro Australia payout for his day to day expenses.
[5] Annexure D Husband’s affidavit
Each of the parties solely contributed all other assets identified in the asset schedule as belonging to them or in their possession.
In Parshen v Parshen (1996) FLC 92-720 the Full Court held, “In our view in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s.79 that monies how so ever received by a party during the course of the parties’ cohabitation, are used by that party for the benefit of the family unit. Such monies, in those circumstances, thus constitute a contribution by the party who received the money”. These principles apply during the parties’ cohabitation. From cohabitation until April 2001, the wife earned between $48,000 and $59,000 gross per annum. The husband was self-employed, earning substantially less than the wife. Although in his affidavit he says he was earning $32,500 plus overtime with Torro Australia, annexure D to the husband’s affidavit makes it clear that his employment with Torro Australia ended in July 2000, well prior to the parties’ marriage. During cohabitation, the husband worked hard establishing his fledgling mower repair business and I am satisfied that during cohabitation, but for the two weeks during which the wife was unemployed, the wife’s income considerably exceeded the husband’s. During cohabitation both parties contributed all earned income for the benefit of their family. The effect of this is that during cohabitation the wife contributed more to the cost of their day to day living expenses than the husband.
During cohabitation both parties contributed to the day to day effort of maintaining the household. Although the husband claimed a greater contribution in this regard than the wife, I do not accept his evidence. Between them, the parties shared responsibility for all of the household tasks necessary for day to day living. On the evidence before me there is no valid distinction discernable between their homemaker contributions.
On an asset by asset approach the parties’ contributions may be summarised thus:
·Whether calculated at separation or hearing the husband made the sole contribution to the Miller property.
·Whether calculated at separation or hearing the husband made the sole contribution towards the Wrights Beach land.
·The husband made the overwhelming contribution to the Macquarie Fields property. As at the date of separation, the wife’s contribution to Macquarie Fields was miniscule and as at the date of hearing, it is so small it is almost unquantifiable.
·Whether calculated at separation or hearing the wife made the sole contributions towards Currans Hill.
·The husband alone contributed the Bow Bowing property.
·Whether calculated at separation or hearing the parties each made the sole contribution towards their respective superannuation interests.
·Whether calculated at separation or hearing the husband made the sole contribution to his jet ski, trailer, caravan and Torana motor vehicles. He alone contributed his Falcon Utility.
·As at separation and hearing the parties each solely contributed to their respective IAG share portfolios.
·Whether calculated at separation or hearing the wife made the sole contribution to her Daihatsu Charade.
·The wife solely contributed to her savings held at separation. Basically her savings depleted during cohabitation.
Both parties claim contributions to either wedding or honeymoon expenses. In my view, the payment of wedding expenses in most cases cannot be seen as a financial contribution within the meaning of s.79(4)(a). It cannot be said the payment of wedding expenses led to the acquisition, conservation or improvement of property. While it may be argued that money spent on their wedding enabled guests to be invited, which in turn introduced property by way of gifts, the issue of gifts that result from a wedding is a different consideration. The gifts themselves can be regarded as a contribution by the person whose family or friends provided them. Whilst there is evidence of monies paid by the wife towards the wedding and the husband towards the honeymoon, I am not satisfied that these comprise relevant contributions.
The net effect of this is that as at separation the parties’ contributions made during cohabitation do not warrant an adjustment in either parties favour measured against their initial contributions.
Overall, at the time of separation the husband’s total contributions greatly exceed the wife’s. Because I do not have evidence of the value of real estate and other assets at cohabitation or separation, it is difficult to place a precise figure on their respective contributions at either juncture. However this is not as problematic as it appears at first blush. This is because post separation neither party made any contribution to the other’s assets. In many cases there is a significant difference between contributions calculated at separation and hearing. In this case, because cohabitation was so brief, there is no distinction between initial contributions and contributions at separation. Excluding s.79(4)(c) contributions, the total value of each party’s entire contribution is reflected in their respective assets. Simply put, this means each party solely contributed those assets in their name and possession as at the date of hearing. Including superannuation assets, in percentage terms this means the husband’s contributions are 70 per cent compared to the wife’s 30 per cent. Excluding superannuation the husband’s contributions are 73 per cent compared to the wife’s 27 per cent. Examined alone, the wife’s contributions towards superannuation are about 74 per cent compared to the husband’s 26 per cent. As the parties do not draw any distinction between superannuation and non superannuation assets, I consider it appropriate to have primary regard to their contributions to the entire asset pool globally, namely treat these contributions as being 70/30.
The husband’s insistence on an asset by asset approach runs into difficulties when the court considers the wife post-separation parenting contribution. This contribution is one of the important features of this case. As I have already found, the child was born post-separation and he has always lived with the wife. Upon the child’s birth, the wife took twelve months leave, using up her accrued annual, sick and long service leave entitlements. With the overwhelming responsibility for their son, the wife has not been able to resume full time paid employment. Twelve months after the child’s birth she returned to work part time and now works eight hours each Tuesday and Wednesday and four hours each alternate Sunday. Whilst the wife is at work, the child is in day care for which the wife pays. Although formalising a long term arrangement for the husband’s contact with the child has been fraught with tension, since the child’s birth the husband has exercised age appropriate and regular contact with their son. For a considerable period this involved full day visits which the wife supervised. For some time, the husband has exercised unsupervised day contact, with the frequency provided in the December 2004 orders. Comparatively, the wife’s contribution to the child’s welfare vastly exceeds the husbands. In Ferraro the Full Court highlighted the difficulty involved in evaluating and balancing fundamentally different activities. The Full Court emphasised the court must recognise in a real way contributions to the families welfare. With respect to his submissions, the husband’s assertion that the court would value the wife’s post separation contributions to the child’s welfare at $5,000 falls well short of the mark. In Ferraro, the Full Court said, “Whilst a breadwinner contribution can be objectively assessed by reference to such things as the party’s employment record, income and the value of the assets acquired, an assessment of the quality of a home maker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent home maker and parent and cannot be readily equated to the value of assets required. This leads to a tendency to undervalue the homemaker role”. For the reasons given in Ferraro I am satisfied that the wife’s post-separation parenting contributions warrant an adjustment in her favour of three per cent.
The orders I propose will not affect the earning capacity of either party.
Since the child birth, the Child Support Agency has issued a series of administrative assessments requiring the husband to pay the wife child support. Although the husband emphasised he has paid child support in accordance with these assessments, it cannot be overlooked that the all assessments have required the husband to pay minimal child support. The husband was assessed to pay $5.00 per week which he supplemented by making cash payments totalling $560 and for about twelve months buying relatively inexpensive items such as nappies, a baby bath and an inexpensive pram.
I accept the wife’s evidence that the husbands supplementary payments ended in June 2004, which coincided with deterioration in their personal relationship. To the extent the husband claims his supplementary payments ended as a consequence of the wife refusing to sign receipts for his payments, I reject his assertion. With respect to the husband’s claim of recent invention, I was impressed by the wife’s quiet dignity as she dealt with this issue and prefer her testimony. Between 1 September 2004 and 9 September 2005 the parties’ transaction statement[6] discloses that the husband paid $1,112.54 against an equivalent child support liability. The CSA has yet to acknowledge the husband’s voluntary increase to $100 per week which commenced in mid July 2005[7].
[6] Exhibit B
[7] Exhibit D
As I have already indicated I must take into account and balance all of the parties’ contributions. This means the wife is not required to prove a nexus between her post-separation contribution as a home maker and parent to the parties’ assets. It is immediately apparent that this involved quantifying and balancing fundamentally different activities, something that does not lend itself to mathematical precision. Nor is there an artificial divide whereby contributions made prior to separation are inherently more valuable than those made later. Here, the husband has contributed the majority of the financial assets. The wife’s financial contributions, however, are not insignificant. Although non-financial in nature, the wife’s nearly three years post-separation parenting contribution has been valuable to the family’s welfare. Although a totally different style of activity, the case law makes it plain that such contributions carry real weight.
Taking into account all of the matters referred to, I find therefore that the parties’ total contributions and other s.79(4) factors should be assessed as being 33 per cent by the wife and 67 per cent by the husband.
Section 75(2)
Subsection (a). Each of the parties is 39 years old and in good health. There are no factors which warrant an adjustment pursuant to subsection (a).
Subsection (b). I have already made findings concerning the parties’ assets, financial resources and liabilities. The wife works part time as a nurse employed by another Area Health organisation. Her weekly income comprises $571 salary, $127 family payment, $55 parenting payment and to date $5.41 child support. On this basis her gross weekly income is $758.41. By virtue of the departure order, the wife’s weekly income will increase, although the extent of the increase is uncertain. This because it is likely increased child support may reduce the amount she receives for parenting and family payments. Prior to the child’s birth, the wife gave up hospital nursing, preferring to work in community health. She agreed with the husband’s counsel that she has the capacity to return to hospital nursing although in order to do so she requires retraining. The significance of this is the husband asserts hospital nursing is financially better renumerated. Also it appears common ground hospital nursing provides greater opportunities for casual work and thus higher income. However, the wife explained a particular attraction of community nursing is that she works part time fixed rosters. This enables her to manage the child’s care and ensure that she has available childcare places which correspond to her working commitments. I agree that this is an important consideration. Although the wife has the physical and mental capacity for hospital nursing, industry conditions are inconsistent with her childcare responsibilities for the foreseeable future.
During his opening remarks, the wife’s counsel confirmed reference in his case outline to Black v Kellner (1992) FLC 92-287 and Weir v Weir (1993) FLC 92-338 underscored the wife’s claim the husband failed to fully disclose his income. Simply put, the wife alleged the husband received income which he failed to disclose to the court and the Australian Taxation Office. At the hearing the husband produced a vast volume of records. Every document the wife’s counsel called for was produced. The hearing adjourned overnight so that the wife’s counsel could examine the husband’s documents. By the end of the husband’s cross-examination, the wife’s counsel conceded that he had not established the husband received undisclosed income or failed to give full and frank disclosure of material financial matters. It would have been preferable had the parties’ solicitors, arranged informal discovery prior to trial. In any event, the husband’s taxation returns disclosed taxable income as follows:
·Tax year ended 30 June 2001 husband’s taxable income was $48,042 including his mower repair gross income $66,542 and, before expenses $7,200 rental income[8].
·Tax year ended 30 June 2002 husband’s taxable income was $7,884 including his mower repair gross income $90,359 and, before expenses $9,650 rental income[9].
·Tax year ended 30 June 2003 husband’s taxable income was $20,846 including his mower repair gross income $130,071 and, before expenses $12,339 gross rental income[10].
·Tax year ended 30 June 2004 husband’s taxable income was $4,820 including his mower repair gross income $144,245 and, before expenses gross rental income of $10,920.
·Tax year ended 30 June 2005 husband’s taxable income was $6,056 including his mower repair gross income $102,097 and gross rental income of $10,920.
[8] Exhibit C
[9] Exhibit C
[10] Exhibit G
Because of the manner by which the husband derives income he is able to claim a variety of expenses as legitimate taxation deductions. These include motor vehicle expenses, interest on loans, depreciation, council and water rates, not all of which are expenses actually incurred while other’s support asset growth. Expenses associated with one income venture are able to be offset against other more profitable ventures. In effect, although the husband’s taxable income is modest, through negatively gearing he is able to increase his net worth through property ownership. In his submissions, the husband’s counsel emphasised the wife’s greater income and submitted this differential entitled the husband to an adjustment pursuant to the subsection. If the subsection was solely concerned with income I would agree. However, the court must also consider property and financial resources. Whilst the wife’s total income exceeds the husband’s, focussing on income alone leads to an unduly narrow application of the subsection. When property and financial resources are included, one can see that notwithstanding his lesser income, since separation the husband has improved his overall financial position at a greater rate than the wife. For example, post-separation the husband has been able to support the costs associated with acquiring Bow Bowing and benefited from its capital growth. Whereas the wife, notwithstanding her greater income, has not acquired additional property and achieved little more than paying out her mortgage. The husband agreed he has the capacity to return to full time work as a salaried motor mechanic and doing so would result in greater income. However, because he believes long term self employment will produce greater financial rewards he chooses not to do so. This involves similar considerations as his argument the wife should resume hospital nursing. Having decided the wife has good reason for not resuming hospital nursing, it would be unreasonable to decide the husband should give up what appears to be a promising business venture, supporting capital growth in favour of short term increased income. When income, property and financial resources are all taken into account, I am not satisfied there should be an adjustment in the husband’s favour.
Subsection (c). The child is three years old. There is no dispute he will continue to live with the wife. But for his care, I am satisfied the wife could return immediately to full time employment. Although the husband will exercise increasing contact with the child, day to day primary responsibility for his care will remain with the wife. In Clauson the Full Court of the Family Court held, “In addition it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment mobility and the restriction on an independent lifestyle which the obligation to care for children usually entails”. These observations apply to the circumstances of this case. By virtue of the child’s care, the wife is no longer a free agent in a career sense. When the child is ill and needs to take time from school or childcare arrangements fall through, the responsibility for dealing with this falls overwhelmingly on the wife. By virtue of the child’s care the wife does not have the same flexibility which the husband enjoys to devote herself to her career. I am satisfied there should be an adjustment in the wife’s favour pursuant to this subsection.
Subsection (d). This focuses on the financial needs of the parties, including their financial commitment supporting any children. In her financial statement, the wife claims total personal expenditure of $961 per week, which exceeds her income by approximately $200. Uncertain about question 30, concerning minimum credit card payments, the wife indicated average weekly credit card payments of $250. As far as possible, the wife pays expenses on her Mastercard which she fully repays at the end of each month. She averages about $1,000 per month credit card payment. To include $250 per week Mastercard payment and also her average weekly expenses at $828, erroneously double counts the wife’s expenditure. From her total expenditure of $961 her $250 Mastercard expenditure must be deducted. The effect of this is that the wife is able to meet her and the child’s day to day expenses from her income. The wife impressed as a cautious money manager, who is unlikely to routinely spend more than she earns. The sense I had of her approach to finance is that she lives within her means. If this means that she must go without, she does so. Concerning the child’s expenses, of her total average weekly expenses, the wife spends $379 on the child; I infer considerably more than the husband spends. Unfortunately, notwithstanding this case involved a child support application, the husband did not complete Part N of his financial statement. Excluding day to day living expenses, the husband claims weekly total expenditure of $2,970 supported from total average weekly income of $2,988. On the husband’s evidence, he has $18 per week with which to feed and clothe himself and meet his other day to day living expenses. Plainly this is impossible. The husband does not claim to meet his day to day expenses through borrowings and maintains expenditure which is discretionary and unnecessary. For example, $1,800 per annum registration on multiple cars and $650-700 per annum registration for his jet ski. I do not accept the husband would maintain discretionary assets if doing so rendered him unable to meet his reasonable financial needs. I infer that the wife’s commitments (including the child’s) exceed the husband’s non-business commitments and are likely to do so for the foreseeable future. I am satisfied that there should be an adjustment in the wife’s favour pursuant to the subsection.
Subsection (e). Other than the child, neither party has any responsibility to support another person. I make no adjustment pursuant to this subsection.
Subsection (f). I have already made findings concerning the wife’s social security benefits, which benefits are linked to the child’s care. It seems likely she will have continuing eligibility for benefits for the foreseeable future. The husband does not receive any benefit of the type referred to in the subsection. I make an adjustment in the husband’s favour pursuant to the subsection.
Subsection (g). The husband has maintained a standard of living comparable to that enjoyed prior to the cohabitation. The wife has returned to her home at Currans Hill, which is now unencumbered and offers long term secure housing. By virtue of her reduced income and greater expenses, including the child’s expenses, the wife has suffered a reduction in her standard of living. However, I have taken into account elsewhere the financial consequences to the wife of the child’s care. In these circumstances I make no adjustment pursuant to the subsection.
Subsections (h) – (k). These subsections do not arise.
Subsection (l). Presently the wife works part time and wishes to do so at least until the child starts school. The wife explained she wishes to parent the child rather than pay other’s to do so. Basically she has tried to strike a balance between the benefits to the child of a parent’s care and her need for paid work. As the child gets older and more independent the wife’s capacity for paid employment increases. I do not accept the wife must be expected to return to work full time once the child is school age. However, she will significantly increase her hours and thus her income. The subsection recognises the wife may legitimately choose to spend time with the child at school and need not place him into long day-care fulltime as soon as he reaches school age. There is an obvious connection between this subsection and s.75(2)(b) and (c) and the court must be careful not to double count the impact of the wife’s circumstances of her primary care of the child. To the extent not already addressed I make a small adjustment in the wife’s favour pursuant to the subsection.
Subsection (m). Neither party cohabits with another person. I make no adjustment pursuant to the subsection.
Subsection (n). Section 75(2)(n) achieves a cross-referencing between s.75(2) and s.79(4). The outcome of the assessment of contributions and other factors has resulted in the husband receiving 67 per cent of the available assets compared to the wife’s 33 per cent. Both parties will retain superannuation assets and neither seeks a superannuation splitting order. It appears that the parties’ respective superannuation interests are relatively modest, and neither suggests a discount is appropriate by virtue of the wife taking a larger share of her interest in superannuation rather than immediately available assets. By virtue of the orders I will make, the husband will receive 56 percent of the assets and the wife receive 44 per cent. Neither party contends that these circumstances warrant a further adjustment pursuant to the subsection. With this I am in agreement.
Subsection (na). The husband has recently increased his child support payment to $100 per week, and by virtue of the agreed departure order, he will continue to pay child support at that rate until 2015. Only if either party can show a ground for departure in the special circumstances of the case will his liability change. For the next two years, the husband’s child support liability is secured by an injunction preserving his interest in Macquarie Fields. By this I mean the asset is security for his child support payment. Although I have some disquiet about the husband’s long term commitment to child support, on balance I consider it reasonably likely he will make an appropriate contribution to child support at least at the amount provided for in the departure order. Given that there is approximately fifteen years of child support paying years ahead of him, I am satisfied there should be an adjustment in the husband’s favour pursuant to the subsection.
Subsection (o). The husband claims an adjustment because he has paid considerable legal fees. Successfully defending the wife’s AVO proceedings he paid $8,582.97 for his own legal costs. At the end of that hearing the husband failed in his costs application. If the husband was entitled to his costs I infer his costs application would have succeeded. If the refusal of his AVO costs was wrong in law the husband’s remedy lies in an appeal to the appropriate court. He is not entitled to use these proceedings as a back door appeal’s court. For the parenting proceedings the husband paid $21,247.36 legal expenses. By Div 21.02(1)(a) of the Federal Magistrates Court’s Rules the husband had 28 days from the final parenting orders within which to make any costs application. Apparently he did not do so and even now does not invite this court to grant him leave pursuant to Div 21.02(1)(c) to make an application for his costs out of time. Adverse costs are regulated by s.117. The courts discretion under subsection (o) is wide but not so wide this subsection can be used to decide an application which the Act directs must be decided differently. That is by reference to s.117. Again subsection (o) does not provide a backdoor method for granting relief disregarding other mandatory provisions. In these proceedings the husband has paid approximately $20,000. If upon entry of my orders the husband believes he has a proper basis for making a costs application he may do so. There is no basis for making an anticipatory adjustment on the basis of his costs pursuant to the subsection.
Subsection (p). This issue does not arise.
Having regard to all of the s.75(2) factors I find that it is appropriate that there should be an adjustment in the wife’s favour of 11 per cent. This outcome reflects the cumulative outcomes of the findings I have made pursuant to s.75(2). See Tomasetti (2000) FLC 93-023. Any lesser adjustment, given the size of the asset pool would be notional.
Section 79(2). Is this outcome just and equitable?
Because the court must consider the actual orders, not just the percentage distribution under s.79(2) justice and equity in cases like this require that the court stands back and looks carefully at the outcome of the s.79(4) and s.75(2) process. It is at this stage that the court considers the actual structure of the orders.
I will not repeat the findings made thus far. There are key findings which lead to my comfortable satisfaction that an outcome distributing the available assets between the parties 56 per cent to the husband and 44 percent to the wife is just and equitable. Simply put, these include the husband’s overwhelmingly greater initial contribution and total financial contributions. The wife’s more modest financial contributions are enhanced by her post-separation contribution to the welfare of the family. Although the wife’s available income exceeds the husband, he chooses to arrange his financial affairs focussing on property acquisition rather than net income. The wife’s career, by virtue of the child’s care, is materially affected in the manner described in Ferraro’s case and she carries significant costs by virtue of him living with her. Although the husband will pay many years child support his contribution does not offset the financially adverse impact the child’s care imposes on the wife.
Although I am satisfied this outcome is just and equitable it results in the wife receiving more than she seeks, by only a small amount. Throughout these proceedings and at trial the wife was well represented and it appears she is content to receive slightly less than the court orders. During closing submissions the wife’s counsel mounted a powerful argument claiming the wife may well expect to receive considerably more than $150,000. Notwithstanding this the wife claims no more than $150,000. Notions of justice and equity are not absolute, and in the exercise of its discretion it can be reasonable to acknowledge a parties’ slightly lesser expectation, provided of course the differential is relatively insignificant. In this case, granting the wife the relief sought still enables the court to deliver a just and equitable result.
Structure of the property orders
The effect of the orders will mean that the wife has Currans Hill, IAG shares and Daihatsu the value of which is $270,544 as well as her superannuation worth $55,332.18. The wife has liabilities of $2,000. This means she will have net assets of $323,876.18. Forty four per cent of $1,087,453 (net assets) is $478,479.32. Therefore rounded out the husband must pay her $154,604.00. This is slightly more than the wife seeks. For the reasons outlined above the husband will be ordered to pay the wife the amount sought, namely $150,000. The husband will have three months within which to pay the wife. This strikes a proper balance between giving the husband sufficient time to rearrange his financial affairs, including disposing of an asset if he prefers, without requiring the wife to wait an unduly long time to receive her entitlement.
In the event the husband fails to comply with these orders Macquarie Fields will be sold. Although it has an agreed value its net sale proceeds cannot be known. Excluding Macquarie Fields and its mortgage from the asset pool reduces the pool to $818,918.00. The wife’s total assets are $323,876.00. Forty four percent of $818,918 is $360,324. After the wife receives 44 percent of Macquarie Field’s sale proceeds the husband must pay her an adjusting amount to ensure she receives 44 per cent of the total asset pool. The adjusting amount is $360,324 less $323,876.00 which is $36,448.
I have made the usual suite of orders for sale in the event of default. In the unlikely event there are difficulties concerning the sale I have made a s 106A order for a Registrar to sign documents.
Capitalised child support
The wife seeks a lump sum payment of child support pursuant to sections 123 and 124 of the Child Support (Assessment) Act1989. Having agreed on a departure order commencing 1 January 2005 and ending 31 December 2015, the wife says the husband should pay this as a lump sum rather than periodically. Basically the wife submits thus far the husband has demonstrated a poor record in terms of the child’s financial support, and based on his demonstrated attitude and capacity to make enforcement difficult, only if a lump sum is ordered is future payment ensured. The wife submitted the court would regard the husband’s recent increase as a cynical exercise initiated to lessen the possibility this child support action might succeed. The husband agreed he hoped his voluntary increase would work to his advantage, however also emphasised he has paid more child support overall than assessed.
Section 123(1) of the Act provides that application may be made to a court exercising jurisdiction under the Act for an order that the liable parent provide child support otherwise than in the form of periodic amounts paid to the carer. Before a court can make an order for substituted support, the court is required by s.124(1)(b) to be satisfied that it would be just and equitable as regards the child, the carer entitled to child support and the liable parent, and otherwise proper to make such an order. The court is required to have regard to the matters contained in s.124(2) and in determining whether it is “just and equitable” or “otherwise proper” the court must have regard to the matters contained in subsections 117(4), (5), (6), (7) and (8) of the Act. The court is not limited by those factors alone (s.124(5)) which suggests that the court has a wide discretion in determining such an application.
The Full Court in Prpic v Prpic (1995) FLC 92-574 at 81,688 held:
“Capitalisation orders may well be appropriate where there are difficulties in enforcement or where it is proper to sever the financial link between the parties. However, as a general rule, given that payments of child support depend upon circumstances prevailing from time to time, which circumstances cannot be predicted with any significant degree of certainty, it seems to us that the provision of child support by way of lump sum should not be considered to be a readily available alternative but one that is only exercised where there are circumstances that make it appropriate to do so. We would endorse the observations of Mushin J in Bendeich (1993) FLC 92-355 at 79,954 where his Honour said: ‘The rationale underlying the general approach of the court was that the longer a lump sum order operates the greater chance of change in circumstances necessitating a variation of that order, thereby making the order unjust. Those changed circumstances might be in relation to the liable parent, custodial parent or the children. Incomes may increase or decrease and the children may change their living arrangements from one parent to another’
Thus the court has discretion to order a lump sum payment subject to being satisfied as to the matters identified in the Act. It is also clear that the court must exercise that discretion only when there are circumstances which make it appropriate to do so. Normally it is preferable for periodic support to be paid.
The factors relevant in this case to the exercise of my discretion are set out below. Firstly, the parties agree their circumstances amount to a ground for departure in the special circumstances of the case. The basis for this appears to be the administrative assessment results in an unjust and inequitable determination of the husband’s contribution to the child’s expenses when measured against the husband’s income and property. The husband has paid child support at the assessed rate since an assessment first issued. To date there has been no enforcement action required to address any default. Although the assessment has resulted in the wife carrying a disproportionate share of the child’s expenses, the Act does not require the husband to initiate an increase of his child support liability. There is no evidence the husband has tried to divest himself of assets or income so as to avoid paying child support. Less weighty considerations include the husband concedes his child support should increase and without order has voluntarily commenced paying the amount sought.
I do not doubt these parties are weary of litigation. Although not unique, their circumstances are unusual and understandably fraught with tension. They have each spent considerable sums on legal expenses, something each is keen to avoid in the future. However, their legal expenses bear little relationship to the child support issue and appear to predominately relate to parenting and property matters. In refusing the wife’s capitalisation application I am not persuaded this inevitably involves future litigation or unreasonable uncertainty that she will continue to receive appropriate child support. The scheme of the Act promotes a clear preference for periodic child support. While I accept enforcement of the husband’s child support liability may be more difficult by virtue of his being self employed, the evidence does not persuade me it would be either just or proper to presently capitalise his child support payments.
At the end of the hearing the husband agreed to a two years injunction against his interest in Macquarie Fields as security for future child support payments. Although he has considerable assets, this property is where he lives and is not income producing. The injunction is merely in aid of compliance with the departure order and in the event of default makes it far easier for either the wife or CSA to ensure relatively speedy enforcement. Because enforcement of the husband’s s.79 obligations may result in Macquarie Field’s sale, I make provision in the orders for the establishment of a fund from any sale proceeds which achieve the same effect.
For these reasons I make the orders set out at the beginning of this judgment.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of Ryan FM
Associate: S. Mashman
Date: 13 October 2005
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