ANMAR & DEMERLY
[2020] FCCA 2645
•25 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ANMAR & DEMERLY | [2020] FCCA 2645 |
| Catchwords: PROPERTY – balance sheet issues - contributions assessed to be equal – disparity in income earning capacity – 60%/40% adjustment to wife – wife to retain home. DEPARTURE ORDER – departure order made as sought by wife. |
| Legislation: Family Law Act 1975 (Cth), ss.60B, 60CA, 60CC, 62G, 72, 79, 75(2), 81 Child Support (Assessment) Act 1989 (Cth), ss.3, 116, 117(1), 117(2), 117(4), 117(5), 117(6), 117(7), 117(7A), 117(8), 123, 124 |
| Cases cited: Baghti & Baghti & Ors [2015] FamCAFC 71 Goode & Goode [2006] FLC 93-286 MRR v GR (2010) FLC 93-424 U v U (2002) 211 CLR 238 AMS v AIF; AIF v AMS [1999] FLC 92-852 Stanford & Stanford (2012) 247 CLR 108 Stephens & Stephens & Ors [2007] FamCA 680 Ashton & Ashton (1986) FLC 91-777 NHC & RCH [2004] FamCA 633 Petruski & Balewa (2013) 49 FamLR 116 Beklar & Beklar [2013] FamCA 327 Field & Smith (2015) FLC 93-638 Carmel-Fevia & Fevia (No 3) [2012] FamCA 631 Gyselman and Gyselman (1992) FLC 92-279 |
| Applicant: | MS ANMAR |
| Respondent: | MR DEMERLY |
| File Number: | SYC 4969 of 2017 |
| Judgment of: | Judge Purdon-Sully |
| Hearing dates: | 20, 21, 22, 23 & 24 May 2019 |
| Date of Last Submission: | 5 July 2019 |
| Delivered at: | Brisbane |
| Delivered on: | 25 September 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Fowler |
| Solicitors for the Applicant: | Broun Abrahams Burreket |
| Counsel for the Respondent: | Mr Dura |
| Solicitors for the Respondent: | Barry Nilsson Lawyers |
ORDERS
PARENTING
Special Occasions
That the children X born in 2012 and Y born in 2014 (the children) live with the father:
(a)From 2pm Christmas Day until 5pm Boxing Day in 2019 and each alternate year thereafter;
(b)From 2pm Christmas Eve until 2.00pm Christmas Day in 2020 and each alternate year thereafter;
(c)From 2pm Easter Sunday until 5pm Easter Monday in 2019 and each alternate year thereafter;
(d)From 3pm on Thursday before Easter until 2pm Easter Sunday in 2020 and each alternate year thereafter.
That the children live with the mother:
(a)From 2pm Christmas Eve until 2.00pm Christmas Day in 2019 and each alternate year thereafter;
(b)From 2pm Christmas Day until 5pm Boxing Day in 2020 and each alternate year thereafter;
(c)From 3pm on Thursday before Easter until 2pm Easter Sunday in 2019 and each alternate year thereafter;
(d)From 2pm Easter Sunday until 5pm Easter Monday in 2020 and each alternate year thereafter.
Extra-Curricular Activities
In the absence of the parents’ agreement in writing about the enrolment of either child in an extracurricular activity, each parent may enrol each child in one extracurricular activity each calendar year, providing the father will not enrol Y or X in soccer or any other extra-curricular activity in which Mr B is associated.
PROPERTY
That the Court make Orders as to the alteration of property and liabilities of the parties to effect the following.
That the husband retain to the exclusion of the wife all his right, title and interest in:-
(a)C Pty Ltd.
(b)D Pty Ltd.
(c)E Pty Ltd.
(d)F Pty Ltd.
(e)His superannuation entitlements in F Pty Ltd Super Fund;
(f)His share portfolio.
(g)His jewellery and personal possessions.
(h)His bank accounts.
That the wife retain to the exclusion of the husband the property situated and known as G Street, Suburb H (the G Street, Suburb H property).
That within 56 days of the date of these Orders and simultaneously:
(a)The husband will vacate the G Street, Suburb H property;
(b)The wife will pay the husband $252,008;
(c)The parties will do all things and sign all documents necessary to cause the release of the husband’s personal guarantees provided by him to the ANZ Bank in relation to the mortgage secured against the G Street, Suburb H property.
The wife retain to the exclusion if the husband:
(a)Her Motor Vehicle 1;
(b)Her superannuation entitlements with J Super Fund;
(c)Her bank accounts;
(d)Her jewellery and personal possessions.
The parties will divide the contents of the G Street, Suburb H property by agreement and failing agreement by adopting A & B List Method. For the purpose of the preparation of the A & B List the husband will prepare same within 14 days of the date of these Orders and submit to the wife and the wife will select one of those lists submitted to her by the husband within 14 days thereafter.
CHILD SUPPORT DEPARTURE
That pursuant to section 118 of the Child Support (Assessment) Act 1989 (Cth) there be a departure from the administrative assessment of child support payable by the husband to the wife such that the annual rate of child support for the children shall be calculated in the sum of $75 per week per child and:
(a)The child support to be paid pursuant to clause 10 of these Orders be varied on 1 January of each year (the review date) commencing 1 January 2020 to such sum as shall be determined by multiplying the child support being paid on the review date by the faction N/B where “B” is the Consumer Price Index for Sydney (All Groups) published by the Australian Bureau of Statistics (CPI) in respect of that quarter year ended on the day 12 months prior to the review date, namely 31 December and “N” is the CPI in respect of the quarter year ending on the day immediately preceding the review date;
Pursuant to sections 123 and 124 of the Child Support (Assessment) Act 1989 (Cth), the husband shall provide child support to the wife for the benefit of the children (in addition to the amounts required to be paid pursuant to Order 10 by way of payment as and when they fall due:
(a)100% of children’s compulsory tuition fees and levies;
(b)100% of the children’s compulsory school uniform, books, information technology expenses and school requisites;
(c)100% of all compulsory co-curricular activities and equipment expenses;
(d)50% of the agreed extra-curricular activities expenses;
(e)100% of the children’s private health insurance premiums as and when they fall due from time to time with the same or better level;
(f)50% of children’s agreed or urgent medical expenses which are not otherwise paid by private health insurance and Medicare and which exceed $100 for any item.
Pursuant to sections 123 and 124 of the Child Support (Assessment) Act 1989 (Cth), the wife pay, or cause to be paid, non-periodic child support as follows:
(a)50% of the agreed extra-curricular activities expenses;
(b)50% of the children’s agreed or urgent medical expenses which are not otherwise paid by private health insurance and Medicare and which exceed $100 for any item.
Section 106A
The husband and wife shall promptly do all acts and things and give all consents and execute all documents in writing necessary to give effect to these Orders.
That in the event either party refuses or neglects to execute any deed or instrument necessary to give effect to all or any of these Orders made herein, the Registrar of the Court be appointed pursuant to section 106A to execute such deed or instrument in the name of the said party and do all things necessary to give validity and operation to the said deed or instrument.
The Registrar is authorised to execute any such necessary deed or instrument upon being satisfied by affidavit of the neglect or fault, as the case may be, as occurred.
Costs
That any application for costs shall be filed and served within 28 days of the date of these Orders with any response to filed and served 14 days thereafter.
IT IS NOTED that publication of this judgment under the pseudonym Anmar & Demerly is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 4969 of 2017
| MS ANMAR |
Applicant
And
| MR DEMERLY |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties seek the court’s determination on the following issues:
a)Four issues with respect to the parenting arrangements for their two children: X born in 2012 (aged 8) and Y born in 2014 (aged 6), the parties otherwise in substantive agreement on parenting matters which will have the children live with them for equal periods of time, consent orders having been made on 5 March 2019.
b)An adjustment of their property interests pursuant to s.79 of the Family Law Act 1975 (Cth) (the Act) the husband seeking a 70% division in his favour of a pool to which he ascribes a value of $693,163 inclusive of add-backs and the wife seeking a 60% adjustment in her favour of a pool she asserts has a value of $1,065,253; and
c)The application of the husband and wife for a departure order pursuant to ss.123 and 124 of the Child Support (Assessment) Act 1989 (Cth) (CSSA).
The parties detail the orders sought by each of them in their respective Case Outlines and or written submissions.[1]
[1] Written submissions of wife dated 13 June 2019 at [104] and Case Outline document of husband dated 17 May 2020 and filed 20 May 2019 at Part E as amended by written submissions at [187]
The trial, originally listed for three days was heard over five days on 20 to 24 May 2019 with final submissions in reply received on 5 July 2019.
I have considered the evidence and submissions. I do not propose to respond to every submission made however in reaching a decision I have considered all submissions (Baghti & Baghti [2015] FamCAFC 71 at [63] – [64]).
The court apologises to the parties for the delay in the delivery of these reasons. This is a busy court, the majority of its work involving children’s matters which require the court to prioritise the matters before it. However the court acknowledges that every litigant who seeks its assistance is entitled to a timely determination.
Contextual background
The husband is aged 46 having been born in 1974. He is a professional operating his own business C Pty Ltd.
The wife is aged 37 having been born in 1982. She is a customer services representative. She has a second casual job on Saturdays as an artist.
The wife is of Country K Australian cultural background and the husband of Country L Australian cultural background.
The wife is Muslim. The husband Roman Catholic. The children, by agreement, have been baptised and raised in the Roman Catholic faith.
The parties commenced cohabitation at the date of their marriage in 2009. They separated under the one roof on 12 August 2016 on the evidence of the wife and 22 September 2016 on the evidence of the husband. Nothing significant turns on the differences in their evidence on this point.
On 5 July 2017 the wife left the matrimonial home at G Street, Suburb H (the G Street, Suburb H home), moving with the children to her parents’ home in Suburb M from 5 July 2017 until 31 January 2019. She thereafter obtained rented accommodation. The relationship accordingly had a duration of just over 7 years.
The circumstances of the wife’s departure from the home were that on 5 July 2017 following a dispute the police attended the home. A provisional Apprehended Domestic Violence Order (ADVO) was made against the wife naming the husband as the protected person. The wife was charged with assault, a condition of being that she not live at the G Street, Suburb H home. That assault charge was successfully defended and dismissed on 25 August 2017. On 25 August 2017 and without admissions they agreed to a final ADVO for 12 months.
X attends at N School at Suburb O.[2] Y commenced kindy in 2019 at the same school.
[2] Grade 2 at trial
Since 5 July 2017 the children have lived with the parties in an equal time regime. That care arrangement was formalised by way of final orders on 5 March 2019. The children also spend holiday and special occasions time with each of their parents. There is an order for the parties to have equal shared parental responsibility.
The husband pays child support pursuant to an administrative child support assessment at a weekly rate of $127.18 based on the husband’s provisional income of $84,988 and the wife’s adjusted taxable income of $28,683.
Neither party has re-partnered.
The issues
In relation to parenting, the issues are:
a)when the equal time regime will move to a week about care arrangement:
i)the wife contends for the commencement of the first school term in 2022; and
ii)the husband contends for the commencement of the first school term in 2021;
b)with which parent the children spend Christmas and Easter:
i)the wife seeks orders that the children spend a portion of each holiday with each parent each year; and
ii)the husband seeks orders that they spend each holiday with only him each year;
c)the children’s enrolment and participation in extra-curricular activities:
i)the wife seeks orders that the children may be enrolled in one extracurricular activity each year, unless otherwise agreed, and provided that they are not enrolled in an activity with which Mr B is associated; and
ii)the husband seeks an order that in the event the parents cannot agree, then, he is to have sole parental responsibility for decisions concerning the enrolment of the children in extracurricular activities but limited to one activity per season.
In relation to property the issues are:
a)the quantum of the pool to be divided between the parties including the value of the G Street, Suburb H home and the husband’s business and liabilities asserted by the husband;
b)the disparity in the parties’ initial capital contributions to the relationship and the weight to be attached to that in the assessment of the parties contribution based entitlements;
c)the adjustment to the contributions based assessment having regard to the relevant s.75(2) factors;
d)who should retain the G Street, Suburb H home; and
e)further orders sought by the husband which include whether the wife should repay to the husband one half of the costs of a family report in the sum of $5,500.
In relation to child support:
a)The husband seeks that his child support liability be reduced to nil; and
b)The wife seeks that his periodic liability be increased and that he continue to pay non-periodic support.
I shall deal with each issue in turn as identified.
Parenting
The legal principles applicable to parenting matters are well known and do not require detailed repeating, the Court noting the discrete nature of the issues that require determination.[3]
[3] See for example Goode & Goode [2006] FLC 93-286;MRR v GR (2010) FLC 93-424
The Court is required to evaluate the proposals advanced by each of the parties having regard to the relevant legislative provisions found in Part VII of the Act which concern children.
The objects of Part VII and the principles underlying those objects are detailed in s.60B.
Section 60CA requires the court to regard the best interests of the child as the paramount consideration when deciding to make a particular parenting order in relation to a child.
Section 60CC lists the considerations a court is required to have regard when informing its discretion as to what order to make in the best interests of a child. To that end there are primary considerations and secondary considerations to take into account. The primary considerations are contained in s.60CC(2). There are also a number of additional considerations in s.60CC(3) to which the court must have regard where relevant.
I have had the benefit of a report prepared pursuant to s.62G of the Act by family consultant, Ms P. The report was prepared on 5 December 2017. [4]
[4] Exhibit 1
Discussion
Neither parent contends that the children are at an unacceptable risk of physical or psychological harm or abuse in the care of either parent.
Neither parent argues that the children would not benefit from having a meaningful relationship with each parent. That is consistent with, and so much is plain from, the fact that each parent seeks an order for equal shared parental responsibility.
The children are too young for their views, if any, to attract any meaningful weight. Ms P held a similar view ([110]):
… Both of the children are too young to appreciate the implications or consequences to them of any particular parenting arrangement. …
Both parents have struggled with their mental health. Ms P acknowledged these issues in her report however, on a fair reading, her report does not evince any weight attached to those issues provided that each parent seeks appropriate professional assistance with dealing with their co-parenting issues. Both parties told Ms P that they thought their frame of mind had improved since the parties physically separated. No submissions were made on this point on behalf of either parent.
In my view the following matters are relevant to the issues as identified:
a)the likely effect of any changes in the children’s circumstances, including the likely effect on the children of any separation from their parents;
b)the culture and traditions of the children and the children’s parents;
c)the parents’ co-parenting relationship.
Commencement of week about regime
The children are currently spending equal time with each parent on the basis of a 2:2:5:5 fortnightly regime (save for special provisions for school holidays). Both parents seek that an equal time regime continue. The issue is when a reconfigured regime of the time in the form of a week about structure should commence. The mother contends that it should be at the beginning of the 2022 school year. The father says it should be 12 months before that.
Paragraph 3 of the orders made on 5 March 2019 provides:
3. That from the commencement of the first school term in 2021/2022 (date to be determined by the Trial Judge), the children shall live with the Mother and Father as agreed and failing agreement as follows in the following two week cycle:
3.1.In week 1, with the Mother from the conclusion of school on Monday until before school on the following Monday and for that same period in each alternate week;
3.2.In week 2, with the Father from the conclusion of the school on Monday until before school on the following Monday and for that same period in each alternate week;
3.3.For the purposes of order 3.1 and 3.2, if the first day of the school week falls on a day that is not Monday or the Monday is a public holiday, then the period will commencement from the Tuesday.
The father’s proposal would see the children move into a week about living arrangement when Y is just shy of 7 years old and X is just shy of 9 years old.
On the mother’s proposal Y would be nearly 8 years old and X almost 10 years old.
The father’s case is inter alia based on the following premises:
a)the children will have been in an equal time arrangement for over three years;
b)there are already arrangements in place for the children to spend week about time during school holidays so the children have experienced week about time with him during school holidays;
c)the current arrangements have the children spending two-week blocks of time with each parent during the summer school holidays at the end of 2021, supportive of the position that one-week blocks should start at the commencement of 2021;
d)introducing week about earlier will reduce the number of changeovers and limit the issue of the children’s school and other equipment passing between the parents, thus reduce the potential for the children to be exposed to any conflict between the parents;
e)there is no evidence that the children suffer from any separation anxiety or stress as the mother contends they will if the father’s proposal is adopted; and
f)there is no identified risk to the children in moving them to a week about arrangement in 2021 as opposed to 2022.
The mother’s case is comprised of the following:
a)the children have experienced significant changes in their care arrangements since separation;
b)on her proposal, the children will have experienced the 5:2 arrangement for over 3 years and be better able to adjust to an arrangement whereby they will not see one of their parents for seven consecutive nights each week;
c)Ms P’s recommendation that “either the parenting arrangements remain basically as they are or, in the alternate, are not changed in any drastic way”;
d)Ms P’s evidence that:
How X and Y cope in the long term with the changes ahead of them depends on how drastic the changes are and how Ms Anmar and Mr Demerly themselves cope with them. It is my view that a change that saw X being separated from her father for any length of time would be unlikely to work well for her (or for Ms Anmar), notwithstanding her attachment to her mother. Likewise, Y being separated from his mother for any length of time is unlikely to work well for him, notwithstanding his attachment to his father.
e)the changeovers during school term each occur at the children’s school and do not require any face to face handovers by the parents and there has been no conflict or other difficulties arising from changeovers that have adversely impacted the children;
f)the father’s proposal presents a risk to the children that one or both of them will not cope with being separated from each parent for seven days at a time, thus the mother’s proposal presents less risk to the children;
g)there are no apparent advantages of the father’s proposal;
h)the mother gave evidence of the risk to the children of commencing a week about regime from 2021 (paragraph 4(j) of the wife’s written submissions). This includes concerns for their age, level of maturity, stability, separation anxiety and the nature of the parent’s co-parenting relationship.
I prefer the proposal of the mother.
It is a proposal that is supported on the evidence of Ms P, her recommendation to that effect at the end of her report, namely:
111.It is recommended that either the parenting arrangements remain basically as they are or, in the alternate, are not changed in any drastic way.
The benefit of the proposal of the mother is that it affords the children, still young, more time to settle before they move to the week about regime. Ms P noted X’s particular attachment to her father and Y’s particular attachment to his mother, cautioning against change in any drastic way.
Whilst on one view effecting this change in 2021 could not be viewed as a drastic change - Y started kindergarten in 2019 and X was in Grade 2 at trial – on the evidence of the mother the children are naïve. She is concerned about separation anxiety. A benefit of her proposal is that it gives the children one more year to settle and mature. There is no persuasive evidence to suggest that affording the children that extra time would have any negative impacts for their relationship with either parent. They will continue to spend equal time with both parents.
Whilst a reduction in six changeovers effected in a fortnight under the current regime to one change over each week on the proposal of the father presents as a benefit for parents with some challenges in their co-parenting relationship, it is not a benefit on the evidence which outweighs the benefits of the mother’s proposal given the children’s ages and attachments.
The mother deposes to experiencing anxiety and depression. She presented as emotionally fragile at times during the giving of her evidence. As the children’s historical primary carer her concerns about the impact on the children of implementing change prematurely should not be lightly dismissed. Whilst it is the best interests of children that is paramount, it is not the sole consideration.[5]
[5] U v U (2002) 211 CLR 238 per Kirby J at [159]; See also AMS v AIF; AIF v AMS [1999] FLC 92-852 per Kirby J at [193]
On her evidence she and the father do not have the type of relationship that suggests flexibility. For example, she gave evidence at trial of some particular difficulties in maintaining telephone contact with the children during the time they spend with their father.
In summary there is no persuasive evidence that the current arrangement is not working in the overall best interests of the children. The proposal of the mother presents less risk for the children in coping with a new arrangement, for parents who have co-parenting issues. It is a proposal as I have noted that better accords with the recommendation of the independent court expert.
Christmas and Easter
The second dispute is about with which parent the children should spend Christmas and Easter periods. The father argues they should be with him for the entirety of both holidays. The mother seeks orders that the children spend the first portion with one parent and the second with the order, alternating yearly.
Ms P gave the following evidence at [99] of her report:
Ms Anmar is of Country K Australian cultural background and Mr Demerly of Country L Australian cultural background. It is my understanding that family relationships, including with extended family members, are important in both cultures. Ms Anmar is of Muslim Religion and Mr Demerly Roman Catholic. The children, by agreement prior to marriage, have been baptised and raised in the latter. Ms Anmar celebrates and enjoys Christmas. Mr Demerly, to the best of my knowledge, does not celebrate the Muslim holy days. The Islamic family celebrations would therefore, sensibly, be spent by the children with their maternal family. The religious aspect of Christmas and Easter, sensibly, would be celebrated by the children with their paternal family. Birthdays and other family celebrations should be shared in such a way as to have the children included and embedded in both of their families. Mother’s and Father’s Days are self-explanatory.
Ms P gave her recommendation at [112] of her report.
It is recommended that provision be made in the orders for the children to spend time with the relevant parent or with both parents, whichever may apply, on special occasions, including Muslim and Christian celebrations, birthdays, Mother’s and Father’s Days.
The father argues that the children should spend religious occasions with the parent (and that parent’s family) who is of that particular faith. He submits that the children could celebrate (and there is no loss or harm to them so celebrating) Christmas and Easter with their mother on a day other than Christmas Day and Easter Sunday, respectively.
The father also argues that the mother’s negative attitude towards his faith tends towards a conclusion that it is in the children’s best interests to spend the special days with only him.
Other submissions made on his behalf, I think, argue that the mother will be unlikely to foster and facilitate the children’s participation and practice of the Catholic faith. However it is important to take into account the context in which, for example, the wife “makes criticism of the Husband and the fact that the children are at a catholic school at the insistence of the Husband”. That context is the conflict between the parents.
I do not accept that the mother would not facilitate the children’s Catholic faith. During the relationship she participated in the traditions that surround Christmas and Easter including but not limited to present giving, hanging a Christmas tree, putting food out for Santa and she involved herself in the traditions associated those events.
I accept that the children would benefit from spending Christmas Day with their mother each alternate year. That benefit outweighs, in my view, any disadvantage to the children of not celebrating Christmas with their father for religious reasons on Christmas Day.
The children are being raised in the Catholic faith and attend a Catholic school. That is likely to reinforce the special nature of the two events in their mind.
The fact that the mother may not have attended church on those occasions does not enable the court to conclude that there are no benefits to the children in celebrating special occasions with one of their two parents, both then seen to be supporting their faith’s tradition, when the mother has participated in the past and seeks to continue to do so. This is more so where the mother does not celebrate special Muslim occasions such as Ramadan.
In summary, there is no evidence to suggest that there are not benefits to the children in participating in a celebration with both parents which in Australian society is not purely a religious celebration and which for young children, in particular, is usually an exciting and special occasion which involves their parents and, in circumstances where their experience has been that in the past pre and post-separation, their mother has been part of that celebration.
Extra-curricular activities
Finally, the parents are unable to agree on the extra-curricular activities in which the children should participate: more precisely, how the activities ought to be decided. The mother says the children should be enrolled in one activity per year and that activity should not be one with which Mr B is associated. The father argues that it should be one activity per season, and if they cannot otherwise agree, then he should have the final say.
The father argues that he ought to be the sole decision maker in respect of the children’s enrolment in extra-curricular activities because:
a)he has historically been the parent that has taken the interest in ensuring the children participate in extra-curricular activities, the mother not attending any of Y’s soccer games which he has been playing since he was 3 years old;
b)the mother is not facilitating Y’s involvement in soccer because she objects to him playing at the club at which Mr B is coach of the team because she may be uncomfortable attending games;
c)the mother said nothing in her evidence in chief that the father and Mr B are “bullies” and neither Mr B nor the father were cross-examined on the issue;
d)the mother adduced no evidence of any detriment to Y in playing in a team coached by Mr B;
e)if the parties are required to agree on each activity in which the children are to be enrolled, then it will only be a fuel for conflict and may result in neither child being enrolled in any extra-curricular activity;
f)the mother works on Saturdays and she is likely to arrange for someone else, such as her parents, to take the children to their extra-curricular activities and in that sense, there is no sense in precluding the children from attending activities in which Mr B is involved;
g)the children will be required to move sporting teams every season, affecting their development and social connections;
h)the mother has in the past unilaterally enrolled Y in separate child cares depending on with which parent he would be living with at the time; and
i)the order sought by the mother gives Y a poor message about Mr B who is his godfather.
I prefer the proposal of the mother.
The father has failed to make out a persuasive case that the children’s best interests are served by him having ultimate decision-making responsibility with respect to the children’s enrolment in extra-curricular activities.
There are benefits to the children in both parents supporting and being involved in their extra-curricular activities including decision-making.
The proposal of the mother better accords with the objects of s.60B of the Act namely that the best interests of children are served inter alia by:
a)“ensuring that children have the benefit of both of their parents having a meaningful involvement in their lives, to the maximum extent consistent with the best interests of the child” (s.60B(1)(a)); and
b)“ensuring that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children (s.60B(1(d)).
It is a proposal that better supports the following principles underlying those objects namely:
a)“children have a right to spend time on a regular basis with, and communicate on a regular basis with, both their parents and other people significant to their care, welfare and development (such as grandparents and other relatives)” (s.60B(2)(b); and
b)“parents jointly share duties and responsibilities concerning the care, welfare and development of their children” (s.60B(2)(c)); and
c)“parents should agree about the future parenting of their children” (s.60B(2)(d)).
The proposal of the mother, which enables each parent to enrol the children in one activity each year unless otherwise agreed, will enable the children to benefit from the input of both parents in this regard. The father, for example, has a keen interest in soccer. The mother may seek to support the children’s other interests.
I place no weight on the father’s submission that the mother works Saturdays. It may be the case now, however the children are young. Whether she will continue to work each and every Saturday for the next ten or so years is not known. It does not preclude the making of the order she seeks in the children’s best interests.
I place no weight on the father’s submission that the children will be moving from one sports team to another each season. Mr B is involved, as I understand the evidence, in one club. There are other clubs in Sydney which would be able to facilitate the children’s involvement in soccer. There is no persuasive reason why the children would have to move from one club to another each season.
The father relies upon the evidence of Ms P in support of his case. His written submissions (at [127.7]) sets out the following extract of [102] of Ms P’s report:
… For example, there is a question as to whether Ms Anmar’s decision not to allow the children to attend the birthday party (and/or the Q concert) was related to a punitive reaction to their having “pushed” her away or to panic about the possibility that she might be losing them (or a mixture of both) …
It was submitted on behalf of the father that the Court should infer from the mother seeking to preclude the involvement of the children with Mr B in the way that she does, coupled with Ms P’s evidence above, that she is yet again acting punitively. I do not accept that submission.
Ms P’s report (at [102]) continues:
Whatever her motives may have been, the children, being children, would have been likely to interpret her decision as punishment of them. The children’s reported reactions to their mother are more likely to have been related to their exposure to the parental conflict than a rejection of her and, just as Ms Anmar, if she understood that, might have managed the situation differently so might Mr Demerly have managed it differently (for example, by telling the children to kiss their mother goodbye).
The gravamen of that evidence in relation to this issue, in my view, is that both parents have been unable to appreciate the adverse impacts that their behaviour is having on the children and the lack of insight demonstrated by both parents. There is no force in this aspect of the husband’s submission.
On balance I have further concluded that the best interests of the children are met in them not being involved in an activity where Mr B is coach or plays for a club where he is involved.
Parental involvement in a child’s sporting or other extra-curricular activity, here soccer participation, cannot be assumed to begin and end as either chauffeur or watching from the side lines on a weekend. Whilst there is no specific evidence in this regard, it is not a leap to conclude that dependent on either Y or X’s continued enthusiasm, skill-set and level of participation in soccer, it may involve more than a Saturday morning sporting commitment. There may be other attendances which the mother would be required to facilitate when the children were in her care.
Mr B is a qualified soccer coach and a Director at the Suburb R Soccer Club. His expertise and qualifications to coach the children’s soccer pursuits is not an issue. He is however a close longstanding friend of the father who was also a witness in support of his case, not only on this issue, but a significant issue to do with whether the father owed him a considerable sum of money. Whilst none of these factors in and of themselves disqualify Mr B from coaching a soccer team for Y or X, it being the best interests of the child that is paramount, it is not the sole consideration as earlier noted. The best interests of the children cannot be considered in vacuo in circumstances where the children’s participation is facilitated by both their parents, given the equal time regime implemented by them, and where it cannot be reasonably argued that it is in their best interests that both parents have a level of comfort with the people involved when supporting the children’s interests.
What is important is they engage in an activity they enjoy. There is no evidence that they would not otherwise enjoy their soccer commitment absent Mr B’s involvement.
Whilst I accept that the mother is conflating her interests with the children’s, that is also the case with the father. However it is the mother who has the issue with Mr B, not the father. She no longer views him as a friend. She views him as partisan. There was an incident where she required him to leave the property. Her level of comfort with Mr B should not be ignored when considering what proposal will further the best interests of the children.
What is made out on the evidence is that the father has a clear incentive for Y to be in Mr B’s team and that the mother has a clear incentive for Y not to be in his team. The mother became upset in the witness box when questioned about him. Mr B may be “the ham in the sandwich” however the Court accepts the mother’s level of discomfort with Mr B may have a flow on effect for the children. It would not be in the best interests of either child if the mother’s participation in an activity they enjoyed was curtailed or blunted by her anxiousness or discomfort associated with Mr B’s involvement.
There is no evidence to suggest that the children’s soccer interests can only be furthered by their attendance at Mr B’s club or tutelage under Mr B.
Nor is there evidence that Mr B’s encouragement and support of their soccer interests cannot continue as he continues to have contact with the children through their father.
Nor is there evidence that Mr B’s role as Y’s godfather would be compromised if he did not assume or continue the role of his soccer coach. On Mr B’s evidence at [28] of his affidavit he continues to enjoy a close relationship with the children. This is notwithstanding the breakdown of the parties’ marriage.
Property
Legal principles
Part VIII of the Act deals with, inter alia, the property of the parties to a marriage.
Section 79(1) of the Act relevantly provides that:
In property settlement proceedings, the court may make such order as it considers appropriate … altering the interests of parties to the marriage in the property;
Section 79(2) relevantly provides that:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(4) prescribes matters that must be taken into account in considering what if any order is made under the section.
The legal principles required to be applied in adjusting property interests on the breakdown of a marriage were considered by the High Court in Stanford & Stanford (2012) 247 CLR 108 (“Stanford”). Those principles are well known and do not require detailed repeating.[6] In summary, the court must identify the existing legal and equitable interests of the parties in the property, liabilities and financial resources of the parties at the time of the hearing and then in the application of s.79(2) of the Act determine whether it is just and equitable to make a property settlement order. If it is so satisfied then the court should make such an order having regard to the matters in s.79(4) of the Act.
[6] See also Bevan & Bevan (2013) FamCAFC 116 (Bryant CJ, Finn and Thackray JJ) at [57] to [89]
In approaching the assessment and adjustment process under s.79(4) of the Act and separate and distinct from the s.79(2) requirement and consistent with Stanford I propose to:
a)have regard to the joint balance sheet composed by the parties (Exhibit 2) and any findings made in that regard;
b)consider the contributions made by the parties as defined in s.79(4)(a) to (c) adopting a global approach to assessment of contribution (there being no contention to the contrary) before then considering the matters in s.79(4)(d) to (g), in particular, the provisions of s.75(2) in so far as they are relevant: (s.79(4)(e));
c)consider the “justice and equity” of the actual orders to be made in the context of the court’s obligation to make “appropriate orders” as provided for in s.79(1) of the Act.
Schedule of existing interests in property and notional add backs contended for by each party
The joint balance sheet submitted by the parties details the assets agreed or not agreed as otherwise amended in written submissions[7] or conceded during the trial and which I shall hereafter address in turn:
[7] Wife’s submissions at [40]
| Item | Owner | Description | Ref | Wife's Value | Ref | Husband's Value |
| ASSETS | ||||||
| 1 | W | G Street, Suburb H | $1,250,000 | $1,100,000 | ||
| 2 | J | Household contents in G Street, Suburb H property | $10,000 | $10,000 | ||
| 3 | H | S shares | $5,121 | $5,305 | ||
| 4 | W | Jewellery | $0 | $0 | ||
| 5 | H | Jewellery | $500 | $500 | ||
| 6 | H | Westpac account ended in #...54 | $298 | $298 | ||
| 7 | W | ANZ Account ended in #...79 | $390 | $390 | ||
| 8 | W | Westpac account ended in #...30 as at 14.02.19 | $314 | $314 | ||
| 9 | H | C Pty Ltd | $135,000 | $0 | ||
| 10 | H | F Pty Ltd | $500 | $0 | ||
| 11 | H | T Pty Ltd | $0 | $0 | ||
| 12 | H | E Pty Ltd | $0 | $0 | ||
| 13 | W | Motor Vehicle 1 | $6,000 | $10,000 | ||
| 14 | H | Demerly Discretionary Trust | ($11,000) | ($31,116) | ||
| $1,397,123 | $1,145,691 | |||||
| Item | Owner | Description | Ref | Wife's Value | Ref | Husband's Value |
| ADDBACKS | ||||||
| 15 | W | Funds withdrawn from mortgage account | N/A | $42,000 | ||
| $42,000 | ||||||
| Item | Owner | Description | Ref | Wife's Value | Ref | Husband's Value |
| LIABILITIES | ||||||
| 16 | W | Mortgage - ANZ Home Loan – G Street, Suburb H as at 01.03.19 | $446,828 | $446,828 | ||
| 17 | J | U Company | $0 | $27,433 | ||
| 18 | J | V Company | $0 | $94,050 | ||
| 19 | J | W Company | $0 | $5,361 | ||
| 20 | W | ANZ Visa | $7,490 | |||
| 21 | H | AMEX Credit Card | N/A | $14,020 | ||
| 22 | H | Z Bank Credit Card | N/A | $14,980 | ||
| 23 | H | AA Bank Credit Card | N/A | $10,008 | ||
| 24 | H | Loan from Ms BB | $10,000 | $10,000 | ||
| 25 | J | CC Company | $0 | Not known | ||
| 26 | J | DD Pty Ltd | $0 | Not known | ||
| 27 | H | Demerly Discretionary Trust | N/A | |||
| 28 | H | Loan from C | $0 | |||
| $479,500 | $630,170 | |||||
| NET ASSETS (excluding Superannuation) | ||||||
| $917,623 | $557,521 | |||||
| Item | Owner | Description | Ref | Wife's Value | Ref | Husband's Value |
| SUPERANNUATION | ||||||
| 29 | H | F Pty Ltd Superannuation Fund | $91,346 | $79,358 | ||
| 30 | W | J Super Fund | $56,284 | $56,284 | ||
| $147,630 | $135,642 | |||||
| NET ASSETS (including Superannuation) | ||||||
| $1,065,253 | $693,163 | |||||
Item 1 – The value of the matrimonial home
The wife contends for a value of $1,250,000 based on a valuation report prepared by Mr EE dated 8 April 2019 annexed to his affidavit filed 12 April 2019.
The husband contends for a value of $1,100,000 based on a valuation report of Mr FF dated 26 February 2019 annexed to his affidavit filed 28 February 2019.
The evidence of both valuers was tested at trial. I have considered their opinions.
I prefer the evidence of Mr EE and adopt his valuation. My reasons for the preference of Mr EE’s valuation is as follows.
Mr EE was a confident and assured witness. He has a depth of experience relevant to the circumstances of this case. The methodology employed by him is sound. The opinions expressed on the value of G Street, Suburb H are logical and persuasive. His position remained when challenged in cross-examination.
With respect to his qualifications and experience, Mr EE is a registered real estate valuer of longstanding with extensive experience primarily Sydney based.
Mr EE is a licensed builder of 20 years’ experience with a background in the construction industry, including the construction of single dwellings.
Mr EE is also building surveyed qualified.
I accept his evidence based on his experience that he has “… a fair idea of what …..a building may be worth”. The submissions made on behalf of the husband at [24.1] of written submissions with respect to Mr EE not providing evidence of his expertise is rejected.
Whilst Mr FF was also an experienced valuer he is not a licenced builder. He evidenced no experience in the construction industry.
With respect to his methodology in addition to undertaking a comparison analysis of the subject property with sales of other properties in the G Street, Suburb H area, Mr EE used the check method of value to cross-check his analysis of the sales evidence. I do not accept that this demonstrated any lack of rationale or methodology. It involved him determining the land only value of each property sold by deducting from the sale price of the property an amount determined by Mr EE to be the value of the existing improvements. In so doing Mr EE reached an opinion that the land value of G Street, Suburb H was $700,000. To that value he then added his estimate of the cost of improvements on G Street, Suburb H ($581,700) after deducting depreciation and a further allowance for renovations required. Mr EE gave evidence that the cross-check method, used secondarily to the comparative sales method, is a common and legitimate valuation method for real estate and a method he uses in all of his reports. Mr FF did not use the cross check method.
I prefer the sales evidence relied upon by Mr EE. I accept his evidence with respect to why he used the sales he did. I accept his evidence with respect to the property at G Street, Suburb H presenting as the most comparable to the subject property. I accept his evidence with respect to recent comparables outside of the G Street, Suburb H area and what could be drawn from that with respect to the subject property, namely properties in inferior locations selling in a current market and managing to achieve sales prices in the vicinity of the subject property. It was evidence that supported the market that prestige homes with the land size of the subject property could command.
The comparable sales used by Mr FF were of a smaller land size to the subject property. G Street, Suburb H is considerably larger (at 444.4sqm), the sales evidence used by Mr FF ranging from 343sqm to 402.sqm. Of the six comparative sales considered, only one property had a land size above 400sqm.
On the evidence of Mr EE, the subject property was unique in the area by reason of it having a larger land size. On his evidence land size is relevant to value (“…it has a drastic effect on value…it commands a higher price because of its land size…. More facilities can be built on the land….a larger building can be built because the FSRs that are allowed. Beautification works, landscaping, pools… and what has been built there is quite a nice home”).
I otherwise accept the submissions made on behalf of the wife at [24] of reply submissions in their entirety as to why the court should prefer the evidence of Mr EE and adopt his valuation.
The court further accepts the wife’s reply submissions at [3] which are comprehensive and otherwise persuasive, that reply in response to [24] of the submissions on behalf of the husband.
Item 2 – S shares
The S shares are in the possession of the husband. In Exhibit 2 the husband’s column shows the figure of $5,305. The wife says they are worth $5,121. The husband’s Financial Statement filed 20 February 2019 records the value at $5,121 as does the balance sheet at [85.2] of the husband’s submissions. There is no independent evidence as to value. I accept the figure of $5,121.
Items 9, 10, 11, 12, 14 and 29 – the value the husband’s business entities and interest in his self-managed superannuation fund
The husband is a professional who provides services from which he derives income and otherwise engages in property development through the following entities:
a)C Pty Ltd;
b)Demerly Discretionary Trust; and
c)F Pty Ltd;
d)T Pty Ltd;
e)E Pty Ltd;
f)F Pty Ltd Superannuation Fund.
The value of the husband’s business entities and his interest in his self-managed superannuation fund were the subject of joint valuation by Ms GG as at 30 June 2018. Her report is annexed to her affidavit sworn 4 March 2019. [8]
[8] Exhibit 7
The wife adopts the values determined by Ms GG in her Summary of Valuation on page 3 of her report as follows:
C Pty Ltd $135,000 F Pty Ltd $500 T Investments Pty Ltd $0 E Pty Ltd $0 F Pty Ltd Superannuation Fund $91,346 Motor Vehicle 1 $6,000 Demerly Discretionary Trust ($11,000)
The parties are ostensibly in agreement that the T Investments and E Pty Ltd companies have a nil value. The husband otherwise takes issue with Ms GG’s report which I shall now discuss.
All of the above entities serve the purpose of conducting business of which the husband is the controlling mind and ultimate beneficiary. That is the effect of the arrangement.
E Pty Ltd is the Trustee of the Demerly Discretionary Trust. The husband is the sole director of E Pty Ltd. He owns the only share issued in the company. In his Financial Statement filed on 20 February 2019[9] the husband says:
I am the primary beneficiary and there are other classes of beneficiary including the entities in which I have an interest and members of my family.
[9] Note 3.1
E Pty Ltd conducts a business through the Trust. That business is received from C Pty Ltd. The business’s income is from referral fees.
So there are two businesses: the original business, carried on by C Pty Ltd, and the second business, carried on through the Demerly Discretionary Trust by the trustee of that Trust, E Pty Ltd.
C Pty Ltd
The husband is the sole director and shareholder of C Pty Ltd. It employs two professionals and one administration assistant in addition to the husband.
Ms GG’s report sets out her methodology for determining the value of the company as $135,000.
The wife accepts Ms GG’s valuation.
The husband argues that Ms GG’s methodology and value are flawed because:
a)she “treated the two separate arms of the business, namely the two businesses, as one whole business”. She “applied the same multiple to each component of the business when it was clearly established on the evidence that such approach was flawed”;
b)she included in her valuation the value of the Motor Vehicle 1 which had been transferred to the wife; and
c)she failed to acknowledge that the future cost of vacating the premises is a current cost of operating the business.
In her report Ms GG explained why she valued the two businesses together:
43. As E P/L holds the licence, not the Demerly Discretionary Trust, and the Husband is the sole authorised representative of the licence, I consider it appropriate that the two businesses are combined when calculating the value for the Family Law purposes.
44. There are a number of reasons for this including the fact that the accounts of both businesses do not properly show all expenses relative to each of the businesses. The Discretionary Trust pays no wages to the Husband or administration staff, no rent, no telephones, no electricity, computer expenses, office expenses, internet nor some other normal operating costs. These expenses are paid by E P/L.
45. It is my opinion that the combination of the two businesses, for valuation purposes, will lead to the same conclusion as valuing each of the two businesses separately. To value them separately would require substantial further investigations, and reliance upon the Husband to provide details of the “probable” separation of expense between the two entities, and not lead to a different total result than the combining of the two businesses.
The explanation for why she valued the two businesses together is clear from the above extract. She was not in the position to value them separately because she required substantial further investigations. Further, she said she would have to rely on the husband’s explanation of the notional separation of expenses between the two businesses. The magnitude to which the expenses of the businesses are entwined is encapsulated by Ms GG at [44] of her report above.
Further, she has not simply combined the two businesses. At various stages of her report she analyses and explains when and why she is taking into account separate aspects of the separate businesses: see for example [60], [61], and [63].
Counsel for the husband put to Ms GG that it would be more appropriate to have considered the businesses separately. She gave the following evidence: [10]
They’re very similar in so many ways that it really is treated – I’ve treated it as an add-on to the business. The problem that we really do have anyway is the fact that there’s no separation of – of expenditure in – in the accounts, like they weren’t treated by the – the owner, the director as two separate businesses. They were treated, basically, as the one business. It’s very difficult, very time consuming. The mortgage broking business has been around forever. It was growing quite quickly. There was no reason to sort of think that it was a negative to the business. It was an add-on to the business.
[10] T455 L5-13
She later explained that:
a)there was no “reason to consider it as two real separate business (sic) particularly when the owner of the business didn’t separate them out”; and
b)she would have adopted the same multiple of four for the broking business had she valued them separately.
It is clear from Ms GG’s evidence in cross-examination, and from her report initially, that her method of valuation was appropriate in the circumstances. Her explanations for why she valued the businesses together rather than separately are logical, rational and persuasive. Her position remained when challenged in cross-examination.
The husband argues that the value of a motor vehicle in the amount of $10,000 must have an impact on the valuation of a business or company.
Ms GG was cross-examined by Counsel for the husband about the inclusion of the Motor Vehicle 1:[11]
[11] T458 L33-T459 L17
And one of the net assets that you took into consideration was the motor vehicle - - -?---It - - -
- - - which I think was included on the balance sheet of the company of $10,000?---Okay.
And if I have a look at the letter that you have sent back to the parties to answer some questions dated 25 January 2019, in particular page 151, that with that motor vehicle coming out of the company, then the proper accounting for that would be treated as a loan to the wife?---Yes.
Okay. So if that loan – I know for proper accounting purposes it would be treated as a loan in the books to the wife, and the wife would then owe the company $10,000. But if that were disregarded – appreciate not proper accounting - - - ?---Yes, I was very – I’m not happy with the accounting for that because, whilst it says 10,000, the accounts only show that it was worth 6,236. And I couldn’t work out – out why – where was the other 4,000? It should have been shown as a profit, and it’s not – profit on transfer. It should be shown somewhere. So I don’t – didn’t quite understand the mathematics of – it’s not accounted for - - -
The whole value of $10,000?---The ten – yes, it’s not accounted for correctly, and I don’t know if the other side, the account was to put it to the husband’s loan account or something, but there was another side of the account that should have gone in profits. So the value of that car is only 6,236 per the accounts, and I don’t know how that 10,000 arose. It might be a value that the – the parties put to it, but it’s not accounted for correctly in the accounts.
And does it affect the value you’ve given to the business in any way with that motor vehicle?---No.
It’s - - -?---No, because the value of the business is the 135 no matter what the assets are.
(Emphasis added)
In her report at [58] Ms GG sets out her analysis of the balance sheet for C Pty Ltd. It includes as a current asset the value of “Motor Vehicle sale/transfer”. She explained in cross-examination her difficulty with how that figure came to be, and that it does not correspondingly appear elsewhere in bookkeeping documents as it ought to. Nevertheless it forms part of the net assets of the business. Ms GG’s evidence was that whether the $10,000 was taken into account or not does not affect the end valuation. So much can be seen from a quick calculation. Paragraph 65 of her report provides (emphasis in original):
I have determined that the business has a goodwill value as set out below:
Future Maintainable Earnings
36,281
Capitalisation rate
4.00
Value of Business
145,124
Less Net Business Assets E PL
19,937
Less Net Business Assets Demerly DT
3,954
Goodwill of Business
121,232
Goodwill Rounded
121,000
The value of the businesses is the amount of “Future Maintainable Earnings” of the businesses multiplied by the “Capitalisation rate or multiple”: see [63] – [65] of Ms GG’s report. The goodwill of the businesses is then determined using the above table.
Paragraph 66 provides:
The company is therefore valued at $135,000 comprising (emphasis in original):
Net Tangible Business Assets
19,937
Goodwill
121,000
Surplus Assets
-
Debt
(6,076)
Value of Company
134,862
Value of Company Rounded
135,000
In the first table (for Goodwill), if the value of the Net Business Assets E PL was $10,000 less, the value of Goodwill of Business would be $10,000 greater: $131,000. That translates to, in the second table (the Company):
Net Tangible Business Assets
9,937
Goodwill
131,000
Surplus Assets
-
Debt
(6,076)
Value of Company
134,862
Value of Company Rounded
135,000
Thus, Ms GG’s evidence in cross-examination is made out and I accept it.
The husband further argues that Ms GG’s methodology is flawed because he argues that the future cost of vacating the premises is a current cost. In a letter from Ms GG dated 25 January 2019 she said that the “future cost of vacating the premises is not a “current cost” of operating the business”. In support of his submission the husband relies and tenders (in written submissions the tender of which is not objected to by the wife) a letter dated 11 June 2019 from HH Company to the husband giving notice that he is to vacate the premises by 18 December 2019. I will accept the tender and mark the letter as exhibit 19.
Ms GG was not cross-examined on the future cost of vacating the premises. The husband was.
I accept the wife’s submission that the husband’s evidence was that:
a)He would fund any relocation costs on a lease.
b)He has no idea of what the relocation costs may be.
c)There are some smaller offices available which he has looked at. In this evidence the husband was indicating that a relocation may save him rent in any event.
d)If he relocates his business he is “confident I will do my very best”.
e)After the conclusion of these proceedings he will be able to “concentrate on my business”.
The husband submits that his interest is as a value to owner only and not the value that would be achieved on the open market. On this point Ms GG was cross-examined. The transcript reveals: [12]
[12] T455 L37-40
And you’ve looked at this business, haven’t you, as more of a value to owner - - - ?---Yes.
‑ ‑ ‑ approach, haven’t you, as opposed to ‑ ‑ ‑?‑‑‑Absolutely.
The inference is open to me that her valuation is as to owner and I so find. In any event, the difference between the value as to owner and as to market is insignificant.
The husband further argues that the court cannot, first, accept Ms GG’s valuation and, second, still take into account the husband’s income under s.75(2) because to do so would be double counting.
The consideration under s.75(2) of the parties’ income earning capacity is not a mathematical exercise. The business is property of the parties. The husband’s income is the husband’s income, and the court takes into account a party’s capacity to earn an income. He would be capable of selling the business and finding other work. He is an experienced professional who has run his own business for many years.
The husband has taken me to no authority in support of his submission and I reject the husband’s submission in this regard.
The arguments made on behalf of the husband in written submissions at [29.4] do not demonstrate that the methodology of Ms GG is flawed. It was not contended that any other aspect of Ms GG’s methodology was unsound or should otherwise not be accepted by the court.
Demerly Discretionary Trust
According to Ms GG, the Trust has net value of:
a)-$11,000 (rounded) net of the loan owing to the husband of $181,049; or
b)-$192,000 (rounded) with the husband to have a corresponding asset of the value of the loan of $181,049.
The outcome is the same.
Ms GG’s view was that the Trust was a trading trust and she had assumed the loan would be repayable to the husband from the profits of the business.
I accept the approach adopted by the wife and supported on the cross-examination of Ms GG as being the simpler way of doing it, namely the value of the Trust to be included in the balance sheet net of the loan to the husband for the purpose of the s.79 assessment. I accept the submission on behalf of the wife that if the husband’s loan to the Trust is unlikely to be ever recovered and therefore treated as nil in the balance sheet the value of the Trust is -$11,000 and not -$192,000 as the trust will not be repaying the loan to the husband.
There is a dispute in respect of the value of the Trust as to whether two bank accounts in the name of the Trust should be included:
a)JJ Bank Managed Funds bank account (SV) in the amount of $11,881; and
b)JJ Bank Managed Funds bank account (LV) in the amount of $8,284.
The wife argues that the court should accept Ms GG’s valuation inclusive of the two bank accounts. Her written submissions relevantly provide:
21. Ms GG said in cross-examination that her valuation of the Demerly Discretionary Trust can be reduced by the value of those accounts ($20,165) if the Court is satisfied on the evidence of 2 things, namely:
a. That those funds are actually being held upon trust for the children by the entity; and
b. The children are likely to receive those funds.
22. Ms GG agreed prima facie those funds belong to Demerly Discretionary Trust as they are in the name of that entity. The Applicant submits that as there is no evidence before the Court which satisfies the 2 criteria identified by Ms GG, which would result in the value of Demerly Discretionary Trust being reduced by the value of those accounts, the value of this entity as determined by Ms GG in her report remains unchanged.
The husband asserts that the two JJ Bank accounts hold money on trust for the parties’ children. He submits that the values of those bank accounts should be disregarded entirely because the children have the beneficial interest in the money and that the value of the Trust for inclusion in the balance sheet is -$31,165. He argues that the wife has given evidence consistent with his case in her affidavit: “Mr Demerly deposits $200 each month towards investment accounts held in trust for each child in Demerly Discretionary Trust.”
I do not accept that submission. One need only read the entirety of the paragraph in her affidavit at [114] from which that quote is extracted to understand the context in which it is said, that is, he might deposit that money, but that it may be disingenuous.
The money in the bank accounts should be considered property of the husband for the purposes of s.79.
The Trust deed is not in evidence. The husband could have adduced that evidence to substantiate his case that the money is held on trust for each child and that each child is the sole beneficiary of those respective funds. He has not done that. There is no evidence of sub-trusts having been declared or any paperwork executed to evidence that the funds were to be held on trust for the children including when the children would likely to receive the funds. The bank accounts are held in the name of the Trust which invites the inference that they are trust property. The husband, on his evidence, is the primary beneficiary of the Trust.
I also consider the husband’s ability to control the trust and its assets and his ability to distribute capital and income to the children (over whom he can exercise control) as relevant: Stephens & Stephens & Ors [2007] FamCA 680 at [256] – [257] per Warnick J. In that sense, “No person other than the husband has any real interest in the property or income of the Trust except at the will of the husband.” (Ashton & Ashton (1986) FLC 91-777 at 75,763).
F Pty Ltd
According to the husband’s evidence, F Pty Ltd never “independently traded externally”. The company is the trustee of the F Pty Ltd Superannuation Fund.
Ms GG valued F Pty Ltd at $500 rounded from $515. That value is nothing more than the value of its bank account. [13]
[13]T462 L37-38.
Neither party made any submissions in respect of the difference in the balance sheet.
I accept the evidence of Ms GG.
F Pty Ltd Superannuation Fund
Ms GG values the self-managed superannuation fund at $91,346. Neither party challenged Ms GG’s methodology. The wife adopts the value calculated by Ms GG. The valuation report is as at 30 June 2018.
The husband submits that the value of the interest in the superannuation fund is actually $79,358. In his written submissions the husband asserts that on 18 January 2019 he provided to the wife his financial accounts for the superannuation fund as at 31 December 2018. That document does not appear to be in evidence. The wife makes no concession about receiving the document or the contents thereof.
The husband argues that he was not cross-examined on his assertion of the value of the superannuation fund as recorded in the joint balance sheet. The wife points out, quite correctly in my view, that the husband was not cross-examined on it because there is no evidence to support his assertion and that he need not be challenged on assertions as opposed to evidence.
In the absence of evidence supporting the husband’s asserted value of the superannuation fund, and in circumstances where neither party challenged Ms GG’s methodology, I find the value of the superannuation fund is $91,346.
Item 13 – Motor Vehicle 1
Ms GG included in her valuation of C Pty Ltd the amount for the Motor Vehicle 1 as $10,000. Ms GG’s report is silent on the methodology, if any, for determining the value of that vehicle.
The vehicle has since been transferred to the wife.
The wife says the vehicle is worth $6,000. The husband argues that the value of the vehicle should be as contained within Ms GG’s valuation in circumstances where the wife adopts the valuation report of Ms GG for the value of C Pty Ltd.
The wife argues that there is no evidence of the value of the vehicle and so the court should accept its value as contended for by the wife as a statement against interest.
The husband submits:
Further it is submitted that the Court had suggested the Wife obtain a red book value for the motor vehicle, however she did not adduce such evidence. An adverse inference must be drawn that production of a red book value would not have assisted the wife with her asserted value.
I do not accept that submission. I agree with the submission made on behalf of the wife that a red book valuation is inadmissible evidence as to the value of the vehicle.
Ms GG was cross-examined by Counsel for the husband:[14]
The whole value of $10,000?---The ten – yes, it’s not accounted for correctly, and I don’t know if the other side, the account was to put it to the husband’s loan account or something, but there was another side of the account that should have gone in profits. So the value of that car is only 6,236 per the accounts, and I don’t know how that 10,000 arose. It might be a value that the – the parties put to it, but it’s not accounted for correctly in the accounts.
(Emphasis added)
[14] T459 L6-11
I am satisfied on the evidence before me that the value of the car is $6,236. That is the value attributed to the vehicle by the company which, on the husband’s evidence, he owns and controls. In the absence of any reliable evidence, I accept it as a statement against interest.
Item 15 – Funds withdrawn by the wife from the mortgage account
It is uncontroversial that the wife withdrew $40,000 from the ANZ mortgage account attached to the matrimonial home in April 2017 and a further $2,000 in May 2017. She did so without the husband’s knowledge and consent.
The evidence of the wife is that when she withdrew those funds she had no savings left to meet her living expenses and her legal fees. I accept that evidence. However that is the extent of her evidence in chief. She does not explain the proportion of the $42,000 that went to paying her living expenses and that which went to paying her legal fees. That issue was clarified in cross-examination: [15]
[15] T44 L45-46
All right. And did you apply that money towards your legal fees?---Yes, sir, I did. The 40 I did.
Of the $2,000, there is no persuasive evidence to suggest that the wife has not applied those expenses as asserted by her. The amount is modest. I accept that the wife had little or no money left at the time to fund her living expenses. I am unable to conclude that justice and equity dictates that that amount be added back to the pool for the purpose of determining the adjustment in existing assets.
The principles for dealing with expenditure on legal fees is well rehearsed.
In NHC & RCH [2004] FamCA 633,the Full Court (Finn, Kay & May JJ) examined the authorities in relation to the treatment of legal costs and said:
56.In summary, we consider that the above mentioned decisions of the Full Court establish that, while 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 the funds.
57.If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58.If 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 added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.
59.Outstanding legal fees themselves are generally not taken into account as a liability.
60.If in the exercise of the discretion, it is determined that legal fees already paid should be taken into account as a notional asset, then normally any liability associated with the acquisition of the monies used to pay the legal fees should also be taken into account.
I propose to treat as an add-back the sum of $40,000 applied by the wife as legal fees.
The wife submits that if her expenditure on legal fees is to be added back then so too should the husband’s. The husband’s evidence was that about $57,000 of his paid legal fees came directly from C Pty Ltd. It is an entity conducted by the husband during the marriage, supported by the wife and an asset for the purposes of the asset pool. On his evidence it was income on which he paid tax.
The wife argues, inter alia, that that connection is sufficient to warrant a consideration of the payment of those costs by the husband as an addback or otherwise be treated in the same way as the $42,000 drawn from the mortgage. It is contended that this is particularly so if the wife’s paid legal fees are added back where the wife had less income than the husband following separation, was in a difficult financial position, the husband having ceased his financial assistance to her and where the husband had utilised much of the accrued redraw facility on the ANZ home loan during 2016 and 2017 and had failed to make all of the required repayments on the home loan.
In my discretion I do not propose to treat the sum of $57,000 as an addback as contended by the wife. It is however a matter that I propose to consider during my assessment of the parties post-separation contributions and further under s.75(2) in considering the husband’s capacity to generate income and the disparity in the parties post-separation circumstances.
The sale of the engagement ring
The husband seeks to have added back to the balance sheet $10,000 representing money obtained by the wife from the sale of her engagement ring which sum she applied to her legal fees.
The husband’s evidence is that he bought the ring for $25,000 in 2007. The wife sold the ring for $10,000. To the extent that the husband argues that she sold it for a different amount, I reject the submission.
The husband submits that the wife sold her engagement ring at a significantly lower price than it was worth. He argues that it was worth $36,500 per a Certificate of Valuation issued by the very jeweller from which the ring was bought and to which the ring was sold. Page 35 of Exhibit -1 is a copy of an appraisal of the ring in 2013 for the purposes of home and contents insurance policy taken out by the parties.
The husband says that he had sought to have the ring valued and the wife subsequently unilaterally disposed of the ring without his knowledge or consent.
The wife gave evidence that she applied the funds from the sale of the ring to pay her legal fees and supplement her income including paying her credit card debt: see [87] of her affidavit. She does not say in what proportion she spent it on legal fees or living expenses.
There is no contemporaneous valuation of the ring. It was bought for $25,000 in 2007. It was appraised at $36,500 in 2013. It was sold for $10,000 in 2018.
I do not accept the value of the ring from the certificate of valuation. The author was not cross-examined. His qualifications were not established and his methodology, skills and experience are not in evidence.
I do not intend to make any finding about the value of the ring. I accept that it was sold for $10,000 in 2018. I accept that part of the proceeds of sale were applied to the wife’s legal fees. The wife’s evidence at [87] of her affidavit filed on 14 February 2019 is as follows:
“I sold my engagement ring and received $10,000 in early 2018. I have paid legal fees and supplemented my income with these funds including paying my credit card.”
In the absence of evidence of the amount of the proceeds of sale applied to legal fees, I propose to add-back the entirety of the funds representing the unilateral disposal of property by the wife the proceeds of which were applied to payment of her legal expenses.
In the absence of reliable evidence, I do not intend to add back or otherwise take into account the disposal of any other items of jewellery. There is no evidence to demonstrate the value of the items of jewellery that the husband alleges the wife has sold or retains. He simply submits that the court should find that the wife is in possession of the engagement ring “together with other jewellery, being those items that she only disclosed during cross-examination which include her wedding band with diamonds and her gold bangles and not contained in her Financial Statement”.
I cannot make a finding of value on the evidence before me.
Items 17, 18 and 19 – Loan owing to U Company, Mr B and W Company
The husband contends that the following amounts should be included in the balance sheet as liabilities:
a)Item 17 – U Company (Mr KK) - $27,433
b)Item 18 – V Pty Ltd (Mr B) - $94,050
c)Item 19 – W Company (Mr LL) - $5,361
The wife opposes the inclusion of the items in the balance sheet, the quantum of the debts disputed by the wife as having either been incurred with her consent or otherwise owing.
I propose to take a cautious approach in my consideration of the inclusion of the asserted debts in the balance sheet because:
a)None of the asserted debts were disclosed by the husband in the financial information provided by him in an application to the MM Bank for a loan of $682,910 signed by him on 19 May 2017. [16] No persuasive reason was advanced for the omission, if they were actual liabilities. The MM Bank would have had no interest in equitable interests in property in determining the husband’s loan application. Further, the husband’s distinction between personal as opposed to trust assets cannot be accepted given the inclusion under assets, of life insurance and household contents.
b)It is unlikely that the husband would undertake painting and electrical work of a largely cosmetic nature at a time when he was under financial pressure, in debt to Mr B if his evidence is accepted, unable to pay the mortgage on G Street, Suburb H and his marriage unravelling or over.
c)The husband’s evidence under cross-examination had impacts for his credit generally, because of contradictions and/or concessions that evidence he swore to be correct was not. For example:
i)The husband’s evidence at [91] of his affidavit of 24 August 2017, given at a time when opposing the wife’s application for interim spouse maintenance, where he said that he met all of the mortgage payments and outgoings for G Street, Suburb H was wrong. He had not made a payment on the mortgage for 13 months. It was evidence that further contradicted what he asserted at trial had always been his position, namely that the wife had contributed her income, as he did, towards the mortgage on G Street, Suburb H.
ii)The husband’s evidence that notwithstanding an ASIC search to the effect that he was a beneficial shareholder of one-third of the shares in a company, D Investments Pty Limited, that information was also incorrect even though he was a director of the company.
iii)The husband’s evidence to the effect that he and the wife discussed registering G Street, Suburb H in the wife’s sole name to take advantage of the first home owner’s grant contradicted his later evidence that it was undertaken for asset protection reasons.
iv)The husband’s evidence at [187] of his affidavit of 24 August 2017 as clarified under cross examination that he and his father attended to the majority of the rectification work to the G Street, Suburb H home contradicted his evidence that the work was undertaken by contractors, supervised by Mr B, with the husband also engaging contractors and assisting from time to time.
v)The husband’s evidence with respect to the amounts owing at trial that even at the time of the swearing of his affidavit the debt to Mr B was $85,755, not $94,050.
[16] Exhibit 9
Mr KK
Mr KK is a friend and a longstanding client of the husband who share a mutual interest in soccer.
In early 2015 the husband commenced District Court proceedings against a joint venture partner Mr UU for failure to meet one half of the expenses associated with the Suburb NN properties. The reason he sued Mr UU was because the two properties were running at a significant loss from 2009 onwards. Mr UU however was made bankrupt in 2016. The husband did not recover any of the losses from him. He would have had some costs associated with that litigation as he retained a solicitor.
The husband conceded that 2016 was a poor financial year because of the impact of the investment properties (“In 2016 it was difficult …year in a sense of trying my best. My – my income was going to – to diminish the T Investment properties….”), his financial juggling resulting in him being unable to meet his mortgage commitment in full on G Street, Suburb H in 2016 and 2017.
Whilst the wife seeks an adjustment of 5% in her favour by reason of the debt burden brought into the relationship by the husband and its consequential cost to the parties I am unable to conclude that that would be a just and equitable outcome. Had the husband’s real property endeavours turned a profit she would have not unreasonably sought to share in any financial benefits.
It is an approach that ignores the husband’s efforts over the course of the relationship not only with respect to his direct financial contribution to the G Street, Suburb H land but his efforts with respect to the construction of the home on it, the home as earlier noted representing the parties significant asset at trial.
The husband’s introduction of his business which supported the family must also be considered. There is no evidence to suggest that the husband could have earned a greater income elsewhere as a salaried professional.
Post-separation the husband had the benefit of occupation of the home. Any contributions made by him to the mortgage and home over that period must be considered in the context of the wife’s post-separation living circumstances and the husband’s post-separation defaults on the mortgage which cannot be attributed to the wife.
Taking into account the above factors I assess the parties’ contribution based entitlements to be equal.
Section 79(4)(d), (e), (f) and (g)
The husband is 46 and the wife 37.
Neither party has health issues that prevent them from obtaining gainful employment.
Both give evidence of stress and anxiety associated with the breakdown of their marriage and these proceedings.
Neither has re-partnered. The husband contends that the wife is living in a de-facto relationship. There is no evidence to support the husband’s assertion. The submission then on behalf of the husband that the wife has failed to disclose the circumstances of a de-facto relationship that she denies and which was not explored with her at trial is rejected.
The wife supports herself by way of income from employment, government benefits and child support.
The wife earns a gross income of $634 per week or about $33,000 per annum from paid employment. Her expenses exceed her income from all sources by a little under $700 per week.
The submission on behalf of the husband that she has failed to exercise her earning capacity is rejected. It ignores the impact upon the wife’s employment choices as a result of her primary parenting role during the relationship. It ignores her skill-set. Whilst having undergone some training to up-skill, unlike the husband she does not have a professional qualification.
At trial the wife was working two jobs 6 days a week. She works 23 to 28 hours a week. Her hours as an artist are variable.
Unlike the husband she does not have a tertiary qualification or business acumen (on her own admission).
Unlike the husband her employment history was interrupted by the birth of two children and her ensuing primary care of them.
Unlike the husband the wife’s work is part-time and/or casual.
I find that on the whole of the evidence she is doing the best she can to earn income to support herself and contribute to the support of the children.
There is no evidence she has failed to disclose the true extent of her income.
The wife should not be criticised for prioritising employment post-separation that assists her in the care of the children where the parties have a shared care arrangement, where the children are young and where she tailors her hours in their best interests including her ability to take them to and from school rather than put then into care.
The wife’s evidence in response to why she has not applied for other work was persuasive (“… Because Employer VV, my permanent part-time role has offered me something more valuable than money. They have offered me 9.30 to 2 o’clock, which is availability for my children. This is more valuable to me at this stage in my life than money. If I take up 9 to 5, sir, I have to put my kids into after-school care for two hours minimum”).
The submission then on behalf of the husband that the wife has not considered school care as an option to allow her to engage in full-time employment is not supported on the evidence and is otherwise rejected.
The fact that the wife has the assistance of her mother does not lead to a contrary conclusion. Over and above some limitations in that regard on the evidence of the wife, it is parents who have the primary responsibility for the care of their children, not relatives.
The submissions otherwise made on behalf of the husband with respect to why the wife has not undertaken work on Wednesdays and Thursdays when the children are in his care and her capacity to increase work as an artist with private clients are based on assumption, opinion and conjecture without persuasive evidentiary support. The wife’s work with Employer WW is variable and dependent on bookings. Her employer recently went into liquidation resulting in reduced shifts and uncertainty with respect to the availability of future work from that source.
The wife is unlikely to be able to earn the income generated by the husband. I further find that her income is likely to continue to be impacted by her care of the children. I accept her evidence that with Y commencing school in 2019 it is reasonable for the wife to prioritise her availability to the children including during school holidays.
There was a disparity in the parties’ living circumstances post-separation. The court accepts that the husband was better placed than the wife to vacate the home given that he was earning the greater income.
The wife was unable to fund independent accommodation living with her parents at a standard below that enjoyed by her during the relationship. For example, she and the children were required to share one bedroom flat.
When the wife did obtain her own accommodation it was a one bedroom flat at a rental of $380 per week. The husband continued to reside in G Street, Suburb H, a 4 bedroom 2 bathroom home with amenities such as a theatre room and heated pool.
Whilst the evidence of Mr EE that it was a property which could command a weekly rent of $740 to $755 was challenged the submissions on behalf of the husband do not articulate how Mr EE’s evidence is flawed or lacks proper foundation. Mr EE was not cross-examined about his opinion on the matter.
Putting that to one side, it is not a leap to conclude that the G Street, Suburb H property if rented would probably attract rent higher than that paid by the wife given its superior amenities compared to her one bedroom accommodation.
The husband also had the benefit of the accrued redraw facility on the ANZ home loan as earlier discussed.
The wife has incurred legal costs of $289,559, the majority paid by her parents and the balance funded the draw down on the mortgage of the home and sale of jewellery. She intends to repay her parents. She evidences no capacity to do so currently. There are no formal arrangements to that end.
The husband is a professional. He continues to operate his own business. He controls a number of entities. At trial he disclosed a weekly income of $1,635 or about $85,000 per annum. It is an income that is over two and half times that earned by the wife.
His evidence under cross-examination suggests a capacity to earn an income from his business that exceeds that disclosed at trial. His MM Bank loan application of 19 May 2017, evidenced a base income of $75,000 and other income of over $140,000. The husband agreed that he had signed a declaration on that application that the information provided was true and correct. The Loan Notes under the heading “Policy Check” make a reference to a gross income of over $150,000 comprised of income in his 2016 tax return of $75,000 and income from the Demerly Discretionary Trust of $84,000. The figure of $150,000 is one that reconciles with the evidence of Ms GG, albeit in another context.[26]
[26] Ms GG’s report at [61]
The husband has evidenced a capacity to borrow funds from time to time. He has utilised his various business structures for his financial benefit. He has demonstrated a motivated approach to his business affairs.
Whilst his property development activities do not suggest profitable endeavour to date (denied by him) he presented at trial as intelligent, assured and confident in his own capacities. There is no evidence to suggest his longstanding interest in acquiring real property for profit and taking opportunities when they present will not continue. He was optimistic about the potential of the Suburb OO properties. He retained confidence in the future in that regard (“I’ve had a good record. I did buy property prior to that………… they’re a different value, a different demographic, everything”).
A difficulty for him on the evidence is over leveraging. In that regard he remained positive at trial. On his evidence with the conclusion of the proceedings he would be able to “concentrate 100 per cent back on my businesses, which is what I intend to do”.
He has incurred $330,739 on legal costs up until the end of the third day of a trial that went five days. He has paid costs of $92,879.61, the source of those costs being credit cards, a $10,000 borrowing from his sister and income from C Pty Ltd. He owes a considerable sum to his lawyers.
I give proportionate consideration to the liabilities the husband owes to contractors, likely to be paid by way of provision of ongoing business services. With respect to Mr B his evidence was: “I will continue to keep doing the work until I’ve paid him off square. I – I don’t want him to be out of pocket.”
The children will continue to live with both parents equally pursuant to consent orders made on 5 March 2019.
Any child support is currently subject to the amount assessed by the child support agency. That has been the subject of ongoing dispute. Both seek a departure order. The parties have otherwise agreed to the payment of specific expenses. It is agreed that the husband will be responsible for the children’s educational costs and private health insurance premiums.
Both parties have the ability to provide some superannuation for themselves however the husband’s capacity to do so is likely greater than the wife.
The wife seeks an adjustment in her favour to the parties contribution based entitlements of 5% to 10%. The husband contends that any adjustment should be no more than 5%.
Given the disparity in the parties’ income and income earning capacities justice and equity require and adjustment in favour of the wife of 10%.
Notwithstanding their age differential the husband exits the marriage with a proven income earning capacity and a skill-set that exceeds that of the wife.
An adjustment of 10% to the wife which represents a disparity of $223,050 on a pool of $1,115,253 gives proper weight in money terms to the factors identified.
Who should retain the home?
Both parties seek an order that they retain the G Street, Suburb H property. I propose that the wife retain the home for the following the reasons:
a)The home is already registered in the sole name of the wife.
b)The wife has the capacity to retain the home given the financial assistance available to her. Her father, Mr Anmar filed an affidavit dated 14 February 2019 attesting to the preparedness of he and his wife to provide the wife with that assistance having made arrangements with his bank to assist the wife up to $800,000. He will assume responsibility for the mortgage.
c)Whilst the court acknowledges the husband’s emotional attachment to the home he has no greater claim to it than the wife. Relevantly he does not provide the court with persuasive evidence that he has the capacity to acquire her interest in the property as assessed and service his liabilities even with a greater focus on his business. As such, there is no utility in an order permitting the husband to buy the property from the wife or affording him time to do so.
In reaching that conclusion I have carefully considered the submissions at [139] to [161] of written submissions filed on behalf of the husband including the comprehensive analysis made of Mr Anmar’s evidence.
With respect to the evidence of Mr Anmar I make the following findings and/or observations:
a)The wife’s father has a proven capacity to assist the wife financially. He has provided her with significant financial assistance to date. There is no evidence that the wife is required to repay her parents within a particular time frame nor evidence of any remedial steps that would be taken by them if the wife was unable to repay them, notwithstanding her intentions to that end.
b)The court rejects submissions that it should proceed with caution in accepting Mr Anmar’s evidence. Mr Anmar presented as a credible witness, a finding not impacted by some inconsistencies on his evidence with that of the wife.
c)There is no inconsistency between Mr Anmar’s sworn and oral evidence on the payment of legal fees. His trial affidavit deposes to a quantum of monies loaned at a particular point. By trial however the total amount loaned had increased to $213,274. It is a figure that accords with the wife’s evidence at trial namely that her father had loaned her over $200,000 for her legal fees.
d)Little weight is placed on submissions advanced with respect to how quickly Mr Anmar could raise the funds to assist the wife to retain the home, asserted inconsistencies in his evidence or concerns with respect to his health and capacity to remain in full time employment and support himself and his wife. The court similarly places no weight on the asserted views of the wife’s mother at one point about the intended use of funds loaned. The court is able to comfortably conclude on the whole of the evidence that Mr Anmar intends to provide further financial assistance to the wife up to $800,000 and that he has the capacity to do so, having an approved loan to that effect. Submissions about a lack of clarity to that end are rejected. Whether he then chooses to sell real property in Australia or overseas (or not) or how he and his wife intend to support themselves into the future will be a matter entirely for Mr Anmar and his wife.
The principal difficulty for the husband, notwithstanding valiant effort to show otherwise in his responses under cross-examination and in the submissions advanced on his behalf, is that there is no persuasive evidence to conclude he could raise the further funds he would need to pay out the wife even on his own proposal. To retain the home he would be required to take on further debt and service that debt. He does not evidence the capacity to do so.
Putting to one side his debt to his sister which on his evidence he would not repay for three years, the effect of the orders he seeks is detailed at [187] of written submissions. On his own proposal it would leave him with liabilities of not less than $957,533 which include a mortgage debt to ANZ of about $446,828, his credit card debts of about $34,249, a debt to his sister of $10,000, a debt to XX Company of $11,000, legal costs of about $255,460,[27] a tax debt of $40,000, a costs debt to the wife of $20,000 (albeit the subject of dispute) and a cash payment to the wife of $139,996.
[27] $237,860 as at day 3 of the 5 day trial with an anticipated further $17,600
He adduces no evidence that he would be able to raise the finance to be able to comply with the orders he seeks nor service a further borrowing in that amount.
The potential availability to the husband of assistance from his sister, alternate lenders and/or the utilisation of unused limits on his credit cards and his asserted ability to transfer balances between credit facilities cards without incurring interest, does not alter the court’s conclusion in that regard.
The husband’s evidence with respect to his capacity to retain the home, carefully explored in cross-examination, suggested, respectfully, hope as opposed to reasoned financial analysis.
The husband defaulted on his mortgage and entered into a repayment arrangement with the bank.
He has been unable to meet tax obligations on time.
He has a loan outstanding to MM Bank from his trust for the Suburb OO properties of about $638,000 which is not neutrally geared.
His weekly expenses exceed his income by $225.
He is yet to rebuild and recover from sales in his business C Pty Ltd declining by 33 per cent in 2016 and 2017.
Even if he was able to borrow from second and third tier lenders who lend money without adequate security at very high interest rates he does not evidence the capacity to service such a borrowing. He accepted there would be stricter lender requirements and that he would need to demonstrate a very good capacity to meet those repayments.
What further assistance his sister Ms BB may offer him is speculative. They have not had any detailed discussion as to her capacity to help or the amount of any financial assistance she could provide or terms of any repayment including the payment of interest. It is unclear if Ms BB is fully aware of the husband’s financial position. While her partner sat in the back of the court on each day of the trial Ms BB’s evidence was that they did not discuss any evidence given by the husband.
The evidence suggests, respectfully, the need to retire debt, not increase it nor delay the payment of it or to expect creditors to await payment for his benefit.
What positive turn around he would be able to effect to his business is unlikely to happen in the immediate future on the evidence.
In summary, the court places weight on the wife demonstrating an ability to immediately deal with the house. By contrast the husband, although a determined and experienced business man, is over-geared. Even with greater focus on his business, it is unlikely that he would be able to raise sufficient funds to facilitate a payment to the wife in any timely fashion. That was the situation on his own proposal. The percentage adjustment of the parties’ property interests as determined by the court renders his prospects of raising appropriate finance even more remote.
In reaching this conclusion I have given proportional weight to the husband’s continued occupation of the home since separation.
I have also given consideration to the fact that the parties have been in significant dispute since their separation, not only in this venue. In proceedings under Part VIII of the Act the court is required as far as practicable to make orders that will finally determine the financial relationship between the parties and avoid further proceedings between them (s.81). That outcome is more likely to be achieved by an order that the wife retain the G Street, Suburb H home and pay out the husband.
The wife retaining G Street, Suburb H should have no significant impacts for the children. They will continue to live half of their time in the home and it will remain one of their two homes.
There is no persuasive evidence that their mother occupying the home would prove a disruption for them or impact the husband’s ability to set up a home office and remain available to them.
Justice and equity
Based on the wife receiving 60% of the net pool and the husband 40% the parties would receive the following assets:
| Ownership | Description | Wife | Husband | |||
| 1 | W | G Street, Suburb H | 1,250,000 | 0 | ||
| 2 | J | G Street, Suburb H contents | 5,000 | 5,000 | ||
| 3 | H | S shares | 0 | 5,121 | ||
| 4 | H | Jewellery | 0 | 500 | ||
| 5 | H | Westpac acc. #...54 | 0 | 298 | ||
| 6 | W | ANZ acc. #...79 | 390 | 0 | ||
| 7 | W | Westpac acc. #...30 | 314 | 0 | ||
| 8 | H | C Pty Ltd | 0 | 135,000 | ||
| 9 | H | F Pty Ltd | 0 | 500 | ||
| 10 | H | T Investments P/L | 0 | 0 | ||
| 11 | H | E Pty Ltd | 0 | 0 | ||
| 12 | W | Motor Vehicle 1 | 6,000 | 0 | ||
| 13 | H | Demerly Discretionary Trust | 0 | (11,000) | ||
| 14 | W | Addback | 50,000 | 0 | ||
| 15 | W | ANZ Home Loan | (446,828) | 0 | ||
| 16 | U Company | 0 | 0 | |||
| 17 | V Pty Ltd | 0 | 0 | |||
| 18 | W Company | 0 | 0 | |||
| 19 | W | ANZ Visa | NA | 0 | ||
| 20 | H | AMEX | 0 | NA | ||
| 21 | H | Z Bank CC | 0 | NA | ||
| 22 | H | AA Bank CC | 0 | NA | ||
| 23 | H | Loan from Ms BB | 0 | (10,000) | ||
| 24 | CC Company | 0 | NA | |||
| 25 | DD P/L | 0 | NA | |||
| 26 | H | Demerly Discretionary Trust | 0 | NA | ||
| 27 | H | Loan from C Pty Ltd | 0 | (22,672) | ||
| 28 | H | F Pty Ltd Super | 0 | 91,346 | ||
| 29 | W | J Super Fund | 56,284 | 0 | ||
| 30 | Payment W to H | (252,008) | 252,008 | |||
| TOTAL | $1,115,253 | $669,152 $446,101 | ||||
| % Split | 60% | 40% | ||||
I find this to be a just and equitable adjustment of the parties property interests. The wife will retain the G Street, Suburb H home subject to mortgage and the husband his businesses and capacity to generate income.
Each will retain their superannuation interests and personal assets.
The husband will receive a cash adjustment from the wife of $252,008 from which he can discharge debt or provide a cash deposit towards another property.
With respect to the order sought at [14] by the husband and the return sought by the husband of the children’s Catholic jewellery the court declines to make the order. The husband was invited by the wife to but did not outline the source of power the court has to make the order sought. In circumstances where the children live in an equal time arrangement and absent any evidence that there is a risk of disposal of the items by the wife the court does not propose to make the order.
The husband seeks an order that the wife pay him $5,500 for her share of the costs of the family report. It is opposed by the wife on the basis that the liability of $10,000 loaned to the husband by his sister to pay for the report is reflected in the balance sheet and the order sought by the husband is not necessary. The husband contends however that such an approach is unfair as it will see one party pay more than the other depending upon the outcome of the property division. The cost of the report is picked up in the calculation of the net pool. The assessment of how the net pool is then to be divided is a separate issue.
The husband further seeks an order in the following terms:
22. That the Wife be restrained from providing to any person or entity other than her lawyers in these legal proceedings any of the following documents:
22.1. Any court document
22.2Any document provided under subpoena; and
22.3Any document provided to her by the Husband or his lawyers in conjunction with these proceedings.
Putting to one side the provisions of s.121 of the Act, there is no evidentiary basis to make the order.
Departure applications
Each of the parties seek orders by way of departure for child support.
Both parties seeks that an order pursuant to ss.123 and 124 of the CSSA that:
a)the husband pay by way of non-periodic child support the following:
i)100% of the children’s compulsory tuition fees and levies;
ii)100% of the children’s school uniforms, books, technology expenses and school requisites;
iii)100% of compulsory co-curricular activities and equipment expenses;
iv)50% of agreed extra-curricular activities expenses;
v)100% of the children’s private health insurance premiums as an when they fall due from time to time with the same or better level; and
vi)50% of the children’s agreed or urgent medical expenses not otherwise paid by private health insurance and Medicare and which exceed $100 per item.
b)that the mother pay the following by way of non-periodic child support:
i)50% of agreed extra-curricular activities expenses;
ii)50% of the children’s agreed or urgent medical expenses not otherwise paid by private health insurance and Medicare and which exceed $100 per item.
The wife however seeks that pursuant to s.118 of the CSSA the rate for periodic child support payable by the husband to the wife be set at $75 per week per child.
The husband opposes the order. He seeks that pursuant to s.118 that he not be liable to pay periodic child support to the mother.
The letter dated 12 March 2019 giving notice to the Child Support Agency for the purposes of Rule 25A.07 is tendered by consent and will be marked Exhibit 20. The reply of the Registrar dated 14 March 2019 is also tendered by consent and marked Exhibit 21.
The wife in written submissions commencing at [78] details the relevant legal principles. There was no challenge to that recitation.
In Gyselman and Gyselman (1992) FLC 92-279 the Full Court (Nicholson CJ, Fogarty & Nygh JJ) at 79,064 explained the approach the court must take in considering whether to make a departure order and the process that must be followed to obtain a departure from an administrative assessment:
Division 4 of Part 7 of the Assessment Act provides a procedure by which the Court may make an order which “departs” from the administrative assessment. Where the Court concludes that it is appropriate to “depart” from the assessment, s 118 (if necessary coupled with s 141), gives the Court wide powers to vary or discharge the assessment including, although not limited to, varying one or more of the component parts of the formula.
Section 114 sets out “additional particular objects of this Division” in the following terms:
“(a) that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents; and
(b) that parents share equitably in the support of their children.”
Section 115 defines the cases in relation to which the Division applies, namely:
“This Division applies where, in the special circumstances of a case, a custodian entitled to child support, or a liable parent, wants a court having jurisdiction under this Act to make an order having the effect that the provisions of this Act relating to administrative assessment of child support will be departed from in relation to a child in the special circumstances of the case.”
Section 116 sets out largely procedural requirements for an application under Division 4. Section 117 is the critical provision.
The structure of that section is that s 117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in sub-sections (2) to (9). Section 117(1)(b) identifies a clear three-step process:
1. Whether one or more grounds of departure in s 117(2) is established.
If so:
2. Whether it is “just and equitable” within the meaning of
s117(4) to make a particular order.3. Whether it is “otherwise proper” within the meaning of
s 117(5) to make a particular order.It is clear from the careful way in which s 117 has been structured that the Court must address each of those three separate issues.
For the purposes of s.116 I am able to conclude that the court is able to make an order under s.118 because:
a)The husband as the liable parent and the wife as the carer entitled to child support are parties to pending proceedings in this court, s.99 of the CSSA conferring jurisdiction on this court in relation to matters under the CSSA.
b)It is in the interests of the husband as the liable parent and the wife as the carer entitled to child support for the court to consider whether an order should be made under Division 4 of Part 7 of the CSSA in relation to the children in the special circumstances of the case.
Both parties ask the court to exercise jurisdiction under Division 4 and Division 5 of the CSAA.
As to the special circumstances of the case each party has spent a considerable amount on legal costs as earlier identified and the court having heard the evidence in relation to the property proceedings over the course of a five day trial, concludes that it is in a better position than the Child Support Registrar to be able to make a determination about the competing child support departure applications of the parties, particularly where the wife contends that the husband’s earnings and earning capacity are not properly reflected in his income tax returns.
Further, where the child support assessment process through the Agency has been the subject of considerable challenge, it is in the interests of both parties that their dispute in relation to child support be determined at the same time as their property proceedings under the Act.
Section 117(1) of the CSSA sets out the requirements the court must be satisfied of before making a departure order.
The court is satisfied that for the purpose of s.117(2)(c) of the CSSA in the special circumstances of the case application in relation to the provisions of the CSSA would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the children because of the income, property and financial resources of the husband. The court repeats and relies upon earlier findings in relation to the husband’s capacity to earn income.
The husband has been assessed to pay a periodic amount of $553 per month or about $127 weekly for the two children. The wife is seeking an increase to the weekly figure of $150 for the two children.
The wife annexes to her affidavit at “M” a copy of the administrative Child Support Assessment for X and Y for the period 1 September 2018 to 30 November 2019, current at trial. That assessment is based on the husband’s income for the assessment period 1 September 2018 to 30 November 2019 based on a provisional taxable income for 2017/2018 of $84,988.
The court finds that the husband’s provisional income assessment for child support purposes does not accurately represent his capacity to earn income in light of his evidence at trial supported by the evidence in the form of the MM Bank loan application.
Even if the court is wrong in placing weight on the MM Bank document, based on his evidence at trial, it is likely that his income will increase above that disclosed in his Financial Statement, namely $85,176 gross per annum. This is because on the husband’s evidence, with the conclusion of these proceedings, he intends to concentrate on his business. On his evidence the child care issues with Y, and consequent impact on his work, had resolved. In response to questions put to him about his capacity to borrow sufficient funds to retain the G Street, Suburb H home, it was his evidence that he was confident that he would be able to service an extra $430 per week over and above what he was currently paying on the home loan. The submissions on behalf of the wife that this would mean an increase in his current income of at least $600 a week, with an overall increase of income to a little over $116,000 per annum, were persuasive and not challenged.
For the same reasons as outlined and for the purposes of s.117(1)(b) of the CSSA, the court finds that it would be just and equitable as regards the children, and the parties, and otherwise proper to make the order sought by the wife under Division 4.
Under s.118(1)(a) of the CSSA the court may make an order varying the annual rate of child support payable.
For the purposes of s.123(2) of the CSAA there is an administrative assessment in force in relation to the children.
The court finds that it is just and equitable and otherwise proper within the meaning of s.123(2) of the CSSA, for the court to make the order sought by the wife, for the reasons set out above.
The parties are otherwise in agreement with respect to the payment of non-periodic orders of payment of child support.
There is no challenge to the submission that the husband withdrew his application of a non-periodic order which relates to payment of the children’s Ambulance NSW membership fees.
For the purposes of s.124(3) of the CSSA, in determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make an order under subsection (1), the court must have regard to the matters mentioned in subsections (4), (6), (7), (7A) and (8) of the CSSA. The court accepts the submissions on behalf of the wife in this regard at [93] to [97] of the written submissions on behalf of the wife.
The court finds it to be just and equitable to make the order sought because:
a)The husband’s duty to maintain the children is a primary one, one that takes priority over all his commitments other than necessary commitments. This includes his financial commitment on his Motor Vehicle 2 and his two investment properties which are negatively geared and costing him money even if it is only the agent’s costs (ss.3, 117(4)(a)).
b)The husband’s acquisition of a new Motor Vehicle 2 in 2016 resulted in him directing otherwise available income to the lease payments on a luxury motor vehicle acquired under finance for $93,310, a motor vehicle surplus to his or the family’s reasonable needs. No persuasive explanation was provided by the husband as to why he could not have acquired a cheaper four door motor vehicle with a lesser monthly lease commitment to accommodate the transportation needs of himself and the children thus enabling him to make the increased contribution sought by the wife following separation. Similarly, in the purchase of the investment properties at Suburb OO for $761,040 in late 2016 at a time when he had ceased his financial support for the wife, properties that were not neutrally geared, the husband prioritised his need to “get back into the market” over his obligation to support his children.
c)I find the proper needs of the children, while living with the wife, are as set out in the wife’s Financial Statement and in [123] of the wife’s trial affidavit (s.117(4)(b)).
d)Section s.117(4)(c) is not relevant. The children do not have an income, earning capacity or financial resources.
e)For the reasons earlier given I find that the husband has an income greater than that set out in his income tax returns and the capacity to satisfy the order sought by the wife. The court otherwise repeats and relies upon the wife’s earning capacity which is fully realised by the wife in working two part time jobs 6 days each week (s.117(4)(d)).
f)I repeat and rely upon earlier findings with respect to the commitments of the husband. The parties’ commitments to support themselves are otherwise detailed in their sworn evidence to which I have had regard. There is no evidence to suggest that the wife’s commitments are unreasonable. Her expenses were not challenged at trial such as to conclude unreasonableness. Neither party has a duty to maintain another child or other person (s.117(4)(e)).
g)With respect to s.117(4)(f) I have had regard to the evidence of the wife with respect to the direct and indirect costs incurred by her in maintaining the children.
h)If the order sought by the wife is not made financial hardship will be caused to her and to the children. The deficit in her income over expenses is met by her credit card or financial assistance from her parents. The husband has made application to the Child Support Agency to reduce his child support payments to nil and to his treat his payment of school fees as non-agency payments to reduce his assessed support. The wife is concerned that her agreement to the husband’s request that the children attend a private school will result in a reduction of the periodic child support otherwise payable by the husband (s.117(4)(g)).
It would be otherwise proper to make the order sought the wife. The court repeats and relies upon earlier findings made relevant to this consideration. There is no evidence to suggest that the making of the order sought would affect any entitlement of the child. (s.117(5)).
The children who are being raised Catholic attend a Catholic Primary school at the request of the husband which is not opposed by the wife (s.117(6)).
The children do not have an income or earning capacity (s.117(7)).
As to the capacity of the husband to derive an income the court repeats and relies upon earlier findings made (s.117(7A)).
The husband is self-employed and is able to manage his working hours around the care of the children while they are with him. The wife works part-time in two jobs and wishes to be available for the children after school when they are with her (s.117(8)).
Having regard to the above I make the orders sought by the wife.
Costs
Subject to contrary submission any costs application should be filed within 28 days of today’s date with a response filed 14 days thereafter.
I certify that the preceding four hundred and thirteen (413) paragraphs are a true copy of the reasons for judgment of Judge Purdon-Sully
Associate:
Date: 25 September 2020
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