Benlow and Hyte
[2008] FamCA 1022
•17 October 2008
FAMILY COURT OF AUSTRALIA
| BENLOW & HYTE | [2008] FamCA 1022 |
| FAMILY LAW - PROPERTY SETTLEMENT – Contributions – Adjustment for other matters FAMILY LAW – MAINTENANCE – spousal – need for support |
| Family Law Act 1975 (Cth) ss 72, 74, 75 & 79 |
In the Marriage of Hickey (2003) 30 Fam LR 35
Mallett v Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) 12 Fam LR 139
In the Marriage of Lenehan (1987) 11 Fam LR 615
In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712
In the Marriage of Zyk (1995) 19 Fam LR 797
In the Marriage of Coghlan (2004) 33 Fam LR 414
In the Marriage of Shaw (1982) 8 Fam LR 432; FLC (1982) 91-540
In the Marriage of Papas (1982) FLC 91-358
M v M (2006) 36 Fam LR 97
Mitchell v Mitchell (1995) 19 Fam LR 44; 120 FLR 292; (1995) FLC 92-601
In the Marriage of Stein (2000) 25 Fam LR 727
| APPLICANT: | Mr Benlow |
| RESPONDENT: | Ms Hyte |
| FILE NUMBER: | SYC | 5939 | Of | 2007 |
| DATE DELIVERED: | 21 November 2008 |
| PLACE DELIVERED: | Sydney |
PLACE HEARD: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
| HEARING DATE: | 17 October 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr J. Lloyd |
SOLICITOR FOR THE APPLICANT: | York Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr G. Foster |
SOLICITOR FOR THE RESPONDENT: | Watts McCray Lawyers |
Orders
The Husband and the Wife shall forthwith do all acts and things and sign all documents necessary so as to effect a sale of the property situate at and known as N in the State of New South Wales for the best price reasonably obtainable in the following manner:
1.1.list the N property for sale by either private treaty within three months from this date and thereafter by public auction with such agent as the parties may agree to appoint and in default of agreement as to agent then with such agent as the President of the Real Estate Institute of New South Wales shall appoint (“the agent”) the costs of and incidental to such appointment to be paid by the Husband as and when same fall due;
1.2.the price for sale or reserve price for the purpose of any auction shall be such price as may be mutually agreed upon by the parties or, in the absence of agreement shall be the price nominated as the fair market value thereof by a valuer appointed by the President for the time being of the New South Wales Division of the Australian Property Institute of Valuers (“the valuer”) the costs of and incidental to such appointment and valuation to be paid by the Husband as and when same fall due;
1.3.the valuer shall, if requested by either the Husband or the Wife at a date three (3) calendar months after the date upon which the N property is first listed pursuant to Order 1.1 herein and thereafter at three (3) calendar monthly intervals until the N property is sold, nominate a sale price other than the originally nominated sale price;
1.4.the parties shall each cooperate in every way with the agent including (without limiting the generality of the foregoing):
1.4.1.making the key available to the agent;
1.4.2.allowing inspection of the N property at all reasonable times requested by the agent;
1.4.3.doing or saying nothing to hinder or prevent a sale being effected;
1.4.4.signing all documents requested by the agent in relation to the listing for sale of the N property except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
1.5.in the event the bidding at the auction does not reach the reserve price the parties or such of them as attends the auction may negotiate with the highest bidders or any other interested person and effect a sale of the N property at a price recommended by the selling agent which is not more than five per cent (5%) below the reserve price, or at such other price as the parties agree upon in writing;
1.6.if the N property remains unsold, the parties shall do all acts and things and sign all documents necessary to continue to re-list the N property for sale by public auction again at three (3) monthly intervals, and the provisions of Orders 1.1 and 1.5 herein shall apply successively until the N property has been sold so that at each successive auction the reserve price shall be as recommended by the valuer in accordance with Order 1.3 herein immediately preceding an auction or as agreed by the parties in writing;
1.7.the parties shall each execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at the sale price;
1.8.the parties shall instruct Watts McCray Lawyers to have the conduct of the sale on behalf of both parties and the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
1.9.neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the N property or to any commission.
Pending the sale of the N property the Husband be responsible for payment of all outgoings relating to that property including but not limited to the mortgage to the National Australia Bank, Council rates, Water rates, insurances and any other amounts that may be required to ready the N property for sale on the recommendation of the selling agent.
The Wife shall have the sole occupation of the N property pending the sale.
That upon the settlement of the sale of the N property the parties shall do all acts and things and execute all documents necessary to cause the proceeds of sale be applied as follows:
4.1.in payment of any agent’s, auctioneers and legal expenses incurred in the said sale including any advertising costs and commission;
4.2.Discharge of any mortgage secured over the N property.
4.3.The net proceeds to be paid to the Wife.
The husband shall pay to the wife $108,000 within 2 months from the date of these orders.
Except as any provision of the paragraphs comprising this Order provide to the contrary, as against the Husband, the Wife is entitled to be the sole owner of and the Husband has no interest in:
6.1.the Wife’s bank accounts;
6.2.the Wife’s superannuation;
6.3.the Wife’s jewellery;
6.4.the Wife’s car;
6.5.all other assets of whatsoever nature and kind presently in the name, possession or ownership of the Wife.
Except as any provision of the paragraphs comprising this Order provide to the contrary, as against the Wife, the Husband is entitled to be the sole owner of and the Wife has no interest in:
7.1.the Husband’s car;
7.2.the Husband’s superannuation;
7.3.the Husband’s shares;
7.4.the Husband’s interest, if any, in X Practice; and
7.5.all other assets of whatsoever nature and kind presently in the name, possession or ownership of the Husband.
Except as any provision of the paragraphs comprising this Order provide to the contrary:
8.1.the Husband hereby indemnifies the Wife from and in respect of all actions, claims, suits and demands as may be made against the Wife in relation to all liabilities in the name of the Husband.
8.2.the Wife hereby indemnifies the Husband from and in respect of all actions, claims, suits and demands as may be made against the Husband in relation to all liabilities in the name of the Wife.
Except as any provision of the paragraphs comprising this Order provide to the contrary, each of the Husband and the Wife release the other from all debts owing from one to the other.
The husband shall pay to the wife by way of spousal maintenance the sum of $376 per week until the child L commences High School. The first payment shall be made within 7 days with such payments to be made by direct deposit to a bank account nominated by the Wife.
The maintenance to be paid to the wife pursuant to Order 10 herein, be varied each year on and from 1 July (hereinafter such date is referred as the “review date”) commencing on 1st day of July 2009, to such sum as shall be determined by multiplying the maintenance being paid on the review date by the fraction N/B, where “B” is the Consumer Price Index for Sydney (All Groups) published by the Australian Bureau of Statistics or its successor (“the CPI”) in respect of the quarter ended on 31 March in the year prior to the year of the review date, and “N” is the CPI in respect of the quarter ended 31 March immediately preceding the review date.
In the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit..
The parties are granted leave on seven days notice to the Court and to the other party to relist the matter for further Orders or Directions to implement these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Benlow & Hyte is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5939 OF 2007
| MR BENLOW |
Applicant
And
| MS HYTE |
Respondent
REASONS FOR JUDGMENT
After living together for about 16 years the parties cannot agree on a settlement of their property. For convenience I will refer to the parties as the husband and wife.
Applications
The husband seeks orders in accordance with a minute of orders provided with his Case Outline as follows:
1.That the husband and wife forthwith do all things and acts as are necessary to effect a sale of the property known as [N], and to that end:-
(a) Provide instructions to an agent of the parties’ choosing to list the [N] property for sale by way of public auction no later than eight weeks from the date of these orders. In the event of there being a dispute between the parties as to the agent, the parties shall directly instruct the President of the Real Estate Institute of NSW to appoint an agent for them;
(b) Provide instructions to a Solicitor of the parties’ choosing for the purpose of preparing a Contract for Sale. In the event of the parties being unable to agree upon a Solicitor to prepare the said Contract, they shall jointly instruct the President of the Law Society of NSW to appoint a Solicitor on their behalf;
(c) Agree upon a reserve price for the sale of the [N] property, and failing agreement instruct the President of the Real Estate Institute of NSW to nominate an agent who shall determine that reserve price for them;
(d) Follow the reasonable instructions of the listing agent concerning ‘Open For Inspection’ days, presentation and marketing;
(e) Attend at the auction and execute a Contract for Sale in the event of the property being sold;
(f) To thereafter do all things and acts as are reasonable to ensure completion of the Contract for Sale.
2.In the event that the [N] property is not sold at auction in accordance with Order 1 herein, provide instructions to the agent to continue to list the property for sale and to thereafter sell the property at the best price reasonably obtainable.
3.Neither party shall be permitted to remain on the property during ‘Open For Inspection’ periods and the wife shall do all things and acts as are necessary to ensure that the property is presented in a neat and tidy condition during all ‘Open For Inspection’ days.
4.The husband shall be entitled, upon reasonable notice given to the wife in writing, to attend at least once every fourteen days during the selling period of the home to inspect and view the state of repair of the property.
5.Upon completion of the sale of the [N] property, the proceeds of sale shall be disbursed in the following fashion and priority:-
(a) In payment of agent’s commission;
(b)In payment of any other sale costs associated with the disposal of the said property;
(c) In discharge of the secured encumbrances;
(d) As to the balance, 70% to the wife and 30% to the husband.
6.That each of the parties be beneficially and legally entitled to all other assets standing to their name, credit or in their possession, including entitlements to superannuation.
7.That in the event of either party refusing or neglecting to sign any documents required of them consistent with the terms of these orders within 48 hours of such documents being presented to them and/or their Solicitor, the Registrar of the Family Court of Australia is hereby appointed pursuant to the provisions of Section 106A(1) of the Family Law Act to execute such documents on behalf of that defaulting party.
The wife seeks orders in accordance with a minute of orders provided with her Case Outline as follows:
Sale of property known as [N property]
1.That the Husband and the Wife shall forthwith do all acts and things and sign all documents necessary so as to effect a sale of the [N] property for the best price reasonably obtainable in the following manner:
1.1.list the [N] property for sale by either private treaty within three months from this date and thereafter by public auction with such agent as the parties may agree to appoint and in default of agreement as to agent then with such agent as the President of the Real Estate Institute of New South Wales shall appoint (“the agent”) the costs of and incidental to such appointment to be paid by the Husband as and when same fall due;
1.2the price for sale or reserve price for the purpose of any auction shall be such price as may be mutually agreed upon by the parties or, in the absence of agreement shall be the price nominated as the fair market value thereof by a valuer appointed by the President for the time being of the New South Wales Division of the Australian Property Institute of Valuers (“the valuer”) the costs of and incidental to such appointment and valuation to be paid by the Husband as and when same fall due;
1.3.the valuer shall, if requested by either the Husband or the Wife at a date three (3) calendar months after the date upon which the [N] property is first listed pursuant to Order 1.1 herein and thereafter at three (3) calendar monthly intervals until the [N] property is sold, nominate a sale price other than the originally nominated sale price;
1.4.the parties shall each cooperate in every way with the agent including (without limiting the generality of the foregoing):
1.4.1.making the key available to the agent;
1.4.2.allowing inspection of the [N] property at all reasonable times requested by the agent;
1.4.3.doing or saying nothing to hinder or prevent a sale being effected;
1.4.4.signing all documents requested by the agent in relation to the listing for sale of the [N] property except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
1.5.in the event the bidding at the auction does not reach the reserve price the parties or such of them as attends the auction may negotiate with the highest bidders or any other interested person and effect a sale of the [N] property at a price recommended by the selling agent which is not more than five per cent (5%) below the reserve price, or at such other price as the parties agree upon in writing;
1.6.if the [N] property remains unsold, the parties shall do all acts and things and sign all documents necessary to continue to re-list the [N] property for sale by public auction again at three (3) monthly intervals, and the provisions of Orders 1.1 and 1.5 herein shall apply successively until the [N] property has been sold so that at each successive auction the reserve price shall be as recommended by the valuer in accordance with Order 1.3 herein immediately preceding an auction or as agreed by the parties in writing;
1.7.the parties shall each execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at the sale price;
1.8.the parties shall instruct Watts McCray Lawyers to have the conduct of the sale on behalf of both parties and the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
1.9.neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the [N] property or to any commission.
Orders pending the sale of the [N] property
2.That pending the sale of the [N] property the Husband be responsible for payment of all outgoings relating to that property including but not limited to the mortgage to the National Australia Bank including the mortgage referred to in Order 6 herein, Council rates, Water rates, insurances and any other amounts that may be required to ready the [N] property for sale on the recommendation of the selling agent.
3.That the Wife have the sole occupation of the [N] property pending the sale.
Division of sale proceeds of [N] property
4.That upon the settlement of the sale of the [N] property the parties shall do all acts and things and execute all documents necessary to cause the proceeds of sale be applied as follows:
4.1.in payment of any agent’s, auctioneers and legal expenses incurred in the said sale including any advertising costs and commission;
4.2.Discharge of any mortgage secured over the [N] property.
4.3.The net proceeds to be paid to the Wife.
Other Property Orders
5.Except as any provision of the paragraphs comprising this Order provide to the contrary, as against the Husband, the Wife is entitled to be the sole owner of and the Husband has no interest in:
5.1.the Wife’s bank accounts;
5.2.the Wife’s superannuation;
5.3.the Wife’s jewellery;
5.4.the Wife’s car;
5.5.all other assets of whatsoever nature and kind presently in the name, possession or ownership of the Wife.
6.Except as any provision of the paragraphs comprising this Order provide to the contrary, as against the Wife, the Husband is entitled to be the sole owner of and the Wife has no interest in:
6.1.the Husband’s car;
6.2.the Husband’s superannuation;
6.3.the Husband’s shares;
6.4.the Husband’s interest, if any, in [X Practice]; and
6.5.all other assets of whatsoever nature and kind presently in the name, possession or ownership of the Husband.
7.Except as any provision of the paragraphs comprising this Order provide to the contrary:
7.1.the Husband hereby indemnifies the Wife from and in respect of all actions, claims, suits and demands as may be made against the Wife in relation to all liabilities in the name of the Husband.
7.2.the Wife hereby indemnifies the Husband from and in respect of all actions, claims, suits and demands as may be made against the Husband in relation to all liabilities in the name of the Wife.
8.Except as any provision of the paragraphs comprising this Order provide to the contrary, each of the Husband and the Wife release the other from all debts owing from one to the other.
Procedural Orders.
9.That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
10.That the parties are granted leave on seven days notice to the Court and to the other party to relist the matter for further Orders or Directions to implement these Orders.
SPOUSAL MAINTENANCE :
11.That the Husband pay to the Wife by way of spousal maintenance the sum of $1,500 per week first payment within 7 days with such payments to be made by direct deposit to a bank account nominated by the Wife.
The proceedings for spouse maintenance were not formally commenced by an application or an amended application and the husband had no opportunity to formally respond. Through his counsel the husband opposes the making of an order for spouse maintenance.
Affidavits
1. Affidavit of Husband filed 4 June 2008.
2. Affidavit of Husband filed 17 October 2008.
3. Financial Statement of Husband filed 4 June 2008.
4. Affidavit of the wife filed 13 October 2008.
5. Financial Statement of Wife filed 17 October 2008.
Issues for determination
The issues for determination are:
Property
Whether the pool of assets should be calculated by reference to:
· $241,568 in the husband’s capital account with X Practice;
· all or part of $168,367 being the balance of the husband’s Westpac Cheque account;
the extent of the adjustment to the wife warranted under section 75(2);
Spouse Maintenance
Whether the wife will be able to adequately support herself from her own resources and, if not, the extent of her need for support.
Short History
The husband and wife are 46 years of age. They commenced cohabitation in 1990, were married in May 1991 and separated in August 2006. The parties’ divorce was granted by the Federal Magistrates Court on 25 September 2008.
Children
The parties have two children:
Rwho was born in July 1998 and as at the date of the hearing was 10 years of age; and
L who was born in August 2001 and as at the date of the hearing was 7 years of age.
Background Facts
The parties commenced living together in 1990.
At that time the parties had minimal assets. The husband, who had tertiary qualifications, was employed in a profession. The wife, who had tertiary qualifications, worked in the media.
In 1992 the parties bought P property for $221,000, $201,782 of which they borrowed on the security of the property. The balance of the purchase price and purchase costs came from joint savings.
In 1994 the wife left her employer and received $20,000 voluntary redundancy payment. The parties bought a Suzuki Cino motor vehicle for about $14,000. The wife commenced work in the public service.
In 1995 the wife joined C Company and worked on a full-time basis until 1998 when she took maternity leave.
In 1997 the parties sold the P property for $307,500 and bought W property. They paid $580,000 and borrowed $440,000 by way of mortgage.
In July 1998 R was born. As at the date of the hearing she is 10 years of age and is in Year 4 at N Public School.
In 1999 the husband became a partner in X Practice.
In 1999 the wife returned to C Company after 12 months maternity leave to work 5 days a fortnight. Her income dropped from $75,000 in 1998 to $35,000 in 2000.
In 2001 the wife took maternity leave for 12 months.
In August 2001, L was born. As at the date of hearing he is 7 years of age.
In 2001 the parties bought N property. They paid $1,360,000 and borrowed $960,000 by way of two mortgages (one fixed and one variable) from the National Australia Bank.
In 2002 the wife again returned to C Company on a part-time basis.
In 2002 the parties sold the W property and cleared about $400,000.
For the years ending 30 June 2003 – 2008 the wife earned:
Year ending 30 June Taxable Income 2003 $34,938 2004 $49,931 2005 $52,708 2006 $49,310 2007 $50,000 2008 $50,000
For the years ending 30 June 2002 – 2007 the husband earned:
Year ending 30 June Taxable Income 2002 $581,739 2003 2004 $773,447 2005 $770,080 2006 $909,454 2007 $941,788
By 2006 the two N property mortgages had been reduced by about $300,000 to $660,000. However, in 2005 the parties commenced renovations to the N property using a $900,000 line of credit facility for buildings under construction from the NAB. The parties vacated the property during the renovations. The renovations were completed in 2007 and ultimately cost about $1,200,000. That cost was met by fully drawing the facility and from the husband’s income.
At the initiative of X Practice, the husband ceased to be a partner of X Practice on 30 June 2006. As of 1 July 2006 he took a fixed share of the partnership based on 75 units.
The parties separated in August 2006.
The husband commenced these proceedings on 27 August 2007 .
As at June 2008 the husband says the mortgage payments were:
Mortgage to NAB Monthly Payment 59-5825-0533 $6,342.38 10-796-8514 $2,994.14 10-796-5830 $3,156.94 Total $12,493.46
On 25 September 2008 a Divorce Decree was made in the Federal Magistrates Court. In the normal course it became final on 26 October 2008.
The husband lives with his partner Ms H. They live in rental premises in the inner suburbs. The wife and children remain in the N property.
The children live with the wife and spend time with the husband each week. They are usually with him each Friday evening to Saturday evening and from Tuesday evening until the commencement of school on Wednesday morning. On some occasions the children have alternate weekends (Friday and Saturday nights) with the husband. They have holiday time with him.
Credit and Submissions
The evidence of the witnesses
The only witnesses called for cross-examination were the parties. There is little by way of relevant factual dispute which falls to be determined on the uncorroborated testimony of one of the parties and therefore there is no need for findings on credit.
Submissions
It is submitted on behalf of the wife that the pool of assets is as set out in the wife’s case outline document except that the claim for an add back of $500,000 is withdrawn, $241,568 should be added as the husband’s capital account with X Practice, $82,000 being the balance of the husband’s Westpac cheque account should be deleted and in lieu, $168,350 and $1,500 should be included as the relevant balances of his accounts. In relation to the capital account it is submitted that the evidence about this fund did not come through the husband’s initial disclosure and in the absence of any documentary evidence the husband’s assertion that this fund, built up from his contributions of 5% of earnings, and which attracts interest from the Practice, will not be paid to him, is inherently unlikely. In relation to the bank balances, the wife’s submission is that the husband’s proposal that the balance should be set off or largely set off against a income tax debt should not be adopted as there is no formal evidence about the tax debt and no evidence is provided as to why the tax debt was not paid directly from income.
It is submitted that the contributions of the parties were equal and that there should be a 30% adjustment to the wife because of:
The imbalance in the income and earning capacities of the parties. In this regard reference is made to Best’s case and B & B No. 2 and the description of an overwhelmingly greater income for one party as being one of the most valuable ‘assets’ of a marriage;
The contribution the wife made to the husband’s earning capacity;
The impact of the marriage on the wife’s earning capacity;
The fact that the physical care and accommodation for the children will fall mainly to the wife;
In relation to spouse maintenance it is submitted that the wife shows a need. She has to date been subsidised by the husband and albeit not at the rate she seeks ($1,500 per week) she has a shortfall of income over proper expenses. In that regard it is conceded on behalf of the wife that she is concerned that the husband’s provision for her household will fall off after the resolution of the property proceedings. It is conceded that to some extent the wife does not know what her financial situation will be in the medium term and wants to put in place a level of maintenance that can then be adjusted, on application by the husband, to meet the circumstances that arise.
It is submitted for the husband that the pool should not include the husband’s capital fund in X Practice or any of his savings. In relation to the capital fund it is submitted that there is no reason not to accept the uncorroborated evidence of the husband that the fund will never come to him. It is submitted that the Court can take judicial notice of the practice of large businesses accessing a ready source of finance by the device of contributions to a capital account and those accounts not being reimbursed at any point to the contributor. In relation to the savings, those amounts are largely set off by tax debts and therefore no amount should be included. Thus neither the $168,350.00, the $1,500 nor the earlier balance of $82,000 should be included.
The effect of the submissions is that the husband agrees that the contributions were equal overall. He would have an argument to make that his financial contributions since separation have been so significant that he is ahead over that period but does not press for a finding other than of equality. In relation to the adjustment the husband submits that it would be 20%. It is conceded that it could be more but that in the context of a long marriage it would be manifestly unjust if he was left with less than his superannuation, shares and other personalty, including money at bank. Thus it is submitted that the upper limit of any adjustment must be the entire equity in the N property.
In relation to spouse maintenance, it is conceded that the husband has the capacity to make a payment. The issue is that of need. It is argued that if one stepped back and looked at the wife as she would be under the husband’s proposals, with over $800,000 in assets, an annual income of about $50,000 and every element of the children’s costs met by the husband, she cannot make a case for spouse maintenance.
The approach in proceedings under section 79
The case law reveals that there is a permissible approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. First, I am to make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Second, I should identify and assess the contributions of the parties within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Third, I should identify and assess the relevant matters referred to in s 79(4)(d), (e), (f) and (g), (the other factors) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourth, I should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case. [1]
[1] This summary of the effect of the authorities is paraphrased from the comments of the Full Court in In the Marriage of Hickey (2003) 30 Fam LR 355 at 370
The property of the parties at the date of the hearing
The Court is required to make a finding as to the property of the parties at the date of the hearing. As to the disputed issues:
The husband’s capital account with X Practice
The submission made on behalf of the wife is that $241,568 should be added to the pool for the husband’s capital account with X Practice. For the husband it is submitted that there is no reason not to accept the uncorroborated evidence of the husband that the fund will never come to him. It is submitted that the Court can take judicial notice of the practice of large businesses accessing a ready source of finance by the device of contributions by partners to a capital account and those accounts not being reimbursed at any point to the contributor.
The entirety of the written evidence about this is the husband’s evidence:
“That amount has not been repaid to me and my understanding is that it will not be repaid to me.”
The husband conceded in cross-examination that the evidence about the likely fate of the capital account is unclear.
This should not be a matter of controversy. Once challenged, the issue cannot be resolved on the basis of the uncorroborated evidence of the husband. Nor can I take judicial notice of a practice in a particular business or in large businesses in general. It would be a simple thing to provide evidence of the practice in relation to capital accounts from the records of the Practice or from the evidence of a Managing Partner or Financial Controller. The onus lies with the husband and he has not discharged it. I will include the husband’s capital account in the list of assets. There are likely to be restrictions on access to this asset, such as it only being available on the husband leaving the Practice.
The husband’s savings accounts
It is submitted on behalf of the wife that the balances of the husband’s Westpac accounts should be shown as $168,350 and $1,500. The submission on behalf of the husband is that the savings are largely set off by tax debts and therefore no amount should be included. Thus neither the $168,350, the $1,500 nor the earlier balance of $82,000 should be included. The wife argues against that approach on the basis that there is no formal evidence about the tax debt and no evidence is provided as to why the tax debt was not paid directly from income.
In oral evidence the husband put the balance of one of the accounts at $168,367 and the other at about $1,200. Those are the values I will accept as admissions against interest.
As to the tax debt, it is addressed below.
Thus the assets of the parties are:
Assets Value N property $2,500,000 Husband’s shares $50,000 Husband’s Holden motor vehicle $10,000.00 Husband’s Westpac Bank accounts $169,567.00 Household contents in husband’s possession $10,000.00 Husband’s BT Superannuation $152,584 Husband’s capital account with X Practice $241,568 Wife’s Westpac Bank account $1,608.00 Subaru Outback motor vehicle (W) $15,000.00 Household contents at former matrimonial home $20,000.00 Wife’s PSS (s)uperannuation $100,000.00 Total $3,270,327.00
Liabilities:
The husband’s tax debt
The tax debt is asserted in the husband’s latest Financial Statement and his Case Outline document, to be $110,000. However, the husband’s oral evidence in cross-examination was to the effect that he had a tax bill due at the end of October of $120,000, with a further amount payable in March 2009. The husband was asked why he had not updated his evidence about this and said that he was not told he had to. It would seem inconceivable that the husband was not told of the need to update his financial disclosure but whether told or not, that was his obligation. I will accept the husband’s formal disclosure about a tax debt and will include $110,000 in the list of relevant liabilities. As to the need to resort to capital to pay the liability rather than paying it from income, the husband was not successfully challenged in relation to his evidence that it was his approach to build up savings and equity and then pay his tax obligations from those sources.
On the basis of the finding referred to above, I find that the relevant liability of the parties as at the date of the hearing is as follows:
Liabilities Amount Mortgage on the N property $1,500,000 Husband’s income tax debt $110,000 $1,610,000.00
The net assets have a value of $1,660,327 ($3,270,327 – $1,610,000).
Financial Resources
There are no financial resources of the parties that are not included in the table of assets.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the parties. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in any merely token way, but in terms of their true worth to the building up of the assets[2]. There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the parties in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of parties[3].
A separate pool for superannuation
[2] Mallett v Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[3] In the Marriage of Shewring (1987) l2 Fam LR 139
As to whether the Court should assess contributions asset by asset or globally, the authorities have it that the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court opined that it is preferable for contributions to superannuation to be assessed separately from those made to other assets. However the Court allowed that superannuation may be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggests that that:
“… approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.”
Here the parties have themselves adopted a global approach to the assessment of contributions. On that basis, I too will employ a global approach.
Contributions
The parties agree that contributions were equal to the date of separation. The husband has an argument that his contributions since separation exceeded those of the wife but despite that position, his case, as with that of the wife, is argued on the basis that the court would find that contributions were equal. That agreed position is supported by the evidence. Without going into great detail, I will briefly address the issue.
Section 79(4)(a) Contributions
The parties had little by way of assets at the start of their marriage. They were each in paid employment. The husband worked throughout the marriage, on a full-time basis in a professional practice. He started as an employee and since January 1999 has worked as a partner. The wife has largely worked in the media. She worked full-time until R was born, had two periods of maternity leave and has otherwise worked on a part-time basis. She works on three days a week. The wife took a redundancy payment from her then-employer in 1994. Otherwise there were no significant injections of funds.
Section 79(4)(b) contributions
There is little evidence of non-financial contributions. While there were extensive renovations to the N property, they were not undertaken by the parties themselves. The wife gives evidence about the planning and direction of that work.
Section 79(4)(c) contributions
There are two children of the marriage. The wife was the primary care giver of the children and was largely responsible for household tasks. The wife deposes to the additional demands imposed on her by health issues in relation to each of the children from time to time. The husband has worked at a senior level and has not been available to the children for much of the working week. He devoted time to the children when available and in particular took them on Saturday mornings when he could.
I am satisfied that the wife was the primary care giver of the children and the main homemaker. That is not to say that the husband was not an interested and loving father but reflects the division of labour made between the parties.
Conclusion on Contribution
The parties agree that the contributions were equal and I so find.
The other matters in Section 79
Dealing with the matters identified in the legislation:
Section 79(4) (d)
Pursuant to s 79(4)(d) I am required to take into account the effect of any proposed orders on the earning capacities of the parties. There is no evidence about this.
Section 79(4)(e) - Section 75(2) Factors
The relevant matters in Section 75(2) would seem to be paragraphs (a), (b), (c), (k) and (l).
(a) the age and state of health of each of the parties;
First, as to the age and state of health of each of the parties. Each of the parties is 46 years of age and there is no evidence about their health.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The husband receives $17,000 per week from his work. He lives with Ms H who he thinks has an income of the order of $200,000 or $250,000 per annum. She makes contributions to her own expenses, including paying about one third of the rent for their apartment. The husband understands that Ms H has a capital fund representing the proceeds of a property settlement with her former partner, which included the proceeds of sale of their strata plan property. The husband gives no evidence about his living expenses. His fixed expenditure is as follows:
Expenditure
Amount
Income tax $8,000.00 Superannuation contributions – BT $230.00 Mortgage payments to NAB & rent $4,260.00 Rates and unit levies $10.00 Motor vehicle registration $10.00 Visa card payments – Citibank $100.00 Child Support payments and expenses $580.00 Total $13,190.00
There is no suggestion that the husband is not exercising his earning capacity. X Practice provides incentives to retire prior to 55 years of age. Subject to further reductions in the numbers of partners by the Practice, the husband does not intend to retire early. He intends to work until he is 75 years of age.
The wife’s income is $1,462 per week made up of her salary of $962 and $500 paid by the husband by way of child support and other payments. I am not sure about this evidence. It is very different to the wife’s earlier Financial Statement which put the husband’s contribution at about $2,500 per week. In a note to her latest Financial Statement the wife refers to the husband paying off her Visa card after she uses that card to meet her expenses. It must be the case that the husband pays more that $500 towards the expenses of the wife and children. The wife readily conceded that the husband has ensured that the children want for nothing in her care. The husband makes a regular provision for their expenses and he provides ad hoc amounts when sought by her.
The wife lives with the parties’ children. The children have no income.
Apart from income tax, about which there is no evidence, the effect of the wife’s evidence in her Financial Statement amended by a concession made in relation to the claim for gas and electricity, is that her expenses are as follows:
Expense Amount Contributions to PSS (s)uperannuation $38.00 Rates $55.00 House insurance $29.00 Motor vehicle insurance – Allianz $20.00 Motor vehicle Third Party insurance $8.00 Motor vehicle registration – Subaru $5.00 Health insurance – HCF $54.00 Trauma insurance – ACL $50.00 Living expenses $3,034.00 Food $364.00 House repairs $244.00 Gas & Electricity $154.00 Telephone $77.00 Petrol $55.00 Motor vehicle maintenance $95.00 Fares and parking $101.00 Clothing and shoes $140.00 Childrens activities $220.00 Child minding $325.00 Medical dental and optical $192.00 Holidays $77.00 Education expenses including school fees $40.00 Chemist pharmaceuticals $58.00 Gardening lawnmowing $100.00 Cleaning $142.00 Books and magazines $77.00 Gifts $12.00 Hairdressing toiletries $35.00 Occupational therapy for child $55.00 Speech pathology for child $60.00 Therapy for child $220.00 Exercise (W) $100.00 Personal care (W) $80.00 Alarm $11.00 $3034.00 Total $3,293.00
Of the living expenses, with the necessary adjustments, the wife says that $1,079 relates to her expenses and $1,955 to those of the children. Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
As to her earning capacity, the wife plans to return to full-time paid employment in the future but does not know when. She proposes to discuss that with the husband in the future. The husband thinks it would be good for the wife to return to full-time paid work but says that is a matter of choice for the wife. On the other hand the husband conceded that if the wife is to increase her income from paid employment, because of the nature of her working hours, the wife would have a greater child minding cost.
The parties had a particular pattern of work in place for the wife. That pattern was needed to accommodate the husband’s working hours and travel commitments. The wife concedes that she will be able to increase her hours of work at some point in the future. She is not inclined to increase her hours now and if she did, there would be some increase in her expenses. The wife’s earning capacity is qualified by the needs of the children.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
R is 10 years of age and is in Year 4 at N Public School. L is 7 years of age and attends the same school.
The day to day responsibilities for the children fall largely to the wife. The children have had health and development issues and continue to receive therapy and treatment.
It was the parties’ arrangement during the marriage that the wife be more available to the children than full-time paid employment would allow. Unless his work interferes, the children spend time with the husband during the school week, overnight on Tuesdays and overnight each alternate Friday.
The wife is the primary point of reference for day to day issues in relation to the children’s schooling, health and social activities. L returned from a holiday in July with an illness that required antibiotics. Both children suffer from eczema and have seen counsellors in relation to the marriage breakdown. L’s eczema has deteriorated and he has returned to wetting his bed each night. The wife reports that L has displayed frequent temper tantrums. During tantrums he physically assaults the wife and swears and her and his sister. The wife cites a tantrum on 28 August 2008 when she refused to permit him to take a new toy to school. L screamed and yelled and cried on the street outside the school. Ultimately the Deputy Principal came out and escorted L to his class. In addition the wife has routine commitments such as canteen duty, band supervision, reading in class and band camp supervision.
The parties have had the assistance of Ms O who cares for the children three afternoons a week and has also helped if either child is sick on one of the wife’s work days.
(d) commitments of each of the parties that are necessary to enable the party to support:
himself or herself; and
a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
I have set out the detail of those commitments above.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
any law of the Commonwealth, of a State or Territory or of another country; or
any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
The parties have been able to generate some superannuation entitlements. Neither of the parties seeks a splitting order.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is little evidence in relation to the standard of living of the parties during the marriage. The parties enjoyed two overseas holidays to France. Since separation, the husband conceded overseas travel including some holiday travel for himself and sometimes his partner or the children. He also conceded lifestyle expenditure on wine and restaurants, including entertaining others.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
This is not relevant.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
This is not relevant.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
The wife’s role at home during periods of maternity leave, during days freed up by part-time employment and while the husband was engaged at work in the evenings, on weekends and during periods of his overseas travel, has allowed the husband to maintain a commitment to his professional practice. That commitment has contributed to his current and future earning capacity which has consistently delivered the best part of $1M in annual income over recent years.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The wife gave up paid employment for periods of maternity leave and gave up full-time employment since the birth of R. It is likely that the marriage adversely affected her earning capacity. She was denied the opportunities that come with an unbroken history of permanent employment, including the building of skills and experience that can lead to better paid employment and the other benefits of employment such as leave and superannuation. That is not to say that even if she had maintained paid full-time employment, the wife could now aspire to anything like the husband’s income earning capacity.
(l) the need to protect a party who wishes to continue that party's role as a parent;
The wife believes that her income earning capacity will continue to be adversely affected for a period of time due to her responsibilities with the children. That is probably correct.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
Apart from the children, the wife lives alone. The husband lives with Ms H. It is the unchallenged evidence of the wife that Ms H is employed in a profession. As is set out above, the husband thinks she has an income of the order of $200,000 or $250,000 per annum. She makes contributions to her own expenses, including paying about one third of the rent for their apartment. The husband understands that Ms H has a capital fund representing the proceeds of a property settlement with her former partner, which included the proceeds of sale of their strata property. It is the husband’s evidence that Ms H pays her own way in relation to any joint travel. There is no other evidence of the financial circumstances of their cohabitation.
(n) the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
There is no child support assessment.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
There is nothing further requiring attention under this provision.
(p) the terms of any financial agreement that is binding on the parties.
There was no binding agreement made between the parties.
Section 79(4)(f)
There are no relevant orders.
Section 79(4)(g)
There is no child support assessment.
Conclusion
The wife argues for a 30% adjustment for the “other matters” referred to above and the husband argues that it should be 20%. It is conceded in the husband’s case that the adjustment could be greater but argues that the limit to that adjustment must be the entire equity in the N property. It is submitted that it would be unjust to send the husband forth with anything less than his superannuation, shares and modest funds at bank. The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are as follows. Favouring an adjustment to the wife there is:
Ø The wife’s earning capacity is less than that of the husband because of the elite professional level at which he works and because the wife’s paid employment has been by way of part-time work since 1998. The corollary of the husband’s commitment of 70 hours a week plus travel has been that the wife was required to be available to the children. This is not a case whereby it is asserted that the wife is doing less than she should. It is conceded that her return to paid employment was not required to supplement the family income. The children are still in Primary School;
Ø There is still 11 years or so until L finishes school and the children spend the preponderance of time with the wife. The wife is likely to receive a proper level of financial support for the children but has only modest respite from day to day supervision. The N property will be sold and the wife will need accommodation suited to herself and the children;
Ø In meeting his own needs, including the need for adequate accommodation the husband has the support of Ms H who is likely to have an income many times that of the wife, together with some capital resources.
It is an agreed fact that there should be an adjustment to the wife by virtue of the other matters in section 79(4). It is not possible or appropriate to fully compensate the wife for the differences in the parties’ assets or earning capacities. I should have regard to the dollar impact of an adjustment, not just to the percentages. In this case the factors favouring an adjustment to the wife are very significant. I will make an adjustment to the wife of 25%. In the context of this case that makes a difference between the parties of the order of $830,000.
Just and Equitable
Based on their contributions and the other matters in s 79 the appropriate division of property is 75% to the wife and 25% to the husband. I must consider whether it would be just and equitable within the context of s 79 if the net assets of the parties were divided in those proportions.
The net assets have a value of $1,660,327. The outcome of that division would be that the husband receive about $415,082 and the wife about $1,245,245.
That would leave the husband with the benefit of:
Assets Value Husband’s shares $50,000 Husband’s Holden motor vehicle $10,000.00 Husband’s Westpac Bank accounts $169,567.00 Household contents in husband’s possession $10,000.00 Husband’s BT Superannuation $152,584 Husband’s capital account with X Practice $241,568 Minus Husband’s income tax debt -$110,000 Total $523,719.00
In order to bring him to 25% he would need to pay the wife $108,637. I will round that figure down to $108,000. The husband will owe his legal fees and any other personal debts.
The wife has or will under the parties proposals have, the benefit of:
Assets Value Wife’s Westpac Bank account $1,608.00 Subaru Outback motor vehicle (W) $15,000.00 Household contents at former matrimonial home $20,000.00 Wife’s PSS (s)uperannuation $100,000.00 Total $136,608.00
In order to bring her to about 75% she would need to receive the net proceeds of the N property and a sum of the order of $108,000 by way of payment from the husband. She would owe her legal fees for these proceedings and any other personal debts.
The ultimate outcome will depend on the net proceeds of the sale of the N property. There is no evidence about the likely selling costs of the property and in any event it is far from certain that the property will achieve the net value of $1M which is allowed for in the calculations above. For that value to be achieved the difference between the ultimate sale price and the discharge figures on the debts secured on the property would need to be greater than $1M by the equivalent of the costs of sale, after allowing for any adjustments on sale. Any increase in the discharge figures should be prevented by the orders in relation to the mortgage payments but as to the sale price, the property market can be volatile. As the wife is to receive all of the equity in the N property there is no simple way of having the parties share the risk/benefit of the net proceeds of sale being less than or greater than $1M.
The outcome I have foreshadowed for the wife is greater than the effect of the orders she seeks. It crossed my mind that I should offer the parties a further opportunity to address me in relation to that outcome. In deciding not to take that course, I took the following matters into account:
ØA court can make a property settlement order different to an order sought. In In the Marriage of Shaw (1982) 8 Fam LR 432; FLC (1982) 91-540 the Full Court said at page 438 :
The section provides, inter alia, that in proceedings with respect to property of the parties the court may make such orders as it thinks fit and, also, that the court shall not make an order under the section unless it is satisfied that, in all the circumstances, it is just and equitable to do so. In our view, when an application by one party is property instituted under s 79, all the property of both parties is brought into issue. Accordingly, provided that the court takes into consideration the matters required by the section to be considered, it seems to us that the court is at large as to what, if any, alteration of property interests is just and equitable in a particular case. No doubt the orders which the court makes in property proceedings will be within the area defined by the pleadings and/or by the way in which the proceedings are conducted. However these are procedural and not jurisdictional limits, and we are unable to agree with the view of the learned trial judge that the absence of a formal cross-application precludes the court from making an order adjusting property interests in favour of a respondent.
In In the Marriage of Papas (1982) FLC 91-358, Murray J said:
I reject the wife’s submission. I am of the opinion that once an application for property settlement has been filed, the question of property settlement is at large before the Court. The Court is then bound to make such order as is just and equitable (see sec 79(1)) and is not limited to making such orders as may be sought in the application.
ØNotwithstanding it was not sought by the wife, the type of order I am contemplating is the inevitable effect of the submissions made on her behalf. Further, the making of such an order was addressed in submissions made on behalf of the husband. Although the wife sought no payment in addition to her retention of the assets she has and the net proceeds of the property, the husband’s counsel addressed, albeit in strongly arguing against it, the possibility that the wife would receive a payment in addition to those two categories of assets;
For those reasons I am satisfied that such an order can be made and there is no denial of natural justice in doing so without further reference to the parties.
Conclusion under Section 79
I will express the orders in the form sought by the wife save for the additional payment. I will give the husband 2 months to make the payment. I will give the parties leave to relist the matter in relation to the drafting of the orders and any other machinery issues within 14 days.
The approach in proceedings for Spouse Maintenance
Sections 72 and 74 of the Family Law Act 1975 provide as follows:
[s 72] s 72 Right of spouse to maintenance:
72
(1)A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
(2)The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.
[s 74] s 74 Powers of court in spousal maintenance proceedings
74
(1)In proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part.
(2) If:
(a)an application is made for an order under this section in proceedings between the parties to a marriage with respect to the maintenance of a party to the marriage; and
(b)either of the following subparagraphs apply to a party to the marriage:
(i)when the application was made, the party was a bankrupt;
(ii)after the application was made but before the proceedings are finally determined, the party became a bankrupt; and
(c)the bankruptcy trustee applies to the court to be joined as a party to the proceedings; and
(d)the court is satisfied that the interests of the bankrupt’s creditors may be affected by the making of an order under this section in the proceedings;
the court must join the bankruptcy trustee as a party to the proceedings.
(3)If a bankruptcy trustee is a party to proceedings with respect to the maintenance of a party to a marriage, then, except with the leave of the court, the bankrupt party to the marriage is not entitled to make a submission to the court in connection with any vested bankruptcy property in relation to the bankrupt party.
(4)The court must not grant leave under subsection (3) unless the court is satisfied that there are exceptional circumstances.
(5) If:
(a)an application is made for an order under this section in proceedings between the parties to a marriage with respect to the maintenance of a party to the marriage; and
(b)either of the following subparagraphs apply to a party to the marriage (the debtor party ):
(i)when the application was made, the party was a debtor subject to a personal insolvency agreement; or
(ii)after the application was made but before it is finally determined, the party becomes a debtor subject to a personal insolvency agreement; and
(c) the trustee of the agreement applies to the court to be joined as a party to the proceedings; and
(d)the court is satisfied that the interests of the debtor party’s creditors may be affected by the making of an order under this section in the proceedings;
the court must join the trustee of the agreement as a party to the proceedings.
(6)If the trustee of a personal insolvency agreement is a party to proceedings with respect to the maintenance of a party to a marriage, then, except with the leave of the court, the party to the marriage who is the debtor subject to the agreement is not entitled to make a submission to the court in connection with any property subject to the agreement.
(7)The court must not grant leave under subsection (6) unless the court is satisfied that there are exceptional circumstances.
(8)For the purposes of subsections (2) and (5), an application for an order under this section is taken to be finally determined when:
(a) the application is withdrawn or dismissed; or
(b) an order (other than an interim order) is made as a result of the application.
The relevant effect of those sections is that if a party to a marriage is unable to adequately support himself or herself from their own resources for any adequate reason, a Court can order the other party to provide that support to the extent of the reasonable capacity of that person to do so. In relation to all of the issues addressed in section 72 & 74 the legislation requires reference to the matters set out in section 75(2). The provisions of section 75(2) have been set out earlier in these reasons.
The Need
Here the wife contends that she is unable to support herself adequately from her own resources.
In M v M (2006) 36 Fam LR 97 the Full Court summarised the authorities in relation to the threshold proposition, in particular Mitchell v Mitchell (1995) 19 Fam LR 44; 120 FLR 292; (1995) FLC 92-601, as follows:
….
The question whether an applicant can support his or herself “adequately” is not to be determined by reference to any fixed or absolute standard but by having regard to the matters referred to in s 75(2): Mitchell (above at Fam LR 59; FLR 308; FLC 81,995).
[32] The question is not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances: Mitchell (above); Evans and Evans (1978) FLC 90-435; Brady and Brady (1978) FLC 90-513 at 77,701; Gamble and Gamble (1978) FLC 90-452; Wilson and Wilson (1989) 13 Fam LR 205; FLC 92-033 and Bevan and Bevan (1993) 19 Fam LR 35; (1995) FLC 92-600.
[33] It is not necessary for an applicant for maintenance to use up all of his or her assets and capital in order to satisfy the requirement that he or she is unable to support him or herself “adequately”: Mitchell, above.
[34] The court is entitled to consider the “notorious circumstance” that there is (Mitchell at Fam LR 61; FLR 308; FLC 81,997):
[A] significant gap between theory and reality for employment, especially for people in middle age, lacking experience and confidence, and who have been out of the skilled work-force for many years, and in the context of current high unemployment. Loss of security, missed promotion opportunities, loss of retraining in developing skills in an increasingly skilled work-force with the loss of confidence which this brings, particularly in times of high unemployment, are notorious circumstances of which the court must take notice and apply in a realistic way.
In M v M the Full Court went on in relation to the appeal before it:
[35] Thus in our view the trial judge was required to consider:
(a) whether employment was available to the wife having regard to the practical realities of her age, experience and confidence having been out of the workforce for a number of years; and
(b) if so, the level of income the applicant might earn from such employment and whether in the circumstances of this case such income fell below adequate support and thus met the requirements of s 72.
In In the Marriage of Stein (2000) 25 Fam LR 727 the Full Court dealt with the problem of including the needs of children in the claim of a wife for spouse maintenance. Section 75(2) plays more than one role in relation to financial proceedings. Perhaps as a result, both the obligation of the carer (s 75(2)(d)) and the liability of a payer (s 75(2)(na)) for child support are matters to be taken into account in relation to spouse maintenance. The Full Court dealt with that issue in this way:
[47] In determining the quantum of spousal maintenance, his Honour was obliged to take into account under s 75(2)(na) not only child support which a parent is providing, but child support which a parent might be liable to provide in the future.
[48] Section 75(2) serves many masters. It contains matters to be considered in both s 74 (spousal maintenance) and s 79 (alteration of property) proceedings. It contains matters relevant to the capacity of the payer to make maintenance payments, and to the needs of the payee to receive them. It contains matters which are relevant to comparing the situation of the parties when deciding what an appropriate adjustment of property interests should be. But its provisions must be read as ancillary to the power being exercised in each case. The maintenance power is to be found within the confines of ss 72 and 74, the property power within the confines of s 79(1) and (2).
[49] It seems to us that in the context of an application for spousal maintenance the consideration in s 75(2)(d) of the “commitments of each of the parties that are necessary to enable the party to support … a child … that the party has a duty to maintain” has greater significance in determining the capacity of a payer to provide support rather than in determining the extent to which the other party requires support. In a maintenance case if, for example, a husband is called upon to pay maintenance for his wife, the court must determine his capacity to pay that maintenance having regard to his obligation to support his children. The level of support that the wife needs for herself is not dependent upon the level of support she must give to others. In a property case however, the extent to which a division of property may be seen as being appropriate might only properly be measured by examining all the demands that each spouse has to meet.
[50] By way of example, s 66M makes it clear that a step-parent does not have a duty to maintain step-children, other than in the circumstances which the court is required to take into account under s 66M. It would not be a proper application of s 75(2)(d) to create a liability of a father to support his step-children via the device of a maintenance application by his estranged wife on the basis that he has a duty to maintain her children and that she requires the provision of maintenance for herself so that she can in turn support her children.
Ignoring the wife’s receipt of child support and the living expenses she attributes to the children, the wife earns $962 per week and spends $1,338. Thus there is a claimed shortfall of $376 per week. The wife was cross-examined in relation to some claimed expenses. She was asked about electricity, gas, house repairs, books and magazines, gardening and lawnmowing and exercise. A double counting of utility costs was corrected. The wife defended the claim for house repair expenses of $244 per week ($122 per week apportioned to the wife and $122 to the children) by asserting that only part of the house has been renovated. I note that the wife has expressly included under this category, her expenses for repairs to furnishings and appliances. The wife did concede that an expense of this order may not continue into the medium term. She also conceded that she might not have a need for $100 per week for gardening and lawnmowing in the future. The wife spends $59 on magazines and $100 per week on exercise which includes something referred to as a boot camp and jazzercise.
The wife was not successfully challenged in relation to whether she incurs any of those expenses or not.
As to the reasonableness of those expenses, taking a broad view of the circumstances of this family during the marriage and the husband’s circumstances since, the wife’s claims do not seem to be excessive. The claims cannot be measured against those of the husband as his Financial Statement did not provide the detail of his living expenses. He cannot be criticised for that as the wife’s claim for spousal maintenance, which triggers the obligation to detail living expenses, was only made in the wife’s case outline document prepared in the days prior to the hearing.
As to the future, I do not know what the wife’s expenses will be. That will be greatly influenced by the extent to which she commits capital to the purchase of accommodation and the type of accommodation she buys. The property orders will leave her with immediate access to $108,000 and upon sale, the net proceeds of sale of the N property, minus her legal fees for these proceedings. It is conceivable that she will have not much more than $1 million in available funds. In terms of an appropriate standard of accommodation, given that the N property has a value of the order of $2.5 million, it would not be remarkable if most if not all of the funds available to the wife were applied to the purchase of accommodation for herself and the children. That would leave little or no balance which could be invested to supplement her income.
The wife’s expenditure on gardens and lawnmowing may disappear if, for example, she moves to strata plan accommodation but there would then be strata levies which she does not have to contend with now. A newer property may cost more but an older property may require more house repairs.
There is a complication in this case because since separation the husband has provided financial support to the wife’s household in addition to the amounts identified by the parties in their Financial Statements. The wife conceded in cross-examination that when the husband was asked for extra support he provided it. For example, she agreed that the husband had provided a clothes dryer, a computer and other goods. It was acknowledged in the wife’s case that she is worried that the level of support she now receives might fall away after the property settlement. The issue is further complicated because the child support arrangement is informal. The wife concedes that because of the husband’s support, she has wanted for nothing in relation to the children. The husband has given no undertaking in relation to the wife’s support going forward. He is under no obligation to give such an undertaking but that suggests that the wife needs formal relief to ensure that the existing support continues for herself.
In all the circumstances I am satisfied that the wife has a need for $376 per week.
The Reason
There must be an adequate reason for the need for support. The examples given in section 72 are: having the care and control of a child of the marriage who has not attained the age of 18 years; and age or physical or mental incapacity for appropriate gainful employment. Beyond that the legislation gives no assistance in relation to what might characterise an adequate reason. I am not aware of any case law on the point.
This is not a case where the wife makes no provision for her own support. The wife returned to paid employment after the birth of each child. In cross-examination it was revealed that the wife believes she should not increase her hours of work for the time being and plans to discuss with the husband her return to full time work in light of the needs of the children, when that time comes. The husband says that her return to full-time employment is a matter for the wife but in his opinion, she could return to full-time paid employment now.
At 10 and 7, the children are of tender years and the pattern of the marriage was to have the wife significantly available to them, more available than full-time paid employment would allow. Further, the unchallenged evidence of the wife is that both children suffer chronic health issues and of more recent times have suffered physical and psychological health problems. In particular, L is not progressing well at school, has violent temper tantrums and suffers bed wetting.
I am satisfied that there is an adequate reason for the need for support, relating to the wife’s care and control of the children.
The Capacity
It is conceded before me that the husband has the capacity to provide support to the wife. Given the level of his income, that is a sensible concession.
Conclusion in relation to Spousal Maintenance
The wife has a need for maintenance of $376 per week. She has a proper reason for that need and the husband has the capacity to provide support.
I propose to order spouse maintenance in that sum and it will increase with movements in the cost of living. As to the duration of the order, the evidence did not explore that issue. One could imagine that a milestone such as the younger child commencing High School might attract itself to the parties as a proper time for the wife to consider full-time employment. The wife has a history of secure paid employment. Her need for support relates to the children. In those circumstances I will order that the maintenance terminate upon L commencing High School. Otherwise, section 83 is the gatekeeper in relation to variation proceedings.
I certify that the preceding one husband and twenty five (125) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate:
Date: 21 November 2008
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Jurisdiction
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Remedies
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Costs
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Injunction
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Procedural Fairness
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