BH & PH
[2006] FMCAfam 167
•13 April 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BH & PH | [2006] FMCAfam 167 |
| FAMILY LAW – Property – application for property adjustment pursuant to s.79 – identifying net asset pool – non–disclosure of beneficial interest in trust–whether advances from parents gift or loan – whether parental contributions to one or both parties – whether friend’s child living with husband a s.75(2)(e) factor – whether Jones v Dunkel inference should be drawn. FAMILY LAW – Parenting – limited contact issue. |
| Family Law Act 1975 Family Law (Superannuation) Regulations 2001 |
| Aleksovski & Aleksovski (1996) FLC 92–705 Jones v Dunkel (1959) 101 CLR 298 |
| Applicant: | BH |
| Respondent: | PH |
| File Number: | NCM 3549 of 2004 |
| Judgment of: | Sexton FM |
| Hearing dates: | 16 & 17 March 2006 |
| Delivered at: | Sydney |
| Date of Last Submission: | 17 March 2006 |
| Delivered on: | 13 April 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr G Johnston |
| Solicitors for the Applicant: | Brazel Moore lawyers |
| Counsel for the Respondent: | Mr D Shoebridge |
| Solicitors for the Respondent: | The Family Law Firm |
BY CONSENT THE COURT ORDERS THAT:
The children SJH, born 15 May 1989 and KJH, born 31 December 1992 [“the children”] reside with the wife.
The parties have joint responsibility for making decisions about the long term care, welfare and development of the children.
Each party have sole responsibility for making decisions about the day to day care, welfare and development of the children whilst in their respective care.
The children have contact with the husband as follows:
(a)From 6.00p.m. Friday until 8.30p.m Sunday each alternate week.
(b)For the first week of the mid term school holidays from the first Monday thereof commencing at 9.00a.m. until the following Sunday concluding at 6.00p.m.
(c)For the first half of the Christmas school holiday period each even numbered year and for the second half thereof for each odd numbered year.
(d)On the husband’s birthday each year.
(e)On Father’s Day each year.
(f)On the children’s birthdays each year at times subject to the children’s wishes
(g)At any other time by agreement between the parties
The children’s contact with the husband be suspended at the following times:
(a)On Mother’s Day each year;
(b)On the wife’s birthday each year; and
(c)During school holiday periods when the children are with the wife.
In respect of Christmas Day the children are to reside with the husband from 3.00p.m. Christmas Day until 3.00p.m. Boxing Day each odd numbered year and with the wife from 3.00p.m. Christmas Day until 3.00p.m. Boxing Day each even numbered year.
The children have liberal telephone contact with the wife and the husband whilst in the other party’s care.
The wife deliver the children to the husband at the commencement of all contact periods and the husband return the children to the wife at the conclusion of all contact periods.
THE COURT FURTHER ORDERS THAT:
In relation to parenting
In the event the children or either of them wish to have additional contact with the husband on any Thursday evening, whether for dinner or overnight:
(a)The wife to notify the husband of the child/children’s decision on the evening before; and
(b)The husband to cause the child/children to be collected at 5.00p.m from the wife’s residence unless an alternative collection time or location is agreed between the parties.
Pursuant to section 65DA(2) of the Family Law Act 1975 the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders are set out in Annexure A and these particulars are included in these orders.
In relation to property
The applicant wife’s solicitor forthwith serve a copy of the proposed property orders on the Trustee of the AMP Superannuation Savings Trust (“Fund”) with a letter requesting the Trustee to notify the wife’s solicitors as soon as practicable but within 28 days whether or not the Trustee objects to the proposed orders or any of them.
Prior to the adjourned date, the wife’s solicitors to file and serve an affidavit verifying compliance with Order (11).
In the event the Trustee objects to all or any of the proposed Orders, the wife’s solicitors to notify the Trustee of the adjourned date.
The matter be adjourned to 30 May 2006 at 9.45a.m. before me for further mention.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
NCM 3549 of 2004
| BH |
Applicant
And
| PH |
Respondent
REASONS FOR JUDGMENT
Introduction
This case concerns property adjustment and contact arrangements for SJH 16 and KJH 13. The parties separated in July 2003 when the wife left the matrimonial home on the Central Coast of New South Wales with the children and moved to rental accommodation. The children live with the wife and have regular contact with the husband. The parties disagree about whether there should be an order for contact on Thursday nights but otherwise agree on parenting arrangements. The parties disagree about the value of the pool of assets to be divided. The parties agree the husband’s parents have given them financial assistance during the marriage but disagree as to whether certain amounts should be treated as loans or gifts and if loans, whether they should be included in the net asset pool to be divided. The wife alleges the husband has not fully disclosed his financial position.
The wife is 43 and the husband 38. They started living together in 1988 and married on 12 January 1991. The parties separated in July 2003 and divorced in May 2005. The wife lives with the children in rented accommodation on the Central Coast of New South Wales and works as a registered nurse. She has a partner but does not live with him. The husband also lives on the Central Coast, works in his own retail business, married JW a month before hearing and presently has the care of a deceased friend’s son, BW, 13.
Issue concerning parenting
The only question the parties ask the court to decide in relation to parenting issues is whether or not there should be an order for the children to have contact with the husband on Thursday nights. It is unfortunate the parties were unable to resolve this issue between them, given the children’s level of maturity and the parties’ agreement on all other parenting issues. The parties agree that the children have often spent Thursday nights with the husband or his parents, particularly over the last 12 months.
The wife complains that the husband makes Thursday night arrangements directly with the children without consulting her, that the children are not collected at a regular time and often need to return home before school on a Friday morning to prepare for the school day. She says both she and the children find Thursday night contact disruptive. SJH has told her he would rather stay at home, but is concerned to disappoint his father. The husband says the children have in recent months spent almost all Thursday nights with him and he wants this arrangement to continue, subject to the children’s wishes. He agreed the children did not choose to spend the Thursday night between the two hearing days with him.
The court must decide any parenting question on the basis of the best interests principle. The court must consider the factors set out in s.68F(2) of the Family Law Act1975, as far as relevant, to determine what arrangements will best promote the children’s welfare. There is no challenge to the strength of the children’s relationship with the husband or his parents and no suggestion by the husband that the wife has not facilitated regular contact for the children with him and his parents. The husband’s father says he sees the children very regularly and the wife says the children enjoy time with their grandparents. There is no evidence before me to suggest the wife will not continue to facilitate contact as she has done in the past. I find the s.68F(2) factors most relevant to this issue are the children’s expressed wishes and the need for the parties to avoid further litigation.
SJH is almost 17 and KJH 13. I accept the unchallenged evidence of the wife that SJH has said he would rather stay at home on a Thursday night. The husband accepts the children should not be forced to come on Thursday nights if it suits them better to stay at home or because of other commitments. I am satisfied that if the children or either of them wish to spend the night with the husband, the wife can make the arrangements directly with the husband. I am satisfied the wife will facilitate contact with both the husband and his parents in accordance with the children’s wishes. However, if the children do not wish to see the husband on a Thursday night, in my view they should not be forced to do so. I also accept the wife’s counsel’s submission that if there is no order for Thursday night contact, there is less likely to be further litigation between the parties. I am not satisfied an order for Thursday night contact will advance the children’s interests and I have made no order. This does not mean the children or either of them cannot continue to spend some Thursday nights or evenings with the husband if they wish to.
Issues concerning property
The approach to the determination of an application under s.79 of the Family Law Act 1975 is well established by authority (In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595) and involves consideration of these questions:
a)What were the assets, liabilities and financial resources of the parties and their values at the time of hearing?
b)What were the financial and non-financial contributions made directly or indirectly by or on behalf of each party to the acquisition, conservation or improvement of the property of the parties?
c)What was the contribution made by each party to the welfare of the family including contributions made in the capacity of homemaker or parent?
d)What is the effect, if any, of any proposed order upon the earning capacity of each party?
e)What matters referred to in sub-s.75(2) of the Act are relevant and what adjustment, if any, should be made as a result of these factors?
f)Have there been any other orders made affecting a child or either party and is child support payable or likely to be payable in the future for the children of the marriage?
g)After consideration of these matters, is it just and equitable to make the actual orders?
What were the assets, liabilities and financial resources of the parties at the time of hearing and their values?
The parties agree to exclude the proceeds of bank accounts, household contents, motor vehicles and paid legal fees from the list of assets and liabilities available for division and I therefore exclude those items.
The parties ask the court to make findings in relation to the items marked ‘In dispute’ in the following table:
| Assets at the date of hearing | $ |
| Net proceeds of sale of former matrimonial home at Erina | 224,693.00 |
| Debts to the husband’s parents | In dispute |
| Husband’s interests in various trusts | In dispute |
| Net Station Pty Ltd [Husband] | Nil |
| Wife’s Mastercard | (1,800.00) |
| Wife’s Superannuation entitlement | 9,008.00 |
| Husband’s Superannuation entitlement | 39,565.00 |
Debts to husband’s parents
The husband contends that the parties owe his parents two separate amounts: one of $50,000 and a further amount of $10,000 which should be repaid from the net sale proceeds of the Central Coast home. He says in addition, his company owes his father advanced capital of $145,000.00 and he personally owes his father other funds. His evidence is inconsistent as to whether he personally owes $20,000 or $25,000. The husband accepts the latter liabilities as his sole responsibility.
I find the husband’s evidence as to what his parents have advanced the parties and as to whether the amounts were loans or gifts, inconsistent and therefore unreliable. In his amended Response he seeks an order that $65,000 be repaid to his father. In his counsel’s case outline document prepared for hearing, he asks for $71,345. In his Financial Statement sworn in August 2005 the husband deposed to the parties jointly owing $50,000 and an additional $20,000 to his parents. In his Financial Statement sworn in January 2006 he deposed to repaying his father $200 a week in relation to a personal loan of $130,000 and a business loan of $145,000. In the same sworn Financial Statement he deposed to having a personal loan to his father of $275,000 in his sole name. In his affidavit sworn 19 January 2006 the husband deposed to his father lending the parties $50,000 on or about 20 July 2003 but made no mention of any other loan to the parties from his father. The husband’s father, in his affidavit sworn 2 December 2005 annexes a loan agreement signed by himself and the parties for $50,000 and says he requires the parties to repay the debt. He says he has made a number of other loans to the parties.
The debt of $50,000
There is no dispute that the husband’s parents advanced the parties $50,000 shortly before their separation. The first issue is whether this amount was a gift or a loan and to which party. The second issue is whether, if a loan, the $50,000 should be included in the list of assets and liabilities to be divided between the parties.
The husband says his father advanced $15,000 on 15 May 2003, $35,000.00 on 21 July 2003 and in relation to those advances the parties signed a loan agreement with his father for $50,000 shortly before separation in July 2003. The loan agreement provides:
I, BH and PH have jointly received the loan amount of $50,000 from HH and agree to jointly repay the loan upon sale of the house or upon request.
Prior to separation, the husband says he was self-employed selling pay television equipment to telecommunications companies and accrued a tax debt by July 2003 of approximately $20,000 as well as other debts. He asked his parents to provide him with an amount of $15,000 and later $35,000 and they agreed to give him these amounts as an interest free loan of $50,000. Mr HH said he went to the husband’s office on 15 July 2003 and learned the husband had debts including a “large amount of money owing to the tax department”. He said he did not want the parties to have to sell their home, and he prepared the loan agreement for signature. He said the $50,000 is part of his and his wife’s retirement fund and they need interest from that fund to live day to day. He therefore requires repayment.
The husband has a poor recollection of any discussions he had with the wife about the need to borrow money before May 2003 and concedes he gave her scant information about their debt position. The wife clearly recalls the husband asking her to sign the loan agreement in the kitchen of their Central Coast home shortly before separation. She says the husband put the document on the bench and said ‘you have to sign it. I’m in trouble with a tax debt.’ ‘If you don’t sign, I’ll take the car away from you. You have no choice.’ The wife said she did not want to sign it, both parties knowing they were about to separate. She knew nothing about a tax debt or that they were in financial trouble, particularly as the husband had arrived home two months previously with a new Sportiva car. She said the husband got angry, “came close, very close to me” made her feel threatened, banged his fists on the kitchen bench and she signed. She believed the husband would physically assault her or take the car if she refused to sign. The husband could not recall the moment his wife signed the agreement but denied the wife’s version of events as to his conduct. I found the wife a frank and careful witness and accept her evidence on this issue.
The wife’s counsel cross-examined the husband at length about the precise nature of his debt position at July 2003 and how he used the $50,000. The husband concedes the position set out in his affidavit is inaccurate and confirmed from his own financial records [Exhibit 6] and I accept that between 20 May and 27 September 2003 he paid $11,620 to the Taxation Office, $15,000 to the home loan and $25,250 to Visa and that these debts arise from the period of the parties’ cohabitation.
It was not explained why Mr HH prepared the loan document two months after paying the $15,000 to the husband on
14 May 2005 nor whether he was aware in May 2003 that the husband would be asking for another $35,000. It may be that when he learned the parties intended to separate he decided to prepare a loan document, but in my view, it does not change the position. The wife’s counsel did not put to Mr HH that he did not intend asking the husband for repayment. Whether or not the agreement existed, I accept the evidence of Mr HH that he made it clear to the husband he would advance the funds on condition he was repaid.I accept the wife’s counsel’s submission that the court has a discretion as to whether or not a debt should be attributed to one or both parties. Counsel submitted that I should accept the wife’s evidence as to the circumstances in which she signed the loan agreement, and disregard the advance as a debt owed by her. Although I accept the wife’s version of events as to the husband’s conduct when the loan agreement was signed, I am not persuaded repayment of the debt should be the husband’s responsibility alone. The funds were advanced to meet debts accrued by the parties during the marriage and I find the parties should bear joint responsibility for repayment.
The debt of $10,000
The parties agree that Mr HH advanced them funds in or around 2004 “to have the carpet and the house painted before sale” and to meet other expenses relating to improvements to the Central Coast home. In oral evidence Mr HH referred, without records, to various expenses he had met for the parties at that time which amounted to approximately $9,000. The husband said his father advanced $8,000. I do not have the benefit of a precise figure, nor any contemporaneous record of any amount the husband’s parents might have expected to be repaid. Mr HH did not prepare a loan agreement in relation to the expenses he met for the parties in 2004. His evidence was that at the time of the advance the parties [my emphasis] talked about the money being repaid when the house was sold but “I cannot force them to repay this debt.” He did not say he had advised the parties he expected repayment of these advances and agreed he made other advances which he regarded as gifts.
The wife’s counsel submitted the approximately $10,000 was simply one of a number of examples of the husband’s parents generosity to the parties and there is no reason to distinguish this amount from other advances Mr HH described as gifts. The husband’s counsel argued that because the husband’s father said he could not force the loan to be repaid does not mean it is not a loan. I agree with him. However, counsel also submitted it is clear on Mr HH’s evidence that he expected the amount to be repaid. In my view the evidence does not support that submission. As I have said earlier in these Reasons, the husband’s evidence as to what the parties owe his parents is confused and contradictory, differing in a number of his sworn documents. I accept the unchallenged evidence of the wife that the husband’s parents gave the husband money for the parties whenever he asked for it. On the evidence before me, I am satisfied the husband assumed his parents would not require repayment although he might have hoped to repay various amounts if he were later in a financial position to do so. I am not satisfied Mr HH advanced the $10,000 expecting to be repaid. I have therefore not included the $10,000 as a debt of the parties, but as a contribution by the husband’s parents.
Husband’s interest in various trusts
The husband did not disclose an interest in any Trust in the Financial Statements sworn by him for these proceedings. In his affidavit in answer to Specific Questions sworn 16 August 2005 the husband says “my parents do not to my knowledge hold money in trust for me.” Two days before hearing, the wife’s legal representatives became aware that the husband is a discretionary beneficiary of The H Family Trust. They also became aware of the existence of other trusts set up by the husband’s father: SCE Trust, SCEU Trust, IRB EU Trust, HH Trust and HB Family Trust. The husband’s counsel concedes these trusts exist. There was no evidence before me as to whether or not the husband holds an interest in any of these trusts. Neither party sought an adjournment of these proceedings to adduce further evidence.
In cross-examination the husband said he knew a trust existed because he had “heard it mentioned in family discussion” but did not know that he and his sister were beneficiaries of a family trust. Later in cross-examination the husband said he knew he was the beneficiary of a trust, but did not know the name of the trust. “I was just in the family trust, that’s all I knew”. Later he said “I’ve been made aware that I am a discretionary beneficiary in a number of trusts set up by my family”. The husband said he was unaware of the source of funds he received from his parents. He conceded he may not have included income received from the H Family Trust in his taxation returns but paid scant attention to their accuracy when signing.
Without satisfactory explanation the husband conceded that he did not make any inquiries prior to swearing his affidavits as to any interest he may have held in a family trust or trusts “I just don’t talk about money with my family, I don’t talk about their finances.” I found the husband vague and unreliable. He seemed untroubled by his failure to make the necessary inquiries.
Mr HH said there were a number of trusts set up by his accountant in or about 1983. He did not know the names of the trusts or the difference between them. He did not know who the trustees were or the beneficiaries, or whether any of the trusts owned assets. He was not aware of the existence of beneficiaries’ accounts in the H Family Trust or any other of his trusts. He said his daughter SH, an accountant, understood how his finances were structured and on request, would have been available to give evidence in the proceedings. He understood the payments he made to the parties came from his company known as SCE Pty Ltd, not the trusts but he was unsure. He said he stopped working in 1999, and the company stopped trading in 2002. Since 2001 he has made payments to the parties from his joint personal account.
The Trust Deed of the H Family Trust [Exhibit 10] provides that Mr HH is the Trustee of the H Family Trust which was established in 1983. The husband, his sister and the husband’s parents are the discretionary beneficiaries. The Trust accounts for the years ending 1989-1998 show amounts held in the beneficiaries accounts for the husband in each of those financial years. The Trust Tax return for 2002 [Exhibit 12] states that the Trust has ceased business. Trust Deeds for the other trusts set up by Mr HH were not in evidence.
The husband’s sister SH did not give evidence in the husband’s case. I am satisfied on the evidence before me that SH has knowledge of her father’s financial structures and the means by which the husband received money from his parents from time to time. SH is likely to have knowledge of the husband’s entitlements in the various family trusts. Had she given evidence, it is likely she could have told the court whether or not the husband retains any interest in a family trust. The husband gave no explanation for his failure to call his sister. The wife’s counsel submitted, on the authority of Jones v Dunkel (1959) 101 CLR 298 that the inference may be drawn that her evidence would not have assisted the husband’s case. I draw this inference given neither the husband nor his father was able to assist the court on these matters. See also Australian Securities Commission v AS Nominees Ltd (1995) 133 ALR 1.
The husband’s counsel submits on the authority of Shaw & Shaw (1989) 92-030 any entitlement the husband has as a discretionary beneficiary is merely “an equitable chose in action … to compel the due administration of the Trust.” Counsel submits given the evidence available, the court can be satisfied the husband has no interest of any value in any trust. I do not accept this submission.
It is well established by the authorities that each party has an obligation to make full and frank disclosure of his/her financial position in proceedings of this kind. It is not the obligation of the other party to spend time and money undertaking investigations to see what can be uncovered. The Full Court in Weir and Weir (1993) FLC 92-338 held (at 79,593):
This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black v Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs…
In the matter of Luciano (2000) FamCA 401, O’Ryan J included the following in his summary of principles emerging from this line of authority:
The obligation [to make full and frank disclosure] arises because of the necessity for the court in such proceedings to consider all aspects of the financial circumstances of each party.
If there is non-disclosure in the relevant sense then the failure to disclose undermines the whole process of adjudication of the proceedings in relation to financial matters.
A finding of non-disclosure may in appropriate cases, depending on the circumstances, result in the other party being granted without more, the relief sought.
The husband’s obligation to make full disclosure, required him to make inquiries as to precisely what trust or other interests he holds. He has provided no explanation as to why he made no inquiries of his parents or his sister as to the source of the funds he has received from his parents. The husband demonstrated poor insight into the seriousness of failing to disclose his true financial position to the wife and to the court in these proceedings.
Given the state of the evidence, I am unable to make a finding as to whether or not the husband owns any assets in any family trust. I take his failure to fully disclose his financial position into account as a s.75(2)(o) factor later in these Reasons.
Both parties seek a splitting order in relation to the parties’ overall superannuation entitlements, the percentage split to be the same as the percentage split of the other assets. The husband’s counsel said he favoured the one asset list approach and the wife’s counsel the two separate lists. The Full Court in Coghlan& Coghlan (2000) FLC 93-220 preferred the two list approach: one ‘property’ and the other ‘superannuation’ which is the approach I have followed.
I find that the two separate lists of ‘property’ and ‘superannuation’ as at the date of hearing are as identified in the following table:
| Assets at the date of hearing | $ |
| Net proceeds of sale of former matrimonial home | 224,693.00 |
| Husband’s interests in various trusts | Not known |
| Net Station Pty Ltd | Nil |
| Debt owed to husband’s father, HH | (50,000.00) |
| Wife’s Mastercard | (1,800.00) |
| TOTAL NET ASSETS | 172,893.00 |
| Superannuation entitlements at date of hearing | |
| Wife’s Superannuation | 9,008.00 |
| Husband’s Superannuation | 39,565.00 |
| Total superannuation interests | 48,573.00 |
I therefore find the assets of the parties available for division between them to be as set out in paragraph 32.
Contributions
The court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties’ assets as well as to the welfare of the family before and after separation. The Full Court said in Aleksovski & Aleksovski (1996) FLC 92-705 (at 83,437):
It is therefore necessary…[to] weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties
Financial contributions
The parties are in agreement about much of their financial history. They purchased their first home in south west Sydney with $10,000 in savings, a $10,000 inheritance to the wife from the wife’s mother, a $20,000 gift from the husband’s parents and a loan secured by way of mortgage. They used the proceeds of sale of the home in South West Sydney to purchase land in northern New South Wales, to build a house on the land and to meet living expenses. They later sold that property and in April 2001 purchased a home on the Central Coast using the proceeds of sale and a State Bank loan. The parties then negotiated an advance on their home loan to undertake renovations including the installation of a swimming pool, landscaping, installation of a rainwater tank and a cover over the outdoor entertaining area. They sold the Central Coast home in 2005 and the net proceeds of sale are being held on trust pending the outcome of these proceedings.
There was no challenge to the wife’s evidence that when the parties were first married, she managed their financial affairs. She paid the bills and ensured the parties could meet accounts as they fell due. She said from the time the parties moved to northern New South Wales, the husband took over the management of their finances, told her nothing about their financial position and excluded her from financial decisions. I find no reason to make any adjustment as a result of these arrangements.
Both parties were employed during the marriage and both had periods when they were not employed. The husband earned significantly more during the marriage than the wife who took the majority responsibility for caring for the children and the household. Between 1996 and 2004 the husband had annual earnings of between $39,238 and $74,871. In early 2005, he started his own retail business on the Central Coast, a computer shop and internet café, known as SN Pty Ltd and says the business has recently become profitable. The wife obtained her qualifications to register as a nurse in 2003 and has worked as a registered nurse since.
I accept the husband paid most of the regular household accounts from his income during the marriage though he did not always keep the home loan repayments up to date and was in arrears in relation to council and water rates and the mortgage in the period prior to sale. The husband conceded that he used over $15,000 of monies borrowed from his parents at separation to deposit to the home loan and had also been putting home loan payments on Visa. The home loan balance has been reduced only marginally between 2003 and 2005. I take into account that to give the husband credit for paying the mortgage and at the same time find the wife jointly liable for the $50,000 debt to the husband’s parents would be to some extent double dipping. For a few months after separation, the husband received income of $435 a week from tenants in the Central Coast home which the husband says he contributed to the home loan while meeting the shortfall on loan of $150 a week. I do not accept the husband’s affidavit evidence that the wife kept her wages to herself. Nor do I accept his evidence in cross-examination that he did not intend to convey the impression that the wife contributed nothing to day to day expenses for the family. I take into account that the wife has paid rent and met the majority of expenses for the children since separation.
Contributions by husband’s parents
The husband’s parents have been financially generous to the parties and their children throughout their marriage. Mr HH acknowledged that his generosity was for the benefit of the family not the husband alone. The wife said “they always gave PH money” “many thousands” and that she used to say to them “don’t give him money, he should be able to stand on his own feet.” They used to respond “Don’t be stupid just take it”.
Neither party set out in any precise way the amounts of money the husband’s parents gave them. On balance however, I am satisfied they gave the parties $20,000 towards the purchase of the south west Sydney property, $15,000 from the sale of a car early given to them, over $20,000 to assist with renovations on the former matrimonial home and approximately $10,000 in 2004 referred to earlier in these Reasons to paint and carpet the former matrimonial home prior to the property being tenanted. In addition, when the parties were living in northern New South Wales, the husband’s parents’ company paid the husband a salary, to which he conceded he was not entitled. The husband did not verify how much the company paid him. He guessed at $120,000 gross. The husband’s income in the 1998 financial year was $59,353 [exhibit 8] and in the 1999 year was $39,238 [exhibit 13] but the husband was unable to tell the court which part of each year they were in northern New South Wales and what other income the husband earned in those financial years. The wife’s evidence took the matter no further. She said that while in northern New South Wales they lived on the husband’s income, a loan of $60,000 and proceeds of the sale of their home in Sydney. The husband’s sister may have been able to clarify the position, but she did not give evidence. Although I accept the husband’s parents contributed financially to the parties during their time in northern New South Wales, given the state of the evidence I am unable to put a figure on it.
The husband and his father deposed to Mr HH advancing $145,000 to the husband to start his new business and to advancing him further funds since separation to assist him with debts and expenses. As the husband does not rely on these payments in his case, I do not take them into account when assessing the parties’ respective contributions.
The wife’s counsel contends that because Mr HH gave clear and unequivocal evidence in cross examination that the gifts of money were for the benefit of the family not the husband alone, the husband should not receive the credit for amounts advanced by way of gift. Counsel relies on the authority of Gosper (1987) FLC 91-818 but referred to no other authorities. His Honour Justice Chisholm in the 1997 decision of Pellegrino & Pellegrino (1997) FLC 92-789 analysed a series of cases including Gosper’s case which have considered how a gift from a relative of one of the parties should be treated. As Chisholm J says, mostly in these situations the donating parents “are happy to benefit both parties”. He concluded:
My reading of the authorities is that in such cases it is normally appropriate to treat the provision as a contribution made by or on behalf of the spouse whose parents made it.
In the unreported Full Court decision of Lorriman & Lorriman [2004] FamCA 1010 the court said “the approach to gifts coming from the family of one of the parties appears to be settled law.” The wife and her father in that case conceded the gifts from the wife’s father were given to both the husband and the wife and intended to benefit them both. The Full Court agreed with the husband’s counsel’s submission that, despite that concession, it would be appropriate to make an adjustment in favour of the wife by reason of her father’s contributions, because were it not for the relationship between the father and his daughter, the gifts would not have been made.
This principle applies in the present case. The wife well understood the gifts were intended to help the husband; she even asked his parents to stop giving him money. In my view, the husband’s parents’ advances of money by way of gift should be treated as contributions made by them on behalf of the husband for which the husband is entitled to an adjustment on contributions in his favour. This adjustment is to a minor extent offset by the wife’s contribution of $10,000 to the purchase of Yagoona from her mother’s estate.
Other factors
The wife complained that the husband donated large amounts of money to the Church of Christ without her approval. The husband was a member of the church from 1999 until separation, and acknowledged making weekly donations to the church and to the church’s benevolent organisation called Hope Worldwide. The husband estimates he donated $5,000 a year or more to the church during this period. Given the financial constraints on the parties during that period, I find this level of expenditure which did not in any way benefit the wife warrants a small reduction in the husband’s contribution entitlement.
It is not in issue that the husband remained living in the Erina property for 12 months from the time of the parties’ separation until July 2004 when he moved to live rent-free with his parents. He moved into the Central Coast home again in April 2005 with his de facto partner and two children of a deceased friend until it was sold a few months later. The wife complained about the way the husband had looked after the Central Coast home when he left it in July 2004 and tendered photographs of its poor state of maintenance and repair [Exhibit 3]. The husband acknowledged the home needed to be repainted, recarpeted and new turf laid to prepare for tenants in December 2004. As stated earlier, the husband’s parents advanced the money for the work to be done, a contribution for which the husband has been credited. There was no real challenge to the wife’s evidence that the husband left the home in a state of disrepair. I have marginally reduced the husband’s contribution entitlement as a result of this factor. The husband denied the home was in a worse state of disrepair again when he was living there in 2005. He agreed the turf was ruined and he and his partner had to clean the walls, the carpets and treat the lawn before sale. However, he says the agent was pleased with the condition of the home when listed for sale. While I accept the home needed significant maintenance after the husband moved out in July 2004, I am not persuaded by the further photographs [Exhibit 4] that the home was in a worse state of repair in 2005.
Having regard to all these factors, I agree with the husband’s counsel that the husband has made the greater financial contribution to the property of the parties given the significant contributions made by his parents.
Non-financial contributions
The wife deposed to the husband organising the tradespeople to undertake the improvements on the Central Coast property and to dealing with the bank to increase the home loan. The husband deposed to subcontracting the builder and tradesmen to build the northern New South Wales house and to working on the property as a tradesman’s assistant and labourer. The wife says although the husband spent his time at the building site, he rarely contributed to the physical labour. The wife says she took responsibility for domestic tasks and day to day responsibility for the children. The unchallenged evidence of the wife was that she made curtains and upholstery when required during the marriage, and was solely responsible for packing up the entire house and ensuring the house was clean each time the family moved. I am satisfied the party’s non-financial contributions were approximately equal.
Contributions as homemaker and parent
The husband did not challenge the wife’s evidence that she accepted the responsibility for caring for the children day to day from the time they were born and to undertaking the domestic tasks involved in running a household with children. She continued to do so after separation. I am satisfied the wife has had only minor assistance from the husband in relation to these duties. I find the wife’s contributions as homemaker and parent were greater than the husband’s.
Superannuation
Having regard to the parties’ superannuation interests, neither side adduced any evidence to suggest the parties’ contributions to these interests should not be treated in the same way as their contributions to the other assets.
The husband’s counsel submits the parties have contributed equally overall during the marriage, with the exception of the husband’s parents contributions. He submits the husband is entitled to an overall 60% by way of contributions. The wife’s counsel submits that if I deduct the $50,000 debt owed to the husband’s parents from the asset pool, the wife is entitled to the balance of the small net asset pool remaining. The wife’s counsel submits the wife’s contributions have been equal to those of the husband.
What is the effect, if any, of any proposed order upon the earning capacity of each party?
The property orders that I propose making in this matter will not affect the earning capacity of either party.
In assessing their respective contributions overall, I find the assets of the parties should be apportioned 57% to the husband and 43% to the wife.
What matters referred to in sub-section 75(2) of the Act are relevant?
I have considered each of the relevant factors listed in s.75(2) of the Act. The husband is 38 and the wife 43. There is no evidence that either party has any health issues. The wife has the care of the parties’ two teenage children.
The husband works for his own company, SN Pty Ltd, a business he started in early 2005. In August 2005 the husband deposed to a gross income of $313 a week. In January 2006 he deposed to an increased income of $615 a week and to his business paying his motor vehicle and mobile phone expenses. He said in evidence his business is now profitable. He has outstanding legal fees. On the other hand, the wife is employed full time as a casual registered nurse at a Central Coast Hospital, usually 6 shifts or 40 hours a week. She earns $23.10 an hour including a casual loading and can expect to earn a maximum base income of $27 an hour in a few years time. She receives family tax benefit. She does not receive sick pay or holiday pay. When she is not working, she receives no income. The wife has outstanding legal fees and a credit card debt. She pays school fees of $800 a term for KJH. At best she can save $50 in a week. Although her partner occasionally buys her some food or takes her on an outing, they do not live together and he does not assist with routine expenses.
I agree with the husband’s counsel that the husband’s financial future in the business is difficult to predict. The husband did not deny that he is likely to have the greater income earning capacity in the future but found it amusing when the wife’s counsel asked him to predict his position in 12 months time. He said his business is still growing and that he expects it to continue to do so. The husband’s father is extremely confident the husband’s business venture will succeed “He won’t fail”. In relation to his $145000.00 investment in the business Mr HH said “It’s just leaving it in the bank, a capital investment there, with interest to pay living expenses.”
I do not accept the husband’s counsel’s submission that the wife has a higher earning capacity than the husband. I am satisfied the husband has the capacity to earn more than the wife and that she has to an extent compromised her work arrangements to accommodate the children’s needs. I have made a significant adjustment in favour of the wife in relation to this factor.
The husband married JW in February 2006. She gave no evidence in the husband’s case, without explanation from the husband. According to the husband’s affidavit sworn 19 January 2006 Ms JW is not working. However, according to his Financial Statement sworn a day later, Ms JW earns $346.02 a week. Once again, I find the husband has shown a careless disregard for accuracy in relation to his financial position. The husband says Ms JW is pregnant with their first child, is not working and has no plans to return to the workforce. He said she ‘went bankrupt’ early this year. He said she is caring for her deceased friend’s son BW. Without evidence from Ms JW, I make only limited findings as to her financial position. I find Ms JW had a taxable income in 2005 of $27000.00 and was earning $346 a week in January 2006. I am satisfied she has the capacity to earn an income and that there should be a small adjustment in the wife’s favour as a result.
I agree with counsel for the wife that it was open to the Court to draw an inference that Ms JW’s evidence would not have assisted the husband’s case on the authority of Jones v Dunkel [supra]. However, given the evidence adduced in cross-examination as to Ms JW’s circumstances, in the exercise of my discretion, I am not persuaded to do so.
In August 2005 the husband deposed to caring for NW 16 and BW 13, two children of his new wife’s deceased friend, as a result of being jointly with his wife appointed their testamentary guardians. He deposed to regarding NW and BW as his responsibility “for the foreseeable future.” At hearing, the husband said NW left after an argument to live with his wife’s sister and he does not expect her to return. BW remains with him. The husband’s counsel submits that the husband has at least a moral responsibility for BW’s care and the husband should receive an adjustment in his favour under section 75(2)(e). I do not agree. The husband has volunteered to care for bw and has provided no evidence as to efforts made to locate BW’s father or other relatives who may be in a position to provide BW with support. The husband provided minimal evidence to explain the apparent failure of BW’s father to provide him with support. The husband’s wife has provided no evidence in relation to this issue. The husband has provided minimal evidence as to why he accepted an appointment as testamentary guardian, particularly in circumstances in which he is unable to provide regular support for his own children. As Lindenmayer J held at 78,837 In the marriage of Lutzke & Lutzke (1979) FLC 90-714:
if the husband wishes to establish such a moral obligation [to support BW] it was essential for him to adduce such evidence.
I am not persuaded there should be an adjustment in the husband’s favour for choosing to care for BW.
As stated earlier in these reasons, as the husband did not comply with his obligation to fully disclose his financial position in relation to his interests in family trusts, I am unable to make a finding as to whether or not the husband has an interest of any value. I am satisfied however, and do take into account that if the husband does hold any such interest, it is a further contribution by his parents. It may well be this failure on the husband’s part has prejudiced the husband rather than the wife, but nevertheless, I find the husband’s failure to make full and frank disclosure requires a minor adjustment in the wife’s favour pursuant to s.75(2)(o).
The wife’s counsel submitted that if I include the $50,000 advanced to the parties by Mr HH as a debt of the parties, the wife is entitled to the whole of the balance of the net asset pool. He contended it is a small pool and the wife has responsibility for the care of the children including the whole of the financial responsibility. He submitted that the wife has limited earning capacity as a registered nurse given the poor levels of pay in that profession. Counsel says the wife will never be in a position to purchase a home.
The husband’s counsel submitted that after payment of the $50,000 to Mr HH, the wife should receive up to 55% of both the superannuation assets and the ‘other property’ assets based on a 60% contribution entitlement to the husband and up to a 15% adjustment in favour of the wife.
Have there been any other orders made affecting a child or either party and is child support payable or likely to be payable in the future for the children of the marriage?
There are no previous orders.
In August 2005 the husband deposed to paying $100 a week in child support. In January 2006 he deposed to paying $67.50 a week. He provided no documents to verify these figures. It is common ground that the husband currently pays no periodic child support to the wife and has child support arrears of over $6,000 to which he makes a contribution from time to time. The husband had an assessed liability of $836.33 a month from the time of separation until 1 February 2004, $862.58 a month from 21 November 2004 until 20 February 2006, but has had that assessment reduced to nil since October 2005. Since separation, the wife has received just over $11,000 in child support [Exhibit 7], considerably less than the amounts assessed. On notice by the wife to the Agency of the orders made in these proceedings, the Agency has power to collect the child support arrears from the husband’s property entitlement. The husband says he hopes his income will increase in the future, that his business is “starting to take shape” “it’s running profitably now and it’s growing.” However, he also says the business needs more capital, he cannot borrow from a bank and he will only borrow more from his father on condition he can pay commercial interest. He laughed in cross-examination when asked to anticipate his income in 12 months time. He denied he would manipulate his income to avoid child support.
I find the husband has demonstrated an irresponsible attitude to his financial responsibilities as a parent. I am not persuaded that the wife will receive more than token child support from the husband in the future.
In assessing the s.75(2) factors, given the modest size of the asset pool, I find a just and equitable result requires the wife to receive by way of adjustment in her favour a further 24% of the matrimonial assets. The wife will therefore receive 67% overall of the net assets of the parties.
Is the result just and equitable?
Section 79(2) 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.
This is a modest asset pool. For the wife to receive 67% of the available superannuation assets and the other assets, the wife will receive $115,838.30 overall, which means she will receive $117,638.30 from the monies held in trust, take responsibility for her credit card debt, and have $23,535.90 [$32,543.91 less $9,008] from the husband’s superannuation fund rolled over into her superannuation fund. The husband will receive $57,054.70 from the trust funds and will retain $16,029.10 in his superannuation fund.
Section 90MZD provides that a splitting order in relation to a superannuation interest may only be expressed to bind the Trustee of the eligible superannuation plan if the trustee has been accorded procedural fairness in relation to the making of the order. Rule 14.06 of the Family Law Rules 2004 provides that the party seeking the order must, not less than 28 days before the date fixed for trial, notify the trustee in writing of the terms of the order that will be sought at the trial to bind the trustee. Neither party in the present case has provided the Trustee of the husband’s AMP superannuation fund with notice of the orders sought. The court cannot therefore make orders, until it is satisfied the Trustee has been accorded procedural fairness. I have set out the orders I propose to make in this matter upon being satisfied the provisions of section 90MZD and Rule 14.06 have been complied with. I have also made an order that the wife’s solicitors forward a copy of the proposed orders to the Trustee of the husband’s superannuation fund and for the matter to be listed for mention to enable the property aspect of the matter to be finalised.
The husband will have assets set out in the following table:
| Assets to be retained by husband | $ |
| Share of funds held in trust for the parties from sale of home | 57,054.70 |
| TOTAL | 57,054.70 |
| Balance of his superannuation entitlement after splitting order | 16,029.10 |
| TOTAL | 16,029.10 |
The wife will have the assets and liabilities set out in the following table:
| Assets to be retained by wife | $ |
| Share of funds held in trust for the parties from sale of home | 117,638.30 |
| Debt to mastercard | (1,800.00) |
| TOTAL | 115,838.30 |
| Her superannuation entitlement | 9,008.00 |
| Share of husband’s superannuation entitlement after splitting order | 23,535.90 |
| TOTAL | 32,543.90 |
I am satisfied that in all the circumstances, the orders I propose to make are just and equitable.
The orders I propose making in relation to property issues are as follows:
Within 14 days, the parties to do all things necessary to authorise the net proceeds of sale of the former matrimonial home in the State of New South Wales be disbursed in the following order and priority;
a)In payment of $50,000 to HH;
b)In payment of $117,638.30 to the wife;
c)In payment of the balance to the husband.
Except as otherwise provided, the husband to indemnify and keep indemnified the wife in relation to debts owed to his parents or either of them.
That there be no alteration to the interest of the wife in the First State Superannuation Fund and that the husband forego any claim against that interest.
That pursuant to sec 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the husband’s entitlement in the Plan known as the AMP Flexible Lifetime Superannuation (“Plan”), member number 704 212 845, the wife shall be entitled to be paid a base amount in the sum of $23,535.90 with any adjustments if applicable in accordance with Family Law (Superannuation) Regulations 2001 and that there be a corresponding reduction to the entitlement of the husband that he would have had in the Plan but for this Order.
That, having been accorded procedural fairness in relation to the making of this order, this order binds the trustees of the AMP Superannuation Savings Trust (“Fund”).
The operative time for Orders is the date being 4 days from the date of service of the orders upon the Trustee of the Fund.
Notation
IT IS NOTED:
(A)That the parties agree that the relevant date for the purposes of valuing the husband’s interest in the AMP Flexible Lifetime Superannuation Plan will be the date of hearing, that being
17 March 2006, and the fund is an accumulation fund for the purposes of valuing the husband’s entitlement in accordance with the Regulations, with an agreed value between the parties of $39,565.00 at the relevant date.(B)That the parties agree that the relevant date for the purposes of valuing the wife’s interest in the First State Superannuation Fund will be the date of hearing, that being 17 March 2006, and the fund is an accumulation fund for the purposes of valuing the wife’s entitlement in accordance with the Regulations, with an agreed value between the parties of $9,008.00 at the relevant date.
Except as otherwise provided in these orders, the husband and the wife retain all other items of property currently in the possession or control of each of them respectively.
Except as otherwise provided in these orders, the husband and the wife remain liable for any debts, howsoever arising, in their own name at the date of these Orders and in this respect shall indemnify, keep indemnified and hold harmless the other from any liability in relation thereto.
In the event the husband or the wife refuses or neglects to comply with any of the Orders herein, the Registrar of this Court at its Sydney Registry be appointed pursuant to s.106A of the Act to execute, in the name of the husband or the wife as the case may be, all deeds and instruments necessary to give effect to the orders herein, or any of them, and do all acts and things necessary to give validity and operation to the said deeds and instruments.
All exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
The solicitor who issued any subpoena collect that subpoenaed material and return it to the owner within 7 days.
All outstanding applications otherwise be dismissed and the matter removed from the list of cases awaiting finalisation.
I certify that the eighty-eight (88) preceding paragraphs are a true copy of the reasons for judgment of Sexton FM.
Associate: Collette McFawn
Date: 13 April 2006
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