Birch and Birch

[2014] FCCA 1199

FEDERAL CIRCUIT COURT OF AUSTRALIA

BIRCH & BIRCH [2014] FCCA 1199

Catchwords:
FAMILY LAW – Property settlement – assessment of contributions – adjustment in favour of wife for s.79(4) factors – child support.

Legislation:  

Family Law Act 1975
Child Support (Registration and Collection) Act 1988

Applicant: MS BIRCH

Respondent: MR BIRCH

File Number: MLC 10310 of 2008

Judgment of: Judge Riethmuller

Hearing date: 12 November 2013

Date of Last Submission: 12 November 2013

Delivered at: Melbourne

Delivered on: 13 June 2014

REPRESENTATION

Counsel for the Applicant: In person

Counsel for the Respondent: Mr Dickson S.C

Solicitors for the Respondent: Parke Lawyers

ORDERS

1. The wife retain the property at Property M and remain solely liable for the mortgage for the property.

2. A base amount to be calculated in accordance with paragraph 3 hereof is allocated by Section 90MT(4) of the Family Law Act to the wife out of the husband’s superannuation interest in (omitted) Super (“the Fund”).

3. Pursuant to paragraph 90MT(1)(a) of the Family Law Act 1975, whenever a splittable payment becomes payable in respect of the husband’s interest in the Fund, the wife is entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using a Base Amount of $55,000 and there shall be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these Orders.

4. These Orders have effect from the operative time and the operative time is four (4) business days after the date of these Orders or service upon the trustee of the Fund, whichever is the earlier.

5. Paragraphs 2 to 3 hereof bind the trustee of the Fund.

6. Until such time as the superannuation split to the wife pursuant to these Orders can be rolled over into a separated account to the wife, the husband by himself, his servants and/or agents be and are hereby restrained from doing any act or thing which would prevent the wife, her heirs, executors, administrators or nominees from receiving the benefits in the Fund to which she is entitled pursuant to these Orders.

7. In the event the superannuation split to the wife pursuant to these Orders can be rolled over into a separate account to the Wife, each of the parties hereto shall each do all such acts and things and execute all such documents as may be necessary to facilitate that roll over.

8. Save and except for Orders 2 and 3 hereof, each party hereby foregoes any claim they may have to any superannuation benefits belonging to or owned by the other.

9. The wife do all such acts and sign all such documents as may be required to forgive the husband’s child support arrears in the sum of $37,625.

10. In the event the wife fails or refuses to forgive the husband’s child support arrears within 21 days of these Orders then the property at Property M in the State of Victoria (“the real property”) be forthwith sold altogether out of Court (“the sale”) and upon completion of the sale, the proceeds of the sale be applied:

    (a)First to pay all costs, commissions and expenses of the sale;

    (b)Secondly to discharge any mortgage and any other encumbrance affecting the real property;

    (c)Thirdly the sum of $37,625 to the respondent; and

    (d)Fourthly the balance to the wife.

11. The wife be at liberty to pay the sum of $37,625 referred to in Order 10(c) hereof to the Child Support Agency on the husband’s account in satisfaction of Order 10(c).

12. Unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent Orders:-

    (a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of that party as at the date of these Orders, the furniture, personal possessions and like chattels in the real property being deemed to be in the possession of the wife;

    (b)Monies standing to the credit of the parties in any joint bank account is to become the property of the wife;

    (c)Each party foregoes any further claims they may have to any superannuation benefits belonging to or earned by the other;

    (d)Insurance policies remain the sole property of the beneficiary named therein;

    (e)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;

    (f)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

13. The applicant wife’s application for spousal maintenance be and is hereby dismissed.  

NOTATION

It is requested that the Child Support Registrar consider remitting the husband’s Child Support penalties in the circumstances of this case.

IT IS NOTED that publication of this judgment under the pseudonym Birch & Birch is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT DANDENONG

MLC 10310 of 2008

MS BIRCH

Applicant

And

MR BIRCH

Respondent

REASONS FOR JUDGMENT

Background

1. The wife was born in 1970 and the husband in 1972.  In 1993, they commenced a relationship, before having their first child in 1996.  In that year, the wife withdrew all of her superannuation funds from her superannuation account on the grounds of hardship (in the sum of approximately $11,000). At this time, the husband had recently commenced an apprenticeship as a (omitted). 

2. During his apprenticeship, the husband excelled, winning the (omitted) in (omitted) in 1997 and representing Australia at the (omitted) in (omitted) in 1998.  In that year, the parties also married, before having their second child in (omitted) 1999.  Their third child came quickly, in (omitted) 2000. 

3. In 2001, they purchased their matrimonial home in Property M for $152,000. The wife says that her parents paid $15,200 by way of deposit on the home.  Given the number of children that they had, that the husband had only recently completed an apprenticeship (although becoming a (omitted) at a (omitted) company in 2000), and having a period where the wife was admitted to the psychiatric ward of a hospital in 2000, it seems to me to be more likely that such a sum would have come from the wife’s parents than simply the sale by the husband of his tools. 

4. After purchasing the home, the husband renovated the kitchen, made improvements by landscaping the backyard and front yard, and built a retaining wall. 

5. In 2002, the husband took up a position with his father’s business, doing contract work for a (omitted) company.  In that same year, the parties had their fourth and fifth children (twins).  By 2005, things had reached a point where the wife had sought an intervention order against the husband and he had given an undertaking for 12 months and she had refinanced the housing loan.  In 2006, she obtained an intervention order and by August 2006, they were separated. The husband was also incarcerated for assault for six months in that year. 

6. Following his period of incarceration, there was some dispute about the extent to which the husband was involved with the wife, him saying he spent two nights per week at the former matrimonial home, the wife saying there were occasional visits. 

7. The husband agrees that the parties separated by 2008 (the wife saying it was in 2006). Later that year, the Department of Human Services investigated claims of risks to the children from the husband and since that time he has not had contact with them. Further intervention orders were taken out in November 2008. 

8. Later in November 2008, the husband was involved in a car accident, suffering a neck injury (the husband says he broke his neck; the wife says that he suffered soft tissue damage). It appears clear that the husband paid around $59,758 into a joint account during the period of May 2008 to January 2010, which was available for the wife to draw upon, and that she did draw upon that sum. Whilst she was evasive in the witness box as to the amount that she withdrew, it appears clear that significant financial support was provided by the husband during that period. 

9. The parties finally divorced in 2011, although the wife did not seek property settlement or spousal maintenance until at least 2013.  Orders had previously been made giving leave to the wife to bring property proceedings out of time. 

10. Given the current circumstances of the parties, it appears clear that there is no question that it is just and equitable that property orders be made.

11. Having determined that it is just and equitable to make property orders, I turn to consider the current property of the parties. 

The Property of the Parties

1. At the trial, expert evidence became available (and it was not challenged by the parties) that the house was valued at $340,000.  The only evidence as to the mortgage amount was a statement produced by the husband showing an outstanding mortgage of $176,238.  The wife has a car which she values at $12,000 and the husband had valued at a greater amount. There are no valuations and I accept the wife’s value. The husband has superannuation interests valued at $63,427. 

2. As a result, I find that the overall pool of assets of both parties is in the sum of $239,189, noting however that some $63,427 of that sum is, in fact, superannuation and not a presently available asset. 

3. The wife raised two issues with respect to the identification of the property in the matrimonial pool.  Firstly, she claimed that the husband was entitled to a significant sum from his father for a claim for unpaid wages. The claim relates to a period before the husband was incarcerated and would now be statute barred in Victoria. No proceedings have been issued in a Court of competent jurisdiction to pursue that claim. The husband gave evidence that it was settled for some $2000, which moneys were made available to the parties. There is no evidence of any great sum being made available or any other proceedings being on foot, nor any other settlement terms. In the circumstances, I am not persuaded that there are further additional assets in this regard. 

4. Secondly, the wife claimed that the husband had failed to make full and frank disclosure and that she believed that he may have other assets or resources. No evidence of what those assets or resources may be was forthcoming. Whilst the lack of full and frank disclosure is a relevant matter to consider when making findings with respect to the assets of the parties, in the absence of any evidentiary basis for concluding that the husband may, in fact, have other assets, the lack of full and frank disclosure of itself is not, in my view, sufficient in this case to justify the findings that the wife seeks. Even if the wife was successful in convincing me that there was some other form of asset or resource, there is no particularisation of its type, nor any way to give it any form of value.

5. During the course of the trial, the wife did cross-examine the husband about his tax returns, as he claimed in his tax returns a mileage allowance pursuant to the taxation rules for the use of a Nissan wagon.  The husband explained that the wagon had been loaned to him by a relative for undertaking work and that his claim on the tax returns was not for depreciation, but simply the 75 cents per kilometre available under the tax rules for a vehicle of that type. There is no vehicle registered in his name. I am not persuaded on the evidence before me that the husband currently owns a motor vehicle.

6. It is clear that the husband has tax debts which appear to have been incurred after separation.  However, the husband, by his counsel, does not seek to have them paid out of the matrimonial pool. Those tax debts are not insignificant in the context of this particular case (being in the sum of $24,915).  I’m not asked to make findings with respect to furniture and the husband did not pursue his claim that the wife had $15,000 worth of jewellery. 

7. The husband also has child support debts of $54,542.55 (as at the time of the hearing), a substantial part of which are penalties that have accrued through the Child Support Agency for non-payment rather than being primary child support debt. 

8. The husband does not argue that the child support debts should be taken up as a debt that is relevant for the calculation of the asset pool for the purposes of the section 79 proceedings.

9. I therefore find that the asset pool is as set out above at paragraphs 12 and 13. 

Section 79(4) Factors

1. I must consider the contributions of the parties during the time that they were together.  It appears to me that both parties made significant contributions early in the relationship.  The husband was earning an income and developing skills to improve his earning capacity during the relationship.  At the time when the wife was admitted to the psychiatric ward, he provided contributions not only in a financial sense for the family, but also with respect to family life.  The wife provided significant homemaker contributions and, through her parents, a contribution of some $15,200 towards the home.

2. Later in the relationship, however, it is clear that the wife made a far greater contribution to the children as their primary carer in circumstances where a number of intervention orders were made and during a period when the husband was incarcerated. I note that the husband made significant financial contributions during the 2008 to 2010 period, and that since separation he has accumulated a very large child support debt, showing that he left the financial responsibility of the children upon the wife.  In this context I note that the husband’s proposal is that from his share of any property adjustment orders the child support debt be paid to the wife, which may result in her being able to retain the matrimonial home (a situation which may not have come to pass had the property proceedings occurred earlier, before the child support debt accrued). 

3. In the circumstances of this case I would assess the wife’s contributions to the date of hearing at fifty-seven and a half per cent (57.5%) and the husband’s at forty-two and a half per cent (42.5%) in order to appropriately reflect the significant differences in contributions made, particularly with respect to the initial deposit for the home and the very different contributions made from the period of the husband’s incarceration to date but not losing sight of the period the wife was hospitalised.

Other Factors

1. I turn, then, to consider the other factors. The parties are of a similar age and both have ongoing health issues.  The husband does not have a significant earning capacity.  He has injuries that will affect him in undertaking physical work, and he does not appear to have any significant skills outside of undertaking a trade or being involved in the supervision of (omitted) workers.  He is presently hoping to obtain a (omitted) certificate.  He obtains work from time to time, but it is not permanent. It seems likely on the evidence before me in this case that he will struggle to achieve even average weekly earnings into the future.  The wife is on a disability pension and does not have any earning capacity.

2. I note that the husband’s financial position generally is punctuated by a very large child support debt and a very large tax liability, which he will continue to be responsible for after the property orders. However this is really just a reflection of his mismanagement of his finances.

3. The wife has had the primary care and responsibility of five children of the marriage and will continue to have that responsibility for many years to come.  The burden of the expenses of five children for a mother on a disability pension cannot be underestimated.

4. Neither party has re-partnered.

5. An adjustment in the order of 22 – 25% in favour of the wife appears to me to be appropriate having regard to the other factors.

Overall Effect of the Orders

1. The proposal by counsel for the husband is for an overall split of property and superannuation of approximately 81% to the wife and 19% to the husband.  In addition, counsel for the husband suggests that it be structured in such a way that the presently available assets component of the split be sufficient to discharge the husband’s primary child support debt, avoiding the necessity for the wife to obtain borrowings or to sell the house in order to pay the husband his share, and the balance by way of a superannuation split. 

2. Considering the matter as a whole it appears to me that this is an appropriate outcome in this particular case, even though it still results in the husband having a significant debt to the Tax Office and little by way of superannuation. 

3. I will therefore make property orders in the terms sought.

Spousal Maintenance

1. Having determined the property issues it is appropriate that I turn to consider the wife’s application for spousal maintenance.  It does not appear to me to be realistic to think that the husband’s current income position (noting that he has no assets) is sufficient to enable him to pay spousal maintenance after he has met his own reasonable self-support expenses and paid such child support assessments as are made from time to time on the income he receives from his occasional earnings.

2. Whilst there is little doubt that the wife has need of support, given that she relies upon the disability pension, I am not persuaded that the husband has any real capacity to pay spousal maintenance in the current circumstances.  I therefore dismiss the wife’s application with respect to spousal maintenance.

3. The wife also sought an order that the husband notify the Child Support Agency and herself of any employment of the husband from time to time so as to enable the wife and the Child Support Agency to be aware of his circumstances to facilitate the proper assessment and inflation of child support in the future. Given the difficulties with employment and the time lag for child support assessments, this seems an appropriate method of ensuring the parties have up to date information.

Child Support Penalties

1. The Court does not have power to discharge the husband’s child support penalties. The wife does not receive the penalties (they are paid to Consolidated Revenue). The Child Support Registrar has a discretion to discharge the penalties under s.68 of the Child Support (Registration and Collection) Act 1988.

2. It appears to me that the course taken by the husband in this case is conduct within the ambit of s.68(1)(b) and (c) of the Child Support (Registration and Collection) Act 1988 and that there are good public policy reasons to encourage those with child support debts to bring their obligations into order at the time of property settlement. As a result I will make a notation requesting that the Child Support Registrar consider discharging the husband’s penalties upon forgiveness of the debt, or payment.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller

Associate: 

Date: 13 June 2014