Brum and Mendes and Ors
[2007] FamCA 1412
•6 December 2007
FAMILY COURT OF AUSTRALIA
| BRUM & MENDES AND ORS | [2007] FamCA 1412 |
| FAMILY LAW – PROPERTY SETTLEMENT – Identification of matrimonial property – Contributions FAMILY LAW – CHILD SUPPORT DEPARTURE – Just and equitable FAMILY LAW – CHILD SUPPORT SUBSTITUTION ORDER – Just and equitable |
| Family Law Act 1975 (Cth) Child Support (Assessment) Act 1989 (Cth) |
In the Marriage of Hickey(2003) 30 Fam LR 355
In the Marriage of Omacini (2005) 33 Fam LR 134
Mallett & Mallett (1984) 9 Fam LR 449
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Shewring (1987) l2 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
McGuiness & Cowie (2002) 29 Fam LR 441
| APPLICANT: | Mr Brum |
| FIRST RESPONDENT: | Ms Mendes |
| SECOND & THIRD RESPONDENTS: | Mr & Mrs Mendes |
| FILE NUMBER: | SYF | 4705 | Of | 2005 |
| DATE DELIVERED: | 6 December 2007 |
| PLACE DELIVERED: | Sydney |
PLACE HEARD: | Sydney |
| JUDGMENT OF: | Judicial Registrar Loughnan |
| HEARING DATES: | 13, 14 & 20 September 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms J Haughton | |
SOLICITOR FOR THE APPLICANT: | Stephen W. Bell & Associates | |
| COUNSEL FOR THE RESPONDENT: | Mr R. Maurice | |
SOLICITOR FOR THE RESPONDENT: | Eleanor Murphy & Co | |
| COUNSEL FOR THE SECOND & THIRD RESPONDENTS: | Mr J Lloyd |
| SOLICITOR FOR THE SECOND & THIRD RESPONDENTS: | Pearson Family Lawyers |
Orders
The husband sign all documents and do all things necessary to transfer to the wife the whole of his right title and interest in the former matrimonial home being the property situate at and known as R being the whole of Folio Identifier … within sixty days (60) of the date hereof.
At the same time as the husband complies with Order 1 hereof the wife pay to the husband the sum of Seventy Three thousand dollars ($73,000.00) and at the same time the wife will arrange for the husband to be released from any obligation under the mortgage to the Westpac Bank and the husband shall sign all documents required in that regard.
In the event that the wife fails to comply with Order 2, the husband and wife shall forthwith sign all documents and do all things necessary to sell their interest in the property and after payment of agents’ commission, legal costs and any necessary adjustments, to discharge their obligation to the Westpac Bank and to distribute the net proceeds of sale, as to $73,000 to the husband and the remainder, to the wife.
In the event either party neglects or refuses to sign any documents to give effect to these orders within seven (7) of being called upon by the other to do so, the Registrar of this court is authorised to sign any such documents pursuant to s.106A of the Family Law Act 1975.
The husband and wife are otherwise to retain any property in their respective name, possession, custody and control including but not exclusively bank accounts, furniture, jewellery, insurance policies, superannuation and motor vehicles.
That the rate of child support payable by the husband pursuant to the Assessment issued by the Child Support Registrar in CSA Case Nos. …1 and …2, the subject of an objection determined on 14 May 2007, be varied as follows:
(a)the husband pay to the wife the sum of $65.00 per child per week for each of the children D born ….10.94 and M born ….04.00 for the period commencing on 13 September 2007 until 31 January 2009; and
(b)thereafter the liabilities of the husband and wife for child support be determined under the terms of the administrative scheme.
The Application and Reply of the husband and the Response of the wife are otherwise dismissed.
The parties are at liberty to restore the proceedings within 7 days from the date of these orders in relation to the form of the orders.
IT IS NOTED that publication of this judgment under the pseudonym Brum & Mendes is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 4705 of 2005
| MR BRUM |
Applicant
And
| MS MENDES |
Respondent
And
| MR & MRS MENDES |
Second and Third Respondents
REASONS FOR JUDGMENT
The husband and wife lived together for a period spanning 10 years but cannot agree on a settlement of their property. The wife’s parents are co-owners of the former matrimonial home and are parties to the proceedings. The wife seeks a departure from a child support assessment and the payment of child support in a lump sum.
Applications
By minute[1] handed up on the second day of the hearing, the husband seeks orders in the following terms:
[1] Exhibit 7
“1.A declaration pursuant to Section 78 of the Family Law Act 1975 that the 2nd and 3rd respondents hold their interest in the matrimonial home on trust for the parties.
2.On or before settlement of the sale of the matrimonial home the 2nd and 3rd respondents do all such acts and things and sign all such documents as may be required for their names to be removed from the title of the matrimonial home.
3.The husband and wife forthwith do all such acts and things and sign all such documents as may be required to forthwith sell the matrimonial home on such terms and conditions as may be agreed between the parties and failing agreement as determined by the Court (“the sale”).
4.That the husband and wife have liberty to apply in relation to the sale.
5.Upon settlement of the sale the proceeds of sale be applied as follows:
a) In payment of selling costs;
b) In payment of the amount required to discharge the mortgage;
c) In payment of legal costs in relation to the sale;
d) The balance to be divided equally between the parties.
6.Pending the settlement of the sale the wife pay as and when they fall due all mortgage payments, rates, water levies and any other outgoings in respect of the matrimonial home.
7.That except as provided herein the husband and wife each be declared the sole legal and beneficial owners of all property or financial resources in their respective possession.
8.The wife’s application in relation to child support be dismissed.
The wife seeks orders in accordance with her Further Amended Response to an Application for Final Orders filed 15 June 2007:
1.THAT the Husband sign all documents and does all things necessary to transfer to the Wife the whole of his right title and interest in the former matrimonial home being the property situate at and known as [the R property] being the whole of Folio Identifier […] within sixty days (60) of the date hereof.
2.THAT at the same time as the Husband complies with Order 1 hereof the Wife pay to the Husband the sum of Fifty thousand dollars ($50,000.00) and at the same time the Wife will arrange for discharge of the mortgage to the Westpac Bank and the Husband shall sign all documents required in that regard.
3.THAT in the event either party neglects or refuses to sign any documents to give effect to these orders within seven (7) of being called upon by the other to do so, the Registrar of this court is authorised to sign any such documents pursuant to s.106A of the Family Law Act 1975.
4.THAT the parties are otherwise to retain any other personalty in their respective name, possession, custody and control including but not exclusively bank accounts, furniture, jewellery, insurance policies, superannuation and motor vehicles.
5.THAT the Husband pay the Wife’s costs of these proceedings on an indemnity basis.
APPLICATION DEPARTURE ORDER RE DETERMINATION OF THE CHILD SUPPORT REGISTRAR AND APPLICATION FOR LUMP SUM CHILD SUPPORT.
[Ms Mendes] (“the mother”) applies for the following orders.
1.That the rate of child support payable by [Mr Brum] (“the father”) pursuant to the Assessment issued by the Child Support Registrar in CSA Case Nos. […] 1 and […] 2, the subject of an objection determined on 14 May 2007, be varied as follows:
(a)that the father pay to the Applicant the sum of $66.00 per child per week for the children [D] born […].10.94 and [M] born […].04.00 (“the periodic amount”) for the period commencing on 1 January 2007 until […] October, 2012 and thereafter $80.50 per week for [M] [for the period commencing] 1 January 2012 to […] April 2018.
(b)That the periodic amount be increased annually on each anniversary of the making of these orders in accordance with the variation of the Consumer Price Index for All Groups for Sydney as compared with the same index of the preceding year.
2.The periodic amount as varied in respect of child support shall continue to be paid until the happening of one or more of the following events:
(a)any terminating event as defined in section 12 of the Child Support (Assessment) Act (“the Act”):
(b) the child reaching the age of eighteen years;
(c) the child competing his secondary education;
(d) the child becoming self-supporting; or
(e) the child ceasing to reside with the mother.
3.That subject to determination of the Application for periodic child support in the preceding paragraphs, the Respondent pay to the Applicant the sum of $50,293.81 by way of lump sum child support which when paid shall be credited pursuant to section 125 of the Act against the father’s liability under any child support assessment from (date of filing of original child support application) at the rate as varied in accordance with orders above.
4. That the father pay the mother’s costs of and incidental to this Application.
Short History
The husband and wife are 35 and 44 years of age respectively. They were married in July 1994 and separated in November 2003.
Children
The husband and wife have two children:
Dwas born in October 1994 and as at the date of the hearing was 12 years of age;
Mwas born in April 2000 and as at the date of the hearing was 7 years of age;
Background Facts
The husband was born in Brazil. He worked casually in the building industry in Australia from 1992 to 1994 at $600 per week. He worked in a restaurant at night for three weeks between construction jobs and had six weeks off work due to a motor bike accident.
The wife commenced her superannuation contributions with ABN AMRO on 9 June 1992.
The husband and wife commenced living together in February 1993. They were married in July 1994.
The husband had no assets of significant value. The wife had furniture, a motor vehicle and an interest in Mendes Investments Pty Limited that she thinks was of the order of $34,000.
The child D was born in October 1994.
The husband had neither residence status in Australia nor a valid visa. He returned to Brazil in November 1994 for six months in order to apply for a visa. During maternity leave from her employment the wife followed him to Brazil three months later and returned to Australia after two months. The wife gave the husband $1,000 for the trip. The husband also had $200 being the proceeds of his motor cycle that was sold for scrap after an accident. The husband had no paid employment while in Brazil. While in Brazil the family stayed with members of the husband’s family. The child D was mostly cared for by the wife. The wife applied her savings and board received from a co-tenant to pay the rent on the accommodation in Australia while the husband and wife were in Brazil. The husband did not contribute to the cost of food in Brazil but some was provided by members of his family. The wife paid the cost of obtaining the husband’s visa.
The wife and the child D returned to Australia in May 1995. In June 1995 the wife returned to paid employment, not less than 30 hours a week. D went to child care.
Soon after his return from Brazil in June 1995, the husband commenced work as a storeman. He worked 5 and sometimes 6 days a week and retained that employment until 2002.
On 6 September 1995, the husband and wife and the wife’s parents bought the R property for $204,000. They borrowed $150,000 from the Westpac bank. The husband had no funds and did not contribute to the purchase. The evidence about the way in which the rest of the purchase was funded is not entirely clear. In her affidavit the wife says that her parents advanced $20,400 for the deposit from her interest in a family company, Mendes Investments Pty Limited and that her parents paid a further $33,660 together with $7,710 being the costs of the purchase, including stamp duty. That accords with the recollection of the wife’s father as set out in his affidavit and it substantially accounts for the purchase price. Unfortunately, the effect of the wife’s evidence in cross-examination is that prior to the purchase, her interest in Mendes Investments Pty Limited had amounted to $34,000 and that all of that sum was applied to the purchase. There is no evidence about the fate of the additional $13,600 ($34,000 - $20,400).
In any event the property was bought in the names of the parties – the husband and wife holding a 50% interest as joint tenants and the wife’s parents holding a 50% interest as joint tenants and the whole property being held by the two couples as tenants in common in equal shares.
It is the husband’s case that he did not know that the wife’s parents were joint owners of the property until April 2004. The husband says he knew the wife’s parents contributed to the purchase but did not know how much they paid. The husband knew that the wife’s parents were joint borrowers on the mortgage. Someone from Westpac explained the meaning of the mortgage and the meaning of a guarantee to him. It is the husband’s evidence that he did not deduce that the wife’s parents were joint owners, despite seeing their names on the rate notices.
The wife’s parents paid $1,100 for the floors to be sanded. The husband says that came from the wife’s savings although he conceded in cross-examination that the money could have come from the wife’s parents. The husband undertook general maintenance and painted the bedrooms and the bathroom. He built shelves in the storage room downstairs and in the laundry. He conceded in cross-examination that he also caused some minor damage to the property by what might be described as indoor archery practice. He conceded that he did not maintain the unit in pristine condition.
It is the wife’s evidence that her parents paid a special levy of $5,000 in respect of the unit soon after the purchase. The wife’s father also recalls paying a sum towards a strata levy for the property. The husband concedes that there was a special levy on the unit soon after purchase but does not concede that he did not contribute to it. He says that at that stage he and the wife were working and sharing expenses. I prefer the evidence of the wife on this issue.
The wife’s parents also paid money to the wife to assist with the mortgage payments. The wife’s father deposes to one payment of $5,000 and another of $10,000. The wife’s parents live in South Australia. In support of this evidence, the wife attaches[2] to her affidavit of February 2007 copies of Westpac statements for her Classic account showing ‘just some’ of the deposits made in South Australia as follows:
[2] Annexure E
Date of deposit Amount 16/11/01 $500 18/3/02 $200 2/10/03 $300 31/12/03 $1,000 5/5/05 $5,000 9/12/05 $200 15/6/06 $5,000 4/12/06 $500
As to the deposit on 15 June 2006, on the same day $3,000 was transferred from the wife’s Classic Account into one of the mortgage accounts.
The wife worked full time from 1995 to 2002 when she reduced her hours to 10am to 2pm.
In 1997 the husband and wife separated for 6 months. During that time the husband lived with his mother and brother. The husband paid one half of D’s day care fees during that period but otherwise made no financial contribution to the wife. When asked why he made no other contribution the husband said that he had to pay rent and that when the wife went to Japan for a month during that period, he cared for D.
The husband became an Australian Citizen on 26 January 1998.
The husband enrolled in an archery club in 1999. He estimates that involved him in archery between 7pm and 9pm every third Tuesday and from between 10am and 11am to between 2pm and 3pm every second Sunday. The wife cared for the child/ren during these periods.
The child M was born in April 2000. The wife took 6 weeks paid leave and 11 months unpaid maternity leave. The husband earned $21,800 in the 1999-2000 financial year. The wife says she relied on Centrelink payments and savings during that period. The husband does not concede that the family was not fully supported by his wages and by drawings on credit cards.
The husband volunteered to work in the 2000 Sydney Olympics. He says he did that during periods of paid leave from his work.
The wife returned to paid employment in February 2001.
The husband and wife and the children travelled overseas in 2001. Following the terrorist attacks in September 2001, the wife and children cut short their trip but the husband spent another month, travelling to Brazil.
From June 2002 to November 2003 the husband was a full-time student at TAFE. He was required to pay course fees and worked 3 nights a week as a delivery driver and for 2 months at a Pharmacy. His taxable income for the 2002-2003 financial year was $1,739. The wife paid the mortgage and the majority of household expenses for this period.
The husband and wife separated on 16 November 2003. The husband completed his course a month or so later.
In cross-examination the husband said that he owed $7,000 “all up” at about the time of separation. The credit card statements produced by the husband suggest that he owed $2,682.81 on credit cards as at the date of separation ($1,071.65 on his Commonwealth Bank Visa account and $1,611.16 on his American Express account).
In 2003 the husband borrowed $3,000 to repair his car after an accident.
The husband was on unemployment benefits in 2003 – 2004. During that period he applied for some work related to his TAFE qualifications, but was unsuccessful. He says that he tried to find work and that in addition he tried to get his own business off the ground.
In relation to his attempts to obtain paid employment, the husband received refusal letters from numerous companies on 23 February 2004; 17 March 2004; 14 July 2004; 9 August 2004. He also applied for other positions on 22 November 2002; in February 2004; 10 February 2004. In cross-examination the husband also recalled seeking employment with an agency. An interview with another organisation was arranged by his TAFE teacher in 2003.
However, the husband concedes that there is no reason why he could not have obtained work as a driver in 2004.
Since 2005 the husband has worked as a casual storeman and later as a driver.
In July 2005 the husband travelled to Brazil for his brother’s wedding and stayed for two weeks. He borrowed $4,500 for the trip from a friend, Mr T. The husband again travelled to Brazil in December 2005 for two months. He borrowed a further $4,500 for the trip from Mr T. For the December trip he was accompanied by his then girlfriend, N and she paid for some of the cost. His share of the rent for his Sydney accommodation came out of N’s bank account and he paid her back after their return. The husband conceded that he might have told the Child Support Agency something different. He says that he repaid N for the rent she paid for him and that any other moneys advanced by N were in the form of a gift. The husband says that his costs in Brazil were subsidised by his family and that he resumed making minimum payments on his credit cards on his return. He also received cash assistance from Mr T. The Husband says he owes Mr T $18,499. Mr T says he is owed $18,469 by the husband. I will come back to that later.
On 5 July 2006, parenting orders were made by consent, with the effect that the children live with their father for 5 nights a fortnight, half school holidays and some special days and otherwise with their mother.
On 29 September 2006 the wife received a redundancy payment of $62,770.98. The wife says she applied those moneys to credit card bills, legal costs and other debts. As at the date of the hearing there is nothing left of that payment.
On 5 January 2007 the wife deposited $18,000 into her ING Direct Deposit account leaving a balance of $6,345 from redundancy moneys in Westpac Classic Account.
In April 2007 Mr T paid for air travel for the husband to the Gold Coast. He also paid for the husband to travel to Brazil in 2007 but the trip has been postponed because of these proceedings.
On 14 May 2007 the husband commenced full-time employment with S Company as a driver earning $38,888 gross per year.
On 14 May 2007 the Child Support Registrar determined the wife’s application to increase child support and issued an assessment putting the parents’ liabilities at nil.
In July 2007 the wife repaid $3,000 to Centrelink for an overpayment of Family Payment. The husband was paid $1,700 as a consequence.
Credit and Submissions
The evidence of the witnesses
The witnesses called for cross-examination were the husband, the wife, the wife’s father and Mr T.
There are relevant factual disputes and so the credit of the witnesses is relevant.
The husband was a poor witness. I gather that English is not the husband’s first language. He was born in Brazil and made reference to the Portuguese language when dealing with the meaning of words in cross-examination. There can be no criticism of him in relation to that. However, he could not account for significant deposits into his bank accounts, even those made earlier this year. When he finally conceded that unattributed deposits could not have come from named employers, he then asserted that they had. His testimony on the issue of undeclared income was unconvincing as was his evidence about the extent of his unexercised earning capacity. On the positive side, he readily conceded the fact that he made only limited contributions during various periods of cohabitation between the husband and wife and since.
The husband was not able to give evidence one way or the other on the critical issue in his property case, whether the wife’s parents held their interest in the home on trust for him and his wife.
Mr T was a good witness. He was not significantly challenged in relation to his affidavit testimony. He readily conceded propositions in relation to his attitude to the recovery of funds advanced to the husband. There are some small discrepancies between the evidence of the husband and of Mr T and there is no indication that they colluded in their evidence.
The wife was a reasonable witness. Her memory is not good and she had made little effort to ascertain some relevant facts, such as the circumstances of advances to her from the Mendes trust.
There was no real challenge to the evidence of the wife’s father. It transpires that he was not a good witness but happily nothing turns on the reliability of his uncorroborated testimony. His inadequacy as a witness arises not from any apparent attempt to deceive or prevaricate but he has little recollection of events 12 years ago, when the property was bought. In addition, he is engaged in caring for his wife, who is gravely ill and he feels under considerable stress. He contradicted his own affidavit evidence and could not support aspects of his version of some events set out in that affidavit. None of that mattered here.
Submissions
The written submissions made on behalf of the husband are:
a. The Applicant Husband relies on Further Amended Application for Final Orders filed 25 May 2005 and also seeks that the Respondent wife’s application for lump sum maintenance filed 15 June 2007 be dismissed..
b. Orders sought by Applicant Husband as per Further Amended Application for Final Orders filed 25 May 2005 Order 6 7, 8 (a)- (c) & (e)
New 8(e) payment of $30,000 to the second respondents.
Respondent’s Wife application for lump sum maintenance second set of orders 1., 2., 3 and 4 of respondent wife’s Further Amended Application for Final Orders filed 15 June 2007 be dismissed
Second Respondent’s claim be dismissed
c. Affidavits relied upon;
(i)[The husband] filed 15 February 2007 and 15 February 2007
(ii) [Mr T] filed 29 June 2007
(iii) Financial Statement filed 3 September 2007.
d. Applicant Husband’s contributions
(a)the financial contribution
·for 7 years of the 10 year 9 month relationship the applicant husband worked and his earnings were pooled with the wife’s for the benefit of the wife and children: taxation returns and pay slips paragraphs 47 of affidavit filed 15 February 2007 (“first affidavit”).
·the applicant husband for most of the marriage paid half of all living expenses despite the fact that the respondent wife earned greater income.
The applicant husband says the respondent wife spent much of her income on personal items such as clothes and shoes; bank and credit card statement of the respondent wife; subpoenaed documents; paragraphs 17 & 18 first affidavit.
·the applicant husband during the marriage undertook full-time study in 1994 but discontinued when the first child was born. He re-commenced part-time training in mid-2002 to obtain qualifications in the […] business and set up his own business. The business failed to earn sufficient income; paragraph 4 affidavit of 29 June 2007 (“second affidavit”).
·1993-1994 the parties had boarders that shared their unit and contributed towards expenses; paragraph 16 first affidavit.
·during the relationship the mortgage, rates, strata levies and all expenses relating to the matrimonial unit was paid from the joint wages and savings of the applicant husband and respondent wife; paragraph 20 first paragraph.
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage
·the applicant husband carried out general maintenance on the matrimonial unit such as painting bedrooms and bathroom, building shelves, replacing door handles and taps; paragraph 30 1st affidavit
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
·the applicant the husband shared in the care of the children picking the children up from daycare in the afternoon, cooking the children’s dinner and bathing the children from 1995 to 2002 when the respondent wife worked long hours: paragraph 33 1st affidavit.
·the applicant husband alone has taken the children to the vast majority of sporting events including nipper’s training, soccer and indoor soccer, AFL; paragraphs 42 & 45 1st affidavit.
·applicant husband during the relationship shared cooking meals, did almost all the ironing and washed nappies; paragraph 34 1st affidavit
(d) the effect of any proposed order upon the earning capacity of either party to the marriage
·the sale of the matrimonial home will mean the respondent wife will need to move to rented accommodation but shall receive sufficient funds to enable her pay rent
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(g) 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.
·since separation the applicant husband has paid child support as assessed and contributed to the expenses of the child; paragraph 44 first affidavit; paragraphs 2 &3 of second affidavit
·the children spend time with the applicant father of over 140 nights per year.
·since separation the respondent wife has received Family Payments that applicant husband was entitled to by claiming sole care of the children and she has had to refund $3,000 approximately to Centrelink, $1,700 of which was refunded to the applicant husband; wife’s solicitor’s letter dated 7/5/07;.
·since separation the respondent wife has received a redundancy payment of approximately $62,000. At least $44,000 she has been spent on her own expenses such as a holiday alone in Ireland, credit card debts relating to post-separation expenditure, legal fees and the purchase of personal items. The majority of such moneys were accumulated during the relationship; paragraph 4 wife’s affidavit filed 25 June 2007; bank and credit card statements of wife
·The applicant husband has always paid assessed child maintenance and there are presently no arrears. The applicant husband is presently in full-time employment and will pay child maintenance as assessed. The applicant husband notified Child Support of his changed financial circumstances on 28/6/07; annexure “B” second affidavit
e. Division based on assessment of contributions
55%/ 45% in favour of the respondent wife
Section 75(2) factors
The matters to be so taken into account are:
(a)the age and state of health of each of the parties;
· Respondent wife is nine years older than the applicant husband.
Both parties are in good 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 Respondent wife worked for 9-14 years in the banking industry and has a greater earning capacity. The Respondent wife receives financial assistance from her parents; wife’s bank and credit card statements.
·The applicant husband on 14 May 2007 obtained full-time employment with [S Company] as a [driver] with an annual salary of $38,888 gross; annexure “A” second affidavit.
· the respondent’s mother is terminally ill and the respondent mother may have entitlements under her mother’s will; wife’s mother’s will subpoenaed
(c)whether either party has the care or control of a child of the marriage who
has not attained the age of 18 years;
· The consent orders made 5/7/06 provide for shared parenting with the children spending over 140 nights a year with the applicant father.
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
·The father pays child support. The mother since September 2006 has not worked and receives social security payments.
(e)the responsibilities of either party to support any other person;
·Not applicable.
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii)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 mother receives social security and Family Payments.
· The father recently has started receiving Family Payments of $134 per week; husband’s Financial Statement 31/8/07
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
(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;
· Respondent mother has training and experience to obtain well-paid employment.
(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; and
· the applicant father has a debts owing to [Mr T] ($18,469) and credit card debts of $16,642; Financial Statement sworn 31/8/07, affidavit of [Mr T] sworn 27/7/07
(i)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;
(j) 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 respondent mother was able to pursue a career in banking and has a greater earning capacity than the applicant husband.
(n)the need to protect a party who wishes to continue that party's role as a parent;
the care of children is shared
· parent responsibility is shared
· respondent mother is capable and qualified to support herself.
(o)if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
the respondent husband since separation has shared accommodation with flat mates to reduce living expenses.
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
·The matrimonial unit will have to be sold if the respondent is to receive the share of matrimonial property he seeks
·the respondent mother’s parents claim to have purchased 50% share of the matrimonial in 1995 which is denied by the respondent husband
(ii) vested bankruptcy property in relation to a bankrupt party; not applicable
(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
· the applicant father will be able to pay child maintenance. The applicants past history of child maintenance and recently improved income position make a lump sum payment of maintenance not justified.
· the respondent mother has shown since September 2006 that she has not attempted to ensure she has adequate savings but has spend large sums on clothes and an overseas holiday. There is no guarantee that she would use a lump sum to ensure the children are adequately provided for; bank and credit card statements of wife.
(p)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
The applicant husband is in debt to [Mr T] for an amount of $18,469. The applicant husband will pay solicitor and barrister costs from property settlement moneys
(q)the terms of any financial agreement that is binding on the parties: not applicable
f. adjustment made under s75 (2) 5% in favour of respondent wife
the final adjustment 60% /40% in favour of wife.
The applicant husband also proposes that the respondent wife’s parents be paid $30,000 and any interest determined by the court. This payment decrease the husband’s share and it is alleged such moneys would be paid by the parents is payment to the respondent Wife and so will increase her share to 70% approximately.
Second respondent’s claim
(a) The applicant husband denies that the second respondent’s have any interest in the matrimonial home or in the alternate that they hold their interest on trust for the wife.
(b)The second respondents’ names on the title was without the consent or knowledge of the applicant husband.
(c)any moneys paid by the second respondents to the purchase of the matrimonial home were a gift to parties.
(d)the second respondents have not shown the source of any money they allege they contributed to the matrimonial home and in particular whether such moneys were trust moneys from a family trust of which the respondent wife was a beneficiary.
(e) The applicant husband concedes the second respondents paid an amount of $30,000 towards the purchase of the home although there was no agreement to do so, and if the source of the funds are be proven, the applicant the husband seeks an order that this amount be refunded to the second respondents.
The written submissions for the husband do not match the orders sought on his behalf. For example, by the minute of orders ultimately sought by the husband, he now proposes no payment or recompense to the wife’s parents. In the oral submissions at the conclusion of the hearing counsel for the husband argued that the pool of assets, including superannuation should be divided in the proportions 62% to the wife and 38% to the husband and that the husband should receive his share in non-superannuation assets. As an example, if the redundancy payment and the wife’s paid legal costs are read back into the list of assets and the husband’s credit card debt and debt to Mr T are ignored, that would call for a payment to the husband of the order of $100,000.
The written submissions made on behalf of the wife were as follows:
The pool of assets is said to be as follows:
F.Property Balance Sheet and effect of orders
ASSETS [The R Property] 75% H & W 280,000 280,000 280,000 93,000 Motor car H 2,000 2,000 Furniture H 550 550 Savings H 1,500 1,500 Personal effects H 800 800 Motor car W 2,000 2,000 2,000 2,000 Furniture/Personal effects W 2,000 2,000 2,000 2,000 Savings (not redundancy) W 50 50 50 50 Disputed addback Redundancy (post-sep) W N/A 62,771 Agreed liabilities Home mortgage H & W (125,000) (125,000) (125,000) Disputed liabilities Credit cards H N/A (13,799) [Mr T] H N/A (18,469) Credit cards W N/A (3,759) Total net assets 163,900 190,644 Lump sum payment H (50,000) Total for wife under her application 109,050 as % of net pool of assets 66.53% Total for wife under Husb's application 97,050 as % of net pool of assets 59.21% Superannuation H 16,353 Superannuation W 64,903 Total 81,256 Notes about balance sheet
·The husband and wife have a 50% share in the home as joint tenants and these figures are calculated accordingly.
·The post separation redundancy would be excluded having regard to Burke & Burke (1993) FLC ¶ 92-356, or even if that is wrong would not be added back; being consistent with Chorn & Hopkins (2004) FLC ¶ 93-204 at page 79,314.
·The husband’s credit card debts and post separation loan from Mr T would not be deducted from the pool consistent with Prince & Prince (1984) FLC ¶ 91-501.
H. Contribution-based entitlement
Should be 40% in favour of husband and 60% in favour of wife [3] based upon the following:
[3] This figure will be higher for the wife if the Court finds that the husband and wife have a greater equitable share in the home than 75% combined.
The husband’s contributions are summarised as:
a)No initial contributions of any significance.
b)Income earner in the family but earned well below AWE and the amount necessary to support the family (average annual taxable income of about $15,000). Not the primary income earner.
c)Minor parenting and domestic contributions. Spent significant periods overseas and living away from the family during the marriage.
d)Token child support and financial assistance for the family over almost 4 years since final separation (averaging only a few hundred dollars per year).
The wife’s contributions are summarised as:
a)Her initial contributions being an entitlement to $34,000 in a company owned by her grandfather, a car, furniture and superannuation.
b)Contributing to income of the family, with a higher income on average than the husband.
c)Non financial contributions in and around the home.
d)Primary parenting and domestic contributions.
e)Sole financial supporter of the family during periods the husband lived away from the family viz: in Brazil for about 6 months in 1994-95 and separation for about 6 months in 1997.
f)Financial assistance from wife’s family towards payment of family expenses.
g)Since separation in November 2003 the wife:
I.Has borne the vast majority of the burden for the financial support of the children of the marriage.
II.Has paid the mortgage and outgoings over the home without contribution from the husband.
I. Sec 75(2) adjustment
Adjustment under sec 75(2) ought to be 10% in favour of the wife [4] based upon the following:
[4] This figure will be higher is the Court does not make a lump sum child support order.
a)The wife was born on […].3.63 (44) in Adelaide and the husband on […].2.72 (35) in Brazil.
b)Each party enjoys good health.
c)There has been a long period between separation and final hearing (about 4 years).
d)The children of the marriage live for the majority of the time with the wife.
e)The husband has a superior income earning capacity to that of the wife although it is presently under-utilised.
f)The husband is 9 years younger than the wife.
g)The wife has not formed a new relationship.
h)The wife does not know if the husband has formed a new relationship.
J. Effect of Orders Sought
Overall adjustment ought to be 33% for the husband and 67% for the wife. [5]
K. Lump sum child support
The wife seeks a departure from the latest child support assessment so that the husband is required to pay $66 per child per week for each child and after the older turns 18 years the sum of $80.50 for [M].
The wife also seeks that the Court allocate a sum of $50,293.81 by way of lump sum child support to be credited under sec 125 of the Assessment Act against the husband’s liability for child support.
[5] Subject to Court’s findings about the husband’s claim that wife’s parents have less than a 25% beneficial interest in the home and whether a lump sum child support order is made.
The submissions made on behalf of the wife’s father and mother were to the following effect:
·The husband cannot succeed in seeking a declaration to the effect that the wife’s parents hold their interest in the home on trust for the parties;
· The proposition was never put to the wife’s father in cross-examination, indeed it was put to the wife’s father that he was guarantor of the loan, not trustee;
· It was not put to the wife’s father that the advances he made were gifts to the husband and or the wife;
· The evidence about the acquisition of the property is clear;
· The contract bears four names and the fact that the names of the wife’s parents are in handwriting does not suggest that they were added after exchange of contract. If that had been the case additional duty would have been payable;
· The legal title cannot be overcome without clear evidence of a trust and there is no such evidence from the husband or the wife’s father;
· There is no suggestion of unconscionable conduct in the terms of Baumgartner & Baumgartner (1987) 164 CLR 137;
· The wife’s father gave evidence that he had no expectation of being required to meet the mortgage but expected that the husband and wife would live in the property and he and his wife would be able to visit from time to time;
· Nothing leads to the inevitable conclusion, on the balance of probabilities that the wife’s parents hold their interest on trust for the parties;
The approach in proceedings under section 78
Whereas section 79 empowers the Court to alter property interests, section 78 empowers the Court to determine the existing property rights of parties to a marriage, and when they are parties to the proceedings, of third parties. Here the husband seeks a declaration that the wife’s parents hold their interest in the R property on trust for the wife and him. By way of consequential order the husband then seeks that the wife’s parents cause themselves to be removed from the title.
This argument must fail. There is no evidence of an express trust. There is no evidence that the husband, the wife or the wife’s parents intended to create a trust. The proposition was not put to the wife’s father in cross-examination. Even if such a trust was established there are then problems because of the lack of a document evidencing the trust. There is no evidence of a constructive trust. It cannot be said that it is unconscionable for the wife’s father to assert his one half interest and to deny the beneficial interest of the husband and wife in the entire property. Quite the contrary, it would be unconscionable for the husband and wife to deny the wife’s father’s interest. Similarly there is no basis for finding an implied or resultant trust. The wife’s parents contributed $33,660 to the purchase of the $204,000 property, together with $7,710 for purchase costs. They allowed their name to be recorded as joint borrowers on the mortgage of the property. They allowed the husband and wife to occupy the property and had no significant use of the property, save for the odd visit.
The application under section 78 must fail.
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 husband and wife at the date of the hearing. Second, I should identify and assess the contributions of the husband and wife within the meaning of s 79(4)(a), (b) and (c) and determine the contribution based entitlements of the husband and wife expressed as a percentage of the net value of the property of the husband and wife. 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 husband and wife 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. [6]
[6] 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 husband and wife at the date of the hearing
The Court is required to make a finding as to the property of the husband and wife at the date of the hearing. There are circumstances which the Court has found in other cases, have justified the inclusion of property that no longer exists, in the pool of property for settlement. Similarly the Court has sometimes found that debts that do exist should not be included in the list that goes to make up the net pool of assets. In In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
[30] To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In In the Marriage of DJM and JLM (1998) 23 Fam LR 396; (1998) FLC 92-816; [1998] FamCA 97 the Full Court said at [11.6]:
[11.6] For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at Fam LR 509; FLC 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In the Marriage of Kowaliw (1981) 7 Fam LN N13; (1981) FLC 91-092 at FLC 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under s 75(2)(o) to applications for settlement of property instituted under the provisions of s 79.
As to the arguments in this case:
Former matrimonial home at R
The relevant asset is the interest of the husband and wife in the R property. As I have discussed above in relation to the application under section 78, there is no basis for going passed the legal title as between the wife’s parents on one hand and the husband and wife on the other. The property has an agreed value of $560,000. Therefore the undivided interest of the husband and wife has a value of $280,000.
Redundancy payment made to the wife
On 29 September 2006 the wife received a redundancy payment of $62,770.98. The wife says she applied those moneys to credit card bills, legal costs and other debts. On 5 January 2007 the wife deposited $18,000 into her ING Direct Deposit account leaving a balance of $6,345 from redundancy moneys in Westpac Classic Account. As at the date of the hearing there is nothing left of that payment. Nevertheless the husband argues that the payment should be read back into the list of assets as if it still exists.
Any funds from this source applied by the wife to the payment of her legal fees will be read back into the list of assets on the basis discussed in In the Marriage of DJM and JLM above. The wife has paid $9,358.88 in legal fees. In order to justify the inclusion of the rest of the payment the Court must be satisfied that this was a preliminary distribution of joint funds to the wife (In the Marriage of Townsend) or represented a waste of joint assets (Kowaliw). Neither case is made out here. In the latter instance there was extensive cross-examination of the wife in respect of her interest in and capacity to spend money on clothes. Indeed, it is clear from the wife’s own Financial Statement that she makes a substantial expenditure on clothing. However, the redundancy payment is properly seen as a replacement for weekly income lost. It is accepted that living expenses can defray assets in the period between separation and hearing. Given that the husband did not provide adequate financial support after separation, he is not in a good position to criticise the wife’s spending habits. Although an incident of her employment, the payment itself was made nearly three years after separation. Looking to the next step it is difficult to see that the husband made any contribution to the payment in any event. In my view, other than that part of the fund applied to legal fees, the redundancy payment should not be read back in to the list of assets.
Household contents of the husband
The husband says that Mr T bought him, among other things, a 127 cm plasma television for about $5,000, a suede lounge suite for about $1,600, a DVD recorder for $788, a camera for $313. The husband explanation for his estimate of $550 for his household contents and $800 for personal effects is that he ignored the items purchased for him by Mr T because he feels that he owes money to Mr T.
There is no doubt that the assets exist. The Court is required to identify the property of the parties to the marriage, at the date of the hearing and its value. These items must be included in the pool. It is the husband’s obligation to provide evidence of value. Notwithstanding that there are assets of a type that would normally depreciate, the only evidence of value is that of the husband as to the purchase price. I will include the items in the pool at those values. It is clear from the husband’s case that he did not mean his estimate for household contents and personal effects to include the value of these items. Therefore the husband’s household items will be included at $8,251 and his personal effects at $800.
Savings and motor vehicle of the wife
I cannot reconcile the table of assets in the wife’s case outline document and the wife’s latest Financial Statement. The Financial Statement is itself confusing, apparently showing different amounts for the current balance of savings. I think it shows the savings at about $1,034 and the car at $1,000. The table puts the savings at $50 and the car at $2,000. The net effect is the same. I will use the figures from the Financial Statement.
On the basis of those findings and the agreement of the parties, the assets of the husband and wife are:
Assets Value Former matrimonial home at R (One half interest) $280,000.00 Husband’s Savings – Commonwealth Bank a/c … $1,500.00 Husband’s 1991 Toyota Corolla motor vehicle $2,000.00 Household contents (H) $8,251.00 Personal effects (H) $800.00 Husband’s MLC Masterkey Superannuation $16,353.00 Husband’s S Company Superannuation $591.00 Wife’s savings Westpac Bank $1,032.44 Wife’s savings ING Bank $2.00 Wife’s 1991 Toyota Corolla motor vehicle $2,000.00 Wife’s Furniture/Personal effects $2,000.00 Wife’s paid legal fees $9,358.88 Wife’s superannuation with Sunsuper $64,903.00 Total $388,791.32
Liabilities:
Mortgage on the R property
In the table of liabilities in the Wife’s Case Outline, the mortgage is put at $125,000. I assume that to be the amount of the entire mortgage debt. It is correct to say that each of the parties owes that entire amount, jointly and severally. Nevertheless, for the purposes of identifying the value of the net pool of assets of the husband and wife, the debt should be taken to be $62,500.
As to the disputed issues:
Husband’s credit card debts
The Husband says he owes $13,800 on credit cards. The evidence is that the credit card debts as at the date of separation stood at $2,682.81. Given the problems of the husband’s evidence about his financial circumstances and his inability to account for his banking arrangements it is difficult to simply accept that the current debt should be included for the purposes of calculating the net property pool. I will include the debt as it stood at separation.
Wife’s credit card debts
There is no evidence as to the balance of the wife’s credit card at separation. Given the length of time since separation and the fact of the availability of the redundancy payment, I will not include the wife’s current credit card debt.
Husband’s debt to Mr T
The Husband says he owes Mr T $18,499. Mr T says he is owed $18,469. The moneys were advanced over time, but after separation. They were advanced in the form of payment for airfares, the purchase of electrical goods and furniture and cash payments. At best this is a conditional liability. Mr T and the husband are good friends. For example, when Mr T underwent surgery in 2006 the husband ran errands for him such as shopping and mail. Mr T says that the husband is a “wonderful friend”. There has never been a discussion between the husband and Mr T beyond, ‘pay me when you can’ or ‘pay me when you can afford to’ or words to that effect. There is no suggestion of any commerciality about the advances – no term of any loan, no interest and no circumstances identified that would trigger repayment. The husband has secured better paid employment in recent months and yet made no effort to repay the debt or any part of it. Indeed the husband has never repaid any money to Mr T. In cross-examination Mr T revealed that he has no intention of calling the debt in and could not envisage the circumstances whereby he would do that.
Any obligation the husband has to Mr T could not be characterised as a liability that should be included in the list of assets and liabilities of the husband and wife relevant to ascertaining the net value of their assets for these proceedings.
I find that the relevant liabilities of the husband and wife as at the date of the hearing are as follows:
Liabilities Amount Mortgage secured on the R property $62,500.00 Husband’s credit cards at separation $2,682.81 Husband’s legal fees[7] $62,000.00 Wife’s legal fees[8] $42,023.22 $169,206.03 [7] A letter dated 14 September 2007 reveals that the husband has incurred legal costs of $62,000 ($50,000 for solicitors’ fees and $12,000 for counsel). The husband has yet to pay any fees.5
[8] A letter dated 5 September 2007 reveals that the wife has legal fees, billed and anticipated totalling $51,382.10 of which she has paid $9,358.88.
The legal fees are not joint debts for this purpose. Therefore the net assets have a value of $323,608.51 ($388,791.32 - $65,182.81).
Financial Resources
There is no evidence that the husband and wife have any other financial resources. It may be that insofar as the wife is concerned there is some support available from her family. Similarly, if the past is any guide, the husband is likely to have financial support from Mr T. However, there is no evidence of the financial circumstances of the wife’s parents or of Mr T.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions of the husband and wife. 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[9]. 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[10].
A separate pool for superannuation
[9] Mallett & Mallett (1984) 9 Fam LR 449; In the Marriage of Ferraro (1992) 16 Fam LR 1
[10] 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 husband has adopted a global approach to the assessment of contributions but as the wife’s counsel made clear in submissions in reply, the wife argues the case on the basis of two pools. Therefore I am obliged to apply section 79(4) to superannuation and non-superannuation assets, separately.
Contributions to non-superannuation assets
Section 79(4)(a) Contributions
The husband brought no significant assets into the marriage:
The husband had some paid employment during the marriage. During the marriage his taxable income was:
Year ending
30 JuneHusband’s taxable income 1994 $20,221 1995 $5,282 1996 $17,926 1997 $19,208 1998 $19,221 1999 $18,983 2000 $21,188 2001 $23.371 2002 $21,455 2003 $1,739 2004 $6,195 2005 $14,460 2006 $11,085
His average taxable income was $15,440.
The wife asserts that for a period in 1995 the husband had undeclared income of $100 per week in addition to a weekly salary of about $450 from the same employer (B Pty limited). She was asked about her motivation for making that assertion but was not challenged as to its accuracy. The husband gives no evidence of receiving any undeclared income. Indeed he was asked about deposits made into his bank accounts over a period that did not appear to come from any of the employers he says he worked for at the relevant time. In no instance did he identify the deposit in question as income from another source. Although he did not appear confident about it, he identified many such deposits as rent from a flat mate, or loans from his brother or Mr T. The latter source cannot account for many of the unidentified deposits because it is Mr T’s evidence that the advances he specified in his affidavit are the only advances he has made to the husband. In this instance each of the husband and wife is arguing against interest. It is in the husband’s interest to show that he made contributions. He does not assert making a contribution by undeclared earnings. I accept, as an admission against interest, that it did not occur.
The wife brought into the marriage a motor vehicle, some furniture and an interest in the Mendes Investments having a value of either $20,400 or $34,000.
The wife’s taxable income was:
Year ending
30 JuneWife’s taxable income 1994* $50,000 1995 Not known 1996* $40,000 1997 $38,587 1998 $40,883 1999 $39,095 2000 $41,446 2001 $22,334 2002 $41,098 2003 $42,840 2004 $40,213 2005 $37,945 2006 $37,942
* These figures are unchallenged estimates from the wife’s affidavit
Thus the wife’s average income was something of the order of twice that of the husband.
Care is needed in relation to the contributions made on behalf of the wife by her parents. I am satisfied that the contributions were made but some were directly or indirectly associated with the R property. It would represent a double counting to include payments made to acquire and preserve the wife’s parents’ interest in the R property as contributions on behalf of the wife. Thus something over $40,000 paid by the wife’s parents towards the purchase of the property is not a payment on behalf of the wife. The $5,000 special levy is a payment owed by owners and in my view only half of that payment was referable to the wife’s parent’s interest. Thus the wife’s parents paid $2,500 on behalf of the wife. Then there was $1,100 paid to sand the floors and several payments towards the mortgage. The wife does not recall how much was provided by her parents. Her father deposes to payments including a payment of $10,000 and another of $5,000 although he did not have independent recollection of those payments when he was cross-examined. The wife’s parents live in South Australia. In support of this evidence, the wife attached to her affidavit of February 2007 copies of Westpac statements for her Classic account showing ‘just some’ of the deposits made in South Australia as follows:
Date of deposit Amount 16/11/01 $500 18/3/02 $200 2/10/03 $300 31/12/03 $1,000 5/5/05 $5,000 9/12/05 $200 15/6/06 $5,000 4/12/06 $500 $12,700.00
As to the deposit on 15 June 2006, on the same day $3,000 was transferred from the wife’s Classic Account into one of the mortgage accounts. The wife was not successfully challenged on this evidence. I am satisfied that the wife’s parents provided the wife with at least $12,700 to help with the mortgage and perhaps more. It is not possible to be precise about the support provided.
In addition the wife’s father says that he and his wife advanced payments of $300 - $500. I accept that evidence.
Section 79(4)(b) contributions
The husband deposes to performing maintenance at the unit, such as replacing washes. He painted some rooms and installed shelves in the downstairs storeroom and the laundry. He did some damage too with archery practice in the unit.
Non-financial contributions do not play a major role in the context of these proceedings.
Section 79(4)(c) contributions
There are two children of the marriage.
The wife had the main caring role. That is not to say that the husband is not a loving father and does not have a good relationship with the children. The husband enjoyed archery on a regular basis for a period from 1999. The husband had significant periods in Brazil without the child/ren. The wife had a one month holiday in Japan without the child D. As to the household tasks. Obviously, the wife had that responsibility when she and the husband were separated and the children were with her.
I am satisfied that the wife was the primary care giver of the children and the main homemaker.
Conclusion
Although different to the written submissions set out above, the husband argues that the contributions favour the wife 52:48 in the event that there is no add-back for the redundancy payment. The wife argues that the contributions favour her in the proportions 60% to 40%.
The marriage spanned 10 years and contributions have been made since. The wife made the only initial contribution. In addition to a car and furniture she bought in between $20,400 and $34,000. There were injections of funds through the wife, from her parents. The wife received at least $12,700 and perhaps more by way of contributions towards the mortgage and some cash advances.
The wife was consistently engaged in paid employment save for a period in 1995. Even when the husband was in paid employment, the wife earned more than him. The husband’s travel overseas was more extensive than that of the wife and albeit to some extent, forced on him, added to the imbalance of contributions. The husband and to a lesser extent, the wife and children were accommodated and supported by the husband’s family in Brazil when there.
There was some maintenance and minor improvements were made to the R property by the husband. The wife was the primary carer and made the greater homemaker contribution.
I find that the contributions by the wife and on her behalf exceeded those by and on behalf of the husband in the proportions 60% : 40%.
Contributions to superannuation assets
Section 79(4)(a) Contributions
The husband brought no superannuation entitlement into the marriage. I gather that he contributed to superannuation during the marriage or since. He made the direct contribution to his superannuation interests.
The wife brought an unspecified superannuation interest into the marriage. She continued to contribute thereafter. She made the direct contribution to her superannuation interests.
Section 79(4)(b) contributions
There are not asserted to be any non-financial contributions to superannuation.
Section 79(4)(c) contributions
For the reasons identified above, I am satisfied that the wife was the primary care giver of the children and the main homemaker.
Conclusion
The wife’s contributions to superannuation were greater than those of the husband. In addition she made the greater contribution as parent and homemaker. In my view the contributions to superannuation were made in the proportions 70% by the wife and 30% by the husband.
The other matters in Section 79
Now the non-contribution elements of section 79(4) must be considered in relation to each pool. 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 husband and wife. 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), (d), (h) & (k).
(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 husband and wife. The husband is 35 years of age and the wife is 44. There is no relevant, probative evidence about their health.
(b)the income, property and financial resources of each of the husband and wife and the physical and mental capacity of each of them for appropriate gainful employment;
The husband receives $865.62 per week made up of $730.80 in wages as a driver, $117.81 from Family Tax Benefit A and $17.01 from Family Tax Benefit B. He lives with his flatmate who pays $170 per week in rent and $40 per week in expenses for the husband’s benefit. Although that is what the husband’s Financial Statement says, it might be that they just share expenses. The husband’s expenditure is as follows:
Expenditure
Amount
Income tax $129.00 Rent $170.00 TTPD Insurance – AAMI $7.00 Life Insurance – Westpac $3.50 Motor vehicle registration $20.00 Credit card payments on American Express $25.00 Credit card payments on CBA Visa $19.00 Credit card payments on CBA Virgin $28.00 Credit card payments on Citibank $13.75 Payments for before and after school care for the children $20.00 All other expenditure $435.25 Total $870.50
The husband provides no detail of the calculation of ‘other expenditure’ of $435.25. I assume it includes his living expenses. Evidence about his assets, liabilities and resources is set out earlier in these reasons.
As to his earning capacity, in my view, the husband has not always sought to exercise his capacity. In those circumstances it is difficult to know whether it is being fully exercised now.
The wife’s income is $370.74 per week by way of Centrelink pension and Family Allowance. The wife lives with the children who have no income.
The wife’s expenses are as follows:
Expense Amount Mortgage payments $223.00 Strata levies and Rates $46.15 Motor vehicle third party property insurance – CGU $8.00 Motor vehicle Greenslip and inspection – AAMI $7.00 Payments on Virgin credit card $33.25 Living expenses $492.00 Food $150.00 Household supplies $10.00 Electricity $12.00 Telephone $21.00 Petrol $20.00 Motor vehicle maintenance $9.00 Clothing and shoes $135.00 Children’s activities $7.00 Entertainment and hobbies $17.00 Holidays $20.00 Chemist pharmaceuticals $5.00 Repairs to furnishings and appliances $4.00 Books and magazines $8.00 Gifts $6.00 Hairdressing toiletries $8.00 Music tuition and fees, camps, swimming, school sport $60.00 $492.00 Total $809.40
The wife apportions the living expenses as to $254 for herself and $238 for the children. Evidence about the wife’s assets and liabilities is set out earlier in these reasons.
As to her earning capacity, the wife has generally demonstrated a wonderful work ethic and is likely to return to the paid workforce at some point in the not too distant future.
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
D and M are 13 and 7 years of age, respectively. They live with their father for 5 nights a fortnight, half school holidays and some special days and otherwise with their mother.
(d)commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) 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:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)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 wife is currently in receipt of Centrelink payments.
(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 husband and wife during the marriage. They enjoyed some overseas travel.
(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;
In 2002-2003 the husband completed 18 months of full time study at TAFE. As yet he has not obtained paid employment that utilises that qualification.
(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;
The orders will put the husband and perhaps, the wife, in funds. That will allow them to pay debts.
(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;
This is not relevant.
(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 associated with the birth of the children and recently. For periods she had part-time work to accommodate the needs of the children. It is likely that the marriage adversely affected her earning capacity. She was denied some the opportunities that come with unbroken paid 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.
(l) the need to protect a party who wishes to continue that party's role as a parent;
The children are still young.
(m)if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
The wife does not live with another adult. The husband has a flatmate and they share some expenses.
(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
The husband does not pay and the wife does not receive child support. However, the issue of child support is to be determined by me in these proceedings. On that basis there will be a proper level of child support.
(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 husband and wife.
Section 79(4)(f)
I have referred above to the current parenting orders.
Section 79(4)(g)
I have already referred to the child support position.
Conclusion
The wife argues for an overall distribution of non-superannuation assets in the proportions 67% to the wife and 33% to the husband. Thus a 7% adjustment on section 75(2). Nevertheless the oral submissions were to the effect that she is entitled to a 10% adjustment for the “other matters” referred to above because she is 9 years older than the husband and has the children for most of the time. The husband agrees that there should be an adjustment in favour of the wife of 10%. The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
Ø The wife is 9 years older than the husband;
Ø The children live for more of the time with the wife;
Ø The adjustment based on contribution alone will favour the wife;
In my view there should be an adjustment to the wife by virtue of the other matters in section 79(4). The income earning capacity of each of the parents are similar but given his age, the husband has the potential for much longer in the paid workforce than the wife. It is agreed that there be an adjustment in favour of the wife.
As to whether the adjustment should be the same for both pools - a complicating factor here is that the wife has more superannuation. Because neither party seeks a splitting order, the wife will also have more of her assets tied up in superannuation for many years. Doing the best I can, I will make an adjustment to the wife of 5% of the superannuation pool and 7% in relation to the non-superannuation pool.
Just and Equitable
Based on their contributions and the other matters in s 79 the appropriate division of the superannuation assets be about 75% to the wife and 25% to the husband and the non-superannuation assets be about 67% to the wife and 33% to the husband. Finally, I must consider whether it would be just and equitable within the context of s 79 if the net assets of the husband and wife were divided in those proportions.
The superannuation totals $81,847:
Superannuation Value Husband’s MLC Masterkey Superannuation $16,353.00 Husband’s S Company Superannuation $591.00 Wife’s superannuation with Sunsuper $64,903.00 $81,847.00
If the husband was to retain 25% he would have $20,462 and the wife - $61,386. Therefore some adjustment is required in favour of the husband out of the non-superannuation assets. It is not a matter of dollar for dollar because the wife is likely to wait many years for access to her entitlements, whereas the husband will take the adjustment in cash. I will allow an adjustment in favour of the husband of $3,000.
The net non-superannuation assets have a value of $241,761.51. If the husband was to receive 33% he would have $79,781.30 and the wife - $161,980.21.
The husband has or has had the benefit of:
Assets Value Husband’s Savings – Commonwealth Bank a/c … $1,500.00 Husband’s 1991 Toyota Corolla motor vehicle $2,000.00 Household contents (H) $8,251.00 Personal effects (H) $800.00 LESS Husband’s credit cards at separation -$2,682.81 Total $9,868.19
In order to bring him to 33% he should receive a further $69,913.11 together with an additional $3,000 for superannuation. I will round that total to $73,000. The husband will still have legal fees to pay and the balance of his credit card debt.
The wife seeks the opportunity to buy the husband out of his interest in the R property. The husband does not oppose that course. The division proposed would leave the wife with her superannuation entitlement and:
Assets Value Former matrimonial home at R (One half interest) $280,000.00 Wife’s savings Westpac Bank $1,032.44 Wife’s savings ING Bank $2.00 Wife’s 1991 Toyota Corolla motor vehicle $2,000.00 Wife’s Furniture/Personal effects $2,000.00 Wife’s paid legal fees $9,358.88 LESS Mortgage secured on the R property -$62,500.00 LESS Payment to the husband -$73,000.00 Total $158,893.32
The wife will have her credit card debts and her legal fees to pay.
Conclusion under Section 79
In my view the outcome I have identified meets the requirements of section 79.
As to the terms of the order, the wife will have the opportunity to buy the husband out. However, if the wife is not able to both pay the husband the required $73,000 and to discharge the mortgage or at lease obtain a release for the husband from the mortgage, then the interest of the husband and the wife in the property must be sold. In the circumstances, that sale will involve some complexity. I will give the parties the opportunity to relist the matter before me so as to better refine the orders necessary to give effect to these reasons.
The practical effect of the property orders I have described is that the husband will have a deficiency when his legal fees and credit card debts are taken into account. Similarly the wife will be heavily overcommitted if she is to retain the property. In large part that has arisen because the husband and wife have spent over $100,000 in legal costs in seeking the division of assets with a net value of $322,000 and child support orders. There is no proportionality between the matters at issue and the costs of resolving them.
The Approach to Applications for Child Support Departure
Jurisdiction
This court does not have unrestricted jurisdiction in relation to the fixing of child support liabilities. In the normal course carers and liable parents are required to go through the process of an administrative departure application made to the Child Support Registrar and then to make an objection and have that determined. Of more recent times they would normally be required to then make application to the Social Security Appeal Tribunal. However, the effect of Section 116 of the Child Support (Assessment) Act 1989 to this case is that Court may consider the wife’s application for departure, notwithstanding that those administrative reviews have not occurred, because the husband and wife are already before this Court on another matter, if the Court is satisfied that it would be in their interests to do so. It is possible that even the substitution proceedings[11] would be sufficient to found the application of section 116, let alone the property proceedings.
[11] See McGuiness & Cowie (2002) 29 Fam LR 441; [2002] FamCA 461,
There is no objection to this course, and in any event I am satisfied that it would be in the interests of the husband and the wife to consider the departure application.
The law
The effect of s 117 of the Assessment Act is that the Court may depart from an administrative assessment if:
1)the Court is satisfied that one or more grounds for departure under s. 117(2) Child Support (Assessment) Act 1989 exist (each ground being prefaced by the requirement “in the special circumstances of the case”); and that it would be
2)just and equitable as regards the children, the carer entitled to child support and the liable parent [s 117(4)]; and
3)otherwise proper within the meaning of s 117(5) to make a particular order.
Special circumstances are facts peculiar to the particular case that set it apart from other cases.
The Exercise of Discretion
In practical terms there is virtually no dispute in relation to the husband’s liability for child support. The wife seeks departure to rate of $66.00 per child per week for the period commencing on 1 January 2007 until … October, 2012 and thereafter $80.50 per week for M to … April 2018. In cross-examination the husband was asked about the rate he wishes to pay and he said words to the effect that he wants to pay the rate according to the formula which he thinks is about $130 per week.
The most recent assessments are:
Assessment dated Period Annual Rate 14 May 2007 30 March 2007 - 31 January 2008 NIL 17 August 2007 1 September 2007 - 30 November 2008 NIL
The Ground [s 117(2)]
In my view a ground is made out because the husband has secured paid employment.
I am satisfied that in the special circumstances of the case, the administrative arrangements have resulted in an unjust and inequitable determination of the level of financial support to be provided by the husband for the children because of the husband’s income, earning capacity, property and financial resources [s 117(2)(c)(i)].
Just and equitable as regards the child, the carer entitled to child support and the liable parent [s 117(4)]
The thrust of this provision is to ensure that child support liabilities are based on the income, earning capacity and financial resources of the parents, to have the parents meet that liability equitably as between themselves and to have eligible children share in the financial fate of their parents.
The Financial Circumstances of the Parties
I have set out the details of the financial positions of the husband and wife earlier in these reasons.
The proper needs of the children
There is no evidence about the needs of the children in the husband’s household. The wife estimates that $238 per week of her living expenses is applied to the children. She has not sought to apportion any of her fixed expenses to them but they benefit from those expenses.
Hardship
Each of the parents wants the husband’s child support liability to be fixed at about $130 per week. Therefore there will be no hardship if that is done.
Conclusion
It would be just and equitable if the husband’s child support liability to be fixed at $130 per week.
Otherwise proper [s 117(5)]
No submissions were made on this point. The wife is in receipt of an income tested benefit and it may be that the level of her benefit will be affected by the level of child support. Therefore the orders proposed may change the balance of the costs of supporting the children that are met by the parents and by the taxpayer. The effect of the decision I propose will be to increase the husband’s liability for the period in question and if anything that will retrospectively reduce the income tested benefit. Therefore it would be otherwise proper to make the order proposed.
Duration of the Departure
Finally, there is the issue of the period for which the departure should apply. I am not limited to the period of the current assessment. The thrust of the child support legislation is to promote the benefits of the administrative scheme. The longer the departure is in place, the greater the risk of an injustice to one of the parents or a miss-match between the needs of the children and the rate of support. On the other hand the parents are entitled to some respite from disputation.
First, as to the commencement of the departure, the husband’s case is that he has wanted to provide money or more money to the wife but she has refused to accept it. There is some evidence about an incident whereby the wife was affronted by a demand for a receipt for a payment of less than $50 and simply rejected it. The husband has been in his current position for some time. I do not wish to burden him with significant arrears but if he believed on 13 September 2007, when he gave his evidence before me, that he should be paying $130.00 per week then that is an appropriate commencement date.
Next, as to the duration of the departure, the May assessment was fixed until the end of January 2008 with a view to a likely change in circumstances. The August assessment was fixed to the end of November 2008. In my view the departure should apply until 31 January 2009. That will give the parents some certainty. Thereafter the administrative scheme will continue to apply. In those circumstances the amended departure sought by the wife upon D turning 18years, does not arise.
Substitution Orders - Payment of Child Support in a form other than periodic payment
Section 123 of the Child Support (Assessment) Act 1989 provides among other things that departure proceedings must be determined before any application under Section 124. Section 124 of the Child Support (Assessment) Act 1989 provides as follows:
124 (1) Where:
(a)a carer entitled to child support or a liable parent makes an application to a court under section 123; and
(b)the court is satisfied that it would be:
(i)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(ii)otherwise proper;
to make an order that the liable parent provide child support for the child otherwise than in the form of periodic amounts paid to the carer entitled to child support;
the court may make the order.
Thus the same sort of criteria applies to this issue as to the question of child support departure.
The wife wants the husband’s liability capitalised and paid to her in a lump sum. The real issue here is whether I can be confident that the husband is unlikely to meet his obligation for periodic payments. The evidence suggests that the husband can be unreliable:
He conceded in cross-examination that his total financial support for the children in the wife’s household from December 2003 to March 2007 could be of the order of $2,750;
He agreed that he could have obtained work as a driver at an earlier date, instead of being out of work for long periods;
He agrees that he paid a low rate of support but says that the children have homes to live in, food and clothes. He feels that the wife might spend too much money on the children’s food – one of them is overweight, in his view;
He conceded in cross-examination that the money he gets from Mr T for trips might be better used for the children;
As is referred to above, the husband has offered some moneys to the wife but has not paid those sums because the wife refused to sign a receipt for the payment. A recent example is a tender of $40 by the husband for pants for one of the children;
The husband commenced his current work on 14 May 2007. He told the CSA of his increase in income at about the time. The husband was asked if he acquired the job as a reaction to the wife’s application for lump sum child support and he denied that assertion. The result has been that the husband has not offered any more money to the wife. In cross-examination the husband said that he believes he should pay about $130 per week. I take it from his evidence and from the submissions made in his case that he does not in fact make that payment because the wife will not sign a receipt for payments and or the wife has not pressed the Child Support Agency for a revised assessment;
The husband level of disclosure is not good. For example there is his claimed expenditure on rent. In his Financial Statement of February 2007 the rent was shown as $140 per week. In April 2007 the husband told the CSA that his rent was $20 per week. In his Financial Statement of August 2007 the rent was shown as $170. There may be an explanation for this related to payments by flat mates.
Thus the husband has proved unreliable in relation to the support he has provided for his children. He has not always exercised his earning capacity and he seems philosophically disinclined to provide financial support that the wife might waste on unnecessary food etc. In addition he has spent extended periods overseas and did not earn income during those periods.
On the other hand to capitalise the husband’s liability has the potential to cause a significant injustice. I made it clear to the parties during the hearing that I had no intention of expressing a substitution order in the terms sought by the wife. Child support is intended for that purpose and not to fill a shortfall in the arrangements necessary to retain a home – important though that aim might be. If there was to be a capital payment then it would be quarantined and drawn down on a periodic basis. In that way if the circumstances of the parents or the children changed, there could be some adjustment made. But even on the basis that the corpus of a capitalised sum is preserved, the husband would still be obliged to establish that fund. On the basis of the outcome of the settlement of property I have no reason to believe he will be able to do that.
At the moment the husband is a wage earner. In those circumstances there are remedies such as garnishment which could address any reluctance on his part to make periodic payments. I accept that the husband loves his children and doubt that he would be willing to jeopardise his relationship with them by leaving the jurisdiction permanently.
On balance, there should be no substitution order at this time.
I certify that the preceding one husband and seventy (170) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.
Associate
Date: 6 December 2007
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