BUCKNELL & BUCKNELL
[2008] FMCAfam 1152
•3 November 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BUCKNELL & BUCKNELL | [2008] FMCAfam 1152 |
| FAMILY LAW – Property orders – 8 year relationship – evaluating post-separation contributions – “global” versus “two-pools” approach – add-backs – periodic spouse maintenance. |
| Family Law Act 1975 (Cth), ss.75, 79 |
| AJO & GRO (2005) FLC 93-218 NHC & RCH (2004) FLC 93-204 Challen & Challen [2007] FamCA 1292 Scott & Scott [2006] FamCA 1379 Farmer & Brambley (2000) FLC 93-060 C and C (2005) FLC 93-220 Clauson and Clauson (1995) FLC 92-595 Mitchell and Mitchell (1995) FLC 92-601 |
| Applicant: | MR BUCKNELL |
| Respondent: | MS BUCKNELL |
| File number: | BRC 6576 of 2007 |
| Judgment of: | Purdon-Sully FM |
| Hearing dates: | 19 February & 21 April 2008 |
| Date of last submission: | 15 September 2008 |
| Delivered at: | Brisbane |
| Delivered on: | 3 November 2008 |
REPRESENTATION
| Counsel for the Applicant: | Ms Hogan |
| Solicitors for the Applicant: | Barry & Nilsson Lawyers |
| Counsel for the Respondent: | Dr Sayers |
| Solicitors for the Respondent: | Harrington Family Lawyers |
IT IS NOTED that publication of this judgment under the pseudonym Bucknell & Bucknell is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 6576 of 2007
| MR BUCKNELL |
Applicant
And
| MS BUCKNELL |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Bucknell and Ms Bucknell lived together for about eight years. They have one child, [X] who is now 3 years of age. [X] is described by Ms Bucknell as has having “been constantly sick since his birth”.[1]
[1] Para 68 Wife’s Affidavit of Evidence in Chief filed 8 February 2008.
Mr Bucknell and Ms Bucknell have agreed on a parenting arrangement that will see [X] remain in Ms Bucknell’s primary care in Brisbane. Mr Bucknell, who lives in Melbourne, will spend regular time with [X], including on alternate weekends.
Mr Bucknell and Ms Bucknell have been unable to agree on how to divide their property. They ask the court to make that decision for them. Ms Bucknell also seeks an order for spouse maintenance.
When they commenced their relationship Mr Bucknell was a graduate [occupation omitted] working in Brisbane. Ms Bucknell had a [beauty] business at [U]. Both were then earning a similar income.
Like many couples starting a life together they owned few assets.
Mr Bucknell’s career became their focus. For most of their relationship they were either travelling abroad or relocating within Australia as
Mr Bucknell pursued opportunities and experience in the telecommunications industry. Mr Bucknell said that until [X]’s birth in 2005, he and Ms Bucknell “travelled extensively”[2] with his work. They lived in Turkey, Hungary, the Czech Republic, Brazil and the United States. Ms Bucknell says that it was part of a “joint plan”, Mr Bucknell availing himself of work opportunities overseas and the ability to save for the purchase of their “first house and a car”.[3] She says that she “lived out of suit cases and in hotels” because she accepted
Mr Bucknell’s assurances that they were a “team” and that it was to “set themselves up” for the future.[4]
[2] Para 98 Husband’s Affidavit of Evidence in Chief filed 15 February 2008.
[3] Above n 1, para 29.
[4] Ibid, para 32.
When Mr Bucknell and Ms Bucknell were in Australia, Ms Bucknell continued to work in the beauty industry. This included during the short periods when Mr Bucknell was seeking employment. However in 2002 she suffered a back injury that made it difficult for her to undertake the lifting and loading requirements of beauty work, including lifting in beauty training work.
Even after they re-settled in Australia, Mr Bucknell’s work took them to Sydney, Brisbane and then to Melbourne. During this period
Mr Bucknell obtained a Masters in [omitted] degree. Ms Bucknell underwent fertility treatment, falling pregnant with [X] in 2004.
When Ms Bucknell was pregnant she remained in Sydney while
Mr Bucknell worked out of Auckland, New Zealand. After [X]’s birth Mr Bucknell continued to commute between Sydney and New Zealand spending weekends with Ms Bucknell and [X].
During their relationship Mr Bucknell set up [C] Pty Ltd as trustee of a family trust. The primary beneficiaries of the trust were Mr Bucknell and Ms Bucknell. From October 2005 onwards Mr Bucknell used [C] to obtain contracts for consultancy work in the telecommunications industry.
When Mr Bucknell and Ms Bucknell separated Mr Bucknell was earning a good income from [C].[5] Ms Bucknell was not working outside of the home. She was the full time carer of [X].
[5] Above n 2, para.38.
Following their separation in December 2006, [C] ceased trading. In January 2007 Mr Bucknell set up [L] Pty Ltd. He used [L], rather than [C], to continue his consultancy work. By July 2007 [L] was also engaging a sub-contractor to provide services to the telecommunications industry.
Following their separation Ms Bucknell returned to Brisbane. Since that time she and [X] have been living with her parents in Brisbane. She would however, like to obtain her own independent accommodation.
Ms Bucknell says that she has found it difficult to obtain part time or casual employment. In March 2008 she started a four year university course. She hopes to obtain [omitted] qualifications. At trial her income consisted of government benefits. Mr Bucknell pays for some of her expenses, including her car. He also pays child support for [X].
Mr Bucknell has remained in Melbourne. He has re-partnered. He and his partner, Ms R, were expecting a child in September 2008. Ms R has a child from a previous relationship. Until May 2008 she was working as a [Manager] four days a week earning an income of about $90,000 per year. She thereafter intended to cease work to prepare for the birth of their child.
In December 2007 Mr Bucknell purchased a property in Property P for about $720,000. The deposit of some $72,000 was paid by [L]. At trial, Mr Bucknell was residing in this property with Ms R and her son.
Whilst Mr Bucknell earned a significant income from his consultancy work in the 2007 financial year, in excess of $320,000, he says that [L] has recently been experiencing cash flow problems. He has concerns about [L]’s ability to secure future consulting work.
The Issues
In AJO & GRO [6] the Full Court outlined the four steps that a Court is required to take in determining what property adjustments, if any, to make on marriage breakdown. These steps involve identifying the net property of the parties, considering the contributions of the parties under section 79(4) of the Family Law Act 1975 and then considering any relevant section 75(2) factors. Finally, the Court must consider if the orders it proposes to make are just and equitable.
[6] (2005) FLC 93-218 at 79,619.
In determining the value of the net property pool in this case, there is an issue about whether there should be an add-back of legal fees paid by the husband from [L]. There is a further issue as to whether a “two-pool” or “global” approach should be taken when assessing the parties’ respective contributions. I will address those issues together and in the context of my consideration of the steps that the authorities require me to take.
I will then deal with the wife’s application for spouse maintenance.
What is the net pool?
Whilst the wife originally sought to include in the net pool some payments in the sum of $62,000 (rounded) made by [C] to the Australian Tax Office, on the testing of the evidence at trial that was not pressed by the wife. Nor did she press for the inclusion of a debt in the sum of $50,000 owed to [C] by the husband’s father.
At trial it was the husband’s case that the net pool was $118,448.[7] The wife says the net pool is $150,659.[8]
[7] Para 12 Affidavit of husband filed by leave on 21 April 2008 and para 8 of submissions of Ms Hogan of Counsel.
[8] Wife’s Amended Schedule of Property Pool handed up at trial.
The differences are reflected mainly in the inclusion of what I will term post-separation property as follows:
a)an “add-back” in the sum of $16,665 paid by the husband to his lawyers from post-separation income derived by him from [L], formerly [C];
b)an interest, to the value of $72,150, representing the deposit applied by the husband to the purchase of Property P post-separation from funds derived by him from [L].
The husband has also included credit card liabilities totalling $2,542.[9]
[9] Above n 7, para 12.
In considering what constitutes the net pool to be divided between the parties I must determine the following issues:
a)Should the wife’s legal fees be treated as an add-back?
b)Should [L] and the Property P property be excluded from the pool and, as I propose to consider this matter at this stage, should I adopt a “two-pools” as opposed to a “global” approach in assessing the parties’ contributions?
Should the wife’s legal fees be treated as an add-back?
The husband says that the legal fees paid by him from [L] should not be added back as notional property as they represent payments out of a post-separation income stream. However what constitutes property to be included in the pool available for division between separated spouses includes, in appropriate circumstances, paid legal costs and whether fees are to be added back is “part of the s.79 exercise, and is, accordingly governed by the principles of justice and equity”.[10] Whether the fees were made from [C] or [L] is, as submitted by the wife’s counsel, a distinction without a difference and artificial. [C] was a company established by the husband during the relationship. It became [L] after separation. The nature of the business and the contractual work undertaken by [C] was then undertaken by [L]. I accordingly find that it is just and equitable to add back the legal fees paid by the husband in the sum of $16,665.
[10] Challen & Challen [2007] FamCA 1292 at para.75 (Murphy J).
In considering this matter the principles from the authorities that bind me are that firstly, the treatment of funds used to pay legal costs is a matter for the discretion of the trial judge and secondly, in determining how to exercise that discretion, regard should be had to the source of the funds.[11]
[11] NHC & RCH (2004) FLC 93-204 at 79,322 para 56 (Finn, Kay and May JJ)
The Full Court in NHC & RCH (2004) FLC 93-204 said, at 79,322-3, that whilst funds used to pay legal fees and generated by a party post-separation from his or her own endeavours would normally not be added back as a notional asset, funds “generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions”.[12]
[12] Ibid, para 58.
Whilst the funds used by the husband to pay his legal fees were generated post-separation from a post-separation business entity established by the husband, that entity assumed the nature and characteristics in all relevant particulars of a pre-separation business entity which ceased trading as a consequence of the unilateral action of the husband, that entity having been the significant business objective of the marriage to which the wife had made contributions.
Counsel for the wife submitted that the husband’s efforts in obtaining the necessary qualifications, work experience and contacts, including travel overseas supported by the wife provided the platform for the husband to establish and secure consultancy business in the telecommunications industry which in turn enabled [C], and later [L], to generate income. It was that income that was the source of the paid legal fees. I accept that submission.
In my view the authorities require me to treat the consequences of the husband’s actions in a just and equitable manner.
Should [L] and Property P be excluded from the pool and should the Court adopt a “two-pools” or a “global” approach?
Counsel for the husband submitted that the factual basis of this case required me to adopt a “two-pools” approach when assessing the parties’ contributions. She says, firstly, that I would exclude the interest in Property P on the basis that the wife had made no contribution to that property. She says that the steps taken by the husband at separation enabled me to make clear assessments of pre and post-separation contributions and that justice and equity arguments require me to adopt a “two-pools” approach. Alternatively, she says that if I am not prepared to exclude Property P, then the “two- pools” approach is otherwise the appropriate approach. She says that the court will often use the “global” approach because of difficulties associated with working out and separating the contributions made before separation and what flows into the post-separation period. She says that the husband’s acquisition of post-separation assets arose from his post-separation efforts and that it was the same “as if he had acquired a new job in a new government department in Melbourne”.
I do not accept those submissions. [L] was not an entirely new initiative established by the husband post-separation. [L] was the source of the deposit on Property P, the husband’s evidence being that $72,150 was paid from the [L] account to his personal savings account being a repayment of a loan by [L] of $36,453.99 and then a further drawing from [L] of $35,696.01.[13] I am accordingly not prepared to exclude Property P from the pool.
[13] See above n 2, paras.86 and 87.
Nor, in my view, is the “two-pools” approach appropriate in the circumstances of this case. It is not unusual for the contributions of a husband and wife to change following separation. As the Full Court observed in Scott & Scott [2006] FamCA 1379 at paragraph 113 (referring to the decision in Cavanaugh & Thrum [2002] FamCA 196 at paragraph 57):
Contributions may clearly change after separation in that there is no longer necessarily a community of contribution between the parties. There may no longer be a carrying out of each of their contributions in their own sphere to the mutual benefit of the other.
In many cases, contribution continues from one party without assistance from the other. That contribution might take the form of caring for children or the management or improvement of assets……. The fact that these events have occurred post separation goes to the weight to be given to the contributions rather than to the exclusion altogether of the asset out of the pool and the reconstruction of an artificial pool of assets as at the date of separation”.
In preferring the “global” approach I accept the submissions of the wife’s counsel and have taken into account as relevant factors the following:
a)That during the period following the parties’ separation when the husband was acquiring property from the income he derived through [L], the wife had the primary care of [X] and the husband’s ability post-separation to assist in his care was limited as he was travelling for work purposes and otherwise resided in Melbourne. This was the case, notwithstanding his spending regular time with [X].
b)That the husband applied his post-separation contributions through [L] to acquire Property P and other post-separation assets, those acquisitions being sourced from income derived from the principal business initiative of the parties, established during their relationship, to which the wife made significant indirect contributions, albeit this entity operating following their separation under a new name.
c)That the proportional significance or the extent to which the post- separation property reflects a percentage of the overall property in this case would, if the court adopted a “two-pools” approach, lead to an artificiality between the two points in time in appropriately assessing the parties’ contributions and risk, in the context of this eight year relationship, over assessing the husband’s financial contributions post-separation.
d)That this is not a case involving the need to consider superannuation separately, accepting, as I do, that the “two-pools” approach is not limited to a consideration of only superannuation interests;[14] and
e)The period of time over which the husband made post-separation contributions was not a significant period. By way of comparison, it was less than the four year period of post-separation contributions made by the husband in Scott (supra).
[14] See Challen & Challen (supra) at para 97 and general discussion following; also see C and C (2005) FLC 93-220.
It is not correct in my view to distinguish or limit the principles enunciated in cases such as Scott (supra) and Farmer & Brambley (2000) FLC 93-060 to cases where the wife had been working to support her husband whilst he completed his degree or where there were children to care for, the husband asserting that, in this case, the parties did not have children until late in their marriage. The wife made various contributions throughout the relationship. Her contributions included, but were not limited to her contribution in bearing and caring for [X] including her care of him post-separation. This was a particularly significant contribution in circumstances where the husband was often absent for work and where [X] was a sick child.
As the Full Court further observed in Scott (supra) at paragraph 113, again quoting a passage in Cavanaugh & Thrum, “As Kay J said in Farmer & Brambley (2000) FLC 93-060 at 87,949 the Court’s task is to evaluate all of the contributions from the time of the commencement of the parties' relationship until the time of the hearing and give such weight to such contributions as the Court thinks is appropriate in the circumstances”. In Farmer (supra), Kay J also said at 87,949, that there is nothing in the legislation “that requires s 79(4) (a) (b) and (c) contributions to be measured only in terms of ‘what either party contributed to the assets of which they are presently possessed’”.[15]
[15] Farmer and Brambley (2000) FLC 93-060 at para 69.
I accordingly propose to include in the pool the assets and liabilities of [L] and bring into account the husband’s interest in Property P. I propose in evaluating the parties’ respective contributions to adopt a “global” approach.
Conclusion on value of net pool
I do not accept that the value attributed to the net pool by the wife in the amended schedule handed up during the course of submissions in the sum of $150,659 is the net pool of assets to be divided between the parties for the following reasons:
a)The additions of the personal bank accounts are incorrect. The personal bank accounts total $2,864, not $8,456;
b)The total of the Family Trust Business Account is $27,588, not $30,790;
c)The total of the Family Trust Assets is $34,573, not $41,730;
d)The total gross pool is $215,885, not $231,836;
e)The total net pool is $137,250, not $150,659.
I do not accept that the value attributed to the net pool by the husband as detailed at paragraph 12 of his affidavit filed by leave on 21 April 2008, as corrected by his Counsel during oral submissions, is correct in that:
a)I propose to exclude the monies on deposit in the Lloyds TSB account being account number [1] in the wife’s sole name which the parties agree and which Exhibit 9 shows had a balance of £33.71 as at 15 August 2007. The balance was not converted into Australian dollars in evidence before me and in any event it is a modest amount.
b)I propose to include as an add-back the husband’s paid legal costs for the reasons that I have outlined;
c)I propose to exclude the credit card liabilities in the sum of $2,542 as I am not satisfied on the evidence that they are matrimonial liabilities that should properly be brought to account.
I find that the net assets of the parties to be $137,250 as follows:
$$
Personal Bank accounts
·Husband 1,562
·Wife 1,110
·Husband and Wife 192 2,864
Family Trust Business account
·[C] 15,964
·[L] trading 6,513
·[L] term deposit 5,111
27,588
Family Trust assets
·Toyota RAV 4 26,600
·[L] share portfolio 7,973
34,573
Superannuation
·Husband total 54,818
·Wife total 7,227
62,045
Husband’s real property interest 72,150
Add Back
·Husband’s legal bills paid 16,665
Gross Pool215,885
Less
Motor vehicle lease 31,036
Other47,599 (78,635)
Net Pool137,250
How are contributions to be assessed?
The husband says that if I adopt a “global” approach then he should receive 90% on contribution. I am satisfied that an adjustment of 90% in favour of the husband is not reflective of the significant pre and post-separation contributions made by the wife. I assess the parties’ contributions up to the date of separation as being equal. I assess the parties’ contributions post-separation as being equal.
The basis upon which I have reached this conclusion is as follows.
This is not a short relationship. It lasted eight years. Both parties made financial and non-financial contributions during the relationship. Both parties made contributions to the best of their ability in the roles that they each assumed during the relationship.
In terms of their financial goals the focus of the husband and wife was on the advancement of the husband’s career. By virtue of his professional qualifications his employment prospects were likely to be the more remunerative. Further the parties proposed to start a family at some stage and it was their intention that the wife should assume a primary carer role for [X], at least in his early years.
Whilst the wife worked outside of the home her efforts were directed to supporting the husband’s career goals for their mutual benefit. She travelled overseas with him when the husband sought work to advance his skills and experience. I accept that the wife was unable to pursue her career whilst overseas. The husband conceded during cross examination that there were countries where the wife experienced visa problems which impacted on her employability. Further, his evidence was that when the wife was offered employment in Budapest she was unable to take that up as it was a few weeks prior to the completion of his work.[16]
[16] Above n 2, para 103.
Counsel for the husband submitted that the wife did not depose to the impact of that on her. However the impact of that on her was an interrupted work history. She left Australia, lived in countries such as Turkey, where she says, and I accept, there were some safety issues that precluded her from working in the beauty industry. This was prepared to do this to further the husband’s career.
Whilst she may have left a beauty business that was not at that time profitable that does not mean that had she stayed in Australia from June 1999 to December 2001 she would not have continued the business or otherwise sought work opportunities and advancement. The fact that when she returned to Australia she was able to resume her work with [company omitted] does not alter the fact that the parties’ relocations associated with the husband’s work, often only for short periods of time, and often in countries where English was not a first language, resulted in interruptions to her own work opportunities by reason of her travel abroad.
Further, the wife’s evidence is, which I accept, that living abroad was at times challenging and impacted upon her socially.
Further, on the parties’ permanent return to Australia the wife continued to support the husband’s career which involved further relocations.
I accept the wife’s evidence that whilst the husband was studying and working full time that she made the greater homemaker contribution to the relationship, including during periods when she was also in paid employment.
With the birth of [X] the wife did not pursue paid employment. She devoted her time and energy in the care of [X] including when the husband was residing elsewhere for work reasons. This was a significant contribution, particularly in circumstances where [X] was unwell. I accept the wife’s evidence in relation to [X]’s health and her response to that.
I accordingly assess the parties’ contributions to the date of separation as being equal.
Following separation the husband made significant contributions. He continued to work long hours. In terms of the value of the husband’s post-separation contributions in the form of his acquisition of his interest in Property P this represents about 52% of the net pool. The husband also contributed financially to the support of the wife in the form of the provision of and payments on her car and to [X] in the form of child support in the sum of $326 a week. He did not seek a reduction in his child support payments for his travel to Brisbane to spend time with [X], the cost being about $550 per visit on alternate weekends.
Whilst I accept that the husband’s efforts post-separation in conducting and developing [L] should be accorded appropriate weight the wife also made a significant contribution in caring for [X]. Whilst the husband has remained a devoted father and is committed to the development of his relationship with [X], his work commitments and the geographical imperatives at play meant that the wife has had to shoulder the major responsibility for [X]’s care notwithstanding [X] spending some time in child care and regular time with his father.
To assess the husband’s financial contributions as having a greater weight than that of the wife’s non-financial contributions in caring for [X] would do an injustice to the wife. I have regard to the dicta of Full Court in Farmer (supra) on the need to evaluate all of the contributions from the time of the commencement of the relationship until the time of hearing, including when considering post-separation assets. I need to consider like contributions to the welfare of the family or otherwise that may have been made over previous years and which have continued following separation.
Further, I take into account that the husband’s post-separation contributions in acquiring Property P were derived from the principal business initiative of the parties established during their relationship to which the wife made contributions.
I assess the parties’ post-separation contributions as being equal.
Overall, I find that the parties’ contributions during their relationship pre and post-separation were equal.
Should there be an adjustment under section 75(2)?
I must now consider if any adjustment under section 75(2) of the Act is warranted. The husband says that there should be an adjustment in favour of the wife, which he puts at 10%. Whilst I am satisfied that there should be an adjustment to the parties’ contribution based entitlements in favour of the wife by virtue of her care of [X] and income earning disparity between the parties, I am not satisfied that 10% of the net pool or about $13,725, as advanced by the husband, is an appropriate adjustment.
The husband is aged 35 years. He enjoys good health. The wife is aged 35 years. She enjoys good health.
[X] is aged 3 years and he resides full time with the wife. He suffers from allergies including a severe allergy to eggs and egg products. He has a wheat nut sensitivity which may develop into a nut allergy. This is being monitored and he must avoid eating peanuts and cashews. He is under medical care and will require review from time to time. He also suffers from eczema which he has had since he was 3 months of age. He also suffers from inhalant allergies. He wheezes and the report from Professor Dr S to Dr Z, dated 7 January 2008, refers to [X] as having had a “bad winter”.[17] These conditions are all being treated in a variety of ways, including by Ventolin and other medication. The wife will be primarily responsible for monitoring and responding to [X]’s health needs, including seeking medical intervention and review as required.
[17] Above n 1, annexure M.
The husband has a history of employment. Any break in his employment history has not been lengthy. He has tertiary qualifications, including a Masters in [omitted] degree which he acquired during the relationship. His taxable income in the financial year ended 30 June 2007 was $323,000 (rounded). His income in the 2006 previous financial year was $162,000 (rounded).
Notwithstanding his concerns about recent business difficulties he was sufficiently confident in February 2008 to prepare a budget that showed a projected personal income of about $220,000 gross or $132,000 net for the year. This budget was prepared at a time when his evidence was that he then had only one contract in place. He also was confident enough to undertake a significant mortgage commitment on the purchase of Property P in December 2007 and for him and his partner to make a decision to start a family. He has continued to meet his financial commitments to [X] throughout this period and also his financial contributions to the wife including up to trial. He presented during the course of his evidence as an intelligent and capable person.
I am satisfied on the evidence and from my observations of him under cross examination, including his attention to and recall of financial detail, that notwithstanding his lack of confidence in April 2008 about the future and the difficulties that he outlined in his evidence that his qualifications and experience are such that he has the capacity to continue to earn a significantly greater income than that of the wife even if the wife obtains her further qualifications.
In summary, whilst the husband’s evidence at trial was that he had been experiencing difficulties securing consultancy work I accept the submission of the wife’s counsel that there was nothing in the evidence that would cause me otherwise to believe that the husband was more likely than not to be able to gain work in the industry, that the history of his employment has shown him to be capable and resourceful and that he is more likely than not able to continue to secure remunerative employment. I further find that he has, on the evidence, given his past employment history, given his industry connections, given his preparedness to pursue avenues of remunerative work, the know-how to apply his skills and qualifications in obtaining work if he decided not to pursue his present consultancy work. His evidence was, for example, that he did not take up some work opportunities because of his desire to be Melbourne based.[18]
[18] Above n 2, para.77.
The wife has not been in paid employment since May 2005. She has qualifications [in the beauty industry]. She is also a qualified [omitted] however views herself as not being a good [omitted]. She suffered a back injury during the relationship which impacts upon her ability to undertake work in the beauty industry. Any training work may also involve her in travel away from home.
The wife is presently a full time undergraduate student at [omitted] University in Brisbane undertaking Bachelor of [omitted] studies. I find on the evidence that it is reasonable for her to retrain and secure [omitted] qualifications. She is in the first year of a four year course. By the time she completes her degree [X] will be about 6 years of age. The qualifications she proposes to obtain will likely place her in a stronger financial position and provide her with employment conducive to her role as [X]’s primary carer, particularly when [X] commences primary school.
At present the wife has the assistance of day care and her parents in her care of [X]. I otherwise accept her evidence in paragraphs 74 to 97 of her Affidavit of Evidence in Chief[19] relating to her attempts to obtain work and the reasons for her undertaking her present course of study.
[19] Above n 1.
The wife is reliant on financial support from the husband in the form of the provision of a car and child support. She is also in receipt of government benefits from which she supports herself.
[X] has health, including dietary needs which I have detailed. The wife will be primarily responsible for his care as the husband lives in Melbourne. Whilst the husband is financially and emotionally committed to [X] the distance factors do not permit him to be as immediately available to [X] had, for example, he lived closer to [X]. He has a partner in Melbourne. It was her intention to cease work pending the birth of their child. The husband will have future commitments, financially and otherwise to their child.
The wife wishes to obtain her own independent accommodation close to her parents. She is paying her parents the sum of $100 per week for board. She outlines in her evidence the quantum of her likely commitments should she obtained rented accommodation.
The husband and his partner are residing in the Property P property. The husband has been meeting the outgoings on that property. He says that if his cash flow does not improve he may have to sell the property and or limit his travels to Brisbane to spend time with [X].
The net pool to be divided between the parties is small.
Taking into account all of these factors, in my view the wife deserves some adjustment in her favour for income earning disparity and her ongoing care of [X].
In Clauson and Clauson (1995) FLC 92-595 the Full Court observed that the application of percentages does not necessarily result in a just and equitable result, when it said, at page 81,911, that there is “at times a tendency to assess s.75 (2) factors in percentage terms without considering its real impact, and we think there is legitimacy in the views expressed in more recent times that the Court has tended to operate in this area within artificially delineated boundaries. That is, it appears almost to be inevitable that the s.75 (2) factors will be assessed in a range between 10% and 20%. A number of cases will justify an assessment outside those parameters and in any event it is the real impact in money terms which is ultimately the critical issue.''
I assess the adjustment in the wife’s favour at 35%. Translated into financial terms this equates to $47,950 of a net pool of $137,000 (rounded). In my view this is an appropriate adjustment.
Accordingly an increase in the wife’s total contribution based entitlement of 50% to 85% of the pool of $137,000 (rounded) is justified in my view.
Is the order just and equitable?
In dividing the total net pool of assets and superannuation of $137,000 (rounded) as to $116,450 or 85% to the wife and $20,550 or 15% to the husband I am required to consider if such an order then satisfies the requirement of justice and equity under section 79(2).
The proposal of the husband does not, in my view, achieve a just and equitable result. It would leave the wife with largely superannuation, some cash and a car with a significant debt attached to it.
I propose that the wife retain her superannuation, her NAB flexi direct account, the overseas joint bank accounts and the RAV motor vehicle, unencumbered. The value of these assets totals about $35,129.
I propose that the wife receive a cash adjustment of $55,000 such sum to be paid as follows:
a)$16,000 within 7 days of the making of these orders; and
b)the balance to be paid within a further 28 days thereafter.
I propose to effect a superannuation split from either the husband’s superannuation interest in ING or from ING and the Australian Super Fund on the basis that the wife receive a splittable payment to a total value of $26,321.
On the assessment proposed by me:
The wife will receive:
Non-superannuation assets $82,902
Superannuation assets $33,548
The husband will receive:
Non-superannuation assets $(7,947)
Superannuation assets $28,497
I believe this to be a just and equitable result.
It provides the wife with an unencumbered and a mix of cash and superannuation. She should have some cash as a buffer against the exigencies of life. There is a pool of assets from which cash can be sourced. The cash component can be funded by the husband from the [C] account and/or the equity in Property P or from the sale proceeds of Property P.
I propose that the wife also retain the balance in the Lloyd bank account in her sole name which I did not include in the pool but which involves a small amount of money.
The effect of my order will be that the husband will either discharge the loan on the car or continue the repayments on that vehicle pending the discharge of the liability. He has of course been making these payments to date, including between February and April 2008 when he said [L] was experiencing cash flow problems. He also appears to have been able to slightly reduce the mortgage liability on Property P over the same period of time.
The adjustment I propose will provide the wife with a mixture of cash and superannuation. It is a modest settlement on any view. It will leave the husband with little in the way of property. However as Counsel for the husband observed, there is little in the pool.
The husband will exit the relationship with professional skills and a work history that will enable him to continue to earn a good income into the future. He is intelligent, capable and healthy. There was nothing in his demeanour or presentation at trial that led me to believe that he was not capable of earning his way out of his current financial position and re-establishing himself.
Is the wife entitled to an order for spouse maintenance?
The principles upon which I must rely are outlined in sections 72, 74, 75(2) and (3) of the Act as considered in a number of authorities, including in Mitchell and Mitchell (1995) FLC 92-601.
There are two issues for my consideration:
a)Is the wife unable to support herself adequately by reason of her care for [X] or other adequate reason; and, if so
b)Does the husband have a capacity to pay?
Is the wife unable to support herself adequately?
The husband says that the wife is able to support herself and that she does not meet the legislative threshold test of need in section 72 of the Act. He says that this is so notwithstanding [X] being in her care because, he says, [X] is in child care three days a week and when one factors in the time he spends with him each alternate weekend, that adds up to six days out of fourteen days when [X] is not in her care during which period the wife can obtain work. Further, the husband says that the course of study undertaken by the wife is some ten to fifteen contact hours each week and that it is not unreasonable for her to undertake some form of part time employment. However[X]’s care involves time, commitment and organisation which the mere mathematical division of the number of days in a fortnight and its impact upon the wife’s time does not appropriately recognise. Further, the wife’s decision to retrain at this time is reasonable as it will not only likely provide her with a better income but work opportunities that are likely to better accommodate the care of [X]. It is also contemplated by section 75(2)(h) of the Act.
The wife is unable to organise her contact hours in blocks and she is required to attend at university every day. I accept her evidence that she was advised by the university that it was preferable that she not work whilst undertaking full time study. She has commitments associated with her course, which currently involve her travelling to and from university daily. She has assignment work. Whilst the husband says that she is able to secure some [omitted] work on the Saturday when she does not have [X] in her care, I accept her evidence as to why she is unable to secure this work.
Whilst it may be the case, as Counsel for the husband submits, that it is common for many full time students to undertake part time work, in addition to her full time study commitments the wife is primarily responsible for [X]. Her parents, whilst supportive, both have work commitments and are not available to care for [X].[20] The fact that [X] is in day care does not diminish the totality of his care arrangements and day to day decision making involved in his care which falls to the wife.
[20] Above n 1, para 97.
The husband further says that the wife’s expenses are not reasonable and in this regard his Counsel referred me to her estimate for entertainment and hobbies at $75 per week and her holidays at $30 per week.[21] However the husband’s Financial Statement discloses an average weekly expense of $114 for entertainment and hobbies and $54 for holidays. In my view the wife’s expenses as disclosed in her Financial Statement are reasonable.
[21] Para 60 Wife’s Financial Statement filed 8 February 2008.
The wife says that although she is presently living with her parents this is not a long term arrangement. She outlines her expenses in the event that she was to secure rented accommodation. Those expenses are however calculated on the basis of her being able to obtain 24 hours of work each week which she has been unable to do and which she has been advised she should not do whilst she is studying full time. Whilst I accept that she has an understandable desire to live independently from her parents, in circumstances where she is retraining and seeking that the husband support her whilst she does so, I do not propose to assess the wife’s reasonable needs other than on the basis of her continuing to reside with her parents.
I find that the wife’s reasonable weekly needs whilst living with her parents are not less than $553 per week (weekly expenses of $450 plus her share of board of $50 per week plus registration and insurance on her car of $24 which have to date been paid by the husband plus minimum credit card payments of $29). I will round this off to $550.
The wife’s income consists of child support payments in the sum of $325.96 per week together with government assistance of $351 per week. From her total income the wife then meets [X]’s expenses and her own expenses which she details in her Financial Statement. The husband says that the wife has a further $37 per week at her disposal as a result of her receiving $42 per week by way of a child care contribution for up to fifty hours of child care whether it is taken or not. The wife’s evidence is that [X]’s costs of child care are $79. I accept Counsel for the husband’s submission in this regard.
I find that the wife has made out a need and that the present shortfall in her income over expenditure is $555 per week, her only income being government benefits.
Does the husband have a capacity to pay?
The husband says that he does not have a capacity to meet the wife’s need due to the difficulties in securing ongoing consultancy work. Whilst I am satisfied on the evidence that the husband has had some difficulties, I find that his revised February budget was prepared against the background of that. I am satisfied that even if the difficulties continued and even if he had to make a decision about continuing with his consultancy business, he has the capacity to secure other employment This is because of his work experience, professional qualifications and skill set.
I assess the husband’s capacity to earn income as outlined in his Financial Statement at $4,964 per week.
The wife says that her failure to challenge the reasonableness of husband’s expenses at trial does not silence her from making submissions on the reasonableness of those expenses provided that the submissions are contained within the compass of the evidence. However the expenses were not challenged and whilst some of the husband’s expenses may be higher than those of the wife the mere fact that they are higher does not mean they are unreasonable. Further, in my view, the husband should have been afforded an opportunity to respond if there was a challenge to his expenses on the basis of reasonableness.
The husband is considering selling Property P. His evidence was that before he purchased Property P, his rental commitment was about $800 per week. I assess his likely future rental commitment, if he did sell Property P, at about that figure.
He will have the responsibility to contribute towards the support of his child with Ms R. No evidence was adduced in that regard however it is a factor that I am entitled to take into account in considering his expenses.
Ms R is capable of earning an income of about $90,000 per annum however the husband’s evidence is that she does not propose to work during their child’s infancy. She has one child from a previous relationship whom she supports and before she ceased work she was contributing to the husband’s household budget by way of food and car expenses in the sum of $80 per week.
The husband claims as reasonable expenses the mortgage payments, rates and contents and mortgage accident insurance on Property P in the sum of $1,208 per week. He claims payments to [L] of $138 per week in respect of the loan to purchase Property P. These expenses total $1,346 per week.
In purchasing Property P the husband acted unilaterally in a way that increased his financial commitments. He did so without regard to the impact of that on the wife. He reduced available cash resources which were then applied to fund mortgage payments and the purchase costs of Property P. He also drew a sum of $13,000 in cash and deposited this to a mortgage offset account as a contribution to the transaction costs of sale. The source of these funds was $12,000 in cash drawn from his NAB Visa card and $1,000 from his savings account.[22] Between February 2008 and April 2008 he managed to reduce the balance on this Visa card to $60.[23]
[22] Above n 2, para 90.
[23] Above n 7, para 12.
I propose to ignore the payments in respect of Property P and assume the husband to be in the position that he was in December 2007 at which time he had a rental commitment of about $800 per week, albeit paid by way of a packaging arrangement with Ericsson.[24]
[24] Above n 2, para 168.
I propose to ignore the Visa card weekly expense in the sum of $215 as the Visa debt is now nominal whereas in February 2008 it was $12,297.[25]
[25] Paras 30 and 51 Husband’s Financial Statement filed 15 February 2008.
I find that the husband’s income is $4,964 per week. I find that the husband’s reasonable weekly expenses to be $4,051 per week as follows:
$ $
Fixed Personal expenditure
Income Tax 1,593
Superannuation 433
Notional Rent 800
Health Insurance 37
NAB Mastercard 50
Child Support 316
3,229
Average Weekly Expenses 822
Total expenses $4,051
I propose to make an allowance of a further sum of $300 per week being expenses of the husband’s second child based on the Lee “Expenditure Survey” tables.[26] I propose to include as an expense $80 per week previously paid by Ms R for the benefit of the husband when she was working and I do not propose to disallow or reduce the benefit to Ms R in residing in the husband’s home.
[26] Para 50-430 Australian Family Law Child Support Handbook
I accordingly assess the husband’s reasonable weekly expenses to be about $4,431. This leaves a surplus of income over expenditure of $533 per week. I propose to round that figure out to $530 as I did not include in the husband’s expenses the cost of contents insurance as the husband’s evidence is that that expense included mortgage accident insurance.
I accordingly order that the husband pay to the wife the sum of $530 per week by way of spouse maintenance.
The husband seeks an order under s.77A of the Act.[27] The section however does not apply to an order for periodical payment of maintenance. I accordingly do not propose to make that order.[28]
[27] Paras 23 and 24 Husband’s Amended application amended at trial; Para 14 Husband’s written submissions dated 15 September 2008.
[28] See commentary Australian Family Law, Butterworths at page 1414.
I ask the parties to prepare a draft minute of orders for my consideration.
I certify that the preceding one hundred and fifteen (115) paragraphs are a true copy of the reasons for judgment of Purdon-Sully FM
Associate: K Issa
Date: 3 November 2008
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