CANION & CANION

[2019] FCCA 2148

FEDERAL CIRCUIT COURT OF AUSTRALIA

CANION & CANION [2019] FCCA 2148

Catchwords:
FAMILY LAW – Property settlement – consideration of contributions – child support departure – passports for children.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79

Child Support (Assessment) Act 1989 (Cth) ss.116(1)(b), 117

Cases cited:

Stanford v Stanford (2012) 247 CLR 108

Russell v Russell (1999) FLC 92-877

Trevi & Trevi [2018] FamCAFC 173

AJO & GRO (2005) FLC 93-218

C & C [1998] FamCA 143

Ascot Investment Pty Ltd v Harper (1991) 148 CLR 337

M & M [1998] FamCA 72

Lane & Lane (1997) FLC 92-729

Williams & Williams [2007] FamCA 313

Pierce v Pierce (1999) FLC 92-844

Gyselman & Gyselman (1992) FLC 92-279

Applicant: MS CANION

Respondent: MR CANION

File Number: HBC 1071 of 2017

Judgment of: Judge McGuire

Hearing dates: 17 & 18 April 2019

Date of Last Submission: 14 October 2019

Delivered at: Burnie

Delivered on: 13 November 2019

REPRESENTATION

Counsel for the Applicant: Mr M Foster

Solicitors for the Applicant: Murdoch Clarke

Counsel for the Respondent: Mr M Trezise

Solicitors for the Respondent: Wallace Wilkinson & Webster

ORDERS

Property:

1. That the property of the parties inclusive of the husband’s superannuation entitlements be divided as to a net 57.5% to the applicant wife and a net 42.5% to the respondent husband.

2. That for the purposes of these Orders the husband, within 7 days of the date of these Orders, notify his election to the wife’s solicitors as to whether he wishes to retain the entirety of his superannuation entitlement and benefit or, alternatively, whether there be a splitting Order in respect of his superannuation policy and entitlement as to 57.5% to the wife and 42.5% to the husband.

3. That within 28 days of the date of these Orders the parties solicitors bring in detailed Orders in accordance with the percentage distribution above as to the assets and liabilities to be retained by each of the parties including as to any capital gains tax obligations in respect of the sale of the property situate at FF Street, Suburb GG.

4. That the matter be listed for further submissions, if necessary, in Hobart on Wednesday 15 January 2020 at 2.15 p.m.

Child Support:

1. That the wife’s Application for departure from Child Support Assessment be dismissed.

Children’s Passports:

1. That within 28 days of the date of these Orders the parties bring in consent orders in respect of passport Applications for the three children of the marriage including details of which party will hold the passports and as to provision of the passports to the other party.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT HOBART

HBC 1071 of 2017

MS CANION

Applicant

And

MR CANION

Respondent

REASONS FOR JUDGMENT

Applications

1. These are proceedings for property settlement. The applicant wife seeks an order whereby she receives 70% of the property pool and the husband receives the balance of 30%. She also asks for a Departure Order from Child Support Assessment for the parties three children, X (aged 12 years), Y (aged 10 years) and Z (aged 8 years). More particularly, the wife proposes that, in addition to child support assessed to be paid by the husband, he meet the following:

   a)One half of the expenses associated with the children’s sporting and extracurricular activities;

   b)One half of the children's education expenses including school fees, uniforms, footwear, excursion costs, books, stationery and electronic devices; and

   c)One quarter of the premium paid by the mother to maintain private health insurance cover for herself and the children.

2. The wife also seeks an order that the parties sign all documents necessary to renew the children's passports.

3. The husband proposes property settlement orders whereby he retain 55% of the property pool to himself and 45% to the wife. He argues that the wife's application for child support departure orders be dismissed.

Background

1. The applicant wife is the 44 years of age and the husband is 46 years old.

2. The wife works part-time as a self-employed tradesperson. She has tertiary qualifications.

3. The husband works as a casual public servant. He also has achieved tertiary qualifications.

4. The wife is from City C in the USA. She is now a permanent resident in Australia.

5. The parties commenced cohabitation in … 2002. They married on … 2006.

6. The parties separated on 15 July 2017.

7. The wife commenced these proceedings by application filed 22 November 2017.

8. The three children live in an equal shared care arrangement between the parties.

9. There is no indication on the material before me that either party has entered into a new relationship of any dependent or supportive nature.

The Evidence

1. Both parties provided affidavits, sworn financial statements, gave evidence and were cross-examined.

2. My observations of both the wife and the husband were of intelligent and articulate individuals but each keen to criticise the other both personally and as to their contributions during the relationship.  Similarly, each was keen to emphasise their own contributions.  Positive acknowledgements of the other were rare and, if given, then only reluctantly extracted during cross-examination.

3. The husband's father, Mr D, also gave evidence and was cross-examined. He is a retired health care worker living in Queensland whose affidavit was affirmed 31 October 2018. Mr D gave evidence supportive and corroborative in many ways of the husband's case, including as to his contributions and including contributions by Mr D himself to the purchase and improvement of various residential properties. Mr D’s evidence, however, was similar to that of his son in its criticism of the wife's contributions and gave me the impression of partisan rather than balanced narrative.

4. The wife adduced evidence from her mother, Ms E, and her two sisters, Ms F and Ms G. All are resident in City C USA and none were required for cross-examination although being made available by telephone.

5. Ms E confirms that the parties lived with her in City C USA between … 2006 and … 2008. Her unchallenged evidence contradicts the husband's evidence as to improvements he says he made on Ms E’s home. Her unchallenged evidence at [4] – [10] is:

   In about 2006,Mr Canion and Ms Canion (who was pregnant with her first child) came to live with me in City C USA. During the visit Mr Canion did not completely renovate anything on my property. I have a house which includes four bedrooms and five bathrooms, and I live alone in this house. Despite this Mr Canion insisted on having his family live in a small storage shed which he insulated with newspaper and painted out. The work on this shed was so poorly done that it will need to be demolished and removed.

   Some years later during a visit Mr Canion put down a bamboo floor in a small bedroom in my house.

   He built pergolas during one visit but these ultimately had to be removed because they were so poorly constructed.

   He never did any painting inside or outside the house.

   I paid for everything he ever did around my house.

   During the visits of Ms Canion and Mr Canion and their children I always financially supported them fully, lending then my car, paying for fuel, groceries and virtually all other expenses.

   During a visit Mr Canion decided to try out an idea of how he wanted to change the drainage of my house.  He caused so much damage to the drainage system to the house that significant repairs are required and there is still more work that is necessary.  Damage to the property has included the creation of multiple huge sinkholes, a destruction of some of the brick fence that surrounds the property and loss of soil behind the storage shed which has caused the shed itself to become unstable.

6. Ms F deposes that she and her family visited the parties in Tasmania in 2003 and that she recalls ‘that Mr Canion devoted a lot of his time to smoking marijuana and to surfing'.

7. Ms G deposes that: 'during visits to City C, Ms Canion's partner, Mr Canion, spent considerable time pursuing personal interests and relaxing at a coffee shop in City C.  I recall that he would undertake short trips away by himself, for example a few days on a canoeing trip.’

8. Both Ms F and Ms G explain their interest together with the wife in a residential property block in City C USA. They depose that the interest was left to the three sisters by their late father and that a number of other people also own interests in that property. Each deposed as to the sentimental value of the property and their reluctance to sell it.

The Issues

1. The argument between these parties rests on the weight that the Court should give to the various and substantial contributions by each of them.

2. The wife emphasises direct financial contributions by or on her behalf including (taken from the case summary):

   ·… 2002 – $309,692 plus three life insurance policies from the wife's father;

   ·… 2003 - gift of US $25,000 from the wife's father;

   ·… 2003 - gift of US $5,000 from the wife's father;

   ·2004 - wife's inheritance of US $202,029;

   ·2006 - US $10,000 gift from the wife's mother for parties wedding;

   ·… 2006 - US $6,100 gift from the wife's mother for the husband's immigration costs to USA.

3. The wife also claims further contributions of a more general sense including the accommodation and support for the parties from the wife's mother while living in the USA and the wife's indirect contributions as homemaker, parent and in respect of the maintenance and improvement of various properties purchased in Australia.

4. The husband claims an initial contribution including a yacht, equity in a house at BB Street, Suburb CC in Queensland, 55 acres at Suburb H in Tasmania, and $36,592 in cash and shares.

5. The husband also claims as a contribution by way of his labours to numerous properties purchased during the relationship and where the parties between them either own or have interests currently in no less than 12 pieces of real property.  A summary of the husband's argument is perhaps best put at [43] of his trial affidavit affirmed 1 April 2019 as follows:

   Between 2009-2016 my father and I purchased another 7 properties.  We undertook renovations on all of these and I managed the purchases and ongoing rentals.  These efforts were wholly those of my father and me.  Ms Canion never spoke to a conveyancer, a realtor nor a lending institution.  Ms Canion never interviewed a prospective tenant nor spoke to a resident.  Ms Canion never assisted in the cleaning, renovations or yard work of any of these properties.  Ms Canion never paid a bill nor handled any of the bookwork, negotiated a loan, tax work, banking or administrative work of any of these properties.  The entire effort of every aspect of these properties fell to my father and to me.

6. The husband claims a contribution on his behalf by the efforts and labours of his father and says at [44]:

   My father's contributions in the building of our asset pool was enormous.  He worked on numerous renovations and was integral to every project that we undertook.

Relevant Law

1. Matters of property settlement or alteration are dealt under section 79 of the Family Law Act 1975 (‘the Act'). Within the statutory limitations, the Court has a broad discretion pursuant to s.79(1) in respect of the orders that it makes.

2. The High Court in Stanford v Stanford[1] challenged a previously accepted four-step approach for trial Courts in considering property settlements.  Essentially, the Court in Stanford emphasised that there was an initial and separate consideration to be had at s.79(2) in that a Court shall not make an order under the section unless it is satisfied in all the circumstances that it is just and equitable to do so. Significantly, that consideration is to be made within the particular factual platform and circumstances and not simply by a conflation of a consideration of contributions pursuant to s.79(4). Nevertheless, later jurisprudence suggests that it is then at least of assistance to trial judges to follow the four-step approach, although not necessarily in a strict formulaic way.

   [1] (2012) 247 CLR 108

3. In the matter now before me the parties cohabited for near 15 years.  They are the joint proprietors of assets and jointly responsible for liabilities. There are children of the relationship. The evidence confirms that the relationship is over.  In all of those circumstances, I am easily satisfied that it is just and equitable to enter upon the consideration of altering property interests.

4. It is then for the Court to establish the property pool. ‘Property' includes assets, liabilities and financial resources. In this sense, superannuation is to be 'treated as' property although not strictly so in that it is not crystallised in the sense of other assets. There is, therefore, a discretion in the Court as to whether to consider superannuation together with assets in a 'one-pool' approach or separately in a 'two-pool’ approach. In this exercise the Court is to attribute value to the items in the property pool and hence obtain value for the pool itself.

5. Next the Court considers the contributions to the acquisition, conservation and/or improvement of the property pool. Contributions may be of either a direct or indirect financial type.  They might be of a non-financial type including contributions as homemaker and parent.

6. After a consideration of altering the parties interests in the property pool by reason of contributions, the Court is then to consider whether there should be any further adjustment to either of the parties on the considerations at s.79(d) – (g) of the Act and including any relevant considerations under s.75(2).

7. Finally, it is generally considered proper for the Court to then 'stand back' and be satisfied that the anticipated orders to be made are just and equitable and not just a mathematical percentage division of the parties property.[2]

   [2] Russell v Russell (1999) FLC 92-877

The Property Pool

1. To their credit and despite their capacity for disagreement and suspicion, the parties have essentially agreed the property pool and valuations for the purposes of this consideration.

2. There was at the commencement of the trial a disagreement as to the value of the wife's interest in an 'American property' and/or a company known as J Group. The respondent initially attributed values of $44,333.33 and $54,115 respectively.  The wife says, firstly, that the real property is the asset of the J Group and therefore effectively the same entity. She says that she owns a minority shareholding in the group which owns the real property.  It seems that the wife's sisters and other unconnected persons are also shareholders.  Whilst a land value was obtained, there was never a full and proper value of the wife's asserted interest in that property or entity.  However, in final submissions the husband effectively made a concession that this asserted asset not be included in the property pool where his Counsel’s written submission is as follows:

   He has previously conceded that the wife’s ‘American property’ valued at $AU44,300, and her interest in J Group  are financial resources and can be excluded from the asset pool.

3. After the taking of evidence and submissions and my determinations being reserved the parties jointly asked that the judgment remain reserved pending some further adjustments to their property portfolio.  Whereas, they had owned or had interest in a property at FF Street, Suburb GG at the time of the evidence, they then determined to dispose of that property and which has now had a settled sale with agreed balance proceeds of $142,214.86 now held for the parties in trust.  Accordingly, a previous total mortgage liability of $759,327 has been reduced to an agreed figure of $517,076.16.  A statement of Agreed Facts in the above terms was provided to my Chambers under cover of a letter of 14 October 2019.

4. I note, however, that the “Statement of Agreed Facts” makes no reference to any capital gains tax liabilities in respect of this sale.  The evidence suggests that FF Street, Suburb GG was not the principal place of residence of either party and I expect, therefore, that capital gains tax might be a relevant consideration.  I will give the parties liberty to apply accordingly in my orders in the event that my assumptions are correct.

5. The final issue in respect of the property pool is the wife's claim that there be 'add-backs' in a total of $110,000 comprising the husband's drawdown of approximately $60,000 from his ME re-draw mortgage account since separation and, secondly, what she claims to be an unaccounted sum of the $50,000 from the sale proceeds of the husband's investment property at JJ Street, Suburb KK which sold in August 2017 for $336,000.

6. The wife says that during the period of receipt of these monies the husband had earnings of approximately $63,000 per annum, $11,000 in rental profit after expenses, and a tax refund for the financial year giving him total 'income' of around $80,000.  Further, the wife urges the Court to find that the husband's retention of the $110,000 is part of a deliberate strategy by him to decrease the property pool and/or remove the funds from that pool to his advantage and as evidenced by the concession made by him that he had transferred $40,000 to his father from funds held by him and without the knowledge or consent of the wife. The husband was cross-examined in respect of this issue during the trial. He made candid concessions and emphasised his voluntary repayment of those monies into consolidated revenue.

7. The husband argues that there should be no add-back (or, alternatively no consideration in favour of the wife pursuant to s.75(2)(o) of the Act.). He says that he has given proper, open and adequate explanation as to the use of those monies being justifiable and reasonable expenditure in the particular circumstances of the parties and his own income.

8. In his affidavit of 1 April 2019 at [54] – [57] the husband deposes:

   We sold my house in JJ Street, Suburb KK for $336,000 in August 2017. From this were deducted conveyancing $982, land tax on the property$1,302, solicitors fee $105, loan discharge fees $140,408, loan break cost $987 and realtor’s fees $8,740.  There was $180,149.00 remaining.

   The remaining funds from this sale were used to pay an outstanding land tax bill of $10,630, to clear the $70,000 loan held in my father's name with the Westpac (used to purchase our property at Town K), a container for some storage for my new home $2,860, my new car ($5,500) and $,9500 to clear our debt with my father.  I have also used these proceeds to pay for our families BUPA health insurance ($2,940), Ms Canion’s $299,000 mortgage on LL Street ($13,404), and my $179,000 mortgage on A Street, Suburb B ($8,376).

   Since separation, we have also sold our property at M Street, Suburb N.  The combined Capital Gains tax payable on the sale of the JJ Street, Suburb KK and M Street, Suburb N properties is $44,773.

   I then sold remaining shares in MM Shares for $6,850 and NN for $6,026 in November 2017.  I used this money and my tax return from 2016/17 financial year of a proximally $8,000 to repay my father the outstanding loan of $30,422 ( from the original interest free loan).  I also used $9,500 from the sale of our JJ Street, Suburb KK property to clear this debt.

9. The Full Court have recently in Trevi& Trevi[3] had cause to consider the jurisprudence in respect of claimed 'add-backs'. At [27]- [30] their Honours summarise the process of consideration for trial judges as follows:

   [3] [2018] famCAFC 173

   Dissipation of property and expenditure other than on legal fees

   [27] The Full Court held in AJO & GRO[4] that addbacks fall into 'three clear categories': where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and 'waste' or wanton, negligent or reckless dissipation of assets.

   [28] However, the Full Court also made it clear that addback does not necessarily occur whenever 'a party has expended money realised from the disposition of assets that existed as at the date of separations, the Full Court describing such a proposition as ‘unduly simplistic'. An earlier Full Court made the same point saying that adding back is ‘the exception rather than the rule'. (C & C).[5]

   [29] The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, 'the Family Court must take the property of a party to the marriage as it finds it'[6] at trial.  An important parallel proposition is that the parties do not 'go into a state of suspended economic animation' after separation.[7] Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.

   Two fundamental premises emerge from AJO & GRO and the authorities preceding it. First, 'adding back' is a discretionary exercise. When a discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not 'exceptional' justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s.75(2) factor. Indeed, it has been said that the latter is 'a course which is, perhaps, technically more correct' than adding back to the list of existing interests in property.[8]

   [4] (2005) FLC 93-218

   [5] [1998] famCA 143

   [6] Ascot Investment Pty Ltd v Harper (1991) 148 CLR 337@335

   [7] M & M [1998] FamCA 72 at 2.11

   [8] Lane & Lane (1997) FLC 92-729

1. I accept, therefore, that the making of add-backs is to be seen as 'exceptional' but still an available tool for Courts in determining the property pool in proper factual platforms. I am not of the view that the exercise for the trial judge is a purely mathematical or accounting one in respect of each item of expenditure but generally a consideration of 'circumstance' and 'reasonableness' in the explanation for the asserted expenditure or disbursement of funds. The wife's Counsel in his written submissions says that the husband gives 'no proper explanation as to the fate' of the $110,000. I disagree with that submission. Even within the context of the husband's income, the above-mentioned paragraphs of his affidavit give a form of accounting showing, in my view, a reasonable explanation for the expenditure of those monies. Further, documents were tendered in support of the assertions made in the affidavit. I am not satisfied, therefore, that there should be an add-back of the sum sought by the wife or that sum ought be taken into account under s.75(2)(o) on the basis of the husband either retaining those monies without explanation or, alternatively, dissipating them with any element of wasteful, wanton, negligent or reckless intent.

2. Consequently, I am able to determine the property pool with values as follows:

LL Street, Suburb OO (FMH)

       $670,000

O Street, Town K

  $150,000

Net proceeds of sale of FF Street, Suburb GG

  $142,214.86

Half interest in P(1) Street, Suburb Q (with husband’s father)

  $ 80,000

P(2) Street, Suburb Q

  $150,000

R Street, Suburb S

  $120,000

A Street, Suburb B

  $370,000

Lot 1, PP Street, Suburb H

  $160,000

Lot 2, PP Street, Suburb H

  $ 95,000

Half interest – T Street, Suburb U

  $ 72,500

Half interest – PP Street(3), Suburb H

  $ 50,000

Proceeds of sale from M Street, Suburb N

  $141,630

Husband's Motor Vehicle V motor vehicle

  $    5,500

Wife's Motor Vehicle W motor vehicle

  $  20,900

Wife’s savings

  $    2,000

Wife’s US funds

  $250,000

Wife’s US insurance policies

  $110,769

Total Assets

  $2,590,513.86

Liabilites

Capital Gains tax on sale of M Street, Suburb N and JJ Street, Suburb KK (total)

  ( $  44,882)

ME Bank mortgage (total)

  ( $517,076.16)

Total Liabilities

Total Tangible Assets

  ( $561,958.16)

  $2,028,555.70

Husband’s Superannuation

  $ 44,710

Wife’s Superannuation

  $ nil

Total assets

  $2,013,802

Contributions.

1. Both parties have made significant contributions to the asset pool as set out above. Those contributions differ in a large part in time and nature.  Not surprisingly, each of the parties tends to emphasise the import of their own particular contributions.

2. This relationship brought into the world three children currently aged 12, 9 and 8 years. On the evidence, I am generally satisfied that each of these parties contributed to the care of the children and generally in a homemaker role and did so by each of them not pursuing to the ultimate potential their significant postgraduate tertiary qualifications. To the contrary, each has chosen to pursue more casual or part-time forms of employment.

3. The wife made significant initial financial contributions and also during the early years of this relationship. There is some dispute between the parties as to the quantum of the wife's actual wealth as at the date of commencement of cohabitation.  She says that she had funds of $309,692 together with three life insurance policies all provided by her father. The husband says that the wife had funds of US $220,237 inclusive of her three life insurance policies. A document was tendered as exhibit A1 being apparently prepared by or on behalf of the wife herself. That indicates her wealth at the relevant time without the life insurance policy. In any event, I generally prefer the wife's recollection of her own wealth position at that stage over and above the recollection and assumptions of the husband.

4. After hearing the evidence, I generally accept the wife's assertions as to direct contributions by or on her behalf as set out in her trial affidavit and again in her Counsel’s written closing submissions as follows:

   ·     At cohabitation the wife had $309,692 and three life insurance policies, all provided by her father. Those life insurance policies currently sit in the property pool at value of $110,769.

   ·     In … 2003 the wife's father gifted her $30,000 which was used to purchase the land at FF Street, Suburb GG.

   ·     In … 2003 the wife's father gifted her $5,000 towards living expenses.

   ·     In 2000 the wife inherited US $202,029 and a minority interest in the J Group .

   ·     In 2006 the wife's mother gifted US $10,000 for the wedding expenses of the parties. 

   ·     In … 2006 the wife's mother largely funded the parties marriage in Country QQ.

   ·     … 2006 the wife's mother gifted the parties US $6,100 for the husband's immigration expenses to the USA.

5. The husband also made initial financial contributions in the form of assets owned by him at the time of commencement of cohabitation.  There is some dispute between the parties as to the values of those assets in 2002 with, not surprisingly, the wife claiming that the husband has overvalued them.  Nevertheless, I generally accept the evidence of the husband as to his financial position as at the date of commencement of cohabitation and note again that his assertions are in part supported by evidence tendered to this Court during the course of the proceedings. At [18] of his affidavit of 1 April 2019 the husband deposes:

   I owned:

   (a)     my Yacht ‘…’ (worth $25,000);

   (b)moorings in Town RR, Town H and Town AA (professionally installed and approved by Marine and Safety Tasmania). These were worth at least $,2500 each.

   (c)55 acres at  Town H with a council approved house (worth $224,000).

   (d)$30,000 cash from the first homeowners grant and savings;

   (e)$9,000 in equity in a house that I owned with my parents in BB Street, Suburb CC in Queensland. Ms Canion was aware of this interest is as it was discussed between us and also with my mother and father. Ms Canion subsequently read and witnessed the agreement of sale between my parents and myself. I sold my share back to them for $9,000 on … 2000.  Ms Canion was aware that the money was paid from my parents’ bank account into mine.

   (f)$6,592 share portfolio with DD Shares.

   (g)my car (Motor Vehicle EE worth $1,500, eventually sold for $1000.

6. The major issue in dispute in respect of the husband's initial contributions is as to the then value of the Town H property.  The wife says that that the parties attempted unsuccessfully to dispose of that property in 2006 for less than $130,000.  The husband produces a council rates certificate of 17 July 2006 showing a land value of $100,000 and capital value of $124,000. This is a dispute that cannot be resolved without a formal retrospective valuation. I note, in any event, that the property features in the current list of assets at value and was clearly an initial contribution by the husband and hence it is not strictly necessary for me to conduct a precise mathematical exercise as to its then value.  Similarly the wife asserts that the husband’s yacht was sold for $15,000.  This is a dispute which the Court cannot resolve but is, in any event, of little consequence where the task for the Court in considering the weight to be given to contributions is not a strict mathematical one.

7. The wife’s material details much of the expenditure of her monies for family benefit. Further, the parties lived in the United States for approximately 18 months from July 2006. The wife’s evidence and supported by the affidavits of her family members persuades me that the family received accommodation and other support from the wife’s mother and where I prefer the evidence of the wife and her mother over that of the husband as to his contributions to Ms E’s home, noting that the husband elected not to cross-examine Ms E.

8. In summary the task for the Court is to give weight to and balance these many and differing contributions. The wife's contributions initially and early in the marriage were of a direct financial type. They constitute substantial sums of money and perhaps in excess of AU$650,000.  Those funds were used for the benefit of the family and remain identifiable in the equity in the properties at LL Street, Suburb OO where a direct contribution of $225,805 was made by the wife, PP Street(3), Town H, with a direct contribution of $30,825, and FF Street, Suburb GG with a direct contribution of the $30,000. Much of the remainder, of course, remains in the current asset pool in forms other than real estate.

9. The parties have achieved an admirable portfolio of real estate. The husband owned the properties at Town H at the commencement of cohabitation. Their value then remains in dispute.  However, they are now together valued at $255,000 and the impetus for the current value clearly comes from the husband bringing them into the relationship.

10. The current portfolio of properties has gross value of around $2.2 million and a net value of approximately $1.6 million.  It is true that the husband and his father contributed significantly by their direct labours and financial contributions.  If only by reason of the emphasis of the husband's evidence as to his own labours in respect of these properties, it is logically reasonable to assume that he was not engaged then to his full potential in other remunerative employment.  This is not a criticism but simply an observation. These properties were acquired and renovated during the course of the relationship.  I prefer the evidence of the wife in respect of her indirect contributions during this period by way of homemaker and parent to that of the husband and his father whose evidence does not sit comfortably with their own claims as to the extent of their labours but where they both criticise the wife’s homemaker and parenting roles.

11. I do accept that there has been a significant contribution on behalf of the husband by both the finances and labour offered by his own family but noting again the fact that Mr D has a legal and financial interest in some of those properties and those contributions hence were of direct personal benefit for him.

12. On balance, and considering all of these matters, I am of the view that even given the time of the introduction of the wife's direct financial funds, they should cause some loading in her favour in a balance and weighing of all contributions. Her financial contributions were far superior to those of the husband.  The effect and impact of both parties’ contribution remain evident in the property pool today.  Whilst this is a relationship which began almost seventeen years ago, I am satisfied that the initial contributions of both parties should be given weight accordingly but within a broader consideration of the myriad of contributions by both parties to this marriage. See Williams & Williams[9] and Pierce v Pierce[10].

    [9] [2007] FamCa 313

    [10] (1999)F:C 92-844

13. The husband’s contributions by way of the purchase and renovation of residential properties is a contribution by him to be considered as is the contribution by his father. Those contributions came later in the marriage and are notable in the property pool that the parties now hold.  However, again I do not accept the evidence of the husband or his father in criticising the wife as essentially making no contribution to these assets. Certainly, she may not have made the obvious direct contributions of the husband and Mr D.  However, these were contributions during a marriage where there were also three young children as a part of the family unit.  The husband was contributing his labours to these projects rather than being fully occupied to his potential in the workforce.  Despite the criticisms of the husband and his father, simple logic leads me to prefer the evidence of the wife as to her indirect contributions as homemaker and parent during these times.

14. Consequently, on the basis of contributions, I am of the view that there should be a distribution of the assets as to 57.5% to the wife and 42.5% to the husband. 

Section 75 factors

1. The parties share their care and support of the children who live between them in a shared care arrangement. As mentioned above, neither party is employed as to their remunerative potential. Neither party urges me to make any further adjustment on the basis of the s.75(2) factors. Specifically, in his written final submissions, the husband’s Counsel says at page 7, ‘The husband maintains that no adjustment is indicated here’ although earlier in those same submissions suggesting that the wife’s interest in the American J Group be considered a ‘financial resource’ to her advantage.  Whilst this might strictly be the case, I do not make any adjustment noting the circumstances of the ‘resource’, its value, and it being a ‘contribution’ from the wife’s father.

2. There will be orders then that the wife retain a net 57.5% of the tangible property pool and the husband a net 42.5%.

Superannuation

1. The husband has superannuation of just $44,710. The wife has no superannuation.  Both parties are still young and far from ordinarily being able to crystalise any superannuation entitlement.  As such the Court would normally conduct a ‘two pool’ approach to the consideration of alternation of superannuation interests.  On reflection, however, and given the relatively minimal value of superannuation as against the tangible assets, I intend to leave the husband with the option of retaining his entire superannuation interest in the sense of being a part of ‘one pool’ or, alternatively, to have it split in accordance with the same considerations above which would cause a split of 57.5% to the wife in circumstances where the parties have cohabited since 2002.

Conclusion – Property

1. Consequently, generally I am of the view that the net property inclusive of superannuation be divided as to 57.5% to the wife and 42.5% to the husband.  I do, however, have some difficulty in formulating detailed orders which give effect to this percentage distribution.  I note that both parties agree for instance for the wife to retain the LL Street, Suburb OO property but differ of when and who should discharge the mortgage.  I note in any event that this mortgage is a part of an inglobo mortgage securing various properties.  The evidence did not assist me in ‘separating’ the various securities.

2. Secondly, there may or may not be an issue of a further capital gains tax liability in respect of the sale of FF Street, Suburb GG.  I am allowing the husband the ‘option’ of taking his superannuation as part of a ‘one-pool’ approach.  There then remains the issue of any cash adjustment between the parties according to these variables?   Consequently, I intend to order only the percentage distribution and allow the parties’ time to negotiate a distribution of assets and liabilities accordingly.  If they cannot successfully resolve these matters then I have given them a listing in Hobart on Wednesday 15 January 2020 at 2.15 p.m. for any further submissions.  If, however, they are able to bring consequential orders to my Chambers within twenty-eight (28) days then I shall vacate that return date. 

Child Support Departure Application

1. The wife seeks an order as follows:

   That by way of child support that the respondent pay child support for X born … 2007, Y born … 2008 and Z born … 2011 as follows:

   (a)half of all expenses associated with the sporting and extra-curricular activities of the children from time-to-time including uniforms, footwear, equipment and registration fee. Such sporting activities and extra-curricular activities to be as the parties may agree upon from time to time and in default of agreement as may be ordered by a court with jurisdiction to make orders pursuant to the Child Support (Assessment) Act

   AND THE COURT NOTES that at the present time the parties have agreed that X and Y each play in a sports team, X and Y participate in sports training, that Z participate in hobbies, that Y and Z participate in music and Y play sports.

   (b)half of all education expenses for the children including school fees, uniforms, footwear, excursion costs, books, stationery and electronic devices as recommended by their school.

   (c)An amount equal to one quarter of the premium which the mother pays from time to time to maintain private health insurance cover for herself and the children, such payments to be made by the father to the mother each calendar month when the mother has such insurance and the mother shall keep the father informed of the monthly premium as that changes from time to time and she shall promptly facilitate the making of any claim against the said private health insurance policy in relation to any relevant medical and health expenses incurred for the children by the father.

   (d)That in the event the mother incurs any expenditure which pursuant to this order the father is required to contribute to them he shall reimburse the mother within 14 days of being provided with proof of expenditure.

   (e)That the child support referred to in this order shall not be credited against any child support assessment made against the respondent father. 

2. The father opposes the making of an order in the terms above or at all for departure from child assessment.

3. The father's most recent to sworn financial statement suggests that he currently pays $55 per week total Child Support for the children.

4. Relevantly, the parties agreed in about November 2018 for an interim Child Support departure in the terms above.

5. In his cross-examination it was put to the father that he consider agreeing to a continuation of the interim orders.  He responded that 'I oppose that because I don't trust Ms Canion after this process.  I would rather rely on my Child Support payments.'

6. Interestingly, in her trial affidavit of 29 March 2019 under the heading Child Support at [55] the wife deposes:

   I have applied for non-periodic child support but my understanding is that this has been resolved by consent so I have not complied fully with the relevant Rules as to the background information.'

7. In that affidavit at paragraphs [1] and [5] appears the following:

   [1]The care of the children is presently shared between Mr Canion and myself equally but there are many aspects of their life which I have the main responsibility including the clothing and their needs in relation to extra-curricular activities.

   [5]Mr Canion paid almost nothing with regard to the care of the children until I made a court application.  He paid no child support until November 2018 and refused to split the general costs associated with the children's schooling and recreation.  He still sometimes refuses to contribute to their school uniforms and schools, to their sports fees, to their hobbies and to their doctors bills.

8. There was initially some dispute as to whether the wife had served her application for departure from Child Support assessment upon the Registrar.  I now accept that she has done so.

9. The Court has jurisdiction to entertain an application for departure from Child Support pursuant to s.116(1)(b) of the Child Support (Assessment) Act 1989 where the parties are engaged in a pending application in the Court.

10. Section 117 of the Child Support (Assessment) Act 1989 gives the Court the power to make departure orders in special circumstances.  Subsection (1) provides:

    (1) Where:

    (a)application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and

    (b)     the court is satisfied:

    (i)that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and

    (ii)     that it would be:

    (A) just and equitable as regards the child, the carer entitled to child support and the liable parent; and

    (B)Otherwise proper;

    to make a particular order under this Division;

    the court may make the order.

1. Subsection (2) provides:

   (2)  For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:

   (a)  that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:

   (i)  the duty of the parent to maintain any other child or  another person; or

   (ii)  special needs of any other child or another person that the parent has a duty to maintain; or

   (iii) commitments of the parent necessary to enable the parent to support:

   (A)   himself or herself; or

        (B) any other child or another person that the parent has a duty to maintain; or

   (iv)  high costs involved in enabling a parent to spend time with, or communicate with, any other child or another person that the parent has a duty to maintain;

   (aa)  that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain a resident child of the parent (see subsection (10));

   (b)  that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   (i)  because of high costs involved in enabling a parent to   spend time with, or communicate with, the child; or

   (ia)   because of special needs of the child; or

   (ib)  because of high child care costs in relation to the child; or

   (ii)  because the child is being cared for, educated or trained  in the manner that was expected by his or her parents;

   (c)  that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   (i)because of the income, earning capacity, property and    financial resources of the child; or

   (ia)because of the income, property and financial resources of either parent; or

   (ib)   because of the earning capacity of either parent; or

(ii)  because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.

High costs involved in enabling parent to care for a child

(2B)  A parent's costs involved in enabling the parent to care for a child can only be high for the purposes of subparagraph (2)(a)(iv) or (2)(b)(i) if the costs that have been or will be incurred, during a child support period, total more than 5% of the amount worked out by:

(a)  dividing the parent's adjusted taxable income for the period by 365; and

(b)  multiplying the quotient by the number of days in the period.

(2C)  If a parent has at least regular care of a child, then the only costs that can be taken into account for the purposes of subsection (2B) are costs related to travel to enable the parent to spend time with, or communicate with, the child.

1. The Full Court considered the term 'special circumstances' is Gyselman & Gyselman[11] finding as follows:

   Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that facts of the case must establish something that is special or out of the ordinary, that is, the intention of the legislature is that the Court will not interfere with the administrative formula resulting in the ordinary run of cases.

   [11] (1992) FLC 92-279

2. Further, the Court in Gyselman (supra) summarised the process for the Court at page 79,078:

   As we have already indicated, the exercise under s.117 involves three steps.  The first, which we have already examined, is whether one or more of the grounds in sub-section (2) has been made out.  The legislation then requires the Court to consider whether any proposed order is 'just and equitable' and 'otherwise proper'. 

   Each of these steps must be addressed as a separate issue and separately in respect of each relevant to period for which the departure order is sought.

3. It is significant in my view, that whilst the husband asserts that he pays a sum of approximately $55 per week Child Support and this is evidence by his assessment at $225.25 per month for the period 1 July 2019 – 30 November 2019, there has been a 'new assessment' for that period ending 30 November 2019 whereby the husband would be required to pay Child Support of $1,640.75 per month based on an income of $181,944 for the 2017-2018 financial year. In the circumstances of the evidence before me and the husband's employment, I expect that there may be a request for re-consideration of that assessment?

4. As I understand the wife's case, she argues that the children attend a number of extracurricular activities. The indication is that there is general agreement between the parties to the children participating in these sports and other enjoyments.  Her affidavit says that the husband 'sometimes refuses to contribute resulting in an inequitable level of financial support’.

5. Notably, the children live in an equal time shared arrangement between the parties. Therefore, each of the parents equally carry parental responsibility in respect of their three children and the decision-making which comes with that responsibility. From my own observations, I can easily find that these parents are personally antagonistic towards each other. They are not trusting of each other financially or generally.  Nevertheless, there was also an indication by both that they are generally content for the children to pursue extracurricular activities.

6. Further considerations are that neither of these parents is employed to their full capacity or in accordance with the potential remuneration consistent with their postgraduate tertiary qualifications.

7. The evidence suggests that during an interim period the husband had been meeting the mortgage costs which allowed the wife to live mortgage free. It follows that the parties’ own financial circumstances will significantly change following the property settlement orders that I make above.

8. Considering the matter in both an holistic manner and with specific reference to the notion of 'special circumstances' I am not persuaded that there is evidence of special circumstances in the sense of s.117(2). In any event, I am also not persuaded in respect of the other two steps of my consideration being firstly that the proposed order would be 'just and equitable' in circumstances where the children live equally between their parents and where the parents should discharge their responsibilities for decision-making in respect of their children and, similarly and thirdly, that such an order would be 'otherwise proper'.

9. Consequently, I am not persuaded that the Court should, in this particular matter, make an order for departure from Child Support assessment although, of course, either of the parties remain at liberty to bring an Application for Review of Child Support assessment to the administrative consideration of the Registrar. 

Passports

1. The wife made application in respect of the children's passports.  The application before the Court is otherwise in respect of financial matters.  Nevertheless, the evidence of the parties in Court was as to an agreement in respect of the children obtaining passports and the holding and provision of those passports.  Despite some doubt as to jurisdiction, I am content to make orders by consent in respect of the children's passports should the parties bring detailed consent orders to the Court. 

I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Date: 13 November 2019