CARSE & CARSE
[2012] FMCAfam 1202
•9 November 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CARSE & CARSE | [2012] FMCAfam 1202 |
| FAMILY LAW – Property – spousal maintenance – child support departure- nature of asset pool – add backs – contributions – wife’s capacity to support herself – husband’s capacity to contribute to wife’s support – special circumstances of a departure from child support assessment – justice and equity of child support departure order and whether is otherwise proper. |
| Child Support Assessment Act (1989) s.117 Family Law Act 1975, ss.72, 75, 79 |
| Clauson & Clauson (1995) FLC ¶92-595 Hickey & Hickey v Attorney-General for the Commonwealth of Australia (Intervenor)(2003) FLC ¶93-143 In the Marriage of Gyselman (1992) FLC ¶92-279 Russell v Russel (1999) FLC ¶92-877 |
| Applicant: | MR CARSE |
| Respondent: | MS CARSE |
| File Number: | MLC 8419 of 2011 |
| Judgment of: | McGuire FM |
| Hearing dates: | 29-30 March 2012, 4 June 2012, 16 & 17 July 2012 and 23 July 2012 |
| Date of Last Submission: | 23 July 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 9 November 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Robinson |
| Solicitors for the Applicant: | Westminster Lawyers |
| Counsel for the Respondent: | Mr Puckey |
| Solicitors for the Respondent: | Morrison & Sawers |
ORDERS
That the former matrimonial home situate at Property H in Victoria be sold and that the parties forthwith do all such things and sign all documents necessary to market and sell the property and jointly instruct an agent as agreed to market the property at a price and on terms as agreed and failing agreement then by an agent nominated by the President of the Real Estate Institute of Victoria to delegate thereof.
That the proceeds of sale of the home be disbursed as follows:
(a)To satisfaction of any mortgage liability secured by the home;
(b)To payment of costs and disbursements on the sale;
(c)The residue as between the parties to effect a distribution of the tangible assets of the parties as to a 55 per cent to the husband and 45 per cent to the wife;
That within twenty-eight days of the date of these Orders the husband transfer and/or vest all his right, title and interests in the following to the wife absolutely:
(a)The 2005 (vehicle omitted) motor vehicle;
(b)All personalty and chattels in the possession of or under the control of the wife as at the date of these Orders;
(c)The balance of any bank accounts or like investment in the name of or to the benefit of the wife as at the date of these orders;
(d)The wife’s Retirement Benefit Fund Superannuation policy and entitlement.
That contemporaneously with the transfer orders in paragraph 3 hereof, the wife transfer and/or vest all her right, title and interest in the following to the husband absolutely;
(a)The assets and goodwill of the (business omitted) at (omitted) and any company structure under which that business is owned and operated;
(b)The (vehicle omitted) motor vehicle in the possession of the husband;
(c)The ATM business or interest currently in the name of the wife;
(d)All personalty and chattels in the possession of or under the control of the husband as at the date of these orders;
(e)The balance of any bank account or like investments in the name of or to the benefit of the husband as at the date of these orders.
That the husband be solely responsible for and indemnify the wife in respect of the following:
(a)Any taxation liability in his name;
(b)Any and all liabilities attaching to any of the assets to be retained by him pursuant to these orders;
(c)Any and all liabilities incurred by the husband since separation in either joint names or in his name alone.
That the wife be solely responsible for and indemnify the husband in respect of the following:
(a)Any taxation liabilities in her name;
(b)Any and all liabilities attaching to any of the assets to be retained by the wife pursuant to these orders;
(c)Any and all liabilities incurred by the wife since separation in either joint names or in her name alone.
Pursuant to s.90MT(1)(a) of the Family Law Act 1975 the parties as trustees of the (omitted) Superannuation Fund do all acts and things and execute all deeds, documents, instruments and writings necessary to cause the (omitted) Superannuation Fund to make a splittable payment to an eligible superannuation fund nominated by the wife and for that purpose the sum of $78,547 being the wife’s entitlement and there be a corresponding reduction in the entitlement of the wife.
The operative time for these Orders shall be the beginning of the fourth business day after the day on which a sealed copy of these Orders is served on the Trustees of the respective funds.
The above orders bind the trustee or trustees from time to time of the (omitted) Management Fund Services (omitted) Superannuation Fund.
Spousal Maintenance
That the husband pay to the wife the sum of $300 per week spousal maintenance for a period of fifty-two (52) weeks with the first payment to be due and owing 16 November 2012 and weekly thereafter.
Child Support
That for a period of 12 months from the date of these orders being 9 November 2012 there be a departure from child support assessment in respect of the children X born (omitted) 2006, Y born (omitted) 2008 and Z born (omitted) 2010 (“the children”) whereby the husband as liable parent pay to the wife the sum of $22,185 per year being $1,848.75 per calendar month or $616.25 per child per calendar month with the first such payment due and owing on or before 10 December 2012 and monthly thereafter.
The parties thereafter be entitled to apply to the Child Support Agency for assessment of each party’s liability in respect of the children.
IT IS NOTED that publication of this judgment under the pseudonym Carse & Carse is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 8419 of 2011
| MR CARSE |
Applicant
And
| MS CARSE |
Respondent
REASONS FOR JUDGMENT
The husband commenced these proceedings in September 2011 seeking both parenting and property orders. The wife’s Responses raised issues of her relocation with the three children of the marriage from Property H to Melbourne, spousal maintenance, and a child support departure order.
The trial in this matter proceeded over six separate days and initially involved the wife’s application to relocate the children from Property H to live primarily with her in Melbourne. That issue was resolved during the course of the trial with final parenting orders being made by consent on 17 July 2012 whereby the three children live between their parents in Property H as follows:
(a)With the husband during school terms:
(i) For two out of three weeks from 12 noon Sunday until 12 noon Wednesday;
(ii) For one out of each three weeks from 3.00 pm or after school (as the case may be) on Friday until 3.00 pm or after school (as the case may be) on Monday;
(b)With the wife at all other times during school terms.
(c)With each of the parents for one half of the total of all term and Christmas holiday periods at times to be agreed, but providing the majority of the term 2 and 3 school holidays periods with the husband and the majority of the term 1 and Christmas holidays with the wife.
(d)Time on special days; and
(e)Communication by Skype and/or telephone with each parent
The parents also agree that they have equal shared parental responsibility for the three children. Those children are X born (omitted) 2006 (aged 5 years), Y born (omitted) 2008 (aged 4 years) and Z born (omitted) 2010 (aged 2 years).
The husband is 39 years of age. He is the (omitted) of a (business omitted) in (omitted).
The wife is 38 years old. She is qualified as a (omitted). She has not been in the workforce since the parties’ separation.
The parties commenced cohabitation in 2002 or 2003. They were married on (omitted) 2005 and separated in May 2011.
Orders sought and issues
There is an issue between the parties as to whether or not the husband’s interest in the (business omitted) at (omitted) be included in the asset pool. That interest is a leasehold interest with some six years to run. If the interest in the (business omitted) is included in the property pool then the husband, relying in large part on his contribution of that “asset”, seeks a loading of 10-15 per cent on account of contributions and an adjustment to the wife of 0 – 5 per cent after consideration of the relevant s.75 (2) factors of the Family Law Act 1975 (“the Act”). If the leasehold interest is not included in the asset pool then the husband argues that his contributions be assessed 55 – 60 per cent.
The husband argues against any order for spousal maintenance.
Mr Carse proposes that child support issues be left for amended assessment by the Child Support Agency or, alternatively, that there be a departure order from the current assessment by fixing the wife’s income for the next six months only at zero.
The wife seeks a departure order from the current child support assessment which obliges the husband to pay $330 per week whereby he contribute $485 per week based on a nil income of the wife for three years coinciding with the youngest child attending school.
The wife applies for spousal maintenance in a sum of $300 per week until 2016.
Ms Carse argues that the net property of the parties be divided as to 65 percent to her and 35 per cent to the husband. She says that the husband’s interest in the (business omitted) be included as an asset valued as $117, 755.
The wife proposes that the pool of property should include an add-back for all or part of $110,000 drawn down on the mortgage by the husband post separation. She argues against the husband’s contention that his anticipated taxation liability of $47,062 for the 2011-2012 financial year be included in the pool as a liability.
Consequently, in respect of property division there is a dispute by the parties as to adjustments for contributions and what adjustment there should be for the wife, if any, in respect of considerations under s.75(2). Major issues in dispute centre on the inclusions in the property pool which can be summarised as follows:
(i) Should the leasehold interest in the (business omitted) be included as an “asset”?
(ii) Should the husband’s anticipated tax liability for 2011-2012 be included as a liability?
(iii) Should there be an add-back for monies retained by the husband following his re-draw of $110,000 from the mortgage?
PROPERTY
Legal principles
Alteration of property interests between parties is provided for in s.79 of the Act.
There is now a long established line of authority setting out the preferred approach for the Courts in making determinations as to property settlement. In Hickey & Hickey v Attorney-General for the Commonwealth of Australia (Intervenor)[1] the Full Court observed:
That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79 (4) (a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79 (4) (d), (e), (f) and (g), (“the other factors”) including, because of s.79 (4) (e), the matters referred to in s.75 (2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
[1] (2003) FLC ¶93-143 at [78,386]
Later amendments to the Act now stipulate that superannuation interests are to be “treated as property” for the exercise under s.79.
In respect of the second step being the contributions of each of the parties, consideration is to be had of both financial and non-financial contributions, those made directly or indirectly by or on behalf of the parties to the acquisition, conservation or improvement of their property, together with contributions towards the welfare of the family including contributions as homemaker or parent. All such contributions must be identified and given value or weight.
The third step in the intellectual process includes consideration of the effect of the proposed orders on the earning capacity of either of the parties. The Court must also consider the matters set out in s.75(2) of the Act insofar as they are relevant. Such considerations include but are not limited to:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(g) standard of living that in all the circumstances is reasonable; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the parties.
The so-called fourth step for the Court is to step back after consideration of any adjustments for contributions under s.75(2) factors and consider whether the proposed orders are just and equitable given all of the relevant circumstances. The Full Court in Russell v Russell[2] commented:
Furthermore, it must be remembered in this regard that under s.79(2) of the Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties' assets. Indeed we take the opportunity to emphasise that in what his Honour has termed "the fourth stage", that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered.
The property pool
[2] (1999) FLC ¶92-877 at [86,439]
Value of interest in the (business omitted)
The husband through a trust arrangement holds a 50 per cent interest in the leasehold of the (business omitted) at (omitted). There is dispute between the parties as to whether a value in the pool of property be attributed to that leasehold interest. The parties now agree that the husband’s 50 per cent interest is valued at $117,755 after separate valuations were obtained.
The wife says that the interest should be included as an “asset” at a value of $117,755.
The husband asks the Court to consider whether justice and equity demand that the interest not be included in the property pool. He argues that the interest is simply one of leasehold. The lessees have no interest in the real property. Further, it is a leasehold interest with only approximately six years to run in that all options under the current contract have been activated. The husband’s unchallenged evidence is that the lease will not be renewed and that further options will not be available. It follows, on his argument, that the leasehold interest is no more than a right to derive income for a relatively limited period of time. In that sense the interest is no more or less than the husband’s “occupation”. He says that to include the leasehold at value in the pool of property in those circumstances where a Court is also to consider the income and earning capacity of the parties would be to effectively “double dip” and not provide justice and equity as between the parties. He emphasises that a sale, which would of course crystallise the value of any “asset” is inherently unlikely given the limited remaining term of and expiration of the leasehold interest.
Whilst the husband’s argument is not without merit, I prefer that the leasehold interest be included in the property pool at value. I note the husband’s own valuer, Mr G, arrives at a valuation having taken into account a slower market activity and the “short period to lease expiry under the subject lease…We further note that as the lease continues to expire, demand will continue to weaken and the value of the leasehold interest will continue to decline”. Further, and taking those matters into account, the valuer, using the income capitalisation valuation methodology, applied a multiplier of only 0.75 as opposed to a usual multiplier in the range of 1.5 – 3.0. It follows that the valuer has considered and accepted all of the arguments of the husband set out above but still applied a valuation for the leasehold interest. It is therefore an asset of value capable of being sold to a willing purchaser and has an inherent value separate from the income it provides. Nevertheless, in respect of other considerations I am obliged to make in arriving at a final determination, I must and will consider the limited duration of the husband’s current income source.
Add-backs-drawing down of mortgage account
At the date of separation on 9 May 2011 the parties had a redraw facility available to them on their Westpac mortgage account. The liability then was $26,200. Over the following two days that liability was drawn out to its limit of $156,000 being a total draw down of approximately $130,000.
The wife drew down $20,000 on 10 May 2011. She says that these monies were used to meet ongoing expenses of herself and the children. The husband does not take substantial issue with this assertion. Neither party argues that this $20,000 be added-back to the pool.
The issue is in respect of the sum of approximately $110,000 drawn down by the husband in the days following separation.
The husband says that these monies were spent on debts and ongoing expenses of the business and the family and should not, therefore, be an add-back to the property pool. He refers to his own ongoing living expenses, payment of child support, spousal maintenance, mortgage, rates and insurances which he says accounts for his drawings at the relevant time of approximately $156, 000 for the year. In summary, the husband says that both his drawings and the draw-down from the mortgage were required for and exhausted in payment of ongoing obligations.
The wife argues that the $110,000 drawn-down by the husband in May 2011 should be added-back to the pool or, alternatively, a part thereof.
It is conceded by the wife that the husband, subsequent to his draw-downs, paid amounts of $26,293.60 and $29,388 (total of $55,681.60 towards tax liabilities). She says , however, that those liabilities had not been struck at the time of the draw-downs and that, in any event, the husband had the ability to meet these taxation liabilities from his income and that the anticipated but unknown taxation liabilities could not have been his motivation for the draw-downs.
The wife also concedes that Mr Carse paid a sum of $20,000 from the draw-downs into the (business omitted) leaving a balance of approximately $34,318. The husband’s explanation for his use of this balance is provided at paragraph 4 (jj) (iii) at page 12 of his affidavit sworn 14 February 2012 where he says:
On 11 May 2011 I withdrew the further sum of $47,418. From these funds, I retained $20,000 for my own purposes, to match Ms Carse's $20,000 withdrawal. I applied the balance in part payment of further tax of $29,388. I paid the balance of the tax payment from my own income.
However, the wife counters by arguing that, even allowing for two payments of $26.293.60 and $29,388 for tax, the sum of approximately $34,318 for “living expenses” is unaccounted for and unjustified. She points to other sources of monies available to meet the husband’s living expenses. He had the ongoing income or drawings from the business. He had a distribution of $20,000 from an ATM business and $6,000 in a separate bank account although she conceded that the $20,000 from the ATM business can be traced to being paid back into the (business omitted).
I am of the view that the husband’s payments of taxation assessments are justified. Those payments were made. The fact that monies were secured in anticipation of their payment is irrelevant in my view. Consequently, I find that the payment of taxation liabilities in a sum of $55,681. 60 by the husband from the gross draw downs of $110, 000 is reasonable and should not be added-back to the pool.
Similarly, the payment by him of $20,000 to the (business omitted) can be traced and in that sense is essentially evident in the property pool and the husband was not successfully challenged as to his evidence that the partners were required to make such capital payments and that his business partner contemporaneously matched the payment of $20,000. As such, I find that this payment of $20,000 is justified and should not be added back to the pool.
I am troubled, however by the residue from the $110,000 of $34,318. There is a lack of particularisation by the husband as to his expenditure of these monies. It is not difficult to understand his motivation for making the withdrawals and drawing the mortgage facility to its limit given that the wife had unilaterally made a draw-down and he may have feared further redraws. Nevertheless, at this time the husband had the benefit of the income from the (business omitted). This income had until that date supported the family of five. He also had monies available to him from other sources. I note also evidence that the husband placed other funds from taxation returns with his father for which he was unable in my view to give a satisfactory explanation Whilst I am mindful of the husband’s ongoing commitments set out above, many of which were for the benefit of the wife and children, I am not satisfied that the husband has properly accounted for the remaining sum of $34,318 from the $110,000 drawn-down by him. That amount will be added-back to the property pool.
Post separation taxation liability
As at the date of the trial the husband had an anticipated but unpaid tax liability of $47,062 in respect of the most recent financial year ending 30 June 2012. The husband argues that this is properly a liability of the parties given that the date of determining the property pool should be the date of the hearing. He says that the wife has benefited from the income of the businesses during the relevant financial year as she did prior to separation. That income had provided spousal maintenance, child support, mortgage and insurance payments.
The wife says that the anticipated liability is uncertain, that the evidence in respect of the husbands own income is also uncertain and even from his own accountant and that the date for payment is uncertain. Adding to the unknowns, the wife says that the evidence suggest that the husband may be entitled to further distributions from the business over and above his income and which could be put to the taxation liability.
Whilst it is the nature of business that annual income and taxation liabilities may be difficult to determine with precision at any point of time, I am satisfied on the evidence as a whole, including that of the accountant, that the husband will have a taxation liability in respect of the financial year ending 30 June 2012. The best evidence before me is that this liability will approximate $47,062. Given the onus and standards of proof applicable in this jurisdiction, I am satisfied on the balance of probabilities that the anticipated taxation liability of $47,062 is properly included in the pool of property as a liability and one to be met by the husband given that it relates to income earned prior to the hearing and expended for the benefit of the family.
Conclusions as to property pool
Consequently, I find the property pool to be comprised of the following:
Assets
Value
Property at Property H
$395,000
Interest in (business omitted) at (omitted)
$117,755
Wife’s interest in ATM
$18,683
Wife’s 2005 (omitted) vehicle
$16,000
(Husband's omitted vehicle)
$12,000
Add back – husband’s mortgage – re-draw
$34, 318
Husband’s tax refund (deposited into father’s account)
$14,951
Total assets
$608,707
Liabilities
Mortgage
$306,330
Wife’s taxation liability
$18,389
Husband’s taxation liability – year ending 30 June 2012
$47,062
Total liabilities
$371,781
Net Tangible assets
$236,926
Superannuation
Retirement Benefits Fund – wife
$3,859
Superannuation joint self-managed fund
$179,266
Net Property inclusive of superannuation
$420,051
Contributions
Despite its limited tenure, I have included the husband’s interest in the (business omitted) as an asset. It is, however, an asset contributed by the husband. It is the major tangible asset of the parties in net value and has provided the family with a comfortable income and lifestyle. The husband’s interest initially at 30 percent was subject to a loan from his grandmother of $90,000 which I can only assume on the evidence has been satisfied during the course of the marriage. A second loan was made by the husband’s parents of $54,000 to allow the purchase of a further 20 per cent interest giving the husband 50 per cent interest in the (business omitted). That loan was forgiven upon the parties’ marriage. Hence, the husband’s leasehold interest in the (omitted) is unencumbered.
The wife entered the relationship with an interest in a (omitted) home. That property was sold and netted her $30,500. She also brought to the relationship a HECS debt of approximately $20,000 and a credit card liability both of which on the evidence were satisfied during the relationship. The wife also had a superannuation entitlement of $7,000. The wife had a motor vehicle with little equity.
Both parties contributed by way of employment, homemaker and parenting roles and each party accepts that these contributions during the relationship were equal.
The wife has had primary care of the children since separation but the husband has contributed significantly both financially and by way of care of the children. The wife and the children have had use of the matrimonial home since separation with the husband meeting the mortgage payments as well as paying child support and spousal maintenance is a post-separation contribution by him worthy of consideration.
I am satisfied that the interest in the (business omitted) was the significant and substantial contribution. It has been an asset which has provided the major income for the family unit. The best evidence before me is that the husband’s 30 per cent interest at the date of commencement of cohabitation was worth in excess of $70,000. He later took a further 20 per cent interest essentially by way of a gift from his parents. The significance of this asset is to be seen within the context of the quantum of the relatively small asset pool and the uses to which that asset has been put and the benefits achieved from it in what has not been a long marriage and where this asset still represents, even as a depreciating asset, near one half of the total net tangible assets and about 28 per cent of the total property pool inclusive of superannuation but whilst still viewed within the context of all other contributions to this marriage. Within such a context I am of the view that adjustment of 10 per cent to the husband on account of superior contributions is appropriate.
Section 75 (2) considerations
The children live between their parents. On my calculations they spend nine nights in each three week period during school terms with their father and 12 nights with the mother. School holiday time is shared equally between the parents. Such an arrangement dictates that each of the parents effectively have to provide appropriate accommodation and facilities for the children.
The husband derives a significant income from the (business omitted). That annual income is variously estimated at $187,000 or greater per annum. I note and take into account that there is some uncertainly that this income can be maintained given the limited tenure of the leasehold interest. I take into account also that the leasehold interest has been included as an asset and that the husband urges me not to “double-count”. I am satisfied, however, that the leasehold interest is properly an asset at value in the pool of property. However, it also serves as a source of income for the husband. There is no evidence before me of the husband having any certain options of employment or self-employment after the expiration of the existing lease. I have no evidence that he has any particular skills or experience other than in the (omitted) field although he clearly has managerial skills and experience in that area.
The wife has primarily been engaged in home duties in recent years. She does, however, have qualifications as a (omitted). She has shown a willingness to re-enter the workforce in (omitted) self-employment. Her (omitted) qualifications and the particular living arrangements for the children would in all likelihood allow her some access to employment in that field. Those parenting arrangements are such that she is not precluded from seeking employment even by reason of her claim that she wants to remain a dedicated parent to her young children. Nevertheless, I also accept that the particular parenting arrangements agreed between the parties are framed, in a large part, so as to accommodate the husband’s obligations to his business. I also accept that the husband has had, and in all likelihood will continue to meet, child support obligations due to his superior income.
In summary, the factors that I give weight to areas follows:
(i) The husband has current self-employment which brings him a high income;
(ii) The husband’s employment is uncertain after a further six years;
(iii) The wife has no current employment; and
(iv) The wife has qualifications and experience which would assist her in re-entering the workforce and not totally hindered by her responsibilities for care of the children which in a large part also fall on the husband.
Taking all of these matters into account, I am of the view that there should be an adjustment to the wife on consideration of matters under s.75 (2) of the Act of 5 per cent of the property pool including the superannuation entitlements. I see no reason to differentiate between tangible assets and superannuation which should be treated as property. Consequently the property inclusive of superannuation will be divided as to 55 per cent to the husband and 45 to the wife. This will, of course, result in a greater impact of the 5 per cent loading for the husband than would an adjustment only of the tangible assets.
I am told that neither party wishes to retain the former matrimonial home. The market will therefore determine its precise value. However, accepting the agreed value there will be an equity of only $88,670 less costs of sale.
The husband would retain the following:
Interest in (business omitted)
$117,755
(Husband's omitted vehicle)
$12,000
Add back – husband’s mortgage – re-draw
$34, 318
Husband’s tax refund (deposited into father’s account)
$14,951
Interest in ATM
$18,683
Total
$197,707
Less Husband’s taxation liability – year ending
30 June 2012$47,062
Total
$150,645
The wife will retain only the (vehicle omitted) motor vehicle, $16,000 from the tangible assets and the eventual proceeds of sale of the former matrimonial home but will be responsible for the taxation liability in her name with a quantum of $18,389. If necessary there will be a further cash adjustment in favour of the wife to achieve the 55 – 45 per cent distribution of property given there will be an order splitting the total superannuation entitlements of the parties on the same percentage basis. There will be an Order requiring a split of the superannuation entitlements on the same percentage basis which on the evidence before me would require a base amount of $78,547 to split from the joint self-managed fund to the wife.
I note that the ATM interest appears to be in the wife’s name. However, according to paragraph 4 (qq) of the husband’s affidavit sworn 14 February 2012, that interest is owned jointly with the wives of his business partner and his brother and has an intricate connection to the (business omitted). As such, it is proper that the husband retain that asset unless the parties agree otherwise.
I am satisfied that these orders give proper acknowledgment and weight to the superior contribution of the husband primarily through the introduction of his interest in the (business omitted) and also to the s.75 (2) factors which favour the wife in respect of income earning capacity, at least in the short term. The husband will retain the income producing asset in the form of the (business omitted) leasehold. I am satisfied that these Orders are just and equitable as required by Section 79(2) of The Act.
Spousal maintenance
The wife seeks an order that the husband contribute spousal maintenance to her in a sum of $300 per week for a period of three years being until the youngest child reaches school age.
Section 72 of the Act provides the relevant principles in determining an entitlement for spousal maintenance as follows:
(1) A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Section 74(1) of The Act states:
In proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part.
The legislation stipulates that I am not to consider any entitlement to a means tested pension or benefit as being income for the purposes of a spousal maintenance determination.
In circumstances where a spousal maintenance application is made in conjunction with an application for property settlement, as is the case here, the Court is to consider the applicant’s position after the orders for alteration of property interests are determined.[3]
[3] Clauson & Clauson (1995) FLC ¶92-595
In summary, therefore, I am to consider the applicant wife’s needs in the context of the property orders. I am then to consider the evidence in respect of her own capacity to meet those needs. If she establishes needs and an incapacity to attend to those needs then, and only then, am I to look at the capacity of the respondent husband to contribute to the wife’s needs.
To date the wife’s expenses have primarily been met by the husband who has paid interim spousal maintenance of $300 per week. She receives a single parent’s pension of $356 per week and child support of $330 per week for the children. Mr Carse has also been meeting the mortgage expenses of $500 per week. The parties agree that the home is to be sold pursuant to these orders.
The wife relies on her Financial Statement filed 7 February 2012 in respect of her needs. The sale of the home will in all likelihood result in a rental or mortgage commitment for the wife. Her other ongoing expenses set out in her Financial Statement and not seriously challenged amount to $560 per week. Accommodation costs following the sale of the home will need to be added. I am satisfied that these are reasonable needs and expenses for the wife although items such as gas, electricity and telephone set out in her document are not distributed between she and the children. Nevertheless, the discrepancy is minimal and I remain satisfied that her needs well exceed the sum of $300 per week that she seeks.
The husband takes issue with the second step in the process being the wife’s alleged inability to attend to her own needs. He emphasises that she has professional qualifications and experience in the (omitted) industry and as a (omitted). The living arrangements for the children will serve to free up some considerable time for the wife during which she could pursue at least part-time employment which she does not dispute may be available as a (omitted) although some travel to adjoining towns might be necessary to secure that employment. The husband points to the wife’s own evidence that she is actively looking for work and has shown some initiative in this regard in attempting to establish a (business omitted) business.
The wife says that she is indeed looking for work but I expect that the previous children’s arrangements and the unknown outcome of these proceedings including her anticipated relocation have impacted on her efforts and the options of employment available to her. These circumstances, of course, have now stabilised and the children will be spending substantial and significant time with the husband on about nine nights in each three week cycle during school terms and equal time during holidays. The parties’ non-superannuation assets are not substantial and, as such, the wife’s entitlement will realistically be primarily utilised in re-establishing herself rather than giving her a nest-egg for investment and from which she could support herself.
After seeing and hearing the wife give her evidence and considering factors such as her qualifications, that she lives in a regional town, the children’s circumstances, and her historical and demonstrated work ethic, I am of the view that the wife will actively seek employment but that some time must be allowed for her to pursue suitable options allowing for the variables set out above albeit not the three years the she seeks.
In summary, therefore, I am satisfied that the wife has demonstrated needs and that she cannot immediately attend to those needs herself. The threshold being crossed, I turn to the capacity of the husband to contribute to the wife’s needs. He is self-employed. There was some lack of precision as to the quantum of his income but I am satisfied on all of the evidence including that of the accountant that it is at least $187,000 per annum. The wife’s Counsel conceded in his final submissions that such an income might attract taxation of approximately $66,000 per annum although the most recent financial year saw a liability of $47,000 being struck. Nevertheless, at its highest he would be left with a net income after tax of approximately $120,000. However, from his gross drawings, he will have a child support liability which is also the subject of these proceedings by way of a departure application. The wife seeks an order of $485 per week child support being $25,222 per year which, if achieved, would further reduce his available annual income to approximately $95,000. The wife seeks spousal maintenance of $300 per week or $15,600 per annum which would reduce that nett income to approximately $80,000. The husband will obviously need to re-establish himself in accommodation suitable for the significant time that the children will be spending with him. Of late he has taken residence in the (business omitted) but, properly in my view, says that he will be seeking alternative accommodation.
The husband’s income supported this family of five until separation. Since then he has met the mortgage ($500 per week), interim spousal maintenance ($300 per week), child support ($330 per week), health and home insurance ($152 per week) and council rates ($41 per week) all for the benefit of the wife and children and which I total as $1323. The home is to be sold thereby relieving the husband of approximately $589 per week for mortgage, rates and insurance. His own estimates and expectations suggest a private rental property for himself at significant lesser amount than the current mortgage.
The husband’s Financial Statements filed 16 September 2011 and 31 May 2012 show that his Westpac MasterCard and AMEX liabilities have blown from approximately $4,000 in September 2011 to near $52,000 by the following May. I accept, however that this was a transitory period for the husband in a financial sense and one where he has been obliged to meet unusual costs including, on his evidence, legal fees.
Whether or not I accede to the wife’s application for a departure order in respect of child support, the fact remains that the husband will also incur substantial expense in supporting the children during the nine days out of each three weeks that they are with him as well as a payment to the wife for at least the immediate future. He will also have to attend to his own ongoing living expenses. Those expenses are set out in Part N of his Financial Statement filed 21 May 2012 totalling $1,603 per week but inclusive of spousal maintenance of $300 per week reducing those expenses to $1,303 per week whilst allowing for capital expenses for the (business omitted) at $190 per week. He cites a further $131 for accountancy fees which I expect would be a deductable business expense from his gross income. Other expenses are given as estimates such as clothing and shoes at $100 per week, medical, dental and optical of $40 per week and holidays of $100 per week. Consequently, on the evidence available to me and considering all of the income and expenditure set out above I am satisfied that the husband has the capacity to meet a spousal maintenance order in the quantum sought by the wife of $300 per week. However, that the husband currently pays health insurance at the family rate. Nowhere in her documents or in her Counsel’s submissions does the wife seek that that situation continue and indeed it may not be proper that it does. My orders are made, therefore, in the expectation that the husband will adjust that insurance policy so as to meet the costs of himself and the children but not the wife.
Consequently, I am satisfied that the wife currently has needs and is unable to meet those needs herself and that the husband has the capacity to contribute to the wife’s maintenance in a sum of $300 per week, however it remains for me to determine the duration of any such order. The wife seeks an order for approximately three years. I am of the view, however, that the spousal maintenance order should not operate as a disincentive for an able and qualified person to support themselves. In this matter I note the following:
(i) The ages of the children and the fact that the husband will have the children for at least nine nights out of each twenty one day period;
(ii) The wife has qualifications and experience which may, on the evidence, allow her re-entry into the workplace albeit with the need to travel to adjoining towns;
(iii) The wife has shown a willingness and intent to re-enter the workforce;
(iv) The wife has been out of the workforce for some time and primarily engaged in home duties and parenting.
In all of those circumstances I am of the view that an order for spousal maintenance payable by the husband to the wife in a sum of $300 for a period of 12 months is appropriate and will allow the wife some support and security during her quest for employment.
Child support
I now turn to the wife’s application for a departure order from the child support assessment in respect of the husband’s liability for the three children of the parties. The wife proposes that the husband’s liability be fixed at $485 per week for three years. The husband is currently assessed to pay $330 per week.
Section 117 of the Child Support Assessment Act (1989) (“the CSA Act”) gives power to the Court to make departure orders in special circumstances. Section 117 (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.
Sub-section (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.
The Full Court considered the term “ special circumstances in the decision of In the Marriage of Gyselman[4]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 result in the ordinary run of cases.
[4] (1992) FLC 92-279
I am satisfied that there are special circumstances in the matter now before me so as to activate the Court’s determination. I refer to the fact that the current assessment attributes an income to the wife of $101,878 per annum based on distributions to her in the previous financial year. The husband says that the assessment procedure should, however, remain by reason of the wife simply advising the Agency of her current nil income thereby allowing an amended assessment to issue will provide justice and equity. In addition, however, the husband is effectively self-employed and the wife argues that he has at least the capacity to manipulate his income. She says that this capacity is evidenced by his actions immediately post-separation whereby he obtained an assessment from the Agency requiring payment of only $246 per week for the three children which was not just and equitable or indicative of his actual income.
I must then consider s.117(4) of the CSA Act dealing with the circumstances in which it is just and equitable to make a departure order. That section provides:
In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b) the proper needs of the child; and
(c) the income, earning capacity, property and financial resources of the child; and
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g) any hardship that would be caused:
(i) to:
(A) the child; or
(B) the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii) to:
(A) the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.
The third step in the consideration is with reference to s.117 (5) of the CSA Act in determining whether it is proper to make the departure order. That section says:
(5) In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
The process for the Court is summarised in Gyselman (supra) 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''.
It follows, therefore, that each of these three steps must be addressed by the Court as separate issues and also separately in respect of each year for which a departure order is sought.
I have considered the parties’ relative financial positions above in respect of the issue of spousal maintenance. The accountant’s agree the husband’s income to be $3,613 per week or $187,876 per annum after a contribution to capital. I consider this to be the best evidence as to the husband’s income. By reason of spousal maintenance order the wife will receive $300 per week or $15,600 per annum for one year. This is not such an income that it would impact on the calculations under the formula in respect of the husband’s liability.
I am mindful of the consent orders which see the children living with the husband for nine nights out of every three weeks during terms plus shared school holidays and on my calculations on the basis of twelve weeks school holidays per year would see the children being with the father for 162 nights per year or 44.38 percent of their time.
I note also that the wife has given evidence that she is actively seeking employment and has relevant qualifications. I again note the provision of spousal maintenance for only 12 months with the expectation being that the wife will be able to obtain employment to support herself and hence contribute to the support of the children.
In all of the circumstances I am of the opinion that it would not be just and equitable to fix child support for three years and particularly given the wife’s own current and potential circumstances. Whilst I am satisfied that circumstances exist justifying a departure order, I am of the view that justice and equity demands that the departure be for a period of 12 months only and that the wife’s income be nil for that period with the husband’s income being $187,876. The formula would then operate as follows:
Husband
Wife
Adjusted taxable income
$187,876.00
$0.00
Minus a self-support amount
$21,622.00
$21,622.00
Minus a relevant dependant child amount $0.00 $0.00 Child support income $166,254.00 $0.00 Combined child support income
$166,254.00
Income percentage 100.00 % 0.00 %
Husband Wife Care per year for each child 162 days 203 days Care level Shared care Shared care Care percentage 44.00 % 56.00 % Cost percentage 43.00 % 57.00 %
Husband Income percentage - 100.00 % Child Cost percentage Child support percentage X 43.00 % 57.00 % Y 43.00 % 57.00 % Z 43.00 % 57.00 % Wife Income percentage - 0.00 % Child Cost percentage Child support percentage X 57.00 % -57.00 % Y 57.00 % -57.00 % Z 57.00 % -57.00 %
Child Cost of the child Child support percentage Estimated amount payable X $12,973.00 57.00 % $7,395.00 per year Y $12,973.00 57.00 % $7,395.00 per year Z $12,973.00 57.00 % $7,395.00 per year
The costs of children are based on both parents’ child support incomes, the number of children and the ages of the children.
The costs are then divided between the parents according to their share of the combined income.
Total monthly amount
Child Estimated amount X $616.00 Y $616.00 Z $616.00
I note that the wife has been out of the workforce for some time and primarily engaged in homemaking and parenting duties. My orders give an initiative to the wife to obtain employment so as to contribute to her own support and that of the children. The husband has a substantial income and this income has provided for the family of five until separation and post-separation. I note that the husband post-separation has paid spousal maintenance, child support, mortgage payments and other sundry expenses totalling in excess of $1,130 per week. Whilst the sale of the former matrimonial home will relieve him of the mortgage payments, he will need to obtain accommodation for himself and the children. I am satisfied, however, that a payment of $425 per week is within the husband’s means given the examination of his income and expenditure set out above is a proper contribution to the needs of his children for a period of 12 months following which the assessment procedure can be reinstated and that such an order for that period is just and equitable. I am satisfied that the order is otherwise proper within the meaning of s.117(5) of the CSA Act given the duties of the parents to support the three children relative to the mother’s otherwise entitlement to a government benefit and the relative financial circumstances of the parents both currently and potentially.
I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of McGuire FM
Date: 9 November 2012
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