Chester and Chester
[2008] FMCAfam 115
•15 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHESTER & CHESTER | [2008] FMCAfam 115 |
| FAMILY LAW – Parenting – competing proposals as to time spent with the child – equal shared parental responsibility – facilitation of orders. FAMILY LAW – Property settlement – evidence of forensic accountant – varied pool of assets – use of fund monies – personal debts – contributions. |
| Family Law Act 1975 |
| Black & Kellner (1992) 15 FamLR 343 Farnell (1996) FLC 92-681 Gollings and Scott (2007) FLC 93-319 Goode (2006) FamCA 1346 Hickey (2003) FLC 93-143 Kildea & Kildea (2007) FamCA 1524 Kowaliw and Kowaliw (1981) FLC 91-092 Lavender & Turner (2007) FamCA 182 Omacini and Omancini (2005) FLC 93-218 Pierce (1998) FamCA 74 Robb (1994) FamCA 136 Townsend and Townsend (1995) FLC 92-569 |
| Applicant: | MS CHESTER |
| Respondent: | MR CHESTER |
| File Number: | BRC2696/2007 |
| Judgment of: | Baumann FM |
| Hearing date: | 2 July 2007 |
| Date of Last Submission: | 23 July 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 15 February 2008 |
REPRESENTATION
| Counsel for the Applicant: | Ms Carew |
| Solicitors for the Applicant: | K L King & Associates |
| Counsel for the Respondent: | Mr Gerharty |
| Solicitors for the Respondent: | Hunter Solicitors |
PARENTING ORDERS:
That the child G born in 1998 live with the mother.
That the parents have equal shared parental responsibility.
That the child shall spend substantial and significant time with the father each alternate weekend from after school Thursday until before School Monday (extending to before school Tuesday if Monday is a Public Holiday); and in the other week, from after school Thursday until before school Friday.
That during non-school holiday periods handovers will take place at the child’s school.
Whilst the child is in the care of the parent, the other parent shall be entitled to contact the child by telephone at all reasonable times.
That all Queensland gazetted school holidays shall be shared equally.
That during school holiday periods the father will collect the child from the mother’s residence at the commencement of the time spent with the father and the mother will collect the child from the father’s residence at the conclusion of time spent with the father.
Should Mother’s Day fall on a weekend the child is spending time with the father, then the father shall return the child to the mother no later than 5:00 p.m. on the Saturday immediately prior to Mother’s Day and the child is to thereafter remain in the care of the mother until the child is scheduled to spend time with the father.
Should Father’s Day fall on a weekend the child is spending time with the mother, then the mother shall return the child to the father no later than 5:00 p.m. on the Saturday immediately prior to Father’s Day and the child is to thereafter remain in the care of the father until the commencement of school on the following Monday.
The child shall spend time with the mother on the child’s birthday for three hours at a time to be agreed between the parties, should the child not be in the care of the mother on that day.
The child shall spend time with the father on the child’s birthday for three hours at a time to be agreed between the parties, should the child not be in the care of the father on that day.
That each parent shall be entitled to spend time with the child on their own birthday for three hours at a time to be agreed between the parties.
That each parent shall keep the other informed regarding any medical emergency or urgent treatment required by the child whilst the child is in their care.
That each parent shall keep the other informed of their respective residential addresses and landline telephone number at all times and provide to the other parent written notice of any change within any change within 21 days of such change.
That by consent the Order placing the child G born in 1998 on the Airport Watch List by the Australian Federal Police be discharged.
That neither party shall denigrate the other parent, their family or lifestyle or permit other persons to do so, to or in the presence of the child.
PROPERTY ORDERS:
That the property situated at Property H in the State of Queensland (“the house property”) be placed on the market for sale forthwith by private treaty with such agent or agents as may be agreed between the husband and wife or failing agreement may be determined by the Court at a price to be agreed between the husband and the wife, or failing agreement, as may be fixed by the Court.
That upon completion of the sale, the proceeds of sale be applied by the husband and wife as follows:
(a)Firstly to pay all costs, commissions and expenses of the sale including legal costs and disbursements in respect of the sale of the home;
(b)In satisfaction of the mortgage to the ANZ Banking Group Limited (“the said mortgage”);
(c)Payment of $214,000 to the Trustee of the [A] Group Pension Scheme;
(d)Payment of $40,000 to the Barclays Select Loan Account;
(e)As to the balance, (“called the net proceeds of sale”) to be dealt with as set out in this Order.
That consistent with paragraph 96 of the reasons for judgment delivered in this case the nett proceeds of sale shall be added to the other items referred to, and more particularly set out in Annexure “A” to these Orders, to constitute the nett divisible pool
That the nett divisible pool shall be divided in the proportions of 65% to the husband and 35% to the wife but on the basis that:
(a)The wife shall be entitled to retain all [S] Equipment ($32,960);
(a)The husband shall retain, free of any claim by the wife, his interest as a beneficiary in the National Farmers Union Pension Fund having a deemed value of $92,982;
(b)The parties shall be deemed to have had the benefit of legal expenses paid of $5,000 (for the wife) and $21,224 (for the husband);
(c)The husband shall be entitled to the full recovery of loans made to Mr C deemed to be $40,776
(d)The husband shall be deemed to have had the benefit of $58,000 for the nett proceeds of the [V] Shares.
The parties, by consent, shall adjust the nett proceeds of sale distributable to them under this order by the wife paying to the husband contemporaneously with the payment from the nett proceeds of sale, the following sums:-
(e)$4,084.16 being agreed mortgage arrears;
(f)$4,693.96 being an agreed adjustment.
After the wife vacates the said house property and pending settlement of any sale of the said house property, the parties shall contribute to mortgage payments, Body Corporate levies, local authority rates and charges and insurance in the proportions of 65% (by the husband) and 35% (by the wife).
The husband shall be solely responsible, and shall indemnify the wife in respect of any liability on the Bendigo Bank Visa Card Account.
In respect of [A] Trust, the parties shall sign all such documents and do all such things (whether as officers of the Trustee [A] Pty Ltd or otherwise), so as to perfect the following transactions in accordance with the terms of the parties’ agreement and the reasons for judgment, namely:-
(a)Transfer all right and title relating to the operation of the business [S] to [S] Pty Ltd or such other entity as nominated by the wife;
(b)To Cause the salon lease to be assigned to [S] Pty Ltd or such other entity as nominated by the wife;
(c)To cause [S] Pty Ltd or such other entity as nominated by the wife to assume the liabilities of the business [S] (as identified in the books of [A] Trust) including estimated taxation liabilities (including GST);
Pending the perfecting of the transactions set out in Order 9, the wife shall be responsible for and shall indemnify the husband against any claims, actions or demands against the business entity known as [S].
As soon as practicable after the transactions in Order 9 are completed, the wife will resign any directorship of [A] Pty Ltd and otherwise transfer all her interest as a shareholder in the said company; beneficiary (if at all in the [A] Trust) or a beneficiary of any remaining loan account or beneficiary account to the husband with the interest that the husband shall thereafter control and have complete ownership of the [A] Trust and the said corporate Trustee.
The wife, at her sole costs, shall cause financial statements to be prepared for the [A] Trust for the period commencing 1 July 2006 until the transactions described in Order 9 are completed.
That unless otherwise specified in these Orders:
(a)Each party is to be solely entitled to the exclusion of the other party (including choses in action) in the possession of such party as to the date of these Orders;
(b)Each party shall be solely entitled to the credit of any monies in any bank account in their name;
(c)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;
(d)Each party will be responsible for the costs of transfer of any asset into their name including registration and transfer fees and for any tax arising as a result of that transfer;
That in the event that either party refuses or neglects to sign a document necessary to give effect to these orders within seven (7) days of a written request to do so, a Registrar of the Federal Magistrates Court of Australia at Brisbane be permitted to sign documents on the behalf of the defaulting party.
That the parties be granted liberty to apply to Federal Magistrate Baumann for any incidental machinery orders.
INTERVENER ORDERS:
That from the sale proceeds of Property H due to Mr Chester there be paid to [Mr S] Trust Account the amount of $13,612 in full satisfaction of all claims that Mr T have against Mr Chester with no Order as to costs.
That from the sale proceeds of Property H due to Ms Chester there be paid:-
That the amount of $28,612 in part satisfaction of the claims of Mr T;
The amount of $17,729 to [Mr S] Trust Account pending resolution of a dispute on the fees, such amount to be invested in an authorised bank deposit in the name of Ms Chester with the benefit of the interest to be paid to Ms Chester
That the issue of the dispute in Order 2(b) be adjourned for six (6) months for further mention.
That from the Wife’s share of the proceeds of sale of the property known as and situated at Property H being the property more particularly described as Lot [X] Group Title Plan 1xxx, Title Reference 5xxx an amount of $238,641.00 together with further accumulated interest from the 1st April, 2008 be paid to the trust account of Mr S, Solicitor, pending resolution of any dispute between the Wife and [I] Ltd in respect of monies owing to [I] Ltd and the Wife.
That pending agreement being reached if the funds are paid to the trust account of Mr S they remain there until such time as agreement is reached or further Order is made and the interest accumulated on those funds, which are to be invested, shall be paid as agreed between the parties.
That from the Husband’s share of the proceeds of sale an amount of $116,636.21 together with interest accumulated from the 29th April, 2008 until settlement be paid to [I] Ltd, the Intervener.
That [I] Ltd, the Intervener, sign all necessary documents and do all necessary things to release caveats lodged against the title to the said property to enable settlement to proceed on or before the date of settlement.
NOTATION:
That the notice of intervention filed by [I] Ltd on 4 April 2008 is construed as an application to be joined as a party to these proceedings.
ANNEXURE A
1. Property H
2. Nett proceeds of sale
3. [S] Equipment
4. $32,960
5. [A] Group Pension Fund
6. (after deduction of $116,375)
7. $331,977
8. National Farmers Union Pension Fund
9. $92,982
10. Add Backs
11.
12. [L] Loss/Loan to Mr C
13. $40,776
14. Proceeds of [V] Shares
15. $58,000
16. Legal Expenses
- husband
- wife
17.
18. $21,224
19. $5000
20. Liabilities
21.
22. Mortgage
23. $757,000
24. Loan to Pension Scheme Payable
25. $214,000
26. Barclay Select Loan
27. $40,000
28.
29. $1,011,000
IT IS NOTED that publication of this judgment under the pseudonym Chester & Chester is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC2696/2007
| MS CHESTER |
Applicant
And
| MR CHESTER |
Respondent
REASONS FOR JUDGMENT
Introduction
After cohabitating in England both before and after their marriage in 1998, the Applicant wife Ms Chester and the Respondent husband
Mr Chester immigrated to Australia with their only child G (now aged nine) in early 2004.
Regrettably the tensions in the marital relationship which had surfaced in England did not abate in Australia, such that the parties separated in April 2005. The events surrounding the separation are in dispute.
It is apparent that disputed financial and business interests involving the parties exacerbated the conflict and there were a series of events in mid 2006 which caused the parties to reach a level of angst with each other. I refer to those events in these reasons but they were unfortunate and, perhaps not surprisingly, G was exposed to the emotional hostilities between her parents.
Since mid 2006 the parties have been engaged in litigation firstly in the Family Court of Australia and then, after transfer to this Court, a trial was conducted in July 2007 in respect of disputed parenting and property issues. These reasons seek to explain why I have decided to come to the conclusions I have on:-
a)The care arrangements for G which meet her best interests at this time; and
b)How to divide the available pool of assets in a manner which achieves a just and equitable result.
There is voluminous material filed by the parties in which they detail a number of past events which they regard as significant. I have come to a view that it is not necessary to determine every disputed issue (of which there are many). I see no need to add fuel to the conflict when many of these issues are not determinative of the principal matters I am required to decide. The parties, who are highly competitive, might be disappointed in this approach.
Parenting Issues
By final submissions, as throughout the litigation, the essential dispute was how much time G spends with each parent. There was an element in each parent seeking control – although neither parent sought an order for sole parental responsibility. Put another way, neither parent sought to disturb the legislative presumption created by s.61DA that equal shared parental responsibility is in the best interests of G.
Competing Proposals
By completion of the trial in accordance with considered written submissions delivered by experienced Counsel Ms Carew (for the mother) and Mr Gerharty (for the father), the competing proposals may be summarised as follows.
Mother
That G reside predominantly with her, with the primary proposal being that the child spend time with the father each week from Thursday after school until 6:00 p.m. Sunday. As an alternate, but a less preferred option advanced by the mother, she proposed the time spent be from after school Friday to before school Monday one week and after school Thursday in the other week.
Father
The father’s primary proposal is that G live with him and spend time with the mother four nights a fortnight. In cross examination he indicated he would accept a week about shared care regime which might meet the child’s best interests. Again this second alternative was not his preferred option.
The parents agreed school holidays should be shared equally. There was broad agreement on the importance of G sharing special days with her parents. Some of the specific issues orders contended for I deal with later in these reasons.
Parenting Principles
The child’s best interests are the Court’s paramount consideration. In determining those interests the Court must consider not only the objects of s.60B of the Family Law Act 1975 and the right of a child to have a meaningful relationship with all those people significant to them, but also the additional considerations are set out in s.60CC. The primary considerations under s.60CC(2) and the additional considerations under s.60CC(3) will be analysed below to ensure that the order I propose will serve the best interests of G.
In Goode (2006) FamCA 1346 the Full Court made it clear that the presumption that equal shared parental responsibility is in the best interest of the child (s.61DA) does not carry with it any presumption about time. The issue of equal time is dealt with in s.65DAA and “when the presumption is applied the first thing the Court must do is to consider when making an order whether it is consistent with the best interest of the child and reasonably practicable for the child to spend equal time with each of the parents. If equal time is not in the interest of the child or reasonably practicable the Court must go on to consider making an order whether it is consistent with the best interest of the child and reasonably practicable for the child to spend substantial and significant time with each of the parents” (see Lavender & Turner (2007) FamCA 182).
It follows that unless the presumption of equal shared parental responsibility is rebutted, the Court must consider whether equal time with each parent is in the child’s best interests and reasonably practicable. If the Court does not make an order for equal time, the Court must consider whether the child spending substantial and significant time (as defined by s.65DAA(3)), is in the best interests of the child and is reasonably practicable.
Evidence
I had the advantage of seeing the parents under cross examination. They are quite different people. The tenor of their voluminous Affidavits give an indication of their demeanour.
Family Report writer Valma Johnson in her first report dated July 2006 (with interviews taking place on 7 July 2006 in the midst of the turmoil post the fire and heightened business disputes), described what she saw in the parties as follows:-
“24)… it has been difficult to discern whether the processes within this family’s history and present situation reflect either intense parental conflict and/or underlying personality vulnerabilities in each parent. In my opinion, Ms Chester displays heightened histrionic characteristics, conveying
Mr Chester’s behaviour in extremes and in the absence of balance or perspective. For his part, Mr Chester has a particularly controlling manner with limited insight or compassion.”
The history suggests that when Ms Johnson saw the parties on this first occasion she saw them at their worst – but I have also formed the view that the mother is prone to exaggeration and embellishment – not necessarily motivated by a desire to misinform, but more from her perspective of the drama in her life. The evidence confirms for me that in the post separation period, particularly from mid 2006, she was unable to shield the child from her overly emotive responses.
The father, as Ms Johnson opines from her second report, had developed greater insight and that was also my impression. As I note further in these reasons, some of his actions (again particularly in mid 2006 when he involved the police and others as he did) were ill-considered and overly provocative.
Within these concerning traits, the parents share at least a single quality – devotion to their daughter. The parents’ proposals, perhaps begrudgingly, accept that the other parent’s relationship – from the position of primary care or control which they seek.
G
In circumstances where the report writer has the advantage (over me) of seeing the child, her observations are clearly of assistance. Both parents refer with pride, to the little girl’s high IQ. Ms Johnson agrees, describing G [at paragraph 120] as:-
“… a gifted and talented child. Her cognitive abilities are beyond her chronological age. Her feelings and emotions are nevertheless those of a 7-year-old”
(her age at that time), and [further at paragraph 121] that:-
“G has a number of babyish traits. Some of these appear to stem from her parents inattention to developing her independence and some from her manipulation of the situation.”
I have no doubt at all that this child has been overly exposed by both parents to their conflict and a number of adult issues. In my view the second report of Ms Johnson identifies that the mother’s “shaping” of the child’s views and feelings were still continuing by the time of the second review whilst the father (having thankfully developed some greater insight) was not as involved. Certainly I agree with these comments by Ms Johnson on the whole of the evidence. The father’s email exchanges with G in July 2006 were simply inappropriate. Engaging a child in communication of this nature was likely to have been emotionally difficult for G. I see no reason to recant their contents or to try and over-analyse them, save to say that I agree that the email communication with the father reflects “the confusion of mixed feelings of anger, fear and loving attachment for her father” G felt at that time [Johnson at paragraph 120].
Notwithstanding the child’s acknowledged intellect, this history and the observation of Ms Johnson persuade me to accept, on balance, that I must cautiously weigh the expressed wishes and feelings of the child. I also am of the view that this child’s awareness of the parental conflict does provide an opportunity for her to play one parent against the other, and when told to the mother (coupled with her personality traits), these can be presented by the mother as a much larger problem than is really the case. For example, allegations of the father’s nudity and continuing acceptance of G sleeping in his bed (post the injunction ordered by the Court), which the father denies is capable of less adverse interpretation as the submissions of Counsel for the father suggest. For completeness, I do not find the father has breached the injunction nor do I find any observation by the child of the father being nude, as other than inadvertent.
The mother’s persistence in pressing these issues, both to Ms Johnson and in her trial material, reflects on her capacity for drama.
Abuse by the Father of the Mother’s Children
Allegations were raised by the mother, as indicia of the father presenting a risk to G, of inappropriate actions of the father directed to J and C. Although both J and C gave evidence, I did not find them overly convincing. Certainly they were supporting their mother and hold strong negative views of the father (who of course is not their biological father). The inconsistencies with what they said (and didn’t say) to Ms Johnson add to my reservations. I do not mean to suggest that I do not accept the father at times was in strong conflict with the children. I think he could often have been a harsh and verbally direct parental figure. The mother herself has had difficulties with J. The father acknowledges he may have said he would break J’s legs, as an aggressive comment – and that such words were entirely inappropriate.
However difficult some of these encounters in this blended family may have been from time to time (especially at or around separation and particularly in mid 2006), I do not find that these difficulties are sufficient to support a finding that the father is a risk to G of causing her physical harm.
Events at and Shortly After May 2006
After the initial adjustments made by the parties post separation in April 2005, the tensions settled down a little. The mother formed a new relationship with Mr L resulting in cohabitation in December 2005. There were some difficulties experienced in that new blended relationship, but no purpose is usefully served by delving into those issues.
The continuing business operations were a not entirely co-operative affair, but the parents put in place a regime of sharing G (with the father seeing her two nights a week), without Court orders.
When the father was away in the United Kingdom for business the mother’s home was destroyed by fire. For any person losing cherished and irreplaceable mementos of their life, this would be traumatic. One might have imagined such an event could have unified the parties in assisting the mother and G. Instead, disputes over the insurance proceeds; involvement by police to search for allegedly “stolen” company property (instigated by the father); and demands for the return of a company car being used by the mother and G all caused an immediate escalation in hostilities. The mother made the father’s ability to see G difficult – legal proceedings were urgently commenced. The parties began their irretrievable journey of litigation. The family was in chaos.
Although I have formed the view the mother exaggerated the police action (“pointing guns”), nonetheless the father’s participation in the instigation of these actions, at that time, were ill-informed. These initially private civil disputes were inappropriate for police intervention – especially, as the latter reasons demonstrate, the value of these articles is insignificant in the context of the overall pool. Of course G became upset and although the mother may have found it difficult to disguise her hurt from the child, to a large degree the father brought it on himself.
The real importance of an examination of these events is whether they are an indication of likely future conduct which could adversely affect parental behaviour and compromise the child’s wellbeing.
I have formed the view they are not. I cannot ignore the financial and property context overlaying these events. Money is important to these people. It is clear that G was emotionally troubled by the events, but time already has had a healing effect. I also believe that a resolution of all these issues (and to this extent I express my regret to the parties for my delay in delivering these reasons which ahs prolonged their sense of uncertainty), will remove a further continuing irritation between the parties and allow them to refocus on their child’s needs and their individual business pursuits.
Analysis
Relying on the findings I have made above, coupled with the analysis of the competing proposals through the two tiered primary and additional considerations which follow, I have come to the conclusion that the best interests of G are served at this time by an order which broadly provides that:-
a)The parents have equal shared parental responsibility.
b)G live with the mother.
c)The child shall spend substantial and significant time with the father each alternate weekend from after school Thursday to before school Monday (extending to before school Tuesday if Monday is a Public Holiday) and in the other week, after school Thursday overnight. The school holidays shall be shared equally.
d)I deal with some of the apparently not agreed specific issues orders below. I anticipate no disagreement over arrangements for Mother’s Day; Father’s Day; the child’s birthday or Christmas, however if I am wrong I will make appropriate rulings.
I will ask the parties to confer on the form of the orders which reflect these reasons and be in a position to provide me with a proposed order at 9:30am on Tuesday 26 February 2008. The first draft shall be prepared by the solicitors for the mother.
I have come to the conclusion, shaped by (but not reliant upon) the parent’s apparent acceptance of the legislative presumption, that equal shared parental responsibility is in the best interests of G and is not otherwise rebutted. Whilst it is true, in my view, that at the time of trial the parents did not enjoy effective communication (seemingly relying upon their solicitors to be their mouthpiece), they will be forced to do so in the future and I think they can. They should both be involved in long term decisions affecting G.
Because the presumption applies I am required to consider making an order that G spend equal time with each parent. The father made it clear that he was prepared to consider this option as an alternative proposal.
I have formed the view that although an equal time regime may be appropriate at some time in the future, now is not the time. The combination of the currently ineffective communication between the parties; the primary attachment the child shares with her mother; and need for a predominate home-base makes equal time contrary to the child’s best interests and “untenable” as opined by Ms Johnson. I agree with her.
Meaningful Relationship with Parents
G has a good and sound bond with both parents. The order I propose to make, although not for the amount of time sought by either parent, protects those relationships in my view. To do so is critical to G’s sense of identity and long term stability. As I further indicate, the increased time for G with the father whilst maintaining at least weekly frequency, will enhance the opportunities for G to maintain her meaningful relationship without putting at risk the mother’s relationship with the child.
Protect the Child from Harm
I have already explained why I do not regard the father as being a risk to the child or likely to expose her to harm. Both parents have, by their involvement of the child in this dispute, exposed the child to emotional harm in my view. Her intellect may have in some sense allowed her to create a barrier, but his conflict and the promotion of negative views in one parent’s home against the other parent, presents as the major element of the future harm to G.
Views
To the extent that the child has expressed a view not supportive of an increase in time with the father, whilst not ignoring those feelings, I can not apply determinative weight to them. I do not find that either parent has “coached” the child, but in particular the mother’s views and openly distraught behaviour at times is likely to have “shaped” the child’s views (see Johnson at paragraph 109). This all encourages me to treat the child’s wishes with caution. I note that Ms Johnson did not illicit any consistent view, feeling or behaviour of the child which supported her living with the father.
Relationships
The history of care from birth to separation aggregated with the clear primary care of the mother post separation (and at times in difficult circumstances) support the opinion of Ms Johnson that the child’s primary attachment lies with the mother. I so, find, but in doing so acknowledge, as already found by me, the relationship with her father is strong and enduring.
Clearly the ability for G to maintain her relationship with her siblings C and J is enhanced by remaining in her mother’s primary care. J seems to be moving between Australia and the United Kingdom, however G told Ms Johnson in essence that these relationships were important to her. I do not ignore the negative views held by the siblings (who are at a quite different development stage in their lives) about the father. The mother should be vigilant in not allowing but actively discouraging such views being shared.
Effect of Change
The mother says the child has changed “to a nervy, unhappy child who suffers from nightmares and irrational fears”. I regard the mother’s reports as exaggerated, although I can accept that moving between the parents creates some need to “settle down” after each change. I do not attribute the child’s presentation totally to the father. The high conflict and the child’s awareness of same is, in my view, a major contribution.
I do not accept that a separation from the mother for four days is too long to be away from the mother. Whilst such a regular absence from the mother’s home will be an adjustment, the benefits to the child of having a full weekend with each parent (a situation which has not existed for over two years), coupled with the weekly frequency (which she is used to), outweigh the initial possible reactions to adjusting to this new regime.
The child will remain at the same school where her reports are good. Also the regime I prefer as being in the child’s best interests will allow the father greater opportunities to engage with the child’s school environment including the child’s cohorts.
The mother asserts the father has sought to alienate the child from her. I do not accept this view. I regard the routine proposed as an inhibitor to alienation or unrestrained and imbalanced negativism developing momentum in either home.
Facilitation
Generally the mother has complied with the orders made. Certainly after the events of May 2006, the informal regime was interrupted, however I am satisfied both parents are able to practically and emotionally facilitate time and will do so – even though it is likely both parties may have a level of disappointment with my decision. The events of May 2006 hopefully will not be repeated and I am confident the parents will accept and understand the importance to G of facilitating time and ensuring smooth handovers (which will occur now more naturally at school).
Parental Attitude and Capacity
In their own homes, and subject to the concerns which the history and personality traits identify, both parents function at a high level and have much to offer their daughter. They are different people who not surprisingly parent differently. However their core principles and values are compatible.
Negative comments by one parent about the other parent to or in the hearing of G will be picked up quickly by this intelligent child and cause her distress. The parents, after two family reports and a trial, must well understand that now. I think they do. Apart from those concerns I have no major concerns about parental attitude or capacity not otherwise detailed above.
In this respect at paragraphs 131 and 132 of the second report by
Ms Johnson she says:-
“131) If the Court is minded that the mother can settle into a comparatively co-operative parenting relationship with the father, or it concludes that the father is responsible for generating conflict to the same degree as the mother has, it is my view that G should reside with her mother for nine days per fortnight and with her father for five days per fortnight.
132) If the Court concludes that, the mother’s vulnerabilities preclude her from facilitating a positive relationship between the father and G, it is my view that G should live with the father for ten days per for fortnight and with the mother for four days per fortnight.”
Having found that both parents have contributed to the conflict and that the mother can facilitate the father’s relationship – and with the parents’ capacity not being a difference of significance – I have, as can be seen, adopted the recommendations of Ms Johnson, which I found was based on a factual and considered analysis, which I broadly accept on the whole of the evidence.
Making an Order Less Likely to Lead to Further Proceedings
If I am wrong, and in time the mother demonstrates a lack of capacity to support he father’s relationship then this vigilant father is likely to commence further proceedings to protect his relationship with G. The order I propose to make, whilst allowing the mother to continue as the primary carer, affords the child a mix of opportunities to engage and enjoy time with her father – complying with the definition of substantial and significant time.
A leap to an equal time regime, if it is to occur in the future is more likely to be achieved through negotiation then litigation. I draw comfort from the knowledge that before either party can seek to alter these orders, a material and significant change will have to occur and the pre-action mediation at a Family Relationship Centre will be a step to be undertaken first.
Specific issues
The Applicant mother seeks an order that the father “be restrained from bringing the child into contact with the mother’s parents”. The mother does not enjoy a good relationship with her parents who still reside in England. I am not required to delve or determine the source of their adult dysfunction. Whilst I am concerned about the child hearing any negative views expressed about the mother from other persons including family, the limited phone or possible physical time between the child and the mother’s parents and the detriment of that time must, I believe be weighed against he benefits of the child having an opportunity of contact with a natural part of her life history and identity. I accept that the father is the only one (of the parents) likely to facilitate such time and although it acts as a provocation to the mother, on balance, I do not regard it in the child’s best interests to restrain the father as the mother seeks.
I accept the father’s evidence about the child no longer sleeping in his bed. I do not propose to make any order in that regard.
Although notoriously difficult to enforce, a “non denigration” order in the usual terms applying to both parties and including an extension requiring the parents to use their best endeavours to ensure others do not denigrate the parents (this being intended to alert the parents to protect sibling or grandparental negative comments) should be made.
For the reasons given above, I believe the proposed order will meet the best interests of the child G at this time, which is the paramount consideration
Financial Matters
Much of the factual history is not in contest, and where it was, it has been clarified through the agency of fulsome discovery and the efforts of the Court expert, forensic accountant Joseph Box, who provided two reports dated 10 May 2007 and 2 July 2007.
To the extent to which disputes remain on factual issues as to how, as a matter of both law and discretion I should treat the evidence in this case, the reasons which follow I hope demonstrate the path undertaken by me.
As will be evident, I have neither agreed with the wife that the ultimate division of the pool (as contended for by her) should be equal or with the position contended for by the husband that the pool should be divided as to 75% to himself and the remainder to the wife. Central to the decision, is my determination of what should constitute the pool including any “notional” add backs. Allowance for alleged waste within the Kowaliw principles is also sought by the wife.
Legal Principles
The preferred process of analysis in a property dispute is well settled and was most recently restated by the Full Court in Hickey (2003) FLC 93-143. It essentially involves a four stage process initially to determine, usually at the time of trial, the assets and liabilities of the parties. Secondly, by reference to s.79(4) to consider the respective contributions of a financial, non-financial, direct and indirect nature. Thirdly, to consider as directed by s.79(4)(e) the relevant s.75(2) factors and finally the Court is required to step back and look at the order it proposes to make to ensure that it does justice and equity to the parties in all the circumstances.
As “add backs” loom so large in this case, it is appropriate at this juncture to record the established “guidelines” for a “adding back” (as so often described) which was recently summarised by the Full Court decision reported as Kildea & Kildea (2007) FamCA 1524 (delivered 21 December 2007) where at paragraph 112 the Full Court (Finn, May and Boland JJ) said:-
“The Full Court has had cause to consider on a number of occasions the question of so called “add backs” and has established guidelines to facilitate consistency in decision making (see Chorn and Hopkins (2004) FLC 93-204, Townsend and Townsend (1995) FLC 92-569 and Kowaliw and Kowaliw (1981) FLC 91-092). In Gollings and Scott (2007) FLC 93-319 at paragraph 65 the Full Court said as follows:-
“In Omacini and Omancini (2005) FLC 93-218; (2005) 33 Fam LR 134 the Full Court identified there clear categories of cases where it was appropriate to notionally add back the pool assets which were said by the Full Court to “no longer exist”. Those three categories were:
(a) monies spent on legal fees;
(b) monies disbursed by way of premature distribution of matrimonial assets; and
(c)monies lost by one party either during or after marriage as a result of a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or as a result of reckless negligent or wanton behaviours which had the effect of reducing or minimising the value of assets.”
Furthermore as the Full Court noted in Chorn and Hopkins (2004) FLC 93-204 funds being “added back” is more the exception than the rule.
History
Although some of the issues relating to the pool require greater analysis, for context I provide the following summary of the financial history (which I do not assert is a complete recitation of every event):-
a)At the trial the wife was nearly 40 years old and the husband was 46 years old. They were 28 and 34 respectively at cohabitation.
b)In about 1989, the husband commenced an equal partnership with Mr A principally in the import and export of fresh produce. During the course of the business operations, the companies used as vehicles for the business were [A] Pty Ltd, [AI] Pty Ltd and [C] Ltd. Interests in pension funds were also commenced.
c)The husband at the time of cohabitation in 1996 had an interest in a house at [U] in England as well as his business interests. The wife’s assets were less significant.
d)The wife worked for the business as an interpreter to assist the companies’ business development which continued until before the birth of G in 1998.
e)After the parties married in 1998, they purchased land in [L] which was known as “Property B”. The husband’s brother [Mr C], through his company [E] Pty Ltd (in which the husband was a director at the time) built the home on the land. Building commenced in January 2000 and construction was completed in March 2001. Costs of construction were approximately ₤330,000 and when sold in December 2003 for ₤600,000 a capital gain was realised.
f)The husband speculated, successfully it seems, on currency futures whilst maintaining an active working interest in his business. When the husband and wife were holidaying in Australia in August 2003 (having decided to permanently immigrate), they purchased property at Property O,for A$840,000, the funds coming from the United Kingdom. The property settled in November 2003, shortly prior to the sale of “Property B” and the parties immigrated in December 2003.
g)A separate company, [L] Pty Ltd was incorporated in the United Kingdom in 2003 which the husband said was for the purpose of borrowing funds from the [A] Group Pension Scheme for business investment in Australia. It was the business plan of the parties to fund the establishment of the [S] Academy in Australia using imported specialist beauty therapy equipment from the United Kingdom. The husband says that on 18 February 2004 the [A] Group Pension Fund loaned ₤80,000 to [L] Pty Ltd with further borrowings, he says of ₤47,500 in March/April 2006, which the husband concedes were “loaned” to him principally to enable him “to keep paying debts and to live”. A boat, also funded by [A] Pty Ltd, was purchased in late 2003 and then sold in July 2004 for $62,500 – a loss on the transaction of around $17,000. At about the time of purchase the husband also claims to have received an inheritance of approximately ₤30,128 (A$72,000).
h)In the first few months of 2004, a number of business transactions took place involving the parties including:-
· The continued development of the [S] Academy.
· The purchase of Property P for $380,000.
· The sale by [A] Pty Ltd of the export aim of its business to [V] Holdings (UK) of the export aim of the business for ₤880,000 – the consideration being a mixture of cash and shares. The husband says as to his 50% share, he received ₤102,500 in April 2004, and a further “accelerated” payment of ₤180,444 in July 2004.
· The purchase of Property D for $500,000.
· The establishment of a business known as “[F] Pty Ltd” which helped prepared car wash sties. The husband says he sold three sites.
· Purchase of a parcel of land at Property H in joint names for $950,000 (the wife says $750,000)
i)Property P was sold for $430,000 in March 2005 with modest nett proceeds.
j)When “Property O” sold for $820,000 in April 2005 a substantial part of the nett proceeds were used to discharge the mortgage over Property H land. At the time of separation in April 2005 this property was the family home and after the sale, the wife remained in the home for a time renting it from the new owner.
k)Although as the marriage crumbled the parties decided to list the Property H land for sale, a sale did not eventuate. Even though the parties had separated, in January 2006 they entered jointly into a building contract with [X] Homes for $735,992, borrowing all those funds and more from the Bank. With the assistance of orders of the Family Court made in December 2006, when the home construction was completed in January 2007, the wife was able to exclusively occupy the home, with the wife to meet all reasonable expenses (see paragraph 4(b) of the said order made 7 December 2007).
l)Relevantly by orders of the Family Court of Australia made 5 July 2006 (during the turmoil of the “post-fire” period) the husband was to transfer to the wife “the business known as [S] Academy”, on certain conditions.
As I indicated this chronology covers the major events. It is clear that in the “high conflict/low trust” environment that existed between the parties – and with a number of related entities transferring money all around – a clearer picture of the source and payment of certain funds was required. Although not strictly an “audit” – certainly Mr Box was retained to “trace” the various major fund transactions. I deal with his report and evidence within the context of the various disputes which existed at trial. Broadly, but allegedly not completely, Mr Box had access to a mountain of documents, bank statements and the like which he was asked to review and analyse. His reports seek to do so. He was also the subject of cross examination. His task was not an easy one, but by attending to the exercise with careful diligence, a few of the dispute narrowed or were resolved.
Reports of Joseph Box (forensic accountant)
The report dated 10 May 2007 was concerned with assessing the value of the parties interest in two entities:-
·[A] Pty Ltd as Trustee for the [A] Trust
·[F] Pty Ltd
Mr Box came to the conclusion that the value of [A] Pty Ltd as Trustee for the Trust was nil, taking into account it has a significant loan owing to [L] Pty Ltd, as at 30 June 2006, of $213,861. The main business operated by the Trust is the [S] Academy.
Similarly Mr Box says there is no nett value in the parties’ interest in [F] Pty Ltd.
The second report, commissioned by the wife, summarised his conclusions on certain specified questions as follows:-
“Child Support Payments
11.For the Period 1 November 2004 to 14 August 2006 an amount of ₤5,600 was paid by Mr B into the Parties bank accounts.
First drawdown from the Pension Scheme - ₤80,000
12.I am unable to identify the specific application of the initial funds drawn down from the Pension Scheme, but can confirm that part of these proceeds were applied to all of the following:
i. Personal expenses
ii. [S] business
iii. Repayment of debt
iv. [F] Pty Ltd
v. Property purchase expenses
Second drawdown from the Pension Scheme
13.The amount of ₤47,500 obtained from these drawdowns has substantially been utilised as payments to the following:
Natwest Mastercard – ultimately [L]
₤15,000
Husband’s Brother
₤20,000
The Husband’s ANZ Account(*)
₤10,000
1 Lancaster
₤750
₤45,750
(*) From the amount of ₤10,000 paid to the Husband’s ANZ Account, an amount of $6,120 was paid to JQ & JIF. The Husband claims that these represent rent payments on behalf of the Wife.
Analysis of [L].com
14.With respect to the payments to the Husband from the Husband’s (sic) Brother I note the following:
i. The claimed payment of $50,000 on 15 September 2005 follows a withdrawal on 14 September 2005 from the Parties’ Joint Natwest bank account.
Based on my review of the Parties bank statements it would appear likely that this deposit relates to the withdrawal from the Natwest account and not a deposit from the Husband’s Brother.
ii. The substantiation provided by the Husband for the ₤8,000 payment appears to indicate the payment occurred on 20 July 2006, where the funds are stated to have been deposited into the Husband’s ANZ Account on 14 August 2006.
[S] Academy
15.As detailed in the summary, there are a multitude of transactions between the business and various accounts of the Husband and the Wife. The following is a summary of these transactions:
Transactions between the Husband and the Wife’s bank accounts and [S]
₤
Deposits
₤540,132.76
Withdrawals
₤237,816.64
Total Difference
₤302,316.12
16.I note that this compares to the amount owing by the [A] Trust to the Husband and Wife as detailed in the financial accounts for the year ended 30 June 2006 of $363,485. The difference may be attributable to the fact that bank statements for the period 4 August 2006 to 23 August 2006 were not provided and, therefore, have not been included in my summary (Annexure 12).”
Pool of Assets
As the parties’ final written submissions reveal, many aspects of the pool of assets and liabilities were agreed. I now deal with those items not the subject of agreement as follows:-
[S] Academy
Given that there are no nett assets in this business, the wife properly accepts that a liability for the receipt of funds received by [L] (essentially from the drawdowns on the United Kingdom Pension Fund) exists in the sum of $214,000. The parties must in a sense indemnify the Trust for this loan. Considering the size of the business and the fact, which I accept, that it does not operate profitably, I am attracted to the simple proposition that if the business ceased operation (which it might), – the parties would be left with a debt to pay to [L] and have some equipment and plant to sell. That equipment has been independently valued as either $32,960 (market value) on $48,100 (market value for existing use). I adopt the lesser value on the scenario I have accepted to be the reality of the situation.
[L] Transactions
[L] is an English based betting agency. The husband maintained an account with that agency and wife asserts that the husband “squandered considerable funds through that account”. The evidence reveals the husband used his credit card accounts for the drawdown of funds to be credited to his [L] betting account during the period 24 April 2005 and 4 September 2006. To further complicate the matter the husband’s brother Mr C says, in effect, it was his betting in online poker that was the source of the need for withdrawals. This is explained in the Affidavit of Mr C. The husband says that:-
·Between 24 April 2005 and until 16 March 2006 the account was solely used by [Mr C].
·Between 16 March 2006 and 4 July 2006 he played poker online whilst his brother also continued to use the account, but at different times, until 4 September 2006 when all activity on the account ceased.
After considerable investigation and reconciliation, the wife accepts that the difference between the total sums paid into the [L] account and the total sums received from the [L] account was ₤36,990 (converted to an Australian dollar equivalent of $88,778).
The wife submits that these “losses” should be added back notionally to the pool as a waste of available funds beyond the levels of reasonable entertainment. The husband says that in fact no “losses” were incurred because his brother [Mr C] made payments to the husband of ₤42,000 – or ₤5009 more than the difference of ₤36,990. It follows therefore that I need to consider whether any actual “losses” did occur and if so, whether they should be “added back”.
The husband says his brother paid him the following sums:-
· ₤22,000 on 15 September 2005
· ₤10,000 on 3 May 2006
· ₤2,000 on 20 July 2006
· ₤8,000 on 14 August 2006
I accept the submission that the husband bears the evidentiary onus of establishing the asserted funds were paid to him by his brother from his own funds – and don’t represent some “inter-family” roundabout.
Mr C deposes in his Affidavit sworn 16 April 2007 that the payments of ₤10,000; ₤2000 and ₤8000 came from his account at “the Woolwich”, with the first two payments being deposited into the husband’s Barclays Premium Account and the last payment to the husband’s ANZ Access Select Account. Mr C provides copies of blank statements to support his assertions.
The wife is, perhaps understandably suspicious, that the funds paid by the brother is in some way, connected with the payments made to the brother of ₤10,000 each on 22 and 23 March 2006. The husband says these payments from his Barclays account were repayments of loans made by his brother to him in March 2004 (₤5000) and May 2004 (₤15,000).
There is little doubt that the brothers, who were close and also connected over the years with building operations, assisted each other. It is difficult to be absolutely certain on these transactions; however on the balance of probabilities, I accept that the payments of ₤20,000 were a “reimbursement” of sort for funds used on the [L] account of the husband.
As to the payment of ₤22,000 in September 2005, Mr C swears that he made the payment “to cover previous arrears and put myself in credit”. He says he was asked to pay the money to [AI] Ltd because of exchange rate advantage. This transaction is made more difficult to decipher because of the lack of records available for [AI] Ltd (now in liquidation). Mr Box, after a careful examination and analysis, took the view that the deposit of A$50,000 (which was the equivalent of ₤22,000) received into the husband’s ANZ bank account was more likely to be a withdrawal from the joint Natwest Account than a deposit (in a roundabout way) from the brother.
I have come to the conclusion that the husband has not discharged the onus of establishing that the husband’s brother has paid to him the sum of ₤22,000 for use of the [L] Account for the period. Without seeking to unravel further this confusing scenario, I am comfortable with a conclusion that:-
a)Losses on the [L] Account for the period (however and whoever caused them) amounted to ₤36,990;
b)Mr C reimbursed the sum of ₤20,000;
c)The balance of ₤16,990 (or the Australian equivalent of $40,776), represents gambling losses of the husband and his family or an accommodation given to his brother and not repaid – in essence a form of loan.
I propose to add back the sum of $40,776 which, if gambling, was beyond the reasonable limits of entertainment for such a short period and if a “loan” to the brother, something which the husband should recover.
Sale of [A] Ltd and the [V] Shares
In April 2004, whilst the parties were still an intact couple, the husband and Mr A sold the export operations of the business [A] Ltd for ₤880,990. The husband it is acknowledged had earlier sold his half share in the local aim of the business to his partner. The evidence confirms, and I accept, that this sale price was repayable or broken down into the following components:-
₤215,990
In cash
₤35,000
Initially retained
₤30,000
(being 30,00 x ₤1 shares in [V])
₤400,000
In “A” Loan Notes
₤200,000
In “B” Loan Notes
Mr A, who swore an Affidavit and was the subject of cross examination by telephone from England, said that the sale was “subject to a profit performance clause”. Although the maximum the husband could receive was ₤440,995, the husband and Mr A did not receive payment of the “B” Loan Notes because Mr A says “the level of profit required by the agreement never being reached”. The husband maintained some administrative workload after the sale (for which he was paid separately by the new owners), however the fact that the company went into liquidation in or around July 2006 suggests that Mr A’s claim that [AI] made no profits from 1 April 2005 has a ring of truth about it.
I accept that the wife is suspicious about the transaction. The lack of documents from the liquidation only fuelled her unease about accepting the husband’s version of events corroboration by Mr A. I accept that during the marriage the husband dealt with these business interests and that the wife knew little about them.
The nature of the transaction with [V] Holdings is in part verified by documents produced to the Court including Exhibit 2. I accept on the whole of the evidence that the husband did not receive the full consideration for the sale of the business. I do not regard this as other than the commercial risk associated with the bargain struck with the purchase. It is not a loss attributable to any wanton, reckless or negligent behaviour of the husband. The loss should not be notionally added back.
Part of the proceeds of the transaction available to the husband arises from his interest in 15,000 [V] shares. It was asserted that the husband “owed” a director’s loan of between ₤20,000 and ₤21,000 to [AI]. Some of the loan is said to arise from transactions on the foreign currency trading facility of the company.
In the absence of any records of the company, it is difficult for the Court to accept what, if any loan account due by the husband existed, and also how and in what manner its balance was accumulated. The evidence of the husband and Mr A is that when the husband sold his [V] shares he contributed the proceeds to the loan account – presumably in part payment.
It is not clear why, if any, debt did exist, it was not discharged from the other cash funds received from the sale by the husband earlier than when he sold the shares in August 2005. Whilst I can accept there were probably a lot of “credits and debits” to internal loan accounts over the years – I have formed the view that the husband has not properly accounted for his use of these nett funds from the sale of shares – which, on the evidence, I accept was around ₤24,000 or A$58,000. In the circumstances I believe the proper way to deal with those funds is to notionally add them back as a premature disposition. I intend to do so.
Mr N's Debt
When the parties purchased the Property H land from Mr N it seems part of the transaction involved the payment of large sums of cash (see husband’s Affidavit filed 18 May 2007 at paragraph 111(d)). In circumstances where there is no supporting documentation or any evidence from Mr N to corroborate any loan to him it is impossible for me, on the evidence offered by the parties, to be satisfied that any funds are owing by Mr N at all. I have come to the view that perhaps the Court has not been given the full picture. No action has been undertaken by the parties to recover the asserted loan of $170,000. This is a considerable sum of money and in circumstances where the parties have been under financial pressures, one would reasonably expect to see some action taken (or at least demands for repayment) to try and recover a debt of this size.
The allegation of large sums of cash being paid has a hint of artificiality about it. It would be unfair, in my view, to include any amount in the pool for this alleged debt, or to assign the “benefit” of recovery to either party.
Use of Pension Fund Monies and Other Funds
Mr Box has done his best on the voluminous amount of records to try and trace a number of financial transactions. Money was going everywhere. Intermingling occurred frequently. The parties were living at a high standard and were trying to establish a seemingly unprofitable business ([S]). Whilst I cannot account for every cent, it seems to be the case that more likely than not, funds drawn down from the husband’s United Kingdom Pension Fund entitlements were dissipated on general living; business expenses and the like. I accept that the husband controlled these funds but I am not satisfied he has been guilty of non-disclosure such as to evoke the principles enunciated in decisions like Black & Kellner (1992) 15 FamLR 343. Parties not expected, upon separation to move into a state of “animated suspension”. It seems all funds from the Pension Fund to Australia for use by the parties were channelled through [L]. Both parties say that $214,000 was used for [S]. It is unlikely to be recoverable from that source. Both parties say it is a joint debt. The other loan to the husband was for $116,375. The wife seeks to add it back, but it is already included in the value of the [A] Pension but no longer is available. I think the proper way to treat this issue is to reduce the [A] Pension Fund balance by $116,375. Although technically a debt, it is a debt to himself for which he is liable but which I would not “add back” because of the way it was used.
Consistent with this approach is a rejection of the husband’s assertion that I should “add back” funds accessed by the parties post separation as set out at paragraphs 73 and 74 of the submission of Counsel for the husband. This is save for the process of sale of the [V] shares which I have earlier dealt with in these reasons. For completeness I regard it as unfair in the extreme to expect the wife to add back, as a credit to her, the insurance proceeds.
Relying on the authorities of Farnell (1996) FLC 92-681and Chorn & Hopkins (supra), and consistent with concessions made at the hearing, I propose to “add back” legal expenses of $21,224 for the husband and $5000 for the wife. To not do so, in effect, means a party to contributing to the costs of the other party before any discretion is properly exercised under s.117 of the Act. To the extent that the parties may each have borrowed (or created a liability) to an external fund for their individual legal expenses, that ultimately is a matter for themselves.
Personal Debts
The major liabilities, being the home mortgage ($757,000) and the loan owed to the Pension Fund ($214,000) are accepted by the parties.
I am not satisfied, on the evidence that the funds over $40,000 paid from the Barclays Select Loan to [S] related to other than personal discretionary expenses of the husband. I only intend to include $40,000 therefore as a joint debt. Similarly the husband should be responsible for the small overdraft with Barclays Bank. I accept he was the only person accessing that account for some time.
Considering the sums of money the parties have had at their disposal since separation from all the different sources, it seems to me appropriate they meet any consumer debts, credit cards and the like that have accumulated. I accept the submissions that the husband should bear responsibility for the Bendigo Bank Visa Card debt of $9100.
Conclusion as to the Pool
Based on the findings above and doing the best I can on the evidence offered to the Court, I find the divisible pool to be as follows:-
Property H
$2,100,000
[S] Equipment
$32,960
[A] Group Pension Fund
(after deduction of $116,375)
$331,977
National Farmers Union Pension Fund
$92,982
Add Backs
[L] Loss/Loan to Mr C
$40,776
Proceeds of [V] Shares
$58,000
Legal Expenses
- husband
- wife
$21,224
$5000
Gross Assets
$2,682,919
Liabilities
Mortgage
$757,000
Loan to Pension Scheme Payable
$214,000
Barclay Select Loan
$40,000
$1,011,000
Nett Pool
$1,671,919
The parties both agreed that the husband’s entitlements to the United Kingdom Pension Funds should be treated as an asset. I do so without being asked to examine the Trust Deeds or determining any restrictions on the availability of the funds (including any tax or other consequences of withdrawal).
Sensibly the parties have not sought to include (seemingly agreeing) any of the smaller items usually in the possession of the parties like motor vehicles, furniture or other personalty (such as jewellery etc).
Contributions
It is clear that at the time of cohabitation, and even the later date of marriage, the husband’s assets overwhelmingly exceeded the wife’s.
The husband asserts, without any significant corroboration, that his assets were estimated to be (in Australian dollars):-
[U] Home
$612,500
Furniture
$20,000
50% in [A] Ltd (both import and exportations)
$1,725,000
NFU Pension Scheme
$48,162
[A] Group Pension
$256,195
Estimated Savings
$25,000
$2,686,857
Although the Pension Fund entitlements were the subject of some evidence, no reliable or admissible evidence as to the other items was offered to the Court. The husband points to what he says he received for the [U] home when sold some years after construction was completed in April 1995. He asks me to adopt the gross sale prices for his transfer of his half interest in the import aim to his partner and his share of the sale to [V] Holdings (nearly eight years later) and without allowance for the lack of payment or receipt of over ₤100,000 on the sale price (his share). It may have been possible, although difficult, to produce some expert and reliable evidence (in the case of [A] Ltd supported by financial statements at the time), from which the Court could find or reasonably infer the extent of the husband’s nett worth at the time. Mr A simply opining he thinks the value then was what they sold for years later is neither an expert opinion nor one I can rely upon.
To some extent however the issue is best dealt with by acknowledging, as the wife does, the existence of the main interests (although not the husband’s values), and further accepting as I do that the husband’s initial contributions was almost the entire source from which the parties’ financial security and current assets were created – save for the non-financial contributions through this nine year relationship to separation.
At the highest, the wife’s contributions at commencement are claimed by her to be:-
₤18,000
For furniture
₤5,000
For her car
₤6,000
Nett proceeds of sale of her former matrimonial home
As can be seen, describing the husband’s initial contributions as overwhelming is appropriate.
Clearly throughout the relationship the husband had access to his share of company profits; dividends and drawings. It appears he could use a loan account and the company’s currency trading facility. It is reasonable to infer the husband, and thereby the family, accrued other benefits from the business like travel, company cars and telecommunication support.
The wife, before being primarily responsible for child rearing and home making, did work in the business. The wife points to some advertising which promoted her role in the business. Rarely do I find newspaper advertising reliable evidence of contributions of this nature. I would accept that the wife knew little about the “fresh produce” business before she began working for the company. I accept she worked diligently in her primary role as an interpreter and marketer for the company. I do not accept her contribution was as significant as she paints or as miniscule as the husband paints. The observations of Mr A I would regard as more reliable.
I take into account the inheritance received by the husband of the equivalent of $73,814 in September 2003, which I accept found its way into the pool.
The husband, by his Counsel’s submissions at paragraph 77, invites me to take an overly mathematical approach – which is not consistent with authority. I do not choose to say more about the individual components of the husband’s asserted quantifications of his financial contributions from July 1996 of $725,363.
Of course, the mother’s non-financial contributions as homemaker and parent, both to separation and thereafter, were superior to those in that area by the husband. His commitments to his business not unreasonably occupied him significantly. The authorities which bind me clearly identify that the inability to quantify, as clearly as the husband says he can his direct financial contributions, may lead a trial Court into minimising or not giving adequate weight to the non-financial contributions of the wife. I do not ignore the wife’s small injury compensation payment received in about 1998.
I accept that the husband was the principal negotiator and manager of home acquisition and construction projects through the relationship. Clearly he has, through this experience, some high level business skills. Again, although the husband asserts she really did nothing in these areas, I think he is being less than generous in his acknowledgement of her efforts – but again I would not find them to be as high as she contends. Really, during the relationship they each contributed as best they could in their different roles. For completeness, I would not find the husband’s contributions as falling into that rare number of cases in this jurisdiction where “special” contribution factors exist.
The [S] Academy was envisaged, I am certain, as the business vehicle for creating an income for the family in Australia. The business relied upon the wife’s experiences and skills as a beauty therapist and the husband’s marketing and general business talents. Equipment of a specialist nature was imported from the United Kingdom. The parties, I am satisfied, worked hard in an endeavour to make it a success. A number of factors conspired to make it unprofitable. Put simply, the business was terminally affected by the chronic lack of cohesion between the parties exacerbated by the decaying personal relationship. No wonder staff were confused. Whilst the husband, in his submissions, acknowledges the wife worked in [S] he says they “did not result in financial benefit”. That is not the test.
Often in a relationship parties do their best, but are not financially rewarded commensurate with their efforts. Although the husband implicitly asks me to do so, it would be contrary to authority to not weigh all the different contributions, of both a financial and non-financial character and whether direct or indirect, against each other.
That is the exercise of judicial discretion which s.79(4) compels me to undertake.
Counsel for the wife acknowledges the husband’s initial contributions outweigh the wife’s; submits contributions during the marriage were equal; and contends the wife’s post separation contributions were greater than those of the husband because:-
·The wife had the primary care of G;
·From the time the wife secured an order for sole use, she had been maintaining the mortgage payments;
·After obtaining an interim property order in October 2006 that the business [S] be transferred to her (effectively giving her control), she says she met outstanding creditors of the business
·The husband has made numerous payments for child support.
The husband’s submissions do not break down the various components of contributions, preferring to say, in respect of post separation contributions only that the wife’s payments made by her “are in return for the benefit of the use of the house”. Although the wife has had the benefit of living in the home whilst the husband rents, the preservation of the home is a benefit accrued also to the husband. I also take into account the funds the parties have had the use of post separation.
I do not regard the wife’s claim that, on a contributions based assessment to trial, the wife should receive 40% gives sufficient weight to the husband’s overwhelming initial contributions and the use of those contributions as directed by the Full Court in Pierce (1998) FamCA 74. I regard as division to this stage of the analysis of 72.5%/27.5% in the husband’s favour as appropriate.
Section 75(2) Factors
The factors most relevant to the consideration of the commonly called s.75(2) factors appear to be:-
a)No significant health issues arise and the parties still have the reasonable expectation of some years of work available to them. The wife is of course six years younger than the husband.
b)The husband is associated in a business venture with “K”. Although this venture is in its infancy, the husband’s past exploits in fresh produce are impressive. Although Mr Box estimates his income at $74,849 for the financial year, the indications are that the husband will secure a solid future income stream. The wife has qualifications as a beauty therapist which was achieved during the relationship. She persists in trying to make the [S] Academy a success. The reports of Mr Box suggest this will be no easy task. Perhaps she could secure employment in her field. In any event, the husband’s prospects for employment and income are superior to those of the wife.
c)The wife bears the major responsibilities for the care of G arising from the parenting order I propose to make. Clearly this increases her financial and emotional obligations to support the child as compared to the husband. He has paid minimal child support. Furthermore, the wife’s commitments to G restrict more her capacity to earn an income, having to adjust her work schedule around the child’s needs. The father of course does likewise, but is not required to do so to the same extent.
d)A significant part of the pool comprises pension fund entitlements, which are not splittable under Australian law. The funds of course would have been greater but for the withdrawals for the loan to [S] ($214,000) and the husband’s decision to drawdown $116,375 for private use (including Property H), as already discussed. As the husband submits, “there is a core amount in both plans that cannot be accessed by loans and obviously if loans are obtained they have to be repaid with interest”. I take into account that the lack of liquidity in the funds available to the husband in these pension funds is a detriment to him.
e)I also take into account that the loans from the pension funds are a liability (which the husband bears) and will carry against whatever assets he secures under any order. Of course, if the wife wishes to retain the family home, she also will have a significant debt – however her advantage is that debt can be extinguished or reduced by the sale of assets (eg the home), whereas the husband has less options available to him.
f)It appears, courtesy of [I] Funding, each has a liability for legal expenses exceeding $100,000.
g)Finally, as a factor under section 75(2)(o) of the Act, I make allowance for the contributions the husband’s income made to the needs and support of J and C. Although they are now adults, and whilst I accept some funds were received by the wife from their biological father during the relationship, some adjustment in the husband’s favour consistent with the principles enunciated in Robb (1994) FamCA 136 is warranted – but not as significant or in the way calculated by the husband and set out at paragraphs 84(b) and (c) of his submissions.
Save for the factors which weigh in the husband’s favour (including the ultimate entitlements from my order for division), I would have agreed an adjustment of 20% would have been fair, as sought by the wife. Allowing for those factors I would reduce the further adjustment to the wife to 80%. This computes, on the pool to the husband paying the wife a sum of $125,000 approximately. I regard that as a proper adjustment.
Just and Equitable
Subject to receiving further submissions as to the form of order (which considering the time that has elapsed since trial is appropriate), a division of the pool as to 35% to the wife and 65% to the husband is proper on my analysis.
In circumstances where the wife at trial was seeking to retain the home by paying the husband the sum of $163,000, that might have been achievable. The difficulty in this case, is that the home represents almost the entirety of the liquid pool available for division (being 75% of the nett pool). On my calculations the amount the wife would have to pay the husband to retain the home would be in the order of $795,000. When this is aggregated with the current mortgage (to be refinanced) and other expenses (including legal expense), it is hard to envisage how the wife can retain the home as she seeks.
I will list the matter for hearing further submissions as to the form of order at a time to be agreed.
I certify that the preceding one hundred and twenty-one (121) paragraphs are a true copy of the reasons for judgment of Baumann FM
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