Collata and Webster

[2008] FamCA 1067

FAMILY COURT OF AUSTRALIA

COLLATTA & WEBSTER [2008] FamCA 1067

FAMILY LAW – PROPERTY SETTLEMENT - Property acquired after separation - Adding back to the property pool
FAMILY LAW – PROPERTY SETTLEMENT - Contributions - non-financial contribution
FAMILY LAW – PROPERTY SETTLEMENT - Future needs - Physical requirements of differing employment
FAMILY LAW – CHILD SUPPORT - Application for departure

Family Law Act 1975 (Cth) ss 72(4) and 72(2)
Child Support (Assessment) Act s117

Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355
Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414
In the Marriage of  Gyselman (1991)15FamLR219; (1992) FLC 92-279

APPLICANT: MS COLLATTA

RESPONDENT: MR WEBSTER

FILE NUMBER: SYF 3664 of 2006

DATE DELIVERED: 8 August 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Judicial Registrar JOHNSTON

HEARING DATE: 8,9 May 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton

SOLICITOR FOR THE APPLICANT: Humphreys & Feather

COUNSEL FOR THE RESPONDENT: Mr John Lloyd

SOLICITOR FOR THE RESPONDENT: McDonell Milne Toltz

Orders

The Orders shall be as follows:

1. That within 42 days the husband shall do all things and sign all documents necessary to transfer to the wife his interest in the former matrimonial home situated at and known as B property more fully described as Folio Identifier ….

2. That simultaneously with the transfer referred to above, the wife shall pay to the husband the sum of $103,184.

3. That the interest of the wife in the N Superannuation Plan be dealt with as follows:-

   3.1That the base amount allocated to the husband out of the interest held by the wife in the N Superannuation Plan, member number … is $60,000.

   3.2That whenever the Trustee of the N Superannuation Plan makes a splittable payment from the interest held by the wife in the N Superannuation Plan, the trustee shall pay to the husband, the entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there is a corresponding reduction in the entitlement the wife would have had but for these orders.

   3.3That the above order has effect from the operative time.

   3.4The operative time for these orders is 28 days after the date of service of these orders on the Trustee.

   3.5That this order binds the Trustee of the N Superannuation Plan.

4. That within 42 days the wife do all things and sign all documents necessary to transfer to the husband free of encumbrance her interest in the BMW motor vehicle, registered number ….

5. That within 42 days the husband do all things and sign all documents necessary to transfer to the wife free of encumbrance his interest in the Toyota motor vehicle registered number ….

6. That within 42 days the wife provide for collection by the husband such of the items referred to in the Schedule annexed hereto as are in her possession and/or control.

7. That otherwise, the husband and the wife are declared respectively the sole owner of all other property and superannuation in their possession and/or control.

8. That the husband and the wife remain liable for any debts in their own name and each indemnifies the other in relation thereto.

9. That in the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders, the Registrar of this Court shall be appointed pursuant to s. 106A of the Family Law Act to execute such deed or instrument in the name of such party and to do all things necessary to give validity and operation to the deed or instrument.

10. That the above orders not commence operation until 25 August 2008.

11. That the husband and wife have leave to re-list these proceedings at any time until 22 August 2008 for the purpose of making further submissions in relation to the form of the orders only.

12. That there be a departure from the administrative assessments of child support payable by the husband in respect of the children M born … February 2000 and S born … January 2002 so that:

    12.1For the period from 15 February 2006 to 31 January 2007 the husband shall pay child support in the weekly amount of $168.

    12.2For the period from 1 February 2007 to 14 May 2007 the husband shall pay child support in the weekly amount of $157.

    12.3For the period from 15 May 2007 to 30 June 2008 the husband shall pay child support in the weekly amount of $164.

13. That for the period from 1 July 2008 to 30 June 2010 the husband shall pay direct to the wife within 42 days the sum of $17,108 being lump sum child support for this 2 year period.

14. That for the period from 1 July 2008 o 30 June 2010 the annual rate of child support payable under any administrative assessment is to be reduced by 100%.

15. That in respect of all the above child support periods the husband shall not be liable to pay any fines or penalties and he is to be credited in full for all child support paid by him over the periods.

16. That all exhibits be released.

17. That both parties have leave to re-list these proceedings on 7 days notice in relation to the implementation of these orders.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3664 of 2006

MS COLLATTA

Applicant/Wife

And

MR WEBSTER

Respondent/Husband

REASONS FOR JUDGMENT

Introduction and applications

1. Ms Collatta and Mr Webster are divorced. But for convenience I shall refer to them as “the wife” and “the husband”. Unfortunately they have been unable to resolve their financial dispute which concerns property settlement and child support. Accordingly, they have asked the Court to determine these matters by way of making Court orders.

2. The wife seeks orders to the following effect in relation to property. (I shall refer to the orders sought by her in relation to child support at the end of the section of the reasons which deals with their property)

   1.That the husband transfer to her his interest in the former matrimonial home at [B].

   2.That simultaneously with such transfer the wife pay to the husband the sum of $154,000.

   3.That otherwise, both the husband and the wife be declared the sole owner respectively of all other property and superannuation in their possession and/or control.

   4.That the husband and the wife remain liable for any debts in their own name and indemnify the other in relation thereto.

   5.That certain procedural and enforcement orders be made.

3. On the other hand the husband seeks property orders to the following effect.

   1.That he transfer to the wife his interest in the former matrimonial home.

   2.That simultaneously with such transfer the wife pay to him the sum of $300,000.

   3.That a superannuation splitting order be made with the effect that a base amount of $75,000 be allocated to the husband in the wife’s [S] Superannuation Plan benefit and there be a corresponding reduction in the wife’s benefit in the Plan.

   4.That each party transfer to the other their interest in each other’s motor vehicle.

   5.That the wife provide the items referred to in the Schedule to the husband’s Amended Response filed on 5 July 2007 for collection by him.

   6.That otherwise each party be declared the sole owner of all other property in their possession and/or control respectively.

   7.That the wife pay the husband’s costs.

Background

1. The husband was born in May 1948 and he is therefore almost 60 years of age. The wife was born in November 1965 and she is therefore 42 years of age.

2. The parties commenced cohabiting in 1996. They married in  September 1997 and separated in August 2004. They were divorced on 24 April 2006.

3. There are 2 children of the marriage, M born in February 2000 and S born in January 2002. The children are therefore 8 years and 6 years of age respectively.

4. At the time the parties commenced cohabiting, the wife’s property consisted of a home unit in Victoria subject to a mortgage of $63 000. The wife purchased this property in approximately 1994 or 1995 for approximately $70 000. The wife rented the unit out. The wife was working full time with N Company.

5. At this time the husband owned an interest with his former wife in their former matrimonial home and a superannuation benefit with a value of $206 000. He was working as a customer service manager at N Company.

6. Shortly after marriage the husband had a property settlement with his former wife. He retained his superannuation and his former wife paid him $40 000 upon him transferring to her his interest in their former matrimonial home.

7. The parties commenced their cohabitation in a home unit at R in Sydney owned by the wife’s mother. They subsequently lived with the wife’s mother at B, New South Wales after the wife’s father died. The parties and the wife’s mother then moved to a rented home at W. The wife’s mother paid the rent and the cost of utilities including electricity. They lived in this home until September 2000.

8. In April or May 1998 the parties purchased vacant land in Queensland for $140 000. The deposit was provided from joint savings and the parties borrowed the balance from the S Credit Union. The husband subsequently paid the $40 000 from his property settlement to reduce the outstanding amount owing to the S Credit Union.

9. In 1999 the parties had a home and garage built on their land for approximately $230 000. The wife’s mother gifted the parties $113,513 and the balance of the required funds was borrowed.

10. The parties continued to live in Sydney until their Queensland home was habitable. The husband undertook some work on this property prior to the parties moving into it. I shall refer to this again below.

11. In August 2000 the wife sold her Victorian home unit receiving net proceeds of sale of $38,560. This money was applied towards the costs of developing the Queensland property.

12. During the period when the parties were having their new home built, they decided, together with the wife’s mother, that they would all commence a retail business together in the local area in Queensland. They located a shop and the wife’s mother then purchased the shop.

13. In September 2000 the parties moved into their Queensland home. The wife had just returned to full time work at N Company after giving birth to M in February that year. Within a short time, the parties and the wife’s mother commenced their business under the style of “L Business”. This business sold goods from Italy, Vietnam, Indonesia, China and Thailand. The wife’s mother worked more in the shop than the husband and wife did. The husband continued to work full time with N Company.

14. In June 2002 the parties returned to Sydney to live. The wife’s mother had decided to return to Sydney. The parties rented a home at T. They rented their Queensland property out.

1. In approximately December 2002 the parties purchased the property at B for $442 500. To fund this purchase the parties borrowed a total of $624 000 from National Australia Bank Home Side Lending secured over this property and their Queensland property.

2. In August 2003 the husband accepted a voluntary redundancy package from N Company. He received a redundancy payment of $116 267.57 net and a superannuation payout of $425 588.99 net. The husband used part of these funds to pay out the mortgage on the matrimonial home at B which was then approximately $470 000. He also purchased an 18 foot sailing boat and trailer for $3 500 and renovated this for approximately $7 000. Approximately $35 000 was spent on renovations to the home including to the swimming pool, driveway, shutters and blinds, garage door, bathroom fittings and tiles, fencing, landscaping and drainage.

3. At approximately this time the wife returned to full time work at N Company.

4. On 10 August 2004 the parties separated under the same roof.

5. In February 2005 the husband sold shares which he owned in Qantas and Telstra receiving $17 572.

6. In March 2005 the husband’s mother died and he inherited $101 314.

7. In August 2005 the parties sold their Queensland property for $485 000, the net proceeds of sale being approximately $315 000. Of these funds, the husband received $309 101.

8. In January 2006 the husband purchased a new 39 foot production yacht. The basic yacht cost $328 174 and the husband spent additional money on equipment for the yacht. To fund this, the husband used the $309 101 from the Queensland property and some of his inheritance.

9. In January 2006 the husband vacated the former matrimonial home. For a short period he resided at the home of his former wife. Then he moved to full time residence aboard his yacht which was then, and continues to be, moored at P. The husband was in the process of establishing a watersports business, in partnership with his former wife.

10. In March 2006 the husband sold his 18 foot sailing boat and trailer receiving $10 490. He used these funds for an overseas holiday for himself and his former wife.

11. In November 2006 the husband’s watersports business commenced operations. The husband contributed approximately $50 000 to the establishment of his business in addition to the costs of acquisition of the yacht.

12. In February 2007 the husband commenced receiving the disability pension.

13. On 27 June 2007 parenting orders were made by consent in relation to the children.

The Applicable Law

1. The Court must be satisfied that in all the circumstances it is just and equitable to make an order. This is provided by s.79(2) of the Family Law Act 1975.

2. The Full Court of this Court in its decision in the case of Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355 said as follows:

   “The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79.  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 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:  Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335 (and various other well known authorities).”

3. Despite some criticism of this decision by the majority of the Full Court in Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414, see for example paragraphs 36 and 37 at page 79,641 and paragraph 63 at page 79,646, in my view it is not incorrect to take the approach to the hearing of property proceedings as described in Hickey above.

Property  and superannuation available for division

1. There were several issues as follows.

2. The parties disagreed about whether the $10,490 proceeds of sale of the husband’s boat and trailer should be added back to the pool of property for distribution. As indicated above, the husband used some of the monies available to him upon retirement to purchase a sailing boat and trailer. He subsequently spent funds on its renovation. He sold the boat and trailer for $10,490. The husband used these funds to finance a holiday for himself and his former wife to London to visit their daughter.

3. It was submitted on behalf of the husband that there was nothing unusual or unreasonable about this expenditure and that the Court should not add the money back to the pool of property. I must say the submissions of learned counsel for the wife coincide with my own view about this matter. This money had as its source funds produced as part of the husband’s retirement package. As such, the money was an asset of the parties in the broad sense of being part of their marital property. The husband simply used the funds for his own purposes.

4. It was submitted on behalf of the husband that if I arrived at this view, then I should not include in the list of property the $5,509 owed by the husband’s former wife to the husband. I am unable to see that there is any connection between the funds the husband used to finance the London holiday and what he described as a debt to him by his former wife. The husband and his former wife are business partners and obviously close friends. To some extent their financial affairs are enmeshed. In my view the inference inherent in the husband’s submission is not available. Accordingly, in my view, the $5,509 owing by the former wife is an asset to be included in the pool.

5. In relation to the husband’s savings of $4,608, the husband said that his business has debts which exceed this amount. There were no particular documents to support the husband’s assertions in this regard. Nevertheless, overall I regard the husband to be a truthful witness and I shall accept his assertions. I shall delete this item from the list.

6. On this basis the property available for division is as follows:-

1.	Former matrimonial home at B	$500,000
2.	Proceeds of sale of Queensland property	$309,101
3.	Husband’s proceeds of sale of boat and trailer (add back)	$10,490
4.	Husband’s BMW	$8,000
5.	Husband’s paid legal fees (add back)	$25,944
6.	Husband’s loan to his former wife	$5,509
7.	Wife’s savings	$20
8.	Wife’s paid legal fees (add back)	$28,682
9.	Wife’s Qantas and Telstra shares (add back)	$7,000
10.	Wife’s Toyota	$6,000
Wife’s superannuation	$138,063
Total	$1,038,809

1.	Wife’s HSBC credit cards	$6,106
2.	Husband’s HSBC credit card	$5,000
3.	Wife’s loan from parents for legal fees	$13,530
$24,636
Surplus property and superannuation	$1,014,173

1. The liabilities are as follows:-

Contributions

1. As indicated above, the husband’s property at the time the parties commenced their cohabitation consisted of his benefit in the N Superannuation Plan, his interest in his former matrimonial home and his personal property.

2. The husband’s member benefit statement showed that his superannuation benefit had a value as at 30 June 1996 of $206 283.67. This was approximately the time when the parties commenced cohabitation.

3. The husband received $40 000 from his former wife in return for transferring to her his interest in their former matrimonial home. As indicated above, this occurred a short time after the parties married.  So in a broad sense, at the time the parties commenced cohabiting, the husband owned assets with a value of approximately $246 283 and he had some personal property.

4. By comparison, as indicated above, at this time the wife’s assets consisted of her interest in her home unit in Victoria and some personal property.

5. When the wife sold her home unit, the major portion of the net proceeds was an amount of $38 560. But in addition she received an amount exceeding $6 000 from the agent. The total net proceeds of sale of the home unit were approximately $45 000.

6. The wife’s mother made significant financial and non-financial contributions. As indicated above, the parties lived rent-free in a home unit owned by the wife’s mother at R, when they commenced cohabiting. Then later, they lived with the wife’s mother at Y after her husband died. Subsequently, they lived with the wife’s mother at W and the wife’s mother paid the rent. All in all, the parties lived with the wife’s mother for a period of approximately 4 years.

1. To an extent, this significant contribution by the wife’s mother is offset by contributions to the wife’s mother’s assets by the husband. The first of such contributions was made by the husband repainting the wife’s mother’s R home unit prior to its sale. The husband did this using quality paints purchased by him. The husband also applied $20 000 of his funds to the purchase of stock for the shop and never received repayment from the wife’s mother or any income from this business. The husband also located the shop premises and undertook the bookkeeping for the business.

2. As indicated above, both parties were working full time for N Company at the time they commenced cohabiting.

3. The wife continued working full time with N Company until shortly before the birth of the child M in February 2000. The wife returned to work but on a part time basis in early 2001. The wife again went on maternity leave in late 2001. In late 2002 she returned to working with N Company part time until she recommenced full time work in August 2003 when the husband resigned from his employment.

4. On the other hand, the husband continued working full time until he accepted redundancy and resigned in 2003. The husband has not been employed since then, other than 2 days assisting his son in his landscaping business and, of course, setting up and operating the watersports business.

5. As also indicated above, upon resignation in 2003 the husband received payments totalling approximately $541 856 including superannuation.

6. The husband travelled from Sydney to the Queensland property on at least 10 occasions to supervise the building work during construction of the parties’ new home there. He also undertook further work after the parties moved into occupancy. This included applying oil to the timber veranda decks, constructing picket fences and gates, and painting these, constructing gardens, installing a watering system and planting trees.

7. The husband also undertook renovations and improvements to the B property including building doorways, removing stub walls, removing and replacing pavers, installation of a drainage system, planting grass and gardens, painting the home and fences and landscaping. The husband also undertook routine maintenance and repair of both the Queensland and B properties.

8. Both parties have been involved in the cleaning and general maintenance of the interiors of their homes and in general household chores. I think it more likely than not that the wife undertook more of this than the husband when the children were very young and she was either on maternity leave or working part time than in the later years after the husband had resigned and when she had returned to full time work. In this later period, I think it more likely that the husband did more of these tasks than the wife.

9. Both parties have made significant contributions to the welfare of their family constituted by themselves and the children. But there is no doubt in my mind that the wife has been, and continues to be, the children’s primary parent. This is not to suggest that the husband has not made a significant contribution to the welfare of the children. I am satisfied that he has. The wife, however, has made a more substantial contribution in this regard.

10. But where the differences between the parties in relation to their parenting contributions become most marked is during the period after the husband left the B home and up to the time of the hearing. During this period, the children remained living with the wife and have spent most of their time in her care or that of her mother subject to times spent with their father. I pause to note that the efforts by the children’s maternal grandmother, in her direct supervision of the children and in gifts and other provision she has made for them over the years, will be taken into account pursuant to s.75(2)(o) of the Act below. The children have spent time with their father since January 2006 including occasions overnight. These overnight occasions have usually been at the home of the father’s former wife. Unfortunately, there are difficulties in the relationship between the husband and M the practical consequence being that they have not been spending any time together. I shall refer to this matter again below. I am mindful at this point that the question of child support departure from assessment still needs to be considered. So the post separation financial aspects of the parenting will be considered in that context in order to ensure that there is not a doubling of the consideration of such matters. Having said this, in my view, it is clear that the wife’s contributions pursuant to s.79(4)(c ) of the Act as parent have been greater than those of the husband.

11. There was a strong submission on behalf of the husband to the effect that the imbalance in the financial contributions of the parties, has been so substantial, that the Court would be justified in a finding of contributions overall of 65% in favour of the husband. This was said to be in particular because the husband’s initial contributions were a superannuation benefit with a value in excess of $250 000 as well as the $40 000 interest in his former matrimonial home and to these are to be added the more than $540 000 received by the husband upon his retirement as well as a higher level of income contributed by the husband than by the wife over the whole period. It was said that when these contributions are compared with the wife’s initial contribution, which it was said was $38 600 by way of the interest in her investment unit and $100 000 gifted by the wife’s mother, the disparity was so substantial as to render the husband’s financial contributions overwhelming.

12. With respect to learned counsel for the husband, in my view, this submission does not withstand analysis. For a start, some of the amounts have been misrepresented. The value of the husband’s benefit in the N Superannuation Plan at the time the parties commenced cohabiting was approximately $206 000 rather than $250 000. The amount of the net proceeds of sale of the wife’s investment unit was in excess of $45 000 not $38 600. The amount gifted by the wife’s mother was approximately $113 513 rather than $100 000. But the major problem in the submission is that it is based on an attempt to isolate certain financial contributions from the totality of the parties’ contributions and to attribute an importance to these without balancing these within the context of the entirety of the parties’ contributions.

13. I have endeavoured to encapsulate the various relevant contributions of the parties in the observations which I have made above without going into exhaustive detail. In my view, when one has regard to the totality of the relevant contributions by the parties over all of the years from the time they commenced their cohabitation to the time of the hearing, a very different picture from that submitted by learned counsel for the husband is evident. This picture is one in which I am satisfied that the husband has made greater contributions overall than has the wife, but not by a substantial margin. In my view the appropriate finding is 55% by the husband and 45% by the wife.

Section 75(2) matters

1. The husband is almost 60 years of age.  There are a number of difficulties in terms of his health.  He receives the disability pension.

2. His general medical practitioner, Dr G, describes the husband as suffering from severe degenerative osteoarthritis in his lower back and right sided disc lesion which results in persistent lower back pain.  There was some suggestion that spinal fusion surgery might be required although I am satisfied that after a report by Dr F, this is not the current medical opinion.

3. Dr G said that the husband also suffers from severe osteoarthritis in his right knee for which a total knee replacement is required and that he is on a list awaiting surgery.

4. Dr G also said that the husband has a large full thickness tendon tear in his left shoulder which will require surgical intervention.  This causes the husband pain and loss of function.  The husband also suffers from hypertension, obstructive sleep apnoea and attacks of vertigo.

5. Dr G was subject to vigorous cross-examination in relation to his evidence about matters relating to the husband’s health.  Dr G expressed the opinion in his affidavit that the husband was unable to perform any physical work as a result of his medical impairment and that this would not change until he has the surgical operations.  Dr G conceded that when he gave this opinion in July 2007 the husband had not informed him of details of what was involved in the physical aspects of operating his watersports business.  In any event, the husband said that the watersports business makes little physical demand on him because other persons undertake the steering of the yacht.  The husband also said that his business partner, his former wife, is available to assist with the physical requirements of operating the business.

6. The husband was criticised on behalf of the wife for undertaking two single days of labouring work to assist his adult son in his landscaping business.  This work was undertaken some time ago and at least one of the days involved the husband operating a sit-on lawn mower.

7. The husband has applied for three clerical positions since 2006.  He was not offered an interview for any of the positions.

8. The husband’s business has not yet shown a profit.  It does offer the husband accommodation on, and private use of, the yacht.

9. On the other hand, the wife is 42 years of age.  She is in good health.  She works with N Company and has been working part time.  But this part time work runs out soon and the wife proposes to return to full time employment.  The wife is unsure what salary she will be paid upon returning to full time work.  This is because she said there are some changes at N Company which mean that it is not clear to her on what basis she will be remunerated.  Nevertheless, the wife will receive a higher level of salary than what she is currently receiving on a temporary part time basis.  The wife’s current income from her part time work is $950 per week.

10. As indicated above, there is no question that the wife is the children’s primary parent.  The children have lived with the wife for the whole of their lives apart from some times when they have lived with their father since separation.  Unfortunately there are currently some difficulties in the relationship between M and his father, as I have said.  In these circumstances, the child has not been spending time with his father at all, let alone in accordance with the orders made on 27 June 2007.  It is hoped that once this litigation is completed things will improve so far as M spending time with his father is concerned. 

11. On all present indications, the children will continue to live with their mother at least for the foreseeable future. 

12. As indicated above, the husband has paid only a very modest amount of child support but, I propose to make orders for departure from administrative assessment of child support which will have the consequence that the husband will pay a proper level of child support.

13. The most significant matters pursuant to s.75(2) of the Act are the differences between the parties in terms of their respective capacities to earn income and the differences between them into the future, in terms of responsibility to care for the children.

14. Despite the vigorous cross-examination of the husband and the endeavours by those acting for the wife to try to demonstrate that the husband has a much under-utilised capacity to earn income, in my view, his capacity in this regard is questionable.  He has been unsuccessful in his applications for clerical positions as I have said.  He suffers from the physical problems referred to above and he is in receipt of the disability pension.  He says that in order to try and achieve a profit in his watersports business he will need to increase prices.

15. In my view, the future looks difficult so far as the husband’s capacity for earning income is concerned.  He is facing surgery in respect of his knee and his shoulder.  This would involve periods of convalescence and rehabilitation although there was no evidence about the likely duration of such periods.  Whether either operation would be successful is a matter for conjecture.  Whether he would be able to resume his watersports business after the surgery is also unknown.

16. All this, however, does not mean it would be impossible for the husband to earn some income although this would be on the assumption that he is able to achieve considerable improvement in his physical condition.  But the husband is almost 60 years of age, an age at which many persons in the community retire.  And, as I have said, he requires the operations which would take away considerable time from whatever income-earning time might be available to him.

17. On the other hand the wife is 42 years of age, which is 17 years younger than the husband.  All other things being equal, the wife has many more years over which to earn income than the husband.  In addition, one would expect her to be able to earn income at a considerably higher rate than could the husband.

18. Having said this, the wife is likely also to have to accept a much higher physical and financial burden for the children than the husband, particularly as the years progress.  This will also be likely to affect her capacity to earn income.  The wife relies on her mother to assist her in caring for the children.  The wife says that, to enable her to shift to full time employment, she will also need to pay a friend to assist in some of the care of the children.  Whether the wife’s mother will be able to continue to assist in this regard, only time will tell.  If not, the wife would have to make some other arrangement which, presumably, would involve cost.

19. The other relevant matters are the significant contributions made to the care of the children by the wife’s mother and the fact that, on a contributions basis, the husband will be enjoying more of the available property then the wife.

20. What I make of all this is that the wife has a considerably higher income-earning capacity than the husband.  But this will come at a cost which is unclear.  In any event, in all likelihood, the wife will have to continue to provide a primary residence for the children well into the future.  I think she would probably also have to assume a higher proportion of funding the children’s costs than the husband, particularly as the future unfolds.

21. In all these circumstances, considering all the relevant s.75(2) matters, in my view there should be a modest set-off of property in favour of the wife to achieve a just and equitable order.  In my view this set-off should be 4% of the available property.

Conclusion

1. The wife is to have 49% of the available property and superannuation ($1,014,173). This is property and superannuation with a value of $496,945.

2. The wife has the following:

1.	Savings	$20
2.	Paid legal fees (add back)	$28,682
3.	Qantas and Telstra shares (add back)	$7,000
4.	Toyota motor vehicle	$6,000
5.	Superannuation	$138,063
$179,765

1. But the wife also has the following liabilities:

1.	HSBC credit card	$6,106
2.	Loan from parents for legal fees	$13,530
$19,636

1. Accordingly, the wife has net assets with a value of $160,129. To achieve property with a value of $496,945 the wife requires further property with a value of $336,816 ($496,945 - $160,129 = $336,816).

2. The wife wishes to retain the former matrimonial home which has a value of $500,000. To do this the wife would need to pay the husband $163,184 for his interest in the home ($500,000 - $336,816 = $163,184).

3. On the other hand, the husband is to have property with a value of $517,228. The husband has the following property:

1.	Proceeds of sale of Queensland property (add back)	$309,101
2.	Proceeds of boat and trailer (add back)	$10,490
3.	BMW motor vehicle	$8,000
4.	Loan to former wife	$5509
5.	Paid legal fees	$25,944
$359,044

1. But the husband does have his HSBC credit card debt of $5000. Accordingly, the husband has net property with a value of $354,044. To achieve property with a value of $517, 288 the husband requires further property with a value of $163,184 ($517,228 - $354,044 = $163,184). This would be achieved if the wife was to pay him $163,184 for his interest in the former matrimonial home.

The fourth step

1. The wife is to have the former matrimonial home. But she will also have to pay the husband $163 184. The wife has sought an order to the effect that her superannuation be split so that she could borrow a lesser amount in order to pay the husband for his interest in the home.

2. I understand that if a superannuation splitting order was make in favour of the husband, then, because he is 60 years of age he would be able to withdraw his superannuation entitlement from the fund as cash.

3. As indicated above, the husband’s superannuation was used for the purposes of the family. He no longer has any superannuation.

4. The wife is still comparatively young and should have many income-earning years ahead of her during which she can accumulate additional superannuation.

5. In all the circumstances, in my view, the wife’s application for a superannuation splitting order should be granted. As also indicated above, the value of the wife’s interest in the superannuation fund is $138,063. In my view it would be appropriate to split the interest so that the husband would have a base amount of $60,000 thereof.

6. This would result in the wife having to pay the husband $103,184 less the child support owing by the husband. She would need to borrow this amount and possibly some modest other amount to pay her legal costs. She will also have her personal property.

7. The wife will be able to service such a loan and provide for herself and the children. They will be able to continue living in their home.

8. On the other hand, the husband will have his yacht, the business and the accommodation this provides. He will have the $60,000 superannuation which he will be able to convert to cash , the $103,184 which the wife will have to pay him less the amounts he will have to pay her for child support (in the vicinity of $35,000) and his motor vehicle. He will also have the 2 young children to support at least in part as discussed below and some legal costs to pay.

9. The orders I propose will not affect either party’s capacity for earning income. However, it might well be the case that the husband will be unable to afford to keep his yacht at some point in the not too distant future. But, as indicated above, his watersports business has not yet showed a profit.

Child Support

1. As  indicated above, the wife is also seeking orders in relation to child support.

2. The wife seeks an order to the effect that there be a departure from the various administrative assessments of child support payable by the husband for the two children so that for the child support period from 1 January 2006 to 30 June 2010 the husband be liable to pay child support at the annual rate of $31 200. Initially the wife sought this as a lump sum amount of $156 000 for the period commencing from 1 July 2005 and concluding on 30 June 2010. But during the hearing her counsel indicated that the wife no longer sought departure from administrative assessment for the period from 1 July 2005 to 31 December 2005. So the adjusted lump sum taking account of this would be $140 400.

3. In the alternative, the wife sought an order with the same annual rate but without the lump sum, the difference from the above order being that the payments would be secured by the lump sum being deposited by the husband into an interest bearing account from which the wife would be permitted to withdraw any arrears.

4. By way of further alternative, the wife sought a departure order with the same annual rate to be paid periodically.

1. The wife also sought an order to the effect that from 1 July 2010 the husband’s child support liability be determined by administrative assessment under the Assessment Act.

2. The wife also sought some machinery child support orders including an order for a charge over the husband’s property to secure the lump sum and the security lump sum.

3. I was not provided with a copy of all the child support assessments. But the husband was assessed to pay child support for the period from 15 February 2006 to 14 May 2007 at the annual rate of $260.

4. On 28 April 2006 the wife filed an application to review this assessment. The child support registrar granted the application and subsequently issued an assessment to the effect that, for the period from 28 April 2006 to 27 September 2006, the husband was liable to pay child support at the annual rate of $4 160 and for the period from 28 September 2006 to 14 May 2007, at the annual rate of $6 240.

5. The husband objected to this assessment and the objection was upheld. As a consequence, the assessment was changed so that for the period from 28 April 2006 to 27 September 2006 the husband was liable to pay child support at the annual rate of $1 437, for the period from 28 September 2006 to 5 December 2006 at the annual rate of $3 517, for the period from 6 December 2006 to 31 January 2007 at the annual rate of $6 247, for the period from 1 February 2007 to 14 May 2007 at the annual rate of $2 077 and from 15 May 2007 at the statutory minimum annual rate of $333.

6. On 14 May 2007 the wife filed a further review application and the husband filed a cross-application. In the result, the assessment was changed for the period from 15 May 2007 with the effect that the husband was liable to pay child support for the period from 15 May 2007 to 30 April 2008 at the annual rate of $2 077.

7. The husband subsequently objected. On 21 September 2007 the husband was notified that his objection was disallowed.

8. The husband then appealed to the Social Security Appeals Tribunal. On 4 March 2008 that Tribunal informed the husband that it had decided to set aside the decision of the child support registrar and substitute a decision to the effect that the husband’s child support income during the period from 15 May 2007 to 30 June 2008 be set at $20 000.

9. On 19 March 2008 the child support registrar issued an assessment based on this new child support income amount of $20 000, the effect being that the husband was assessed as liable to pay child support for the 2 children at the annual rate of $1 248 which is a monthly amount of $104.

The applicable law

1. In determining an application for departure from a child support assessment the Court is to undertake the three-step process set out in the decision of the Full Court of this Court in In the Marriage of  Gyselman [1991]15FamLR219, [1992]FLC92-279. This process requires the Court to consider;

   (1) Whether one or more of the grounds for departure in s.117(2) of the Assessment Act is established.

   If so;

   (2) Whether it is “just and equitable” within the meaning of s.117(4) to make a particular order.

   (3) Whether it is “otherwise proper” within the meaning of s.117(5) to make a particular order.

Period from 15 February 2006 to 27 April 2006

1. In relation to this period the husband was assessed to pay child support at the annual rate of $260, which is $5 per week.

Is there a ground for departure?

1. Sub-section 117(2)(c) of the Assessment Act in effect provides that the grounds for departure include that, in the special circumstances of the case, application in relation to the child of the provisions of the Assessment 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 because of the income, earning capacity, property and financial resources of either parent or the child.

2. The meaning of the expression “in the special circumstances of the case” was considered by the Full Court of this Court in Gyselman (above). The Full Court said (at FamLR225;FLC79,065)

   …Whilst it is not possible to define with precision the meaning of that term (in the special circumstances of the case), as a generality it is intended to emphasise that the facts of the case must establish something which 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. In Savery’s Case (at FamLR815;FLC77,897), Kay J, adopting the view in in the Marriage of Philippe (1977)4FamLR153 at 155;(1978)FLC90-433 at 77,202 in a different context, said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.

3. Subsection 4(1) of the Assessment Act provides that the principal object of the Act is to ensure that children receive a proper level of financial support from their parents.

4. Prior to the commencement of this period (15 February 2006 to 27 April 2006) the husband had received his inheritance of more than $101,000 as well as the $309,101 proceeds of sale of the Queensland property. As indicated above, in January 2006 he purchased his yacht using much of these funds. But he did not use the entirety of the funds.

5. At this time the husband’s income was from a government benefit.

6. There are no details about the specific costs of the children before the Court for this period. The wife estimated the weekly costs of the children, as at May 2008, to be $573. This included education expenses of $120 which is for the 2 children and child minding costs of $36. During the early part of 2006 private school fees were being paid only for M. S was attending child care one day per week and the costs were $233 per term. I note that the Lee “Expenditure survey” research figures updated to May 2007 (that is approximately a year later than the relevant period) provide that the weekly costs for a 4 year old  child were $248 and for a 6 year old child were $271. This would be a total of $579. These figures were for a one-child one income family. One usually sees some economies of scale in families where there are more than one child. The Lee figures also included a total of approximately $56 for housing and utilities. Some reduction in the present case would be appropriate because the wife had neither rent nor a mortgage to pay.

7. In my view, some caution is appropriate in considering the application of the Lee figures because the research upon which they are based was conducted many years ago. So I take them into account only in a very broad sense.

8. Doing the best that I can in these circumstances, in my view the proper needs of the children during the period February to April 2006 were $480 per week.

9. As indicated above, the administrative assessment required the husband to pay child support at the weekly rate of $5. Yet the children’s proper needs were $480 per week. The husband’s income was low. But he owned property with a value of well in excess of $300,000.

10. In these circumstances, in my view, application of the provisions of the Assessment Act relating to assessment has resulted in an unjust and inequitable determination of the level of financial support to be provided by the husband. Accordingly, there is a ground for departure from the administrative assessment available.

11. The next matter for consideration is whether it is just and equitable within the meaning of s117(4) of the Act to make an order.

12. As indicated above, the proper needs of the children during the relevant period were $480 per week. The children had no capacity to provide for their needs.

13. The circumstances of the wife during the relevant period were that she was working full time earning a gross income of approximately $73,000 per annum. The wife was living in the former matrimonial home with the children. There was no mortgage on the home.

14. Details of the wife’s own needs at the time were not before the Court. But the wife’s estimate of her own weekly requirements as at May 2008 was $482. At the relevant time the wife’s weekly income was approximately $1403. Her income was higher then than at present so one would expect that she would have had to pay more tax than the $98 per week estimated by the wife for tax in May 2008. But her surplus on this basis would have been $921 ($1403 - $482 = $921). This would have been more than sufficient to pay the tax as well as the entirety of the children’s costs and still leave a surplus of income.

15. On the other hand, the husband’s income consisted of a government benefit. But he owned the property referred to above. He had inherited more than $100,000 from his late mother’s estate.

16. The Court is also required to consider any hardship that would be caused to the children or the wife or the husband by the making of or refusal to make an order. I cannot see that any hardship would be caused either way by making an order to the effect that the husband pay some part of the children’s costs during the period. On the other hand, if I was to decline to make such an order, it could not be said that the wife would suffer any hardship. But in my view, not to make an order that the husband pay a reasonable part of the children’s costs during the period would be unfair to the wife. In my view, the husband should be required to pay 35% of the children’s costs during the period. This would be the weekly amount of $168.

17. The Court is to consider whether it is “otherwise proper” within the meaning of the Act to make an order. The husband was in receipt of a government benefit at the time. I cannot see that an order would affect this. I am not aware whether the wife was in receipt of an income tested pension, allowance or benefit.

Period from 28 April 2006 to 27 September 2006

1. In relation to this period the husband was assessed to pay child support at the annual rate of $1437, which is $27.63 per week.

2. I am not aware of any significant changes in the financial circumstances of the parties compared with the earlier period. The husband was endeavouring to establish his watersports business. The wife was continuing to work as with N Company. I can see no reason for not departing from the assessment and setting the husband’s child support liability at $168 per week.

Period from 28 September 2006 to 5 December 2006

1. The husband was assessed to pay child support at the annual rate of $3517 which is $67.63 per week.

2. It was during this period that the husband commenced operating his watersports business. But this business did not show a profit. Accordingly, in my view, little changed so that it is appropriate to depart from the assessment and put in its place, liability for the husband to pay child support in the amount of $168 per week.

Period from 6 December 2006 to 31 January 2007

1. The husband was assessed to pay child support at the annual rate of $6247. In my view there should be a departure from this assessment. The husband’s child support liability should be the same as for the above periods. Namely $168 per week. And for the same reasons.

Period from 1 February 2007 to 14 May 2007

1. The husband was assessed to pay child support of the annual rate of $2077 which is approximately $40 per week.

2. Again, there are no details of the children’s costs provided for this period. As indicated above, the wife estimated the weekly costs of the children as at May 2008 as being $573. But this included education expenses of $120. I found the proper needs of the children to have been $480 per week in 2006. I must say that for the period commencing February 2007, I am unpersuaded that it is appropriate to include the children’s private school fees in their proper needs. I accept that before separation the husband supported the wife’s desire to enrol the children at the B Christian School. In my view, on this basis, and because M was attending the school during 2006, it was reasonable to include private school costs in the proper needs during 2006. But the husband made it very clear, certainly on several occasions during 2006, that he could not afford to pay for private school costs. It would have been unreasonable, in my view, to disallow such costs during 2006 but the wife continued enrolment during 2007 against the husband’s expressed wishes. In my view, she took the risk on this and she will have to pay for the costs. In any event, she was able to pay the school fees.

3. Clearly some amount is justified for educational costs. The $120 per week estimated by the wife for educational costs was for the two children. I arrived at the $480 proper needs on the basis that only M was attending private school. I propose to reduce the proper costs of $480 by $30 per week to put in place what I have indicated. I appreciate that there would have been some cost of living increases over the period but these would have been modest. In all these circumstances I find the proper needs of the children for the relevant period to have been $450.

4. At this time the wife’s income was approximately $45,000 per annum which is $865 per week. The husband was receiving the disability pension which together with rental assistance was providing him with an income of approximately $16,500 per annum which is approximately $317 per week. The husband was operating his watersports business but this did not make a profit. Nevertheless, he enjoyed some benefits from the business including some private use of the telephone, yacht and his accommodation was provided on board the yacht.

5. But the husband also had the enjoyment of considerable property. In relation to property his position had really not changed from that during the earlier periods. This was that he had had the use of the proceeds of the Queensland property, and his inheritance. Sub section 117(4)(d) of the Assessment Act makes it clear that in considering whether it would be just and equitable to make an order the Court is to take into account not only income of a parent but also property and financial resources.

6. I note in this regard the decision of the Full Court of this Court in the case of Christian and Donald [2004] Fam CA 1171. The Full Court says as follows:

   [47] …There is nothing in s 117(4) that gives any indication as to the primacy to be given to income and earning capacity over property and financial resources in determining what would be a just and equitable order.

7. The Full Court also reviewed the following decision of Lindenmayer J that confirms that a party who is asset rich may be required to pay further child support as a special circumstance.

   [65] In Dwyer v McGuire (1993) FLC 92-420; 17 Fam LR 42 9 (a case in which a mother sought a departure on s117 (2) (c) (i) grounds from a nil assessment against a father who was asset rich but income poor) Lindenmayer J said (at FLC 80,319; Fam LR 56):

   “In any event, having thus identified the availability of substantial property and financial resources, and having taken account of the income versus asset base of the partnership, it is, in my opinion unnecessary for the court to seek to identify any specific source from which an obligation of the father to pay child support can be met … It is obvious, on the evidence, that the father has both sufficient real property, and a financial resource in the form of a capacity to borrow against the value of that real property, to meet any reasonable order for child support. It is up to him to organise his own affairs in order to devise the means to meet his proper level of child support obligations.”

8. The Full Court also referred to the following decision of Nicholson CJ, as he then was:

   [66] In Abela and Abela(1995) FLC 92-568; 18 Fam LR 569, the wife sought a departure from an administrative assessment which required her to pay $150 per week for three children in the husband’s care, on the basis that her income was largely derived from property holdings, and that she should not be required to deplete her capital to meet her child support obligations. In dismissing the wife’s application, Nicholson CJ said (at FLC 81,649; Fam LR 576):

   “[The wife’s] asset position is such that I can see no reason why she should not assist and participate in the obligation of maintaining the children having regard to the way in which the Act is framed.

   It was put on her behalf that she should not be forced into depleting her capital. I can see not basis in law for drawing this distinction. Indeed, I can see great difficulties in accepting such a proposition. There are many in our community who are rich in assets but adept at producing a result whereby they disclose little or no income and it would be highly undesirable if they were able to take advantage of such machinations to deprive their children of support. I do not suggest that the wife in this case falls into that category but the principle that she contends for might produce such a result in cases of that nature”

9. As indicated above, in May 2008 the wife’s personal expenditure on her own needs was estimated by her as being $482. But this included a higher amount of tax than she would have had to pay in respect of her lower income during the period.

10. In relation to hardship, the comments I made in relation to the earlier periods are as relevant to this period.

11. In all the circumstances I propose that the husband should be liable to pay 35% of the proper needs of the children for the period.  This will be the amount of $157 per week which is an annual amount of $8,190.

12. The effect of this on the Family Tax Benefit received by the wife would be minimal. So I am satisfied that it is “otherwise proper” to make such an order.

Period from 15 May 2007 to 30 June 2008

1. The husband has been assessed to pay child support at the annual rate of $1,248 which is $24 per week.

2. As indicated above, in May 2008 the wife estimated the children’s weekly costs as being $573. As also indicated above, this included the $120 estimate for their education expenses at B Christian School. For the reasons explained above, in my view, it is not appropriate that the husband be required to pay part of the costs of the children’s attendance at the private school. But clearly there would be some cost associated with their attendance at a public school. In all the circumstances I find the children’s proper needs to be $470 per week.

3. As was the case with the last period, the husband’s income was modest, consisting of the disability pension and the rental allowance. Again, the husband’s watersports did not show a profit. But the husband continued to enjoy some private benefits from the enterprise as he had done during the last period. Again, the husband continued to have the use of a considerable amount of property although I accept that the yacht would have been depreciating in value.

4. On the other hand the wife’s income was $950 per week and she received the Family Tax Benefit of $90 per week. She continued to enjoy the sole occupancy of the former matrimonial home. In saying this, it should also be noted that the wife continued to have the major responsibility for the care of the children.

5. I make similar observations about hardship as in relation to the above period.

6. In all the circumstances in my view, the responsibility for the costs of the children should be borne 35% by the husband and 65% by the wife. So the husband will be required to pay child support at the rate of $164 per week which is an annual amount of $8,554.

Future Child Support

1. The next matter which arises is to consider the future child support. As indicated above, the wife seeks an order for lump sum child support for the period to 30 June 2010.

2. Section 124(1) of the Assessment Act empowers a court to make an order that a liable parent provide child support for a child otherwise than in the form of periodic amounts paid to the carer. But to make such an order the Court has to be satisfied that it would be just and equitable as regards the child, the carer entitled to child support payments and the liable parent.

1. In my view, it is appropriate to make a lump sum child support order for the period from 1 July 2008 until 30 June 2010. This lump sum will be based on the children’s proper needs of $470 per week as referred to above in relation to the period from 15 May 2007 until 30 June 2008, together with the other matters referred to therein. I propose to apply similar reasoning to the future period.

2. In my view it is unlikely that there will be significant changes over the period to 30 June 2010 except that the wife is likely to be working full time and thereby earning a higher level of income. But it is also likely that her costs will increase particularly in relation to child care.

3. On the other hand, I do not expect the husband’s income will increase significantly if at all. So he is unlikely to have a sufficient level of income out of which he could pay periodic child support. But he will continue to have property and it would be inequitable to the children and to the wife for him not to pay a reasonable level of support for the children. I regard that level to be 35% of the proper costs of the children.

4. The wife should continue to receive the Family Tax Benefit although it might be the case that an increase in her income might reduce such benefit. In any event, I regard it as otherwise proper within the meaning of s 124(4) for the order I propose to be made.

5. The wife will receive an advance of the future child support. But I do not propose to discount this for the reason that the husband has not paid a proper level of child support in the past, yet I have not increased the level to take account of this.

6. In my view, the husband should pay to the wife direct the sum of $17,108 for the period from 1 July 2008 until 30 June 2010. The annual rate of child support payable over the period is to be reduced by 100%.

7. The husband has paid some child support over the relevant years but I do not know the total of payments made. Therefore what he will owe the Child Support Agency pursuant to the orders I propose in relation to the non lump sum periods will have to be determined by the Registrar Child Support in due course.

8. At the conclusion of 30 June 2010, the husband’s liability for child support will have to be determined in accordance with the administrative assessment provisions of the Assessment Act.

I certify that the preceding paragraphs are a true copy of the reasons for judgment of Judicial Registrar Johnston

Associate:     

Date:              8 August 2008