Devopoulos and Devopoulos
[2014] FamCA 224
•8 April 2014
FAMILY COURT OF AUSTRALIA
| DEVOPOULOS & DEVOPOULOS | [2014] FamCA 224 |
| FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE –Where the parties lived under the one roof for approximately 20 years – Where the parties have three children – Where one of the children was diagnosed as being Globally Delayed – Where it is just and equitable that the parties have relief under s 79 – Where both parties made significant contributions throughout the marriage – Where the wife took up significant roles as parent, homemaker and wage earner – Where the husband failed to make a full and frank disclosure thus distorting the process of s 79 – Where the contributions of the wife were found to exceed those of the husband, being 60 per cent compared to 40 per cent by the husband – Where the husband carries a significant debt to the Australian Taxation Office – Where the main load of care for the children will in future fall to the wife – Where an adjustment of 15 per cent in the wife’s favour, to the result based on contributions is appropriate. |
| Family Law Act 1975 (Cth) ss 79(4), 75(2) | |
| Bevan & Bevan [2013] FamCAFC 116 | |
| APPLICANT: | Ms Devopoulos |
| RESPONDENT: | Mr Devopoulos |
| FILE NUMBER: | SYC | 1400 | of | 2009 |
| DATE DELIVERED: | 8 April 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 3, 4 & 5 March 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT WIFE: | Paul Sansom |
| SOLICITOR FOR THE APPLICANT: | Redmond Hale Simpson |
| THE RESPONDENT HUSBAND: | Self-represented |
Orders
The parties shall sign all necessary documents, instruments, writings, things or authorities to cause the sums standing to the credit of the parties in the controlled moneys account and trust account of the Solicitors for the wife to be disbursed as soon as practicable, and in relation to the controlled moneys account as soon as practicable after 25 April 2014, as follows:
(a) $1,100 to Mr A, the Single Expert Property Valuer;
(b) $152,358 to the husband or as he may direct; and
(c) The balance to the wife.
The wife is declared owner at law and in equity as between the parties of the Toyota Corolla motor vehicle registered number … .
Otherwise, each party is hereby declared the sole owner at law and in equity of any item of personalty in their possession, power or control (including but not being limited to bank accounts, policies of insurance, company shares, superannuation and chattels).
The parties are ordered to sign all necessary documents, instruments, writings, authorities or things required to give effect to these orders.
In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders then the Registrar or Deputy Registrar of the Family Court of Australia is appointed pursuant to Section 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed or instrument upon being satisfied by affidavit of such neglect or refusal. A party shall be deemed to be deemed to be in default if that party refuses or neglects to sign any document with seven days of being requested to execute that document, such request being made in writing.
Leave is granted to either party to restore the proceedings to the list within 21 days in relation to the wording of the orders, on giving at least seven days’ notice to the other party and to the Court.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Devopoulos & Devopoulos has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1400 of 2009
| Ms Devopoulos |
Applicant
And
| Mr Devopoulos |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties’ marriage spanned approximately 20 years. Although the parties are divorced, for convenience I will refer to them as the wife and husband.
Applications
The orders sought by the wife in her Minute Of Order dated 6 March 2014 which was provided to the Court and the husband after the hearing, are as follows:
1.That the parties be and are hereby ordered to sign all necessary documents, instruments, writings, things or authorities to cause to be transferred to the wife the sums standing to the credit of the parties in the controlled monies account and trust account of the Solicitors for the wife which funds currently stand to the credit of both parties (less valuation fees of $1,100 which are to be paid to the Single Expert Property Valuer), and in the event that either party refuses, fails or neglects to sign an authority giving effect to this order for seven (7) days the Solicitors for the wife be and are hereby authorised to transfer such funds in accordance with this order.
2.That the wife be and is hereby declared owner at law and in equity as between the parties of the Toyota Corolla motor vehicle registered number … .
3.That otherwise than provided each party be and is hereby declared the sole owner at law and in equity of any item of personalty in their possession, power or control (including but not being limited to bank accounts, policies of insurance, superannuation and chattels).
4.That both parties be and are hereby ordered to sign all necessary documents, instruments, writings, authorities or things required to give effect to these orders.
The husband sought orders in terms of a Minute of Order handed to the court on 5 March 2014 (exhibit F):
1.Payment of any liability owing by the Husband to the Australian Taxation Office.
2.After payment of monies to the ATO, the balance be divided as:
i)70% to the Husband; and
ii)30% to the Wife.
3.That the husband retain sole legal and beneficial ownership of all interests held by him in the company known as [C] Pty Limited CAN …, and the husband shall indemnify the wife of all liabilities in relation to [C Pty Ltd].
4.That the husband shall retain sole legal and beneficial ownership of all interests held by him in the business known as [Devopoulos] & Co ABN … and the husband shall indemnify the wife of all liabilities in relation to [Devopoulos] & Co.
5.That the husband shall retain sole legal and beneficial ownership of the [year of manufacture] BMW 320i.
6.That the wife shall retain sole legal and beneficial ownership of the Toyota Camry motor vehicle.
7.That the husband shall retain sole legal and beneficial ownership of the Mercedes Benz 4WD motor vehicle registration number … .
8.That subject to the paragraphs above and in particular the taxation liabilities of the husband, each party is otherwise solely responsible for all liabilities presently standing in his/her sole name respectively.
9.That the husband and wife shall retain sole legal and beneficial ownership of:
i)All personal property in his/her possession or control;
ii)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his/her sole name respectively; and
iii)All interests in life insurance policies and superannuation funds standing in his/her sole name respectively.
Documents Read
The parties relied on the following sworn documents:
Documents relied on by the wife
·Amended Initiating Application filed 27 March 2009;
·Affidavit of the wife filed 14 February 2014;
·Financial Statement of the wife filed 14 February 2014; and
·Affidavit of Single Expert Mr A filed 17 August 2011.
Documents relied on by the husband
·Affidavit of the husband filed in Court 5 March 2014; and
·Financial Statement of the husband filed in Court 5 March 2014.
In addition, on the application on behalf of the wife, the Court also read the husband’s Financial Statement filed 12 May 2009.
The Hearing
The case was listed for final hearing over three days commencing on 3 March 2013. The wife was represented by counsel and the husband appeared without legal representation. At the commencement of the hearing the husband said that he had not filed any documents but had an unexecuted affidavit with him at Court. After some delay a typescript of an affidavit was provided to the wife’s counsel. The husband then made an oral application to adjourn or vacate the hearing because of his ill-health. The husband said that he had been sweaty and feeling unwell for a week. The hearing was adjourned to 10 am on the second day to enable the husband to attend on a doctor. He was told that if he wished to rely on a medical certificate in support of his adjournment application then the certificate should specify the reason for his inability to attend Court. The husband declined an offer to call an ambulance and the registry made arrangements for a taxi to take him to his doctor. The following morning the husband produced a medical certificate (exhibit B) which represented that “[The husband] is being investigated for possible diabetes and other causes re his lethargy and polyuria and has been advised to take a day’s rest”. The certificate did not represent that the husband was unfit to continue the proceedings or that he was unfit for any other activity. The husband said something to the effect that the doctor told him that it was a matter for the husband as to whether he took the day off.
The husband’s application to vacate or adjourn the hearing was refused. With the co-operation of the husband and the wife’s counsel, the hearing then commenced. On 5 March 2014, judgment was reserved.
Unfortunately the orders sought by the wife were not reduced to writing, events having overtaken the orders originally sought by her. By directions made in chambers, a minute of the wife’s proposed orders was sought and provided to the Court on 6 March 2014 and to the husband. In my view, the orders were consistent with the oral submissions made on behalf of the wife and therefore the husband had an adequate opportunity during the hearing to address her case. Nevertheless, by the orders made in chambers the husband was given the opportunity, if he wished, to make further submissions in writing and in that event, the wife was able to reply to any such further submissions.
I understand that the husband responded to those directions but did not provide further submissions. As a consequence I caused the matter to be listed on 20 March 2014 so that I could ascertain whether the husband sought further time to make submissions in respect of the wife’s minute of orders. The husband appeared by telephone on that date and after hearing from both parties an order was made extending the time within which the husband was to make any further submissions to the close of business on 2 April 2014. Nothing further was received from the husband by that time and I was free to deliver judgment.
The husband was at a considerable disadvantage in the hearing. His objections to the wife’s evidence included objections to several concessions made in his favour. Much of the husband’s case was apparently based on information that he did not include in his affidavit. For example, he gave no evidence about the parties’ respective contributions as parent and homemaker despite the fact that he attached a 2012 representation to the ATO which referred to the wife’s inability to make contributions for a period. He then sought to criticise the wife’s contributions during submissions. Notwithstanding the concessions and restraint showed by learned counsel for the wife, the husband was not an effective advocate. He displayed a flat effect and appeared lethargic, as his doctor opined. During one period of about 20 minutes during his cross-examination of the wife, the husband only asked about 4 questions. To my observation the husband seemed depressed but when I raised that with him he said that he has not been diagnosed or treated for depression.
When he was asked what had gone wrong, the husband referred to the circumstances addressed in his affidavit under the heading “33. Separation”. There the husband reports that decades ago, the wife reneged on an agreement that their children would be raised under the rites of the Macedonian Orthodox Church. I took the husband to mean that he was devastated by what happened and that affected his behaviour thereafter.
Short History
The wife was born in 1959 and as at the date of the hearing she was 54 years of age. The husband was born in 1958 and as at the date of the hearing he was 56 years of age.
The parties lived under one roof for approximately twenty years. They married in May 1989 and separated under one roof, either on 1 March 1995 or 1 March 1996 as variously represented by the husband or on 6 February 2009, as asserted by the wife.
The parties’ divorce became final in June 2011.
Children
There are three children of the marriage:
·Z born in 1995 (aged 19);
·B born in 1996 (aged 17); and
·P born in 1996 (aged 17).
Background Facts
The wife was born in Croatia and is aged 54 years of age.
The husband was born in Macedonia and is 56 years of age.
In May 1989 the parties married and subsequently commenced cohabitation. At the time of marriage the wife was qualified in an education field and employed at an educational institution earning $26,710 that financial year. She then had:
1.Savings of $90,000;
2.A BMW motor vehicle;
3.A sewing machine and over locker;
4.Superannuation benefits with First State Super; and
5.No debts.
At the time of marriage the husband was a manager employed by F Firm. He had:
1.Savings of approximately $250,000.00;
2.A BMW 320i Sedan motor vehicle; and
3.Other personal chattels.
Following their marriage, the parties lived with the husband’s parents in Suburb G. The parties did not pay rent but provided their own food.
In January 1991 the parties purchased I Street, Suburb H for $370,000 (“the matrimonial home”). The purchase was funded by savings that both parties had brought to the marriage together with a mortgage to Westpac in the sum of $91,000. The transfer recorded ownership as to 72/100ths to the husband and 28/100ths to the wife.
In November 1993 the mortgage over the matrimonial home was discharged.
In January 1995 Z was born.
In July 1995 the wife returned to the workforce for 15 hours per week. During this time the maternal and paternal grandmothers cared for Z.
In October 1995 the wife ceased part time work as she was pregnant with the twins[1] and experienced complications during the pregnancy.
[1] The husband objected to the reference to “twins” on the basis that he asserted, without complaint on behalf of the wife, that B and P were born after an IVF procedure. “Twins” is appropriately used to describe babies born at the same birth and on that basis is appropriate here.
In December 1995 the husband ceased working for F Firm with the aim of setting up his own practice in a legal role. The husband commenced obtaining qualifications for this legal role at this time.
The husband asserts that the parties separated on 1 March 1996 (there was also reference in his case to separation being in March 1995) but remained living under the same roof for more than 14 years. The wife disputes that the parties separated at that time. I prefer the evidence of the wife but it matters little. The focus in property settlement proceedings is on contributions rather than the date on which the consortium vitae broke down. There is no doubt that contributions have continued to the date of the hearing.
In March 1996 B and P were born. When P was approximately 15 months of age, he was diagnosed as being Globally Delayed.
In May 1996 the husband commenced trading as Devopoulos & Co, using the home as his office.
In March 1997 a company named C Pty Ltd was registered with ASIC. The husband was appointed as director and secretary of the company in January 2002. He ceased as a director on 2 August 2009. Although he denied it in his oral evidence and elsewhere, the husband held one share in the company which was subsequently transferred to the Devopoulos Family Trust.
On 10 June 1997 C Pty Ltd purchased L Street, Suburb N, being a commercial strata unit from which the husband thereafter conducted his practice. The unit was purchased for $170,000. The purchase was financed by a loan which the parties took from the Advance Bank by way of a line of credit of $180,000, secured over the matrimonial home. The parties represented to the bank that the purpose of the line of credit was so that the parties could buy the Suburb N unit.
Without notice to the wife, the husband lent the proceeds of the line of credit to the Devopoulos Family Trust so that C Pty Ltd could buy the unit for the trust.
The wife deposed that on 12 December 1997 she took a redundancy package offered by the educational institution and received $51,827.35 which she deposited into an ANZ bank account in her maiden name, Ms Randall. The wife remained at home caring for the three children and deposed that she worked at the husband’s office in the mornings. The husband denies that the wife assisted with his business. This issue was not addressed in cross-examination. Such were the difficulties with the husband’s evidence overall, that I accept the wife’s version.
In early 1998 the wife received a gross superannuation payout of $90,762 which she deposited into her ANZ access account.
On 2 March 1998, the wife paid $50,900 from her ANZ bank account into the Advance Bank line of credit.
On 6 March 1998, the wife paid $74,000 from her ANZ bank account into the Advance Bank loan. The line of credit was thereby reduced to $29,022.32.
The wife deposed that on 7 April 2000 the husband withdrew three amounts of $15,234, $66,668 and $6,014 from the parties’ joint account with St George Bank (which had taken over the Advance Bank). The wife deposed that the husband purchased a Mercedes motor vehicle with this money. After these withdrawals the line of credit stood at $128,252.84.
In 2002 the wife returned to work on a casual basis.
On 30 May 2003 the wife withdrew $26,006.50 from the line of credit and purchased a Toyota Corolla motor vehicle.
On 3 February 2004 the husband made a deposit into the St George Bank loan of $173,225.60. It was the husband’s evidence during cross-examination that those funds came from the income of his practice.
In 2005 the wife received $35,000 from the tax office, presumably by way of income tax refund. The wife deposed that she later used these funds to pay part of her legal fees.
In 2008 and 2009 the wife worked as a casual/contractor at O School.
The wife deposed that the parties separated under one roof on 6 February 2009.
From July 2009 the wife and younger children lived in rented premises at Q Street, Suburb N. The wife paid a fortnightly rental of $1,040.
On 15 July 2009 the wife became aware, via email from the husband’s then solicitors, that the husband had an income tax debt of $47,976.42 due by 31 August 2009, a tax debt of $14,667.47 also due by 31 August 2009 and that the husband anticipated a further tax debt in the amount of $60,000.
In August 2009 the parties’ matrimonial home was sold for $1,020,000. The parties received $100,000 each and the balance of proceeds in the sum of $788,072.28 was paid into the controlled money account held by the wife’s solicitors pending the outcome of these proceedings. The moneys have been used to pay for school fees and experts’ reports.
On 1 September 2009 the wife consented to the release of $63,251.26 from jointly held controlled monies in order to pay the husband’s tax debt. The wife’s solicitors wrote to the husband’s then solicitor seeking confirmation that monies paid had been paid to the tax office. No response was ever received.
The wife continued teaching at O School from 2010 to 2012.
On 28 September 2010 interim orders were made in relation to the payment of outstanding school fees.
In 2011 the wife commenced further studies through T University.
The parties’ divorce became final in June 2011.
The wife deposed that on 18 July 2011 she became aware that the husband owed a further tax debt of $949,344.70.
On 2 September 2011 final parenting orders were made by Justice Watts. Those orders provide for P to mainly live with the wife and to spend alternate weekends, special days and half the school holidays with the husband. Sadly, there is a level of estrangement between B and the husband and between Z and the wife.
In about February 2012 a Statement of Claim was issued in the NSW Supreme Court[2] on the application of the ATO in respect of the husband’s income tax.
[2] File number 2012/… .
On 24 October 2012 the wife consented to the release of $228,241.09 from the controlled monies account to enable the “primary tax” to be paid against the husband’s debt.
On 31 October 2012 the husband wrote to the ATO seeking to be relieved of the penalties and interest component of his income tax debt. There is no evidence of him receiving a response to that application.
On 9 May 2013 the wife’s solicitors wrote to the ATO outlining the nature of the proceedings, the first dates allocated for final hearing, that the wife would be claiming all or most of the available funds and that if successful, her claim would defeat that of the ATO. On 17 February 2014 the wife’s solicitors wrote a similar letter to the ATO but including notice of the new hearing dates.
There was no application or appearance at the final hearing by or on behalf of the ATO.
ISSUES
There are many factual disputes between the parties but the dispute of overarching importance is whether the husband’s debt to the ATO should have priority over the wife’s claims under s 79. In the event that the husband’s tax debt is at the asserted figure, or indeed at any figure over $500,000 and it is included in the joint balance sheet, there would be effectively no property to settle.
Credit
The evidence of the witnesses
There are not many issues which fall to be determined on the basis of the parties’ testimony alone. The way in which the husband’s case was conducted was distracting and called into question his judgment about evidentiary matters. For example he disputed that P and B are twins because although born at the same time they were the result of an IVF procedure some years before; he disputed the validity of the wife’s Master’s degree from T University because she did not have an undergraduate degree or an appropriate undergraduate degree. On the other hand he was successful in having concessions about his own contributions removed from the wife’s affidavit on objection. The wife was not successfully challenged on any matter of importance whereas at times the husband’s evidence was unintelligible. Of the parties, I prefer the evidence of the wife.
Obviously I cannot make inferences in favour of the husband about matters not adequately addressed in his evidence.
The Law
The approach in proceedings under section 79
In the context of these proceedings s 79 of the Family Law Act relevantly provides:
FAMILY LAW ACT 1975 - SECTION 79
Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property; or
….
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i)either or both of the parties to the marriage; …
….
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
….
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
The application of s 79 has been the subject of extensive judicial interpretation and comment. In Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395; (2003) FLC 93-143; (2003) 30 Fam LR 355 the Full Court said:
39. 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 in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEJ and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
In Hickey the Court was not asked to address the preliminary aspect of the requirement created by s 79(2) as to whether any order should be made. The proceedings before me do involve a controversy about that issue but only because, on the husband’s case, there is no net property.
As was observed in Stanford v Stanford (2012) 87 ALJR 74; 293 ALR 70 the preliminary, just and equitable requirement is often readily satisfied. Here, after a long marriage, the parties’ relationship has broken down and they live apart. Some $500,000 of joint funds is held in a controlled moneys account. Both parties have invoked s 79, seeking, apart from other orders, orders about that fund. I note the exhortation in s 81 to as far as practicable, “make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them”. It is just and equitable that the parties have relief under s 79.
I turn to the task of identifying just and equitable orders that will alter the interests of the parties in property. There is no mention of steps or stages in s 79, let alone of the sequence set out in a) – d) below. Despite the guidance in Hickey, the Full Court has regularly noted that the “three-step” or “four-step” approach merely illuminates the path to the ultimate result.[3] I will employ that illumination.
[3]Norman & Norman [2010] FamCAFC 66 at [60]; Bevan & Bevan [2013] FamCAFC 116.
I will address the following matters:
a)Make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing;
b)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;
c)Identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties; and
d)Consider the effect of those findings and determinations and resolve what order is just and equitable in all the circumstances of the case.
Disclosure Generally
Before I embark on the application of section 79 to the parties’ circumstances I should say that the husband has manifestly failed in his obligation of financial disclosure. The husband executed a Financial Statement in 2009 and thereby acknowledged his obligations of financial disclosure under rule 13.04 of the Family Law Rules 2004 (Cth) and more generally. Although there were no doubt many changes in his financial circumstances since then, each triggering the obligation to file an updated Statement, no further Financial Statements were filed until he produced an unexecuted Financial Statement during the final hearing. Along with the contents of his draft affidavit, he orally swore that the Financial Statement was true and correct. The latest Financial Statement makes little sense. Therein the husband reveals that he earns $800 per week after tax from his business. He lists as both a source of income and an expense, the child support payments he is obliged to pay for P and B, putting the amount paid and received at nil. He says there are no other income earners in his household although he says in his affidavit that he thinks Z will receive a Youth Allowance from Centrelink this year. He does not report that any of his expenses are paid for the benefit of Z or P. However, in his affidavit he says that Z is reliant on him for financial support and will remain so for many years.
The lack of documentation prevented valuations being obtained for the various entities. Even when a subpoena issued to the husband, the informal and formal mechanisms of disclosure having failed, several appearances were necessary.
A failure to disclose prevents the court discharging its obligations under s 79. In accordance with the authorities, I should not be overly cautious about making findings in favour of the wife in dealing with the known assets.
The property of the parties
In determining what order is appropriate, it is necessary to make a finding as to the property of the parties. That involves identifying assets, liabilities and financial resources and their values.
The hearing was conducted on the basis of a draft balance sheet as follows:
Owner Description Wife’s value Husband’s value 1 Joint Balance (as at 24 April 2013) of proceeds of sale of former matrimonial home held in controlled monies account by Redmond Hale Simpson $499,482.34 2 Wife Toyota Corolla $4,500 NK 3 H C Pty Limited (CAN …) (owner of a Mercedes Benz 4 wheel drive motor vehicle and owner of L Street, Suburb N). Mercedes Benz: E$16,000
Commercial Office Suite:
$E370-380,000
NK 4 H Business trading as Devopoulos & Co $0 $0 5 H Devopoulos Family Trust NK NK Total
Add-Backs
Date
Description
Wife’s value
Husband’s value
6
Withdrawal from St George Account no. …23 on 10.06.1997
$145,000
7
Withdrawal from St George Account no. …23 on 07.04.2000
$15,234
8
Withdrawal from St George Account no. …23 on 07.04.2000
$66,668
9
Withdrawal from St George Account no. …23 on 03.02.2009
$173,226
10
Withdrawal from St George Account no. …23 on 12.05.2004
$10,020
11
Withdrawal from St George Account no. …23 on 12.05.2004
$10,006
12 Withdrawal from St George Account no. …23 on 17.05.2004 $10,000 13 Withdrawal from St George Account no. …23 on 25.06.2004 $10,000 14 Withdrawal from St George Account no. …23 on 06.08.2004 $20,000 15
Withdrawal from St George Account no. …23 on 31. 08.2004
$10,487
16
Withdrawal from St George Account no. …23 on 12.04.2005
$3,231
17
Withdrawal from St George Account no. …23 on 21.04.2005
$5,000
18 Withdrawal from St George Account no. …23 on 28.04.2005 $5,689 19 Withdrawal from St George Account no. …23 on 23.06.2005 $10,000 20
Loan made by husband to Devopoulos Family Trust
$182,000
Total
$676,561.00
Liabilities
Owner Description Wife’s value Husband’s value 1 H Australian Taxation Office Penalties and interest Total
Superannuation
Owner Description
Name of Fund – Type of Interest
Wife’s value Husband’s value 1 W First State Accumulation E$21,217 2 W First State Accumulation E$22,426 3 H NK NK NK Total $43,643
As to the issues about the balance sheet:
Assets
Item 1 – Controlled Money Account held by Redmond Hale Simpson
The former matrimonial home at Suburb H was sold and the net proceeds were placed in a Controlled Money Account, being an NAB Term Deposit. When the current deposit matures on 25 April 2014 the balance of the account will be $516,005.44[4]. In addition there remains $1,136.29 in the trust account of the wife’s solicitors. However the parties owe $1,100 to the valuer of the Suburb N unit for updating his valuation.
[4] Exhibit I.
Item 2 – Toyota Corolla
The husband objected to the wife’s estimate[5] in relation to the value of the motor vehicle driven by the wife. In an earlier Financial Statement the wife had given the car a higher estimated value. There is no valuation evidence and therefore no value can be attributed to the vehicle.
[5] Found at paragraph 40 of the wife’s Updated Financial Statement filed 14 February 2014.
Item 3 – C Pty Limited
Albeit without much confidence, I was asked on behalf of the wife to find that C Pty Limited had a value of at least $200,000. I understood that estimate was put on the basis that one of the assets of the company, the Suburb N unit, has a value of the order of $300,000.
I understand that C Pty Limited was the trustee of the Devopoulos Family Trust and was created among other things, to own the Suburb N premises from which the husband’s practice was conducted. In circumstances for which I was provided no intelligible explanation, the husband lent $180,000 that the parties borrowed from the Advance Bank, to the trust so that it could buy the Suburb N unit. The same Suburb N unit that the parties told the Bank they were buying with the borrowed funds, as an investment. The parties paid off the loan. Indeed they more than paid it off. In just three of many transactions, the wife paid about $120,000 off the loan from her termination payout from the educational institution and the husband paid about $173,000 from the income from the business. If I understood what he said correctly, it was the husband’s evidence that his practice was not charged any rent for the Suburb N premises but notional rent was taken into account in reducing the debt that C Pty Ltd owed him. It is the husband’s evidence that C Pty Ltd repaid his loan long ago. If I have correctly recorded the husband’s evidence then it makes no sense and raises the suspicion that the entire exercise was intended to transfer assets of the marriage to the husband’s extended family. The parties paid off the loan with which the unit was purchased. Why then would his practice be required to pay rent? When pressed about that the husband asserted that his father and his sister performed a great deal of work for the business and indeed, that his sister effectively ran the business. However, even when pressed he would not say, for example, that their work was not properly rewarded by any remuneration paid to them.
None of that matters for present purposes. It is an agreed fact that C Pty Ltd has been deregistered. Pursuant to s 601AD of the Corporations Act 2001 (Cth), upon deregistration all property held on trust by the company vests in the Commonwealth and any other assets vest in ASIC. An interested party can make an application to re-register the company. There is no evidence before me that any person intends to apply to have C Pty Ltd re-registered. Strangely, the husband seeks an order that he retain sole legal and beneficial ownership of all interests held by him in C Pty Ltd.
There is no basis for including C Pty Ltd on the balance sheet, let alone for a value to be attributed to it.
That is not to say that the husband’s evidence and disclosures in relation to C Pty Ltd or in relation to his finances more generally were satisfactory. Quite the contrary.
Item 4 – Legal Role Business – Devopoulos & Co
I am not asked to include the husband’s practice in the balance sheet but as I understand the wife’s case that concession is only made because, given the lack of co-operation and disclosure by the husband it was not practicable to have the business valued.
Item 5 – Devopoulos Family Trust
Again, I am not asked to include the trust in the balance sheet but only because, given the lack of co-operation and disclosure by the husband, it was not practicable to have the trust valued. It is the husband’s case that although he is a beneficiary of the trust, it is controlled by his father. The husband asserts that his father is a very difficult person and at the time of the hearing had only recently come out of a nursing home. The husband said that his father holds all relevant records and will not release them to the husband. The husband said he was not even able to produce the relevant trust deed.
The husband asserted that he is not able to exercise any influence over his father in relation to the trust. He maintained that evidence despite his evidence that he had intervened with his father to have the Mercedes Benz motor vehicle owned by the trust, given or allocated to the parties’ son, Z.
Add-backs
There are circumstances whereby assets are included in the list for division although they no longer exist. The same logic would apply to the exclusion from the relevant list of liabilities, debts that do exist at the date of the hearing. In the Marriage of Omacini (2005) 33 Fam LR 134 the Full Court noted:
30.To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec.75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.
31.As the Full Court said in Browne and Green (1999) FLC 92-873 at 86,360:
44. We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction – a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.
Included in the draft balance sheet are a number of drawings made by the husband on accounts which are said to represent matrimonial funds. The submission made on behalf of the wife is that either the Court could add-back to the balance sheet some or all of those drawings as preliminary distributions made to the husband or they could be taken into account as waste under s 75(2)(o) [s 79(4)(e)].
In my view neither of those approaches is warranted here. The inclusion in the balance sheet of assets that no longer exist or cannot be identified is highly likely to produce an artificial and potentially, unjust outcome. Among the possible explanations for the drawings, it could be that the husband has been unable to attend to business or financial matters for much of the period since 1995. I acknowledge, however, that it could also be that he diverted matrimonial funds from the wife and to his family.
The husband’s failure to disclose will, however, be addressed under s 75(2)(o).
Liabilities
The husband and wife owe $1,100 for the updated valuation of the unit at Suburb N.
The fundamental issue in the case relates to the husband’s taxation liability.
The husband argued that his taxation debt should be included in the joint list of assets and liabilities. The figure shown on the printout of his Statement of Account dated 7 December 2012, is $923,433.46.[6] If I take the husband’s approach, there are no net assets and therefore no property to settle.
[6] See exhibit J.
In relation to this debt, there are effectively two optional approaches proposed by the wife:
1.Because of the uncertainty of the debt (the husband has received no response to his application for relief from the interest and penalties), no figure should be included on the basis of the authorities cited by the wife’s counsel including Puddy & Grossvard & Anor (2010) FLC 93-432; or
2.Include the debt at $923,433.46, but treat it as a debt of the husband alone, in respect of which the wife has no liability.
In Biltoft and Biltoft (1995) FLC 92-614; 19 FamLR 82 125 and following, the Full Court said:
A general practice has developed over the years that, in relation to applications pursuant to the provisions of s. 79, the Court ascertains the value of the property of the parties to a marriage by deducting from the value of their assets the value of their total liabilities. In the case of encumbered assets, the value thereof is ascertained by deducting the amount of the secured liability from the gross value of the asset. See, Ascot Investments Pty Ltd v. Harper & Anor (1981) 148 CLR 337 where Gibbs J. (as he then was) pointed out at p 355 that the Court ''must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it'' . Where the assets are not encumbered and moneys are owed by the parties or one of them to unsecured creditors, the court ascertains the value of their property by deducting from the value of their assets the value of their total liabilities, including the unsecured liabilities. …..
….
Notwithstanding the general practice which has developed, the Court has indicated that it may properly determine not to take into account or to discount the value of an unsecured liability in certain circumstances. Such liabilities would include but are not limited to a liability which is vague or uncertain, if it is unlikely to be enforced or if it was unreasonably incurred.
Notwithstanding that there is no evidence that the ATO has considered the husband’s application for waiver of the penalties and interest, in my view it cannot be said that the debt is vague or uncertain. The quantum of the debt is addressed in a Statement of Claim issued in the NSW Supreme Court dated February 2012 (exhibit K) in the sum of $789,506.61. An amended Statement of Claim may issue in those proceedings or that Court could be later asked to make a finding based on updated evidence as to the quantum of the debt. There is also the evidence from the ATO Portal (exhibit J). As at 17 December 2012 for the tax year ending 30 June 2013, the debt stood at $923,433.46. I am not sure why there is no current evidence about the debt but no doubt that evidence is available.
Although there is no evidence of recent action as a result of the Statement of Claim issued in the NSW Supreme Court, there is no reason to find that the debt is unlikely to be enforced.
In relation to the second of the approaches offered on behalf of the wife, in effect a two pool approach, she argues that the debt was unreasonably incurred. There is no suggestion that the debt arose because of any action or inaction by the wife. Indeed it is the husband’s case that the debt arose long after separation.
It seems to be common ground that the wife only found out about the potential debt in 2009 and that she thereafter pressed the husband to attend to it. The advice[7] in 2009 was to the effect that there were debts of $47,976.42 and $14,667.47 owing on 31 August 2009 and a further anticipated debt of the order of $60,000. On 1 September 2009 the wife agreed to the release of $63,251.26 from joint funds to pay the current debt. It is the wife’s unchallenged evidence that further enquiries from her solicitor to the husband’s solicitor remained unanswered. It is the unchallenged evidence of the wife that at Court on 18 July 2011 the husband’s solicitor handed her solicitor a print out from the ATO portal showing that the husband had a tax liability of $949,344.70. It is the wife’s evidence that she was shocked and burst into tears. It cannot be that the husband was unaware of the magnitude of his tax liability prior to 18 July 2011. No meaningful explanation is provided for the husband’s failure to lodge tax returns, pay his tax or keep the wife advised about the potential liability. On all the evidence the debt was unreasonably incurred.
[7] Paragraph 116 of the wife’s affidavit.
Further, the principal debt has been paid and the balance seems to be penalties and interest. In addition to the release of $63,251.26 in joint funds in September 2009, the wife agreed to a further payment to the ATO of $228,241.09 on 24 October 2012. Therefore the wife has already contributed to the discharge of the main debt because joint funds were released to make the payments.
Importantly, the ATO does not object to the approach proposed on behalf of the wife. The obligation to the ATO as a person potentially affected by the outcome of these proceedings and the specific obligation under s 75(2)(ha) has been discharged by two letters sent by the wife’s solicitors notifying the ATO of the proceedings, the hearing dates and that, against the interest of the Taxation Commissioner, the wife intended to argue this very point.
I am satisfied that the husband owes the ATO a debt which stood at $923,433.46 as at 17 September 2012. However, that debt will not be included in the balance sheet going to establish the net pool of assets for division between the parties.
I find that the assets are:
Owner Description Value Joint Balance (as at 25 April 2014) of proceeds of sale of former matrimonial home held in controlled money account by Redmond Hale Simpson $516,005.44 Joint Balance of money held in trust by Redmond Hale Simpson $1,136.29 Wife Toyota Corolla NK Total $517,141.73
Liabilities
Owner Description Value Joint Valuer in respect of updated valuation of the Suburb N unit $1,100
Superannuation
Owner Description
Name of Fund – Type of Interest
Wife’s value Wife First State Super Accumulation $60,917.09 Wife First State Super Accumulation $32,475.39 Total $93,392.48
Net assets
The net assets for division are valued at $609,433.73 ($517,141.73 + $93,392 - $1,100). Each of the parties have other assets (including furniture and other personalty) and other debts that they have not included in the balance sheet, including debts to family, credit card debts and in the wife’s case, debts for legal fees. The husband has a liability to the ATO which stood at $923,433.46 in September 2012.
Financial resources
The arrangements between the husband and his family are not transparent. The facts are suggestive in relation to the husband but that said, there is no evidence that either of the parties has any financial resources.
Contributions
The obligations placed on the Court by s 79 call for an assessment of the respective contributions by and on behalf of the husband and wife. The manner of assessing contributions has been the subject of previous decisions. The contributions of a parent and homemaker are to be assessed, not in a merely token way, but in terms of their true worth to the building up of the assets.[8] There are said to be risks in taking an overly technical approach to the assessment of the respective contributions of the husband and wife in that the Court can become involved in questions of the quality of contributions which go far beyond the real world expectations of husband and wife.
[8] In the Marriage of Shewring (1987) l2 Fam LR 139.
As to whether the Court should apply the considerations in s 79(4) to the assets globally or asset by asset, the authorities have it the latter approach is preferred, in appropriate circumstances either approach is permissible and sometimes the asset by asset approach is best. See In the Marriage of Lenehan (1987) 11 Fam LR 615; In the Marriage of Norbis (1986) 10 Fam LR 819; FLC 91-712; In the Marriage of Zyk (1995) 19 Fam LR 797.
In In the Marriage of Coghlan (2004) 33 Fam LR 414 the Full Court allowed that superannuation could be included in the list of property drawn up as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. The Full Court suggested at [61] that:
… This approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.
Neither party seeks a splitting order and there was no submission that the wife’s superannuation interests should be treated differently from the other assets.
The parties have excluded some personalty from the balance sheet together with debts that have arisen since separation.
The husband contended that his liability to the ATO should be included in the joint balance sheet but for the reasons given above, I have not adopted that course.
Section 79(4)(a) contributions
Financial contributions to property, both direct and indirect were made by each of the husband and wife.
Each of the parties brought valuable assets into the marriage.
The wife had:
1.Savings of $90,000;
2.A BMW motor vehicle;
3.A sewing machine and over locker;
4.Superannuation benefits with First State Super; and
5.No debts.
The husband had:
1.Savings of approximately $250,000.00;
2.A BMW 320i Sedan; and
3.Personal chattels.
On leaving the educational institution in 1997 the wife received a redundancy payment in the sum of $51,827.35 and a gross superannuation payout of $90,762. From those funds she paid $50,900 and $74,000 into the Advance Bank loan.
Each of the parties had paid employment during the marriage. At the time of marriage the wife was qualified in an education field employed at an educational institution earning $26,710. The husband was employed by F Firm as a manager.
The wife’s income from paid employment is set out at paragraphs 54 and 55 of her affidavit of 14 February 2014. Over 20 years from 1990 the wife earned about $560,000 or an average of $28,000 per annum. That includes four years during which she had little or no income from paid employment.
Although it must be available, there is no equivalent evidence about the husband’s income. Because of the passage of money between the accounts, including loan accounts of the parties and the business, it is not possible to identify the net remuneration received by the husband from the business, let alone how that income was applied. For example there were the transactions involving the line of credit with the Advance Bank (later the St George Bank). The debt was $180,000 and the proceeds were all advanced to the Devopoulos Family Trust.
It was submitted by the husband that any questions about the use of the line of credit are resolved by the fact that upon the sale of the former matrimonial home only $16,000 was required to pay out the loan. That would be true if the only drawings on the line of credit was the initial $170,000 odd for the unit. We know that nearly $300,000 has been paid off the loan in just three of many transactions over the years. It is apparent that the line of credit was used as most lines of credit are used, with funds drawn out and paid back for various purposes. Most of the drawings were by the husband and are unexplained. I note that the wife too made a drawing to buy the Toyota motor vehicle. Unlike the husband’s approach in relation to the Mercedes Benz motor vehicle also paid for from the line of credit, the wife sought to bring the Toyota motor vehicle to account in these proceedings. The husband prevented the attribution of a value to the vehicle.
In the two Financial Statements in evidence, the husband deposed that in 2009 earned about $887 per week before tax and in 2014, he earns about $800 per week, after tax.
Although the wife was not cross-examined on her evidence that she assisted with clerical or administrative tasks for the husband’s business, I accept that he disputes that evidence. However, I find that the wife did assist in the business.
It is the husband’s case that he was unable to attend to the practice, let alone his taxation affairs, for many years. He gave evidence that in effect, his sister, Ms U, ran the business. He records that she worked from 7am to 7pm Monday to Friday.
Notwithstanding the disparity in their initial contributions and her absence from her profession for several years, in my view the financial contributions of the wife exceeded those made by the husband.
Section 79(4)(b) contributions
This provision deals with direct and indirect non-financial contributions other than those made in the form of parent and homemaker contributions.
For nearly two years following their marriage, the parties lived with the husband’s parents in Suburb G. The parties did not pay rent but provided their own food.
There were no major home renovations but if I understood the husband’s evidence correctly, he maintained the former matrimonial home. The evidence contains no detail about that maintenance.
On the face of that evidence there was little significance in any non-financial contributions made by the parties.
Section 79(4)(c) contributions
This provision deals with contributions to the family including contributions in the form of homemaker contributions and contributions to children of the marriage.
The wife’s evidence at paragraphs 64 to 83 inclusive reveals the detail of the tasks performed by the wife and she was not challenged in respect of the substance of that evidence.
It is agreed that the contributions of the wife to the family exceeded those of the husband. That is not to say that the husband was not a loving father who was involved in several of the activities of the children. I accept, for example, that the father made enquiries and located a school for P at one time.
For four years the wife had little or no paid employment and therefore was more available for parent and homemaker duties. The parenting load in this family has been increased by the very significant demands of P’s health and progress. That load has largely fallen to the wife.
To the extent that the business provided income for the family, the wife contributed to that income by her work in the business and by caring for the children.
The contributions of the wife to the family exceeded those of the husband.
Conclusion on contribution
In my view the contributions of the wife exceeded those of the husband. The lack of disclosure by the husband means that in addition to doubts about the identification and valuation of assets, it is not possible to make an accurate assessment of his contributions. By the same token, in those circumstances I am not as constrained in respect of the assessment to be made.
I find that the wife’s contributions were 60 per cent compared to 40 per cent by the husband.
The other matters in Section 79
Once contributions have been assessed, the other factors in s 79(4)[9] need to be considered. Relevantly, they are:
[9] S 79(4)(d), (e), (f) & (g)
Section 79(4)(e) – the Section 75(2) factors
The most important matters in s 75(2) would seem to be paragraphs (a), b), (d), and (f).
(a) the age and state of health of each of the husband and wife;
The wife is 54 years of age. There is no probative evidence about her health.
The husband is 56 years of age. A doctor certified on 3 March 2014 that the husband presented with lethargy and polyuria and was to be investigated for diabetes and other unspecified things. That said, there is no probative evidence about the husband’s health and that is both remarkable and concerning. As I understand his case, the husband says that since his wife reneged 20 years ago on an agreement that the children be brought up according to the rites of the Macedonian Orthodox Church, he felt the marriage was over and he was unable to properly attend to his business and personal affairs. He represented something similar to the ATO in support of his 2012 request for relief from the penalties and interest associated with unpaid tax. To my lay observation the husband appeared depressed but that observation is of no forensic value.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
The wife’s income is $1,808.70 made up of her wages of $1,751 for her employment in the education field and a disability allowance for P of $57.70. The wife receives no child support payments from the husband.
According to the wife’s evidence, she spends $2,422.50 per week including $647.50 in income tax, $520 in rent and $1,156 on living expenses. She lives with P and B who receive $251.35 by way of Disability Allowance and $115.35 in Youth Allowance, respectively.
It was not asserted that the wife is not fully exercising her earning capacity. She has a contract for the 2014 year to work five days a week, being two days on a permanent full-time basis and three days on a temporary basis. At the time of swearing her affidavit the wife anticipated that she would continue to work 5 days a week.
The husband’s income is about $800 per week, after tax, from his legal role business. He lives with Z who he says has no income but who he expects to receive a Youth Allowance.
As is referred to earlier, the husband’s evidence about his financial circumstances is vague and inconsistent. According to his Financial Statement he spends $749 per week including $480 per week in rent and $246 on credit card payments, which presumably include his living expenses.
There is no evidence about the husband’s earning capacity. The husband has worked exclusively in his legal role business since July 1996. The husband deposed that since 2003 the legal role work at Suburb N gradually reduced and that it dried up in 2004/2005. He now works in the legal role from his home at Suburb V. As there is no reliable evidence about the husband’s financial circumstances during the marriage it is not possible to know how his current after tax income of $800 per week compares to his income at earlier times.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
P and B will turn 18 in March 2014. B completed the HSC last year and has commenced a 12 month course with Y College at Suburb AA. The fees of $16,800 will be met with a combination of B’s own funds and the higher education contribution scheme (HELP). She receives $115 per week in the form of a Youth Allowance and is otherwise supported by the wife. The wife does not separately identify the cost to her of supporting B.
P is in Year 12 at O School. Although the orders will lapse on his birthday, the 2011 parenting orders provide for P to spend each alternate weekend with the husband as well as special days and half the school holidays. P receives a Disability Allowance of $251.35 per week. The wife does not separately identify the cost to her of supporting P.
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
Z is 19 years of age and lives with the husband. He has struggled with depression and the husband thinks that he will probably require ongoing support from the husband.
The wife has the primary care of P. He has global delay and learning difficulties. He has the developmental capacity of a 7 year old child. The demands of his care and support are a very important consideration.
If I understand the parties’ positions, the wife believes that P will live mainly with her and the husband anticipates that P might live with him. As to where P will live in the future, the only reliable indicator of what will happen in the future is what has happened before. It is likely that any change to P’s living arrangements will require the agreement of the parties or an order of a relevant tribunal. I take it that P will continue to mainly live with the wife.
The wife expects P to complete school at the end of this year. Thereafter she intends to help him find employment at an establishment in the nature of a sheltered workshop for three days a week and to enrol him in BB College at Suburb CC on the other two days, learning lifestyle and work skills.
It is the unchallenged evidence of the wife that P is unable to catch public transport or to recognise the value of money. He understands basic numeracy for counting up to 10 and recognises some words. He can carry a basic conversation but often obsessively inserts a word. Currently he is obsessed with “711”. He cannot tie his shoelaces. He can dress himself sometimes but has trouble lining up buttons. He showers himself and brushes his teeth (which the wife checks). The wife is teaching him to cut his food with a knife but he cannot open cans of food or tie knots in plastic bags.
P has balance problems for which he has physiotherapy. He has bed wetting problems and has seen a psychologist in relation to anxieties. He displays obsessive behaviour much of the time, such as picking at his fingers until they bleed or repeating words.
The wife takes P ice skating and swimming each week to help build his pelvic floor muscles in order to strengthen his balance.
The parties will be obliged to provide financial support and to care and supervise P, indefinitely. The greatest load will fall to the wife.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia, and the rate of any such pension, allowance or benefit being paid to either party;
That evidence is set out above.
(g) where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
There is no evidence about the parties’ standard of living. The parties have owned expensive motor cars. P attended a private school for a period but that was probably not an expression of lifestyle expenditure. Otherwise the evidence suggests that the parties lived in modest circumstances.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
There is no application for maintenance.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;
I have referred to that matter above. If the wife is to receive any part of the funds held in the Controlled Money Account, that will defeat part of the claim of the ATO. However, the ATO is on notice of the wife’s claims and did not seek to intervene to be heard in respect of the proceedings.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
The wife gave up paid employment for several years and cared for the children. That allowed the husband to focus on his work. Whether he did not focus on his work or was unable to do so, there is no evidence to suggest that the wife’s efforts produced a benefit reflected in the husband’s income, earning capacity, property or financial resources.
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The husband obtained his legal role qualification during the marriage. The evidence is not clear as to whether that was achieved through full-time study or while he was engaged in paid employment.
The wife gave up paid employment for several years and cared for the children. By leaving the educational institution she lost the benefits of long term employment – enhanced superannuation, leave entitlements, greater job security or the potential for that security and the opportunities for promotion.
Albeit that the husband thought it sensible to go out of his way to disparage the qualification, the wife completed further studies and she now relies on those studies for her current employment. Those studies were entirely completed after separation and cannot be said to reflect an increase in the wife’s earning capacity due to the marriage.
(l) the need to protect a party who wishes to continue that party's role as a parent;
Although the evidence about P and perhaps Z might warrant it, neither party sought to make this case.
(m) if either party is cohabiting with another person — the financial circumstances relating to the cohabitation;
I have set out above what there is of that evidence.
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
There are arrears of child support owed by the husband. I take it that … March 2014 will be the date of a terminating event in relation to child support.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
The husband’s failure to disclose has distorted the application of s 79 to the parties’ circumstances. The authorities suggest that, in those circumstances, the Court need not be over cautious in relation to the wife’s case.
Unless the husband achieves relief from his debt to the ATO, the practical reality of the proceedings is that under no circumstances will he retain any moneys allocated to him from the Controlled Money Account. The import of the arguments in the case is whether he will be left with a debt to the ATO of something like $900,000, on the wife’s case or something like $400,000, on his case, or something in between. The husband has provided no evidence as to what he intends to do. There is no evidence about his capacity to repay one amount or another, whether he would consider entering into an arrangement to compromise the debt or some other course. There is no evidence about the impact of his predicted future financial circumstances on his capacity to work in his legal role.
The fact that in any event the husband will be left with a considerable debt would not justify ignoring the husband’s claims to a settlement under s 79. Similarly, notwithstanding my observations about the notice given to the ATO, the claims of the husband’s creditor should not be ignored.
Section 79(4)(f)
Beyond those referred to above, there are no relevant orders made under the Family Law Act 1975.
Section 79(4)(g)
I assume there will be no eligible children after … March 2014.
Conclusion
The relevant matters arising from the remaining elements of s 79, which include the s 75(2) factors referred to above are:
·The parties are both in their 50’s and are closer to the end than to the beginning of their working lives. The husband is older than the wife and currently receives less income than she does. The wife will receive more of the property based on contribution, than the husband. That factor favours an adjustment to the husband.
·P will need his parent’s support for as long as they can give it. The main load will fall to the wife. The evidence does not permit any estimate of the financial and physical impost of that support. Albeit of less intensity, Z may require support from his parents and as things stand that will come exclusively from the husband.
·The wife has some superannuation interests. There is no evidence on the point but I take it that while the wife remains in paid employment, there will be restrictions on the wife accessing her superannuation. On the evidence, neither of the parties can look forward to a self-funded retirement.
·The wife gave up a career with an educational institution for the benefit of the family. She has retrained but that was not done at the expense of contributions to the family.
·The husband’s failure to disclose has distorted the processes of s 79 whereby there can be no confidence that any settlement will be just and equitable.
All but the first of those factors favour an adjustment in favour of the wife. The most important factor is the likely impact of support for P into the future. That argues for an adjustment in favour of the wife. In my view the allowance should be 15 per cent. 15 per cent represents about $91,000 and will make a difference between the parties of about $182,000.
Just and Equitable
The net assets have a value of $609,433.73 of which $93,392 is in the form of superannuation and $516,041.73 is in the form of non-superannuation assets.
If the assets are divided in the proportions 25 per cent to the husband and 75 per cent to the wife then the husband will have about $152,358 and the wife will have about $457,075. As to the form of the orders, the operative order will deal with the division of the fund held in the controlled moneys account.
I will order that upon maturity, the Controlled Money Account be disbursed as to $152,358 to the husband and the balance to the wife. The husband will retain all assets in his possession or control, including his interest in Devopoulos & Co. The husband has various debts on credit cards, to members of his family and a liability to the ATO which stood at $923,433.46 in September 2012.
That will leave the wife with about $363,684 in non-superannuation assets. That represents the balance of the Controlled Money Account and the moneys held in her solicitors’ trust account, after the payment of $152,358 to the husband and $1,100 to the valuer. She will also retain her superannuation interest and all assets in her possession or control, including the Toyota Corolla motor vehicle. The wife has various debts on credit cards, to members of her family and to her solicitor.
Conclusion under Section 79
This was a marriage that involved contributions made over 24 years and very significant contributions were made by each of the parties. The breakdown of their marriage took a toll and the parties were faced with a very substantial challenge because of the misadventure that affected P’s development. The wife took up significant roles as parent and homemaker as well as wage earner. The husband’s finances during the marriage and since were not revealed during the course of the proceedings, largely if not solely because of his failure to provide the relevant information and documents. The wife’s contributions were assessed to be greater than those of the husband. An adjustment in her favour is justified mainly by reference to the responsibility for P’s care and the husband’s failure to disclose. In the circumstances, in my view the orders outlined will reflect a just and equitable division of the parties’ property.
I certify that the preceding one hundred and seventy five (175) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 8 April 2014.
Associate:
Date: 8 April 2014
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Jurisdiction
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Procedural Fairness
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