Dorracott & Dorracott

Case [2021] FedCFamC1F 315

FEDERAL AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)

Dorracott & Dorracott [2021] FedCFamC1F 315

File number(s): MLC 2711 of 2019
Judgment of: HARTNETT J
Date of judgment: 17 December 2021
Catchwords:

FAMILY LAW – PROPERTY SETTLEMENT – Where the parties seek a property settlement – Where the parties seek differing apportionments of the asset pool – Where the wife seeks spousal maintenance – Where the husband asserts the wife is capable of gainful employment – Where it is just and equitable to adjust the parties property interests as to 30 per cent to the husband and 70 per cent to the wife – Where a spousal maintenance order is made.

FAMILY LAW – CHILD SUPPORT – Where both parties seek a departure from the Child Support Assessment Act – Where the wife seeks periodic and non-periodic child support payments – Where the husband agrees to pay the children’s school fees and other expenses – Where one child is currently residing with the wife and the other with the husband and wife – where departure order and periodic sum in respect of the child residing with the wife is made.
Legislation:

Child Support (Assessment) Act 1989 (Cth)
Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)

Cases cited:

Bell & Nahos [2016] FamCAFC 244

Bevan & Bevan (2013) FLC 93-545

Eliades & Eliades (1981) FLC 91-022, 76, 232

Hall v Hall (2016) FLC 93-709

Mallet v Mallet (1984) 156 CLR 605, 608

Stanford v Stanford (2012) 247 CLR 108

Whisprun Pty Ltd v Dixon (2003) 200 ALR 447

Williams & Williams [2007] FamCA 313

Division:  Division 1 First Instance
Number of paragraphs: 111
Date of last submission/s: 11 August 2021
Date of hearing: 2-4 and 11 August 2021
Date of hearing of an Application in a Proceeding for leave to adduce further evidence filed by the wife.

19 November 2021
Date orders made for Application in a Proceeding filed 19 November 2021: 19 November 2021
Date of filing a further Application in a Proceeding to adduce further evidence filed by the husband: 8 December 2021
Date orders made for Application in a Proceeding filed 8 December 2021: 14 December 2021
Place: Melbourne
Solicitor for the Applicant: Kenna Teasdale Lawyers
Queen’s Counsel for the Applicant: Mr Dickson
Solicitor for the Respondent: marshalls + dent + wilmoth Lawyers
Senior Counsel for the Respondent: Ms Smallwood

ORDERS

MLC 2711 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR DORRACOTT

Applicant
AND:

MS DORRACOTT

Respondent

ORDER MADE BY:

HARTNETT J

DATE OF ORDER:

17 DECEMBER 2021

THE COURT ORDERS THAT:

1.Within sixty (60) days from the date of these Orders, or such other time as agreed in writing between the parties, the parties do all acts and things and sign all documents as are required to list for sale the property situate at and known as L Street, Suburb D and being the property more particular described in…

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AGLC
Dorracott & Dorracott [2021] FedCFamC1F 315
Case
[2021] FedCFamC1F 315
Decision Date

CaseChat Overview and Summary

Dorracott & Dorracott was a case involving a dispute between a husband and wife regarding the division of their assets and superannuation following their separation. The wife had sought spousal maintenance and other financial orders from the court. The case was heard and determined by a court, which considered the evidence and submissions from both parties.

The legal issues before the court included the characterization of certain future financial resources, specifically the husband's profit distributions from his partnership, as either property or financial resources. Additionally, the court had to decide on the appropriate division of the parties' assets and superannuation, and whether spousal maintenance should be ordered, and if so, in what amount and for what duration.

The court reasoned that the husband's profit distributions, to be received in August and October 2021, should be characterized as property and a financial resource, respectively. The court found that a 70/30 division of the asset and superannuation pool in favour of the wife was just and equitable, taking into account the wife's health issues and lack of capacity for paid employment, as well as the husband's substantial contributions to the family, including child support and other expenses. The court also determined that spousal maintenance should be ordered in the amount of $1,076 per week until the end of 2024, with the husband additionally making payments from other sources until that time.

The final orders of the court included a division of the asset and superannuation pool in the ratio of 70/30 in favour of the wife, with the wife retaining certain specified assets. Spousal maintenance was ordered in the amount of $1,076 per week until the end of 2024. The court further made orders regarding the children's residence and time arrangements, which had already been agreed upon by the parties.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The wife relied on the following material:[2] (a)Further Amended Response filed 21 July 2021; (b)Financial Statement of the wife filed 21 July 2021; (c)Affidavit of the wife filed 21 July 2021; (d)Affidavit of Mr P filed 21 July 2021; (e)Affidavit of Dr Q filed 21 July 2021; (f)Affidavit of Margaret Neal, solicitor for the wife filed 15 November 2021; and (g)Outline of Case filed 30 July 2021. [2] Outline of Case of the wife filed 30 July 2021, page 1 together with material introduced into evidence post conclusion of the trial. BACKGROUND The husband was born in 1971 and is aged 50 years. He currently resides in a rental apartment on R Street, Suburb D. He is a partner at N Company. The husband is in good health. The wife was born in 1968 and is aged 53 years. She resides in the former matrimonial home situate at L Street, Suburb D in the State of Victoria (“the Suburb D Property”). During the period of the cohabitation and marriage of the parties, the wife worked in office administration. She ceased employment in 2005, around the time of the birth of the parties’ first child, and since that time she has remained in the home engaged in the primary care of the children and home duties. She continues in that role. The wife was diagnosed with cancer following the birth of the parties’ second child. She was again diagnosed with cancer in 2014 and relapsed in late 2017. As of February 2019, the wife’s cancer has gone into remission and she is in otherwise good physical health. The state of her mental health is variable, as is discussed hereafter. The parties commenced cohabitation in December 1998, were married in 2001 and separated in August or September 2018. Their cohabitation period was almost 20 years. There are two children of the relationship, X (“X”) born in 2005, now aged 16 years, and Y (“Y”) born in 2007 (“the children”) now aged 14 years. The 30 June 2021 orders, made by consent, resolved the parenting part of the proceeding on a final basis with the parties having equal shared parental responsibility of the children. Those orders further provided for Y to live with the wife and spend time with the husband as she wishes, and for X to live with the wife during the school week, spend time with the husband each Wednesday for dinner from 6.30pm to 9.00pm and live with the husband each weekend save for every third weekend; and for one half of all school holidays.[3] Since late May 2021 however, X has resided predominately with the husband.[4] Indeed, well prior to the making of the orders, and being between approximately April 2020 and January 2021, X divided his time fairly equally between the households of his parents. Between January 2021, and April 2021, and save for some holiday time he spent entirely with his father, X spent week days in the household of his mother and weekends almost entirely in the household of his father. Before April 2020, and from the time of separation, X resided predominantly with the wife. In essence, the parties are content to support X in his residing with either of them as he wishes at any given time, regardless of the existence of the final parenting orders.[3] Orders made 30 June 2021 by Deputy Registrar McGrath.[4] Affidavit in reply of husband filed 28 July 2021.

Evidence

Evidence Before The Court

Mr P estimated the Capital Gains Tax (“CGT”) liability in respect of the sale of the E Town property, were it to sell at a figure of $975,000 as anticipated by the parties at trial, to be $158,625. That estimate was given on the basis of material provided to him by the wife, without input from the husband. Evidence of Dr Q Dr Q is a General Practitioner (“GP”) whose evidence is accepted by me. She has been treating the wife since 2014.[12] In the last two years, the wife has seen Dr Q on five or six occasions, and otherwise the wife has attended upon another GP in the same practice on eight, approximately, occasions. Additionally, there have been some phone consultations between the wife and Dr Q and/or another GP in the clinic. [12] Affidavit of Dr Q filed 21 July 2021. It was Dr Q’s evidence that the wife has suffered multiple serious health issues since 2014, including breast cancer in 2014 and 2017 which now “requires ongoing close surveillance”; skin cancer in 2013 and 2018 which also “has close ongoing monitoring”; and depression and chronic anxiety “ that requires medication and regular psychotherapy”.[13]Under cross-examination, Dr Q confirmed her affidavit evidence that the wife does not have capacity for paid employment due to “mental health” issues as suffered by the wife. The wife’s stated lack of capacity is not related to any physical injury or condition of the wife. Dr Q confirmed in her oral evidence that she had referred the wife to a psychiatrist and psychologist for further diagnosis of her mental health condition and treatment. No evidence was before me from any of these treating medical experts as to the wife’s current mental health functioning and ability for gainful employment. [13] Ibid page 9. ISSUES FOR DETERMINATION At the commencement of the trial, Queen’s Counsel for the husband confirmed that a number of issues arising in respect of the parties’ asset pool as outlined in the parties respective case outlines were no longer in contention and no longer sought to be included in the asset pool, in particular, the addback of the parties legal fees and the cash withdrawals made by both parties at various times. What did remain in dispute was whether the husband’s profit distributions for the financial year ended 30 June 2021, to be received by him in August, and October 2021, on which the husband had paid already considerable tax, was property or a financial resource. During the course of the trial, Queen’s Counsel for the husband conceded that the monies to be received in August 2021 should be included as property in the sum of $76,671. Otherwise Queen’s Counsel for the husband submitted that the projected partnership profits to be received by the husband in October 2021, were “provisional and notional” and “contingent”, a future financial resource, but not property. It was further the husband’s case that the partners at N Company ‘projected’ share “was just that…a projection and not actuality” and that while the husband was due to receive his remaining share in respect of the 2021 financial year in October 2021, that share “is uncertain…it can vary up, it can vary down from year to year…and it is all contingent on…the board signing off on the approved partnership distributions.” If I were to accept the husband’s submission, Queen’s Counsel for the husband submitted that the husband would agree to an 80 per cent distribution of the net assets to the wife including superannuation, instead of a 70/30 division of the net assets including superannuation in favour of the wife as proposed by him at the commencement of the trial.

Decision

Reasons for decision

The husband has paid regular child support payments together with the payment of extensive other expenses for the children, including private school fees and expenses and those other expenses as set out elsewhere in these reasons. Conclusion The total asset and superannuation pool is approximately $7 million if an allowance is made for CGT as contemplated by the wife. This figure in all probability will increase with an increased sale price for the Suburb D property in respect of which the wife shall benefit to greater extent than the husband. In my view, a 70 per cent adjustment to the wife, and 30 per cent adjustment to the husband of the asset and superannuation pool is just and equitable in the circumstances of this case. 70 per cent is a figure of approximately $4,900,000. 30 per cent is a figure of approximately $2,100,000. A differential of $2,800,000. The wife will retain the C Town property at $2.4 million; the Commonwealth Bank of Australia offset accounts, her shares, her motor vehicle and her superannuation. Her retention of these assets, less her taxation liability, of $24,072, is a sum of $3,093,610. She will then receive a further cash sum of $1,806,390 approximately. Spousal Maintenance Pursuant to s 72(1) of the Act a party to marriage has a right to spousal maintenance if they are unable to adequately support themselves because: (a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or(c) for any other adequate reason; If the court considers it proper to do so, pursuant to s 74(1) of the Act, the court may make an order for spousal maintenance. In determining whether to make an order for spousal maintenance, the court “is obliged by s 75(1) to take into account the matters referred to in s 75(2) and only those matters.”[30] Section 75(2) provides a “comprehensive checklist”.[31] [30] Hall v Hall (2016) FLC 93-709 at [5].[31] Ibid. The test for spousal maintenance is well established and put simply is whether one party to the marriage is unable to support themselves adequately and whether the other party to the marriage reasonably has the capacity to support them.[32] [32] Eliades & Eliades (1981) FLC 91-022, 76,232. The wife seeks that the husband pay her $3,500 per week by way of spousal maintenance in perpetuity.[33] That is a sum of currently $182,000 per annum which is sought to be increased in accordance with any Consumer Price Index (“CPI”) increase.[33] Case Outline of the wife filed 30 July 2021 page 8. The husband originally sought that the wife’s application for spousal maintenance be dismissed.[34] During the trial, the husband proposed that the wife continue to receive the N Company Trust distributions for the next three years, to conclude with distributions for the financial year ended 20 June 2024, anticipated to be approximately $86,000, with the wife to pay income tax on the distributions of approximately $19,000.[35] That would see the wife receive $67,000 a year, which equates to approximately $1,076 a week in spousal maintenance from the husband. The husband additionally agreed to make payments of spousal maintenance, from whatever source, until 31 December 2024, that being the year in which Y will complete her secondary schooling. From this money, the wife will be required to meet a rental cost of approximately $1,000 a week from perhaps June 2022, upon the settlement of the sale of the Suburb D property, until the end of 2024, when on her evidence she will move from a rental in Melbourne to her home in C Town.[34] Case Outline of the husband filed 30 July 2021 page 9.[35] Transcript 3 August 2021, p. 85 lines 25 – 35.

Ratio Decidendi

Legal Principle Established

On 15 June 2018, the wife entered into a deed of agreement with her brother pursuant to which the wife now holds Y and X’s entitlements pursuant to her mother’s estate on trust for the children until they attain the age of 21 years. Those funds exist in a share portfolio which had a value of approximately $150,000 in 2017. Such funds are available to the wife to assist in her support of the children. The wife refuses to use these monies for that purpose, and instead proposes that such funds be kept preserved for the children to receive upon each reaching the age of 21 years, and in particular to enable the children to purchase a home. These funds are however available to the wife to apply in the support of the children. Post-Separation The parties separated in or about late August/early September 2018, when the husband moved out of the Suburb D Property. The wife and the children remained in the family home. The husband temporarily moved into the parties’ house at the C Town Property before moving to his current residence at the R Street Property in November 2018, to be closer to the children. Since the husband moved into the rental property, the wife has continued to have occupation and use of the C Town Property, mostly to the exclusion of the husband, and the Suburb D Property. The husband has continued to pay, since separation, the mortgage repayments on all the properties, rates, taxes (including land tax), child support, school fees, medical expenses, and insurances including health insurance and life insurance. The parties’ mortgage between June 2020 and June 2021 was limited to interest only but has now reverted to principal repayments plus interest. I do not propose to require the wife to convert those mortgages back to an interest only loan in circumstances where there shall soon be a release of the husband from that obligation, he has ample capacity to pay, and the wife can benefit in some very small way. The husband has, I note, continued to pay periodic child support payments to the wife for the support of X regardless of where X is actually living. He has not sought any adjustment in his liability from the Child Support Agency. The husband has also paid non-periodic payments of child support which shall continue as hereafter described. The wife has received ongoing trust distributions from the N Company Trust (“N Company Trust”) of $7,000 a month, which reduced to $5,500 a month, in approximately November 2020.[25] Additionally, the wife receives a further distribution in October each year to meet any taxation liabilities in respect of this receipt of income.[25] Trial affidavit of the wife filed 21 July 2021 at paragraphs 9-10. On 14 January 2020, orders were made by consent for the wife’s inheritance to be paid into an offset account with the Commonwealth Bank of Australia against the parties’ mortgage. The wife transferred $1,138,546.96 into the parties CBA account ending #...51 on 11 February 2020.[26] The wife has since drawn down on the offset account for living and other personal expenses and the payment of her legal fees. [26] Trial affidavit of the husband’s filed 8 July 2021 at paragraph 35.