E and E

[2007] FCWA 125

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: E and E [2007] FCWA 125

CORAM: PENNY J

HEARD: 27 AUGUST 2007

DELIVERED : 25 OCTOBER 2007

FILE NO/S: PT 6266 of 2006

BETWEEN: E

Applicant/Father

AND

E
Respondent/Mother

Catchwords:

Property settlement - wife caring for disabled child - just and equitable result

Legislation:

Family Law Act 1975 - s 79

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr M Rynne

Respondent: Ms J Pinnington

Solicitors:

Applicant: DCH Legal Group

Respondent: Pinnington & Associates

Case(s) referred to in judgment(s):

Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143

Kennon v Kennon (1997) FLC 92-757

1The breakdown of the marriage of these parties has been particularly acrimonious. Immediately after separation the issue of the time the husband, [Scott], should spend with the children of the marriage was the subject of some controversy. [Lara] made a number of allegations relating to [Scott]’s conduct. She obtained a Violence Restraining Order against him, and filed a Notice of Child Abuse relating to him. The parties have, at least temporarily, resolved the children’s issues so that [Scott] is now spending time with the boys unsupervised. The matters to be dealt with by me in this judgment relate to the competing applications of the parties in relation to property settlement and in relation to a departure from the administrative assessment of child support.

2It is [Lara]’s case that she should retain 75% of the parties’ assets, to include the former matrimonial home and an investment property from which she will obtain an income. [Scott] has no objection to [Lara] retaining the former matrimonial home, but says that both investment properties owned by the parties should be sold to enable him to purchase a home for himself. He does not agree that [Lara] should retain 75% of the assets, but filed no minute of orders sought by him.

Short background and history of the parties and the marriage

3The parties met in 1995 and in March 1996 left Australia for an overseas holiday in Europe. They returned to Australia in March 1997. [Jaxon] was born [in] July 1997 with brain damage and serious medical problems. [Lara] has not returned to work since the birth of [Jaxon]. [Jonson] was born in 2000 and is a healthy child.

4[Scott] was in employment during the entirety of the marriage. In the latter part of it he spent a lot of time away from the family working in [a country town]. The parties separated on 10 August 2006. [Lara] and the children remained in the former matrimonial home and [Scott] mainly resided in [a country town]. [Lara] was initially very reluctant to allow [Scott] to have unsupervised time with the children, stating that [Scott] had been violent towards [Jaxon]. [Scott]’s contact with the children was supervised by his parents for some time. Subsequently, [Mr D], a clinical psychologist, provided a report in relation to [Scott]’s relationship with the children. He has had unsupervised contact with the children since that time.

5[Scott] is due to return to Perth to reside in the latter part of this year. When this occurs he wants the children to live week about with he and [Lara]. [Lara] does not agree to this. [Lara] and the children continue to reside in the former matrimonial home.

Issues for determination

6The following matters have been raised by the parties and require a finding by me:

•The date of commencement of cohabitation.

•The characterisation of funds received by the parties post-separation.

•Whether some funds utilised by [Lara] post-separation affect [Scott]’s obligation to pay child support.

•Whether [Lara] has made an extra contribution to the acquisition and maintenance of the assets of the marriage as a result of [Scott]’s aggressive conduct towards [Jaxon].

The law

7The approach to be taken in relation to an application for property settlement pursuant to s 79 of the Family Law Act 1975 is a four step process. Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143. Those steps are:

•identify the value of the assets and liabilities of the parties;

•consider the contributions made by the parties within paragraph (a) to (c) of s 79(4);

•consider the s 75(2) factors, together with any matters relevant pursuant to s 79(4)(d)-(g); and

•consider whether the order proposed is just and equitable.

Assets & liabilities of the parties

8Most of the assets and liabilities of the parties have been agreed. There are some items on which there has been no agreement. They are as follows:

[Scott]’s 2006 and 2007 tax refund

9A determination of the amount which should be added back to take into account [Scott]’s 2006 tax refund involves a consideration of some of the funds received by the parties before and after separation.

10In around 2003 the parties purchased a investment property at [a coastal address]. At the time this unit was purchased the parties obtained a Line of Credit Account with the St George Bank. The maximum overdraft limit of that account was $280,000. In [Lara]’s affidavit sworn 21 August 2007 she described the financial arrangements for this account as follows:

“31During the relationship the money that [Scott] and I received from our rental properties was paid into the St George account, as well as [Scott]’s monthly salary cheque and expenses cheque. I used the account to pay bills and to provide for the Family’s requirements.”

11In fact, since May 2006 [Lara] had been directing her Centrelink benefits and the rent from [another property] (the investment property in [Lara]’s name) into a newly opened personal Westpac account which had not been disclosed to [Scott].

12At the time of separation in August 2006 there was $241,347 owing on the Line of Credit Account. Enquiries by [Scott] after separation show that [Lara] made uncharacteristic cash withdrawals from the St George Line of Credit Account as follows:

•$7,598 in cash withdrawals between March and April 2006;

•$600 cash withdrawal on 27 July 2006; and

•$10,000 by direct debit to her undisclosed Westpac account on 28 July 2006.

13The parties separated in August 2006. [Scott] continued to pay into the St George account until February 2007 the rental income for [his investment property] (the rental property in [Scott]’s name) and his significant income. On 1 January 2007 the balance in the St George account was $229,839. During the month of February 2007 [Scott] withdrew $19,000 from the St George account. On 23 February 2007 [Lara] withdrew $14,056 from the St George Line of Credit Account. [Lara] says she did this because she had concerns about her access to funds given the amounts withdrawn by [Scott]. She subsequently repaid $2,000 to that account.

14In addition to the sums received by [Lara] in her Westpac account from rent and Centrelink, [Scott] paid six payments of child support to the Child Support Agency for payment to [Lara] from 7 September 2006 to 7 February 2007. The amounts paid by [Scott] were $2,014 per month.

15As a result of [Lara]’s withdrawal of the sum referred to above [Scott] ceased paying child support and applied to the Child Support Agency to have the amount withdrawn by [Lara] from the St George account characterised as lump sum child support.

16The Child Support Agency refused to characterise the withdrawal of $12,056 of the sum withdrawn by [Lara] as lump sum child support. A child support debt was created for [Scott] of $8,301. In August 2007 the Child Support Agency garnished from [Scott]’s tax return for the year ended 2006 and retained the sum of $4,527 to discharge part of the debt.

17[Scott]’s application is that there be a departure order pursuant to s 117(2)(c)(ia) and (ii) of the Child Support (Assessment) Act 1989, in terms that the sum of $12,056 withdrawn by [Lara] be characterised as lump sum child support and [Scott]’s child support debt be set aside at nil. If this application is successful [Scott]’s taxation refund will be added back into the asset pool in the full amount of $10,525.

18[Lara] opposes the orders sought by [Scott] and says that she withdrew $17,156 from the account purely for living expenses. [Lara] has set out a list of expenditures made from the amounts withdrawn by her. $12,385 of the sums withdrawn by [Lara] were used to pay the lawyer’s fees. Only $4,771 was used to expenses associated with the children, their expenses and maintenance on the former matrimonial home. The sums spent by [Lara] for legal fees will be added back to the asset pool as an asset already received by [Lara]. [Lara] claims she was as entitled to draw down the funds in the St George account, as was [Scott]. It must be borne in mind, however, that [Scott] chose to continue to pay into the St George account, to which both parties had access, all the income received by him, from separation until February 2007. He could, as [Lara] opted to do, put both his income and the amount received from his rental property into a separate account. From that account [Scott] could have paid child support and had access to any excess income himself. He did not do this until after the sums were withdrawn by [Lara] in February 2007.

19In my view, given the access [Lara] had to the St George Account and the fact that [Scott] had paid child support until the lump sums were drawn by her, the sum of $4,771, which was applied towards the children’s living expenses, should be characterised as lump sum child support for [Lara]. This amounts to approximately two months payments of child support. In my view, there should be a departure order such that the administrative assessment of child support should be departed from and [Scott] should have a nil assessment for the months of March and April 2007. While the departure order made by me is not precisely in the terms sought by [Scott], it is my view that his 2006 tax return should be taken into account in the assets of the parties at the full amount which he was due to receive of $10,525.

20[Lara] seeks to have [Scott]’s 2007 tax refund taken into account. [Scott] has not completed his taxation return for 2007. [Lara] has estimated that [Scott]’s refund will be around $15,000. I have not seen any evidence as to how that assessment was calculated. In my opinion, it should be taken into account as a s 75(2)(o) factor as a sum [Scott] may receive in the future.

The husband's paid legal fees

21[Lara] says [Scott]’s legal fees should be added back to the asset pool even though, it is agreed, that those funds were paid from the income earned by him since separation. I am not prepared to do that.

The wife’s debts

22[Lara] claims that there should be taken into account liabilities owing by her in the sum of $14,812. Of that sum in excess of $7,000 is owed to her solicitors. I do not intend to take into account this sum as a debt of the parties.

Superannuation

23Neither party made any submission in relation to the manner in which superannuation should be dealt with. Neither is seeking a superannuation split. I have no reason to believe other than both party’s entitlement to superannuation have accrued during the course of the marriage. Part of [Scott]’s Virgin superannuation will have accumulated since separation. I will include the superannuation as an asset of the parties.

Assets and liabilities

Assets:

[Matrimonial home] $797,000.00

[His - investment property] 390,000.00

[Her – investment property] 380,000.00

[Ta Shares] 3,496.00

[TT Shares] 654.00

[A Shares] 13,250.00

[His motor vehicle] 18,000.00

[Her motor vehicle] 23,000.00

[Her household contents] 7,175.00

Tools 330.00

[Her jewellery] 2,200.00

[His] 2006 tax return 10,525.00

[Her] savings 10,047.00

[His]’s savings 3,187.00

[Her] paid legal fees 27,000.00

[His] Virgin money superannuation 24,854.00

[His] portfolio care superannuation 82,252.00

[Her] portfolio care superannuation 8,556.00

$1,801,526.00

Liabilities:

Mortgage on [matrimonial home] $145,000.00

Mastercard 4,000.00

GE Credit Card 5,047.00

Capital Gains Tax on [his investment property] 33,624.00

Agent’s fee on sale of [his investment property] 12,000.00

[Lara]’s miscellaneous debts 7,116.00

$206,787.00

Net assets $1,594,739.00

24It is [Lara]’s case that she does not want to sell [her investment property]. I have, for the purpose of these calculations, excluded the expenses on its sale. If the property does have to be sold, these sums should be added to the liabilities.

Contributions

Financial contributions

25There was some dispute between the parties as to the date they commenced cohabitation. [Lara] says the parties commenced a de facto relationship on 1 October 1996. [Scott] says that they commenced a de facto relationship in March 1995. I do not agree with either party’s assessment of when the relationship commenced. The parties met around March 1995 and started going out together shortly thereafter. [Scott], at the time the parties met, was living in rental accommodation owned by his father. [Lara] was living in an apartment owned by her. The parties used to spend a significant amount of time at [Lara]’s residence.

26In March 1996 the parties left Australia for an overseas holiday in Europe. The parties lived together permanently from the time they left Australia in March 1996. They had both had savings and sold some possessions to fund their holiday. They worked during the time they were in England and pooled their funds. [Lara] was pregnant with [Jaxon] before they returned to Australia. The parties saved money while working [overseas] and used those funds upon their return to purchase what became [the former matrimonial home]. I am satisfied that at least from March 1996 the parties were living in a de facto relationship.

27At the commencement of the relationship [Lara] was the owner of the property at [the address and is known as her investment unit]. [Lara] says that her equity in the property, on the basis of an historical valuation obtained from an expert as at 1 October 1996, was $40,351. As the date of cohabitation was six months earlier than that, I do not know what the value of the property was at the time the parties commenced living together, but will assume it was between $30,000 and $40,000. She also owned a [motor vehicle], which was also sold to fund the holiday, and some furniture and contents. At the commencement of the relationship [Scott] had savings of $41,000, being term deposit and Challenge Bank Achiever Account. He sold his car and motorbike for a total of $11,500 to help fund the holiday.

28The parties worked in [overseas] while on holiday and managed to save $20,000 while working there. When they returned to Australia in March 1997, [Lara] was pregnant and did not return to work. [Scott] commenced full-time employment [in his profession] on a salary of about $65,000 per year.

29Shortly after the parties returned they bought what was to become the former [matrimonial home]. They paid $200,000 for the property. They used their savings as a deposit. The parties continued to live in [Lara]’s residence at [her investment property], while the [matrimonial home] property was rented. In February 1998 the parties moved to [the matrimonial home] and [Lara]’s [investment property] was rented. The income from this property was used to reduce the periodic mortgage payments along with [Scott]’s income.

30In June 1997 [Scott]’s parents gifted him the sum of $25,000, which he applied towards reducing the mortgage. The [matrimonial home] property was substantially improved after the parties moved in. These improvements were funded by [Scott]’s income.

31In April 2006 the parties purchased a second investment property at [an address] in [Scott]’s name. The unit was purchased for $225,000 and was financed by a mortgage in joint names in favour of the St George Bank.

32From 1998 until the parties separated, [Scott]’s income increased each year. In 2004, he was earning $118,738. In July 2005 [Scott] was offered, and he accepted, a position with his present employer, [CEL]. It was known that in the medium term the position would involve [Scott] spending periods of time on site in [a country town], although initially he was able to spend some time in Perth. [Scott]’s income increased significantly when he took this position to $165,000 gross per year, plus a car allowance of $10,000 and superannuation of $14,850.

33The parties’ initial financial contributions were very similar. It is clear that since 1997 the overwhelming financial contributions to the accumulation and maintenance of the assets of the parties have been made by [Scott].

Non-financial contributions

34The parties agreed, upon the birth of [Jaxon], that [Lara] would be homemaker and carer for the children and [Scott] would be the income earner. Part of [Lara]’s role was to take responsibility for the renting of, first, [her investment property] and, for the last three years of the marriage, for [for his investment property]. She was also responsible for maintenance issues relating to their properties.

35[Lara] was also responsible for the maintenance of the [matrimonial home] property, either effecting such maintenance herself or organising for tradesmen to attend. [Scott] was also responsible and assisted with renovating the [matrimonial home] property.

Contributions to the welfare of the family

36As stated previously, [Lara] was mainly responsible for the home duties, including cleaning the house, cooking, washing, ironing, shopping and gardening. She was also responsible for the care of the children. This obligation was particularly onerous, considering the significant disabilities suffered by [Jaxon]. [Jaxon]’s birth was a very difficult one. He is autistic, as well as suffering from a muscle hypotonia, motor co-ordination problem and feeding difficulties. The latter three conditions are more likely to have resulted from neonatal encephalopathy. One of the consequences of these difficulties is that he suffers from oral dyspraxia and poor co-ordination of chewing and swallowing mechanisms. This means that feeding, if not effected properly, is dangerous for him. Meal times are serious business because he must be carefully supervised because of risk of choking. In addition, [Jaxon] now, aged 10, has little control over bowel and bladder movements. He frequently wets and soils his bed and clothes. [Jaxon]’s toilet habits are unhygienic and this frequently results in faeces and blood on his clothes, skin, chairs and tables. He has to be carefully supervised when out of the house or when at school.

37[Lara] has been responsible for organising and attending upon all of [Jaxon]’s medical appointments, of which there have been many, at numerous medical practitioners and agencies.

38In the latter years of marriage [Scott] was frequently away [in the country]. In the last year he was away at least a third of the year. This meant [Lara] was shouldering a very significant portion of the responsibility for both [Jaxon] and [Jonson]. [Scott] assisted [Lara] when he was able, but it was [Lara] who was overwhelmingly the significant carer for both children.

39[Lara] says [Scott] was very short tempered with [Jaxon] and would become frustrated at his limitations and, particularly, his inability to eat and drink properly. She said this “violence” started in 2003 and was almost always directed at [Jaxon]. She describes [Scott] as grabbing [Jaxon] by the neck and shaking him. She described [Scott] as kicking [Jaxon] and pushing him on many occasions. She states that neither she nor the children would know when the “violence” would occur. She discussed the difficulties with the Department for Community Development in April 2006. She describes [Scott], in the last two to three years of the marriage, losing his temper, shouting and criticising her.

40The allegations of [Scott]’s “violence” towards [Jaxon] were denied by him and investigated by [Mr D], psychologist, as part of the investigation into the time [Jaxon] and [Jonson] should spend with [Scott]. In making his assessment as to whether the children were in any danger of risk or abuse from [Scott], [Mr D] found as follows:

“The Single Expert accepts that the father would from time to time be frustrated with the children’s behaviour and how best to deal with this, and probably then did not calmly handle the children and perhaps yelled, raised his voice, physically constrained [Jaxon] and some physical punishment may have occurred. The father admits to “kicking [Jaxon] on the backside” as a method to let him stop doing certain behaviours, ie stopping to repeatedly pushing the DVD player on and off… but the father says he did not intend to physically harm the child.”

41I am not satisfied that [Lara] has been altogether frank in her evidence in relation to [Scott]’s violence. I am satisfied that [Scott] did lose his temper from time to time and became frustrated when dealing with [Jaxon]. There is no doubt that during the last two to three years of the marriage the parties were unhappy in the relationship and there was tension and unpleasantness between them. In my view, none of this conduct warrants an allowance for a greater contribution made by [Lara]. The submission in this regard relied on the authority of Kennon v Kennon (1997) FLC 92-757. This matter involved a consideration of the effect on the wife’s contributions to the welfare of the family and of the husband’s violent conduct towards the wife during the course of the marriage. In relation to this issue, Fogarty and Lindenmayer JJ stated at p 84,294:

“Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s 79. We prefer this approach to the concept of “negative contributions” which is sometimes referred to in this discussion.

In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that.

…

However, it is important to consider the “floodgates” argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters - a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.

However, in our view, s 79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk.”

42As stated previously, there were significant difficulties faced by [Lara] and [Scott] as a result of his frequent absences from the home. More of the responsibility for the children, but particularly [Jaxon], fell upon [Lara]. She formed the view that [Scott] was not able to adequately cater for [Jaxon]’s needs, particularly because he would get frustrated from time to time. In my view, there is nothing exceptional about [Scott]’s conduct which made [Lara]’s contributions more arduous. It is more likely that her contributions were arduous as a result of his frequent absences from the house. This was off-set, or course, by the significantly greater income he was earning as a result of working away from Perth in [a country town].

Post-separation contributions

43[Scott] has made financial contributions to the marriage post-separation. The first seven months after they separated he put the entirety of his income into the joint account to be used for family purposes. After February 2007 he did not pay child support because of the lump sums taken by [Lara]. [Scott]’s obligation to pay child support has been paid partly by his tax refund. As a result of my determination in relation to the issue of the departure from the administrative assessment of child support for the period February to September 2007, there is now likely not to be any child support debt. [Lara] has contributed the income from the investment property towards the family’s expenses.

44[Lara] has been primarily responsible for the care of the children post-separation. Part of the reason for this is that she refused to let [Scott] have significant contact with the children until such time as [Mr D]’s report was completed. [Scott] was spending time with the children each Wednesday after school and each alternate Sunday. This meant that for each period of contact he drove from Perth to [the country] and back, a trip of 800 kilometres. From February 2007 that was changed to [Scott] spending time with the children each alternate Saturday and Sunday from 9.00 am to 6.00 pm unsupervised. [Scott] has asked for extra time with the children, but this has been rejected by [Lara] on a number of occasions. [Lara] has been the primary care-giver for the children post-separation.

Conclusions on contributions

45In my view, based on contributions alone, the assets of the parties should be divided equally between them. Both parties came in with a small amount of assets. [Scott]’s parents contributed $25,000, which helped to reduce their mortgage. [Scott] worked hard during the marriage and it was as a result of his income that the parties were able to accumulate the assets they have. [Lara] was the primary care-giver for the children and contributed all her energies to that, and other non-financial contributions relating to the maintenance and income derived from the investment properties of the parties.

Section 75(2) factors

46[Scott] is aged 38 and [Lara] 39. They are both in good health. [Lara] has not worked since 1997, mainly as a result of the need for her to be available to care for [Jaxon] and to take him to the various health professionals he has been obliged to see. Given the ages of the children, [Lara] has decided that there is now an opportunity for her to retrain and look for some employment in the future which she will be able to do mainly from home. She has commenced to study a [bookkeeping] course. After a period of two years of study, she anticipates that she will be able to earn an income and establish a client base doing work from home.

47[Scott], on the other hand, has worked through the entirety of their marriage and has come out of it with a very significant earning capacity. His “package” is worth around $190,000 per year. He has no obligation to support anyone other than the children. He has been assessed to pay child support at a sum in excess of $2,000 per month.

48I am satisfied that when [Scott] leaves [a country town] towards the end of this year and comes to Perth to live that he will be able to relieve [Lara] of some of the duties associated with caring for the children. He is keen to be involved in their care and to become more active and involved in their lives. This has been rejected by [Lara] to date. In my view, however, it is most likely that [Lara] will continue to be the primary care-giver for the children and her ability to earn will be compromised by the necessity to care for the children, particularly [Jaxon]. His needs will not cease upon leaving school or attaining the age of 18 years. [Jaxon]’s care will be the responsibility of the parties, particularly [Lara], for many years.

49There should, in my view, be an apportionment of the assets to take into account [Lara]’s lesser earning capacity and the fact that her capacity to earn will be negatively affected by her obligations as the primary carer for the children. Taking into account these matters, there should be an apportionment in favour of [Lara] in the sum of 20%. The effect of this will be that [Lara] will retain assets of $1,116,317, and [Scott] will retain assets of $478,421.

Just and equitable

50A settlement in these terms results in [Lara] receiving $637,896 more by way of settlement of property than [Scott]. In addition, $107,106 of the funds received by [Scott] are by way of superannuation entitlement. [Scott] is only 38 and it will be many years before he able to access these funds. These funds amount to 22% of the asset pool retained by [Scott]. Even taking into account [Scott]’s excellent earning prospects, I am not of a view that a settlement in these terms is just and equitable in all the circumstances.

51In my view, there should be a reduction by 5% of the funds [Lara] receives so that she retains 65% of the assets and [Scott] 35%. This will result in [Lara] receiving assets of $1,036,580 and [Scott] $558,158, a difference of $478,422. [Scott]’s superannuation now makes up 19% of the assets taken by him. This result, in my view, is just and equitable in all the circumstances.

52[Lara] seeks a result that will enable her to keep [her investment property] valued at $380,000 together with [the former matrimonial home]. This will provide her with a rental income.

The assets to be retained by [Lara] are as follows:

[The former matrimonial home] $797,000.00

[Her investment property] 380,000.00

[Her motor vehicle] 23,000.00

Household contents 7,175.00

Jewellery 2,200.00

Savings 10,047.00

Paid legal fees 27,000.00

Portfolio Care Superannuation 8,556.00

$1,254,978.00

Liabilities:

Mortgage on [matrimonial home] $145,000.00

Miscellaneous debts 7,116.00

$152,116.00

Net assets to be retained by [Lara] $1,102,862.00

Less amounts to which [Lara] is entitled $1,036,580.00

Amount to be paid to [Scott] $66,282.00

53Should [Lara] be unable to raise a loan in this amount to pay out [Scott], then [her investment property] will also have to be sold along with the other unit [his investment property]in Hastings Street, and the agent’s fee and Capital Gains expenses added back. It is up to [Lara] to determine which way she wishes to finance the payment to [Scott].

54[Lara]’s case was that if she was not able to retain [her investment property], she would seek spousal maintenance from [Scott]. I will defer consideration of that matter until I am told what [Lara] wishes to do in relation to the investment property.

I certify that the preceding [54] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate