Ellery and Ellery
[2007] FamCA 390
•4 May 2007
FAMILY COURT OF AUSTRALIA
| ELLERY & ELLERY | [2007] FamCA 390 |
| FAMILY LAW - CHILDREN - With whom a child spends time with - Best interests of child FAMILY LAW - PROPERTY SETTLEMENT |
| Family Law Act 1975 (Cth) |
| APPLICANT: | Mr Ellery |
| RESPONDENT: | Mrs Ellery |
| FILE NUMBER: | SYF | 4040 | of | 2003 |
| DATE DELIVERED: | 4 May 2007 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 20-21 October 2005; 14–16 December 2005; 30 November 2006 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Livingston |
| SOLICITOR FOR THE APPLICANT: | Adrian Twigg & Co |
| COUNSEL FOR THE RESPONDENT: | Ms Knox |
| SOLICITOR FOR THE RESPONDENT: | Dettmann Longworth |
Orders
Children’s Orders (made 26 June 2006)
That the children of the marriage, the eldest son born in April 1993, the middle son born in September 1995 and the youngest son born in February 1998 live with the mother, Mrs Ellery at all times they do not live with the father.
That the children live with the father, Mr Ellery as agreed between the father and the mother but failing agreement as follows:
2.1.Subject to paragraph 3, during school term on 3 out of 4 weekends from after school Thursday to 5pm Sunday or, in the event of a long weekend, 5pm Monday. The pattern of such weekends in each term shall commence:
2.1.1.Where the children were with the mother for the second half of the immediately preceding school holiday period on the first weekend occurring after the school term commences;
2.1.2.Where the children were with the father for the second half of the immediately preceding school holiday period, on the second weekend occurring after the school term commences.
2.2.During school term on each Wednesday night with one of the children (which child shall change week to week) from after school Wednesday until the following Thursday morning when he shall deliver them to school. The Court notes the intent is that the father have one night each week with one of the children;
2.3.That subject to paragraph 2.4, for one half of each school holiday period (which shall be defined to include any pupil free days at the beginning or end of any school holiday period) as agreed and failing agreement:
2.3.1.The father shall have the children for the 1st half of any school holiday period in 2006 (including the 2006/2007 Christmas holiday period) and alternate years thereafter commencing after school on the last day of school and concluding at 6pm on the middle day of such holiday period;
2.3.2.The father shall have the children for the 2nd half of any school holiday period in 2007 (including the 2006/2007 Christmas holiday period) and alternate years thereafter commencing at 6pm on the middle day of such holiday period and concluding at 6pm on the last day of such holiday period;
2.3.3.For the purposes of these orders, and unless the children are to be with their father from the conclusion or commencement of school, the father shall collect the children from the mother (who shall make them available) at the commencement of the time they are to be with him and the mother shall collect the children from the father (who shall make them available) at the conclusion of that time.
2.4.That the parent who does not have the children with them for the first half of any given Christmas holiday period pursuant to orders 2.3.1 or 2.3.2 shall have time with the children from midday Christmas Eve to midday Christmas Day. For the purposes of this order, the parent having this time with the boys shall collect them at the commencement of this time from the home of the other parent (who shall make the children available) and shall return the children at the conclusion of this time to the home of the other parent.
2.5.That for the purposes of these orders any school holiday period shall commence upon the conclusion of school on the last day of school term.
That in relation to order 2.1 the time one of the boys (which child shall change week to week) spends with their father shall be suspended from after school on the Thursday night until the commencement of school Friday morning. The Court notes the intent is that the mother have one night each week with one of the children.
That in relation to Mother’s Day and Father’s Day:
4.1.In the event Father’s Day falls on a weekend when the children would not otherwise be with him pursuant to these orders then the father shall have time with the children from 6pm on the preceding evening to 5pm on Father’s Day, the father to collect the children from the mother at the commencement of this time and return the children to the mother at the conclusion of this time;
4.2.In the event Mother’s Day falls on a weekend when the children would otherwise be with the father pursuant to these orders then the father shall return the children to the mother at 6pm on the preceding evening.
That in relation to the children’s birthdays:
5.1.In the event any of the children’s birthday falls on a school day then the father shall have time with all of the children from after school until 7pm, the father to collect the children from school at the commencement of this time and return the children to the mother at the conclusion of this time;
5.2.In the event either children’s birthday falls on a non-school day when the children would not otherwise be with him pursuant to these orders then the father shall have time with all children for 4 consecutive hours at such times as agreed;
5.3.In the event either child’s birthday falls on a non-school day when the children would otherwise be with the father pursuant to these orders then the father shall return the children to the mother for 4 consecutive hours at such times as agreed.
That the father and the mother are each restrained from denigrating or criticising the other parent in the presence or hearing of the children.
That the parties shall each have responsibility for the daily care, welfare and development during the periods in which the children are with each party respective.
That the father and mother jointly exercise responsibility for the long term care, welfare and development of the children.
That pursuant to Rule 1.12 Family Law Rules 2004 (“FLR”) the time for starting an appeal from these orders under Rule 22.03 FLR not commence until the publication of the reasons for making these orders.
That pursuant to s.65DA(2), the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders are set out in Annexure A and these particulars are included in these orders.
Property Orders
That pursuant to Section 79 Family Law Act an order be made in the terms of paragraph 2 – 10.
That within sixty (60) days the husband pay to the wife the sum of $10,745.
That within sixty (60) days from the date of these orders, the following shall occur:-
3.1.The husband shall do all acts and things and sign all documents necessary to transfer to the wife all his right, title and interest in the former matrimonial home situate at and known as A.
3.2.The wife shall do all acts and things and sign all necessary documents to indemnify the husband in relation to the mortgage to the National Australia Bank secured on the former matrimonial home.
That within twelve (12) months from the date of these orders the wife shall do all acts and things and sign all necessary documents to discharge or vary the mortgage to the National Australia Bank secured on the former matrimonial home so that the husband no longer has any personal responsibility in any capacity under the mortgage to the National Australia Bank.
That pending transfer of the title of the home the wife shall have the right to occupy the home together with the children and shall pay all regular outgoings in respect of the home including any arrears in respect of those outgoings.
The wife shall do all things and sign all necessary documents to effect a transfer of her right, title and interest (if any) in the following assets and the husband will be declared to have sole right, title and interest in the following assets:-
6.1.2001 Subaru Outback (AUJ.25J)
6.2.ANZ Bank a/c
6.3.Receipt from M P/L (5%)
6.4.C Litigation - prior to re-opening
6.5.Add back - Boland J (22.10.04)
6.6.Add back - Loughnan JR (9.5.05)
6.7.Add back - Loughnan JR (9.5.05)
6.8.Furniture – C
6.9.Monies in trust – K firm
6.10.Legal fees paid – husband
6.11.Masterfund ING
6.12.Additional monies received by the husband as a result of the settlement of the C Litigation
The husband will indemnify the wife in relation to the following liabilities:-
7.1.Subaru debt (St George hire purchase)
7.2.The husband’s father (for N)
7.3.Cost of C litigation up to 15 August 2005
7.4.all and any liability incurred by the wife in respect of any business operated by the husband or any company in which the husband has an interest and in any superannuation fund operated by the husband, including but not limited:-
7.4.1.Liability in relation to loan accounts or pursuant to a guarantee or personal covenants.
7.4.2.Liability incurred in the pursuit of any of the aforementioned entities or the shareholders, unit holders or office bearers.
7.4.3.Any taxation liability, house or whatever such liability arises in whatever capacity such liability is incurred by the wife.
The husband will indemnify and keep indemnified the wife in respect of all and any liability of either party to the husband’s father and Ms S.
The husband shall do all things and sign all necessary documents to effect a transfer of his right, title and interest (if any) in the following assets and the wife will be declared to have sole right, title and interest in the following assets:-
9.1.1998 Honda Odyssey (…)
9.2.CBA Bank a/c
9.3.Furniure – A
9.4.Legal fees paid – wife
9.5.Q Superannuation
9.6.ING.
Each party be solely entitled to the exclusion of the other to all other property, chattels and superannuation in their respective names or possession as at the date of these orders and that each party indemnify the other in relation to any debt associated with any asset that is kept by each of them respectively.
That if either party refuses or neglects to sign (within fourteen (14) days of a written request to do so) any documents necessary to effect the terms of these Orders, the Registrar of the Sydney Registry of the Family Court of Australia is hereby appointed pursuant to the provisions of Section 106A of the Family Law Act to execute such documents on behalf of such party.
That either party have liberty on seven (7) days notice to apply for implementation of these orders.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Watts delivered this day will for all publication and reporting purposes be referred to as Ellery & Ellery.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 4040 of 2003
| Mr Ellery |
Applicant
And
| Mrs Ellery |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This case is about what the future parenting arrangements should be for the eldest son (aged 12), the middle son (aged 10) and youngest son (aged 7) and what alteration of property interests should be made between the parties.
BACKGROUND FACTS
In January 1988 the wife brought a unit in Canberra for $63,000 with funds borrowed from her father.
In February/March 1988 the husband purchased a property at A.
The parties commenced cohabitation in 1988.
In December 1988 the wife rented out her Canberra unit until December 1991 when it was sold for $108,000. Net funds of approximately $60,000 were received by the wife.
In January 1992 the parties married.
In March 1993 the wife commenced maternity leave.
In April 1993 the eldest son was born (aged 13 at the time parenting orders were made).
In May 1994 the wife resumed employment two days per week.
In August 1995 the wife commenced maternity leave for a second time.
In September 1995 the middle son was born (aged 10 at the time parenting orders were made).
In October 1995 the husband’s father transferred 15 per cent of the shares that he owned in N Pty Ltd to P Pty Ltd The basis upon which this happened is contested.
In October 1996 the wife accepted a redundancy and left work at Telstra. The total payment made to her was $45,000, of which $34,784 was tax free. The net payment received by her was $42,014.34.
On 15 January 1997 the wife received an eligible termination payment from Telstra. The total payment available was $110,962.88 of which $7,250.94 was preserved. An amount of $100,000 was lent to the husband’s father and was paid back at a later time by the husband’s father.
In February 1998 the youngest son was born (aged 8 at the time parenting orders were made).
On 16 June 1999 The Ellery Family Trust was established with P Pty Ltd as trustee.
In mid 2001 the husband signed a variety of documents including a shareholder’s agreement, acceptance of a share offer, an application for shares in CA Pty Ltd, and other documents in a series of transactions referred to as “the [C] transactions”. Some of the parties to the C transactions include the husband, CA Pty Ltd, Mr G, Mr H and Mr K.
In September 2001 the parties separated. The husband moved to a serviced apartment. The wife remained in the matrimonial home with the children.
In October 2001 the husband moved to an apartment in North Sydney.
In December 2001 the husband was paying child support at a rate of $2,599 per month. That rate continued for the next nine months.
In December 2001 the husband asserts that his father gave up his rights under the October 1995 arrangement (see paragraph 12 above) for the promise of a payment of $150,000.
In March 2002 the husband moved to an apartment in C.
In September 2002 the husband’s child support assessment was reduced to a rate of $21.67 per month and that rate continued for the next twelve months.
In late 2002 the wife undertook a refresher course at TAFE to update her office skills.
In February 2003 the wife obtained employment as a teacher’s aid at N Primary School. This was initially two half days of employment on Mondays and Wednesdays, later adding half a day on Thursdays.
In May 2003 the husband commenced proceedings in the Industrial Relations Commission of NSW by way of “Summons for Relief” (IRC No. … of …) (“the [C] proceedings”). The C proceedings arose in part out of the C transactions. Named respondents are CA Pty Ltd, CC Pty Ltd, Mr G, Mr H and Mr K. Cross claims saw the C proceedings transferred to the Supreme Court.
In June 2003 the husband moved to his present residence, a three bedroom home at C.
In June 2003 the husband filed an application seeking final and interim parenting orders.
In August 2003 the wife by way of an amended response sought different parenting orders and orders in relation to alteration of property interests.
On 20 August 2003 some interim parenting orders were made by Judicial Registrar Loughnan. The wife says on 1 September 2003 the husband’s child support assessment was reduced to a rate of $646.91 per month and that continued for 8 days and on 10 September 2003 reduced to $554.83 per month and that continued for the next three months. On 1 April 2004 it is said to have reduced to $28.50 per month and that continued for the next 9 months.
On 18 December 2003 a statement of claim was filed in the Federal Court of Australia by two companies, CA Pty Ltd and CC Pty Ltd naming the husband as respondent (proceedings No. … of …). These proceedings also arose in part out of the C transactions. The plaintiffs claimed unspecified damages, interest and costs. At the same time, the same two companies filed an application under the Trade Practises Act 1974 against the husband in the Federal Court (under the same proceedings number).
In January 2004 the wife obtained part time employment at Z Company as a receptionist two days per week from 9.15am to 2.30pm. This was in addition to her employment at N Primary School on the other three days a week. The wife at this point is working a total of 20 hours in two jobs.
In May 2004 the defendants in the C litigation tender a payment to the husband of $790,000. The husband does not accept that payment.
In July 2004 the wife commences employment five days a week at Z Company in a receptionist position, increasing her hours to 27 hours per week.
On 9 August 2004 Judicial Registrar Loughnan made orders inter alia relating to application of monies in the P Family Trust. The husband then lodged an application for review of that decision.
On 1 October 2004 the wife says that the husband’s child support assessment was reduced to a rate of nil per month which continued to the date of the hearing.
On 22 October 2004 Justice Boland heard the review of the Judicial Registrar’s orders made on 9 August. Details of the orders made by Her Honour on that day are set out later in these reasons for judgment.
On 12 November 2004 a decree nisi of dissolution of marriage is granted on the husband’s application.
On 31 January 2005 the husband gave notice that he intended to move back into the former matrimonial home (having not lived there since September 2001). The wife opposed that proposal.
On 31 March 2005 the wife filed an application in a case seeking the husband be restrained from entering or remaining in the former matrimonial home.
On 6 April 2005 Judicial Registrar Johnston gave the husband access to $2,843 to pay one month’s rent.
On 9 May 2005 Judicial Registrar Loughnan made orders which are set out in detail later in these reasons. This included an order for the sale of the matrimonial home but also contained an order which would avoid a sale if a refinance was possible.
On 2 June 2005 the wife sought a review of the orders of 9 May 2005. The wife sought to preserve the former matrimonial home and to have more time to arrange a refinance.
On 15 July 2005 the refinance of the mortgage on the matrimonial home was completed. The parties borrowed $315,000. Payments and allowances were made from borrowed funds in accordance with the court orders.
On 15 August 2005 Justice Moore made orders which are set out in detail later in these reasons.
On 20 - 21 October 2005 and 14 – 16 December 2005 the hearing of competing applications for parenting orders and alteration of property took place before me. The evidence concluded on 16 December 2005 without time for oral submissions. Written submissions were ordered. The husband’s submissions in reply were forwarded on 7 December 2006. The wife’s submissions in reply were forwarded on 5 March 2006.
On 5 May 2006 and prior to delivery of the reserved judgment the husband telephoned the wife and told her that the C litigation had settled.
On 25 May 2006 the wife filed an application seeking that she be allowed to reopen the case so that the Court could be informed that the C litigation had settled and seeking an order that the husband provide to the wife particulars of the resolution and settlement of the C litigation.
On 20 June 2006 I made an order in those terms and gave reasons for those orders.
On 28 August 2006 the wife filed an application in a case seeking leave to be able to reopen the proceedings and adduce further evidence relating to the details of the settlement of the C litigation.
On 7 September 2006 I made an order allowing the reopening of the proceedings for that purpose and gave reasons for those orders.
On 30 November 2006 I heard further evidence and received further oral submissions. The following order was made:-
1.By way of interim property settlement to the wife, the husband pay to [G Company]:-
1.1.within a period of seven (7) days, a sum of $11,117.95;
1.2.a sum of $2,151.93 on 5 December 2006;
1.3.a sum of $2,151.93 on 5 January 2007.
CREDIT
The husband was not a good witness. He did not focus on the questions asked. He was intent on giving long explanations relating to the circumstances surrounding what he thought the question might be. The husband on many occasions during cross examination had difficulty giving a direct answer or an answer that was responsive to the question at all.
He was argumentative, sometimes aggressive, and sometimes belligerent. Some of this may have been as a result of a “depressive condition”. He sought to minimise this condition when asked about it. At the beginning of the evidence he said he felt “nervous”. His attitude to full and frank disclosure was to put all his papers in a big box and let his wife sort it out. At one point he said to Counsel during cross examination “don’t look at me like that”.
The husband was coy about how he believed his depressive illness had affected the children on occasions when that illness had been severe.
In contrast the wife gave her evidence in a straight forward manner. She made appropriate concessions.
The testimony of the husband and wife did not conflict in very many places. Essentially the wife had little knowledge of the financial arrangements between the husband and the father. She had little direct knowledge of the husband’s financial dealings since separation.
Where there are differences between the evidence of the wife and the husband which cannot be resolved by other acceptable objective evidence, I prefer the evidence of the wife.
In a number of important areas the husband has given evidence which is not contradicted by the wife’s evidence but which is challenged by Counsel for the wife. Counsel for the wife’s basic submission is that the Court should find that the husband’s memory is so poor that absent independent corroboration by objective evidence, one should not accept historical statements made by him.
The husband in his evidence has provided significant detail in relation to financial transactions. Some of those transactions have been attacked by Counsel for the wife on the basis that they do not exactly correspond with written documentation. An example of this is a claimed repayment by the husband to his father of $50,000 in relation to M Pty Ltd. The husband’s father’s evidence is that he paid back at least $60,000 out of an amount of $63,000. When confronted with that evidence the husband altered his original evidence.
A large number of the transactions asserted by the husband, however, went without challenge and in relation to that body of evidence, there is no reason in my view not to accept it.
In relation to other evidence of the husband which is challenged, particularly the $150,000 debt to his father, I will make more specific findings later.
PARENTING ORDERS
On 26 June 2006 I made the following orders:-
1.That the children of the marriage, [the eldest son] born [in] April 1993, [the middle son] born [in] September 1995 and [the youngest son] born [in] February 1998 live with the mother, [Mrs Ellery] at all times they do not live with the father.
2.That the children live with the father, [Mr Ellery] as agreed between the father and the mother but failing agreement as follows:
a. Subject to paragraph 3, during school term on 3 out of 4 weekends from after school Thursday to 5pm Sunday or, in the event of a long weekend, 5pm Monday. The pattern of such weekends in each term shall commence:
i.Where the children were with the mother for the second half of the immediately preceding school holiday period on the first weekend occurring after the school term commences;
ii.Where the children were with the father for the second half of the immediately preceding school holiday period, on the second weekend occurring after the school term commences.
b. During school term on each Wednesday night with one of the children (which child shall change week to week) from after school Wednesday until the following Thursday morning when he shall deliver them to school. The Court notes the intent is that the father have one night each week with one of the children;
c. That subject to paragraph 2.4, for one half of each school holiday period (which shall be defined to include any pupil free days at the beginning or end of any school holiday period) as agreed and failing agreement:
i.The father shall have the children for the 1st half of any school holiday period in 2006 (including the 2006/2007 Christmas holiday period) and alternate years thereafter commencing after school on the last day of school and concluding at 6pm on the middle day of such holiday period;
ii.The father shall have the children for the 2nd half of any school holiday period in 2007 (including the 2006/2007 Christmas holiday period) and alternate years thereafter commencing at 6pm on the middle day of such holiday period and concluding at 6pm on the last day of such holiday period;
iii.For the purposes of these orders, and unless the children are to be with their father from the conclusion or commencement of school, the father shall collect the children from the mother (who shall make them available) at the commencement of the time they are to be with him and the mother shall collect the children from the father (who shall make them available) at the conclusion of that time.
d. That the parent who does not have the children with them for the first half of any given Christmas holiday period pursuant to orders 2.3.1 or 2.3.2 shall have time with the children from midday Christmas Eve to midday Christmas Day. For the purposes of this order, the parent having this time with the boys shall collect them at the commencement of this time from the home of the other parent (who shall make the children available) and shall return the children at the conclusion of this time to the home of the other parent.
e. That for the purposes of these orders any school holiday period shall commence upon the conclusion of school on the last day of school term.
3.That in relation to order 2.1 the time one of the boys (which child shall change week to week) spends with their father shall be suspended from after school on the Thursday night until the commencement of school Friday morning. The Court notes the intent is that the mother have one night each week with one of the children.
4.That in relation to Mother’s Day and Father’s Day:
a. In the event Father’s Day falls on a weekend when the children would not otherwise be with him pursuant to these orders then the father shall have time with the children from 6pm on the preceding evening to 5pm on Father’s Day, the father to collect the children from the mother at the commencement of this time and return the children to the mother at the conclusion of this time;
b. In the event Mother’s Day falls on a weekend when the children would otherwise be with the father pursuant to these orders then the father shall return the children to the mother at 6pm on the preceding evening.
5.That in relation to the children’s birthdays:
a. In the event any of the children’s birthday falls on a school day then the father shall have time with all of the children from after school until 7pm, the father to collect the children from school at the commencement of this time and return the children to the mother at the conclusion of this time;
b. In the event either children’s birthday falls on a non-school day when the children would not otherwise be with him pursuant to these orders then the father shall have time with all children for 4 consecutive hours at such times as agreed;
c. In the event either child’s birthday falls on a non-school day when the children would otherwise be with the father pursuant to these orders then the father shall return the children to the mother for 4 consecutive hours at such times as agreed.
6.That the father and the mother are each restrained from denigrating or criticising the other parent in the presence or hearing of the children.
7.That the parties shall each have responsibility for the daily care, welfare and development during the periods in which the children are with each party respective.
8.That the father and mother jointly exercise responsibility for the long term care, welfare and development of the children.
9.That pursuant to Rule 1.12 Family Law Rules 2004 (“FLR”) the time for starting an appeal from these orders under Rule 22.03 FLR not commence until the publication of the reasons for making these orders.
10.That pursuant to s.65DA(2), the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders are set out in Annexure A and these particulars are included in these orders.
I now provide my reasons for making the orders on 28 June 2006.
Legal principals for parenting orders
Section 65E Family Law Act requires that, in deciding whether to make a particular parenting order, my paramount consideration be the best interests of the child/children. I am further required by Section 68F(1) Family Law Act, when determining what is in the best interests of the child/children, to consider the matters set out in Section 68F(2) Family Law Act.
Statutory considerations
Wishes
Although a submission was made by Counsel for the husband that the wife declined the husband’s invitation for a “wishes report” there was no evidence before me that that was so.
The husband has often spoken to the boys in relation to their wishes. The husband gave evidence on the weekend prior to the hearing that he had asked the boys whether or not they still wanted to spend 50/50 time with him. Counsel for the husband concedes in submissions that the husband could be criticised for discussing with the boys in too much detail and too often this litigation and more specifically the boys’ wishes. The husband did not concede that he had done this “most weekends”. He did however say that he believed in being open with the boys and in discussing most things with them.
An example of the type of conversation the husband had previously had with his children is given in paragraph 53 of his affidavit sworn on 8 July 2004. In that paragraph he sets out a conversation he had with the eldest son. In part it is in the following terms:-
“I said to him “I will be writing a letter to your mother asking that we change the care arrangements to 50/50”. We have discussed this between the boys often over the last year and I asked him if he still felt it was a good idea. He said “Yeh, of course”. When I explained that “I think it would be a good idea for mum as well as she would get a bit better quality time on the other weekend”, he said “mum needs a break, she is so busy with work and everything”. We talked about the benefits of living closer to the school, being on a school bus root (200 metres).”
Whilst the husband gives evidence that the boys were telling him that they wanted a 50/50 arrangement, the above evidence from the husband indicates an example as to how the conversations usually took place. That is, the husband raising the topic and seeking that the boys agree with him. I do not accept any evidence given by the husband to the effect that the boys spontaneously raised the issue with him.
The wife’s evidence was that she did not speak to the boys about the litigation. She did not engage them in conversation about what time they wished to spend with both parents. She was not surprised at the fact that when constantly pressed by their father the boys would say to him that they thought that it would be “fair” to spend more time with him.
Counsel for the wife submits that it is of “considerable moment” that the conversations that the boys have about wishes are only with their father. I accept the evidence that the boys have not expressed such wishes to their mother at all. I find that the father has very little appreciation that it was inappropriate to continually discuss the litigation and attempt to elicit the boys’ views in relation to the outcome of the litigation.
As I have said, the husband was argumentative, sometimes aggressive and sometimes belligerent in the witness box and some of that behaviour may be as a result of the depressive condition. I have no doubt that, if pressed by their father, the boys would go along with his suggestion that 50/50 would be a “fair” arrangement.
The children were aged between 13 and 8 when the parenting orders were made. I refer to [the eldest son’s] nervous condition elsewhere. [He] has started high school in 2006 and normally his wishes would give some weight.
Given that they have been expressed in circumstances that are set out above however, I am unable to say that any expression to their father of their wishes accurately represents those wishes. In the circumstances I am unable to place any great weight on any conversation between the husband and the boys in relation to their wishes.
The nature of the relationship between the children and each of the parents
There is no issue about the children’s relationship with each of their parents. The three boys enjoy a very good relationship with both their parents. The wife is the person who has the track record of providing stability for the children, both in relation to their physical and emotional needs.
There is no doubt that the father has gone through a particularly difficult time during the process of separation and to the time of the parenting orders. These have been financially difficult times and his long history of having a depressive illness has not assisted in that regard. It seems clear that the father has become more “child focused” since separation. To some degree that focus has enabled him to manage the difficulties he felt with his depressive illness, the separation and his financial problems. There is some evidence arising from the conversations that the father has had with the boys in relation to spending more time with him that the boys are to some degree meeting the husband’s needs as well as he meeting theirs. That is not a feature of the boys’ relationship with their mother.
Likely effect of changes to the children’s circumstances
Counsel for the wife submits that the husband has never had to get the children up, get them dressed, get them out the door, make their lunches and iron their clothes on school days on a regular basis.
The wife’s evidence was that she does not believe that the husband could cope with doing that. She gave some evidence that there were days when the boys went to school without having their clothes ironed and without having their lunches made. She believed that the pressures on the husband meant that he would have difficulty organising himself in a way that would enable him to ensure consistency for the boys on the week that they would be with him on his proposal.
The wife pointed to evidence that the husband was unable to complete projects that the boys had to do. He would print “research” material off the internet but would not assist the boys or ensure that that material was collated in a way that could be presented as a final work.
The husband’s has had a long standing depressive illness which he says that he has been suffering from since his early 20s. Notwithstanding his written evidence that sometimes it has been a “deep depression”, the fact that he denied in the witness box that he had ever had a deep depression was a matter of concern. This illness has from time to time meant that he has had to call upon the wife to look after the boys when they were due to be with him. I find that the husband played down his depressive illness. I do not have sufficient evidence before me to make any conclusive findings as to what the husband’s medical condition is.
The difficulty with changing parenting arrangements to what the husband is seeking is that it will inevitably place a greater strain on the husband in terms of the pressures of parenting. The result of that is less than clear. That pressure may in fact serve to exacerbate the husband’s long standing medical condition.
It also appears that the husband’s business is expanding. He has recently taken on two new staff. The supervision of that staff will involve extra pressure. On the other hand of course I am now aware that the C litigation has settled. I will also shortly be making final orders in relation to alteration of property interests which will give some certainty to both parties as to what their financial circumstances will then be.
The husband’s evidence is that he has a very flexible working arrangement and that enables him to contemplate a 50/50 arrangement with the boys. There is some doubt however as to how much the husband’s current employment will take him away from Sydney. The husband concedes that it will at times but he says he can organise himself so that it happens during the weeks when he does not have the boys. I am not fully convinced that there would not be a conflict between the husband’s expanding business and the time that he will devote to re-establishing himself in business on the one hand and the husband’s proposals for a week about parenting arrangement on the other.
The husband has done work outside Sydney. There was evidence that that work was done in such places as W, F, T and the Gold Coast. I accept the submission that as the husband attempts to re-establish himself in business (particularly now after the C litigation has settled), travel is more likely. In particular the husband is establishing a business in the F area. His evidence was that he would not need to be there anymore than three days a week. The orders that I propose will fit that work pattern of the husband.
I have evidence that the father, in caring for the children, has relied upon the assistance of various women. This has included Ms H, a woman named M, Ms K, his ex-partner C and more recently his new girlfriend F. I had evidence that on the weekend before the trial ended F minded the boys at T whilst the husband worked.
A move to the proposal suggested by the husband brings with it some uncertainty of whether the husband would be able to manage the change in a way that would provide a better outcome for the children.
Attitude to the children and the responsibilities of parenthood
The wife possesses a calm and reasonable personality. I have no doubt that the husband’s manner and depressive illness has created challenges for her. The wife meticulously refused to involve the boys in the litigation. The husband in oral evidence did not acknowledge the inappropriateness of discussing the litigation with the boys. She has been aware of the limitations on the husband’s ability to cope. She has been there as a backstop when he has been unable to do so.
The husband is not a irresponsible parent but does not display the insights into the boys’ needs that the wife does. The eldest son has a disease, which at the age of 12, saw him still soiling his pants. He is a nervous boy who still sucks his thumb at night. The husband’s attitude to the eldest son seeing his psychologist Ms E was an ambivalent one. It was quite clear that he had a reasonably negative attitude about the counselling whilst at the same time saying “I am supportive of it”. Whilst negative about the eldest son’s counselling he was not overtly expressing that negativity. The wife gave evidence that the eldest son has been gradually improving. She said the son still has an issue with being able to make friends. The husband also showed some lack of sensitivity in relation to medical and social problems that the eldest son had on a school excursion. The wife behaved appropriately in attempting to involve the husband in discussing issues with him.
The parties are able to talk at some levels but there is still a reasonable degree of animosity between them. This is no doubt in part due to the fact that property proceedings between them are yet to be concluded. The husband is currently not welcome to enter the wife’s premises.
The husband has had one long term girlfriend, C. He had given evidence on a previous occasion in writing that he saw that as a long term relationship and that she would be part of the boys’ lives. That relationship concluded a reasonably short period after the husband had given that evidence. The husband has a new relationship with a woman called F. F did not give evidence.
The wife gave evidence about Mr J, whom she had been dating for approximately two years. He stays about once a month when the boys are in the home and sometimes stays on weekends when they are not there. The wife said that she had a pleasant relationship with Mr J and was not looking for more at the current time. She was uncertain as to what the future held in respect of that relationship. The boys have a good relationship with him. Again, Mr J did not give evidence and the wife’s new relationship was not explored in any depth.
The husband left the matrimonial home in October 2001. In March 2005 (3½ years later) the husband thought it might be a good idea if he was able to move back into the matrimonial home and he caused his solicitor to write a letter indicating that that was his intention if certain things did not happen. In early 2005 there was a defended application in a case where the wife sought that the husband be restrained from coming to the home. When questioned about this in the witness box he said that he did not believe that it would have been a difficult thing for the children to cope with. When he was asked to think about that, he agreed, in hindsight, that it would not have been a good idea. I agree with the submission by Counsel for the wife that this behaviour by the husband showed a level of disregard of and lack of understanding and insight of the obvious effects on the children and the wife of this behaviour. It was an occasion in which the husband focused on his own needs rather than the children’s. He sought to justify them on the basis of saying that at that time he was at a financially low ebb and was finding it difficult to see how he could accommodate himself with the children when they were with him unless he moved back into the house. I find that that is not the most likely explanation as to why he did what he did. The most likely explanation is to be found in the conflict that at that time existed between the parties, the husband’s sometimes aggressive and belligerent nature and the possible effects of the husband’s depressive illness.
Future litigation
The husband in his case outline (which is referred to in final submissions) submits that the orders he seeks would not likely lead to further proceedings. It is submitted that if the Court rejects the husband’s proposals, it is likely that the children’s wishes will continue to be expressed in favour of a shared arrangement, and, as they grow older, those wishes will become extremely weighty, resulting in a likely need to change the orders to reflect those wishes.
I have made findings above in relation to the weight to be attached to statements made in conversations between the husband and the boys about what time they want to spend with their father. Given my findings I do not accept that there is any certainty that any expression or wish that the children might have made to their father will grow and become more weighty as they become older.
Problems with contact
At the moment the parties live in close proximity to one another. The wife proposes that the children continue at their current school. She seeks an order which would enable her to maintain the current home in which the children live.
There is no reason to believe that the children will not be able to continue to reside in their current home or a home in reasonably proximity to the current home where they spend most of their time during the school week. There should therefore be no difficulties for the parties to continue to implement the orders that have been made.
The current level of communication and co-operation between the parties
I accept the wife’s evidence that the parenting styles of both the husband and wife are very different and that their communication is not very good.
The husband’s position is that the degree of disharmony between the parties is not sufficiently great to reject a shared care (50/50 time) arrangement. He points to the “ad hoc” arrangements that the parties have made from time to time where the wife has looked after the children during times when he has been unable to do that due to depression or work. He also pointed to times when the wife has asked him to look after the boys where they have been sick. The wife conceded that the husband does that if he is available. The wife on the other hand says that that is not a consistent thing and she has had to take time off work from her employment to look after the children when they have been sick.
The husband has never had to cope with the stress and routine of a full school week. His ability to do that is unknown and because of matters relating to his work and health it cannot be assumed that he would automatically cope with it. The wife has certainly been of the view over the years that he would not be able to cope with the stress and routine of a full school week and for that reason has traded leisure time that she could otherwise enjoy with the boys so that she can ensure that it is guaranteed that their needs will be met. She gave clear evidence that she did not believe that her former husband could manage and given that that doubt is firmly based in the evidence given by both parties before me I accept that some weight should be given to her belief.The wife gave detailed evidence in her affidavit as to what she does for the boys during school week. The husband gave little evidence as to what he did.
CONCLUSION
The orders which the wife seeks are similar to the time that the boys have been spending with their parents over the last two and a half years.
It is not disputed that the wife has been the primary carer of the children during the time the parties lived together and since that time.
The only significant change the wife seeks to the current arrangements is that she would like to have what the husband has in terms of one to one contact with each child. On Wednesday nights of each week the husband currently has one of the boys after school each Wednesday and takes him to school on Thursday morning. The husband conceded the advantages in one to one time with each boy. The wife wants to have this arrangement for the boys and herself on the Friday night when the other two boys are with their father in three weekends out of four. The husband objects to that taking place on Friday evenings but does not suggest an alternate time.
It is the husband’s case that given the level of co-operation between the parties that there is no reason why the current substantial amount of time that the husband has with the boys cannot be extended to equal time. He proposes that the boys spend alternate weeks with him during school term. There is no issue between the parties that school holiday time would be shared equally between the parties.
The wife in the formal orders that she seeks proposes that the time during the end of year Christmas school holidays be taken week about by the parents. The husband proposes that the time be divided equally and unless the parties agree to the contrary the husband have the children for the second half of the school holidays which commence in odd numbered years and the first half of holidays which commence in even numbered years.
The husband’s proposal for week about during school term is a significant change from what the boys have been used to in the last two and a half years.
The husband says that the boys would benefit from a shared care arrangement. He says that it would enable the boys to be engaged by him in a wider range of activities and that it would mean that each parent’s care of the children was not “compartmentalised” to the degree it currently is.
The husband points to the expressed wishes of the children where he asserts that they have said to him that they believe it would be “fair” if they spent equal time with both parents. As I have commented I do not have the benefit of any family report in this case. Given the discussion in relation to the children’s wishes set out above, whilst I acknowledge what the boys are saying to their father, they are not saying similar things to their mother. In the circumstances I do not place a great deal of weight on what the boys have said to their father.
I find that the husband’s depressive illness and the desire for him to re-establish a new business place constraints upon him in terms of being able to offer the boys the same level of attention that their mother has demonstrated that she can offer to them. The wife has taken the unusual step of trading, during negotiations with the husband, her leisure time with the boys for school term “routine” time. I find that she has done that on the basis that she has historically been the primary carer of the children and has been there at times where for one reason or the other (associated with work or health) the husband’s capacity to care for the boys has been diminished.
There is currently a level of animosity between the parties. The wife is not willing to have the husband upon her premises. I acknowledge that there is however a reasonable degree of communication between the parties and that the current level of animosity is in part caused by the continuing litigation between the parties in respect of alteration of property interests.
Given my findings about the husband’s personality however I think that it is likely that the level of communication between the parties is not ever going to be what the court would hope for when ordering an equal time arrangement. Having said that there is a reasonable likelihood that the current fairly icy relationship between the parents will thaw after all the litigation is over.
I find that it is not in the children’s best interest to allow the alternate week co-parenting arrangement proposed by the husband.
I accept the wife’s complaint that the husband does not have an unblemished track record in relation to preparing the boys for school and attending to their homework and school projects. However I am persuaded that the boys should spend some school time with their father so that they have the opportunity of being parented by their father in that area of their life.
The wife has given evidence that she has on occasions had to collate, organise and put into a final presentation material that the husband has generated with the boys by way of research. The evidence was that most projects get put in on a Tuesday. I infer that the activity of finalising the projects of that nature gets done after the boys return on Sunday night and also Monday after school.
The wife resisted a suggestion that the husband be able to take the boys to school on a Monday morning. She did this because she said that she had traded away half her school term leisure time with the boys and that Sunday night was her “down time” with the boys.
Given that I have found that it is in the boys’ interests to spend some time with their father during the school week and I have concluded that this is best done at the end of the school week. Accordingly I propose to order that on the weekends the boys go with their father during school term that contact start after school Thursday.
The boys will come back to their mother at 5pm on Sunday night on the weekends that they are with their father during school term. They will then be able to settle into the place that they normally live during the school term week and get themselves organised for the new school week. This includes completing any work that they have not been able to complete when they were with their father for the weekend. It also means that they spend some down time with their mother each week.
The one to one contact time during school week with one of the boys on a rotating basis on a Wednesday night with his father will continue.
I am also persuaded that it is in the boys’ best interest to have a similar one to one time with their mother during periods of time when the other two boys would be with their father. Given the orders I have indicated I intend to make, during school week that one to one time could take place on a Thursday night. This would mean that if the husband wanted to go away with the boys on any weekend that arrangement would not be interfered with.
There was no real focus in the evidence as to why an alternate week arrangement during Christmas time was preferable to the arrangement proposed by the father. Adopting the principal that it is in the children’s interests for each of their parents to have some time with them to share various types of activities with them I find that the husband’s proposal in relation to Christmas school holidays is the preferable one. Dividing the long break into two blocks which the boys share with each parent respectively creates different opportunities (for example a more extended period where the parent can spend time away on holidays with the boys) than can be created at other times during the year.
ALTERATION OF PROPERTY
Prior to the hearing being reopened, it was agreed between the parties that consistent with consent orders made by Moore J on 15 August 2005 the husband would take his interest in pending litigation in the Supreme Court and that it would have an agreed value of $559,850. The evidence led when the case was reopened is the subject of discussion below. The approach that I take in these reasons however is to add into the first pool of assets of the parties part of the value that the husband got from the C Litigation in the sum of $559,850. The balance of the benefit that he obtained from that litigation is dealt with in a separate pool because in my view the contributions made to that additional sum are different in their character to the contributions the parties have made to the assets in pool 1.
The approach taken in these Reasons for Judgment
In this matter my task is to:
121.1.Identify and value the property, assets, financial resources and liabilities of the parties;
121.2.Identify relevant contributions and assess them;
121.3.Consider relevant matters referred to in Section 79(4)(d) – (g) Family Law Act;
121.4.Ensure my order adjusting the property assets and liabilities of the parties is just and equitable.
INTERLOCUTORY ORDERS ALREADY MADE
22 October 2004
On that day Justice Boland made the following orders:-
1. That Order 3 of the orders made by Judicial Registrar Loughnan on 9 September 2004 is discharged and the following orders substituted in lieu.
2. That the parties do all acts and things necessary to cause all funds held by [P] Pty Ltd to be paid into National Australia Bank account No. […] (“the mortgage account”) and thereafter immediately cause the following to be paid by way of redraw.
(i) [K Firm] Lawyers – for outstanding fees - $65,664.68
(ii) [K Firm] Lawyers – amount requested for trust account - $50,000.00
(iii) ATO – TFN […] - $1,219.17
(iv) ATO – TFN […] - $5,733.55
(v) [X Company] #[…]4 - $1,375.00
(vi) [G Fund] #[…]1 - $2,671.00
(vii) [A] College - $3,824.00
(viii) NAB – to repay overdraft A/C […] – approx $8,500
(ix) NAB – to repay Mastercard – A/C […] – approx $2,500
(x) Balance to be paid into the redraw facility secured on the former matrimonial home account […] to be held for payments in (4) thereof.
3. The parties shall do all acts and things necessary to cause to be paid to the husband by redraw from the mortgage account the sum of $40,000 by way of partial property settlement.
4. The parties sign all documents necessary to redraw from the mortgage account the following as and when they fall due:
(a) School fees for the children
(b) Rates and taxes in respect of [A Property]
(c) Premiums for Health Care to [G Fund] No. […] for the family
(d) Tax incurred by [P] or on any distributions from [P]
(e) Other monies as agreed.
5. Upon payments in 2(viii) and 2(ix) being made the parties do all things necessary to close the NAB overdraft account […] and Mastercard account […].
6. Except as herein provided pending further order the parties are restrained from making withdrawals from or initiating any redraw of funds from the mortgage account other than by joint written agreement or pursuant to a further order of this court.
7. The wife shall file and serve her affidavit of evidence in chief and any witness affidavit in respect of the parenting proceedings on or before 4pm on 13 December 2004.
And the Court notes both parties may make submissions in respect of the treatment of the sum of $40,000 received by the husband by way of partial property settlement to the trial Judge.
9 May 2005
On 9 May 2005 Judicial Registrar Loughnan made the following orders:-
1.That within 21 days from today’s date each of the parties sign all documents and do all things necessary to cause the property at [A] in the State of New South Wales to be listed for sale.
2.That the property be listed for sale in such manner as the parties agree and in default of agreement within 21 days from today’s date that is to be by auction.
3.That the property be listed with an agent to be agreed between the parties and in default of agreement between the parties within 48 hours of any proposal of an appropriate agent being submitted by one party to the other that is to be an agent nominated by the President of the Real Estate Institute of NSW.
4.That the parties fix a sale price or a reserved price (as the case may be) being a price agreed between them and in default of agreement a price recommended by the selling agent.
5.Upon sale of the property the proceeds of sale be applied:
a)to meet all costs of sale including legal fees and agent’s commission and advertising expenses;
b)to discharge the mortgage outstanding in respect of the property after legal costs;
c)in payment of $40,028.10 to [K Firm] Solicitors;
d)in payment to the husband of the sum of $69,112.57 and the sum of $69,101.21;
e)the payment of all outstanding school fees in respect of the children [the eldest son] born [in] April 1993, [the middle son] born [in] September 1995 and [the youngest son] born [in]February 1998; and
f)that the remaining balance be held in trust pending further agreement between parties.
6.That subject to the orders made today and pending further order of the Court that forthwith upon receipt of the sum of $69,112.57 pursuant to Order 5(d) the husband pay that sum to the entities and in the amounts listed at Annexure U of his affidavit sworn on 4 April 2005.
7.That forthwith upon the payment of $69,101.21 pursuant to Order 5(d) the husband cause that amount to be paid to the creditors and the amounts listed at paragraph 14 of his affidavit sworn 3 May 2005.
8.That subject to any further agreement between the parties or further order of the Court there be payments out of the fund holding the balance of the net proceeds of the sale of the property to meet:
a)any rental bond and rent payable by the wife for accommodation for herself and the children until further order;
b)the rent payable by the husband in respect of the net rental cost of his own accommodation up to a maximum amount of $300.00 per week for a period of 6 months.
IT IS NOTED
9.That in the Court’s view, subject to the parties agreeing to the contrary, there should be no further payment of monies in respect of the legal fees associated with the [C] litigation until there is provided to the Court in proper form evidence about the future carriage of that litigation, a staged estimate as to the cost of that litigation, the prospect of success of that litigation and the current legal advice about the timing and terms of any offer of settlement of that litigation.
IT IS FURTHER ORDERED
10.(a) That in the event the wife wishes to borrow funds secured on the matrimonial home sufficient to pay the following sums and debts {“the ordered payments”}:
i)the discharge of the current mortgage in respect of the property; and
ii)$40,028.10 to [K Fund] Solicitors;
iii)$69,112.57 and $69,101.21 to the husband for the purposes only referred to at orders 6 and 7 above.
iv)the payment of the husband’s rent on the same terms referred to at order 8(b) above;
v)the payment of school fees for the parties’ children;
vi)to service the borrowings for a period of 6 months.
then the husband is ordered to promptly do all things necessary and sign all documents to join in and support such application and further the husband is restrained from doing any act or omission which would have the effect of causing any such loan application to not be granted.
(b)That in the event the parties make such loan application pursuant to order 10(a) and such application is granted then:
i)the parties shall ensure the monies available by virtue of any such loan are applied to the ordered payments; and
ii)the operation of Orders 1 to 8 inclusive is discharged.
11.That:
(a) subject to order 11(b) below, in the event that the husband has borrowed funds from a person or entity {“the early lender”} to effect repayment of any of the debts the subject of order 5 hereof at a date earlier than they might be paid as a consequence of the operation of these orders, then upon the parties completing the sale of the home pursuant to orders [1-5] or borrowing the funds pursuant to order 10 herein then the proportionate amount already repaid shall be paid from the sale or loan proceeds to the early lender, to the intent:
i)the person or entity to whom the original debt was owed is not paid twice; and
ii)there is in effect an assignment of the debt to the person or entity to whom the amount or amounts are ultimately owed.
(b) the husband shall submit to the wife for her consent details of the proposed borrowings including the identity of the proposed early lender, the term of the loan, the interest rate and the size and frequency of the repayment(s) required. In the event that the wife does not consent to the husband’s proposal to borrow funds from an early lender, the husband may have leave to apply to the Court to seek approval of his proposal and for the substitution of the early lender whether before or after the borrowing.
IT IS FURTHER NOTED
12.That the payment to husband of $69,112.57 referred to in Orders 5(d) and 10(c) above is a payment by way of partial property settlement to the husband.
13.That it may be argued on behalf of the wife that the payment of $69,101.21 referred to Orders 5(d) and 10(c) above be also treated in that fashion.
15 August 2005
On that day Moore J made the following orders:-
1. That orders be made in terms of the document titled “Terms of Settlement”, signed by the parties, their legal representatives and filed herein as set out hereunder:
“1. That the children’s issues and property issues in the above proceedings be reconsolidated.
2. That by consent it be declared for the purposes of these Family Law proceedings only that the husband’s interest in […] of […] in proceedings in the Supreme Court of NSW Equity Division be valued in the sum of $810,000 gross and after payment of income tax at $559,850.
3.(i) the terms of these orders are not to be disclosed to any third party, save on the order of a judge of a court or with the consent of both parties; and
(ii)the terms of settlement signed by the parties and these orders are to be placed in an envelope to be marked “Not to be opened save on the order of a judge of a court or with the consent of both parties”.
4. The parties are to forthwith do all acts and things and sign all documents necessary to appoint [Mr Y] as a single expert witness to report on the value of [A property] (at a cost borne equally by the parties).
5. Direct that the parties are to file and serve any affidavit or financial statement on or before 4pm on 30 September 2005.”
Noted that the parties agree that the foregoing orders contain commercially sensitive information.
ORDERS MADE ALLOWING WIFE TO REOPEN THE HEARING
On 20 June 2006 I ordered:
1.That leave be granted to the Respondent Wife to reopen the proceedings for the purposes of adducing the evidence contained in paragraph 7 and annexure B of her affidavit sworn on 25.5.2006.
2.That an order be made in the terms of order 2 as sought in the wife’s application in a case filed on 25.5.06, namely:
“That the Applicant Husband immediately provide to the Respondent Wife particulars of the resolution and settlement of his litigation known as “the [C] Ligitation”.
3.That this matter be adjourned for the making of orders in relation to the children to 9.45am Monday 26 June.
On 7 September 2006 I ordered:-
1.Leave be granted to the wife to reopen the proceedings and to adduce further evidence in the proceedings.
2.It is noted that the wife seeks to rely upon an affidavit sworn by the wife on 25 May 2006 and a further affidavit sworn on 27 August 2006 and that that is the entirety of the evidence which she seeks to further adduce.
3.It is noted that the husband’s Counsel has estimated that he will cross examine the wife in relation to the contents of the evidence referred to in the previous notation for a period of 20 minutes
4.Leave is granted to the husband to adduce further evidence and it is noted that the nature of the evidence which he seeks to further adduce is the evidence outlined in an affidavit sworn by the husband on 6 September 2006; evidence of revaluation of the matrimonial home by [Mr Y] and (if it remains an issue) evidence in relation to the liability for taxation arising from the husband’s receipt of the proceeds of the settlement of the [C] litigation.
5.The husband file and serve within 14 days any further affidavit by himself, his father and his mother.
6.The affidavits referred to in order 5 will not include any new evidence concerning debts between the husband and his parents that pre-date 16 December 2005.
7.The husband will make inquiries as to when [Mr Y] can complete a revaluation of the matrimonial home.
8.Pending further order the husband will pay any costs associated with [Mr Y’s] revaluation.
9.Within 14 days the husband will provide to the wife documents relating to any communication by the husband’s accountant with the Australian Tax Office in relation to the liability for taxation arising from the husband’s receipt of the proceeds of the settlement of the [C] litigation.
10.Pursuant to Rule 1.12 Family Law Rules 2004 (“FLR”) the time for making an application for leave to appeal (under Rule 22.46 FLR) from these orders and orders made by me on 20 June 2006 not commence until the final orders for alteration of property settlement between the parties are made.
11.The subpoena issued by the wife to [K Firm] be discharged.
12.The matter be adjourned for further mention to 9.30am on 29 September
GLOBAL OR ASSET BY ASSET APPROACH
Counsel for the wife submitted that the husband had not pressed an asset by asset approach as the way of dealing with the matter. Whilst that is mostly accurate (but see comments in wife’s submissions in reply at 26), when analysing what approach I should take to reach a just and equitable outcome, I am not necessarily bound by submissions of either party. In my view it is appropriate to place the second sum into a separate pool given the different nature of the contributions that have been made towards it.
I find that there is a distinction in this case between the part of the amount the husband finally received from the litigation that was an agreed value pursuant to Moore J’s orders and the part that only happened because the husband batted on when everybody else told him not to. The distinction is based on different type of contributions. That distinction will be discussed below.
I have however divided the fruits of the litigation into two separate pools because the contributions that the wife directly made towards the assets in Pool 2 are different from those made to Pool 1.
I consequently intend to adopt an asset by asset approach (see Norbis & Norbis (1986) FLC 91-712; Lenehan & Lenehan (1987) FLC 91-814; Zyk & Zyk (1995) FLC 92-644).
PROPERTY ASSETS, FINANCIAL RESOURCES AND LIABILITIES OF THE PARTIES
There has been substantial agreement in relation to the values to be attributed to those assets and liabilities contained in the pool of assets, which are set out in the table below. “Determined” in the agreed/determined column in that table indicates items for which no value has been agreed. A determination has been made in relation to contentious items for the reasons set out after the table.
The asset pool, as agreed or determined by me, is as follows:-
Pool 1 Assets Item no. Title Description H value W value Agreed/ Determined Value 1 J A property $1,300,000 $1,250,000 Determined $1,250,000 2 W 1998 Honda Odyssey (…) $18,000 $18,000 Agreed $18,000 3 H 2001 Subaru Outback (…) $23,500 $23,500 Agreed $23,500 4 H IAG Shares (385 @ $2.50) $0 $2,002 Determined $0 5 W CBA Bank a/c $2,000 $2,000 Agreed $2,000 6 J ANZ Bank a/c $34,558 $34,558 Agreed $34,558 7 H Receipt from M P/L (5%) $0 $63,238 Determined $63,238 8 H C Litigation - prior to re-opening $559,850 $559,850 Agreed $559,850 9 H Add back - Boland J (22.10.04) $0 $40,000 Determined $40,000 10 H Add back - Loughnan JR (9.5.05) $0 $69,113 Determined $69,113 11 H Add back - Loughnan JR (9.5.05) $0 $69,101 Determined $69,101 12 H Add back - payment to father (1.4.05) $0 $25,910 Determined $0 13 H Add back - payment to father (15.7.05) $0 $5,000 Determined $0 14 J Furniture – A property $8,000 $8,000 Agreed $8,000 15 H Furniture – C property $17,000 $25,000 Determined $17,000 16 H Monies in trust – K Firm $14,764 $14,764 Agreed $14,764 17 H Legal fees paid - husband $37,048 $37,048 Agreed $37,048 18 W Legal fees paid - wife $10,260 $10,165 Determined $10,260 19 H Masterfund ING $48,637 $72,000 Determined $48,637 20 H ING $0 $10,329 Determined $0 21 H Ellery Superannuation Fund $0 $2,300 Determined $0 22 W Q Superannuation $744 $744 Agreed $744 23 W ING $14,000 $14,000 Agreed $14,000 Total assets $2,279,813 Liabilities Item no. Title Description H value W value Agreed/ Determined Value 24 J Mortgage NAB $315,000 $315,000 Agreed $315,000 25 H Subaru debt (St George hire purchase) $23,500 $23,500 Agreed $23,500 26 W L Finance (refinance fees) $0 $1,309 Determined $0 27 H Loan from husband’s father $119,219 $0 Determined $0 28 H Loan from husband's mother rent $3,000 $0 Determined $0 29 H NAB - Visa $12,957 $0 Determined $0 30 H ANZ - Visa $17,347 $0 Determined $0 31 H Citibank - Mastercard $30,000 $0 Determined $0 32 H American Express $5,000 $0 Determined $0 33 H Husband’s father (for N) $150,000 $0 Determined $150,000 34 H Amount paid to K Firm in August and September 2005 $31,331 $0 Determined $0 35 H Cost of C litigation up to 15 August 2005 n/a n/a n/a $253,803 Total liabilities $742,303 Total net assets $1,537,510 Pool 2
Assets Item no. Title Description H value W value Agreed/ Determined Value 36 Additional monies received by the husband as a result of the settlement of the C Litigation $733,322 $761,155 Determined $733,322 Total assets $733,322 Total net assets over all pools $2,270,832
POOL 1
A property (Item 1)
There is a dispute between the parties as to whether or not the value of this property is $1,250,000 or $1,300,000.
On 15 August 2005 Mr Y was appointed to value the property as a single expert by consent order. His valuation (which is part of exhibit 19) dated 11 October 2005 estimates the value of the matrimonial home at A to be $1,300,000. On page 6 of his report he makes the following remark:-
“In considering the significance of the cracking to the walls, it is my opinion that a hypothetical purchaser of the property would require some confirmation as to the serious nature of this defect and it may discourage potential buyers from proceeding with the sale until the cost of rectification was clarified.”
The wife in correspondence sought agreement for Mr V to provide opinion as a single expert in relation to the structural integrity of the A property, any works which are required to repair or rectify any structural defects and an estimate of the costs of rectification works (see exhibit 17).
On 16 December 2005 the wife sought and obtained leave to file an affidavit of Mr V which was sworn 16 December 2005. That affidavit annexed a comprehensive report by Mr V as to the structural cracking of the A property. At page 10 of his report Mr V estimated that the total cost of repairs would be in the sum of $36,151.
Mr V was cross examined by counsel for the husband. Mr V agreed that A had fairly clay soil and that the cracking to this Californian bungalow would have been visible to any lay observer who would have been able to see that there had been a problem for a number of years. He agreed that this type of problem was not unexpected and it is not a problem that is unusual in Californian bungalows in the A area.
The wife sought and obtained leave to file an updated report from Mr Y. Exhibit 19 contains a letter from Mr Y dated 12 December 2005 to the wife’s lawyers. Mr Y says that, having regard to Mr V’s report, he would adopt a total figure of $50,000 to represent “the cost of rectification and the inconvenience in having work carried out to the subject property”. Mr Y said he therefore considered that the current fair market value of the subject property as at 11 October 2005, with consideration of the above factors was $1,250,000.
Pursuant to the Rules, the solicitor for the husband wrote to Mr Y asking additional questions in relation to Mr Y’s revised valuation. On 13 December 2005 Mr Y provided answers. Mr Y indicated that his original valuation did not make any allowance for the defects in the property as outlined in Mr V’s report. Mr Y referred to the caveat that was in his original report about the need to clarify the issue in relation to cracking from a hypothetical purchaser’s point of view. Mr Y confirmed that in his view the rectification work proposed by Mr V would not add value to the property but rather would underpin his original valuation of $1,300,000 dated 11 October 2005 (once the work had been carried out).
Mr Y was cross examined by counsel for the husband. Mr Y confirmed that the caution that he placed in his report was placed there because it was beyond his qualifications to comment upon the extent of the cracking and the cost of rectification the cracking. He said it was because he didn’t know the extent of it that he suggested a building report be obtained. Mr Y denied that he had already taken into account the effect of the cracking when reaching the valuation of $1,300,000 in his original report.
In submissions counsel for the husband said that Mr Y failed to offer any adequate explanation as to how he arrived at his conclusion that a hypothetical purchaser would be able to successful deduct $50,000 from the purchase price. In support of that general submission, counsel for the husband submitted that “the defects to the property would have been obvious to any hypothetical purchaser at that time”. I presume that the “time” counsel for the husband refers to is the time Mr Y did his original valuation. That submission does not recognise the evidence of Mr Y about the caution that he placed in the original report. The revised view was as a result of receiving information from another expert (which information he suggested be obtained in his original report).
In relation to the quantum of the reduction ($50,000), counsel for the husband makes the point that Mr Y has deducted $50,000 whereas Mr V has indicated that the costs of rectification are only in the sum of $36,151. That is, Mr Y is making an allowance of about $14,000 for “having to face the inconvenience of tradesman entering onto and into the property to repair outstanding work”. Counsel for the husband argues that Mr Y does not have the requisite expertise to discount the value of the purchase price of the property by almost $14,000 to compensate any potential purchaser for inconvenience.
One problem counsel for the husband has with that submission is that he did not during cross examination of Mr Y put to him that he did not have the expertise to make that assessment. Mr Y’s expertise remained unchallenged. Whilst the documents before me do not set out any curriculum vittae for Mr Y, his affidavit makes it clear that he is a valuer. Both parties must have believed that he had sufficient expertise to carry out the valuation for them to have originally chosen him as the single expert. Given that there was no challenge in respect of his expertise on this issue, an issue that would normally fall within the ordinary compass in which a real estate valuer would express an opinion, there is no reason in my view to ignore or discount that opinion.
Accordingly I find the value of A property to be $1,250,000.
Shares IAG (item 4)
In submissions the wife asserted that the husband had IAG shares to the value of $2,002. The husband in his submissions does not include it in his table of assets. There are no other submissions about it. It does not appear in the husband’s financial statement. There is no other reference in the evidence to IAG shares. I consequently do not include them as an asset.
Items 7, 9, 10 and 11
Items 7, 9, 10 and 11 are claims by the wife that monies should be added back against the husband.
The wife says that in a situation where she has exercised her capacity to seek work, has had majority care of the children, where the husband has failed to seek employment, has paid minimal child support overall and no child support for some time and where it is necessary for the parties to diminish the joint assets considerably to pay living expenses, that it is inappropriate for the wife to have to fund the husband living expenses. The wife submits that she should not fund living expenses for a period of more than three years after the separation.
In relation to those credit card debts which were paid from some of these payments to the husband, the wife submits that the husband agreed in cross examination that at separation the parties did not have extensive credit card debts. Boland J previously made an order clearing credit card debts (that was the $40,000 order) and seven months after this the husband again sought an order that his MasterCard be paid out.
The husband for his part says that it was not suggested that he had wasted monies. His expenditure was on rent, the C Litigation and caring for the children and his own costs of living. Counsel for the husband submits that the high water mark in a cross examination of the husband was that he had run up substantial credit card debts (which was not disputed), that he had Foxtel and that he took the children to breakfast. It was not otherwise suggested that the husband had lived an extravagant lifestyle.
The wife submitted that there was a huge inequity if the husband was allowed to have use of significant amounts of the parties’ assets post separation without have to account for them in circumstances where the wife has not lived in such a way. It was also said that monies were not just for the husband’s living expenses, they were for his business.
The Full Court in Chorn & Hopkins (2004) 32 Fam LR 518 set down as the general rule monies that are expended on ordinarily living expenses are not to be added back. I would have to find it is an exception in order to add it back.
The wife submits that the case is exceptional because the court must take into account the fact that the husband failed to seriously seek a job for a period of four years after the date of separation. Instead he chose to involve himself in a start up business that generated little income and did not increase in its value in any significant way over that period. It is also said that he paid little child support and the wife had to struggle by since separation.
The wife submits submitted that AJO & GRO [2005] Fam CA 195 creates an onus on the husband to establish the reasonableness of his expenditure of matrimonial assets post separation. The wife says that in stark contrast to the husband in AJO & GRO, the husband in this case has provided only broad statements as to how he spend over $178,000 released to him by the court between October 2004 and July 2005 and other borrowings which he seeks to have taken into account. I agree with the submission that there is a lack of detail as to how the funds have been spent.
Further, the wife submits that it is relevant to the exercise of the discretion that the husband expended these joint funds well after the parties had separated and well after the wife had “left the joint roller coaster ride of their marriage and began to take individual responsibility for their own future” (see F & K [2003] FamCA 612). I accept that the wife post separation acted reasonably and prudently and took steps to manage her financial situation and provide for the children.
Overall I accept the wife’s submission that the release of funds by way of court orders should be added back against the husband.
In doing so however I will later in the balance sheet add back the legal fees that the husband paid or had paid towards the funding of the C litigation post separation and up to the making of Moore J’s orders.
Receipt from M Pty Ltd - $63,000 (item 7)
Counsel for the wife submits that where monies have been released to one party post separation the onus is on that party to establish reasonableness. I accept that proposition and I approach the analysis of this and the next three items on that basis.
On the evidence that I have the two mortgages on the A property exceeded its value at that time. I am not able to make any finding as to what the underlying debt relating to the second mortgage was. I am not able to make any finding as to what the value of N was at that time. I am consequently not able to find as the husband invites me to, that he had equity in the Artarmon property at the date of cohabitation in the sum of $94,500.
N and M Pty Ltd
At cohabitation the husband had 85 per cent of the shares in N Pty Ltd (the former owner of the companies that became the subject of the litigation in the Supreme Court with Mr G) and he had an interest in M Pty Ltd. As set out above there is no indication as to what N might have been worth at the date of cohabitation (if anything). There is no valuation of the husband’s shares in N at the date of cohabitation. Nor is there any evidence of what the shares in M Pty Ltd might have been worth in 1988.
Other initial contributions
The husband also had some furniture and superannuation.
The wife at the time of cohabitation had $20,000 equity in the property in Canberra and superannuation.
I find on the evidence before me that there is not such a difference in the initial contributions of the parties that I would need to be worried about what weight I should place upon those contributions. In assessing the overall contributions of the parties I certainly do not find, as asserted in the husband’s case outline document, that “the husband brought significant assets into the marriage, including the home at [A]. With his business assets, in particular, he had the equivalent of greater than the unencumbered property at [A]”. That is an assertion that the husband had, at the time of cohabitation, equity in A in the sum of approximately $284,500. The evidence does not substantiate that claim.
Financial
The wife concedes that during the marriage the husband made a significant financial contribution from his earnings. The husband for significant periods during the marriage worked long hours, at times seven days a week. He was away travelling on business to some extent. I accept the wife’s evidence that “the company was [the husband’s] package”. The husband worked at home extensively including in the evenings during the week and on weekends.
The wife also contributed by working part time during the marriage. The details provided in paragraph 16 of her affidavit of 1 October 2005 were allowed into evidence as an aide memoir. However, the wife did not tender, during the hearing, the tax returns that would form the basis of me accepting those figures. I therefore do not have any precise evidence as to the history of the income earned by the wife as she worked part time.
The husband earned a large income for some periods of the marriage. However again the evidence in relation to exact earnings is not before me.
The wife’s Canberra unit was sold in December 1992 and approximately $40,000 was expended in relation to renovations and family expenses.
In 1996 the wife received a redundancy of about $42,014. In 1996 she received an eligible termination payment of $110,962.
I accept that the wife has had the main financial burden of the children since separation. I find that the husband has paid minimal child support in the years since the separation. The wife has increased her hours of work since the separation.
Non financial
I find the wife was the primary care giver of the children both during the marriage and since the marriage ended.
The husband suffered from bouts of depression during the marriage. During these periods the difficulty of the wife’s contribution in the role of homemaker and parent were greater than the times the husband was not suffering deep depression.
The husband has spent considerable time with the children since separation.
I find that the wife undertook the vast majority of the household duties for the family during the marriage.
The husband pursuant to interim orders spent substantial amounts of nights with the children, being most weekends during school term, weekend contact and half the school holidays.
The former matrimonial home was made available for the wife and the children to live in and Mr J, the wife’s new partner, visited the house at times.
Post separation
I take into account the rent that the husband has paid since separation at a time when the wife and children have had the benefit of the occupancy of the matrimonial home.
I am of the view that the mother has made a more significant contribution than the father since separation in the role of homemaker for the children and that the father’s focus on the C litigation has been at the expense of funds that he would otherwise have available to provide more adequately for the children.
The wife’s contribution post separation, particularly in the role of parent, has been in circumstances where her financial support for the children was greater than by the husband’s financial support of the children.
The parties give different evidence as to the child support paid since the separation in September 2001. The wife has given detailed evidence in paragraph 32 of her affidavit sworn 1 October 2005 as follows:-
“Since we separated in September 2001 I have had to go out to work to make ends meet. In that time [the husband] has paid child support as follows:-
Est. Period Per Month
17.12.01 – 4.9.02 9 mths $2,599.00
4.9.02 – 31.8.03 12 mths 21.67
1.9.03 – 9.9.03 8 days 646.91
10.9.03 – 31.12.03 3 mths 545.83
1.1.04 – 30.9.04 9 mths 28.50
1.01.04 – present 20 mths Nil
In total over about 4 years I have received about $25,712.45 or about $126 per week. Of that amount, $23,391 was received by September 2002 and the balance, $2,321, has been received over about the last 3 years being about $14.88 per week.”
That evidence differs from the evidence given by the husband in paragraph 18 of his affidavit sworn 28 June 2005. Where that evidence differs I accept the evidence of the wife
School fees to A College were paid from a fund that had been set up from a trust fund that had been established with joint assets.
It goes without saying that the husband made a contribution to a component of the C litigation dealt with by Moore J’s declaration by keeping the litigation going. However, I have made allowance for that by adding back notional liability for legal fees paid for the C litigation to the date of Moore J’s orders (see item 35).
Contributions by the husband to the C litigation at its agreed value before the case reopened
Exhibit 7 is a schedule setting out legal fees paid in relation to the C litigation. The total cost of the litigation to the end of September 2005 was $285,134. As at that date there was $31,331 still outstanding.
Early on in exhibit 7 the husband indicates that he spent from his own post separation resources about $9,500 between 18 April 2002 and 11 September 2002 with a note “this is when I ran out of money”. If you assume that he borrowed $119,291 and $3,000 from his mother and father and put in $9,500 from post separation resources, then about $122,303 went in from other sources. He received about $170,000 from the orders of Boland J on 22 October 2005 and the Judicial Registrar on 9 May 2005. That roughly means that the husband received about $47,697 for living expenses and establishing his business between 2002 and 2005. This does give some indication as to what a drain the costs of the C litigation was on the husband’s post separation resources (including monies received from joint funds which the wife seeks to add back against the husband).
Conclusion
I place no weight on differences (if any) in the initial financial contributions of each of the parties. Contributions during the marriage slightly favour the wife, particularly arising from contributions she made during periods when the husband was deeply depressed. By the inclusion of item 35, the husband has been given credit for legal fees he spent post separation on the C litigation and so no weight need be given to that contribution. The husband has had some of his post separation living funded from joint assets whilst the wife has supported the children with the benefit of occupancy of the matrimonial home. The wife is entitled to some adjustment for contributions in the post separation period.
I find that based on contributions to the first pool, there should be an adjustment in the wife’s favour of 52.5 per cent to her and 47.5 per cent to the husband.
CONTRIBUTIONS TO POOL 2
The wife submitted that not only had she had made significant contributions to the litigation at the time of Moore J’s orders, but also that she had made a significant contribution to the balance proceeds of the C litigation.
Having submitted that monies received by way of interim property settlement and put towards the litigation should be entirely added back against the husband, the wife then sought to claim some kudos from the fact that those monies originally came from joint funds. Counsel for the wife makes the point that at least two small amounts of legal costs, $4,600 and $10,853, came from the family company, P Pty Ltd.
It is appropriate at this point, to consider in more detail the wife’s approach to the C litigation.
On 22 March 2004 the wife’s lawyers wrote to the husband’s lawyers (annexure C of the affidavit of Mr Twigg sworn 5 June 2006). In that letter the wife says:
“In relation to the C/Mr G litigation, our client does not see it as “favourable” to be unwillingly attached to litigation which is at least highly speculative and is clearly contrary to advice from the solicitors managing the matter.
Our client remains of the view that the mortgage should be paid immediately thereby reducing the paries’ costs. Taking that step will leave substantial funds for the essential expenses of the parties and child related expenses with further funds available for the said litigation.”
The wife then said a little later in that letter said:
“Your client....appears dedicated to pursuing regardless of cost or delay.
The outcome of litigation is inherently uncertain and our client is substantially concerned......”
In May 2004 the defendants in the C litigation tendered an amount of $790,000 to settle the litigation.
On 30 August 2004 (annexure F to Mr Twigg’s affidavit) the solicitors for the wife wrote:-
“That aside the contents of your letter are themselves (sic) very concerning. The thrust of your client’s letter seems to be that because he is involved in litigation, which he has refused to settle, he is somehow hampered financially. Your client appears to see the C/Mr G Litigation as a Holy Grail that he is prepared to throw everything at including our client’s financial security and that of the children.......Perhaps your client should strongly consider accepting a settlement in the C/Mr G litigation cutting his perceived losses and afford to all concerned a level of financial security....again, your client perhaps should step back, look at the overall picture and, whilst it might be a blow to his pride, settle that litigation once and for all”.
On 18 March 2005 the wife’s solicitors wrote (annexure H to Mr Twigg’s affidavit):-
“The real issue is that the time has come for your client to be realistic about a number of things including the [C] litigation and his business.”
As set out above, Judicial Registrar Loughnan on 9 May 2005 made a notation that there should be no further payment of monies in respect of fees associated with the C litigation until there was some proper evidence about the future carriage of that litigation, a staged estimate as to the cost of that litigation, the prospects of success of the litigation and the current legal advice about the timing in terms of any offer of settlement of that litigation.
On 1 July 2005 the wife’s lawyers wrote:-
“Our client has been consistent in expressing her opposition to the style and manner in which the [C] litigation has been managed and is still being managed.....our client does not agree that any further funds be spent on the conduct of the [C] litigation other than making an offer of compromise.”
On 29 July 2005 the wife’s lawyers wrote:-
“The best case scenario would seem to be therefore that your client would be able to claim, inclusive of recoverable costs, $1,199,050.....there seems absolutely no sense in taking any further steps into litigation....of course there is also, and always, the risk of losing. Further there is the chance either party will appeal an adverse result. We are accordingly instructed to suggest your client make an offer of settlement in the [C] litigation of somewhere between $800,000 and $850,000. Despite all the suggestions in [K Firm’s] letter, and all the proposed expert’s reports and the like, it does not appear any of that material could actually lead to any better result.”
In my reasons for judgment of 20 June 2006 I referred to the positions taken by the parties in final submissions at the end of 2005 and submissions in reply in relation to the C litigation. For convenience I set out the relevant parts of that judgment:-
9.Page 28 of the wife's written submissions records that that order, as I have read it out, values the husband's interest in the [C] litigation at $559,850. It is the wife's position in her primary submissions that the husband should retain the proceeds of the litigation as an asset himself, and that the wife should not be responsible for any costs in respect of that litigation after a certain point in time. That is found at page 29 of the submissions.
10.It was the husband's position in his final submissions dated 23 December 2005, that the wife should receive 35 per cent of whatever the result of the litigation became. That is set out in pars 16 and 17 of his submissions. And in the alternative:
"It is submitted that the husband's interest in the litigation, although given a fixed value, ought to be seen as having a far from certain delivery date, and that by the time of receipt yet further effort will have been incurred post-separation by the husband in obtaining them."
11.In submissions in reply, the wife, at pages 26 through to 28, responds to the husband's primary submissions in relation to the [C] litigation, saying:
Page 16, para 3 to Page 17 para 2
Counsel for the husband appears to be arguing at this point for an ‘asset by asset’ approach which has not been the basis upon which both parties approached and conducted the litigation.
In particular the husband submitted:
.....To do otherwise would, it is submitted, not afford equal justice as between the parties because [A property] and the fruits of the litigation are so different.
It is submitted in reply that this is not correct. Such a submission might have been available had the parties not entered into Consent Orders of Her Honour Justice Moore on 15 August 2005 fixing the value of the husband’s interest in the [C] litigation. The parties did however enter into those Consent Orders which the husband has not sought to disturb.
Consequently the value of the [C] litigation is in the same dimension as the value of any other asset in the pool. To treat it otherwise would, with respect, be to make a farce of the Consent Orders of 15 August 2005. In arriving at those Consent Orders both parties must have weighed up a number of factors including, on the husband’s behalf, things such as the vicissitudes of the litigation.
The following points underpin the wife’s submission as the correct approach:
a).Parties may either agree about the value of an asset or contest it. If contested then the Court expects expert evidence. The Rules set out how that evidence is to be brought and dealt with. In the subject case the parties had a number of assets, resources & liabilities. The parties were in obvious disagreement about some such as the value of the home and a number of the husband’s alleged debts. Much time was devoted to the evidence brought by the parties about these issues.
The parties were in clear agreement about the value of other items such as the wife’s motor vehicle and the parties superannuation interests. Once agreed there is no issue. The very point of entering into the Consent Orders on 15 August 2005 was to remove the issue as one to contest.
b).On the first day of the trial the husband conceded paragraphs 8 & 9 of the orders sought by the wife in her Case Outline subject to a qualification to paragraph 9. This has already been addressed in the wife’s primary submissions. This concession however is consistent with the approach that the [C] litigation was a closed issue.
c).If the husband is to argue that the [C] litigation is still ‘alive’ and the wife should ‘ride the roller coaster’ and take a percentage of the eventual outcome, it was incumbent upon the husband to bring evidence so that the Court could be satisfied as to things such as the prospects of the litigation and the timeframe to a resolution. This was alluded to by Judicial Registrar Loughnan in his Orders and Notations on 9 May 2005. Some form of answer came in the form of a letter from the husband’s lawyers instructed in that litigation dated 17 June 2005 [Exhibit B]. This however was 2 months before the Orders of Moore J on 15 August 2005 and 6 months before the final hearing in the subject matter.
The Consent Orders of 15 August 2005 resolved the issue. The wife fairly understood from the clear and unambiguous terms of the Orders that the value of the litigation was resolved. In doing so the wife must accept that if the husband achieves a better outcome she will have no part of it.
If the husband proposed to argue that the Court should treat the [C] litigation differently because, to quote the husband’s counsel’s submission that it “...has a far from certain delivery date” then there should have been evidence of such things which may allow this court to assess, for example, the delivery date and its degree of certainty. Such evidence might have indicated whether offers had been made or the matter had progressed to mediation or hearing dates had been set. The fact is the husband chose to bring no evidence which might assist the Court to assess the factors the husband now says are pertinent.
12.The husband, in his submissions in reply, which are dated 7 February 2006, says on page 6 under the heading: "Categorisation of the [C] Litigation":
"Agreement has been reached as to the value of the litigation, and the husband has indicated that he would consent to the litigation forming part of his property settlement."
As I noted in the judgment of 20 June 2006 the husband changed his position between original submissions and submissions in reply. As I said, instead of agitating for a splitting of the proceeds of the C litigation, as he did in his primary submissions, he was in his submissions in reply saying that he would take that chose in action as forming part of his property settlement.
As I however further noted, the husband in his submissions in reply made the following comments:-
"This is an asset to which the wife has made no contribution, aside from some recent commentary from her solicitors. The wife's policy has generally been to oppose the expenditure of moneys on the litigation, and the husband has been obliged to conduct applications to the Court to obtain funds to continue the case.
Notwithstanding, the agreement reached as to the value of the litigation, the date on which litigation will conclude is uncertain and it will not be reached until the husband has made further contributions both financially and non-financially. As a financial resource, it bears little similarity to, say, a home of similar value. It will not keep the husband warm at night."
In final submissions it was the husband’s position that in relation to the asset which is Pool 2, he took the whole of the risk. The wife accepted the shield that was offered by the husband. The husband argued that the wife’s course of action in not being supportive of the litigation made the husband’s contributions to the litigation considerable more difficult and that that course of conduct by the wife commenced in March 2004.
The wife now argues that an analysis of the settlement deed of 5 May indicates that the husband obtained $1.29 million for the share price which was approximately $501,000 more than he originally was asking. Counsel for the wife submits that the share price is firmly based on an asset which had been built up entirely during the marriage to which the wife made significant contributions. Counsel for the wife submits that there is no evidence before the court that the husband did anything to affect the value of that part of the litigation other than to prosecute it. The wife concedes that he had to pay his lawyers a considerable sum but he borrowed the money from his father and it has been fully repaid from the proceeds of the settlement of the litigation.
The submission was made by the wife that the second sum would not have been possible apart from the fact that matrimonial assets were spent to get the C litigation to the point that it was at when Moore J’s orders were made.
The wife made it clear in submissions that she did not wish to go behind the declaration that Moore J made on 15 August 2005 as to the value that the husband had in the chose in action which was his interest in the C litigation. I accept however that Counsel for the wife’s submission that the husband now has a completely different form of property. He has a sum certain given that the litigation has ended.
Counsel for the wife referred to paragraph 17 of Boland J’s judgment where Her Honour concluded that the husband did not have, on the evidence before her, capacity to fund litigation to a concluded hearing as estimated by his lawyers.
The wife is still able to point to contributions that she made in that period in the role of homemaker for the children, particularly given that the husband was providing little child support to her during that period.
I conclude that in relation to the asset which is Pool 2, the husband has made a substantial contribution to that asset.
In order to conclude that the wife should be entitled to some percentage of Pool 2, I take into account the following matters:-
328.1.The fruits of the C litigation are based on an asset which had been entirely built up during the marriage;
328.2.The wife made contributions post separation in the role of homemaker for the children and has been the person who has primarily supported the children after separation; and
328.3.In his initial submissions the husband proposed that the wife should receive 35 per cent of whatever the result of the litigation became.
These considerations however do not lead to a substantial finding of contribution by the wife towards the asset which is in Pool 2. The asset would not have existed at all, if it were not for the husband’s dogged pursuit of what the wife called the husband’s ‘Holy Grail’.
Based on matters referred to in paragraph 328, I find the wife has made a 5 per cent contribution to Pool 2 and the husband a 95 per cent contribution to it.
SECTION 79(4)(d) – (g) MATTERS
Although contributions under “step 2” might be looked at either on a global basis (one pool of property and superannuation together) or on an asset by asset basis (separate pools), the preferred approach for assessment of any adjustment under Section 79(4)(d) – (g) has still not been defined at an appellate level. A reading of Zyk and Zyk (1995) FLC 92-644 at page 82, 509 – 510, and the methodology adopted by the Full Court in McMahon and McMahon (1995) FLC 92-606, would lead to the view that the whole of the property and superannuation interests should be the subject of the one adjustment in Section 79(4)(d) – (g).
The wife was born 25 November 1960 and is 46 years of age. She is in reasonable health.
The husband was born 19 May 1957 and is 49 years of age. He is in reasonable health.
The husband does not hold a higher school certificate but generally he has been successful self employed since at least the late 1980s.
Problems with the father’s depressive illness have been long standing.
The husband submits that his employability is likely to deteriorate. In my view there is no evidence to support that submission.
The husband after separation deliberately chose not to “get an ordinary job” because he believed that developing his own business would mean that his earning capacity would be greater.
Despite a long history of depression (which at some times has been severe) the husband has demonstrated during the marriage an ability to earn significant income. The C litigation has now concluded. The husband now has the ability to refocus the energy that he was giving to that litigation into his new business.
The wife is working part time (school hours) five days a week as a receptionist and has no formal qualifications. She earns approximately $30,000 per annum. Her evidence on the last day was that her income had gone up $4 per hour. Since separation the husband has paid limited child support but her position in that regard could change.
Both parties have enthusiastically litigated against one another in relation to financial matters. In relation to future child support issues I am confident that the mother will pursue her legal entitlements under the Child Support (Assessment) Act and obtain an assessment from time to time for the children which is just and equitable. At least for the foreseeable future the father will certainly have assets and I am confident that he will have a level of income that would be sufficient to ensure that the wife will receive whatever child support she is entitled to.
The duration of the marriage has affected the wife’s ability to earn income more than it has affected the husband’s. The husband during the marriage worked very long hours developing skills which I find are transportable in the future into the new business activities he is developing.
There is no evidence before me that either party is cohabitating with another person with whom they have a financial relationship. At the time of the initial hearing the wife had a relationship with Mr J. Mr J was not called to give evidence. There was no cross examination of the wife in relation to any financial support of the wife by Mr J and I have no evidence to suggest that there is any financial relationship between the two of them.
The wife has expressed a wish to retain the former matrimonial home and the orders I propose will give her an opportunity to do so.
As a result of the findings I have made in respect of contributions, the husband will have a significantly larger capital base than the wife.
Another circumstance: Interest payable to the father
Evidence from the husband indicates that he had an agreement with his father to pay his father interest. In the amount of $19,218. On the last day of the hearing that figure was not the subject of cross examination. I take into account the husband has paid that amount to his father from the proceeds of the litigation. Whilst some of that interest relates to post August 2005 borrowing I infer most of it relates to borrowings prior to that time.
Counsel for the wife’s general submission was that none of the debts which the husband says that he paid in paragraph 4(g) of his most recent affidavit should be counted and that all these debts should be added back in because of their discretionary nature and the fact that they were debts acquired after separation.
The wife will continue to have the primary care and control of the children of the marriage.
Each party will be entitled to benefits under a superannuation fund or scheme. The parties have both invited me to treat the superannuation as property and add it into the pool of assets and I have done so. To look at the disparity in the superannuation of each of the parties in isolation would be to double count it. I have considered the disparity in the overall assets and financial resources of the parties as a whole, after my analysis of the contributions made by the parties.
There is no evidence that the parties have entered into any financial agreement.
The capital that each party will have after my findings as to contribution and the disparity in the parties’ future earning capacities (particularly given the wife’s role as primary care giver) means that there should be an adjustment in her favour.
Having regard to the above matters I conclude that there should be a 7.5 per cent adjustment in favour of the wife for s.79(4)(d) – (g) matters.
JUST & EQUITABLE
Prior to the reopening of the hearing the wife’s application was for a division of the assets 65 per cent to herself and 35 per cent to the husband on the basis that she had made a 55 per cent contribution towards the pool of assets and there should be a 10 per cent adjustment for s.79(4)(d) – (g) matters.
Counsel for the wife’s final submission was that the additional funds received as a result of the settlement of the litigation should be added into the one pool and that a contribution assessment be carried out on a global basis. The submission was that the contribution should be the same so that there was a 55 per cent adjustment in favour of the wife on the basis of contributions. The adjustment for matters under s.79(4)(d) – (g) would be reduced to 5 per cent so that the overall adjustment to the wife would be 60 per cent of the overall property and financial resources held by the parties.
In his case outline the husband submits that on the pool as it existed at that time he should be entitled to a 70 per cent adjustment by way of contributions. He further submitted that there should be no further adjustment for matters referred to in s.79(4)(d) - (g). In his outline of submissions, Counsel for the husband before the case was reopened made the following submissions:
“It is submitted that, in relation to contributions, the husband’s contributions, exceed those of the wife. He made a substantial initial contribution. His father made an unmatched contribution, only part of which he seeks to be compensated for. The husband’s superior contributions favour him by 15%.”
He also argued notwithstanding the fact that the wife had primary care of the children that the per ponderous of “s.75(2) matters” favoured the husband. He argued for a 10 per cent adjustment of s.75(2) factors. However, having made those submissions he concluded “the overall result, it is conceded should result in an adjustment of 15 per cent in the husband’s favour, ie 65 per cent”. Whilst those submissions are a little hard to follow mathematically there was a further discussion with Counsel for the husband in final submissions after the case had been reopened. During those submissions Counsel for the husband modified his position by abandoning his submission that there should be a 10 per cent adjustment in his client’s favour for s.79(4)(d) – (g) factors. I took Counsel for the husband’s final position to be that the additional monies received as a result of the settlement of the C litigation should be excluded from calculation and that the husband should receive 55 per cent of the remaining net assets as an overall result.
The result achieved having considered contributions to Pool 1, contributions to Pool 2 and the adjustment in favour of the wife for s.79(4)(d) – (g) matters, is 55.3 per cent to the husband and 44.7 per cent to the wife. Standing back and looking at the matter on an overall basis I consider that result to be just and equitable.
That is calculated in the following way:-
Husband
Wife
Pool 1
47.5%
730,317
52.5%
807,193
Pool 2
95%
696,656
5%
36,666
s.79(4)(d)-(g) matters
-7.5%
(170,312)
7.5%
170,312
Total
1,256,661
1,014,171
That alteration of property would be achieved by a distribution of the assets in the following way:-
Distribution to Husband (55.3%) Assets Item No. Description Value 3 2001 Subaru Outback (AUJ>25J) $23,500 6 ANZ Bank a/c $34,558 7 Receipt from M Pty Ltd (5%) $63,238 8 C Litigation - prior to re-opening $559,850 9 Add back - Boland J (22.10.04) $40,000 10 Add back - Loughnan JR (9.5.05) $69,113 11 Add back - Loughnan JR (9.5.05) $69,101 15 Furniture - C $17,000 16 Monies in trust – K firm $14,764 17 Legal fees paid - husband $37,048 19 Masterfund ING $48,637 36 Additional monies received by the husband as a result of the settlement of the C Litigation $733,322 Liabilities Item No. Description Value 25 Subaru debt (St George hire purchase) $23,500 33 Husband’s father (for N) $150,000 35 Cost of C litigation up to 15 August 2005 $253,803 Husband pays Wife $26,167 Net Assets $1,256,661 Distribution to Wife (44.7%) Assets Item No. Description Value 1 A property $1,250,000 2 1998 Honda Odyssey (…) $18,000 5 CBA Bank a/c $2,000 14 Furniture – A property $8,000 18 Legal fees paid - wife $10,260 22 Q Superannuation $744 23 ING $14,000 Liabilities Item No.
Description
Value
24
Mortgage NAB
$315,000
Wife receives $26,167 Net assets $1,014,171
As set out at paragraph 52 above, an order was made for interim property settlement in the wife’s favour on 30 November 2006. As a result of that order the wife received $15,422 ($11,118 + $2,152 + $2,152). The amount payable to the wife in the sum of $26,167 therefore needs to be adjusted downwards to an amount of $10,745 ($26,167 – $15,422).
Whilst I will order that the wife indemnify the husband, upon the transfer of the matrimonial home to her, in relation to any liability in respect of the current mortgage to the NAB I will give the wife one year to reorganise her financing so that the husband is no longer a party to any mortgage secured on the matrimonial home. At the end of 12 months the husband will cease to have any theoretical or actual responsibility to the NAB under the mortgage.
I certify that the preceding three hundred and sixty (360) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts
Associate:
Date: 4.5.2007
Key Legal Topics
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Family Law
Legal Concepts
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Appeal
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Costs
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Jurisdiction
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Remedies
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Statutory Construction
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