FISCHER & FISCHER
[2014] FCCA 1088
•6 June 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FISCHER & FISCHER | [2014] FCCA 1088 |
| Catchwords: FAMILY LAW – Property – Husband’s substantial initial contributions and inherited farming properties – weight to be applied to these contributions – whether a one pool or two pool approach should be adopted – what relevant s.75(2) factors apply and what adjustment if any should be assessed – how member benefits in the self-managed superannuation fund can be effectively “split”. CHILD SUPPORT – Application by Mother for departure – leave required to allow departure outside of the 18 month period required in s.98S(3)(b) – leave refused – whether special circumstances has been established to depart – whether a ground of departure has been established for each assessment period – application dismissed – further application for child support in a form other than periodic payment – application dismissed. |
| Legislation: Child Support (Assessment) Act 1989; s.98S(3)(b) |
| C & C [2005] FamCA 429; (2005) FLC 93-220; (2005) 33 Fam LR 414 Farmer & Bramley [2000] FLC 93-060 Garwin & Garwin [2013] FamCAFC 210 at [26] Gyselman (1992) FLC 92-279 Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Hides & Hatton (1997) FLC 92-759 Stanford & Stanford [2012] HCA 52 |
| Applicant: | MR FISCHER |
| Respondent: | MS FISCHER |
| File Number: | SYC 5367 of 2011 |
| Judgment of: | Judge Baumann |
| Hearing dates: | 16 & 17 December 2013 |
| Date of Last Submission: | 24 January 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 6 June 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Millar |
| Solicitors for the Applicant: | Dobinson Davey Clifford |
| Counsel for the Respondent: | Mr Batey |
| Solicitors for the Respondent: | Farrar Gesini Dunn Family & Collaborative Law |
ORDERS
This matter be adjourned to 1:00pm on 19 June 2014 in the Federal Circuit Court of Australia at Brisbane.
IT IS NOTED that publication of this judgment under the pseudonym Fischer & Fischer is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
SYC 5367 of 2011
| MR FISCHER |
Applicant
And
| MS FISCHER |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties in this matter separated after a relationship of nearly fourteen years that bore three children are unable to agree on how to divide a pool of assets that comprises both property and superannuation. The Husband has been a farmer all his life and brought into the relationship and inherited during the course of it, substantial farming properties.
Although other issues arise, the major issue is what weight should be applied to the more significant financial contributions by the Husband and how those contributions should be considered with the other financial and non-financial contributions of the parties.
Furthermore, the Wife seeks departure from child support assessments. All these issues are the subject of the reasons that follow.
Competing property proposals
The Applicant Husband’s Case Outline filed 12 December 2013 set out a proposed minute of order, which is annexed to these reasons and marked Appendix One.
The Respondent Wife’s Case Outline filed 11 December 2013 set out her proposed minute of order, which is annexed to these reasons and marked Appendix Two. The Wife’s minute estimated a cash payment by the Husband to the Wife of $667,500 whilst the Husband merely contended that “the combined net assets of the parties (non-superannuation and superannuation assets) be divided as to 80% to the Husband and 20% to the Wife”.
In his final written submissions, Counsel for the Wife, Mr Batey, argued that the Wife’s overall entitlements lay between “35% and 45% of the combined pools”.
The form of orders articulated also identify that the following issues, apart from some pool identification issues and the weight to be applied to both contributions and to the so called s.75(2) factors, were contentious:-
a)Should there be a splitting order as sought by the Wife; and
b)Which party should retain the Property F property; and
c)The Husband seeks some specific orders for delivery of property.
The Husband also opposes any child support departure orders being made, and this aspect of the dispute is dealt with in a separate part of these reasons below.
Principles
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143, in a property settlement case, the court must adopt a well-known four-step process, essentially:
a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s.79(4);
c)to consider the factors as are relevant contained in s.75(2) of the Act; and
d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make it just and equitable to both parties.
Contextual history
Before providing a contextual history of this relationship, I observe that I found the Husband and the Wife creditable witnesses. Little ultimate factual dispute emerges – save for the perspectives each party has of the quality and nature of the contributions they each made. My clear conclusion was that they are both thoroughly decent people, not perfectly matched for a life-long union, but who strived during the relationship through hard work and lifestyle sacrifices, to create a future for themselves and their children.
Undoubtedly, life on the land has its challenges thrown up often by circumstances beyond the farmer’s control – such as weather; markets and interest rates. I have no hesitation in accepting the Wife’s description of the family having “no history of extravagant spending” as accurate and probably also aptly describing the Husband’s parents.
That the pool set out below, however configured, has no significant liabilities to bring into account, is testimony enough to the values identified above.
The parties, under cross-examination, could both be accused at times of embellishing their own contributions and tending to minimise the other party’s contribution, but in the absence of any real corroboration, the Court is comfortable with the findings it makes below. In this case however, the factual journey of asset creation is not significantly in dispute, and what follows is largely uncontroversial.
Statements of fact hereafter should be construed as findings of fact.
The Husband was born in 1958 and is currently aged 55 years. The Wife was born in 1959 and is currently aged 54 years.
In November/December 1996 the parties, after a relationship of about a year, became engaged and the Wife moved from the town to the family’s farming property known as “Property B”. The properties run by the Husband over the course of the relationship produced fat lambs; prime beef, crops (wheat, canola, oats) and produced prime irrigated Lucerne hay (as seasons and markets permitted). Wool was also produced.
At the time of cohabitation (which I regard as December 1996), the Wife was working in town for (employer omitted). The Wife had been married previously, and had three sons. C who was approximately 20 years old was living independently. B was 17 and in Grade 11 at (omitted) High School. He lived on the farm for a couple of months and then moved into town to live with his Father, which continued until he began his apprenticeship at the completion of Grade 12.
The Wife’s youngest child, A, was 13½ when the parties commenced living together and spent most of his weekends in (omitted) with his Father and brother.
At the time of cohabitation it is agreed that the Wife had savings of around $30,000; a motor vehicle and an interest in the (omitted) Superannuation Fund of around $12,000 – which interest now is part of the (omitted) Superannuation Fund. She also held some bank shares worth around $7,000.
The Husband had significant farming and other interests at the time of cohabitation comprising:-
·Cash of approximately $150,000;
·(omitted) Superannuation Fund $14,000
·An interest (with his parents) in a property at Property C, sold in January 1997. The actual amount of the total net proceeds of $94,291 received by the Husband is uncertain
·A 50% interest in a property known as “Property G” which, by historical valuation, had a value of around $95,000 ($190,000 ÷ 2)
However, the most significant asset of the Husband was his 50% share in a family farming partnership known as “(omitted) Partnership”. The remaining 50% interest was held jointly by the Husband’s parents. The partnership, which was established in or about 1976, had assets including:-
·Livestock
·Hay and grain
·Wool
·Plant and equipment
·Property at Property L
·Property known as “Property L”.
It is not possible to accurately assess the market value of all these interests. The Wife points to financial statements for the partnership at 30 June 2007 (Annexure “I”) which shows the 2006 figures, which the Wife says reveals a value of his interest at $252,972. Whilst acknowledging it is possible to establish that figure, it must be noted that the (omitted) Partnership Balance Sheet included property interests, plant and equipment “at cost”. By way of example, the evidence of historical values of the properties given by Mr S in his affidavit filed 12 December 2013 opines these values:-
“Property G” $190,000
“Property L $260,000
with the value of “Property L” being less than the “cost price” in the 2006 figures.
The parties married in March 1997 and the Wife ceased full-time work for (employer omitted), as she prepared for the birth of the parties’ eldest daughter, X on (omitted) 1997. Y quickly followed on (omitted) 1999.
On 1 July 1997, the parties commenced their own “farming partnership”, I infer for tax minimisation purposes, so as to allow income previously taxable solely in the Husband’s hands to be “split”. Over time, this partnership generated more income because of the changes that occurred with the (omitted) Partnership and, ultimately, the inheritance by the Husband of the principal farming property known as “Property B”.
In May 1998, the parties established a self-managed superannuation fund known as “Property B Superannuation Fund” and regular contributions were made to the fund – I find from all the evidence, as both a wealth creation strategy and a tax effective strategy. It is conceded that all the funds contribution to the Property B Superannuation Fund occurred after cohabitation – including some funds post final separation.
In December 1998, the Wife received an inheritance from her late aunt of $49,658 which, I accept, was paid into family accounts, including shares in the Wife’s name.
In 2001, the Husband’s mother died and her 25% interest in the (omitted) Partnership passed to the Husband’s father. The Husband says, and I accept that in 1997 all hay held by the (omitted) Partnership was transferred to the farming partnership operated by these parties, and when “(omitted) Partnership” was dissolved in 2006, stock were also transferred. At paragraph 8 of the Husband’s affidavit, he gives details of some cash adjustments made on the dissolution of the partnership which I accept.
Z, the parties’ youngest child, was born on (omitted) 2001.
The Husband at paragraph 4 of his affidavit claims six periods of separation (totalling about 14 months from 2000), all of which occurred after the children were born of course. The Wife accepts separations did occur, but says it was more like seven months over five periods. In my view, little turns on this difference, save to observe that the challenges of farm life and raising three young children seemed to take its toll on the adult relationship.
In January 2007, the parties purchased a home in town ((omitted) at 14 Property T), for $315,000. I am satisfied the acquisition was made from joint funds generated by the farming partnership. The home was used from time to time as a town base. The Wife has lived in the home since final separation and continues to live there.
In 2007, the Husband’s father Mr G passed away, and under his Will the Husband inherited (see clause 6 of the Will – Exhibit 3):-
·One sixth share in Property L property (meaning the Husband owned a third share);
·“Property B”, including all fixtures and machinery;
·Half share in “Property L”;
·Half share of 200 acres of “Property G”.
Again, subject to the reservations identified by the valuer attaching to “historical” valuations, Mr S opined that at October 2009, the value of 50% of “Property G” was then $190,000 and the value of 50% of “Property L” was $170,000.
Mr S opined that at October 2009, the value of “Property B”, including the water licence was $1,587,000. I note the accepted valuation for the hearing was $1,455,000.
Although the family provision claim by some relations of the Husband may, I infer, have affected his entitlements to the residuary estate (clause 13), the specific bequests of property as above were not distributed and were “vested” around October 2009, when the Husband also received a payment from the estate of $200,000.
Before separation finally on 28 July 2010, the parties purchased in joint names, a beachside holiday/investment property in Property F. The Wife says, and I accept, it was acquired in January 2010 for $290,000. The parties agree that the purchase of this property was funded in part by the inherited monies and the balance of purchase price and some renovations came from the family partnership account described simply as “Fischer Partnership Account”.
The partnership was dissolved on 27 April 2011 by actions of the Husband. Nothing turns on that dissolution and to the extent, post-separation, the parties accessed savings, income or transfers from the Farm Management Deposit (created under taxation laws to offer some opportunity to spread income over a number of years), those matters were the subject of significant discovery and exploration and, save for some findings below, do not need fuller discussion.
The Wife commenced part-time employment in the (omitted) in November 2010.
Despite the parties consenting to final property adjustment orders in the Family Court of Australia on 10 February 2012, by consent, and as a result of an Application filed in the Family Court, (but transferred to this Court), Federal Magistrate Sexton (as she then was), set aside the earlier orders under s.79A of the Family Law Act 1975 on 3 August 2012. The Husband then commenced property and parenting applications on 8 August 2012 in the Canberra Registry.
On 10 October 2012, final parenting orders by consent were made. Those orders provide inter alia, that:-
“…the children will live with and spend time with each of the Respondent Wife and the Applicant Husband in accordance with their views…
No more prescriptive orders were made. It seems, on the evidence, that the Mother predominantly cares for the children when not at school. X attends a (omitted) school and is now aged 16; Y (aged 15 years) and Z (aged 12 years) attend school in (omitted) and all the girls spend irregular time with the Father.
At the hearing, it appeared obvious to me, that the Father demonstrated a level of sadness in the infrequent time that occurs with his daughters, however, these proceedings were not a forum to explore that further – particularly when one considers the terms of the parenting orders made by consent.
Pool
Exhibit 12, which was adopted by both parties, reflected broad agreement as to the property interests and superannuation interests which, both parties contend, should be the subject of property alteration orders (although different). Some submissions as to the inclusion or otherwise of some items must be determined by the Court.
Before doing so, a fundamental difference exists as to whether the interests should be aggregated into one pool (of both superannuation and non-superannuation interests) or whether a two pool approach is to be adopted.
At paragraphs 4-6 of the Husband’s submissions, Mr Millar argues that as all the contributions with respect to the Property B Superannuation Fund commenced after marriage and the other small funds are modest, “no useful purpose is served by treating the superannuation interests of the parties separately from their net property when assessing contributions and other factors…”. In response, Mr Batey at paragraph 2 of the Wife’s submissions contends that the Court “would adopt and apply the four stage process to a “2 pool” approach”.
As the Full Court in C & C [2005] FamCA 429; (2005) FLC 93-220; (2005) 33 Fam LR 414 made clear, whilst a discretion resides in the trial judge to have a combined pool (and in my experience that is often the better approach), adopting a two pool analysis is the “preferred” approach. In my view, considering the significant diverse manner in which the parties will be found to have contributed to the non-superannuation pool of assets, does justify adopting the two pool approach. To do so is likely, in my view, to give greater transparency to the analysis of the evidence and the leap from the qualitative to the quantitative.
Before setting out the two pools as found by me (and acknowledging the various agreements of the parties incorporated in Exhibit 12), I make the followings discreet determinations:-
a)Balance of Husband’s inheritance
(i)The Husband’s father died in 2007, and whilst the majority of his estate has formerly vested in the beneficiaries in accordance with the terms of his Will (as subsequently varied as a result of the Husband’s sisters bringing a successful family provision application in the Supreme Court of New South Wales), a balance of $215,431 remains in the hands of the estate trustees, Ms S and Ms K. Other specific bequests to the Husband (under clauses 4 and 6 of the Will dated 29 September 2006) have been perfected. In my view, no satisfactory explanation was offered to the Court by the trustees (who control the distribution) or the Husband, as to why a distribution of these remaining funds to the Husband has not been made in a timely manner. The only person entitled to the funds is the Husband.
(ii)At paragraph 8, Mr Millar in his submissions asserts the entitlement “should be deleted from the balance sheet and taken into account as a factor when the Court is considering any adjustment to be made by reason of the factors referred to in s.75(2) of the Act”. The reasons advanced for such treatment are wholly unpersuasive. Whilst the Court has a discretion to delete some interest from a pool in the way suggested by the Husband’s submissions, I would not do so in this case. The funds are “as good” as in the Husband’s own bank account – and he will be given credit for the contribution in my analysis. However, the interest is not a “financial resource” merely because, it seems, the Husband has elected not to ask for it to be paid to him. The usual approach of including in the pool the value of the property of the parties at the time of hearing, should not be departed from in respect of the inheritance of $215,431.
b)Children’s trusts
(iii)Exhibit 3 contains both the Will of the Husband’s late father, Mr G and a Deed of Trust dated 25 August 2009. Under clause 7 of the deceased’s Will, a testamentary trust was created for his grandchildren. The capital sum was $25,000 each and the three children of the parties (X, Y and Z) benefit from the trust upon them attaining the age of 24 years. The testator directed that it was his wish that “such legacies be invested in a manner as agreed between my executors and by the respective parents of my grandchildren”.
(iv)By deed, and purportedly empowered by s.6 of the Trustee Act 1925 (NSW), the outgoing trustees (and executors) appointed the Husband as the new trustee of the testamentary trusts for his children, by way of a separate instrument for each beneficiary. Although unstamped, no objection was raised about the tender of the three Deeds of Appointment of New Trustee.
(v)In my view, despite some occasional withdrawals (which have been the subject of capital return), the Husband has no beneficial interest in these funds and they should not be included in a list of property interests of the parties.
Based on these findings; the decision to adopt a two pool approach, and the concessions reached by the parties set out in Exhibit 12, I find the pool one and pool two interests to be as set out hereunder.
Pool One – Non-Superannuation Interests
Ownership Asset Value H Property B $1,455,000 J Property T 327,500 J Property F 310,000 H Property L 330,000 H Property G 320,000 H ⅓ share of Property L 40,000 H Share portfolio 144,749 W Share portfolio 135,822 W Nissan 20,000 H Mazda 2 12,000 J Property B Pastoral (omitted) Bank cash 19,284 J Livestock 139,322 J Plant, machinery, equipment and Hilux ute 120,250 J Wool, hay 20,292 H Husband's (omitted) Bank savings (including farm deposit) 1,840 W (omitted) Bank Savings 22,047 W Wife's (omitted) Bank account 282 J Share portfolio 535 H Husband’s tax refund 19,438 H Balance of Husband’s inheritance 215,431 W Loan from Wife to son 47,681 H Husband’s further tax refund 5,611 TOTAL: $3,707,084 Liabilities W Margin Loan ((omitted)) 47,681 W Wife’s tax liability 2011 44,317 H Husband’s tax liability 2011 19,372 Total liabilities: $111,370 NET ASSETS: $3,595,714 Pool Two – Superannuation Interests
J cash Property B Super Fund $733,838 J shares Property B Super Fund 744,477 H (omitted) Super Fund No.2 24,116 W (omitted) Super Fund 24,188 W (omitted) Super Fund 32,107 Total superannuation: 1,558,726 Total combined pool: $5,154,440
Although I will return to this issue later in these reasons, I am comfortable at this stage of analysis to show the parties’ interests in the Property B Superannuation Fund, which is a self-managed fund and in which the parties are the only trustees and members, as a “joint” interest. I accept the failure by either party to put in evidence any recent member statements and/or audited (or for that matter unaudited) financial statements for the fund, beyond those tendered as Exhibit 4 (being the financial reports to 30 June 2013), creates some challenges. I explore some solutions below.
Is it just and equitable to make an order?
As the High Court in Stanford & Stanford [2012] HCA 52 made clear, the substantive question posed by s.79(2) must be answered. As the pool above identifies, the Husband’s current legal interest (including his “half” share of joint assets) significantly exceed those of the Wife. The nature and characteristics of the parties’ relationship during the marriage, significantly changed at separation – and not only through the unilateral dissolution of the parties’ farming partnership but by the severance of joint activities.
In my view, it is just and equitable for the Court to make an order, and Counsel for both parties did not contend otherwise.
Contributions
Drawing from the findings set out in the contextual history set out above, it reveals that the most significant direct financial contributions made by the parties to both pools, from cohabitation to at least the date of financial separation, can be summarised as follows:-
Husband
a)Initial contributions as set out at paragraphs 17 and 18 above.
b)The benefits which passed to the Husband as a result of the (omitted) Partnership dissolution in 2006, including the smaller sums paid to the Husband as set out at paragraph 85 of his trial affidavit.
c)The benefits received (and to be received) from the estate of his late father as set out in the Will and discussed at paragraphs 28 and 31 above. I include in these benefits, the funds of $215,431 which are yet to be paid by the trustees to the Husband.
d)Post-separation, the farming partnership between the parties continued to provide support to both parties until dissolution of the partnership on 27 April 2011. Since then, the Husband has continued to work and maintain the properties and the parties drew on bank accounts maintained and movements (in a tax effective way) of funds from the Farm Management Deposits. As set out below, some available funds were used to make superannuation contributions – for both parties to the Property B Superannuation Fund. Although at one stage of the litigation both parties raised, in their material, concerns about the use of substantial cash funds available at or following separation, better discovery and the assistance of the business accountant seems to have enabled both parties to concede, that generally funds were used to meet legitimate business expenses (including increases in the cost of fertilizers), living expenses and school expenses for the children. Neither Counsel, in final submissions, urged an “add back” or that any expenditure post-separation should be considered under s.75(2)(o).
Wife
The Wife properly acknowledged that the Husband’s direct financial contributions significantly outweigh those made by her, however, she did make direct financial contributions, initially from her employment outside the home farming business from her role with (employer omitted), but also as an equal partner in the farming partnership, which was the “vehicle” through which the majority of income due to the family from the farm ultimately passed – and it seems all farm income passed after the dissolution of the (omitted) Partnership. The other direct contributions included:-
a)Her initial contributions set out at paragraph 16 above.
b)The inheritance from her aunt’s estate of $49,658.
The non-financial contributions to the Pool One assets are, by nature, less capable of quantification than direct valued interests acquired or inherited. However, as the Full Court has often reminded trial Judges, s.79(4) “requires the Court to consider the entirety of the parties’ contributions, financial and non-financial, to the welfare of the family and to the acquisition, conservation and improvement of assets”. Contributions are not required to be tied to particular assets and are taken into account in a general sense (see Farmer & Bramley [2000] FLC 93-060). The Court’s role is to evaluate the significance of the various contributions (see Garwin & Garwin [2013] FamCAFC 210 at [26]).
In terms of these non-financial contributions, in my view they are for the length of the relationship different but approximately equal and include:-
a)The Husband was engaged primarily in conducting the livestock and cropping business of the partnership on the properties earlier set out. I have no doubt this involved long days and hard physical work. Although the Husband acknowledged the Wife undertook some duties in relation to the farm activities, the Wife claims to have done more. I suspect both versions reflect the prism through which they looked at their efforts.
b)The Wife undertook the overwhelming majority of the homemaking and parenting duties (which does not mean the Husband did nothing, for I am satisfied when he was both physically and emotionally available he did), and I would accept that considering the age of the children, these duties were time consuming.
c)I accept the Wife managed the farm accounts and prepared documents for (and liaised with) the business accountant. The Wife, as a partner, was required at times to sign guarantees for loans and other advances.
d)The parties did enjoy the benefit of living on Property B in some respects “rent free”, however, I am satisfied that the Husband maintained the cottage and both parties worked on the farm. I agree with the submission of Mr Batey, that as the Husband’s parents got older and were not able to do the work around the farm in the same way as previously, more tasks (whether in the compass of the (omitted) Partnership or not) fell upon the hard working shoulders of the Husband. In a family farming business, this is only to be expected and, I infer, was recognised by the Husband’s father when the benefits his son received under the Will were drafted in 2006.
The Husband points, in addition to the actual inheritances received by him, to the support his parents, both financially and non-financially, provided the parties and their family, however, it seems to me much of this support was both mutual and reciprocal.
Although post-separation, the Husband did continue to operate the farm and both parties did benefit from the income generated, the Wife post-separation was almost entirely responsible for the day to day care and management of the needs of the children.
Taking all these significant and diverse contributions into account, and giving appropriate weight to the initial contributions received by the Husband and the ongoing benefit that continued to flow from the inherited properties, the Court regards a fair contribution based entitlement of each party to the pool one assets, to be 18% to the Wife and 82% to the Husband. On the pool one interests, this 64% difference equates to about $2,300,000.
In respect of the pool two superannuation interests, the values adopted by the parties for the “joint” interests in Property B Superannuation Fund of $1,478,315 as at 15 December 2013, represents almost 95% of the total pool two interests. I do not ignore the other small funds in which the parties are members. I take into account that he Husband had his (omitted) policy at cohabitation and the Wife had her (omitted) Super Fund policy (previous (omitted)), at cohabitation. I note that the Wife’s current interest in the (omitted) Superannuation Fund, has been swelled by the $30,000 contribution made post-separation from joint monies, accessed by the Wife. The Husband says he also made two contributions of $50,000 each for the 2011 and 2012 tax years into his Property B Superannuation Fund, from farm income.
It is reasonable to infer, on all the evidence, that a major focus of the parties’ joint wealth creation strategy, was to use the tax effective vehicle of superannuation. All the contributions into this fund were made post-cohabitation. The mixture of cash and equities has, no doubt, post-contribution, generated income with an accumulating effect. In my view, I regard the parties’ contributions based entitlements to the pool two interests as equal.
Section 75(2) factors
At paragraphs 62 to 88 of her submissions, Counsel argues for an adjustment of 10% to the Wife. The Husband, in his submissions by Mr Millar of Counsel, urges an adjustment in the range of 5%.
The Court has formed the view that no adjustment for these factors should be made to the pool two superannuation interests beyond the equal contribution finding made above. As a result, the maters now considered relate to the pool one (non-superannuation) interests (although the effect of the property and superannuation orders are not ignored).
In my view, the following factors are most relevant in this case:-
a)The parties are of a similar age and both enjoy good health (save for the Husband’s eye injury). Neither party has repartnered.
b)Although the parties’ income as revealed in their most recent Financial Statements are modest, and not dissimilar, it is the income “capacity” which does, in my view, distinguish the parties.
Although the Wife has part-time (permanent) employment as a (omitted) for 17 hours per week, even if she were able to increase her hours, her income would be modest. This arises from her lack of any formal qualifications. Whilst she did work in the (employer omitted) at the time of the marriage, that is many years ago. I am not satisfied that her chosen country town environment allows her to generate an income much more than $40,000 per annum (about twice her current income from wages). I do not ignore her income from dividends, however, she must also pay the costs of the margin loan for those shares.
The Husband claims a gross income of $647 per week ($33,644 per annum) from farming, dividends and interest, however, those figures are somewhat artificial in reality. For example, he claims a liability for income tax of $491.73 per week ($25,570 per annum). It is difficult to assess with precision the Husband’s income – due to the fluctuations in farm income and the expenses associated with that income. The Husband says (at paragraph 71) that he finds the hard physical work and long hours are more difficult as he has aged, and hopes to retire at age 60 years. Although on the evidence produced, it is difficult to be certain of the actual income available from the farm over the last 10 years or so, it has been sufficient to allow significant superannuation contributions to be made and to accrue and accumulate, without it seems any need for substantial borrowings. On balance, I regard the Husband’s earning capacity exceeds the Wife’s earning capacity.
c)The Wife will have the “care and control” of the parties’ daughters now aged 16, 15 and nearly 13 years. Whilst X attending boarding school might reduce the “day to day” responsibilities for her, the Wife is responsible for the majority of emotional needs of the children. Furthermore, her desire to be available for her children is a factor to be considered under s.75(2)(l). Although parents with school aged children can work “full-time” – there are consequences in terms of time management and also after school/holiday care. Whilst I gained the distinct impression the Husband would be willing and desires to spend more time with the children than he does, the fact remains that the Wife will face employment impediments that are not faced by the Husband.
d)I take into account that the effect of the orders the Court propose to make, is that both parties will have access to about 50% of the total Pool Two interests – an amount, on estimates given at the hearing, of $1,558,726 or about $780,000 each. At their age, and under current superannuation legislation, both parties may be able to consider a transition to retirement pension or other cash managements options.
e)The Wife says that the farming lifestyle undertaken during the relationship was not extravagant. My impression is that holidays were minimal, but that the income generated allowed a reasonable standard of living was enjoyed – and I assess that post-separation and with the effect of the orders the Court propose to make, a standard of living that in all the circumstances is reasonable, can be maintained.
f)As discussed in the section of these reasons relating to contributions, I am satisfied that the contributions by the Wife have been a positive contribution to the farming activities (not the least in being a partner), and that the preservation of the farm, debt free, enables the income which the Husband solely now receives to be a factor to be considered under s.75(2)(j). This is not to “double dip”, as s.75(2)(n) requires the Court to also consider the effect of the terms of any order made under s.79. I acknowledge that the Husband’s contribution based entitlements will alter the interests significantly in his favour, however, the analysis under s.75(2) is not to permit of some “engineering” of a result that does not properly understand the contributions made above. When I come to discuss the order that achieves justice and equity, it will become apparent that one effect of the orders I propose to make is that for the Husband to retain his farm in total, he will be required to borrow funds which will reduce his income. Otherwise, he would have to consider selling some of his property.
g)The Husband, in his submissions, says, and I accept, he pays child support (as assessed) and has paid other amounts as set out at paragraph 26 of his affidavit. Although I accept administrative assessment of child support against a party whose source of income fluctuates is a challenge for the system, the administrative review process permits such factors to be explored. I made the observation at the completion of the hearing, that in my view, the circumstances which exist in this case make it ideal for the parents to enter into a sensible Child Support Assessment Agreement, rather than to embark on the likely child support administrative journey for review on a regular basis. I deal with the Wife’s child support departure application later in these reasons, but I find that the Husband will pay such child support as assessed into the future.
h)The final factor referred to is s.75(2)(o) – “any fact or circumstances” that should be taken into account. The Husband says that support was provided, during the course of the relationship, to the children of the Wife from her prior marriage (see submissions at paragraph 44). I accept that submission, but regard the adjustment in the Husband’s favour being minimal.
Overall, I am satisfied the factors explored and analysed above compel an adjustment in the Wife’s favour of 10% on the Poo Two interests – or a figure in real terms of $359,500 approximately. This is a proper recognition of the factors above that favour the Wife.
What order achieves justice and equity to both parties
Higher authority makes it clear that it is not the “percentages” which dictates whether an order does justice and equity, but the effect of the order made. For context however, a division of the pool one interests in the proportions of 72% to the Husband and 28% to the Wife, would result in a mathematical differential of over $1,580,000 in favour of the Husband. I have already identified that I do regard it as just and equitable to “split” the parties’ interests in the pool two superannuation entitlements equally. How to achieve that result is dealt with shortly.
The Husband’s minute of order makes it clear that he wishes to retain (as would be expected) his farming interests. He also contends that the Wife should transfer her half interest in the Property F property to him, whilst he accepts that he should transfer his half interest in the property at Property T to the Wife. The Wife seeks the Property F property. A clear consequence of the Husband seeking that he retain the Property F property is that he will have to borrow more funds to pay a larger cash adjustment to the Wife.
As I will be seeking further brief submissions on the form of the order, for reasons which I explain, I will allow the Husband to contemplate whether he still seeks to retain Property F, now that he understands the sums he will be required to accumulate (through borrowing or sale of assets) to enable him to pay the Wife. I make this observation in the circumstances that if he wishes to retain the Property F property, then I regard it as proper that he do so. In this respect, I have considered the competing submissions of the parties on this issues, and the evidence I heard, being:-
·The Wife at paragraphs 93 to 96; and
·The Husband at paragraphs 55 to 58.
Both parties live some distance away from the beachside town of Property F and, apart from occasional use for holidays, the property is likely to be rented for holiday purposes to the public. Both parties seek to assert some better claim – through actions (or inactions) post-purchase of each other or through a “sentimental” attachment. The Husband says he is respecting the wishes of his father; the Wife says it was a holiday destination when she was a child. In my view, the factor which ultimately weighs in favour of the Husband is that he chose to use some of his $200,000 inheritance received in December 2009 towards the purchase of the property. Whilst the Wife relies on “Annexure K” to try and establish only $80,000 of the inherited funds were used to buy the property (a fact disputed by the Husband), the intermingling of the funds with farm income makes it difficult to accept the level of contribution from the inheritance. What is apparent however, is that the property was purchased in January 2010 – only weeks after the inheritance of $200,000 was received. It is therefore reasonable to infer that the anticipated receipt of the funds by the Husband was a catalyst for the research he undertook before selecting the unit. I do not ignore the Wife’s claim that she is likely to use the property for the children’s benefit, however, the unit is first and foremost an investment.
If the non-superannuation pool one interest are divided as to 72% to the Husband and 28% to the Wife, the Husband would have to pay the Wife the sum of $545,466 calculated as follows:-
28% of $3,595,714 equals $1,006,800 made up as follows:-
Property T $327,500 Share portfolio 135,822 Nissan 20,000 Bank account – (omitted) Bank 22,047 Bank account – (omitted) Bank 282 Loan to son 47,681 $553,332 Less Margin loan 47,681 Tax liability 44,317 91,998 $461,334 Plus payment by the Husband 545,466 $1,006,800
In passing, I note this figure is less than the Husband proposed to pay – but adopting one pool of assets.
The Husband’s 72% of the pool of $3,595,714 equals $2,588,914 made up as follows:-
Property B $1,455,000 Property F 310,000 Property L 330,000 Property G 320,000 ⅓ share of Property L 40,000 Share portfolio 144,749 Mazda 12,000 Property B Pastoral Co cash 19,284 Livestock 139,322 Plant and equipment etc 120,250 Wool and Hay 20,292 Bank account (omitted) Bank 1,840 Joint share portfolio 535 Tax refund 19,438 Balance of inheritance 215,431 Further tax refund 5,611 $3,153,752 Less, tax liability 19,372 $3,134,380 Less payment to the Wife 545,466 $2,588,914
In my view, an order which distributes the pool one interests in this way and equalises the parties’ interest in the pool two superannuation entitlements is an order that achieves justice and equity for both parties.
Taking the two pools together, the division on a combined pool of $5,154,440 is 34.7% ($1,786,163) to the Wife and 65.3% ($3,368,277) to the Husband.
Superannuation splitting orders
The Husband opposes superannuation splitting orders as proposed by the Wife, or at all. His position is articulated at paragraphs 59 to 61, which I set out in full now:-
“59.The Wife seeks superannuation splitting orders which are opposed by the Husband. The Husband’s position is that the parties should simply retain the accounts which they each have in the superannuation fund. There is no need to make the orders sought by the Wife to achieve a just and equitable outcome. It will be necessary to await the explanation in the submissions to be made for the Wife as to why such orders are necessary and why it wold be just and equitable to make them in the circumstances.
60.Further, in relation to the Property B Superannuation Fund it is submitted that the Court cannot make the splitting orders sought by the Wife or any splitting order in the absence of evidence as to the current value of the interests to be split. The evidence gives the value of the interest of each party as at 30 June 2013 (Exhibit 4) but it is clear that the values at that time do not represent the values of those interests now. Accordingly it is submitted that the court cannot make orders splitting superannuation interest of the parties in the Property B Superannuation Fund.
61.In relation to the (omitted) Superannuation Fund and the (omitted) Superannuation Fund in which the Wife has interests there is no reason why these interests should be split for the purpose of achieving a just and equitable outcome between the parties. The Husband opposes such splitting orders being made. No presumption of equality applies in these proceedings. Accordingly it is not appropriate or justified in principle to simply split the interests of the Wife has with the Husband so that they will have equality between them.”
It is noted that, of course, the Husband had argued for a combined pool approach which was rejected for reasons already given. Considering the contribution findings made earlier, I am satisfied that justice and equity is best achieved by making a splitting order.
It is a matter of concern that neither party attempted to put proper evidence of the current values of the superannuation member balances before the Court – other than for Exhibit 4, which are the financial statements for the Property B Superannuation Funds to 30 June 2013. Those statements reveal that:-
a)They were audited by Mr D.
b)At that date the member entitlements were:-
- Husband $1,018,099.87
- Wife $380,398.66
with total net assets being $1,435,050.
c)In percentage terms, the net assets (after allowance for other liabilities of $36,552) were held as follows:-
- Husband 72.8%
- Wife 27.2%
d)At 30 June 2013, the assets comprised essentially of:-
- (omitted) Bank Savings $712,672.51
- Shares in listed companies $708,854.79
e)During the 2013 tax year, only $1,500 was received as a contribution (from the Husband), and notably there was a “significant movement in net market values” of $148,909. Considering the assets of the fund, this is attributable to share price improvement.
These financial statements enable the Court to be satisfied what were the values of the parties’ interests in the fund as at 30 June 2013. I disagree that the Court cannot make a splitting order. The parties seemed to accept these financial statements, and as the only trustees and members, they had the capacity to put better evidence of value of entitlements before the Court if they so desired. They have not done so. As a result the financial statements represent the best evidence of the value of the members’ entitlements at 30 June 2013.
The challenge for the Court is what orders are likely to affect an equal entitlement to the pool two interests. In this regard, disregarding the member benefits in the Property B Superannuation Fund, the other benefits are currently:-
HUSBAND - (omitted) Superannuation $24,116 WIFE - (omitted) Superannuation $24,188 - (omitted) Superannuation $32,107 $56,295 TOTAL: $80,411
To achieve equality, there should be a splitting order in favour of the Husband from one of the Wife’s superannuation interests of a base sum of $16,090 ($24,116 + $16,090 = $40,205).
The evidence is that there have been no contributions to either of the parties’ member accounts since 1 July 2013. On that basis, I infer that the entitlements each member retains to the net assets now will remain the same as they were at 30 June 2013. That is to say, that any increase in the funds’ assets since 30 June 2013 (whether by reason of dividends or interest) must be distributed in the same proportions as the capital accounts. Whilst this seems a logical approach, I accept that the Court has not been provided with a copy of the Trust Deed for the fund, or any evidence from the auditor of the fund.
On the basis of this assumption to achieve equality of member benefits, it is reasonable to find (on the assumptions made), that a split of 31.32% of the Husband’s current benefit to the Wife would have the effect of creating an equal division.
This base splitting order is calculated as follows:-
·Wife to receive a further 22.8% of the total fund
·22.8% of the fund of $1,398,498 equates to $318,857
·$318,857 of the Husband’s balance of $1,018,099 is 31.32%
I regard it as fair to both parties to use a percentage figure as a base sum, rather than a dollar figure. A percentage figure allows for fluctuations in the member benefits. The member benefits are likely to have increased, as both parties agreed to include in the Pool of Assets, a “joint” fund balance of $1,478,315 (at the time of hearing) which is an increase of over $50,000, above the fund balance (for cash and equities) of $1,421,526, at 30 June 2013.
As the parties have not had an opportunity to be heard on the form of the order the Court proposes for the splitting order, it is proper to allow them to do so before the Court so orders. It is also accepted that the parties, as the only trustees of the fund are entitled to be provided procedural fairness.
Child support departure application
Orders numbered 31 and 32 in Appendix Two are the child support orders sought by the Wife. It is not necessary to repeat the chronology incorporated in these reasons, save to repeat that the parties are the parents of the three children:-
·X born (omitted) 1997
·Y born (omitted) 1999
·Z born (omitted) 2001
and as such, the parties have a duty imposed by the Child Support (Assessment) Act 1989 (“the Act”) to meet the needs of their children equitably.
The usual practise is for one parent to seek an administrative assessment against the other parent, which the Mother did, and based on assessments of income and adopting the statutory formula, assessments have issued against the Husband (as the “liable” parent) initially on 19 July 2012 and then, it seems also on 22 August 2012, 26 February 2013 and 14 June 2013. The administrative assessments are annexed to the Wife’s trial affidavit and reveals as follows:-
Period Amount monthly 6 July 2011 to 26 January 2012 $544.83 27 January 2012 to 25 June 2012 458.17 26 June 2012 to 30 June 2012 616.58 1 July 2012 to 18 July 2012 562.33 19 July 2012 to 1 September 2012 598.67 2 September 2012 to 30 June 2013 2,951.50 1 July 2013 to 1 December 2013 3,058.75
The Wife seeks departure from these assessments, which I assume have not been the subject of any other application for administrative departure, for the period from 28 July 2011 to 30 June 2014 to essentially set the Husband’s income in a particular way.
The Husband has not sought any departure, seeking merely, (but on different grounds), that the Wife’s application for departure be dismissed.
Child support periods prior to 1 July 2012
It is common ground that the Wife’s application seeking relief pursuant to s.118(c) and (g) of the Act was filed on 2 December 2013 and that the period from 28 July 2011 to 1 July 2012 falls outside of the 18 month period required in s.98S(3B). Accordingly, the Wife requires the Court’s leave to include the excluded period as part of her application.
At paragraphs 3.10 to 3.13 of the Wife’s submissions (dated 7 January 2014 but not filed in Court until last week), it is argued that leave should be granted because:-
·The Wife was not aware of how the Husband had arranged his financial affairs
·She only became aware of his financial position when he filed his taxation returns; revealed the effect of the dissolution of the partnership and received the evidence of the family accountant Mr B.
In response, at paragraphs 8 to 23, very comprehensive submissions are articulated as to why leave should be refused.
I am not satisfied, on the evidence offered to the Court, why the Wife failed to lodge her application earlier, although her consideration of child support issues was clearly apparent from her response filed 14 September 2012 where she sought orders “that the father pay her periodic child support as assessed by the agency…”. On its face, this was a curious application (akin to seeking enforcement), but seen in light of the fact that the first administrative assessment issued on 19 July 2012, it is not explained why the Wife did not seek a departure at that time. The Wife, I am satisfied, was aware of the types of legitimate taxation minimisation strategies that had been employed during the relationship, particularly:-
·advance payment of expenses;
·management of farm management deposits to average income;
·making sizeable superannuation contributions to reduce taxable income.
as she was the partnership bookkeeper. Although she may not have known with certainty, by the end of 2012 what the figure were, if she had made a proper application for departure, by that date, the periods of assessment numbered 1, 2 and 3 in the table above would have been covered by the application.
I am otherwise persuaded by the Husband’s submissions that leave should be refused.
Periods after 1 July 2012
There are four assessments made after 1 July 2012 as set out previously.
Although since 2006, the administrative review processes leading ultimately to a review by the SSAT, have generally reduced the Court’s jurisdiction in child support matters to an Appeal on a question of law from the SSAT, the Court may grant leave pursuant to s.116(1)(b) of the Act to determine a child support departure application where there are other proceedings before the Court involving the same parties. This provision was designed to allow parties to ask the Court to consider the application, without first going through the internal review process.
In this case, the Court was seized with the property application and cross-examination (although limited) in respect of the children’s expenses was undertaken. At paragraph 7 of the Husband’s submissions, he concedes that he is “content for the Court to hear and determine the Child Support Department applications on the evidence which has been adduced by the parties in these proceedings”. Although it seems the Husband does not oppose leave being given, it is ultimately a matter for the exercise of discretion by the Court.
I am satisfied leave should be given.
I agree with the submissions of Counsel for the Husband, that as the Full Court in Hides & Hatton (1997) FLC 92-759 directs, it is necessary to perform the three stage process (identified in Gyselman (1992) FLC 92-279), in respect of each of the four remaining assessments however “tedious” that may be – particularly, in this case, where two assessments cover a period of only 17 days and 45 days respectively.
However, that is the task the Court is required to undertake. On all the evidence however, based on the findings made above (which I rely upon) and the following factual findings, the Court believes it is capable of making it clear to the Wife why it has decided to dismiss her application for a departure from the administrative assessments issued by the Registrar. To provide some context, the Court finds that:-
a)The Wife has failed to place before the Court any reliable evidence of the reasonable needs for the children at the relevant times – save for their current needs. As to their current needs, the Wife in her Financial Statement sworn 26 November 2013 sets out at Item 60 (Part N), her estimate of the children’s expenses of $1,018 per week – which includes $380 per week for education expenses (almost entirely for X). Other than dealing with X’s school fees, paragraphs 50 to 64 of the Wife’s affidavit under the heading of “Child Support” makes many “submissions” but is reliant upon little evidence about the children’s needs from 1 July 2012.
b)The Wife approaches the matter, seeking to rely upon modified assessment, shaped as her order suggests, by three variations designed (I infer) to adjust any taxable income declared by the Husband by:-
i)ignoring any deductions for deposits into farm managements accounts;
ii)ignoring any deductions for contributions to superannuation; and
iii)deeming the Husband to have received 100% of the income of the Fischer partnership.
c)As Counsel for the Husband asserts, superannuation contributions are “added back” pursuant to s.43 of the Act. The notes to each administrative assessment makes it clear that is the position.
d)Considering that the partnership was dissolved on 27 April 2011, all income from that date became taxable in the hands of the Husband. This date falls within the “excluded period” which has already been identified. It is also noted that to the extent that any taxation liability extended to the Wife for the 2011 tax year, such liability was included in the pool of assets and liabilities considered for the property adjustment.
e)The Wife seeks to now impose an artificial inhibition on the Husband managing farm capital and expenses through the entirely legitimate FMD –when, during their marriage that was exactly what they did. Furthermore, the Wife post-separation accessed a FMD in her name for $85,000 which she used for living expenses – including school and living expenses for the children. These funds were additional to the further sum of $40,000 available and used by the Wife post-separation. I speculate, perhaps unhelpfully, that some of these monies were used to meet legal expenses.
f)The use of FMD is a way by which farmers “average” their incomes over good and bad years. To ignore those transactions is to essentially contend that child support (based on taxable income calculations) should only apply in good years. I again note the Court’s suggestion for these parties to negotiate and enter into a child support agreement to avoid these likely fluctuations, was not taken up, as the parties were perfectly entitled to do.
g)The two assessments covering the periods from 2 September 2012 to 1 December 2013 equate to the Husband paying approximately $3,000 per month on average – or $692 per week. Although the Court has no real evidence as to the children’s reasonable needs at 2 September 2012, the evidence the Wife offers in her recent Financial Statement reveals an expense (including school fees) of $630 per week. Whilst the Court accepts that this figure does not include an allowance for accommodation expenses (noting the Wife resides in an unencumbered home with the children but does have rates, insurance and other usual outgoings), it is clear that the assessment raised against the Husband results in his payments meeting the majority of the children’s expenses as asserted by the Wife.
Before undertaking the three step process for each assessment period as required by authority, two further matters require to be raised.
Firstly, the Wife has adopted the position in her case, that the mere adjustment to the Husband’s income as she proposes (which I have already expressed some misgivings about), will generate a fair result – apparently because the formula is fair. However, in every departure application, the Court is not entitled to lose sight of the reasonable needs of the children. If, for example, the application of the formula created an assessment which far exceeded the reasonable needs of the child, then such assessment would be amenable (on application) to departure by the liable parent on that basis.
Secondly, and fundamentally, the Court must not interfere with the administrative assessment unless it is satisfied that “special circumstances” exist to do so (see s.117) with the Wife bearing the onus, as she does for the following three steps.
As to the special circumstances for each of the periods in question under review, apart from the two assessments from 1 July 2012 to 1 September 2012, I am satisfied that the assessment made does almost entirely cover the children’s expenses (save for X’s private school expenses). Considering the funds available to the Wife post-separation, I am not satisfied that special circumstances has been established for any of the assessments.
Having made such a finding, it would be entirely proper to now dismiss the Wife’s application for departure from the four administrative assessment, however through an abundance of caution (including the Husband’s submission to deal with each period on the evidence, which might be construed as a concession that special circumstances has been established), I now deal with each period.
Assessment 1 July 2012 to 18 July 2012
This assessment issued on 19 July 2012 and utilised, as the Husband’s income, his 2010 taxable income of $49,355, resulting in a monthly assessment of $562.33. The Wife’s taxable income was similar at $48,973 being her 2010 taxable income. These figures were taken from returns lodged whilst the parties were an intact couple.
Without adjustment for the factors identified by the Wife, the Husband’s taxable income for the 2012 tax year appears to be $181,237 (this figure is drawn from the administrative assessment that issued on 26 February 2013 for the period commencing 1 July 2013).
The ground for departure relied upon is s.117(2)(c)(ia), namely that the administrative assessment of child support “would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child … because of the income, property and financial resources of either parent”.
I am satisfied the Husband’s taxable income used for this period of $49,355 is not a true indication of his income and if applied for the 17 days in question this increases the daily rate to approximately $100.49281 – up from $18.47502 per day – an increase of approximately $82 per day or $1,394 for the period.
In my view however, even though I have no evidence of the needs of the children at that time, I do not regard it as just and equitable or otherwise proper to depart from the assessment. I am not satisfied that hardship was caused to the Wife during that period because of her access to other capital from the FMD and other sums in her control.
Assessment 19 July 2012 to 1 September 2012
This assessment also issued on 19 July 2012 using the same taxable income for the Husband of $49,355 but a reduced taxable income for the Wife. Adopting his 2012 taxable income as accurate. I find that for the 45 days covered by this assessment, the daily rate of $100.49281 should apply – up from the daily rate applied of $19,66872 – an increase of approximately $80.83 per day or $3,637.35 for the period.
Similarly to the first administrative assessment, I have no evidence of needs of the children at that time, but I do not regard it as just and equitable or otherwise proper to depart from the assessment. During this period the Wife had access to the capital earlier referred to.
Assessment 2 September 2012 to 30 June 2013
This assessment issued on 23 August 2012 and utilized, as the Husband’s income a “provisional” taxable income of $200,000, resulting in a substantial increase in the monthly assessment of $598.67 per month to $2,951.50 per month. I again observe that there is no evidence to suggest that the Husband sought to depart, by administrative process (or in these proceedings) from that assessment. The Wife’s taxable income for the purpose of the assessment was estimated at $34,994 per annum.
As the last assessment reveals (which I deal with next), the Husband’s taxable income for the 2012 tax year was actually less than the provisional sum adopted of $200,000. I have already identified why I believe that the Wife’s attempt to “recalculate” the Husband’s taxable income is, in my view, flawed. Based on the actual taxable income and my finding that it is a reasonable estimate, no ground of departure as asserted by the Wife has been established.
Assessment 1 July 2013 to 1 December 2013
Between 22 August 2012 and 14 June 2013, the Husband’s taxation return for the year ended 30 June 2012 must have been filed, because this assessment adopted a taxable income for the Husband of $181,237, rather than the provisional income figure of $200,000.
The fact that, despite the Husband’s drop in his adopted income, the assessment increased to $3,058.75 per month appears to be attributable to a decrease in the Wife’s income from $34,994 to $28,177 per annum. I do not ignore the Wife’s submissions at paragraph 3.15 which conclude that, for the reasons identified at paragraph 3.14 of the submissions, the Husband’s taxable income for the 2012 tax year should be $211,237. I simply do not accept the submission.
For the assessment period, no ground of departure as asserted by the Wife has been established.
For completeness, having found for this assessment period (as well as for the period from 2 September 2012) that no ground of departure has been established, it is not necessary to consider whether it is just and equitable and otherwise proper to depart from the assessment.
Application for order to pay school fees
The Wife, at proposed order 32, seeks that pursuant to s.124 of the Child Support (Assessment) Act 1989 that the Husband pay “all of the following expenses for the child X”, which relate to her attendance as a boarder at (omitted) College including extra school tuition, text books and materials, artistic and sporting activities and all school uniforms and sports clothing.
Unlike the earlier discussions on the periodic child support which often involve a retrospective analysis, this application relates to a future period (although it would be proper for the Court to consider commencing the order from 1 January 2014).
The evidence is that the Husband has paid 50% of X’s school fees at (omitted) College and half of the costs of uniforms, text books and some excursions. At paragraph 26 of his affidavit he sets out the voluntary payments he makes at the current time. In his submissions at paragraph 48, the Husband contends that he “is willing to continue to pay one half of X’s school fees and no order is required that he do so. However, the Husband opposes the order sought by the Wife that the pay the entirety of X’s school fees and other identified costs”.
The Act provides for an application to be made that a liable parent provide child support other than in the form of periodic amounts if an administrative assessment is in force in relation to the child. The Court must have regard to the matters in s.117(4), (6),(7), (7A), and (8) of the Act and I adopt the contention at paragraph 3.26 of the Wife’s submissions as to the relevant matters in this case, in order that the Court, in the special circumstances of this case, is satisfied that it is just and equitable as regards to the child, the carer entitled to child support and the liable parent, and otherwise proper to make an order.
I am not satisfied that “special circumstances” exist to make such an order. I have no concerns that the Father will, as he says, continue to pay half of the expenses as he has done voluntarily. In cross-examination he committed to X remaining at (omitted) College. Arising from the property adjustment orders I propose to make, the Wife’s capacity to contribute to school fees will improve. This is without her even seeking to access her accumulated superannuation by way of a transition to retirement pension to increase her income. I adopt earlier findings made about the Husband’s income to 30 June 2012. Whilst the Husband’s income tax return to 30 June 2013 (Exhibit 10) suggests a taxable income of only $33,748, I am satisfied he will pay his share of X’s school fees and associated costs, which in all the circumstances I regard as fair.
If “special circumstances” were established (which I find is not the case), then I accept the parties had agreed to enrol the child X in private education as a boarder. She has two years to complete. This application does not seek any non-periodic sum for the education of either Y or Z.
Counsel for the Husband submits that no administrative assessment is in force. At the time of the hearing, that was the case, however it is reasonable to infer that an assessment has issued for the period from 1 January 2014, in the normal administrative course.
The increased financial capacity of the Wife (through the property adjustment orders) and the level of child support assessed to 31 December 2013 together with the voluntary payments made by the Husband, persuade me that the order sought by the Wife would not be just and equitable or otherwise proper to make, if special circumstances had been established.
Finally, the Wife points to the funds held by the Husband, as trustee, for the children arising from the testamentary trusts created by the Will of the Husband’s late father as a source for payment of school fees. Whilst it is clear what the Husband, as the trustee, could do so within the terms of the trust, it is not his money. It offends both the law and principle for the Husband to meet his personal obligations as a “liable parent” under the Child Support (Assessment) Act 1989 by drawing on the trust. Whilst drawing on the trust funds would obviously reduce the net obligation of the parents to contribute to X’s school fees, such application of funds is entirely within the discretion of the Husband – not as the father, but as a trustee. If, as he had indicated in cross-examination, he was not minded to do so, preferring to provide each of the children with a payment when they reach the age of 24 years (as a reminder to them of the love of their deceased grandfather), then no challenge to such discretion could reasonably be made.
For the reasons set out, I will dismiss the Wife’s application, on the two separate bases, for any child support orders.
I propose to list the matter within fourteen (14) days, on a date to be agreed, to allow the parties to consider these reasons before I take, as anticipated, some further submissions as to the form of orders – particularly the proposed superannuation splitting orders.
I certify that the preceding one hundred and twenty-six (126) paragraphs are a true copy of the reasons for judgment of Judge Baumann
Associate:
Date: 6 June 2014
APPENDIX ONE
(Orders sought by the Husband)
That the combined net assets of the parties (non-superannuation and superannuation assets) be divided as to 80% to the Husband and 20% to the Wife, such that the following shall occur:-
1.1The Husband shall retain the real properties known as “Property B”, “Property L”, “Property G” and “Property F” and Property L.
1.2The Husband shall retain all cash held by him at banks, the Property B Pastoral Company, his shares, plant, machinery, equipment stock and motor vehicles and the balance of the Fischer Partnership bank account.
1.3The Husband shall retain the account balance in his name of the Property B self-managed Superannuation Fund and his (omitted) superannuation interest.
To give effect to Order 1 above, the Husband shall transfer to the Wife all of his right, title and interest in Property T in the State of New South Wales and:
2.1 The Wife shall retain:
2.1.1 All monies in bank accounts held by the Wife including but not limited to monies currently in bank accounts held by the Wife, and the $40,000 received by the Wife from the Property B Farm Management Account and the $85,000 in Farm Management deposits received by the Wife at separation and the balance of her own bank account at separation (by way of ad backs).
2.1.2 The Wife’s account balance in the Property B Superannuation Fund by way of a super splitting Order and any other superannuation interests held in the Wife’s name.
2.1.3 The funds held in the Property B Pastoral Company Bank Account.
2.1.4 The Wife’s share portfolio.
2.1.5 Within 90 days the husband shall pay to the wife a cash sum to give effect to the 20% distribution to the wife from the asset pool.
That the Wife’s application for departure Orders pursuant to the Child Support Assessment Act (1989) Cth be dismissed.
That within 28 days the wife deliver up to the husband the following items:
4.1 One of two DVD discs containing photographs of the parties’ children
4.2 Video cassettes containing images of the parties’ children (the Husband to make a duplicate copy and return the originals to the wife)
4.3 All document sin her possession with respect to the Fischer Partnership
APPENDIX TWO
(Orders sought by the Wife)
That the Husband pay to the Wife, within 28 days, the sum of $667,500.
That the Husband forthwith, sign, execute and deliver up to the Wife Memoranda of Transfer transferring to her the whole of his right, title and interest in:
a.The property known as Property T in the State of New South Wales, being Lot (omitted) in Deposited Plan (omitted);
b.The property known as Property F in the State of New South Wales, being Lot (omitted) in Strata Plan (omitted).
a. The Husband pay, and indemnify the Wife in respect of liability for, any amount of tax assessed as payable by her on any income which she is deemed to have received consequent upon the dissolution of the partnership Fischer on 27 April 2011 and the transfer of the livestock and other assets of that partnership to the Husband.
b.To that end the parties accept the amount certified by the Wife’s accountant, Mr B, as the relevant amount under paragraph (a) of this order and the Husband pay that sum to the Australian Taxation Offie to the credit of the Wife’s tax account within 28 days of receiving notification of the relevant amount.
Superannuation Orders – (omitted) Super Splitting Order (formerly (omitted))
That, in accordance with paragraph 90MT(1)(b) of the Family Law Act 1975:
a.the Husband (or such other person to whom a splittable payment is payable) is entitled to be paid the specified percentage out of the Wife’s superannuation interest in the (omitted) Superannuation Fund (Member Number (omitted));
b.the Wife’s entitlement (or the entitlement of such other person to whom a payment may be made out of the Wife’s interest) in the (omitted) Superannuation Fund, is correspondingly reduced by force of this Order; and
c.the percentage specified for the purposes of the (omitted) Super Splitting Order is 50%.
That the trustee of the (omitted) Superannuation Fund do all such acts and things and sign all such documents as may be necessary to:
a.Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Husband in the immediately preceding clause of this Order; and
b.Pay the entitlement whenever the trustee makes a splittable payment from Wife’s superannuation interest in the (omitted) Superannuation Fund.
That Order 4 of this Order has effect from the (omitted) Super and the (omitted) Super is the beginning of the day upon which this Order is made.
That the Court notes:
a.The value of a non-member spouse interest awarded under Order 4 of these orders is calculated in accordance with Party 7A of the Superannuation Industry (Supervision) Regulations 1994; and
b.Any payments from Wife’s superannuation interest in the (omitted) Superannuation Fund made after the trustee has dealt with the interest in accordance with Part 7A of the Superannuation Industry (Supervision) Regulations 1994 are not splittable payments in accordance with Division 2.2 of the Family Law (Superannuation) Regulations 2001.
Superannuation Orders – (omitted) Super Splitting Order
That, in accordance with paragraph 90MT(1)(b) of the Family Law Act 1975:
a.the Husband (or such other person to whom a splittable payment is payable) is entitled to be paid the specified percentage out of the Wife’s superannuation interest in the (omitted) Superannuation Fund (Member Number (omitted));
b.the Wife’s entitlement (or the entitlement of such other person to whom a payment may be made out of the Wife’s interest) in the (omitted) Superannuation Fund, is correspondingly reduced by force of this Order; and
c.the percentage specified for the purposes of the (omitted) Splitting Orders is 50%.
That the trustee of the (omitted) Superannuation Fund do all such acts and things and sign all such documents as may be necessary to:
a.calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Husband in the immediately preceding clause of this Order; and
b.pay the entitlement whenever the trustee makes a splittable payment from Wife’s superannuation interest in the (omitted) Superannuation Fund.
That Order 8 of this Order has effect from the (omitted) Super and the (omitted) Super is the beginning of the day upon which this Order is made.
That the Court notes:
a.the value of the non-member spouse interest awarded under Order 8 of these Orders is calculated in accordance with the Superannuation Industry (Supervision) Regulations (1994); and
b.any payments from Wife’s superannuation interest in the (omitted) Superannuation Fund made after the trustee has dealt with the interest in accordance with the Superannuation Industry (Supervision) Regulations 1994 are not splittable payments in accordance with Division 2.2 of the Family Law (Superannuation) Regulations 2001.
Splitting Order – (omitted) Splitting Order
That, in accordance with paragraph 90MT(1)(b) of the Family Law Act 1975;
a.the Wife (or such other person to whom a splittable payment is payable) is entitled to be paid the specified percentage out of the Husband’s superannuation interest in the (omitted) Superannuation Plan, Plan No: (omitted), under the (omitted) Superannuation Savings Trust (the “(omitted) Fund”), (omitted) Superannuation (the “Trustee”);
b.the Husband’s entitlement (or the entitlement of such other person to whom a payment may be made out of the Husband’s interest), in the (omitted) Fund, is correspondingly reduced by force of this Order; and
c.the percentage specified for the purposes of the (omitted) Splitting Order is 50%.
That the trustee of the (omitted) Superannuation, as Trustee of the Fund, do all such acts and things and sign all such documents as may be necessary to:
a.Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Wife in the immediately preceding clause of this Order; and
b.Pay the entitlement whenever the trustee makes a splittable payment from Husband’s superannuation interest in the (omitted) Fund.
That Order 12 of this Order has effect from the (omitted) operative time and the operative time is the beginning of the day upon which this Order is made.
That the Court notes:
a.the value of the non-member spouse interest awarded under Order 12 of these Orders is calculated in accordance with the Superannuation Industry (Supervision) Regulations 1994 are not splittable payments in accordance with Division 2.2 of the Family Law (Superannuation) Regulations 2001.
Superannuation Orders – Property B Self-managed Superannuation Fund Wife to transfer her entire interest in the Property B Self-managed Superannuation Fund to the Husband (Property B Splitting Order1)
That in accordance with section 90MT(1)(b) of the Family Law Act 1975:
a.The Husband is entitled to be paid the specified percentage being 100%, of each splittable payment from the Wife’s superannuation interest in the Property B Fund; and
b.The Wife’s entitlement (or the entitlement of such other person to whom a splittable payment may be made out of the Wife’s superannuation interest in the Property B Fund) is correspondingly reduced.
That the Trustee of the Property B Fund do all things necessary to:
a.Calculate, in accordance with the requirement of the Family Law Act 1975 and the Family Law (Superannuation Regulations 2001 the entitlement awarded to the Husband in the immediately preceding clause of this Order; and
b.Pay the entitlement whenever the Property B Trustee makes a splittable payment out of the Wife’s interest in the Property B Fund.
Property B Splitting Order1 operates from the Property B Super1.
Superannuation Split in favour of Wife (Property B Splitting Order2)
That in accordance with section 90MT(1)(b) of the Family Law Act 1975:
a.The Wife is entitled to be paid the specified percentage being 50%, of each splittable payment from the Husband’s superannuation interest in the Property B Fund; and
b.The Husband’s entitlement (or the entitlement of such other person to whom a splittable payment may be made out of the Husband’s superannuation interest in the Property B Fund) is correspondingly reduced.
That the Trustee of the Property B Fund (“the Property B Trustee”) do all things necessary to:
a.Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement awarded to the Wife in the immediately preceding clause of this Order; and
b.Pay the entitlement whenever the Trustee makes a splittable payment out of the Husband’s superannuation interest in the Property B Fund.
Operative Times of the Property B
The operative times for the Property B operate as follows:
a.Firstly, Property B Super 1 operates from the beginning of the day of the date of the transfer of the Property B transferable benefits; and
b.Secondly, Property B Super 2 operates immediately following the operation of Property B Super 1.
Transfer of Transferable Benefit
That after service by the Property B Trustee of the payment split notice pursuant o r.7A.03 of the Superannuation Industry (Supervision) Regulations 1994, the Wife shall do all such acts and things and sign all such documents as may be necessary, including but not limited to exercising her request pursuant to r.7A.06 of the Superannuation Industry (Supervision) Regulations 1994) from the Property B Fund to her interest in the (omitted) Super Fund (ABN (omitted)) (“the Wife’s New SuperFund”)…
That the Husband and Wife shall convene a meeting of trustees within 30 days after receipt of the New Financial Statement and do all such acts and things, and sign all such documents as may be necessary by reference to the Financial Statement to transfer to the trustee of the Wife’s New Super Fund the Property B transferable benefits pursuant to r.7A12 of the Superannuation Industry (Supervision) Regulations 1994 by cash transfer only.
That contemporaneously with the transfer of the Property B transferable benefits from the Husband’s interest in the Property B Fund to a superannuation interest in the name of the Wife in the Wife’s New Super Fund:
a.The Wife shall do all such things and sign all such documents as may be necessary to resign as trustee and member of the Property B Fund in accordance with its Rules;
b.The Husband shall do all such things and sign all such documents as may be necessary to resign as trustee of the Property B Fund and as the remaining member appoint the New Trustee to be the trustee of the Property B Fund in accordance with its Rules; and
c.The Husband and Wife shall do and sign all such documents necessary to transfer the investments held by them in their capacity as trustees of the Property B Fund to the Trustee of the Wife’s New Super Fund noting that such transfers will be eligible for Capital Gains Tax Rollover relief pursuant to Income Tax Assessment Act 1997 s124-160 and may be eligible for stamp duty relief.
That contemporaneously with the Wife’s compliance with the provisions of clause 24 of this Order, the Husband will indemnify and keep the Wife effectively indemnified against all liability of and in relation to the Property B Fund including any debt personally guaranteed by the Wife, and including any unpaid income tax assessed or hereinafter assessed against the Wife in respect of income derived or deemed to have been derived by the Property B Fund inclusive of interest, penalties, costs and fines and from all proceedings, costs, claims or demands in respect thereof.
That in the event of any dispute arising between the parties in the exercise of their powers as trustees of the Property B Fund, the parties shall appoint an arbitrator nominated by the President of the Institute of Chartered Accountants.
Pending the transfer of the Property B transferable benefits from the Husband to the Wife and from the Wife to the Husband:
a.Each party is restrained from dealing with, charging, encumbering or disposing of any of the investment property of the Property B Fund other than in accordance with the terms of this Order; and,
b.Each party shall immediately revoke any binding death benefit nomination already made and each party be, and is hereby, restrained from:
i. making any binding death benefit nomination in favour of a child described in regulation 13 of the Family Law (Superannuation) Regulations 2001;
ii. making any other nomination where the effect of such nomination would be to render any splittable payment not splittable; and
iii. doing any such act or thing which would defeat, extinguish or reduce the entitlement of either party under this Order.\
Other Property Orders
Unless otherwise provided in these orders, as against the Wife, the Husband is to be declared the sole owner of:
a.Any money in any account in his name with any bank or other financial institution;
b.The assets of the partnership known as Fischer (“the Partnership”);
c.The assets of the company known as Property B Pastoral Co. Pty Limited (“the Company”);
d.Subject to these Orders, any interest in real estate in his possession;
e.Subject to these Orders, his superannuation interests;
f.Any shares owned by him; and
g.All goods, chattels and personal property in his possession.
The Husband indemnify and keep the Wife indemnified in relation to:
a.Any debt of the Partnership; and
b.Any debt of the Company.
Unless otherwise provided in these orders, as against the Husband, the Wife is to be declared to be the sole owner of:
a.Any money in any account in the name of any bank or other financial institution;
b.Subject to these Orders, her superannuation entitlements;
c.Any shares owned by her; and
d.All goods, chattels and personal property in her possession.
Child Support
That for the purposes of the calculation of child support payable by the Father to the Mother for their three children:
a.The Father’s child support income amount for the child support periods from 28 July 2011 to 30 June 2014 be calculated by:
i. ignoring any deductions for deposits into Farm Management accounts;
ii. ignoring any deductions for contributions to superannuation;
iii. deeming the Father to have received 100% of the income of the Fischer Partnership.
b.The Mother’s child support income amounts for the child support periods from 28 July 2011 to 30 June 2014 be her taxable income, as assessed following the lodgement of her income tax returns for the years 2011 to 2013 inclusive but ignoring any income deemed to have been received by her from Fischer partnership.
Pursuant to section 124 of the Child Support (Assessment) Act the Father pay all of the following expenses for the child X born (omitted) 1997, as and when they fall due:
a.School fees for the child’s attendance at (omitted) College including boarding fees;
b.The cost of any extra school tuition;
c.The cost of school text books and materials;
d.The cost of artistic and sporting activities; and
e.The cost of all school uniform and sports clothing
AND IT IS NOTED
A.That pursuant to Section 81 of the Family Law Act the parties intend these orders to be in full and final settlement of any financial claims each may have against the other for property settlement or spousal maintenance and each party undertake to make no further claim against the other by way of property settlement or spousal maintenance.
B.That the provision of Section 77A of the Family Law Act are not applicable in these proceedings.
C.The value of the Property B transferable benefits to be transferred:
a)from the Wife’s interest in the Property B Fund to the Husband’s interests in the (omitted) Fund; and,
b)from the Husband’s interest in the Property B Fund to the Wife’s interest in the Wife’s New Super Fund;
are calculated in accordance with r.7A.12 and r.7A.11 respectively of the Superannuation Industry (Supervision) Regulations 1994;
D.Pursuant to r.14F of the Family Law (Superannuation) Regulations 2001, any payments from:
a)the Wife’s interest in the Property B Fund made after the Property B trustees have transferred the Property B transferable benefits from the Wife to the Husband’s interest in the (omitted) Fund; and
b)the Husband’s interest in the Property B Fund made after the trustees have transferred the Property B transferable benefits to the Wife’s New Super Fund;
are not splittable payments.
Key Legal Topics
Areas of Law
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Family Law
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Statutory Interpretation
Legal Concepts
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Appeal
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Jurisdiction
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Remedies
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Statutory Construction
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