Fleck and Fleck
[2014] FCCA 2595
•13 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FLECK & FLECK | [2014] FCCA 2595 |
| Catchwords: FAMILY LAW – Property – 15 year cohabitation – Wife not working – two Children in Wife’s majority care – debt to Wife’s father in dispute – two major assets are the former matrimonial home and the Husband’s superannuation interest – consideration of the “mix” of assets with which each party will be left as a result of proposed orders – disparity in income – Husband’s partner not available to be cross-examined – Jones v Dunkel inference – spouse maintenance. |
| Legislation: Family Law Act 1975, ss.72, 74, 75, 79 |
| Bevan & Bevan (1995) FLC 92-600 In the Marriage of Burke (1981) FLC 91-055 In the Marriage of Prince [1984] FLC 91-501 |
| Applicant: | MS FLECK |
| Respondent: | MR FLECK |
| File Number: | SYC 1432 of 2013 |
| Judgment of: | Judge Sexton |
| Hearing dates: | 16-18 June 2014, 23-24, 28-29 July 2014 |
| Date of Last Submission: | 12 August 2014 |
| Delivered at: | Sydney |
| Delivered on: | 13 November 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr T Hodgson and Mr N Ford |
| Solicitors for the Applicant: | Prime Lawyers |
| Counsel for the Respondent: | Mr P. Batey |
| Solicitors for the Respondent: | Dimocks Family Lawyers |
THE COURT ORDERS THAT:
By no later than the end of January 2015, the Husband and Wife do all things necessary to effect a sale of the property known as and situate at Property T being the whole of the land and improvements contained in Folio Identifier Lot (omitted) of Section (omitted) in Deposited Plan (omitted), by way of auction with a real estate agent agreed between the parties or failing agreement by 15 January 2015, by an agent appointed by the Real Estate Institute of New South Wales at a price agreed between the parties and failing such agreement at a price to be determined by the Australian Property Institute of New South Wales or his nominee and the parties share equally any fees involved.
The parties instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties or, in the absence of agreement by 15 January 2015 shall instruct such solicitor as may be appointed by the President of the Law Society of NSW, the costs of an incidental to such appointment to be borne equally by the parties as and when they fall due.
On settlement of the sale of the (omitted) property, the proceeds of sale be paid in the following manner and priority:
(a)in payment of all costs and expenses of sale including legal costs and disbursements, agents commission and auction expenses;
(b)in payment of the amounts required to discharge the loan secured by way of mortgage to the (omitted) Bank being registered mortgage (omitted).
(c)in payment of any adjustments in accordance with usual conveyancing practice;
(d)in payment of $150,000 to Mr J;
(e)in payment of $45,970 to Mr J;
(f)in payment to the Wife of 74% of the balance then remaining;
(g)in payment to the Wife of $165,314; and
(h)in payment to the Husband of the balance.
Until 31 January 2015, the Husband continue to meet the mortgage repayments on the (omitted) property and the Wife otherwise meet the outgoings on that property.
There be no alteration to each party's entitlement to superannuation.
The Husband be declared the owner, to the exclusion of the Wife, of all items of property in his possession or under his control including but not limited to the Volkswagen Passat motor vehicle registration (omitted) and his interest in the (omitted) Superannuation Fund.
The Wife be declared the owner, to the exclusion of the Husband, of all items of property in her possession or under her control including but not limited to her interests in (omitted) and (omitted) Superannuation Funds.
Except as otherwise provided, each party be responsible for debts held in that party's name, and indemnify and keep indemnified the other in relation to those debts.
Spouse maintenance
The Husband pay to the Wife by way of periodic spousal maintenance the sum of $600 per week for a period of 6 calendar months, first payment 7 days after the Husband's obligation to meet the mortgage repayments ceases.
The maintenance payments referred to in Order (9) be payable by the Husband fortnightly by way of deposit to an account nominated by the Wife by 15 January 2015.
IT IS NOTED that publication of this judgment under the pseudonym Fleck & Fleck is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 1432 of 2013
| MS FLECK |
Applicant
And
| MR FLECK |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings, commenced by the Wife in March 2013, were originally listed for hearing for 3 days in relation to parenting issues, property settlement and spouse maintenance. However, the matter required 7 hearing days.
Mr Hodgson represented the Wife until the final two days of hearing, when Mr Ford of counsel appeared on the Wife’s behalf. Mr Batey of counsel appeared for the Husband.
On the 5th day of the trial, the parties resolved the parenting dispute concerning their two children, X aged 9, and Y aged 6 years. Orders were made by consent on 24 July 2014 providing for the parties to have equal shared parental responsibility, for the Children to live with the Mother and until certain conditions are met, to spend supervised time with the Father as a result of concerns raised about the Children's emotional and physical safety in the Father’s care. If the Father meets a number of conditions relating to ongoing testing for illicit drug use, in particular cocaine, the orders provide for the Children's time with him to be unsupervised and to gradually increase in duration until they are spending alternate weekends with the Father as well as time in school holidays.
The parties were unable to resolve the property and spouse maintenance issues.
During the marriage, the Husband was the primary breadwinner and the Wife the primary homemaker. The Wife has not been in the paid workforce for 10 years, and until separation, depended solely on the Husband for her financial support, and the Children's financial support. The parties’ major asset is the former matrimonial home at Property T. The Wife wants to remain living there.
Issues
The issues include whether or not the Husband has fully disclosed his financial position, whether or not an amount of $150,000 is repayable to the Wife's father, whether there should be a splitting order in relation to the Husband’s superannuation, and whether or not the Wife should receive any spouse maintenance.
Background
The parties commenced cohabitation in (omitted) 1997 and married on (omitted) 2001. X was born on (omitted) 2004 and Y was born on (omitted) 2007.
The parties separated on 17 March 2012, but remained living in the Property T property until 11 May 2012 when the Husband moved out. By the time of separation, the Husband had formed an intimate relationship with Ms K, aged 42 years, with whom he is now living.
The Wife, aged 42 years, has not been in the paid workforce since 2004, and describes her occupation as “home duties”.[1] She and the parties' two daughters live in the former matrimonial home at Property T and the Children attend the local (omitted) Public School, X in Year 4 and Y in Year 1.
[1] At page 108 of transcript of Wife’s evidence – 17 June 2014
The Husband, aged 40 years, is employed full time as a (occupation omitted) by (employer omitted) where he has been employed for 14 years. He specialises in (omitted) in the Sydney (omitted). He and Ms K, a (occupation omitted) employed full time, rent a city apartment.
Orders sought by Wife
The Wife’s counsel submits that the Wife is entitled to 55% of the net asset pool by way of contributions and a 20% adjustment for s.75(2) factors, or a 25% adjustment if the commissions due to be received by the Husband in September/October 2014 are not included in the Balance Sheet. That is a 75/25 or 80/20 division of the net property, inclusive of superannuation. The Wife seeks orders providing for her to retain the former matrimonial home, subject to the existing mortgage, and for the Husband to retain the whole of his superannuation entitlement. Although in her Minute of Orders the Wife sought the transfer of the Husband’s Volkswagen Passat motor vehicle to her, at the end of the hearing the Wife’s counsel advised the Court and the Husband’s counsel that she no longer sought that order. The Husband then agreed to retain the Passat at the agreed value.
The Wife seeks spouse maintenance indefinitely in the sum of $1,000 a week.
Neither party’s counsel referred to the Wife’s claim for spouse maintenance in final oral submissions, apparently an oversight. They later filed written submissions on that issue.
Orders sought by Husband
The Husband seeks a 50% division of the net pool by way of contributions and a 10% adjustment to the Wife for s.75(2) factors, a 60/40 division of the net pool in the Wife's favour. The orders he seeks include a splitting of his superannuation entitlements such that the parties each hold a 50% share of their combined superannuation entitlements. He asks the Court to dismiss the Wife’s application for spouse maintenance.
Legal principles in relation to property
Section 79 of the Family Law Act 1975 (Cth) gives the Court power to alter the interests of the parties to a marriage in the property of the parties to that marriage. Prior to the High Court’s decision of Stanford & Stanford [2012] HCA 52 it was generally accepted that the approach to the determination of an application under s.79 involved a 4 step process: identification of the pool of assets, an assessment of contributions, both direct and indirect, an assessment of s75(2) factors, and consideration as to whether the actual orders are, in all the circumstances, just and equitable.[2]This trial was conducted substantially in accordance with this 4 step process and neither counsel submitted that the Court’s approach should change as a result of Stanford.
[2] Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93 - 143
The Full Court in Bevan & Bevan [2013] FamCAFC 116 discussed the impact of the High Court’s decision in Stanford on this settled 4 step approach. The Full Court said that Stanford will serve as a reminder that the 4 step process “merely illuminates the path to the ultimate result”… “it is no more than a shorthand distillation of the words of a statute which has but one ultimate requirement, namely not to make an order unless it is just and equitable to do so.”[3]
[3] Bevan & Bevan [2013] FamCAFC 116 at paragraphs 71 & 72
The Full Court in Bevan emphasised that the pre-condition to making any order is a finding that it is just and equitable to do so in accordance with s79(2) which provides:
The Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.[4]
[4] Family Law Act 1975 (Cth), s79(2)
The Full Court said[5] that the three “fundamental propositions” laid down by the High Court “will provide useful guidance to trial judges in approaching the task under s79” and summarised them as:
a) Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
b) The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
c) A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4) and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.[6]
[5] Bevan & Bevan [2013] FamCAFC 116 at paragraph 73
[6] Bevan at paragraph 73
The first step therefore requires identification of the property in which the parties have a legal or equitable interest.[7] The second requires consideration of whether it is just and equitable to make any order to alter the parties’ property interests. If the Court decides it is just and equitable to make an order, the Court must then determine what orders are just and equitable by applying s.79(4) of the Act. The Court may make such orders “as it considers appropriate” and shall not make the order unless it is “just and equitable” to make the order.[8]
[7] Bevan at paragraph 77
[8] Family Law Act 1975 (Cth), ss79(1) & (2)
The High Court explained the meaning of “just and equitable” as follows:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.[9]
(Footnotes omitted)
[9] Stanford & Stanford [2012] HCA 52 at paragraph 36
In relation to the parties' superannuation interests, the Court has a discretion as to whether to treat superannuation interests as a separate pool of assets, or as part of one asset list. The majority of the Full Court in C & C[10] said there is no binding principle as to the exercise of the Court’s discretion in deciding whether a one list or two list approach should be adopted.
[10] (2000) FLC 93-220
Existing property interests of the parties
The parties agree on the majority of the items of property and their values, held by each of them at the date of hearing. Both counsel asked the Court to exclude legal fees paid and debts incurred to meet legal fees from the balance sheet. I have therefore done so. There are three disputed issues in the balance sheet. Firstly, whether or not credit card and personal debts should be included; secondly, whether the amount the Husband will receive in September 2014 by way of commissions should be included; thirdly, whether a debt allegedly owed to the Wife's father should be included as a liability.
Credit card/personal debts
The Husband's counsel submits that each party's credit card debts and the Husband’s personal bank loan were accrued after separation. Counsel submits there is no evidence to support a finding that the debts were incurred during the marriage or existed prior to the separation. Counsel submits that these debts should therefore be excluded from the Balance Sheet. The Wife's counsel made no final submission on this issue.
I agree with the Husband’s counsel that neither party adduced any evidence as to how his/her credit card/personal loan debts were incurred, when they were incurred or whether or not the debts were unreasonably incurred. Neither party was cross examined on these debts.
While the Court ordinarily deducts the value of all the spouses’ liabilities, whether secured or unsecured,[11] the authorities make clear that the Court may properly determine not to take into account or to discount the value of an unsecured liability in certain circumstances.[12] Given the state of the evidence on this issue in this case, I have decided to exclude each party’s credit card debts and the Husband’s personal loan account from the balance sheet, as requested by the Husband's counsel.[13] They will be considered under section 75(2).
[11] See for example In the Marriage of Prince [1984] FLC 91-501
[12] Biltoft & Biltoft (1995) FLC 92-614
[13] See Biltoft & Biltoft (1995) FLC 92-614; Chapman & Chapman [2012] FamCA 196
Commission payment due to the Husband in September 2014
I am satisfied that the Husband will have received gross commission payments of $89,012 in or about September 2014. The Wife's counsel submits that this payment should be included as an asset in the balance sheet. I do not accept this submission. I agree with counsel for the Husband that this payment had not been received at the time of hearing, had not been precisely quantified in net terms, and should be treated as part of the Husband's income in the 2015 financial year. I find it is not property which should properly be included in the balance sheet.
Debt to the Wife's father
In February 2009, the parties purchased the former matrimonial home at Property T from the Wife’s father, Mr J. The question is whether the parties have a debt to Mr J of $150,000 as a result of an agreement reached between them at or about the time of the purchase. The Wife, the Husband and the Wife's father gave affidavit evidence of what occurred and each was cross examined on this issue at some length.
The following facts were agreed:
a)The parties lent Mr J the sum of $150,000 in 2008 which was repaid in full in February 2009 when the parties purchased the Property T property from him.
b)The Husband arranged a valuer known to him to prepare a formal valuation of the property.
c)The purchase price on the contract of sale for the Property T property was $780,000, being the formal valuation.
d)The parties paid stamp duty on a purchase price of $780,000.
e)The $150,000 owed by the Wife's father to the parties (from 2008), was included as part of that purchase price. The parties borrowed $700,000 from the (omitted) Bank and they paid $600,000 of those loan funds to Mr J at the time of settlement of the sale.[14]
f)The Wife's father was paid $750,000 in total at the time of purchase, being the $600,000 paid by the parties from their loan funds and the repayment of the 150,000 debt Mr J owed the parties.[15]
g)There was a conversation between the Husband and Mr J at the time of the purchase when it was agreed that the parties would pay a further $150,000 to Mr J at a later time[16].
[14] At page 328 of transcript of evidence of Mr J – 28 July 2014; and paragraph 30 of Husband’s affidavit sworn on 26 May 2014
[15] The Husband says the parties used the balance of the loan from the (omitted) Bank to pay out a car loan, to meet stamp duty costs and retained the balance for living expenses
[16] At paragraph 32 of Husband’s affidavit sworn on 26 May 2014
The Husband acknowledges telling Mr J at the time of purchase that the parties would pay him a further $150,000 in the future. However, the Husband contends that the parties have only a moral obligation, not a legal obligation to pay this sum, and that therefore it should not be included in the Balance Sheet as a debt.
The Husband says that the parties paid the balance to Mr J to make up the purchase price of $780,000 by way of cash payments, although his recollection seemed vague. In his Affidavit, the Husband said that the parties paid Mr J in cash amounts for his help with the renovations of the Property T property, because Mr J did not want his pension affected.
Mr J emphatically denies ever receiving cash payments from the parties after the date of purchase and says $750,000 is all he has ever received. He denies any conversation about a pension and says he has never received a pension. Mr J claims that the property was undervalued at $780,000 to save the parties stamp duty and that the sale price agreed between the parties "at the kitchen table” of his former wife's home was $900,000.[17] He agreed to accept the balance of $150,000 [$900,000 - $750,000] three years later, in March 2012. Mr J says that the agreement to pay him a total of $900,000 took about 5 minutes and he and the Husband shook hands. He trusted the Husband like his own son. He says[18]:
...when I make a commitment and when I shake [sic] hand, which I did, and when I told Mr and Ms Fleck that they can repay me in three years time, interest free, that means, for the next three years, I did not talk about $150,000... I was waiting for three years to run out...
[17] At page 339 of transcript of evidence of Mr J – 28 July 2014
[18] Ibid at page 332
In early 2012, because the Husband was in hospital as a result of an accident, Mr J says he offered, in a conversation with the Husband at the hospital, to extend the time for payment by another 12 months to March 2013. He recalls the Husband being grateful.
Mr J believes that he and the parties signed a piece of paper at the time of the purchase to confirm their agreement. In cross examination he says "it was not an official document. It was just within the family...between the 3 of us." .."it was just on a piece of paper."[19] Mr J could not recall signing a document relating to the extension of time for repayment of the loan, and says the Husband would not have signed anything at that time because his hands were injured. He has been awaiting the finalisation of these property settlement proceedings for repayment as he says he needs the $150,000 to live on.
[19] Ibid at page 330
The Wife was surprised to learn the debt owed to her father was disputed by the Husband because he had never before questioned the existence of the debt. The Wife recalled the Husband arranging a low formal valuation to reduce stamp duty and recalled the Husband and her father agreeing over a handshake to the parties paying her father a further $150,000 at a later time. The Husband said to the Wife at the time ‘I’m the one in (occupation omitted). I know what I’m doing'.[20] She denied the proposition put to her by the Husband’s counsel that her father wanted monies paid by instalments so his pension would not be affected, and confirmed her father’s evidence that her father had never been on a pension. The Wife prepared a Deed of Loan in February 2009[21] to verify the terms of the agreement and to ensure that "if anything happened"…"Dad would be repaid."[22] The Agreement stated that the parties owed the Wife's father $150,000 and it was repayable, interest free, in March 2012. It did not refer to the Property T property or to the purpose of the loan. She says that when her father agreed to extend the time for repayment by a further 12 months, she retrieved the original 2009 loan agreement from her computer, and added a clause to state that the time for repayment had been extended until March 2013.[23] She and her father signed both Deeds of Agreement. The Husband did not. Neither Deed was stamped.
[20] At page 184 of Wife’s transcript of evidence – 17 June 2014
[21] Exhibit 7
[22] At page 184 of Wife’s transcript of evidence – 17 June 2014
[23] Annexure QQ of Wife’s affidavit sworn on 22 May 2014
While I accept the Husband’s evidence that the parties paid Mr J $750,000 at the time of the purchase, I prefer the evidence of Mr J and the Wife on the debt issue. The Husband conceded that with the exception of his Financial Statements sworn in May and June 2014, he has acknowledged the debt in correspondence with the Wife and in all documents filed in these proceedings, including his Affidavit sworn in July 2014.[24] I do not accept the Husband’s contention that he included the liability in Court documents because he was "prepared to do anything not to end up in here spending all this money on legal fees.”[25]
[24] Affidavit sworn 22 May 2013, the Husband deposes to the parties owing Mr J $150,000 – Exhibit 9. In his Response filed 23 May 2013, the Husband seeks an order [17(d)] that Mr J be repaid $150,000 from the net sale proceeds of the Property T property. In his Financial Statement sworn on 22 May 2013, the Husband deposes to a joint debt to Mr J in the sum of $150,000 – Exhibit 10. The Husband acknowledges the debt in emails to the Wife dated 17 June 2013 [Exhibit 14] and July 2013 [Exhibit 15]. In his Response filed on 14 October 2013, the Husband seeks orders providing for repayment of $150,000 to the Wife's father [Exhibit 11]. In his unfiled Response dated 15 October 2013, the Husband confirms the parties' owe $150,000 to the Wife's father [Exhibit 12]. In his affidavit sworn on 4 July 2014, the Husband deposes to owing the Wife's father, or the Wife's father and his wife, the sum of $150,000 [Exhibit 13].
[25] At page 424 of transcript of Husband’s evidence – 29 July 2014
I am satisfied that the Husband obtained a low formal valuation of the Property T property to reduce stamp duty and agreed with Mr J, on a handshake, that the parties would pay him an additional $150,000 in three years’ time. The Husband said[26]:
Look, we did say when we bought the house we sort of paid $780,000 for it, 600,000 from our mortgage, $150,000 from the loan being repaid and from cash that sort of went through. ...I think we always thought we got a good deal and might have thought we got a bit too good a deal as well, so I guess to sort of appease him I said I would - well, Ms Fleck and I said we would give him $150,000 in the future sometime.
[26] Ibid at page 424
I do not accept the Husband’s evidence that when Mr J visited him in hospital in early 2012, Mr J told him he was no longer asking for the $150,000. I find that Mr J agreed to extend the time for repayment for another 12 months and at the same time, the Wife added a clause to the Deed of Agreement she had prepared in February 2009, to reflect the variation to the original Agreement.
While I accept Mr Batey’s submission on behalf of the Husband that it is likely duty would have been payable on the loan agreement, if it were related to the purchase of the Property T property, I nevertheless conclude that the debt was associated with the transfer of the Property T home. The Husband himself relates it to the purchase of the property in the quote I have referred to. In his Affidavit sworn on 4 July 2014, the Husband relates the $150,000 to the purchase of the property. I do not accept the Husband’s evidence that the parties paid additional funds later for the purchase by way of cash instalments and accept the evidence of the Wife’s father, that he has only received $750,000 by way of sale proceeds. I also accept Mr J’s evidence that he has never been on a pension. I accept that the Wife accurately documented the terms of the arrangement in the Deed of Loan she drafted in February 2009, and in the amended Deed of February 2012, despite the Deeds not being signed by the Husband. While there is no evidence of a piece of paper signed by the parties and Mr J at the time of the agreement, as recalled by Mr J, I am satisfied the debt exists, is likely to be enforced and must be repaid.
Without explanation, the Wife does not refer to the debt to her father in her Minute of Order sought at hearing. I agree with Mr Batey that this is inconsistent with the Wife's position, and should have been explained by the Wife's counsel. I am nevertheless satisfied that the parties owe the Wife's father the sum of $150,000 and that Mr J has been awaiting the finalisation of these proceedings for repayment of the debt. I am satisfied the debt was due for repayment in March 2013 and remains outstanding. It will therefore be included as a joint liability in the Balance Sheet.
I find the existing property interests of the parties as at the date of hearing as follows:
Assets and liabilities at the date of hearing
$
Property T (Mr J)
1,560,000
(omitted) Bank Account No: (omitted) (W)
2,678
(omitted) Bank Account No: (omitted) (W)
33
Paypal Internet Account (W)
25
Household Contents ((omitted)) (W)
5,000
(omitted) Bank Account No: (omitted) (H)
2,000
Volkswagen Passat Motor Vehicle (omitted) (H)
19,720
Household Contents (Husband’s residence) (H)
Nominal
Monies held in solicitors’ trust account (H)
760
Mortgage to (omitted) Bank for Property T property (Mr J)
(658,235)
Debt to Wife's father (Mr J)
(150,000)
(omitted) Valuers (H)
(729)
Debt to Mr J for payments of mortgage (Mr J)
(45,970)
(omitted) Superannuation (W)
32,651
(omitted) Superannuation (W)
16,456
(omitted) Superannuation (H)
221,618
TOTAL NET ASSETS OF PARTIES
1,006,007
Is it just and equitable to make an order?
The Court was not asked by either party's counsel to address the requirement created by s79(2) of the Act as to whether any order should be made. The parties were married for 11 years, their relationship has broken down, the former matrimonial home is held in their joint names, and they both seek orders providing for an adjustment of property interests pursuant to s79 of the Act.
The plurality of the High Court in Stanford said:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the Court make a property settlement order.[27]
[27] Stanford at paragraph 42
In Bevan the Full Court said:
In our experience, the circumstances described in the paragraph above encapsulate the vast majority of cases. Hence, the reminder in Stanford of the pivotal role of s 79(2) is unlikely to have any impact in most cases.[28]
[28] Bevan at paragraph 70
Justice Finn said in Bevan that the question as to whether it is just and equitable to alter the existing property interests:
…will be easily answered where both parties are seeking orders which alter their respective property interests.[29]
[29] Bevan at paragraph 165
In the circumstances of this case, I am satisfied that it is just and equitable for the Court to alter the parties’ existing property interests.
Contributions
In accordance with s.79(4), the Court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties’ assets as well as to the welfare of the family during cohabitation and after separation. The Court must consider the contributions in an overall sense.[30] The Full Court has held that it is not necessary for the Court to justify its decision in property cases by reference to precise mathematical calculations, but rather a broad approach is preferred.[31]
[30] Norman & Norman [2010] FamCAFC 66; Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143; Kowalski and Kowalski (1993) FLC 92-342; G & G [2000] FamCA 1075
[31] In the Marriage of Burke (1981) FLC 91-055
The High Court in Stanford makes clear that the Court has an obligation to examine what contributions were made by each party. The Court must examine what actually happened, not make assumptions about what happened. It is not sufficiently rigorous to assume that what one party did is equal to what the other party did and conclude there is no distinction to be made in relation to each party's contributions.
Neither counsel asked me to approach this matter on an asset by asset basis, and given the circumstances in which neither party had assets of significance at the commencement of cohabitation, and the net asset pool is of modest value, I find it convenient to adopt the global approach.[32]
[32] Norbis and Norbis (1986) 161 CLR 513
Neither counsel made submissions as to whether the Court should consider the parties' non-superannuation assets and superannuation assets as two separate pools or as one pool. Given the Wife has not been in the paid workforce for 10 years, and therefore has not been contributing directly to superannuation for a long time, and given the parties' superannuation assets are relatively modest, I find it is appropriate in this case to adopt an integrated approach to the superannuation and non-superannuation assets of the parties.
Section 79(4) contributions
From the commencement of cohabitation until 2004, the Wife was employed as a (omitted), a (omitted), a (omitted), a (omitted), a (omitted), a (omitted) at (employer omitted) and from 2002-2004 as an (omitted) for (employer omitted) earning approximately $600 a week. Prior to the birth of X in 2004, the Wife resigned and has been a full time homemaker since.
The Husband is employed as a (occupation omitted) with (employer omitted), an (omitted) company and subsidiary of (omitted), a (omitted) company.
Neither party was cross examined on their contributions during cohabitation because the parties agreed that their contributions to the date of separation should be assessed as equal.
The question therefore, is whether there should be any adjustment to the parties’ contribution entitlements as a result of their respective contributions after separation.
Post separation financial contributions
For a short period immediately after separation in March 2012, the parties' usual financial arrangements continued. The Husband paid his salary into the parties' joint account and the Wife used that account for living expenses. On 15 May 2012, (4 days after the Husband moved out of the former matrimonial home and 2 months after separation) the Husband says the Wife withdrew $15,000 from the joint account without his consent and then $3,530, so he redirected his salary to an account in his sole name. It was not suggested that the Wife applied the funds for any improper purpose.
Wife’s income. The Wife has not been in the paid workforce since 2004. Since separation, apart from income of $797 from the sale of a small book she wrote on “(omitted)" the Wife has earned no other income from employment. The Wife supports herself and the Children on Centrelink benefits of $384 per week and child support from the Husband of $590 a week, a total of $974 a week.
Husband's income. The Husband is employed as a (occupation omitted) by (employer omitted) in the Sydney (area omitted). The Wife alleged that the Husband had not accurately disclosed details of his income, in particular, details of his income by way of commissions and bonuses. The Wife deposed to the extensive efforts made by her solicitors during the course of this litigation to obtain this information from both the Husband and from the Husband’s employer.
Mr D, the (position omitted) of the legal department Australia/New Zealand, employed by the holding company ((omitted)) of the Husband's employer (employer omitted), was not on affidavit but gave evidence by phone in the proceedings. Mr D said that the Husband will personally receive $89,012 gross by way of commissions for work performed in the 2014 financial year. This was not disclosed in the Husband’s affidavit evidence. Mr D would expect the Husband to receive that sum within 4 months of the date the invoices were issued by (employer omitted), (approximately September 2014) as long as the tenants pays the invoices, which he anticipated they would. The Husband is also part of an "incentive and commission plan". [33] Mr D explained that the Sydney (omitted) team, of which the Husband is a member, pools their annual invoice figures into a shared pool. At the end of each financial year, certain members of that (omitted) team are entitled to a percentage of that pool which includes an adjustment for the overall team's entertainment costs. Mr D was unable to say what amount the Husband could expect to receive from the shared pool.
[33] At page 51 of Husband’s affidavit sworn on 26 May 2014
The Husband deposed to a gross $120,000 guaranteed income per annum by way of a base salary, which includes superannuation.[34] In addition, he may receive a retention bonus and/or commission in accordance with the company's Incentive and Commission Plans.[35]
[34] At paragraph 45 of Husband’s affidavit sworn on 26 May 2014
[35] Annexure H of Husband’s affidavit sworn on 26 May 2014 and page 196 of Wife’s affidavit sworn on 22 May 2014
In cross examination, the Husband explained how the bonus and commission system operates. The Husband is eligible to participate in a retention bonus scheme. He explained that, subject to achieving minimum revenue hurdles, he may receive a bonus. He says it is not guaranteed as he must remain working in the company until the end of this year "and there's no guarantee I will do that"[36] because the company is under merger and acquisition. Any amounts payable under the Bonus Retention Plan will be settled in cash at the end of the 2014 calendar year and paid on or around 15 January 2015.[37] In addition, the Husband may be entitled to commissions, based on fees invoiced during the relevant period, and paid. The Husband anticipated a payment of $89,012 in or before September 2014 by way of commissions. The Husband might also be entitled to an Annual Profit share bonus subject to certain criteria being met in the relevant financial year.[38] In February 2014, he received a gross amount of $89,547 by way of an annual profit share bonus, though the Husband said that was a one-off payment at the end of a lengthy dispute with the company.
[36] At page 353 of transcript of Husband’s evidence – 28 July 2014
[37] At page 197 of Wife’s affidavit sworn on 22 May 2014
[38] Ibid at page 199
When shown his payslip from 1 June 2013 - 30 June 2013, the Husband acknowledged that his gross income in the 2013 financial year was $308,829 or $5,939 a week, not $120,000 per annum as he deposed in his May 2013 financial statement[39], when he swore to a weekly income of $2,307 (including "(omitted)" for commissions), an understatement in weekly income of $3,632 a week. In that same financial statement, the Husband included this note[40]:
The Husband receives commissions, but due to the poor state of the (omitted) market and the nature of his payment structure, there is no guarantee that he will receive any substantial commissions in the future.
[39] Exhibit 20
[40] Ibid
The Husband's payslips for the period 1 July 2013 to 31 July 2014 were in evidence.[41] The Husband conceded that the average commissions he received for that period amounted to $3,304 a week, not $2,639 a week as deposed to in his Financial Statements sworn on 13 June 2014 and 16 May 2014. He was not sure how he calculated the figure he included. The Husband did not include the gross payment of $89,547 he received in February 2014 as part of his income calculation in his Financial Statement, but noted it as a one off payment of a net $48,378. In cross examination, the Husband did not accept that the February 2014 payment should have been included as part of his income. In relation to his bonuses, commissions and other entitlements the Husband said "Look, I have no idea what it could be. It's impossible for me to predict it. " [t 410].
[41] Exhibit 16
In his pay period 1-31 July 2014, the Husband acknowledged receiving a bonus payment of $13,822, calculated under Part 3 of the Incentive Plan.
In cross examination, the Husband denied he was due to receive $89,012 shortly (once the issued invoices were paid), but then conceded that he would receive that sum less tax and superannuation, perhaps 50% of that sum by way of commissions under Part 2 of the Incentive Plan. He could expect to receive those funds by September/October 2014.
I am not satisfied the Husband accurately disclosed his income in his Financial Statements sworn in May 2013 or in May and June 2014. Firstly, I find the figure of $2,117 for his base weekly salary in his June 2014 Financial Statement inaccurate, when on his own evidence he receives a weekly salary of $2,307 (or $120,000 a year) inclusive of superannuation. If he wanted to separate his superannuation income, it should have been disclosed at Item no 14 of that form, which it was not. In fact, the Husband said that he had a superannuation expense of $365 a week, not income. I find his evidence in relation to his income inaccurate and misleading. Secondly, while I accept that the Husband cannot predict with certainty the commissions or bonuses he will receive from year to year into the future, he was obliged to disclose the entitlements he had actually received in addition to his base salary when swearing his Financial Statements. He did not do so. I find the discrepancies between his actual income figures, and the figures to which he deposed, are substantial. I find that the Husband significantly understated his income in both the 2013 and 2014 financial years in relation to the bonuses and commissions when swearing his Financial Statements in those years.
The Husband can expect to receive his base salary of $120,000 in the 2015 financial year, and has already received a bonus payment of $13,822 in July 2014. He will receive an estimated net $45,000 by way of commissions in September 2014. I find no basis to conclude the Husband's income will be any less than it was in the 2014 and 2013 financial years. I am satisfied that the Husband is likely to receive a gross income of at least $300,000 in the 2015 financial year.
Expenses met by Wife since separation. The Wife deposed to weekly expenses well in excess of her income. Since the Husband redirected his salary from the parties’ joint account in May 2012, the Wife has met the shortfall in her expenses with the assistance of her family, particularly her father. At annexure TT of her affidavit, the Wife sets out some of her expenses between September 2012 and May 2014, by way of mortgage repayments [3,527], gas and electricity, [2651], home and contents insurances [2443], life insurances [1271], telephone and internet [4947], health insurance fees [3721], Sydney water [1568], rates and charges [960], car registration [990] school fees and uniforms, school swimming, soccer and gym expenses [3,895]. The Wife’s father paid $45,970 by way of mortgage repayments, $30,000 of which was paid to meet the arrears following a Notice of Demand from the bank. While the total repayment amount has been agreed as a joint debt of the parties, I give credit to the Wife as a result of the interest component.
Expenses paid by Husband since separation. The Husband paid the mortgage instalments on the former matrimonial home until August 2012 (a period of 5 months from separation) and then stopped. On 22 May 2013, the Husband made a repayment of $4,490 and on 1 August 2013, a payment of $5,000. On 15 October 2013, interim orders were made for the Husband to pay $923 a week ($4,000 a month) towards the mortgage. Between 17 October 2013 and 19 May 2014, the Husband paid $26,664.97 in mortgage repayments, just under the amount ordered. At the time of hearing, the mortgage was in arrears as the Husband had not made payments for approximately 3 months. The current repayment required is $4,077 a month. While the Husband included a figure of $983 a week for his mortgage expense in his Financial Statement sworn on 13 June 2014, it was not being paid. I find that the Husband has met approximately half the mortgage repayments due between separation and hearing.
Though the Husband deposed to a payment of $600 a week by way of child support, I prefer the Wife’s evidence that the amount actually paid is $590 a week. The Husband has paid for the costs of supervision of the Children’s time with him which have been considerable.
The Husband was cross examined about his expenses since May 2012. He acknowledged going on a number of holidays, though could not recall them all.In cross examination, the Husband accepted that in July 2012, he went to Melbourne with Ms K; in September 2012, (omitted), in September 2010 the (omitted), in October 2012 (omitted), Queensland, in December 2012 the (omitted), in January 2013 Queensland, in February 2013 (omitted), March 2013, Queensland, March to (country omitted) (he says work trip), May/June 2013 (country omitted), May 2013 the (omitted), July 2013 to Canberra. In the last 12 months, the Husband said he has been to (country omitted) and to Canberra, but could not recall whether he had other trips away. I accept the Wife’s counsel’s contention that the Husband spent at least $22,667 on trips away between July 2012 and July 2013. A bundle of (omitted) Bank statements and Amex credit card statements within the period March 2012 to July 2014 were tendered to verify his expenses on those trips.[42] These statements also disclose the Husband’s regular expenditure on entertainment including bars and restaurants.
[42] Exhibits 18 and 19
Non-financial contributions including contributions as homemaker or parent
The Wife has lived in the former matrimonial home, while the Husband has rented alternative accommodation. The Wife has maintained the home.
From May 2012, when the Husband moved out of the Property T property, for a period of 12 months, the Children did not see the Husband at all. The Wife therefore took the whole of the responsibility for the Children’s day to day care for that period. Apart from the usual day to day domestic tasks including washing, ironing, cooking, shopping, the Wife was solely responsible for preparing the children for school, taking them, collecting them, attending school assemblies, reading groups, 'class mum' duties and assisting with homework. The Wife described the additional work she does with Y each day to assist Y with her particular learning challenges. The school identifies her specific difficulty in the area of literacy.[43]
[43] Exhibit 5
Assessment of Contributions
As already noted, the parties agree that their contributions to the date of separation should be assessed as equal and I accept their assessment. The Wife's counsel submits that the Wife’s contributions to the date of hearing should be assessed at 55%. Counsel submits that the Wife paid outgoings on the home including a mortgage payment, her father contributed to the mortgage without charging interest on the debt accrued, the Wife had 100% responsibility the Children for the first 12 months after separation, and for almost 100% of the time thereafter. The Wife has also maintained the home.
The Husband’s counsel submits that the Wife has had the use of the home while the Husband has paid the mortgage for the majority of the post-separation period, and is liable for the mortgage as a result of the Court’s orders. In addition, the Husband has paid child support and the costs of Phoenix Rising for supervised contact. Counsel contends that the Wife was resistant to the children spending time with the Husband after separation which led to the Husband seeking the Court’s intervention on a number of occasions. Counsel submits that the Court should have regard to the Husband’s payments to Phoenix Rising, which should offset any adjustment by way of contributions for the Wife. Counsel submits that if the Wife receives any adjustment on contributions, any adjustment she receives as a result of s.75(2) factors should be reduced to the extent of the contribution adjustment.
I do not accept counsel’s submission in relation to the Wife’s resistance to contact. The Husband acknowledged avoiding time with the children for the 12 months after separation as a result of an AVO which he says he believed prohibited him from seeing them. This was in fact not the position, but nevertheless the children did not see him for 12 months. I find that the difficulties he faced thereafter in relation to contact, resulted in substantial part, from the Husband’s own conduct.
On a weighing of all these matters, I find the Wife has made the greater post-separation contributions. Overall, I find the Wife's contributions should be assessed at 54% of the net pool and the Husband at 46% of that pool.
The effect, if any, of any proposed order upon the earning capacity of each party
Neither party's proposal will affect the earning capacity of the parties.
Relevant section 75(2) factors
The age and state of health of each of the parties.
The Wife is 42 years of age. The Wife suffers from an autoimmune condition known as Graves’ disease, diagnosed in 2003, which the Wife says causes accelerated heart rate, anxiety, insomnia and fatigue and for which she is medicated. She underwent surgery in relation to her condition in February 2013. The Wife annexes a report from Dr D, her consultant endocrinologist,[44] confirming her diagnosis and symptom history. However, the report does not address any potential impact of the Wife’s condition on her capacity to work.
[44] Annexure A to Wife’s affidavit sworn on 22 May 2014
The Husband is 40 years of age. He suffered an accident in December 2011, badly damaging his pelvis. He was hospitalised for 2 months, which he says has impacted on his health, his employment and ability to earn commissions because of an inability to stand for long periods or work long hours. The Husband does not adduce medical evidence in relation to the impact of his condition on his capacity to work.
The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
The Wife has been out of the paid workforce for 10 years, since the birth of the parties’ first child in 2004. Apart from receipts of $797 from the sale of her small book on ‘(omitted), she has had no income from employment since then. The Wife deposed to the Husband encouraging her to remain at home with the children during the marriage. The Husband said that he was neutral on the issue of whether the Wife worked. The Wife has no formal qualifications and has not acquired any qualifications during the marriage or since. While she said that she has no present plans to seek work, she says she hopes to undertake a university course online to qualify her to work with children, probably as a (omitted) or to work with (omitted). The Wife is dependent on child support, Centrelink payments and assistance from her family for her financial support. I find it unlikely that the Wife will obtain employment in the near future.
As noted, I am not satisfied that the Husband fully disclosed his income. I find that the Husband is earning a minimum of $300,000 a year gross including bonuses and commissions. There is a therefore a major disparity between the incomes of the parties as a direct result of the length of the marriage, and the division of roles agreed between the parties during the marriage. I find it highly unlikely that this will ever change.
Whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The Wife has the care of the parties’ two children with minimal respite. This is likely to continue for a considerable period, given the parenting orders made during the course of this hearing provide for the children to have only limited time with the Husband for a considerable period into the future, and eventually a maximum of weekend fortnightly time and holiday time when certain conditions have been met by the Husband.
The Wife said she needs to provide Y with additional daily assistance because she is a kinaesthetic child. She described children with this condition in this way: “they’re always on the move. They’ve got to explore their world. They just want to know everything that is going on around them.” According to her counsellor’s notes, Y has difficulties with reading and learning.[45] The Wife said the Husband has chosen not to assist her with the costs of addressing Y’s learning difficulties.
The responsibilities of either party to support any other person
[45] Exhibit 5
The Husband pays child support, in the sum of $590 a week. Apart from the children, neither party has an obligation to support any other person.
The eligibility of either party for a pension or benefit under any superannuation fund or scheme and the rate being paid to either party
The Wife is entitled to a supporting parent benefit and family tax benefit in the sum of $384 a week.
The need to protect a party who wishes to continue that party’s role as a parent
The parties have agreed that the Wife will remain the primary carer for the two children, aged 9 and 6 years. The Wife wishes to continue to support the children day to day, given the children have been accustomed to the Wife being available to them day to day, the adjustment they have had to make since separation, and the additional assistance required by the younger child in relation to her literacy. The Wife hopes ultimately to work part-time so she will continue to be available to take the children to school and pick them up.
If either party is cohabiting with another person – the financial circumstances relating to the cohabitation
The Husband has been in a relationship with Ms K since the first half of 2012, and has been living with her since February 2014. Despite being advised by the Wife's legal representatives that she was required for cross examination, the Husband did not make Ms K available to give evidence. No satisfactory explanation for her absence was given to the Court. In her affidavit sworn on 13 June 2014, Ms K deposed to employment as a full time (occupation omitted). She provided limited evidence as to her contribution to the costs of the household she shares with the Husband and to other expenses relating to their cohabitation. The limited evidence she does give differs from the evidence given by the Husband about her in his Financial Statement sworn on the same day. Ms K provided no details as to her financial circumstances. I give Ms K's affidavit evidence minimal weight, and as a result of the Husband’s failure to call her, draw the inference that her evidence would not have assisted the Husband's case.[46]
Any child support that a party to a marriage has provided, is to provide, or might be liable to provide in the future for a child of the marriage
[46] Jones v Dunkel [1958] HCA 8
As already noted, the Husband pays child support for the two children of the marriage.
Any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account
The Wife is unable to meet her current expenses without assistance from her family. The Wife has a credit card debt of over $35,000, and owes her father over $154,000 in legal fees. The Wife and her father entered into a Deed of Loan in June 2012 which provides for the wife to repay the whole of those loan funds to her father. [47]
[47] Annexure SS of Wife’s affidavit sworn on 22 May 2014
The Husband has a credit card debt and personal loan totalling over $45,000, but will have received approximately $45,000 by way of commissions since this hearing concluded. At the time of hearing, the Husband owed legal fees of approximately $120,000.
The Husband has a superannuation entitlement of $212,618 which is accumulating as a result of his employment. The Wife is yet to obtain employment. The Husband’s superannuation entitlements will therefore increase while the Wife’s may not increase at all, or will increase at a much slower rate.
While the Husband has failed to comply with orders in relation to payment of all mortgage instalments since the Court ordered that he do so, he remains responsible for the mortgage repayments.
The Husband has failed to make careful and frank disclosure of his financial position. I have found the Husband’s financial evidence unreliable and the Husband resistant to disclosing the true position. I am satisfied his true financial position is more substantial than disclosed.
Assessment of section 75(2) factors
The Court must weigh all the s.75(2) factors together and then make an adjustment.[48] The Wife's counsel submits the Wife should be entitled to a 25% adjustment.[49] The Husband’s counsel submits the Wife should be entitled to a 10% adjustment. As noted, the Husband’s counsel submits that if the Wife is given an adjustment in her favour by way of contributions, as a result of the extent of her care of the Children post separation, there should be a corresponding adjustment to what she is entitled to by way of s.75(2) factors. While that might be appropriate if the care of the Children were the only factor being considered, that is not the case here, and I am therefore not persuaded to take that course.
[48] Tomasetti & Tomasetti [2000] FamCA 314
[49] At page 433 of transcript of evidence – 29 July 2014
On a weighing of the s.75(2) factors, I have determined that the Wife will be entitled to a 20% adjustment for s. 75(2) factors.
Is the result just and equitable?
The Court must be satisfied that the actual orders provide for a just and equitable distribution of the property of the parties.[50]
[50] Family Law Act 1975 (Cth), s79(2)
I find the net assets of the parties total $1,006,007 inclusive of superannuation. On the figures identified, the Wife's entitlement of 74% will give her net assets with a total value of $744,445 and the Husband $261,562.
The wife seeks to retain the former matrimonial home at Property T. The Husband agreed that the Wife should be given the opportunity to buy out his interest in the former matrimonial home, although his counsel submitted it seemed likely the property would have to be sold. The Wife's counsel submits that I should give the Wife this opportunity on the basis her brother or members of her family may be in a position to assist her to achieve this result. However, the wife adduced no evidence at all as to whether this is remotely possible. The Wife's father made it clear in cross examination that he is not in a financial position to assist the Wife to purchase the Property T property. He said he requires his debts to be repaid from the net proceeds of sale. The Wife adduced no evidence of her borrowing capacity or as to how she would meet her financial obligations if the court made an order for her to retain the Property T home. Given the size of the debt secured on the home, the size of the debts owed to the Wife's father, and the Wife's dependence on Centrelink for income, I am not persuaded that the Wife can retain the Property T property. The property will therefore be sold. Should the Wife's family be in a position to assist her to purchase the property, it will be open to the Wife to make those arrangements.
The Husband seeks a splitting order in relation to the Husband’s fund which would leave the parties with an equal split of their total superannuation entitlements. The Husband's counsel submits that it would be manifestly unjust to leave the Husband with the whole of his superannuation, given his age and that his superannuation is not available to him for 15 years. Such a result would leave him with minimal capital, and given the legal fees owed, this could mean he has nothing. The Wife seeks orders providing for each party to retain their own superannuation interests. Mr Ford submits that this is one of those cases when the Court would be satisfied that, on the basis of the Husband's income, he would earn in a short period any cash component the Court ordered he be paid to adjust the splitting order. He says the Wife needs the capital available to her now. The Husband will build his capital from his income and has borrowing capacity.
In D & D,[51] the Full Court upheld a decision in which the Wife retained the family home while the Husband received nearly all of his entitlement in his superannuation entitlements. The Full Court said:
[51] D & D [2006] FamCA 199
…the decision about the mix of assets was a discretionary one.
In L & L[52], Moore J balanced a number of factors before deciding that the wife should have a greater percentage of the available assets and a lesser percentage of the splittable superannuation in order to give effect to the appropriate overall percentage division.
[52] [2003] FamCA 40
In SDM & JCM [2006] FamCA 840, the Full Court noted where there were no findings by the Trial Judge about any particular need of the husband for capital, and where the wife had less capacity to retain and repay any borrowing, it was just and equitable for the wife to receive most of the ‘tangible assets’, though she received a small part of her entitlement in superannuation. In Bucknell [2009] FamCAFC 177, the Wife received the bulk of the realisable assets, and the Husband received a small debt and superannuation assets. According to the Full Court:
An order in which one party receives no immediately realisable funds is uncommon. But of itself, that does not indicate any error. In our view, the result is responsive to the circumstances of the case which, as seen, involve a period of contributions to trial of about 10 years, a very young child in the primary care of the wife, a small asset pool and a significant disparity in earning capacities, favouring the husband.
As the Full Court said in Clauson & Clauson (1995) FLC 92-595 at 81,911:
It has long been recognised that in most cases the most valuable ‘asset’ which a party can take out of the marriage is a substantial, reliable, income earning capacity.
The Husband’s counsel properly conceded that the Husband has the ability to financially recover much more quickly than the Wife.[53] The Husband earns a good income and also enjoys the financial benefit of sharing expenses with his partner who holds a senior position as a full time (occupation omitted). The Wife has not re-partnered and I am satisfied the Wife’s income is likely to be modest long term, given her lack of formal qualifications and her majority care of the Children, the youngest of whom is 6 years of age. The Wife has a modest superannuation entitlement which she will retain as a component of her entitlement. I am satisfied in the circumstances of this case it is just and equitable not to make a splitting order.
[53] At page 449 of transcript of proceedings – 29 July 2014
Excluding the Property T property and the debts related to that property, the Wife will receive her bank account proceeds including the Paypal account, her home contents and her superannuation entitlements. These items total $56,843. The Husband will receive his bank account proceeds, the Volkswagen Passat motor vehicle, his home contents, moneys held in trust, his superannuation entitlements and the debt to Property T valuers. These items total $243,369. The value of the assets excluding the Property T property and the debts related to that property total $300,212. If these items are divided on a 74/26 basis in favour of the Wife, the Wife is entitled to $222,157 and the Husband $78,055. This means the Husband must pay the Wife $165,314 to give the parties a 74/26 division in favour of the Wife of the items unrelated to the Property T property. This adjustment will be made from the net sale proceeds of the Property T property.
The Property T property will be sold and after deduction of the sale costs, the mortgage secured by the property, the debts of $150,000 and $45,970 owed to the Wife's father, the Wife will receive 74% of the balance then remaining and then a payment of $165,314 and the Husband will receive the balance.
Having regard to all the circumstances of this case, I am satisfied that the orders set out at the beginning of these Reasons are just and equitable.
Spouse maintenance
The Wife seeks spouse maintenance from the Husband in the sum of $1,000 a week. The Husband opposes any order for spouse maintenance.
Legal principles
Section 72 of the Family Law Act 1975 provides that a party to a marriage is liable to maintain the other party, to the extent that the first mentioned party is reasonably able to do so, if, and only if, that other party is unable to support himself or herself adequately whether:
a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
c)for any other adequate reason;
having regard to any relevant matter referred to in s. 75(2).
Section 74 provides that the court may make such order for spouse maintenance as it considers proper.
S.75(1) provides that in exercising its jurisdiction under s.74, the Court shall take into account only the matters referred to in s.75(2). The Full Court in Bevan [54] held that the Court should pay proper regard to the factors set out in s.75(2).
[54] (1995) FLC 92-600
I accept the submissions of the Husband’s counsel as to how the legal principles should be applied.[55] I agree with counsel that s.72 establishes a threshold question and that the two conditions upon which the liability for spouse maintenance rests are in essence economic.
i)Is the Wife unable to adequately support herself for one of the reasons stated? If so,
ii)Is the Husband reasonably able to maintain her?
[55] At page 2 of written submissions of Husband’s counsel dated 12 August 2014
The word “adequately” must be determined by reference to the matters in s.75(2).[56] The authorities state that “adequately” does not mean subsistence level[57] but “imports a standard of living which is reasonable in the circumstances.”[58] In Bevan[59], the Full Court held that “reasonableness” is the guiding principle.
[56] Mitchell & Mitchell (1995) FLC 92,691 at 81,995
[57] Bevan & Bevan (1995) FLC 92-600 and Mitchell & Mitchell (1995) FLC 92,691
[58] Per Lindenmayer J in Nutting & Nutting (1978) FLC 90-410
[59] (1995) FLC 92-600
The Wife’s counsel refers to the four steps His Honour Justice Coleman set out in MS & PS[60]:
a)To what extent is the Wife unable to support herself;
b)What are the Wife’s reasonable needs;
c)What capacity does the Husband have to meet an order, if one is made.
d)If (i) – (iii) favours the Wife, what order would be reasonable having regard to the factors in s.75(2) of the Act.
[60] [2006] FLC 93-268
To what extent is the Wife unable to support herself adequately?
Mr Ford for the Wife submits that the Wife cannot adequately support herself because she is 41 years of age, has no formal qualifications, she has been out of the workforce for 10 years, has the full time care of two children and will have the majority care of the children into the future. The Wife relies on Centrelink for her support. Counsel submits that the Wife seeks a standard of living for herself and the Children that is commensurate with the standard of living achieved during the marriage. Counsel submits that the Wife contributed to the Husband’s career success during their 15 year relationship by accepting the homemaker/parenting role, enabling him to work long hours. She wishes to continue in her role as a mother while undertaking a course to qualify for working with children. Mr Ford submits that the Court should take into account that the Husband has not disclosed the financial circumstances relating to his cohabitation with Ms K[61], nor did he fully and frankly disclose his financial circumstances. Counsel submits that the Wife should not be required to use capital received from her property settlement to support herself.
[61] Section 75(2)(m)
Mr Batey for the Husband submits that the Wife is able to adequately support herself if she chooses to find employment. Counsel highlights the Wife’s communication skills, sales and organisational skills. The Husband contends[62] that the Wife should pursue her career in writing on the basis of the Wife earning approximately $797 from her literary endeavours to date.
[62] At page 19 of Husband’s outline of case
What are the Wife’s reasonable needs?
The Wife relies on her Financial Statement sworn on 22 May 2014.She deposes to weekly expenses for herself (excluding the children) of $922 [Part N] + $50 [mortgage] + $53 [rates and levies] +$16 [Husband’s life insurance] +$32 [home and contents insurance] + $47 [private health insurance] + $138 [Visa], a total of $1,258 a week.
The Husband’s counsel challenges the Wife’s claimed expense of $50 a week for entertainment, $50 a week for holidays and $100 a week for gifts, on the test of reasonableness. However, the Husband deposes to expenses for himself of $460 a week on these same three items in his Amended Financial Statement sworn 13 June 2014, over twice the amount claimed by the Wife so I allow those expenses. Counsel also highlights the duplicated expenses in Part N, already included at Part G. They will be counted once. The Husband is presently legally required to pay the mortgage as a result of a Court order, but on the property orders I have made, the Wife may have to pay rent, well in excess of the $50 a week she claims for the mortgage. I therefore allow that figure. I accept the Wife’s figure for her visa card as interest payable on her visa card debt of over $30,000. I allow the whole figure claimed for health insurance, rather than a share for her and a share for the children.
On the Wife’s figures, I find she has expenses for herself of $919 a week made up of car registration (18) home and contents insurance (32) rates (53) visa (138) life insurance (16) health insurance (47) food (120) electricity/gas (20) phone (30) petrol (40) fares/parking (10) clothing and shoes (60) gap medical (20) entertainment (50) holidays (50) chemist (40) dry cleaning (10) books/magazines (15) gifts (100) hair and toiletries (50) and in addition, may have to pay rent.If so, the Wife adduced no evidence as to likely rental costs.
Until the Wife obtains employment, I am not satisfied the Wife is able to meet her own expenses. The Wife has received $797.15 from sales of a small book on (omitted). I do not accept counsel’s submission that I should therefore find the Wife has a capacity to earn $10.20 a week, based on that income figure over 18 months. The Wife is not, at least at this point in time, writing books as a career and I am not persuaded this book should be treated as more than a one off. The Wife derives her income for herself from Centrelink benefits and assistance from her family. These must be excluded from consideration of her spouse maintenance claim.
Does the Husband have the capacity to meet this payment?
As already noted, I find that the Husband has a present gross income of at least $300,000 per annum or $5,769 a week, inclusive of commissions and bonuses. On the income figure to which he deposes of $4,756 a week, he estimates paying tax of $2,656 a week.[63] In the absence of specific evidence of the amount of tax payable on the higher income of $5769, I estimate and allow the Husband’s tax at 2,700 a week. On an analysis of the Husband’s expenses set out in his Amended Financial Statement sworn on 13 June 2014, I do not include a figure for superannuation because his payslips[64] show that his employer pays his superannuation in addition to his salary. I include a figure of $525 a week for his rent (50% because he shares with his partner and on the unsatisfactory evidence available on this issue I have divided the rent in half), mortgage payments of $941 a week (calculated on a monthly payment of $4077), health insurance of $34, loan repayments of $178. I do not include the payment he claims on his American Express credit card ($100) as these expenses are included at Part N. I include child support at $590, food at $200 (I have not included household supplies), gas at $25, fares/car parking at $40, clothing and shoes at $60, medical gap at $20, entertainment at $50, holidays at $50, (as allowed for the Wife) chemist at $10, dry cleaning at $60, books at $10, gifts at $60, hair and toiletries at $40, rehabilitation expenses at $85. I have not included his figure for hiring a “(omitted) car” given he now the use of the Volkswagen Passat. His expenses on this assessment total $5,678 a week, which means the Husband has $91 a week available to him to meet the Wife’s spouse maintenance claim. When he stops paying the mortgage the Husband will have another $941 available to meet the Wife’s claim, a total of $1,032 a week. I therefore find that the Husband has the capacity to meet a proportion of the Wife's reasonable needs once he stops paying the mortgage instalments for the Property T property.
[63] Amended Financial statement of Husband sworn on 13 June 2014
[64] Exhibit 16
What order would be reasonable having regard to s.75(2) of the Act?
The parties lived on the Husband’s income alone since their Children were born, because of their partnership decision for the Wife to remain at home to care for the Children, look after the home and support the Husband’s career. I accept that the Wife has contributed to the income of the Husband, and his earning capacity,[65] and the length of time she has been out of the workforce has adversely affected her earning capacity and the financial resources available to her.
[65] Section 75(2)(j)
While the parties acknowledge that they lived a relatively modest lifestyle during the marriage, I find that the Husband has enjoyed a better lifestyle than the Wife since their separation, given the disparity in their disposable incomes. In particular, the Husband has been able to travel regularly while the Wife has not travelled at all, and the Husband has been able to eat out, while the Wife has not been able to do so. However, I am not persuaded, as submitted by the Wife’s counsel, that the Husband has enjoyed an extravagant lifestyle.
The Wife has made no attempt to find employment since the parties separated. She has relied on the Husband and her father to meet the mortgage payments, Centrelink benefits and her family’s largesse to remain living in the Property T property with the Children. The Wife wants to retain that home for herself and the Children but has adduced no evidence as to how such an outcome is financially possible. I find her evidence about how she proposes to retain the home, what she plans to do by way of employment or study, and how she plans to meet her expenses in the future, vague and inadequate. She has made no attempt to date to obtain employment or to gain qualifications to assist her to obtain employment. While I accept that she has wanted to be available to assist at the Children’s school and to be available to meet the Children’s needs at all times, I am not persuaded the Wife’s wishes in this regard should justify her remaining out of the workforce. The Wife’s evidence does not support a finding that spouse maintenance would enable the Wife to undertake a course of education or training.[66] It seems inevitable that the Wife will need to obtain employment as soon as possible. While I find it unlikely she will be unable to earn the level of income required to meet all her own expenses, at least in the immediate future, and that she will need time to find a suitable job, I find no basis in the evidence to conclude that the Wife lacks the capacity to find work and contribute to her own needs within a relatively short period. I take into account that the Wife is likely to be eligible for family tax benefit in the foreseeable future, even when employed. [67]
[66] Section 75(2)(h)
[67] Section 75(2)(f)
The Court must consider the Wife’s property settlement entitlement when deciding what order for spouse maintenance, if any, would be reasonable.[68] The Wife will receive by way of property settlement the total sum of $744,445, most of which is outside superannuation. She has substantial debts to repay from her entitlement. After she receives her entitlement from the sale of the Property T property, and has paid her debts, she should have approximately half a million dollars to invest. She could realise a modest income from such an investment, but not sufficient to meet her reasonable needs as assessed.
[68] Section 75(2)(n)
The Husband will receive 26% of the net asset pool, most of which will not be accessible to him for a minimum of 15 years. I take into account that the Husband’s income varies according to the vicissitudes of the commercial property market. I take into account that the Husband will effectively be starting again, with considerable debt including legal fees. He is meeting his child support obligations and is required to meet the mortgage instalments on the Property T property until the end of January 2015. However, as submitted by the Wife’s counsel, the Husband has the financial benefit that flows from sharing household expenses with Ms K, and is likely to have the capacity to borrow money on the basis of his substantial income. I am satisfied that the Husband, will, in time, be in financial position to re-establish himself.
On a weighing of my findings under s.75(2), I have determined that the Husband will contribute to the Wife’s support for a limited period after his obligation to pay the mortgage instalments ends, to give the Wife the opportunity to find employment. The Husband will contribute $600 a week towards the Wife’s support for a period of 6 months after his obligation to meet the mortgage payments ceases.
I certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of Judge Sexton
Associate:
Date:13 November 2014
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