FULTON & CARDONA

FAMILY COURT OF AUSTRALIA

FULTON & CARDONA

[2017] FamCA 158

FAMILY LAW – CHILDREN – PARENTAL RESPONSIBILITY – Where the father seeks that the parties have equal shared parental responsibility for the child – Where there are allegations of family violence – Where the presumption against equal shared parental responsibility has been rebutted – Consideration of s 60CC factors – Where the child is aged 15 years and holds strong views that the father not be involved in her life – Where the child’s views are given substantial weight – Where an order is made for the mother to have sole parental responsibility.

FAMILY LAW – PROPERTY SETTLEMENT – Where the husband and wife’s contributions are assessed at being equal – Where the husband was out of employment for a number of years due to injury – Consideration of s 75(2) factors – Where the wife alleges that matrimonial funds were wasted by the husband – Where the wife has primary care of the parties’ child – Where a 7.5 per cent adjustment is made in favour of the wife – Where the husband is given the opportunity to buy out the wife’s share in the former matrimonial home.

Family Law Act 1975 (Cth) ss 4, 60CC, 61DA, 75(2), 79(2)

Dundas & Blake (2013) FLC 93-552
Kowaliw and Kowaliw (1981) FLC 91-092

APPLICANT:

Ms Fulton

RESPONDENT:

Mr Cardona

INDEPENDENT CHILDREN’S LAWYER:

Independent Children’s Lawyer

FILE NUMBER:

SYC

7120

2013

DATE DELIVERED:

17 March 2017

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Rees J

HEARING DATE:

8 March 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Ward

SOLICITOR FOR THE APPLICANT:

Rowan Solicitors

SOLICITOR FOR THE RESPONDENT:

Robert Balzola & Associates

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER:

Legal Aid NSW

Orders

IT IS ORDERED

That the wife have sole parental responsibility for B (“the child”) born … 2001.
That the parties jointly instruct C Lawyers, to hold the sum of $90,000 on trust for the parties jointly and to disburse those funds for the purpose of the payment of the child’s school fees on presentation of any invoice for such fees. Service of these Orders on C Lawyers shall be sufficient notice of the parties’ instructions.
That the parties cause the balance of the funds held by C Lawyers to be paid to the wife.
That, in the event that the whole of the sum of $90,000, referred to in Order 2, is not expended on the child’s school fees, the parties shall instruct C Lawyers to pay any amount remaining when the child finishes Year 12 as to 57.5 per cent to the wife and 42.5 per cent to the husband.
That within six (6) weeks of the date of these Orders, the husband pay to the wife the sum of $776,221. Simultaneously with the payment of $776,221, the wife shall do all acts required to transfer to the husband her interest in the property at D Street, Suburb E (“Suburb E”) being the land in Folio … and the husband shall indemnify the wife in respect of any liabilities attaching to Suburb E including, but not limited to mortgages, rates and other statutory charges.
That in the event that the husband has not paid the sum in Order (5) to the wife by the due date, then each party shall do all things required to sell Suburb E and to pay to the wife the sum of $776,221 together with interest on that sum at the rate prescribed by the Family Law Rules 2004 (Cth) from the due date until the date of payment.
That each party do all things necessary to sell the jointly owned Telstra shares and to pay the proceeds of sale of those shares as to 57.5 per cent to the wife and 42.5 per cent to the husband.
That, subject to these Orders, each party is otherwise solely entitled to any items of personal property in his or her possession.
Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Fulton & Cardona has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 7120 of 2013

Ms Fulton

Applicant

And

Mr Cardona

Respondent

REASONS FOR JUDGMENT

Ms Fulton (“the mother”) and Mr Cardona (“the father”) ask the Court to resolve a dispute about the allocation of parental responsibility for their youngest daughter, the child, born in 2001 and now aged 15.
The parties have resolved all other parenting aspects by orders made by consent on the day of the trial. Those orders provide that the child will live with the mother and spend time with the father in accordance with her wishes. The father is restrained from contacting the child or communicating with her other than at the child’s instigation and he is restrained from attending at her school or any of her activities.
The parties also have two older children who are not the subject of these proceedings, namely Ms F aged 21 and Mr G aged 18.
The parties also ask the Court to make orders for property settlement.

PARENTAL RESPONSIBILITY

In the parenting proceedings the Court was assisted by a Family Report dated 1 February 2017, prepared as a result of interviews conducted in December 2016 by the Family Consultant. An Independent Children’s Lawyer (“ICL”) was appointed for the child.
The father contends for an order that the parents have equal shared parental responsibility for the child. The mother, supported by the ICL, seeks an order that she have sole parental responsibility.
The issues about which parental responsibility requires parents to consult are the major, long-term issues for the child which are defined in s 4 of the Family Law Act 1975 (Cth) (“the Act”) as:
(a) the child's education (both current and future); and
(b) the child's religious and cultural upbringing; and
(c) the child's health; and
(d) the child's name; and

(e) changes to the child's living arrangements that make it significantly more difficult for the child to spend time with a parent.

There is a presumption in s 61DA of the Act that it is in the best interests of a child that the parents have equal shared parental responsibility when making parenting orders. The presumption is rebuttable.
The relevant paragraphs of s 61DA of the Act are set out below:
........... Presumption of equal shared parental responsibility when making parenting orders
(1) When making a parenting order in relation to a child, the court must apply a presumption that it is in the best interests of the child for the child’s parents to have equal shared parental responsibility for the child.
Note: The presumption provided for in this subsection is a presumption that relates solely to the allocation of parental responsibility for a child as defined in section 61B. It does not provide for a presumption about the amount of time the child spends with each of the parents (this issue is dealt with in section 65DAA).
(2) The presumption does not apply if there are reasonable grounds to believe that a parent of the child (or a person who lives with a parent of the child) has engaged in:
(a)abuse of the child or another child who, at the time, was a member of the parent’s family (or that other person’s family); or
(b)family violence.
(3) When the court is making an interim order, the presumption applies unless the court considers that it would not be appropriate in the circumstances for the presumption to be applied when making that order.
(4) The presumption may be rebutted by evidence that satisfies the court that it would not be in the best interests of the child for the child’s parents to have equal shared parental responsibility for the child.
On behalf of the ICL it was submitted that the Court would find that the father has engaged in family violence towards the mother and that it is otherwise not in the child’s interest for the father to have shared parental responsibility for her.
In relation to family violence, the ICL relied on the fact that Apprehended Domestic Violence Orders (“ADVO”) were made against the father for the protection of the mother in 2007, 2009 and 2013.
The mother, in her affidavit, deposed to a number of incidents of violence perpetrated against her by the father. The father is a qualified in martial arts.
The mother deposed that in October 2007 she and the father had an argument as a result of which the father pushed her to the floor and kicked her across the floor. He sat on top of her and pushed a knuckle of his finger into her throat. She could not breathe and the father said to her “I could kill you now, without leaving a mark on you, and no one would know how you died”.
The mother further deposed that on 5 November 2007, the father came to the home where the mother and the children were living and an argument ensued. The children were awoken by the argument and Ms F and Mr G came to see what was happening. The mother deposed:
[The father] then went to the kitchen where he proceeded to pull out a large carving knife from a draw (sic), returning to me and the children, and holding it up in front of him. No words were spoken by him, just a threatening look. The children were screaming and placed themselves between [the father] and myself to protect me. As they appeared very frightened, I did the motherly thing of embracing them against me. [Ms F] and [Mr G] did not wish to go near [the father] whilst he had the large carving knife in his hand.
[The father] ran out of the front door. I locked the front door and called the police and they attended the home. The incident was reported, and an Apprehended Domestic Violence Order … was set in place.
The mother deposed that she instructed the police not to proceed with the ADVO because she was afraid that the father’s employment would be terminated.
The mother deposed that on or around 20 April 2009 the father called police alleging that the mother was being violent. The police records annexed to the mother’s affidavit indicate that police attended the parties’ home and the mother told police she wanted to leave with the children but the father would not let her. The mother told police that she had no fears for her safety but did not want the father near her. The police noted that they held fears for the mother’s safety and took out an ADVO against the father for the protection of the mother and children.
The mother deposed that in 2011 the father was taking the child to a ballet lesson and Mr G was in the car. The child and Mr G later told her that there had been a car accident where the father hit the car that was in front of him. The father argued with the female driver and then the father walked to the passenger door, opened it and yelled at Mr G “You caused me to have a car accident” and slapped Mr G across his face.
The mother deposed:
When I was living at [Suburb H] and [Suburb I] with the children after separation, [the father] continually turned up in the middle of the night in his car, sitting outside the front of our home in [Suburb H] and [Suburb I]. He has hidden behind bushes, poles, and parked in nearby carparks watching us all. He always followed us to friends places, and once approached me at a café, while I was having coffee with my neighbour.
The mother deposed:
After separation, [the father] stalked the children and myself at various times. [Mr G] told me when we were living at [Suburb I] that:-
“Dad was at [Suburb I] Railway Station in the morning, and I was frightened by him. He got on the train and sat next to me and my friends. I said to Papa, go away and stop stalking me.”
The mother deposed that in June 2012, the father turned up at Ms F’s dancing performance at the school and insisted on standing next to the mother and the child in the foyer despite her asking him to leave. The mother walked in to the ladies’ toilet with the child and the father followed her and the child in the seating area, sitting next to them. Ms F came out from the dressing room and said to the father “Get away from me”.
On 13 August 2013, the mother obtained an ADVO alleging that the father was stalking her and the children.
In the Family Report, the father denied the mother’s allegations in relation to family violence. However the mother was not cross-examined in relation to her allegations and I accept her evidence.
I am satisfied that the presumption in favour of equal shared parental responsibility does not apply by virtue of the family violence perpetrated by the father.
I accept the submission of the ICL that the presumption in favour of equal shared parental responsibility has been rebutted.
The mother relied on the Family Report.
The Full Court of the Family Court of Australia in Dundas & Blake (2013) FLC 93-552, in relation to parental responsibility, said (at 87,408 – 87,409):
56.
Her Honour’s discretion in determining the question of parental responsibility was not at large. Her Honour’s discretion was circumscribed by s 61DA, which requires the court to apply a presumption that it is in the best interests of the child for the child’s parents to have equal shared parental responsibility. In this case, as we have already indicated at [34], her Honour was required under

s 61DA(4) to rebut the presumption “by evidence that satisfies the court that it would not be in the best interests of the child for the child’s parents to have equal shared parental responsibility for the child”.
57. In our view, her Honour was in error in making an order for sole parental responsibility. Section 61DA is mandatory in its requirement that the presumption must be applied until a level of satisfaction upon the evidence is reached that it would not be in the interests of the child for it to apply. …
58. It is not, in our view, sufficient for her Honour to point to the parties having poor communication or little confidence in each other’s parenting capacity. …
At Paragraph 61, their Honours Bryant CJ, May and Ainslie-Wallace JJ say:
In our view, the mandatory requirement to apply the presumption, unless the evidence satisfies the court that it is not in the best interests of the child, makes it necessary for there to be explicit and cogent reasons why the presumption should be rebutted. …
Therefore, in order to determine the competing applications for parental responsibility, it is necessary to look to the matters in s 60CC of the Act in order to determine what is in the child’s best interests.
B told the Family Consultant that she found it difficult to recall any positive memories of her father. The Family Consultant reported:
She said that her memories of [the father] are primarily related to his physical aggression, that is, hitting her and her siblings and allegedly, on one occasion “shoving me into a wall”. She alleges that [the father] hit her “on the back of the head, on the face and on the back” asserting that this resulted in bruising. [The child] recalled [the father] attending one of her ballet exams and said that, after the exam, “He hit me on the face and told me I did something wrong” during the exam.
[B] recalled that she was aware that she had made several mistakes during the exam. From [the child’s] perspective, [the father] had very high expectations of all the children, “He expected us to be the best”, particularly in relation to martial arts. She alleges that [the father] would humiliate her in martial arts classes if she did not do the correct moves.
The Family Consultant recorded:
[B] described [the father] as someone who is: “arrogant”, alleging that he believes he is always in the right; “violent”, alleging that she saw him “smash [Mr G] against a wall”; and “vindictive”, asserting that [the father] “puts you down and hounds you” until you agree with him. … She recalled that, when at home, [the father] spent “a lot of time” on the computer or laptop. [The child’s] memory of her parents’ marriage is of them having many verbal arguments and that [Ms F] and [Mr G] “tried to protect me”.
The Family Consultant reported:
[B] is adamant that she does not want to have any contact with [the father] and does not want him to attend any functions at her school or have any information about her progress at school. She was adamant that she would not take part in a joint interview and/or observation with him.
Throughout her interview, [the child] remained relative (sic) calm although she, on occasions when describing incidents which had distressed her, struggled with her emotions and occasionally became tearful and openly distressed.
The Family Consultant also interviewed Ms F and Mr G, both of whom have refused to have anything to do with their father.
The Family Consultant, in her evaluation, stated:
Information provided by [the mother], [the child] and her older siblings indicate that, if correct, the children have been exposed to a significant degree of violence and/or conflict over a long period. If this is correct, then [the child’s] negative views of, and her wish to have no contact with [the father] are based on her experience of her father and thus valid. While [the father] believes that [the mother] has deliberately sought to present a negative view of him to the children, and has alienated [the child] from him, the police records, however, seem to indicate that [the mother’s] and the three children’s views of [the father] are realistic and based on their experience of him.
The Family Consultant stated that the affect and presentation of both the child and her older siblings indicated that their views were based on their experience of the father and their exposure to a high level of conflict between the parents.
The Family Consultant assessed the child as being at above average maturity for her age. The Family Consultant stated:
In 2014 she had expressed a wish not to have any contact with [the father] at the time of the Child Responsive Program interviews and she has maintained these views during her interviews for this report. She is supported in her views by her mother and older siblings. Significant weight should therefore be given to the child’s wishes. [The child], by the time this matter is heard, will have commenced Year 10 and will be moving towards her final school years. This is a time when she needs to be able to focus on her own developmental need to individuate from her parents, to continue to consolidate her own personality, and to develop her own interests and friendships and focus on her studies. [The child] may experience significant pressure if she were forced to review her relationship with her father, particularly when she has not had any contact with him for over five years.
The Family Consultant recommended that the mother have sole parental responsibility for the child.
Having regard to the child’s age, maturity, the length for which she has held her current views and the strength with which those views are expressed, I give significant weight to the child’s wish that her father not be involved in her life.
I do not propose to exhaustively consider the other matters in section 60CC(3) of the Act because I am of the view that the child’s wishes, expressed in the manner in which I have detailed above, would outweigh all of those factors.
Accordingly, an order will be made for the mother to have sole parental responsibility.

PROPERTY

In this portion of the judgment, the parties will be referred to as “the wife” and “the husband”.
The husband is almost 61 years old and the wife is 55 years old. Throughout their relationship, they have both been employed in hospitality.
In 1988 the husband purchased land at J Town, Queensland, for $58,000 with a mortgage of $46,400.
In 1990 the husband purchased a property at Suburb K. The price recorded on the transfer was $150,000. There was a mortgage over Suburb K of $128,000.

In March 1991, the husband had a motor vehicle accident.
The husband and wife commenced co-habitation in 1993, living in rented accommodation.
The husband and the wife married in 1994.
At the time of the marriage the husband had equity in J Town, Queensland, and in Suburb K, NSW, but there is no evidence of the amount. The wife estimated that the husband’s interest in his employer’s Superannuation Scheme was about $30,000 at the time of marriage.
At the time of the marriage the wife had cash of $28,000, a car, and was a member of the Superannuation Scheme. She estimated that her entitlement then was about $16,200.
Four days after the marriage, the mortgage on J Town was paid out. There is no dispute that the funds used came from the wife. The husband says that she lent him the funds. Nothing turns on the characterisation of the payment. The husband says the amount was $26,500. The wife asserts it was $30,000.
In 1994, their first child L was born. She died shortly after her birth.
In April 1995, the wife purchased in her sole name a property at Suburb M in Victoria for $94,500. The parties borrowed $105,000 using the husband’s Suburb K property as collateral.
The parties’ second child, Ms F was born in 1996.
In March 1996 the husband’s employment was terminated. He received $55,704 in termination payments.
In July 1996, the husband’s common law claim, arising out of the motor vehicle accident in 1991, was settled. There is a dispute about the amount the husband received. The wife asserts that the amount was $217,965. The husband asserts the amount was much more. That issue will be dealt with later in these reasons.
In April 1997 they purchased ten acres of land at Suburb E for $335,000. There is a dispute about the source of the purchase money. $234,500 was borrowed from the Employees Credit Union (“ECU”) by way of mortgage. The husband asserts that he provided the balance from his compensation payment. The wife disputes that assertion.
Documents tendered in the wife’s case show a transfer from her ECU account to the husband’s ECU account of $31,311 on 14 April 1997. It is likely that the balance of the purchase price of $69,189 and the stamp duty totalling $11,446 came from funds held by the husband.
In July 1997, the husband, unsuccessfully, sought re-instatement by his employer. He then instituted proceedings for unfair dismissal. The legal fees for those proceedings were estimated by the wife to be between $17,000 and $25,000.
The parties’ third child, Mr G was born in 1998.
On 10 August 1999, the husband sold J Town for a net amount of $144,638. What subsequently happened to those funds is in issue and will be dealt with later in these reasons. It is sufficient to say here that the wife asserts that the husband wasted most of those funds.
The parties’ fourth child, the child was born in 2001.
In 2002 the parties commenced the construction of a home on the Suburb E land. There is a dispute about the source of the funds used for the construction.
The family moved into the house at Suburb E in 2003.
In 2007 the husband and the wife separated for about two months after the wife complained of violence and police took out an AVO against the husband for her protection. The wife and the children remained at Suburb E and the husband left. They reconciled in December 2007.
They separated again in April 2009. The wife left the Suburb E home with the children and rented premises in Suburb H. The husband rented out the Suburb E home and lived with his mother. He retained the rent.
The parties reconciled again in June 2009 and lived in the property at Suburb H that was rented by the wife. Suburb E continued to be tenanted.
They finally separated on 4 June 2011. The wife and the children remained at Suburb H.
After the separation, the two older children did not see the husband at all. The child did not see him after October 2011.
In December 2011, the wife and the children moved from Suburb H to Suburb I.
In January 2012 the husband sold Suburb K for a net amount of $136,031. A sum of $45,195 was used to pay school fees and the balance was held in the trust account of N Lawyers. On settlement the amount required to discharge the mortgage was $341,500. The mortgage at the time of the purchase was $128,000.
In March 2012 the wife sold Suburb M and the net proceeds of sale of $246,891 were then held by solicitors, C Lawyers, pending resolution of the financial matters between the parties. Suburb M had originally been mortgaged for $105,000. The amount required to discharge the mortgage was $240,071.
By agreement, $106,163 from the sale of Suburb M was used to pay school fees for Ms F and Mr G. In these proceedings, it is agreed that $90,000 of the balance remaining will be held and used to pay the child’s school fees.
In December 2015, the parties consented to orders allowing the funds held by N Lawyers to be released in equal amounts to each of them. A term of the consent orders was that they would each pay half of the school fees outstanding to Mr G’s school. The father acknowledges that he did not pay his share of the outstanding school fees. That order remains in force.
By February 2017, the mortgage over Suburb E had risen from $234,500 to $354,181.

ISSUES FOR DETERMINATION

As can be distilled from the narrative above the issues to be determined are:
·    The amount received by the husband pursuant to the common law claim and what was done with those funds;
·    The proper treatment of the disposition of the sum of $130,000 from the sale of J Town;
·    The cost of construction of the Suburb E property and the source of funds;
·    The explanation for the increase in the mortgages secured over Suburb K, Suburb M and Suburb E.

THE COMMON LAW CLAIM

The common law claim was heard in July 1996. The gross amount awarded to the husband was $320,000. No documents were made available in relation to the claim or the judgment. Thus it is not possible to ascertain, for present purposes, how that sum was calculated. Presumably there was a component for pain and suffering, a component for loss of income, a component for out of pocket expenses and a component related to the care provided to the husband by the wife.
The wife deposed “Throughout [his] disability period, I was the primary carer and support for him. [He] from time to time would be in bed for days due to pain and migraines. He later suffered depression due to the frustration of his situation and pain...”
The husband, in cross-examination, agreed that the wife had been his carer.
Annexed to the wife’s affidavit is a statement from the husband’s ECU account showing the deposit of $217,965. There are no other documents in evidence showing the receipt of a greater sum.
The husband asserts, but did not prove, that he received net $270,000. Of that amount, he says he contributed $114,988 towards the purchase of Suburb E. Suburb E was purchased in April 1997. The ECU statement shows that by 31 December 1996, the balance had been reduced to $106,114.
The parties agree that $39,000 was paid from the common law verdict for a family holiday overseas.
The wife asserts that a further sum of $120,000 was paid for the husband to obtain a commercial licence. The husband had commenced that training in 1993. The wife produced no documents to support her assertion and the husband denied it. However, the husband, deposed that he paid the sum of $50,000 from the verdict money towards his licence. The ECU statement shows a withdrawal marked “Journal” of $40,000, withdrawn on the same day as the verdict money was deposited in the ECU. That may be the money for the licence. It is impossible to know. The statement shows a further withdrawal of $20,000 on 23 December 1996 described as “Westpac Bank for [Mr O]” and a withdrawal of $3,000 in cash on the same day. The wife deposed that this amount of $23,000 in total was used to buy a utility motor vehicle.
I accept that the balance of the purchase price of Suburb E (including stamp duty) of about $80,635 came from the verdict money.
The husband has not established that he received any more than $217,965.

WASTE

It cannot be disputed that the husband received the proceeds of sale of J Town and converted $130,000 of that money into US$80,000 in cash. Documents annexed to the wife’s affidavit substantiate those payments.
The wife deposed that the husband told her that he intended to use the money for a business venture in Asia. She deposed that she was not told anything about the proposed venture. Subsequently, the husband told the wife “I have lost the lot, I gave the bag of money to a … Diplomat, who has disappeared with it.”
The wife was not cross-examined in relation to that evidence. Specifically, it was not put to the wife that she had any knowledge of the transaction, that she had any input into the transaction, that she was consulted in relation to the transaction, that she was a party to the transaction, or that she agreed with the proposed transaction before it occurred.
I accept that the wife played no part in this transaction and had no knowledge of it other than as she deposed.
The husband in his affidavit deposed “Of the $148,000, $90,000 was lent to a third party which was never recovered. The residue was spent on school fees of approximately $26,000.”
In cross-examination, the husband gave an expanded account. He said that he met, in Sydney, a man named Mr P, who was a cousin of the King of [Country Q]. Mr P told the husband that he could double the money so “we” lent him the money.
Mr P died. The husband went to Asia to try to recover the money from Mr P’s sons but did not succeed.
The husband denied that the money was still available to him.
The case which has come to define the scope of “waste” in the family law context and which is viewed as establishing legal “guidelines” for this Court is the frequently cited case of Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”).
In Kowaliw, Baker J made the following comments on the topic of “waste” at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of sec. 79.
At 76,645 of Kowaliw Baker J reiterated his earlier comments by stating:
If a party has acted in a manner to which I have referred earlier … then such conduct in my view and the economic consequences that flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of sec. 75(2)(o).
I am unable to conclude that the sum of $130,000 remains available to the husband. The most likely outcome is that he was swindled.
However, I accept that the husband’s actions in relation to that money fall into the category of reckless, negligent or wanton conduct to which Baker J referred and that the husband has committed waste.
This is a matter to be taken into account when assessing the appropriate adjustment pursuant to s 75(2) of the Act.
It is convenient to deal here with other money spent by the husband which the wife asserted was waste.
The husband, on his own evidence, spent at least $50,000 on obtaining a commercial licence. He has never worked in this profession and concedes that he never will.
He completed a security course at a cost of $3,500 and paid $2,500 for a pistol. He did a little work as a security officer.
He completed a Real Estate course at a cost of $3,000. He did not work as a real estate agent.
He completed a massage course but has not worked as a massage therapist.
He has completed martial arts courses and has also earned a small amount as a martial arts instructor.
I do not consider that these expenses fall into the same category of reckless, negligent or wanton conduct and they will not be included in the waste claim.

CONSTRUCTION OF SUBURB E AND THE INCREASE IN MORTGAGES

Construction of Suburb E commenced in 2002. The husband deposed that he used the money from his termination payment, received in 1996, for site preparation. He provided no document to substantiate that claim.
There is no evidence which establishes what was spent at Suburb E. The wife’s estimate is $161,000 but that is no more than an estimate.
The wife concedes that the mortgages over Suburb E, Suburb K and Suburb M were all increased to finance the construction. But she disputes that the full amount of the increase, some $479,000, was spent on Suburb E.
That is probably correct. But the parties had children in expensive private schools. Ms F attended a private school from kindergarten (presumably in 2001) and Mr G from Year 3 in 2007.
In 1996 the wife was on maternity leave and the husband’s employment was terminated. The wife remained on full time maternity leave until 1999 and in the same period the husband earned very little income.
In 2000 the wife earned $32,000 working part time and the husband earned $1,132.
From 2001 to 2006 the wife continued to work part time as the children were small and the husband was earning on average about $60,000 per annum.
The wife returned to full time work in 2007 and the husband’s income gradually increased after that time.
It is difficult to see how the parties’ living expenses could have been maintained from their incomes. The most likely explanation is that the funds drawn down on the mortgages were used to contribute to living expenses as well as funding the construction at Suburb E.

SECTION 79(2)

The only substantial asset of the parties is their equity in Suburb E. They can no longer jointly enjoy the benefit of that asset.
It is just and equitable that the asset be divided between them.

THE COMPETING APPLICATIONS

The wife seeks an order that the assets of the marriage be divided as to 60 per cent to her and 40 per cent to the husband.
The husband seeks an order for equal division. He would like the opportunity to retain Suburb E and pay out the wife’s interest.
Neither seeks a superannuation splitting order.

THE BALANCE SHEET

At the commencement of the trial, the parties provided a joint Balance Sheet which set out their respective contentions as to their assets and liabilities.
The Balance Sheet is reproduced below.
The issues in dispute will be dealt with using the item numbers on the Balance Sheet.

Ownership			Description			Wife/de facto partner’s value	Husband/de facto partner’s value
ASSETS
1	D Street, Suburb E				$1,750,000.00		$1,750,000.00
2	Household Contents				$5,000.00
3	Monies held in C Lawyers Trust A/C (-dispute Respondent Husbands figure)				$140,727.99		$152,963.06
4	Commonwealth Bank A/C …74				$16.00
5	Employees Credit Union A/C …66 and …65				$10.00
6	Company R Shares – 3,418 shares				$11,211.00		Not disclosed
7	Telstra shares – on both parties signatures 400 shares @$4.55 per share as at 3/3/17				$1,820.00
8	Funeral Plot – L – Crematorium and Memorial Park Melbourne VIC				$6,000.00
9	NAB Account				$170.00
10	Company R Account …71				$1.29
11	Company R Account ..43				$1.29
12	Gym equipment, tractor, trailer, ride-on lawn mower, air compressor, air tools, oxywelding sets, jackhammer, furniture, fixture and fittings				$5,000.00
Total		$ 1,919,784.99		$ 1,903,135.64
~~ADDBACKS~~ ALLOWANCE FOR ADDITIONAL FINANCIAL CONTRIBUTION TO WELFARE OF FAMILY AFTER SEPARATION
13	Expenses paid for children less child support during the period of separation (04/06/2011 to current: $253,731.96 (total expenses - children) - $92,024.18 (total child support)			$161,707.78
14
Total		$161,707.78
LIABILITIES
15	Loan/Mortgage – D Street, Suburb E				$354,180.70	$365,000.00
16	Australian Taxation debt				$161,851.00	$255,000.00
17	T Lawyers				$23,997.35
18	Mastercard				$888.00
19	B School Fees Years 11-12				$90,000.00
20	Child Support liability				disputed	$501.00
21	University S				disputed	$97,000.00
22	Council Rates Expenses (6xyears payments)				disputed	$9,700.00
23	Water Rates (6 years payments)				disputed	$6,000.00
24	Environmental Cycle Expenses (6 years payments)				disputed	$7,200.00
25	NAB Visa Card				Not during marriage	$8,500.00
26	Supergas Rental and Expenses				disputed	$664.80
27
28
29
Total		$630,917.05	$749,565.80
SUPERANNUATION
Member			Name of Fund	Type of Interest		Wife/de facto partner’s value	Husband/de facto partner’s value
30	Company R Superannuation Limited	Accumulation and defined benefit interest: as at 24.01.17 = $411,264.67 as at the date of separation 04.06.11 = $255,826.82, difference =$155,437.85 – No Sections 79(4)(a) and (b) contributions		$255,826.82
31	Company R Super Fund	Beneficial		No statement provided	$181,239.68
Total			$255,826.82	$181,239.68

Item 3 – Money held by C Lawyers

The husband in his Financial Statement deposed that the amount held was $140,728. He now contends for a different figure but provides no evidence to substantiate his claim. The trust account will be included at the wife’s figure.

Item 6 – Husband’s Company R shares

In his Financial Statement the husband discloses that he has 430 shares. The wife values her Company R shares at $3.80 each. Applying the same value to the husband shares, they have a value of $1,634.

Item 8 – Funeral plot – L

There was no evidence as to the ownership of the plot or the parties’ intentions in relation to it. I assume it is jointly owned. Neither party seeks any order in relation to it and the item will be removed from the Balance Sheet.

Item 12 – Husband’s equipment and tools

There is no evidence of the value of these chattels. They will be removed from the Balance Sheet.

Item 13 – Allowance claimed by the wife for children’s expenses

It is unclear how it is asserted this item should be taken into consideration. Annexed to the wife’s affidavit is a schedule of all of the money spent by her since separation. There was no challenge to the schedule.
However, even a cursory examination reveals items such as rent, moving expenses, furniture, travel, family outings, holidays, driving lessons, admission to the races, parking fines, sponsorship, Christmas presents for Ms F’s boyfriend, supplies for pets, deposit on a car for Mr G, cost of the Year 12 Parents’ dinner, spray tans, birthday present for the child’s friend, and eye brow waxing.
This item will be removed from the Balance Sheet. The cost of the children after separation can be taken into account when considering contributions made by each of the parents post-separation.

Item 15 – Mortgage over Suburb E

The parties contend for slightly different amounts. There is no document provided to establish the correct amount.
The wife’s evidence in relation to matters of detail was generally more accurate than that of the husband. Her figure will be accepted.

Item 16 – Taxation debts

The parties agreed that each should be responsible for their own tax debt. The wife asserted that the debt that has been raised against her is incorrect because the husband prepared her returns and the information that he used was inaccurate.

It is likely that each will challenge the correctness of their assessments and it is not possible to predict what the outcome might be.
The safest course is to remove these debts from the Balance Sheet.

Item 17 – T Lawyers

The wife has a liability to her solicitor of $23,997. The husband, in his Financial Statement, deposed to a liability to his solicitor for “anticipated legal fees” of $50,000. That liability was not included in the Balance Sheet.
Neither party provided a costs letter.
Each of them will be liable to pay legal fees according to the arrangements they have made with their respective legal advisors.
This item will be removed from the Balance Sheet.

Item 18 – Wife’s Mastercard debt

This not a debt referable to the period of co-habitation. It will be removed from the Balance Sheet.

Item 19 – the child’s school fees

It is agreed that a fund of $90,000 will be set aside to pay these fees. They are agreed to be a joint liability.

Item 20 – Child Support Liability

There is a dispute about this item. There is no evidence in the husband’s case to support its existence.
This item will be removed from the Balance Sheet.

Item 21 –University S fees

The husband has commenced a course at the University S in psychology in 2017. There is no evidence to support his assessment of the prospective fees.
It is a discretionary expense.
This item will be removed from the Balance Sheet.

Items 22 to 24 – expenses relating to Suburb E

The husband claims to owe rates, water rates and environmental cycle expenses for the past six years.
There was no evidence to support his claim. The claim is not referred to in his Financial Statement sworn 22 February 2017.
The expenses arose in the period when the husband had the sole occupation of Suburb E and chose to live with his mother and rent out the house. He received the rent. He did not rent out the shed which has a rental value of $500 per week.
These items will be removed from the Balance Sheet.

Item 25 – the husband’s Visa debt

There is no evidence that this liability is referable to the period of co‑habitation. It will be removed from the Balance Sheet.

Item 26 – Supergas Rental and expenses

There is no evidence in relation to this asserted liability.
The claim is not referred to in his Financial Statement sworn 22 February 2017.
This item will be removed from the Balance Sheet.

Item 32 – Husband’s superannuation interest

No document has been provided by the husband in relation to the current value of his interest. It appears to have been conceded by Counsel for the wife that the amount is accurate as the 2015 balance.
There is no other evidence of the value of the husband’s superannuation interests.
I therefore find the assets and liabilities of the parties, for the purpose of these proceedings to be:

ASSETS VALUE

J D Street, Suburb E $1,750,000.00

W Household Contents $5,000.00

J Monies held in C Lawyers Trust A/C $140,728

W Commonwealth Bank A/C …74 $16.00

W Company R Employees Credit Union A/C …66 and …65 $10.00

W Company R Shares – 3,418 shares $11,211.00

H Company R shares – 430 shares $1,634

J Telstra shares – on both parties signatures 400 shares @$4.55 per share as at 3/3/17 $1,820.00

H NAB Account $170

H Company R Account …71 $1.29

H Company R Account …43 $1.29

Total $1,910,592

LIABILITIES VALUE

J Loan/Mortgage – D Street, Suburb E $354,181

J B School Fees Years 11-12 $90,000.00

Total $444,181

SUPERANNUATION

Name of Fund Type of Interest Value

W Company R Superannuation Limited Accumulation and defined benefit interest:
as at 24.01.17 = $411,264.67
as at the date of separation 04.06.11 = $255,826.82, difference
=$155,437.85 – No Sections 79(4)(a) and (b) contributions
$255,826.82

H Company R Super Fund Beneficial $181,240

Total $437,067

Thus the parties have net assets, excluding superannuation, of $1,466,411.
Of the asset pool, the value of the wife’s personalty is $16,237.
The husband’s personalty (excluding his equipment and tools which have not been valued) is valued at $1,807.

CONTRIBUTIONS

At the commencement of the co-habitation, in 1993, the husband owned J Town which had been purchased in 1988 with an equity of about $12,000. He also owned Suburb K which had been purchased in 1990 with an equity of about $22,000.
The wife had received a property settlement in relation to her first marriage which the husband conceded was about $30,000. She used that money to pay out the mortgage on J Town.
Both of the parties worked throughout the marriage with some interruptions. The wife took maternity leave and worked part time after the children were born and when they were little. The husband’s employment was interrupted between about 1994 and 2001 as a result of his injuries although during that time he received sick leave, holiday leave and long service leave.
Annexed to the wife’s affidavit is a schedule of their respective incomes from 1993 until separation in 2011. The wife earned about $861,252. The husband earned about $924,896 inclusive of his termination payment in 1996.
The husband relies on the compensation payment received in 1996 which I have found to have been a net amount of $217,965.
From that amount he paid $50,000 for the commercial licence. I accept that the balance of some $167,000 was applied to the purposes of the family. However, the fact that the husband received the compensation payment does not mean that the amount should be treated as a contribution by him alone. In so far as the compensation payment had a component for loss of income and for the wife’s care of him when he was ill, she made a contribution to the amount he received. There was no attempt to put evidence before the Court as to the manner in which the verdict was calculated.
After separation, the children lived with the wife and their relationship with the husband ceased although he continued to pay child support. At separation Ms F was 15, Mr G was 13 and the child was 10 years old.
I accept that the amount of child support which the husband paid was not the equivalent of the whole of their expenses. However, the husband was not responsible for the whole of their expenses. He paid, according to the wife’s unchallenged evidence, $92,024 in child support up to the date of the trial. She calculated that she had spent $253,732 on the children’s expenses during the same period. After separation, the wife’s income exceeded that of the husband. She would have been responsible for at least half of the children’s expenses. However, I do not accept that all of the expenses she claimed would be accepted as reasonable expenses for the children and her calculation makes no allowance for the benefit she herself received from such payments as rent and moving expenses. Neither does her calculation take into account the fact that, in relation to Ms F and Mr G, they reached 18 years of age in 2014 and 2016 respectively. I am not persuaded that there should be any adjustment of contribution arising from the wife’s payment of expenses for the children.
The private school fees have been paid from capital and therefore from joint assets.
However, there should be an adjustment in favour of the wife to take into account the fact that since separation, she has had the sole day-to-day physical care of the children. The child is 15 years old and has two more full years of school. The wife will be responsible for her physical care during that time although the husband will pay child support as assessed and the child’s school fees will also be paid from capital.
Taking into account all of the contributions, the husband’s slightly greater initial contribution, the common law verdict and the wife’s greater parenting responsibilities after separation, I find that their contributions are equal.

SECTION 75(2)

The wife is aged 55 years and the husband almost 61 years. She has more years left to work, and accumulate superannuation, than does the husband.
The wife earns $91,918 per annum and the husband $77,168.
The wife will retain superannuation of $411,265 of which $155,438 was accumulated after separation and the husband will retain superannuation of $181,240.
The wife needs to rehouse herself and the child. The husband needs only to rehouse himself.
The wife will be responsible for the child’s care although, I take into account the fact that she is now 15 years old.
The husband has had the sole use of Suburb E since 2011 while the wife has paid rent. The single expert’s evidence was that the rental value of the house is $550 and of the shed $500. The shed has not been rented out and the husband negotiated a rent reduction from $550 to $430 for the house.
I also take into account the fact that the husband wasted $130,000 from the sale of J Town.
Taking all of those matters into account, there should be an adjustment in favour of the wife of 7.5 per cent.

CONCLUSION

The wife will receive 57.5 per cent of the net assets or $843,186. She has assets of $16,237 and will receive the balance of the C Lawyers trust account of $50,728, together with any interest that may have accrued since the trial, therefore the husband must pay her $776,221 if he wishes to retain Suburb E.
In the event that any of the $90,000 which is retained for the child’s school fees remains at the end of her completion of Year 12, the balance should also be divided as to 57.5 per cent to the wife and 42.5 per cent to the husband.
Neither party made submissions in relation to the jointly owned Telstra shares. They should be sold and the proceeds divided in the same proportions.

I certify that the preceding one hundred and eighty (180) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 17 March 2017.

Associate:

Date: 17/3/2017

[2017] FamCA 158

17 March 2017

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Costs

ASSETS		VALUE
J	D Street, Suburb E	$1,750,000.00
W	Household Contents	$5,000.00
J	Monies held in C Lawyers Trust A/C	$140,728
W	Commonwealth Bank A/C …74	$16.00
W	Company R Employees Credit Union A/C …66 and …65	$10.00
W	Company R Shares – 3,418 shares	$11,211.00
H	Company R shares – 430 shares	$1,634
J	Telstra shares – on both parties signatures 400 shares @$4.55 per share as at 3/3/17	$1,820.00
H	NAB Account	$170
H	Company R Account …71	$1.29
H	Company R Account …43	$1.29
Total	$1,910,592