H and H
[2002] FMCAfam 381
•20 November 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| H & H | [2002] FMCAfam 381 |
| FAMILY LAW – Property settlement – spouse maintenance – child maintenance payable by step-parent – primary duty of parents – lump sum child support. Lee Steere and Lee Steere (1985) FLC 91-626 |
| Applicant: | T H |
| Respondent: | B F H |
| File No: | HBM2251 of 2001 |
| Delivered on: | 20 November 2002 |
| Delivered at: | Launceston |
| Hearing Date: | 20 & 21 August 2002 |
| Judgment of: | Roberts FM |
REPRESENTATION
| Counsel for the Applicant: | Mr. P. Fitzgerald |
| Solicitor for the Applicant: | The Legal Aid Commission of Tasmania |
| Counsel for the Respondent: | The Respondent appeared on his own behalf |
ORDERS
That B F H (“the Husband”) do pay to T H (“the Wife”) the sum of $20,000.00 within sixty days of the date of this Order.
That there be a departure from administrative assessment in relation to the child E J H born 13th May 1997 in that the annual rate payable by the Husband be set at $1,820.00 for the period commencing 1st October 2002 and concluding on 30th September 2004.
That pursuant to Section 141 of the Child Support (Assessment) Act 1989 the child support payable pursuant to Order No. 2 hereof be capitalised and be paid by the Husband as a lump sum within sixty days of the date of this Order.
That any periodic child support paid by the Husband pursuant to any administrative assessment for the period commencing 1st October 2002 be credited towards his liability pursuant to Order No. 3 hereof.
That the Wife cause a sealed copy of these Orders to be served upon the Child Support Agency in Hobart.
That save as to costs the Wife’s Applications filed 17th September 2001, 23rd April 2002 and 20th June 2002 and the Husband’s Response filed 14th December 2001 be otherwise dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT LAUNCESTON |
HBM2251 of 2001
| T H |
Applicant
And
| B F H |
Respondent
REASONS FOR JUDGMENT
Background and applications
The Applicant, T H (“the Wife”) and the Respondent, B F H (“the Husband”) were married on 26th February 1996.
Because the Wife came from the Philippines, it was necessary for her to remain there until she received approval to settle in Australia. As a result, the parties did not commence cohabitation until early August 1996.
The parties separated in October 1998, so their period of cohabitation lasted a little more than two years.
There is one child of their relationship, E J H born 13th May 1997 (“E”). However, the Wife has another daughter, who has taken the name M H (“M”). She was born on 20th July 1990.
Both parties are thirty six years old.
On 17th September 2001 the Wife filed an Application in this Court seeking a division of the parties property on the basis of 80% to her and 20% to the Husband. She also sought an Order for spousal maintenance at the rate of $100.00 per week.
On 23rd April 2002 she filed an Amended Application seeking long and detailed orders for property settlement, which effectively reduced her claim for property settlement to 40% while retaining a claim for spousal maintenance at the rate of $100.00 per week. It is not necessary to recite the actual orders sought, because her counsel indicated at the start of the hearing and in his final submissions that the settlement that she was seeking was a payment of 20% of the net value of the parties’ property by way of property settlement and spouse maintenance.
On 20th June 2002 she filed a further application to seeking orders pursuant to the Family Law Act 1975 for maintenance for the child M and orders pursuant to the Child Support (Assessment) Act 1989 in relation to the child E.
In essence therefore, the Wife is pursuing three applications. They are:
a)an application for a lump sum for property settlement and spouse maintenance;
b)an application for capitalised child support for E; and
c)an application for capitalised step parent maintenance for M.
It seems to me that I should deal with each application separately.
Property settlement and lump sum spouse maintenance
As mentioned above, the Wife is seeking 20% of the net value of the assets by way of property settlement and spouse maintenance.
The Court’s approach to the determination of an application for the adjustment of property interests has been well established by authority. See Lee Steere and Lee Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335 and Clauson (1995) FLC 92-595. It is essentially a multi-step process: firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing; secondly, evaluating the contributions made by the parties as defined in Section 79(4)(a) to (c) and thirdly, evaluating the matters contained in Section 75(2) if they are relevant.
It is also clear from Russell v Russell (1999) FLC-92877 that the Court must also look at the overall result to see whether it is “just and equitable” in accordance with section 79(2) of the Family Law Act 1975.
Property and resources of the parties
The Husband is in a farming partnership with members of his family. He has a 25% interest in that partnership. The farming partnership business is run on land owned by the individual partners. Some of that land is owned by the Husband alone.
The Husband is the owner of a property at Industry Road and the parties are agreed that its value is $97,500.00.
The Husband is also the owner of a property at Dalrymple Road. The government valuation of that property is $250,000.00 inclusive of buildings. The Husband says that some of those buildings are owned by a number of people who have a right to use an airfield on that property. It is also his evidence that those people have the right to remove those buildings and that the total value of those buildings is $92,839.00. Consequently, he says that the real value of the property is $157,187.00.
No evidence was put forward by the Wife to counter that proposition, so I must accept it. I therefore find that the Dalrymple Road property is worth $157,187.00.
The Husband is entitled to one quarter of the stock of the partnership and his share is worth $79,480.00. He had a debt for legal expenses which has been paid by the partnership. That was accepted by the Wife and I shall refer to it below when dealing with the liabilities.
In relation to the plant and equipment of the partnership, it seems clear to me from authorities such as Elias v Elias (1977) FLC ¶90-267 and Jordan and Jordan (1997) FLC ¶92-736, that the Husband cannot tell the Australian Taxation Office one thing and then tell this Court another thing. It is perfectly clear that the Husband has told the Australian Taxation Office consistently that he is entitled to a quarter share of the plant and equipment and motor vehicles of the partnership (notwithstanding that some of the motor vehicles are registered in the individual names of partners). Further, it seems to me that he has had the tax advantages that flow from what he has told the Taxation Office.
The plant and equipment is shown in the depreciation schedule of the partnership for 30th June 2002 as being worth $15,740.00, so the Husband’s quarter share of that is worth $3,935.00. Similarly, the motor vehicles are shown to be worth $15,362.00, so the Husband’s share is worth $3,840.00. No evidence was put before me that the values in the depreciation schedule are not the correct values.
The Husband quite properly included in his assets his one quarter share of the hanger and office that the partnership is entitled to remove from his property. The value of $8,000.00 should therefore also be included.
The Wife has purchased a house and the parties agree that it is worth $42,500.00. They also agree that her car is worth $1,800.00.
Taking the above into account, the property of the parties is as follows:
I R property ------------------------------------------- $97,500.00
D R property------------------------------------------ $157,187.00
Share of Stock------------------------------------------ $79,480.00
Share of plant and equipment--------------------------- $3,935.00
Share of motor vehicles--------------------------------- $3,840.00
Share of hangar and office------------------------------ $8,000.00
Wife’s house------------------------------------------- $42,500.00
Wife’s car------------------------------------------------ $1,800.00
Total:-------------------------------------------------- $394,242.00
The parties’ liabilities also need to be taken into account.
Both parties accept that the Husband is responsible for his share of the partnership overdraft, being $14,000.00.
There is a mortgage over the I R property in the sum of $87,000.00. However, the Husband conceded in his evidence that he was not the borrower of that money. His sister borrowed the money and he merely put up his property as security for her. Consequently, I am not prepared to take that into account as a liability of the Husband.
As referred to above, the Husband’s partnership paid a legal bill on his behalf of $15,580.00 and the arrangement between the partners means that that reduces his equity. However, in my view it is easier to take that into account as a liability, rather than reduce the value of his interest in the partnership. Either way, the “bottom line” is the same.
In the document handed up by the parties to show their different positions in relation to assets and liabilities, the Wife appears to claim a debt of $5,000.00 for legal expenses. However, that is not referred to in her financial statement, nor is it mentioned in her affidavit. Further, she gave no evidence in relation to that liability, so it seems to me that because it is not a debt that is accepted by the Husband, I cannot take it into account.
The parties do agree that the Wife has a mortgage liability of $30,500.00.
The total liabilities that I will take into account are therefore $60,800.00.
Consequently, the total net value of the parties’ property after deducting liabilities is $334,162.00.
Neither party has any superannuation.
As can be seen from the above, the Husband has interests in property worth $349,942.00, subject to liabilities of $29,580.00, making the net value of his property $320,362.00.
The Wife has property worth $44,300.00 subject to a liability of $30,500.00, so she has property with a net value of $13,800.00.
This means that the Husband has approximately 96% of the total net value of the property available to the parties. The Wife has the other 4%.
Contributions
In terms of contributions, it is clear that the Husband made all the direct financial contributions and he had his interests in most of the property before he even met the Wife.
It is also clear that the Wife’s contributions as a homemaker and parent during the short time that the parties were living together would not have been very significant. In this regard, I accept the Husband’s evidence that the Wife was unwell for approximately six months after the birth of E and that he was the primary homemaker during that period.
The Wife’s counsel suggested in his closing submissions that on contributions alone, she would not be entitled to more than 5%. If I am to accept that argument, and bearing in mind that the Wife has property worth 4% of the total, it would appear that on contributions alone, the Wife would be entitled to little more than she already has.
However, the Wife’s counsel argued that a further section 75(2) adjustment of an additional 15% should be made (i.e taking it up to 20%). He based that essentially on the Wife’s future needs. Consequently, if that argument succeeds, I would need to make an adjustment in the vicinity of $53,000.00 in her favour. That obviously requires a careful look at the factors set out in section 75(2) of the Act.
Section 75(2) factors
In dealing with the section 75(2) factors in relation to this matter, I will not refer to every part of that subsection. I shall deal only with those that are relevant to this particular matter.
As stated above, both parties are aged thirty six years. Both appear to be in reasonable health.
As stated earlier, the Husband is employed in a farming partnership with members of his family. His average taxable income for the five years from 1997 to 2001 inclusive was $14,919.00 per annum. The Wife’s income is made up of Centrelink benefits and Child Support that she receives from the Husband for the child E. Her Financial Statement showed that the total of those two was only $321.00 a week.
The property and financial resource of the parties are referred to above so I do not need to mention those again.
In general, both parties are physically and mentally capable of undertaking employment. However, the Wife’s poor English speaking ability would severely restrict the type of employment that she would be able to undertake to that of an unskilled and menial nature.
The Wife’s ability to be employed is further restricted by the fact that she has children aged 12 and 5 years in her care. Clearly, the Wife has the major responsibility to care for those two children and I shall deal with her applications for financial assistance in relation to that below in these Reasons.
The Husband has a son who was born after the breakdown in the relationship between himself and the Wife. However, he does not appear to be still in a relationship with the mother of that child. His son is currently one year old and it is likely that the Husband will have a continuing commitment to pay child support for him.
The length of the marriage is a factor that the Court must consider. In this case, the parties lived together for a little more than two years, so the marriage was clearly a short one.
It is primarily because of the shortness of the marriage and the fact that most of the assets in the Husband’s possession or control were acquired by him prior to the marriage, that the Wife cannot claim any real direct contribution to those assets. However, she can claim contributions towards the purchase of her home, notwithstanding that it was funded by the First Home Owners Grant and borrowings.
It is quite clear that the parties are not entitled to property adjustments simply because there is a significant disparity in their financial resources. In Hirst & Rosen (1982) FLC 91-230, Nygh J put that proposition quite colourfully when he stated that section 79 does not entitle the Court to adopt “a soup kitchen” approach. That is clearly correct. However, subparagraph (k) of subsection 75(2) of the Act refers not only to the duration of the marriage, but also to the extent to which it has affected the earning capacity of the party whose maintenance is under consideration. In this particular case, it seems to me that I have no particular evidence of any effect upon the Wife’s earning capacity. Her evidence was that she was not working in the Philippines and it appears that she is not working now. However, I have no doubt that her current standard of living is superior to that which she enjoyed in the Philippines.
During the hearing the Husband stated that the Wife had told him in an argument shortly after she came to Australia that he had been her “free ticket to get a better life”. The Wife denied that she had said that. However, I believe the Husband’s evidence. Indeed, the Wife even says in her affidavit that she saw that the Husband “could provide (M) and myself with a life we did not have in the Philippines”.
There was also some evidence given by the Husband that the Wife had told him that she was in fact married in the Philippines. That raised the possibility of a bigamous marriage to the Husband. The Wife denied that also and I ruled during the hearing that the evidence did not override the presumption of the validity of the marriage between the Husband and the Wife.
Having considered all the evidence in relation to the Wife’s Application for property settlement and spouse maintenance, I come to the conclusion that if it were not for the fact that there is a child of the marriage, I would be unlikely to make any adjustment of property at all. However, there is a child of the marriage who is predominantly in the care of the Wife and she is only five years old.
I recall that in Russell v Russell (supra) the Full Court of the Family Court of Australia said:
“Furthermore, it must be remembered in this regard that under s.79(2) of the Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties' assets. Indeed we take the opportunity to emphasise that in what his Honour has termed ''the fourth stage'', that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered.”
As stated above at paragraph 39, the Wife’s counsel argued that I should make an award of 20%, which I calculate would require a payment in the vicinity of $53,000.00 to the Wife. In my view, such an award would be excessive and not “just and equitable” for the purposes of section 79(2) of the Act. In my view, a more appropriate figure to be paid to the Wife is $20,000.00.
The Husband does not have $20,000.00 immediately available to him and he will have to make arrangements to borrow that sum, so I will allow a period of sixty days for him to make that payment.
Maintenance for step-child
As mentioned above, the Wife has applied for orders that the Husband pay maintenance for the child M. The Application seeks an amount of $100.00 per week “annualised at $5,200.00 p.a.” Further, she seeks an Order that it “be capitalised in the sum of $20,000.00 and credited against the annual rate of child maintenance …”
A step-parent is defined in Section 60D of the Act as a person who:
a)is not a parent of the child;
b)is or has been married to a parent of the child; and
c)treats, or at any time during the marriage treated, the child as a member of the family formed with the parent.
It is perfectly clear that the Husband fits those criteria.
Section 66D provides that a step-parent has the duty to maintain a child “if, and only if, a court, by order under section 66M, determines that it is proper for the step-parent to have that duty”. However, the section goes on to state that the duty of the step-parent to maintain the child is a secondary duty which is subject to the primary duty of the parents of the child and does not derogate from the primary duties of the parents to maintain the child.
Pursuant to Section 66M, in determining whether it is proper for a step parent to have a duty to maintain a stepchild, the Court must have regard to the following, and no other matters:
a)the matters referred to in Sections 66F, 66B and 66C; and
b)the length and circumstances of the marriage to the relevant parent of the child; and
c)the relationship that has existed between the step-parent and the child; and
d)the arrangements that have existed for the maintenance of the child; and
e)any special circumstances which, if not taken into account in the particular case would result in justice or undue hardship to any person.
It was put to me by counsel for the Wife that for a number of reasons, the Court should exercise its discretion in favour of the Wife. Those reasons include the following:
a)the child M has called the Husband “Dad”;
b)the child is known by his family name;
c)the Husband has sought Orders in relation to M and he has a right of contact with her pursuant to those Orders; and
d)he clearly wants to take the role of a parent in relation to M.
The biological father of M is apparently resident in the Philippines. The Mother says that she and the father were never married and that he had little to do with M during the time that they lived in the Philippines. She says that he has not provided any financial support for M and that before leaving the Philippines in early 1997, she did not know of his whereabouts.
Her affidavit stated that she had no idea of the biological father’s whereabouts and that her lawyer had informed her that seeking maintenance would be “an impossible task, even if I could find him”.
The evidence that the Wife gave during the hearing was somewhat different. She said that her sister had been able to locate the biological father in the Philippines and that he had asked his own sister to write to M. However, there had been no communication since. Certainly, she had not written to M’s biological father.
It is clear from section 66D that any duty of a step parent to maintain a stepchild is a secondary duty and that it is subject to the primary duty of the parents of the child to maintain the child. Further, it does not derogate from that primary duty. In this particular case the Wife has not put forward any evidence to show that she has sought to enforce the biological father’s primary duty. Indeed, I have no evidence of his financial circumstances and I accept the Husband’s submission that the Court cannot know whether the biological father is a wealthy businessman or a pauper.
In the circumstances, I adopt the approach taken by Mullane J in Cooper & Cooper (1989) FLC 92-017. In this case also there is no evidence to establish that the financial support of the biological father is not available, because the Wife has made no efforts to put that evidence before the Court. (See also Day and Day (1993) FLC 92-333)
In the circumstances, I will dismiss the Wife’s Application for orders that the Husband pay maintenance for M.
Child support for E
On the same day that she filed an application for maintenance for M, the Wife filed an application in relation to child support for E. In short, she seeks orders that there be a departure and that there be a capitalisation of child support for the period from 15th July 2002 until 13th May 2014 (which was incorrectly said to be the date on which E turns eighteen years of age).
The Husband is currently paying child support at the rate of approximately $9.00 per week. Clearly, that is an inadequate contribution towards the support of a five year old child. In this regard, counsel for the Wife quite properly referred me to the Lee and Lovering research in relation to the costs of raising children.
Although I have no evidence that the Wife has sought to vary the current child support assessment through the processes of the Child Support Agency, that is not an issue because there are clearly other proceedings before the Court and it is appropriate that I deal with the application at the same time as those other proceedings.
Before considering whether capitalisation is appropriate, it is necessary for me to consider whether a departure should be made from the child support assessment. Section 117 of the Child Support (Assessment) Act 1989 is the relevant section and it sets out a three stage process for determining departures from child support assessments. Subsection (1) requires the Court to be satisfied that in “ the special circumstances of the case” one or more of the grounds for departure outlined in subsection (2) exist and that under subsection (1)(b)(ii) it would be just and equitable as regards the child, the Wife and the Husband, and further, it would be “otherwise proper” to make the order.
In her application, the Wife did not quantify her claim, but simply referred to “an annual rate” without being specific. Further, her counsel was not particularly helpful to me in his submissions about what rate is appropriate for child support. However, it was his submission that it would be better for me to make an order for a lump sum in lieu of periodic child support.
It was the Husband’s case that he pays more than the approximate sum of $9.00 per week because he pays “in kind maintenance” by being responsible for private health insurance, all travel costs associated with contact and some other expenses for E and M. Notwithstanding this, it is my view that the sum of approximately $9.00 per week is still inadequate when I take into account the Husband’s income, property and financial resources.
I am mindful of the fact that the Husband has a relatively low taxable income as a farmer. However, I am also aware that he has some of his expenses met by the partnership. For example, his rent is offset against other partnership expenses. In this regard, he is residing in the former matrimonial home that was originally built as a retirement home for his parents.
It is clear to me that the Husband does not have any significant or unusual expenses associated with his day to day living.
While it is clear that the Husband will also have an obligation to maintain his son (referred to at paragraph 46 above), I am of the view that the Husband has a capacity to pay more child support for E than he is currently paying. I am therefore of the view that the child support for E should be at the rate of $35.00 per week and I will make a departure order to provide for that.
I now turn to the question of whether there should be a capitalisation of that child support and an order that it be paid in a lump sum.
Under the Family Law Act 1975, there appears to be a clear preference for periodic payments of child maintenance. That preference is specifically stated in subsection (5) of Section 66K of that Act. In Luckie and Luckie (1989) FLC 92-036, the Full Court of the Family Court of Australia made it clear that, save in exceptional circumstances, the most appropriate order for child maintenance is a periodic order rather than a lump sum order.
However, while the Child Support (Assessment) Act 1989 makes no specific reference to a preference for periodic support in the objects set out in Section 4, a preference for periodic support is clearly an underlying presumption of the Act. This is because:
a)the Act provides for periodic assessment as the automatic first calculation of child support;
b)periodic support is provided for by way of administrative assessment, whereas lump sum support is only available by agreement or by court order; and
c)a court can only make an order for non periodic payments if it is satisfied that the order would be just and equitable as regards the child, the carer entitled to child support and the liable parent and that it is otherwise proper (see Section 124).
It is clear that, in relation to Court ordered child support, lump sum orders are likely to be the exception rather than the rule. Mushin J explained the rationale in Bendeich and Bendeich (1993) FLC ¶92-355. He said: "The rationale underlying the general approach of the court was that the longer a lump sum order operates the greater the chance of change in circumstances necessitating a variation of that order, thereby making the order unjust. Those changed circumstances might be in relation to the liable parent, custodial parent or the children. Incomes may increase or decrease and children may change their living arrangements from one parent to another.''
In Dwyer v McGuire (1993) FLC ¶92-420 and Lightfoot v Hampson (1996) FLC ¶92-663, the Full Court of the Family Court of Australia approved of those comments in Bendeich.
Bearing all these matters in mind, I come to the conclusion that the Husband should pay child support at the rate of $35.00 per week for E and that it would be just and equitable, and otherwise proper for that to be capitalised for a period of two years. I am mindful that this is for a relatively short period, but I also take into account that, in the farming industry in particular, conditions can change from season to season.
The sum of $35.00 per week is $1,820.00 per annum so it is clear that the Husband should pay $3,640.00 by way of child support for that period of two years. As I will order that the period commence on 1st October 2002, the Husband may already be in credit in relation to that. He will need to wait for the Child Support Agency to inform him of his liability, and I will require the Wife to provide a copy of the Orders to the Agency.
It seems likely me that he will also have to borrow those funds, so he should be given sixty days in which to comply with the Order.
I shall make orders to take account of the matters referred to above and I shall otherwise dismiss all applications (save for any applications in relation to costs).
I certify that the preceding eighty-five (85) paragraphs are a true copy of the reasons for judgment of Roberts FM
Associate:
Date: 20th November 2002
3
0
0