Harrison & Harrison

[1995] FamCA 163

[1995] FamCA 163

FAMILY LAW ACT 1975

FAMILY COURT OF AUSTRALIA  

AT MELBOURNE  

NO. ML 5938 of 1994

IN THE MARRIAGE OF:

Ian Robert Harrison  (Husband)

and

Rosemary Elizabeth Harrison  (Wife)

JUDGMENT DELIVERED BY

THE HONOURABLE JUSTICE BROWN

Date of Hearing:          11, 12 & 13 September 1995

Date of Judgment:      17 November 1995

Appearances:              Mr. St. John of counsel, instructed by Stedman Cameron, Solicitors, DX 217, Melbourne, Victoria, appeared on behalf of the husband.

Mr. Bartfeld of counsel, instructed by Simon Parson & Co., Solicitors, DX 84009, Morwell, Victoria, appeared on behalf of the wife.

Before the court are cross-applications for property orders pursuant to section 79.  Further, the wife was granted leave to make an application seeking weekly spousal maintenance for herself, and her application seeking a departure from the child support assessment (made in an application filed 31 August 1994) was varied to substitute the assessment for the period 1 July 1995 to 30 June 1996 as the one from which departure was sought. 

BACKGROUND

The husband is 41.  All his working life he has been employed by B Pty Ltd, a company formed by his father and of which he is now a director and 14 percent shareholder. 

The wife is also 41.  At the time of marriage she was working as a clerk and studying part-time tertiary education.  She did not complete the degree.  Subsequently, she worked for a government department and then as a secretary at a private firm.  She stopped paid employment to have the first of the parties' four children and remained out of the paid workforce until after separation.  Soon after separation she obtained employment as a part-time receptionist, averaging approximately 15 hours work one week and 23 hours the next. 

The parties were married in 1977 and separated on 18 March 1993.  In 1995 a decree nisi was pronounced.  The parties have four children, W born 1981, X born 1982, Y born 1985 and Z born 1987.  The wife has custody of the four children who live with her in the former matrimonial home.  The husband has regular access.  The three boys spend more than 109 nights per year with him, which is reflected in the child support assessment.  Z spends every second weekend with him. 

ORDERS SOUGHT

In her answer and cross-application filed 21 June 1995 the wife sought that the husband transfer his interest in the former matrimonial home to her, pay her $320,000 plus a further lump sum and transfer his interest in Motor Vehicle 1.  In his final submissions her counsel proposed the husband transfer the former matrimonial home and car to her, together with a lump sum of approximately $155,000.  He sought weekly spousal maintenance of a figure which he conceded could vary between nil and $300, depending on the capital sum received by the wife.  He also sought a departure order in respect of the current child support year, seeking that child support be assessed on an income which included the sum of $5,000, representing the value to the husband of the provision by B Pty Ltd to him of a fully equipped and maintained motor vehicle. 

The orders sought by the husband at trial were that the wife receive the whole of the former matrimonial home and Motor Vehicle 1, plus a quarter interest in his superannuation fund, either when it vested in due course or, if an application were successful, on receipt of the funds now. 

PROPERTY

Acquisition of Assets

Prior to the marriage the husband was registered as the proprietor of C Street, Suburb D, then worth approximately $16,000.  He owned 20 shares in E Pty Ltd, a company in which all shareholders and directors were and remain members of his family.  E Pty Ltd owned two properties.  The commercial business of B Pty Ltd was conducted from one of these at 1 F Street, Suburb G.  The other, at 2 F Street, Suburb G, was vacant at the time of marriage. 

Prior to the marriage the parties purchased a house at H Street, Suburb J as a proposed matrimonial home.  The purchase price was $38,600.  It was funded by savings of the wife's of $5,000, a Commonwealth Bank mortgage of $13,000 and personal loan of $5,000, and a loan from  B Pty Ltd of $15,000.  Soon after marriage the husband sold his house at Suburb D, which realised approximately $16,250.  Those funds were used to discharge the loan from B Pty Ltd and the balance of the bank personal loan. 

In late 1983 the parties sold the H Street house and bought the property at K Street, Suburb L for $97,000.  This was funded by the nett proceeds of the H Street property, accumulated savings from wages and dividends declared by E Pty Ltd and a Commonwealth Bank mortgage of $27,000.

In July 1985 the husband's mother gave him 1,120 shares in B Pty Ltd, a 14 percent stake.  Their value for duty purposes was $32,838.40.  At about that time he became a director of B Pty Ltd and a factory was built on the land owned by E Pty Ltd at 2 F Street, Suburb G.

In 1985 a family trust was created called the Harrison Family Trust.  It is a conventional discretionary trust.  The husband is the trustee and the beneficiaries are the husband, wife and their children.  That family trust acquired 25 percent of the units in a unit trust called E Trust of which E Pty Ltd is the trustee.  The remaining 75 percent of the units were held by the husband's brother, sister and father through their respective trust entities. 

The significant asset of E Trust is M Street, Suburb O, purchased for $565,000.  Some time later the Superannuation Fund 1 was established as a superannuation fund for family members.  It acquired a 20 percent interest in E Trust, acquiring 5 percent from the family trusts of each of the husband, brother, father and sister. 

In September 1991 the husband's father gave 500 Commonwealth Bank shares to the husband.  The wife's evidence was that she believed this to be a joint gift.  She thought that her "understanding" came from the husband and said she was never made aware the gift was purely for him.  I accept that the wife held that view but the evidence, including hers, suggests it is far more probable that the shares were intended as a gift to the husband and for that reason were transferred into his name alone.  The value of the shares at the time of transfer was $2,700; now they have an agreed value of $5,459. 

In the late 80s and early 1990s B Pty Ltd was very successful.  The husband was paid a salary plus dividends by both B Pty Ltd and E Pty Ltd.  In the years 1991 and 1992 the dividends totalled $50,074 and $51,744.  $9,779 was received early in 1993.  I accept the evidence that the business suffered substantial reverses in the years following 1992, occasioned by a major recession in the industry.  All family members working for B Pty Ltd took salary decreases;  by agreement the husband was spared the worst of these because of his financial obligations.  No dividends have been paid since early 1993.  The husband's father has lent the company significant sums. 

Although this period of decreased profitability coincided with the breakdown of the parties' marriage I do not find the connection anything other than coincidental.  The evidence as a whole satisfies me that this is not a case where there has been an attempt to minimise corporate profits to reduce liabilities arising out of marriage breakdown.

The company's fortunes have improved this year.  Accounts for the year ending 30 June 1995 have not been prepared but the turnover was approximately $4.7 million, the largest turnover the company has ever achieved.  Its workforce has increased since 1993, when it employed only 13 people.  About 28 people were employed by early 1995 and at the time of trial the workforce had grown to more than 40 in response to a particularly large tender.

I accept the evidence that it is not unusual for workers to be put on and then laid off, depending on the work available.  I also accept that in the current climate the margins on tender work are substantially lower than in earlier years and that the number, size and value of future tenders are speculative.  Nevertheless, it is reasonable to assume on this year's figures that the company's financial position is improving and to be cautiously optimistic about its future prospects.

At separation the parties had savings of about $28,000 in an account in the name of the Harrison Family Trust.  By agreement this money was used to pay various debts and the balance was divided, each party getting about $3,000.  The husband took some furniture and commenced living in rented premises at N Street, Suburb L.  He has commenced a relationship with Ms P.  It is possible they will marry. 

The wife continues to live in the former matrimonial home and remains in a relationship with Mr Q, a man she met prior to the separation.  I accept the future of that relationship is uncertain and that his financial situation is modest.  The relationship itself is not of relevance to these proceedings.  I am satisfied Mr Q provides no financial support to the wife.  However, the wife's evidence about the commencement and nature of it was, at best, disingenuous and suggested a tendency to reconstruct events to put herself in the best possible light. 

I propose to adopt the now well established approach to the exercise of the discretion under section 79, as re-stated by the Full Court in Davut and Raif (1994) FLC 92-503. The Full Court suggested that it is appropriate for the judge to identify the assets to be divided between the parties, identify the liabilities to be taken into consideration and then to determine the manner in which the assets ought to be divided having regard to section 79(4)(a), (b) and (c) considerations. Then having considered (d) to (g) of section 79(4) the court should determine what further adjustments should be made having regard to section 75(2) considerations.

Assets

Either before or during the trial the parties reached agreement on the value of most assets.  The major dispute related to the valuation of the husband's interest in B Pty Ltd and E Pty Ltd.  Much of the trial was taken in cross-examination of accountants employed by the husband and wife.  In the long run the only major issue about which they disagreed was whether the value of these respective share-holdings should be discounted to reflect their minority nature. 

In theory Mr R and Mr S used different valuation methods.  However, in practice Mr S used the nett asset valuation method as employed by Mr R, rather than the orderly realisation of assets method which, in his report, he said would be preferable.  As the area of dispute is narrow I do not propose to canvas all the evidence of the two accountants, save to say that, in general, I found Mr R's evidence more lucid, consistent, detached and informative. 

Using the nett asset valuation method the value of the husband's interest, without discount, in B Pty Lt dis $149,461 and in E Pty Ltd $121,799.  The husband submitted that there should be a 10 percent discount in assessing the value of the interest in B Pty Ltd and a 5 percent discount for that in E Pty Ltd, each relating to the fact and circumstances of the minority interest. 

It was common ground that the memorandum and articles of B Pty Ltd and E Pty Ltd preclude the transfer of shares unless such transfer is approved by the directors.  It is patently clear that these are family companies conducting a family business.  I accept that it has never been the expectation of the husband, his father, brother or sister that anyone other than a family member would hold shares in either of them.  I accept their evidence that they would not approve a transfer to a third party and that that decision itself has nothing to do with this case.  Further, I accept that each of the husband's father, brother and sister deny they can or will purchase his shares in the companies.  It is likely that refusal - at least by the husband’s father and brother, each of whom was cross-examined - is influenced by the desire to support the husband against the wife’s claims.  However, there was no evidence of their capacity to assist and their stated intentions were clear.

Mr R's evidence was that to value the company, as he did, on a nett asset basis resulted in a higher figure than if a nett realisable asset valuation had been used.  As the husband's shareholdings are low (respectively 14 percent and 20 percent), he said that their valuation warranted a discount because of lack of control.  His evidence was that the range commonly accepted in practice as a discount in such circumstances varied between 10 and 25 percent.  He adopted a lower discount figure for E Pty Ltd as its nature is that of an investment vehicle; considering factors such as its assets, return and the husband's higher percentage shareholding he said the lower figure was warranted. 

The theory of discounting is based on the notion that a willing but not anxious purchaser and vendor would strike a price using a discount which would reflect the potential lack of power and control. An opposing view (advanced at one stage by Mr S) that the minority shareholdings should be valued at a premium relates to provisions in the Corporations Law protecting the interests of oppressed minority shareholders.

Mr R conceded that it may not be appropriate to value shares in such private family companies on the basis of what a hypothetical purchaser may pay for them.  On the other hand, Mr S said that he had assumed there would be a purchaser in the family.  That is, his hypothetical buyer was a family member, willing to buy and treating the outgoing family member equitably.  On that basis he thought there should be no discount because the family would want to retain 100 percent and would be willing to pay a fair price.  He agreed he would, in general, tell a purchaser to claim a discount if he or she were acquiring a minority interest in a company (assuming their transfer could be registered) and said that discounts for non-negotiability often ran between 10 and 25 percent.

Taking into account the reports and evidence of both accountants I prefer the evidence of Mr R.  I find that his assessment of discounts of 10 percent and 5 percent respectively are appropriate in this case. 

Assets

The assets of the parties are as follows:

K Street, Suburb L  $235,000
Husband's interest in B Pty Ltd  $134,515
Value of business name  $ 3,500
Husband's interest in E Pty Ltd  $115,490
Commonwealth Bank shares  $  5,439
Loan to Harrison Trust  $ 16,913
Motor Vehicle 1  $ 13,500
Total assets  $524,357

Liabilities

The parties' respective liabilities all have arisen post-separation.  The husband has bank loans and overdrafts for $44,000 and owes legal fees of $15,000, a total of $59,000.  The husband's loan account with B Pty Ltd stands at $24,000.  He is the only family member whose loan account is in debit; the loan accounts of his father, brother and sister are all in credit.  The husband was not aware of the existence of the loan account until the trial and remained somewhat incurious about its existence and potential benefit.  The evidence disclosed that it has at times provided a buffer to enable him to make drawings and certain expenses (for example, half his telephone bills) were routinely debited against it.  Its existence was taken into account in assessing the value of the company and I am satisfied it is highly improbable that any demand for its repayment is likely to be made in the foreseeable future. 

The wife has a bank loan (taken out to pay legal fees) of $16,000, outstanding accounting fees of $26,680, legal fees of $10,000, valuer's fees of $2,700 and credit card and family debts of $7,800.  These total $71,960. 

Financial Resources

The husband has an entitlement to superannuation benefits pursuant to Superannuation Fund 1.  His retirement age is 55 unless he is medically unfit to work earlier.  All contributions arose after marriage.  His entitlement at 30 June 1994, were he entitled to claim it, was $101,427 (realisable) which would be subject to an income tax liability of $12,166.  The realisable figure is lower than that shown in the books but it is common ground that a decline in the value of the property at M Street necessitates a realistic discount.  In the year ending 30 June 1995 the husband paid a further $3,101 to the fund. 

The husband opened his case on the basis that he was prepared to make an application to the Insurance and Superannuation Commissioner to enable him to access these superannuation funds now.  If that were not granted he submitted that the wife should receive a share (which he put at 25 percent) when he eventually received a benefit. 

The authorities make it clear that the present interest of the husband in the superannuation fund cannot be regarded as property. See for example Coulter and Coulter (1990) FLC 92-104 and Mitchell and Mitchell (1995) FLC 92-601. The husband's entitlement is certainly a financial resource and one which might be accessible earlier. The fund is effectively controlled by the husband and his family.

He has an additional financial resource in his entitlement to long service leave which is shown in B Pty Ltd's records as standing at $24,624. Long service leave is part of the employee’s indirect remuneration arising from his or her employment, to which the employee’s spouse may have made a contribution under section 79(4)(c) during the period of the marriage that relates to the relevant period of employment. The husband’s superannuation scheme is administered by Superannuation Fund 2. It is unlikely the husband could take his entitlement to this leave as a capital sum, unless and until he leaves his employment. In these circumstances it is reasonable to view the long service leave as a financial resource of the husband: see generally Nolan and Ingram (1984) FLC 91-585.

Prior to considering s.79(4) factors I turn to the submission by the husband that his interests in B Pty Ltd and E Pty Ltd should be considered neither as financial resources nor assets.  That is, although evidence was called by the husband (and accepted) as to the value of his interest in B Pty Ltd and E Pty Ltd, this should not be included as part of the pool of assets available for distribution.  It was his submission that the total pool is $270,852, made up of the former matrimonial home, Commonwealth Bank shares, loan to T Trust and Motor Vehicle 1. 

The husband's submission was that although the shares can be artificially valued they are valueless because unrealisable.  This ignores the benefits which accrue to the husband through their ownership.  Amongst those benefits are the right to receive dividends, which in the past have been substantial, the buffer of a loan account, the provision of a motor car and other vehicles, the contribution towards payment of certain household bills and the flexibility of being, if not self-employed, employed by a company in which he is a share-holder and director and whose ethos allows him a degree of autonomy.  It also effectively ignores the assets of and business conducted by the companies and the reality of the husband's interest in them. 

The issue of valuation of shares in private companies has been considered by this Court in numerous cases. Clearly, each is dependant upon its own facts. In Hull and Hull (1983) FLC 91-360, Nygh J dealt with a company, the allocation of shares in which gave the wife's mother voting power and control over the company but the wife virtually the whole of its equity capital. It was submitted that this rendered the wife's shareholding valueless. At p. 78,410 his Honour said:

"However, it is in my view artificial to adopt such a basis of valuation in relation to interests in private companies.  It cannot be said in all seriousness that Mrs. Hull's interest in the company is valueless.  The tests laid down in Spencer's case can only be applied where there is a ready and available market.  It is of no application in a case such as this where such a market is lacking. 

This court must approach a question of valuation on a realistic basis and as the High Court accepted in St. Helen's Farm case, the question of valuation is essentially a matter for the trial judge". 

In Turnbull and Turnbull; Turnbull JR, Bald Hills Pty. Limited, Allans Water Pty. Limited and Apropos Pty. Limited (interveners) (1991) FLC 92-258 at p. 78,737, Baker J said:

"It is not appropriate in the context of family law proceedings to value shares in private family companies on the basis of what a hypothetical purchaser may pay for them.  Similarly, it is quite inappropriate to adopt the approach taken in the revenue and resumption cases".

His Honour agreed with the statement of the Full Court in Reynolds and Reynolds (1985) FLC 91-632. In the course of its reasons for judgment at p. 80,111 the Full Court said:

"We are doubtful, however, where the valuation methods which have been developed for commercial purposes are entirely appropriate for the purposes of family law.  The present commercial or capital value of shares in a proprietary company may not reflect their value to the spouse, who either has control after divorce or who stands ultimately to benefit from them or control them after the death of generous parents, as appears to be the case here". 

In Sapir v Sapir (No. 2) (1989) FLC 92-047 Young J reviewed the authorities in considering whether the court needed to determine the value of the shares in the hands of a hypothetical willing seller or a hypothetical willing buyer. His Honour defined "the hypothetical purchaser basis" as:

"the value which somebody would be prepared to pay for them if they were offered for sale with all the restrictions contained in the articles". 

At p. 77,543 his Honour referred to the decision of Nygh J in Hull and Hull (supra) where it was held that it was artificial to value a wife's share in a private company in matrimonial proceedings according to the hypothetical purchaser rule.  He continued:

"That rule is only applicable where there is a ready and available market, and where there is a closely held family corporation with restrictions on transfer of shares the court must value the shares on the realistic value they had to the parties".

Following the Family Court precedents discussed in the judgment his Honour held, at p. 77,543,

"Accordingly, in my view I should adopt the basis of valuation put by the husband's valuer, that is, the value of the shares to the wife, not their commercial value or their value to a hypothetical purchaser".

I am satisfied in the context of proceedings under the Family Law Act that when a judge is determining the value of shares held by a party in a family company, she or he must look at the reality of the situation and value the shares on the basis of their worth to the shareholder. In this case, the husband's shares can only be valued on the basis of their worth to him in the context of the Harrison family as a whole. That worth is substantial.

In all the circumstances of this case I reject the submission that the husband's shareholding in both companies should not be included in the pool of assets.  The pool totals $524,357. 

Section 79(4)(a) to (c)

I turn to the second of the steps in the exercise under s.79, namely an assessment of the parties’ contributions within the context of s.79(4)(a) to (c).

I am satisfied that throughout the marriage each of the parties worked hard.  By agreement they played what might be called traditional roles.  The husband's commitment to working long hours resulted in the family receiving financial rewards; the corollary of that was that the bulk of the work involved in running the house and bringing up the children fell to the wife.  I am satisfied the husband contributed as best he could during the marriage.  That he put much of his non-working time into the family is perhaps demonstrated by his evidence that he has had a lot more time to play sport on non-access weekends since the separation. 

I am satisfied that during the marriage each worked hard in their respective roles and contributed equally.  Neither shirked their responsibilities; the marriage was a working joint venture. 

Although the husband brought more assets into the marriage than the wife, I do not find that that should simply be numerically reflected in their respective contributions. In Bremner and Bremner (1995) FLC 92-560 the Full Court (at p. 81,588) adopted the view expressed by Fogarty J in Money and Money (1994) FLC 92-485, that:

"... an initial substantial contribution by one party may be eroded to a greater or lesser extent by the later contributions of the other party, even though those later contributions do not necessarily at any particular point outstrip those of the other party."

I do take into account that the shares in B Pty Ltd were gifted to the husband some 8½ years prior to separation and the Commonwealth Bank shares only 1½ years prior to that date. I am satisfied these were contributions made on behalf of the husband; see Gosper and Gosper (1987) FLC 91-818. The gift of the B Pty Ltd shares was particularly important as it was that gift which allowed the husband to receive substantial dividends thereafter, dividends which had not been available to him as an employee of the company.

Counsel for the husband submitted that if the husband’s family company shareholdings were to be included in the pool of assets I should find that the parties' respective contributions during the marriage were 65 percent by the husband and 35 percent by the wife.  On the other hand, if I were to accede to his submission that the husband's interest in B Pty Ltd and E Pty Ltd should not be included in the asset pool, there should be a contribution split of 50/50.

He submitted that the 8½ year period between the gift of the B Pty Ltd shares and separation could not be sufficient to wipe out the value of a contribution of $32,000 which has resulted in the husband now having an interest valued at $134,515.  He conceded that if the marriage had lasted 20 years after the gift this could be the result but said that in this case there had simply been an insufficient effluxion of time.  Further, he said that during the 8½ years the wife's contribution were no greater than the husband's.

It must be acknowledged that the wife's contribution during the marriage was entirely that of home-maker and parent (save for savings put into the Suburb J house), that the husband brought a property and the E Pty Ltd shares to the marriage and that the B Pty Ltd shares were a gift to him.  However, inherent in counsel's submission is the unspoken premise that a contribution as a home-maker and parent can never amount to more than 50 percent; i.e. however hard the wife worked as home-maker and parent during that 8½ years, her contribution could only equal that of the husband's financial and non-financial contributions during the same period.  On this view once the husband was given the shares in 1985 the wife could not achieve equality of contribution thereafter, unless the marriage endured for 20 or more years. 

Whilst I do not find that the wife's contribution as home-maker and parent during the marriage exceeded the contributions made by the husband, I do find that it is reasonable to discount the effect the gift of the B Pty Ltd shares in 1985 has on the overall contributions of the parties during the marriage.  Taking into account all contributions and the length of the marriage I find that the parties respective contributions should be assessed as 60 percent to the husband and 40 percent to the wife. 

Section 79(4)(d) to (g)

I turn to the matters referred to in s.79(4)(d) to (g). 

(d)The effect of any proposed order upon the earning capacity of either party to the marriage.

The husband has maximised his earning capacity within the family business.  So long as he retains his interest in the companies orders made are unlikely to impact on his earning capacity.  I will consider issues relating to the wife’s earning capacity in the context of s.74(2)(h) and (k).  In her case it is important that orders made do not detract from her present earning capacity and foster, so far as is practicable, her future earning capacity. 

(e)The matters referred to in sub-section 75(2) so far as they are relevant.

I will consider each of the relevant paragraphs.

(a)     The age and state of health of each of the parties.

The parties are both in good health.  Both are aged 41. 

(b)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 husband's income is presently $1,193 per week, totalling $62,036 per annum.  I have found that it is probable that the company is on the way to better financial times which may lead to the payment of dividends in the future.  He has available to him a long-service-leave entitlement, although if that is taken as capital on retirement that is a long way off.  He also has a prospective entitlement to superannuation. 

The wife is in part-time employment, earning $14.24 per hour and $20.00 per hour on Saturdays.  She works as many hours as possible on Saturdays during the weekends on which the children are with the husband on access.  During the last six months she was able to work on Wednesdays for five weeks as a staff member was away and for additional hours on some Saturdays.  Averaging the last twenty weeks work she received $265.60 nett per week.  I accept her evidence that the average is lower if no additional work is available.  In addition she receives social welfare payments of $88.55 per week, family allowance of $47.00 and child support of $305.28. 

The husband submitted that the wife could work longer hours and earn more income.  Firstly, I accept her evidence that she works as many hours at her work place as she can consistent with her parenting duties.  Secondly, she already works on access Saturdays, a time which she would otherwise have to catch up on household demands and perhaps have a little time to herself.  She has been out of the paid workforce for many years.  There is no evidence that she has or could have available to her better paid employment than that which she has found since separation.  Further, her income, even were she to work full-time in a job such as the one available to her, would only ever be a fraction of the husband’s. 

(c)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 custody of the four children.  The husband has liberal access, spending over 109 nights a year with the boys and alternate weekends with Z.  The evidence discloses that the children are all big for their respective ages and I am satisfied their care is a very demanding role.  Although the husband shares in this care to a considerable extent, the brunt of it is borne by the wife. 

(d)Commitments of each of the parties that are necessary to enable the party to support:

(i)himself or herself;

(ii)a child or another person that the party has a duty to maintain.

I accept that it is appropriate that the husband rent a reasonably large house, given the age and size of the children and the extent of his access.    That extent is reflected in the child support formula.

(e)The responsibilities of either party to support any other person.

There is no evidence that either party has any such responsibility.

(f)The eligibility of either party for a pension allowance or benefit or superannuation fund or scheme. 

The wife is in receipt of a government department pension.  Were she to earn additional wages it would no doubt decrease.  The husband will in due course be eligible for a benefit under the B Pty Ltd scheme.  It is impossible to quantify that.  His entitlement on retirement will be dependent on future contributions made by or on his behalf, management of the fund and the success of its investments. 

(g)Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable.

It is inevitable in this case that the parties' standard of living cannot be maintained at that which they enjoyed when they were together.  What is important is that if there is to be a decline it not be borne unreasonably by one rather than the other, or by the children.  Both parties hope the children will be able to attend private schools for the latter part of their education however this is unlikely to be a possibility unless B Pty Ltd’s business picks up during the next few years. 

(h)The extent to which (orders) would increase the earning capacity of a party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income. 

Whilst this factor is also referable to spousal maintenance it can be considered as relevant to the property application.

In evidence the wife said that she would like to undertake some course of training, possibly in administrative or management areas, in order to improve her earning capacity in the future.  She had made no enquiries about available courses, could cite no preference for a particular one and could give no evidence about the duration of such a course, if undertaken.  I do not doubt that the wife thinks it would be useful for her at some time in the future to upgrade her qualifications.  However, on the evidence I cannot find that she is likely to do so in the foreseeable future or whether it would increase her earning capacity in any specific way.  I make no criticism of the wife for this; she has her hands full with her obligations as parent, home-maker and part-time receptionist. 

(j)The extent to which a party has contributed to the income, earning capacity, property and financial resources of the other party.

The wife’s acceptance of the primary role of homemaker and parent enabled the husband to prosper in the family business.  It is clear his job is no sinecure.  He has had to work long hours and has experienced considerable work-related pressure and stress.  His capacity to do so was part of (and a result of) the parties’ agreed “partnership”. 

(k)The duration of the marriage and the extent to which it has affected the earning capacity of the parties.

I am satisfied that the wife gave up a reasonable career and the prospect of completing a degree in order to play the primary role as wife and mother.  Through her commitment to the family she freed the husband to concentrate on his career with B Pty Ltd. 

(l)The need to protect a party who wishes to continue that party's role as a parent.

It is clear that it was the expectation of the parties that the wife would play a major role as home-maker and parent.  Whilst the wife has accepted the necessity for her to engage in outside employment it is important, given the age and stages of the four children, that she have the maximum opportunity to continue the role played prior to separation. 

(na)Any child support provided for the children of the marriage.

The husband pays child support of $305.28 per week. 

There are no other orders made under the Family Law Act which affect a party or child which need to be taken into account pursuant to s.79(4)(f), save for the custody and access orders referred to in relation to s.75(2)(c). Similarly, the provisions of s.79(4)(g) have been considered in relation to s.75(2)(na), a course referred to as “generally convenient” by the Full Court in Clauson and Clauson (1995) FLC 92-595 at p. 81,911.

Taking all of these matters into account it is my view that a just and equitable result requires the wife to receive by way of adjustment an additional 20 percent of the asset pool.

Sixty percent of the asset pool totals $314,614.  The readily realisable assets are the former matrimonial home, Motor Vehicle 1 and Commonwealth Bank shares.  These total $253,939.  There is a shortfall of $61,665. 

The husband’s evidence was that he has no borrowing capacity at all but that he was prepared to try to have superannuation funds released. Section 80 of the Family Law Act gives the court the power to make a wide range of orders in property and maintenance proceedings. In addition to orders for payments of lump sums, orders may be made for payments by instalments and the court may make any order which it thinks it is necessary to make to do justice.

After considering all the circumstances of this case I propose to make orders which will allow the husband to pay the sum due to the wife as a lump sum if he finds he has the capacity to do so. However, if that is not possible I will make orders for payment of that sum by instalments, together with interest. I do not propose to accede to the submission that the wife wait for the balance of funds until the husband retires and he receives his superannuation entitlement. Differing views have been expressed in this court as to the appropriateness of making an order which attaches to property not presently in existence, as is the case with an order that a specified part of a superannuation payment be paid on receipt in the future; see, for example, West and Green (1993) FLC 92-395, Sharp and Sharp (1978) FLC 90-470 and G and G (1984) FLC 91-582 cf. Crapp and Crapp (1979) FLC 90-615 and Bailey and Bailey (1978) FLC 90-424. However, in the circumstances of this case I do not find that it would be appropriate to make such an order, given the likely length of the husband’s paid working life and the needs of the wife at present and in the short term future.

The husband may be able to borrow all or part of the sums necessary to fulfil his obligations under the orders.  I will order that he make application to the Insurance and Superannuation Commissioner for approval to access the sums credited to him in Superannuation Fund 1.  If that application is granted the sum of $61,665 can be paid to the wife from the proceeds. 

If the application is refused and the husband is unable to make alternative arrangements I propose to order that the capital sum be paid by annual instalments of $7,500, commencing on 1 July 1996 together with interest on the balance outstanding, calculated quarterly at the overdraft rate charged from time to time by the Commonwealth Bank to private customers. 

This division will leave the wife with a capital sum, if she sold the Commonwealth Bank shares, of between $66,000 and $67,000.  It is true that she has debts which exceed this sum, however the former matrimonial home is unencumbered, at least one of her debts is paid in instalments and minor debts to family members may be able to be renegotiated.  Certainly, the orders will not leave her in a strong financial situation and she will remain financially vulnerable.  However, the effect of the orders on the husband must also be assessed. 

The husband will effectively be left with his interests in B Pty Ltd and E Pty Ltd which, it is probable, will generate dividends and thus income in excess of his present income in the future.  He will also have available the other benefits of that shareholding referred to in this judgment, including use of a car and other vehicles.  He may have available to him the balance of his superannuation fund (if the entire fund is released), however that will be modest.  He, too, has considerable debts which would exceed that sum.  When he retires he will be owed a reasonably substantial sum by way of long-service-leave pursuant to statutory provisions, however that is at least fourteen years away. 

SPOUSAL MAINTENANCE

The wife sought spousal maintenance, relying generally upon the shortfall between her expenses and income and, in particular, relying on sub-paragraphs (h) and (k) of section 75(2). 

In Bevan and Bevan (1995) FLC 92-600 at pp. 81,981 to 982 the Full Court stated the law as being:

“that an award of spousal maintenance requires:

1.a threshold finding under section 72;

2.consideration of section 74 and 75(2);

3.no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit;  and

4.discretion exercised in accordance with the provision of section 74, with “reasonableness in the circumstances” as the guiding principle.”

Section 72 imposes a duty on a party to maintain the other if reasonably able to do so and if that other party is unable to support himself or herself adequately by reason of one of the factors set out in the section.  Section 74 enables the court to make such order as is proper and it is further required to take into account the matters referred to in section 75(2), one of which (section 75(2)(n)) provides that the court shall have regard to the terms of any order made or proposed to be made under section 79 in relation to the property of the parties. 

I have already referred to the fact that the duration of the marriage has affected the earning capacity of the wife. 

For the purpose of the spousal maintenance application I must disregard the receipt by the wife of her income tested benefit. As the Full Court noted in Mitchell and Mitchell (1995) FLC 92-601 at p. 81,995 the threshold question of whether an applicant can support him or herself “adequately” is not to be determined by any fixed or absolute standard, but having regard to the matters referred to in s.75(2). Nor is the question to be determined upon a “subsistence” level. I accept that on the income available to her the wife is unable to support herself adequately.

The husband has a current weekly income of $1,193.  In his Form 17 he deposed to weekly expenses totalling $1,402.  These include $401.00 income tax, $200.00 rent and $305.28 child support.  These total $906.28.  As previously noted he has debts of a little over $50,000.  Even if his expenses were exaggerated or he has been living beyond his means, as submitted by the wife, in my view at this time the husband does not have the means or ability to pay spousal maintenance.  Were his application for access to superannuation funds entirely successful he might receive a balance of a bit under $30,000.  That is less than his debts and, in any event, is speculative.  If the application is unsuccessful he will have to endeavour to accrue capital or borrow to pay the wife her entitlement over the next few years. 

In all the circumstances I do not find it appropriate to make an order for spousal maintenance at this time.

DEPARTURE ORDER

The wife seeks a departure order from the assessment for the period 1 July 1995 to 30 June 1996.  No continuing order was sought.  It is common ground that the present order accurately reflects the husband's salary and the extent of access enjoyed by him. 

The wife submitted that the assessment should be varied by increasing the child support income amount for this year to $67,036.  This represents a $5,000 increase, attributed to the notional value of the provision of a fully maintained car to the husband by his employer. 

Section 117(1)(b) of the Child Support (Assessment) Act provides that a Court may make a departure order where it is satisfied in the special circumstances of the case:

(i)that one or more of the grounds for departure mentioned in sub-section (2) exists or exist;  and

(ii)that it would be:

(A)just and equitable as regards the child, the custodian entitled to the child support and the liable parent;  and

(B)otherwise proper

to make a particular order. 

It was not argued by the wife that either of the grounds set out in sub-paragraphs (a) or (b) of section 117(2) were made out.  Those matters put went to paragraph (c) which sets out as a ground for departure:

"that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of:

(i)the income, earning capacity, property and financial resources of either parent of the child;"

The aim of the Child Support legislation is to assess child support based on the income, earning capacity, property and financial resources of the liable parent.  If a person receives benefits in his or her salary which another person would have to pay for or provide out of his or her salary, that constitutes a financial resource.  Whether it is one which needs to be notionally added to the person's salary in order to avoid an unjust and inequitable determination of the level of child support will depend on the nature of the benefit. 

In this case, the husband is provided by the company with a fully maintained four-wheel drive vehicle.  He uses it in the course of his employment and in his private life and gave evidence that, for example, he uses it in conjunction with other vehicles.  If he were not provided with a motor vehicle he would need to obtain, maintain and service one.  No evidence was called as to the calculation of the notional benefit of the provision of a motor car but a before tax figure of $5,000 does not seem excessive. 

I am satisfied that the threshold required by section 117(1)(b)(i) is satisfied, as in the special circumstances of this case application of the provisions relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent of the children because a financial resource of the liable parent has not been taken into account.

I appreciate the husband’s financial position is not strong and that he has commitments necessary to support himself.  He may incur additional commitments to pay out the wife.  However, notwithstanding this it is in my view proper to include a notional component for the provision of a motor vehicle.  The figure of $5,000 was claimed.  I can take into account common experience of the costs of running a vehicle although in the absence of specific evidence any assessment is necessarily arbitrary.  I do not wish to put the parties to additional expense and there needs to be finality.  I will order that for the child support year ending 30 June 1996 the existing child support income account be varied to $66,036.  That includes a notional $4,000.  If the husband takes issue with the figure (not with the departure order itself) he may have the matter listed for evidence to be called on the issue before me within fourteen (14) days.

ORDERS

Subject to any submissions as to form the orders will be as follows:

1. That on or before 17 December 1995 the husband do all such acts and things and sign all such documents as may be required to transfer to the wife at her expense all of his right, title and interest in the real property situated at and known as K Street, Suburb L, being the whole of the land more particularly described in Certificate of Title Volume …, Folio … (the real property).

2. That as from the date of the transfer by the husband to the wife of his interest in the real property pursuant to paragraph (1) hereof the wife indemnify the husband against all rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind. 

3. That on or before 17 December 1995 the husband do all necessary acts and things and sign all necessary documents to transfer to the wife at her expense all his right, title and interest in:

   (a)Motor Vehicle 1, registration number …;

   (b)The five hundred Commonwealth Bank shares registered in his name.

4. That unless otherwise specified in these orders:

   (a)Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof, superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements and the chattels in the real property are deemed to be in the possession of the wife;

   (b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

5. That on or before 17 January 1996 (the due date) the husband pay to the wife the sum of $61,665 (the capital sum).

6. That on or before 1 December 1995 the husband make application to the Insurance and Superannuation Commissioner seeking to have paid to him all sums standing to his credit in the Superannuation Fund 1 and keep the wife advised of the progress of such application thereafter. 

7. That in the event of the husband failing to pay the capital sum on the due date pursuant to paragraph (5) hereof (whether or not the said application to the Insurance and Superannuation Commissioner was granted) the husband shall pay the wife the capital sum by annual instalments of $7,500, together with interest on the balance outstanding, calculated quarterly, at the overdraft rate charged from time to time by the Commonwealth Bank to private customers, the first instalment to be made on 1 July 1996 and yearly thereafter.

8. That the husband have the right to pay to the wife at any time the balance of the capital sum then outstanding, together with interest calculated pursuant to paragraph (7) hereof to the date of such payment. 

9. That there be a departure from the child support assessment issued to the husband dated 8 May 1995.

10. That for the child support year ending 30 June 1996 the existing child support income amount be varied to $66,036.

11. That the husband have liberty to apply within fourteen (14) days to list the matter for the hearing of evidence as to the value to him of the vehicle supplied to him by his employer.

12. That the wife’s application for spousal maintenance be and is dismissed.

13. That all extant applications be and are otherwise dismissed.

IT IS DIRECTED

1. That these proceedings be removed from the Active Pending Cases List maintained by the Court. 

IT IS CERTIFIED

1. That pursuant to Order 38 Rule 13 1(a)(i) of the Family Law Rules this matter reasonably required the attendance of counsel.

All exhibits may be returned to the parties.