Hendry and Birmingham

[2014] FCCA 1569

FEDERAL CIRCUIT COURT OF AUSTRALIA

HENDRY & BIRMINGHAM [2014] FCCA 1569

Catchwords:
FAMILY LAW – Property – farming assets – small pool – consideration of s.75(2) factors – child support departure application.

Legislation:

Family Law Act 1975

Family Law (Superannuation) Regulations 2011
Child Support (Assessment) Act 1989
Superannuation Industry (Supervision) Regulations 1994

Pierce & Pierce (1999) FLC 92-844
Stanford & Stanford [2012] HCA 52

Applicant: MS HENDRY

Respondent: MR BIRMINGHAM

File Number: MLC 8486 of 2013

Judgment of: Judge McGuire

Hearing date: 26 June 2014

Date of Last Submission: 26 June 2014

Delivered at: Melbourne

Delivered on: 31 July 2014

REPRESENTATION

Counsel for the Applicant: Mr Laidlaw

Solicitors for the Applicant: Jellie McDonald

Counsel for the Respondent: Mr D Sweeney

Solicitors for the Respondent: Fogarty Lawyers

ORDERS

Property

1. Within sixty (60) days of the date of these orders the husband shall:

   (a)Pay to the wife a lump sum of $10, 522;

   (b)Transfer all his right, title and interest in the following to the wife absolutely:

   (i)The wife’s Volkswagen (omitted) motor vehicle;

   (ii)The balance in the wife’s (omitted) Bank account;

   (iii)The balances in any other bank accounts and all like investments in the name of or to the benefit of the wife as at the date of these orders;

   (iv)All personalty and chattels in the possession of or under the control of the wife as at the date of these orders;

   (v)Any superannuation policy or entitlement in the name of the wife.

   (c)Provide the wife with a release duly authorised by the (omitted) Bank in respect to the following:

   (i)(omitted) Bank mortgage secured by the property known as ‘Property B’ (more particularly described as Property B and comprised in certificate of title volume (omitted), folio (omitted) and volume (omitted), folio (omitted));

   (ii)(omitted) Bank partnership loan ($1,060,000 est);

   (iii)(omitted) Bank overdraft;

   (iv)(omitted) Bank mini-visa liability ($30,043 est);

   (v)(omitted) company liability ($21,000 est);

   (vi)‘(omitted) company’ liability ($86,000 est);

2. Contemporaneously with the payment referred to in Order 1 (a) hereof the wife transfer all her right, title and interest in the following to the husband absolutely:

   (a)The farming property known as ‘Property B’ but subject to these orders;

   (b)The farm plant and equipment in the possession of or under the control of the husband as at the date of these orders but subject to these orders;

   (c)All farm stock in the possession of or under the control of the husband as at the date of these orders but subject to these orders;

   (d)All personalty and chattels in the possession of or under the control of the husband as at the date of these orders but subject to these orders;

   (e)The balances of any bank accounts or like investments in the name of or to the benefit of the husband as at the date of these orders but subject to these orders; and

   (f)Any superannuation policy or entitlement in the name of the husband but subject to these orders.

3. Provided that should the husband not make the payment referred to in Order 1 (a) and not be able to provide the releases pursuant to Order 1 (c) hereof then the following be sold at auction or by private treaty as determined by the agents:

   (a)The farming property known as ‘Property B’;

   (b)All plant and equipment referred to in these orders; and

   (c)All stock referred to in these orders;

4. That the proceeds of sale of the assets referred to in paragraph 3 above be applied as follows:

   (a)To the reasonable costs and disbursement of the sales;

   (b)To the satisfaction of the following liabilities:

   (i)The (omitted) Bank mortgage secured by ‘Property B’;

   (ii)The (omitted) Bank partnership loan to a maximum of $1,060,000;

   (iii)The (omitted) Bank overdraft in the quantum of a maximum of $20,000;

   (iv)The (omitted) Bank mini-visa liability to a maximum of $30,043;

   (v)The husband’s (omitted) Bank credit card to a maximum of $12,496;

   (vi)(omitted) company liability to a maximum of $21,000;

   (vii)The ‘(omitted) company’ liability to a maximum of $86,000.

   (c)As to the balance then 55% to the wife and 45% to the husband.

5. There be liberty to apply to the parties or either of them with respect to the appointment of agents for the sale of the property.

6. That pending the payments referred to in Order 1 hereof or all sales referred to in Order 3 hereof then the husband be entitled to drawings of $5,000.00 per calendar month from the farm and that any balance income during such period be put to the above liabilities as agreed between the parties and if not agreed then at the discretion of the wife and for these purposes the husband is to account to the wife (or provide access to the farm accounts to the wife, her solicitor and designated accountant) on or before 7 August 2014 and on or before the 7^th of each subsequent month.

7. That each party be otherwise solely responsible for and indemnify the other in respect of any and all liabilities attaching to any of the assets retained by that party pursuant to these orders.

8. That pursuant to s.90MT(4) of the Family Law Act 1975 a base amount of $62,500 be allocated to the wife out of the husband’s interest in the (omitted) super scheme (customer no: (omitted)) (“the Fund”).

9. That in accordance with Paragraph 90MT(1)(a) of the Family Law Act 1975:

   (a)The wife is entitled to be paid the amount calculated in accordance with Part VI of the Family Law (Superannuation) Regulations 2001;

   (b)And the husband’s entitlement and the entitlement of such other person to whom a splittable payment may be made out of the husband’s interest in the fund is correspondingly reduced.

10. The Trustee of the Fund, (omitted) Pty Ltd (“the Trustee”) shall do all such acts and things and sign all such documents as may be necessary to :

    (a)Calculate, in accordance with requirements with the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2011, the entitlement for the wife created by paragraph 8 of these orders; and

    (b)Pay the entitlement whenever the Trustee makes a splittable payment out of the husband’s interest in the Fund.

11. This order have effect from the operative time and the operative time is four (4) clear business days after service of a sealed copy of this order upon the Trustee.

12. That, after service of the payment split notice pursuant to rule 7A.03 of the Superannuation Industry (Supervision) Regulations 1994, the wife shall do all such things and sign all documents as may be necessary, including but not limited to exercising her request pursuant to rule 7.A.06(1) of the Superannuation Industry (Supervision) Regulations 1994 for the rollover or transfer of the transferrable benefits out of the husband’s interest in the Fund to a fund of the wife’s choosing in accordance with rule 7.A.12 of the Superannuation Industry (Supervision) Regulations 1994.

13. And the Court notes:

    (a)The value of the transferrable benefits from the husband’s interest to the wife’s interest are calculated in accordance with rule 7A.12 of the Superannuation Industry (Supervision) Regulations 1994;

    (b)Pursuant to rule 14F of the Family Law (Superannuation) Regulations 2001, any payments from the husband’s superannuation in the interest in the Fund made after the Trustee has created a new interest in the wife’s name in the Fund, as contemplated in paragraph 11 of these Orders are not splittable payments; and

    (c)The Trustee will be relieved of its obligations to calculate and split payments under paragraph 9 of these orders in the event that the transferrable benefits have transferred to a fund of the wife’s choosing in accordance with the requirements under the Superannuation Industry (Supervision) Regulations 1994.

Parenting

1. The parties have equal shared parental responsibility for the children X born (omitted) 1997 and Y born (omitted) 2000.

2. That X and Y live with each of the parents as agreed between the parents.

Child support

1. That there be a departure from any assessment of child support for either of the parties for the periods from the date of these orders until 31 December 2015 by there being a nil assessment for each parent provided that each parent meet one half of the following in respect of the children X born (omitted) 1997 and Y born (omitted) 2000:

   (a)School fees struck in respect of either child from the commencement of term 2 in 2014;

   (b)Any additional tuition fees as from the commencement of term 2 2014;

   (c)Any excursion costs;

   (d)School uniforms and shoes including sports uniforms; and

   (e)Levies.

2. Within sixty (60) days of the date of these orders the wife pay to the husband all arrears of child support owing under any previous assessment or court order.

IT IS NOTED that publication of this judgment under the pseudonym Hendry & Birmingham is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 8486 of 2013

MS HENDRY

Applicant

And

MR BIRMINGHAM

Respondent

REASONS FOR JUDGMENT

1. These proceedings raise issues as to the following:

   a)A property settlement between the parties;

   b)Parenting orders for the parties’ two teenage children;

   c)The husband’s application for a departure order in respect of child support;

   d)The husband’s application for a non-periodic child support from the wife in the form of a contribution to private school fees; and

   e)The husband’s application for “reimbursement of school fees” in the sum of $2,694 from the wife.

2. The matter is highlighted by an extremely small net tangible property pool, if any.

3. The parties are both from (country omitted).  They came to live in Australia in 2007. The husband is 53 years old.  The wife is 47.  The husband and wife married in (country omitted) on 5 September 1996. There are two children of the marriage, being:

   i)X, born (omitted) 1997 (aged 17 years);

   ii)Y, born (omitted) 2000 (aged 14 years)

4. The parties separated in May 2013 when the wife moved from their farming property to rented accommodation in (omitted). 

5. The parties’ farming partnership was dissolved on 31 July 2013 and the husband has continued in occupation of the farm and trading as a sole trader.

6. There are no extant children’s orders.

7. The wife commenced these proceedings on an application filed 2 October 2013.  The husband’s response filed 1 November 2013 raised the child support issues.

Orders sought – wife

1. The wife seeks a cash adjustment in her favour of $75,000.  She would transfer her interest in the farming property to the husband if he can refinance and obtain a release for her of all liabilities secured by the farm although she says that her pragmatic position is that the farm be sold and that she receive $75,000 (presumably regardless of its sale price). This position is apparently based on her personal pessimism as to the viability of the farm.  She proposes retaining her motor vehicle and its liability, together with the $40,000 balance in her bank account.

2. The wife seeks a superannuation split in her favour from the husband’s entitlement with a base amount of $62,500, thereby equalising the parties’ superannuation entitlements.

3. The wife wishes to formalise children’s orders whereby the parents have equal shared parental responsibility for X and Y and “that the children live with and communicate with the mother at all times as may be agreed between the parties”.

4. She opposes the husband’s child support departure application.

Orders sought – husband

1. The husband argues that there is a nil net property pool or a minimum pool, at best.  He concedes that the wife should retain her motor vehicle and her bank account.  If, however, the court determines that there be a positive net pool of property, then he seeks an order for 60 per cent in his favour and 40 per cent to the wife.

2. The husband agrees that there should be an equalising of the parties’ superannuation and is content for a splitting order with a base amount of $62,500 from his policy.

3. The husband wishes to retain the farm and will attempt to refinance accordingly, thereby assuming all of the liabilities, save and except the debt on the wife’s motor vehicle.

4. The husband’s outline of the case does not disclose him seeking any particular children’s orders.

5. The husband seeks child support departure orders as follows:

   a)That the adjustable taxation income of the wife be fixed at $92,000 per annum;

   b)That such amount be increased on 1 July each year by the Child Support inflation factor;

   c)That the wife pay 50 per cent of private school fees (including tuition fees) and related school expenses and school uniforms in respect of the children’s attendance at (omitted) and (omitted) College;

   d)That the wife pay to the husband by way of reimbursement $2694, being fees for the school year 2013;

   e)That the wife sign all documents to transfer the sum of $40,000 held at (omitted) Bank by her on behalf of the children into a joint account of the husband and wife to be applied for payment of private school fees.

The Issues

1. On consideration of the documents filed and after hearing evidence, the following appear to be a summary of the issues:

   a)What constitutes the pool of property, with the wife arguing some unnecessary post-separation capital purchases by the husband;

   b)Valuation of plant and equipment with the wife arguing that some items were not included in the valuation;

   c)The status of debt incurred post-separation and post-partnership-dissolution by the husband;

   d)An issue as to the relative contributions of the parties with reference to the husband’s contribution early in the marriage as against the wife’s inheritances late in the marriage;

   e)The weight to be attached to post-separation contributions, including to the care and support of the children and the husband’s retention of the farm and its profits and benefits;

   f)The relative considerations under s.75(2) of the Family Law Act 1975 (“the Act”), with reference to the wife’s income and the husband retaining the farm;

   g)The wife seeking an order for the sale of the farm as against the husband wishing to retain the farm;

   h)Whether or not it is necessary to make orders in the interests of X and Y; and

   i)Whether it is appropriate in all of the circumstances to make a departure order under section 117 of the Child Support (Assessment) Act 1989.

The Evidence

1. Each of the parties was represented.  They each relied on a trial affidavit and a sworn financial statement.

2. The applicant adduced evidence by way of a spreadsheet being his budget for the 2013/14 financial year and apparently relied upon in his pending application to the bank for refinancing.

3. The wife adduced evidence of correspondence between solicitors as to discovery; husband’s sworn financial statement filed 4 March 2014; and a document titled “Tax Calculation for Wife’s Income”.

The relevant law 

1. Section 79 of the Act provides the courts powers in making orders for alteration of property interests or property settlement between parties.

2. Section 79(1)(a) provides:

   (1) In property settlement proceedings, the Court may make such order as it considers appropriate: 

   (a) in the case of proceedings with respect to the property of the parties to the marriage or either of them – altering the interests of the parties to the marriage in the property; 

3. Section 79(2) stipulates:

   The Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

4. Section 79(4) sets out the matters to be considered by the Court in arriving at its orders and as follows:

   (a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them:  or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;  and

   (b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;  and

   (c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent;  and

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

   (e) the matters referred to in subsection 75(2) so far as they are relevant;  and

   (f) any other order made under this Act affecting a party to the marriage or a child of the marriage;  and

   (g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

5. There has been recent re-assessment of the preferred approach for trial judges in dealing with matters under section 79 of the Act[1].  Firstly, the Court is to identify the legal and equitable interests of the parties and each of them in property.  The usual preferred date for this exercise is the date of the hearing. 

   [1] Stanford & Stanford [2012] HCA 52

6. Secondly, and pursuant to section 79(2) of the Act, the Court is to determine whether, in all the circumstances of these parties, it is just and equitable to make orders altering their property interests. In practice such an exercise does not normally present difficulties where, as in the matter now before me, the parties are separated and they have joint interest in substantial assets.

7. The Court then moves to identifying and assessing the contributions of the parties within the provisions of subss.79(4)(a)-(c) of the Act and detailed above.

8. After making determinations as to contributions, the Court moves to consider whether any further adjustment is required upon consideration of the relevant factors under subs.79(4)(d)-(g), including the relevant factors under section 75(2).

9. Throughout this process there permeates a consideration of justice and equity, and including a requirement for Court to “stand back” and consider whether the proposed orders are in themselves just and equitable[2].

   [2] Russell & Russell (1999) FLC ¶92-877

The Property Pool

1. It is convenient at this point to set out the property pool as identified by the wife’s counsel in an aide-mémoire provided to the Court after the evidence and as follows: 

Assets

“Property B” Farm (valued 15.10.13):   2,405,000

VW (purchased by wife September 2013):  42,490

(omitted) shares (husband, 26.06.2014),     618.00

(omitted) Partnership stock (at 10.06.2013):   549,750 

Plant and equipment:                       149,700

Outdoor spa:      4000.00

Horses (1) (at 20 June 2014):                      1000.00

Container (at 10 June 2014):                   5000.00

Water licence:     14,325.00

(omitted) Bank account (farm – (omitted)) (at 26.06.14):  100.00

(omitted) Bank term deposits (wife’s inheritance):  40,000.00  

TOTAL:$3,211,983 

Liabilities

(omitted) Bank mortgage (at 10.06.14):               1,419,000

NAB loan

(omitted) (partnership):   1,060,000

(omitted) Bank partnership overdraft:  20,000

Debt (joint) to (omitted) company:  21,000

Finance on VW (wife):  23,000

Trade creditors (at 3414):                     402,761

Debt/loan to (omitted) company (as at 26.06.14):  60,000

(omitted) Bank mini-Visa debt (husband) (farm and personal):     30,043

(omitted) Bank credit card (husband):   12,496  

TOTAL:      $3,048,300

NET ASSETS: (non-superannuation):   $163,683

Superannuation

Husband's (omitted) Fund policy:    189,000

Wife's (omitted) Super policy:    64,777

TOTAL:        $253,777

1. The above list of assets and liabilities at value represents the wife’s position in her counsel’s closing address.  There are a number of items disputed by the husband and as follows:

The value of plant and equipment

1. The husband attributes a value of $113,000.  He relies on the one valuation carried out by a valuer of the wife’s choice. 

2. In cross-examination, however, the husband conceded that two utility motor vehicles were not included in the valuation.  The wife calculates their joint value at $20,000.  She was not challenged as to this evidence.  The husband did not contradict it during his own cross-examination. Neither party called the valuer to challenge or expand on his evidence. The husband, of course, relies on the valuation.  It was the wife who instructed the valuer.  In all of those circumstances, I propose to accept the valuation at $113,000 with the additional $20,000 for the utilities, being a total of $133,000 but with the outdoor spa, horse, container, and water licence already added and noted in the wife’s list of assets and liabilities set out above.

3. Consequently, there should be a sum of $20,000 added to the wife’s gross assets, giving a figure of $3,231,983.

Wife’s expected tax return

1. There was some argument on behalf of the husband that the wife’s expected tax return should also be added as an asset. She expects to receive around $5000. That figure has not yet crystallised and the trial in this matter was conducted prior to the end of the financial year. As such, I do not intend to add this as an “asset”, but will take it into account under section 75(2)(o) of the Act.

Debt/loan - (omitted) company – incurred post-separation.

1. The husband sells his milk to (omitted) Pty Ltd.  He previously had a relationship with (omitted) company.  It seems that these milk companies provide an “overdraft” facility which is addressed at various times by the proceeds of his sale of milk.  The wife says that this debt at the operative time is $60,000.  The husband says that it is $86,000.  The dispute does, of course, relate to an account that varies considerably over any period of time. 

2. The wife argues for some “drawing of a line in the sand” and consistency in determining the value of the assets and liabilities.  Whilst this is an admirable aim, the fact is that farming entities are extremely fluid in their operations.  They are seasonal.  Their assets and liabilities vary considerably in value accordingly. 

3. The husband swore his final financial statement on 10 June 2014, being only two weeks prior to the trial.  He gives the figure for the (omitted) company debt at that stage of being $86,715.  The remaining debt to (omitted) company is $21,016.  The (omitted) Bank overdraft at that date is $20,833.  The husband was cross-examined as to the variance over time in his accounts.  He was cross-examined as to the accuracy of the above debts as of 10 June 2014.  I am satisfied that the husband’s evidence in all respects was satisfactory and that he has made a legitimate attempt to paint a picture of his finances as of that date. 

4. I accept that the husband has commenced a new account with (omitted) Bank since separation.  That has an overdraft facility with a current liability of $28,841.  The milk cheques, which can be substantial, are now paid into that account.  I will take this into consideration in determining the profitability of the farming enterprise in the hands of the husband if he is to retain the farm.  I otherwise accept the representation of his liabilities set out in part K of his financial statement sworn 10 June 2014.

5. Consequently, I will make the following adjustments to the wife’s list of assets and liabilities set out above: 

   a)(omitted) company debt/loan, $86,715 – adjustment of $26,715;

   b)Two (omitted) Bank overdraft accounts – total liability $49,674 – adjustment $29,674.

6. Consequently, I calculate the liabilities to total $3,104,689. 

7. I therefore calculate the net tangible assets of the parties’ (non-superannuation) to be $127,294.

Contributions 

1. At about the date of the parties’ marriage the husband assumed a one-third interest in the family farm in (country omitted).  Approximately three years later the parties bought out the remaining two-thirds interest held by the husband’s parents.  At that stage the husband’s initial one third interest was valued at ₤224,000.  When the farm was sold in October 2007, the parties cleared ₤1,000,000 which at that stage converted to $2,200,000. 

2. The husband commenced a superannuation plan in (country omitted) in 1983.  The wife says the contributions to this policy continued “until just a few months before we left (country omitted)” being 2007.  Substantial contributions were made by the husband from 1983 or some thirteen years prior to the marriage.  I assume that this original superannuation entitlement is new represented by the husband’s (omitted) Super fund.

3. The husband’s unchallenged evidence is that at the date of the marriage he held bank account balances and shares to a value of ₤20,000. 

4. The wife’s evidence is that she had cash of ₤25,000 at the date of the marriage.  She received various inheritances between 1998 and 2012, which she says totalled approximately ₤315,979 with the majority coming later in the marriage.

5. I am satisfied that the parties generally provided these direct financial contributions to the assets and benefit of the marriage.   

6. The husband was generally self-employed in the parties’ farming enterprises.  The wife worked both on and off the farm and contributed her income from outside employment.  The wife prepared the books of the farming enterprise. 

7. I am satisfied that both parties contributed as parents during the course of the relationship. 

8. The parties have been separated since mid-2013.  Their daughters have continued to live primarily with the husband who has been responsible for their financial support with some assistance by child support paid by the wife and some contribution by her to school fees.

9. Each of the parties has made substantial financial contributions to the property pool.  The husband’s contributions came early in the marriage from real property and superannuation, whilst those from the wife came later.  In the well-known decision in Pierce and Pierce[3] the Full Court considered the issue of contributions being “eroded” over time, and observed:

   In our opinion, it is not so much a matter of erosion of contribution, but a question of what weight is to be attached, in all the circumstances, to the initial contribution.  It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife.  In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.

   [3] (1999) FLC 92-844

10. In the matter now before me, the husband’s initial contribution was in the form of real property.  Its weight should be considered accordingly and does not diminish in importance or weight simply by the flux of time.  That is, the husband’s initial contribution is easily identifiable in the $2,200,000 the parties netted from the sale of their (country omitted) farm in 2007.

11. The wife also mounts an argument of “wastage” or negative contribution by the husband.  She says that he has incurred deliberate and unnecessary expenditure in order to reduce the net worth of the asset pool.  At paragraph 31 of her trial affidavit, the wife deposes:

    Mr Birmingham has not complied fully with these orders (written monthly accounting to the wife), but from the documents produced by him so far, I can see that Mr Birmingham has continued to spend money recklessly and unnecessarily, and to accumulate further debt deliberately, I believe, to reduce the value of the assets and in order to defeat or prejudice my claim.  I have no idea now of what the true financial position of the trust or partnership are.

12. The wife then particularises her argument as follows:

    a)the expenditure on 13 August 2013 of $17,077.50 for the clearing of trees, claiming that the work was not necessary for the day to day running of a dairy farm;

    b)purchase of a new cultivator for $22,000 on 14 October 2013;  (III) purchase of a second-hand fuel tank for $2279.75 on 19 November 2013;

    c)purchase of a ride-on mower for $3900 on 27 November 2013;

    d)purchase of five (omitted) stock bulls on 23 December 2013;   and

    e)purchase of planting equipment from (omitted) in January 2014 for $18,920. 

13. The wife continues that the husband has drawn a wage of $5,000 per month from the partnership accounts since separation for his personal benefit, whilst using the partnership accounts to meet business expenditure and some personal expenditure.  She particularises expenditure of $1,383.80 on the husband’s personal legal costs and paid from partnership accounts.  In all, she totals some $14,983, which she says should also be taken into account as private expenditure by the husband from partnership accounts and, in this sense, a negative contribution by him to the asset pool.

14. The husband was cross-examined in respect of these matters.  I am not satisfied that there was a deliberate or conscious decision to purchase capital equipment so as to reduce the value of the property pool. None of the purchases seem incongruous with a farming venture.  I am not satisfied that the specific purchases were “unnecessary”.  In any event, the value of the plant and equipment is all-inclusive, as set out above.  The fact of these purchases is relevant, however in consideration of the prospective profitability of the farm if it is to remain in the husband’s hands.

15. It is clear that the husband has made some purchases from partnership accounts for personal benefit, such as his own legal costs. He does, however, operate a farming property. He has had the prime responsibility for the financial support of the two daughters, including meeting their school fees. Those fees total some $36,000 per annum. There is inevitably a “merging” of personal, family, and business expenditure in a farming enterprise, just as there are financial benefits in him continuing to live on the farm. Given the wife’s argument, however, I am not satisfied that there has been wastage or intentional misuse of the partnership accounts in the specifics and the quantum she alleges. In all of the circumstances, I think it proper that I deal with this matter under section 75(2)(o) of the Act in considering that the husband has had the continued benefit of the farm, which obviously meets some of his personal living expenses, and that there has been some benefit to him from the use of partnership accounts.

16. Taking into account the direct financial contributions by each of the parties during the marriage, their contributions as homemaker and parent, and the uses made of those contributions, together with the husband’s post-separation contributions to the care of the daughters, I am satisfied that there should be no adjustment to either party on account of financial or other contributions.

Section 75(2) Factors

1. The husband has the continuing primary care of the parties’ two daughters.  They are, however, teenagers, and relatively self-sufficient in that they do not inhibit the husband’s capacity for employment. 

2. The husband gave evidence of confident and positive financial projections for the farm.  If his confidence is realised then he would be likely to achieve an income greater than that of the wife.  He estimates to the bank profits or available income of around $120,000 per annum.  In addition the husband has the ongoing benefit of the farm meeting many of his day-to-day living expenses.

3. The wife says she has a gross income of approximately $65,000 per annum but her latest sworn financial statement suggests the annual income to be $71,604.  She has been obliged to obtain rental accommodation for herself following separation, and perhaps into the future.  She does not have the benefit of the farm meeting her daily living expenses. 

4. Both parties have the advantage of residual tax credits from the farming partnership, meaning that they will effectively not be paying tax on their personal income for many years. 

5. The wife will be required to pay child support for the children or to meet expenses such as school fees.

6. There is no evidence before me that either party has re-partnered.

7. The husband wishes to retain the farm and these orders will provide him with that opportunity.  On his own evidence and provided to the bank in anticipation of refinancing, his income will be superior to that of the wife.  He has benefits from the farm which are not available to the wife.  The husband has retained the farm and the benefits which have accrued to him, and mentioned above, since separation including expenditure for personal benefit. On his evidence his actual income capacity will far exceed that of the wife. The financial benefits available to him from the farm only serve to add to the benefit of that income. I place some considerable weight on this discrepancy. The wife expects her taxation return but in reality neither party has paid tax on their incomes.

8. In all of the circumstances, I am of the view that there should be an adjustment to the wife of 5 per cent of the property pool on consideration of the relevant factors under section 75(2) of the Act.

9. Consequently, I find that the net tangible assets of the parties be divided as to 55 per cent to the wife and 45 per cent to the husband.  I have found the net property pool to amount to $127,294.  The wife would therefore be entitled to assets to a value of $70, 012.  She will retain the following: 

   a)(omitted) Bank term deposits, $40,000;  and

   b)equity in VW, $19,490. 

10. I calculate, therefore, a cash adjustment to the wife from the husband of $10,522.

11. I agree with each of the parties that it is appropriate for there to be an equalising of their superannuation entitlements which would require a splitting order to the wife of $62,500. 

12. The wife’s position at the start of the trial was that the farm be sold. I intend however to give the husband the opportunity to retain it provided he can obtain a release for the wife of all liabilities secured by the property.

Children’s Orders

1. The wife seeks an order for the parties to have equal shared parental responsibility for X (aged 17 years) and Y (aged 14 years).  She seeks an order in simple terms whereby the children “move between the parties as agreed between the parties”. 

2. The husband does not seek any particular orders in respect of the children.

3. The unchallenged evidence of the wife in her affidavit is that since separation the husband has not consulted her in respect of some important issues in respect of the children.

4. Section 61DA of the Act provides a presumption that it be in children’s best interest for parents to exercise equal shared parental responsibility. There is no evidence before me suggesting that the presumption does not apply for reasons of family violence. I have no real evidence (and there was little or no testing of such evidence as there is) that the presumption should be rebutted. Consequently, I am satisfied that the presumption remains.

5. The orders sought by the wife give some form and formality which could benefit these children enjoying a meaningful relationship with both parents. Issues of violence do not feature here. The form of order sought and historical evidence suggests that the children’s views as to their parenting and living arrangements will be given some credence by the parents. Similarly, the capacity and attitude of the parents is not at issue. Neither are practical considerations.

6. Given the ages of the children, and a lack of contest by the husband, I am satisfied that the children’s best interests are served by there being the generic order sought by the wife.  There will be orders accordingly.

Child Support Matters

1. In his amended response, the husband seeks a departure order pursuant to section 117 of the Child Support (Assessment) Act 1989 from 2 August 2013 in that the mother pays: 

   a)child support commencing 2 August 2013 until 30 June 2014 in the sum of $500 per month per child; 

   b)that the mother’s child support obligations be increased as of 1 July in each year by the child support conflation factor as determined from time to time pursuant to the Child Support (Assessment) Act 1989;

   c)That pursuant to section 124 of the Child Support (Assessment) Act 1989 and in addition to the periodic payments referred to above, the mother pays 50 per cent and the father pays 50 per cent of private school fees (including tuition fees) and related school expenses and school uniforms referable to the attendance of the children at (omitted) & (omitted) College until the completion of each of their secondary schooling and for any extracurricular activities of the children;

   d)Such non-periodic child support to continue until the happening of the child support terminating event; and

   e)That the mother pay to the father the sum of $2694 by way of reimbursement of fees paid to (omitted) & (omitted) College for the school year 2013.

2. Section 116 of the Child Support (Assessment) Act 1989 allows an application to this court if there are other pending proceedings between the parents and if the court is satisfied that it would be in the interests of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child and the special circumstances of the case. 

3. Section 117 sets out the matters that the court must be satisfied of before make a departure order. The court must be satisfied that one of the statutory grounds referred to in the section exist and that it would be just and equitable as regards the child, the carer entitled to child support, and the liable parent, and be otherwise proper to make the particular order under this Division. Special circumstances include:

   (i) because of the income, earning capacity, property and financial resources of the child;  or (ia) because of the income, property and financial resources of either parent;  (ib) because of the earning capacity of either parent.

4. In determining a departure order which is just and equitable, the court is entitled to have regard to the income, property and financial resources of each of the parents and the earning capacity of the parents together with their financial commitments.

5. In determining whether an order would be “otherwise proper” the court must have regard to:

   a)the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child;  and

   b)the effect that the making of the order would have on:

   i)any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit;  or

   ii)the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

1. The wife’s most recent financial statement deposes to an income of $1,377 per week gross from her employment.  I calculate this to be $71, 604 per annum.

2. The wife has a current obligation of $1,251 per month in respect of the two children.  She agrees that she has not made the payments from April/June 2014 and is $3,750 in arrears as of the trial.  She explains this by saying that she has been waiting on advice as to whether or not she can pay or contribute to the children’s private school fees in lieu of periodic maintenance. She apparently has not yet received a definitive response.

3. The wife agrees that she has tax credits such that she will effectively pay no tax on her gross earnings for the foreseeable future.

4. The wife agrees that at separation an amount of $5,388 was owing in school fees for the girls.  She says that she has contributed $1,500 since that time.

5. In cross-examination, the wife denied that she had a current or ongoing responsibility to meet private school fees for the girls.  She says that she cannot afford to pay both school fees and child support and, if pressed, would agree to the younger child, Y, moving away from private school.

6. The husband agrees that he takes drawings of $5,000 per month from the farm.  He agrees that he receives some other benefits by living and working on the farm.  He says that during the marriage, the parties jointly agreed for the children to attend private schools. He volunteered in evidence, however, that he told his bank that professional financial projections given an expectation of profit or income of closer to $120,000 per annum. Not unusually the husband’s ‘taxable income’ has been calculated as minimal. I do not however his capacity of late for capital expenditure.

7. The wife’s unchallenged evidence is that X now spends approximately 50 per cent of her nights with each parent.  The husband’s unchallenged evidence is that Y spends only rare nights with the mother.

8. On 20 March 2014, and with both parties represented by counsel, there was a consent order until further order in the following terms:

   Pursuant to section 117 of the Child Support (Assessment) Act the adjustable taxable income for the wife to be fixed at $92,000 and that an administrative assessment of child support be issued for the children X, born (omitted) 1997, and Y, born (omitted) 2000, for the period 1 March 2014 to 30 June 2014.

9. It is clear that by reason of his farming enterprise then the husband will have a nil or minimal taxable income but that this might not represent his “real income”.  I am satisfied, however, that he has drawings of $60,000 gross per annum.

10. In his final submissions, counsel for the wife put in an alternative proposition, being that the wife pay no child support by way of assessment but meet one half of the school fees for the children until the end of 2015.  Her obligation would be at a quantum of approximately $18,000 per annum on $1,500 per calendar month.  She would require the arrears owing under the current order on assessment to be discharged.

11. I am satisfied that simply leaving the parties’ bald financial positions to the assessment process would possibly produce an injustice simply by the husband being likely to have a nil taxable income but in reality having drawings for personal benefit of $60,000 per annum.  His “income” is therefore not dissimilar to that of the wife.  Both will be relieved from any taxation obligation on this income.  The husband’s own evidence, as set out above, is of him being confident of the farm producing profits which would now accrue to him as a sole trader.  I am satisfied on the evidence that X now lives equally between her parents.  I am satisfied that Y lives primarily with the father.

12. I am satisfied that during the course of the marriage the parties agreed for the children to attend private school.  These fees were obviously met from the income of the farming partnership in which both parties participated.  Consequently, I find some merit in the wife’s position that she would struggle to meet both a proportion of private school fees and child support assessed on her gross income, or, more likely, an assessable income of close to $90,000 per annum given the lack of any tax obligation.

13. On reflection, and considering the particular circumstances of this case including the living arrangements for the children and the income, earning capacity and financial resources of each of the parties together with the circumstances of the children attending a private school I am satisfied:

    a)That a departure order is appropriate and that it would be just and equitable and otherwise proper for there to be an order whereby that until 31 December 2015 each of the parties meets one half of the private school fees and also associated education expenses for the children X and Y and each of them at (omitted) & (omitted) College; and

    b)That there otherwise be no assessment of periodic child support during that period payable by either of the parents to the other.

14. In coming to this conclusion, I note that the mother’s obligation would be some $18,000 per annum.  I note her current assessment, absent school fees, is considerably less at approximately $14,500 per annum.

15. However, and given the greater contribution since separation by the husband to the children’s school fees, I see no reason why the wife should be relieved of payment of any arrears under any previous assessment or departure order.  Similarly, though, and doubting any power to make such an order, I am not inclined to make any order that the wife “reimburse” the husband in respect of any school fees paid by him since separating or part thereof.  I note, in any event, that these matters have been considered above in respect of the various issues raised between these parties.

I certify that the preceding ninety six (96) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Date: 31 July 2014