Herbert and Herbert
[2006] FMCAfam 254
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HERBERT & HERBERT | [2006] FMCAfam 254 |
| FAMILY LAW – Property – marriage of approximately fifteen years in duration – parties separated in excess of seven years – assessment of contributions post separation – children of marriage currently aged 20 and 15 resident with wife since separation – relevance of absence of child support determination between separation and December 2003 (5 years) – payment of private school fees – valuation issues – Red Book values for motor vehicles – s.75(2) factors – relevance of child support assessment when husband has left workforce to pursue tertiary studies – relevance of income earning capacity – disparity of income and superannuation – application for certificate pursuant to Federal Proceedings (Costs) Act 1981. |
| Family Law Act 1975 – ss.75, 79 Federal Proceedings (Costs) Act 1981 – s.10 Family Law (Superannuation) Regulations 2001 – s.90 Federal Magistrates Court Act 2000 – s.42 Child Support (Assessment) Act 1989 |
| Lee Steere v Lee Steere (1998) FLC 91-626 Ferraro v Ferraro (1993) FLC 92-335 Clauson v Clauson (1995) FLC 92-595 Wardman & Hudson (1978) FLC 90-466 Russell v Russell (1999) FamCA 187 Waters & Jurek (1995) FLC 92-635 Smith & Smith (1991) FLC 92-261 Commonwealth v Milledge (1953) 90CLR 157 E & E [2005] FMCAfam 204 C v C (2005) FLC 93-220 Pierce &Pierce (1999) FLC 92-844 Norbis v Norbis (1986) FLC 91-712 Williams & Williams (1985) FLC 91-628 Spiteri & Spiteri (2005) FLC 93-214 Mallet v Mallet (1984) 156 CLR 605 D & D [2003] FamCA 473 DJM v JLM (1998) FLC 92-816 Paradine & Paradine (1981) FLC 91-056 Levick and Levick unreported decision of Moore J delivered 31 January 2003 |
| Applicant: | MS HERBERT |
| Respondent: | MR HERBERT |
| File number: | ADM 40 of 2004 |
| Judgment of: | Brown FM |
| Hearing dates: | 24 and 26 April 2006 |
| Delivered at: | Alice Springs |
| Delivered on: | 31 May 2006 |
REPRESENTATION
| Counsel for the Applicant: | Ms Ross |
| Solicitors for the Applicant: | David Peacock |
| Counsel for the Respondent: | Mr Morcombe |
| Solicitors for the Respondent: | Marssons Family Lawyers |
ORDERS
That within 60 days of the date of these orders the wife pay to the husband the sum of $35,000.00.
That contemporaneously with the payment referred to in Order 1 hereof the husband transfer to the wife, at the wife’s expense, the whole of his right, title and interest in the property known as and situate at Property B in the State of South Australia and being the whole of the land comprised in Certificate of Title Register Book Volume [omitted].
That upon the transfer of the property referred to in Order 2 hereof the wife shall forthwith discharge the mortgage to the Adelaide Bank secured against the aforesaid property and shall obtain the removal of the husband’s liability to pay any and all liabilities pursuant to the same.
That contemporaneously with the payment referred to in Order 1 hereof the parties shall each pay the sum of $5,422.05 to the Business Manager of [S] School being monies owed for tuition fees at the said college as at 5 February 2004 in respect of the parties’ children’s attendance at the college and to this end the wife is authorised to deduct the sum of $5,422.05 from the monies due to the husband pursuant to Order 1 hereof and direct them in payment of the school fees as ordered herein.
That pursuant to section 90MT(4) of the Family Law Act 1975 a base amount of $34,000.00 be allocated to the husband in respect of the wife’s superannuation interest in the [H] Super Fund and that pursuant to section 90MT(1)(a) whenever a splittable payment becomes payable in respect of that interest the husband is entitled to be paid the amount to be calculated in accordance with the Family Law (Superannuation) Regulations 2001 in respect of that base amount and there is a corresponding reduction in the entitlement of the wife.
That the trustee of the [H] Super Fund, the husband and the wife in accordance with the Family Law (Superannuation) Regulations 2001 shall do such acts and things and sign all such documents as may be necessary to calculate the payment entitlement of the husband in accordance with Order 5 hereof.
That Order 5 of these orders have effect from the operative time which shall be on 1 July 2006.
That the solicitor for the wife serve a copy of these orders on the trustee of the [H] Super Fund and the trustee and the parties be given to liberty to re-list the matter on giving 7 days written notice if the trustee is unable to comply with the orders herein.
That unless specified in these orders and except for the purpose of enforcing any payment of money due under these or any subsequent orders, each party be solely entitled to the exclusion of the other to all property (including chose-in-action) in the possession of each party and superannuation standing in the name of each party as at this date.
That all applications herein be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Herbert & Herbert is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADM 40 of 2004
| MS HERBERT |
Applicant
And
| MR HERBERT |
Respondent
REASONS FOR JUDGMENT
Introduction
These are property proceedings. The applicant is MS HERBERT “the wife”. The respondent is MR HERBERT “the husband”.
The major events of the parties’ marriage are not in dispute between them. The parties are of a similar age - the wife having been born [in] 1960 and the husband having been born [in] 1958. They married at [omitted], in the State of South Australia, [in] 1983 and separated on 10 January 1999, when the husband left the former matrimonial home at Property B, [B]. They have lived apart since that time. The marriage between them was dissolved on 9 March 2004.
The parties are the parents of two children, [X] born [in] 1985 and [Y] born [in] 1990. [X] is a university student in his third year of study. [Y] is in Year 10 at [S] School. Both children live with the wife in the [B] property and have done so since separation.
There are significant disputes between the parties regarding how they have each provided financial support for the children in the period of now over seven years since they separated and as to how past and future liability for the payment of the children’s private school fees should now be divided between them.
The wife is a [occupation omitted]. She currently holds a [omitted] position at [omitted]. She earns approximately $68,000.00 per annum. In the past, the husband worked in the [omitted] industry. He was a [occupation omitted]. He earned approximately $65,000.00 per annum. From January of 2005, he was on sick leave and thereafter took long service leave until 9 June 2005, when he resigned voluntarily from [O].
Since March of 2005, the husband has been engaged in fulltime tertiary study. He is studying [omitted]. At present his major source of income is an Austudy allowance of $167.00 per week. He anticipates he will complete his degree by the middle of 2008. In these circumstances, his capacity to provide financial support for [Y], in particular, is limited.
The parties’ major asset is their former matrimonial home, which is subject to a mortgage. Both have some accumulated superannuation, though the wife thus far has been able to acquire significantly more superannuation than the husband. Each party has a motor vehicle of modest value. The pool of assets is not a large one. The wife wishes to retain the [B] property, which has been her and the children’s home for many years. The husband has no objection to this occurring. However the parties are in strenuous dispute as to the quantum of the sum of money which the wife should pay to the husband to acquire his interest in it.
The wife acknowledges that the parties’ various contributions during their long marriage should be regarded as being approximately equal in value. However, it is her contention that, in the seven or so years since the parties separated, her contributions, particularly in regards to the financial support and parenting of [X] and [Y] have been markedly superior to the husband’s contributions. Accordingly, she contends that she is entitled to retain property equivalent to a further 10% of the parties’ current nett worth.
In addition, it is the wife’s position that, in the years to come, because of what she regards as the cavalier and selfish behaviour of the husband, the major burden of parenting and financially supporting the parties’ two children will continue to fall predominantly on her shoulders. As a result, the wife argues that she is entitled to a further 10% of the parties’ nett assets because of her likely prospective needs in this regard.
The husband does not accept that a 70/30% division of the parties’ assets, in the wife’s favour, would represent a just and equitable outcome in this case. It is his position that the court should regard the parties’ contributions, up to this stage, including the period after separation, as being essentially equal. He contends that he has made significant financial contributions to the children’s financial support since 1999, particularly in regards to the payment of private school fees and, since December of 2003, by way of child support.
Although he concedes that the financial burden of supporting particularly [Y], in the short term to medium term, will fall primarily on the wife, he points to her currently markedly superior income and contends that it would not be appropriate for the court to award the wife any further proportion of the parties’ property by reason of this disparity. Accordingly the husband’s position is that an equal division of the parties’ assets would be a just and equitable outcome in the case.
These proceedings are designed to resolve these various issues between the parties. At present, the parties are not particularly well disposed towards one another. The major bone of contention between them is in respect of whether there was any particular form of agreement between them in regards to the payment of the children’s school fees at [S] School and particularly whether, as a quid pro quo for the husband paying the children’s tuition fees at the college, the wife agreed she would forebear from seeking child support from the husband.
Given the parties’ financial circumstances, the payment of the children’s school fees at the college constituted a significant financial burden for them, particularly after they had separated. Monies in respect of arrears of the school fees remain outstanding and a determination will have to be made as to how these fees are to be paid. In addition, the husband acknowledges that he has arrears in the sum of approximately $5,000.00 in respect of child support.
At the outset, I am at pains to point out to the parties that the task I must undertake is not a simple accounting or arithmetical exercise. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretations. The task, set out for me in this case, requires me to balance and compare contributions which are by their nature different. The discretion I have is a wide one.
The legal principles to be applied and the issues in the case
The process to be followed for the division of the parties’ property is well established by law.[1] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[1] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[2] The parties are in dispute about the value of a number of items of their property, most importantly the value of the [B] house. Both the husband and wife engaged professional valuers to value the property – in the wife’s case a Mr W and in the husband’s case a Mr P. Initially Mr W assessed the property as being worth $225,000.00 whilst Mr P valued it as being worth $290,000.00.
[2] See Wardman & Hudson (1978) FLC 90-466
Prior to giving their evidence, the two valuers conferred but were unable to reach a common view as to the value of the property, notwithstanding they had exchanged information about the methodology adopted by each of them respectively and their views about comparable sales in the area. Mr W was prepared to revise his value to $250,000.00, which the wife accepts is a fair and reasonable value. Initially Mr P was prepared to accept a value of $270,000.00 as an appropriate value for the property. However, during his evidence, he resiled from this value and asserted his opinion that $290,000.00 was the current market value of the property. The husband accepts this value. Accordingly, the court will have to resolve the issue of the value of the former matrimonial home or determine some alternate method of it being brought into account.
The parties each own motor vehicles. Neither party obtained a formal value of either of these vehicles. The husband seeks to rely on the “Red Book” value of the vehicles. The “Red Book” is the second hand motor car dealers’ trade guide regarding the value of particular models and types of motor vehicle. The husband asserts this is the best evidence available to the court in the present circumstances. The wife does not accept this evidence and believes the court should not include the motor vehicles in the parties’ pool of assets but rather allow each party to retain his or her motor vehicle.
Otherwise the parties have been able to agree on the value of their other property. Their most significant joint liability is the amount outstanding on the mortgage secured against the former matrimonial home. The parties agree that the sum involved is $85,000.00. It is also common ground that there is a sum of $10,844.10 outstanding to [S] School in respect of the children’s school fees. The parties have different views as to how the court should approach this sum.
It is the wife’s position that this debt is the husband’s alone and the court should direct that the husband pay it from any monies he receives by way of settlement of these proceedings. It is her position that the parties agreed the husband would pay all the school fees in lieu of the wife seeking a formal assessment of child support for [X] and [Y]. The husband denies that such an agreement was reached. In his view, the parties should pay the school fees equally. Accordingly, the court must determine whether the monies outstanding to [S] School should be called into account as a joint marital debt.
Secondly, I must ascertain the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property. The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.” It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a contribution to property.
This second step occasions controversy between the parties in the following major areas:
·It is the wife’s position that her financial contributions made towards the support of [X] and [Y], in the period since the parties separated, have been significantly superior to those of the husband. She asserts that she relied on the husband’s word that he would pay all the children’s tuition fees at [S] School and as a result, did not seek child support from him. She asserts that the husband did not keep his word in this regard and so she was deprived of both child support for a significant period of time and also compelled to pay large amounts towards the children’s school fees;
·The husband does not accept this is so. He asserts that he has always made significant financial contributions towards the children’s school fees and was always happy to pay child support. However the wife did not seek child support from him for a number of years. The record of monies paid by the parties to [S] School is not a complete one, as neither party has maintained particularly comprehensive records. There are also not insubstantial incidental fees which relate to the children’s school attendances, which are also in dispute. These matters have added to the difficulty of resolving the issue of the school fees;
·The wife asserts that her contributions as a parent and homemaker, in the period since the parties separated, have been superior to those of the husband. The husband believes the wife overstates her contributions in this regard;
·The wife has paid all the necessary outgoings in respect of the [B] property, including the mortgage, rates and insurance on it, since the parties separated, which she asserts are significant direct financial contributions, for which she is entitled to significant credit;
·The husband concedes that the wife has paid all the necessary outgoings in respect of the former matrimonial home. However, he asserts that the wife has had the benefit of living in the property, whilst he has had to rent alternative accommodation for himself. In essence, he asserts that the wife has had the benefit of his capital investment in the property over many years;
·In addition, the husband asserts that the wife has allowed the former matrimonial home to fall into a state of disrepair through not performing necessary routine maintenance on it. This has led to a decline in the value of the property.[3] The husband asserts that the wife has had access to the required funds to maintain the property, whereas he has not. This failure to maintain the property, the husband characterises as a “negative contribution” made by the wife, which he believes the court should take into account in some way. By implication, he asserts that the wife has been content to allow the property to decline in value;
·It is the wife’s position that, since separation, the husband has been content to walk away from all his financial responsibilities towards the former matrimonial home and his family generally and due to this, she has not been in a position to properly maintain the property;
·The wife also contends that the husband has appropriated the long service and recreation leave he accumulated during the marriage to his own use and this is a factor which needs to be taken into account in her favour. This amounted to approximately $13,750.00 prior to tax.
[3] The amount of money required to repair the property and bring it up to a standard at which it can be sold is at the heart of the dispute between Mr W and Mr P as to the value of the [B] property.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act. Pursuant to section 75(2) (o), the court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. In the main, section 75(2) deals with the prospective needs of the parties. The matters for consideration under this heading create controversy between the parties in the following areas:
·It is the wife’s position that she will continue to bear the primary responsibility for financially supporting [Y], which will be a considerable burden for the next three years or so, for which she deserves credit in the current proceedings and in respect of the division of the parties’ marital assets;
·In addition, although [X] is no longer under the age of eighteen years, as a university student, the wife will continue to provide financial support for him. It is the wife’s position that she regards it futile to pursue an application against the husband for adult child maintenance for [X] and indeed for [Y], after he has turned eighteen years of age. She asserts that these are also factors, which favour her at this stage of the proceedings;
·The wife has currently in her favour a child support assessment against the husband, for [Y], based on an income for the husband of $65,000.00. This assessment expires on 17 June 2006. There are currently arrears accrued under this assessment. In the circumstances of this case, particularly the husband’s decision to leave his employment at [O], the wife asserts that she is unlikely to receive reliable payment of child support from the husband for [Y] in the future and this of itself is another factor which calls for a further adjustment of property in her favour;[4]
·It is the husband’s position that he will pay the appropriate amount of child support, including the current arrears, assessed by the Agency from time to time from what ever award of cash he receives as a result of these proceedings. He disputes that there is any proper evidentiary basis on which the court can conclude that he will avoid his child support responsibilities in the future. As a result, if the wife does receive some allowance as a result of the application of ss.79(4)(g) and 75(2)(na), he asserts that there is a risk such a result will allow the wife to “double dip”;
·It is further the husband’s position that there is presently a gross disparity between the incomes, financial resources and preparedness for retirement of the parties, which favours the wife. In such circumstances, he argues that any allowance which the court may make in the wife’s favour because of her responsibilities to parent [Y] in the future is cancelled out by his currently modest income, whilst he is attending university;
·The wife does not accept this assertion. It is her position that the husband has voluntarily chosen to “sit on” his income earning capacity, which has had detrimental consequences for her and the children. In such circumstances, she argues that it would not be just and equitable for the court to allow the husband to rely on this ground.
[4] See Family Law Act 1975 at section 79(4)(g) and section 75(2)(na) and Clauson & Clauson (1995) FLC 92-595 at 81,911
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[5] The matters for consideration under this final or fourth step have assumed greater import since the advent of Part VIIIB of the Family Law Act 1975. This is the part of the Act which deals with superannuation splitting. However, in this case, neither party seeks any splitting order in respect of the other’s superannuation.
[5] See Russell v Russell (1999) FamCA 187
The intent of Part VIIIB of the Family Law Act 1975 was to ensure an equitable division of matrimonial property and avoid the artificial situation that had prevailed in the past, whereby one party, commonly the husband, had the sole benefit of superannuation and the other party, commonly the wife, was compensated with other assets, which may or may not have had an equal value but was thus denied the benefit of retirement planning through superannuation. Now both kinds of assets can be divided by court order and so the non-member party to a superannuation fund can potentially share the benefits of retirement planning through division of superannuation. However, the legislation has also created its own kind of dilemma.
These dilemmas arise when one or other of the parties would prefer to take a greater proportion of his or her entitlements, from a division of matrimonial property, in the form of immediately realisable assets rather than superannuation assets. In this case, a substantial proportion of the parties’ marital assets is held in the form of superannuation.
The wife has superannuation standing in her name to the value of approximately $103,000.00. The husband the more modest amount of $35,000.00. It is the wife’s position that the court should make some form of split of her superannuation in the husband’s favour. This would obviously minimise the amount of cash she would have to raise to acquire the husband’s interest in the former matrimonial home. It would be the husband’s preference to maximise the amount of cash he is to receive.
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[6] or of equalisation of assets or financial resources.
[6]See Waters & Jurek (1995) FLC 92-635 at 82,375
Other issues
Issues to do with child support have loomed large in this case. The wife applied for child support, for [Y] only, in March of 2004. Since that time, there have been three applications to the Agency seeking a change to the relevant administrative assessment. Most recently, on 18 July 2005, Mr Herbert was assessed to pay child support on the basis of a deemed income of $65,000.00 per annum in respect of the period between 1 January 2006 and 17 June 2006. This was as a consequence of his decision to cease employment at [O].
The parties have vehemently different views as to the rationale behind the husband’s decision to cease his employment. From his point of view, the decision was motivated by his belief that his employment at [O] was tenuous and likely to be terminated shortly. Given his age, he asserts that he believed that it was better for him to re-train sooner rather than later. On the other hand, it is the wife’s view that
Mr Herbert’s decision was motivated predominately by his wish to escape liability to pay her child support for [Y].
Regardless of the truth or otherwise of these competing views, it seems unlikely that Mr Herbert will be able to return to his previous position at [O]. He plans to continue his tertiary studies, on a fulltime basis, until he has completed his degree. At best, he will be able to find part-time work in future. Such work has implications for his entitlement to receive Austudy. Accordingly, his capacity to meet an ongoing assessment of child support, on a basis of a deemed income of $65,000.00, appears problematic.
During the course of his evidence, the husband indicated that he intended to seek a departure from the child support decision made on 18 July 2005, pursuant to the provisions of section 116 of the Child Support (Assessment) Act 1989, on the basis that the decision did not properly reflect his income earning capacity. Although the husband deposed that he accepted that he had some income earning capacity, he asserted a figure of $65,000.00 per annum was excessive as, when he had been earning this sum at [O], he had consistently been working overtime, which would not now be available to him, regardless of whether or not he was still working at [O].
The prospect of the husband commencing further legal proceedings involving her, fills the wife with dismay. As far as possible, she wishes to conclude all litigation between her and the husband at this stage. However, after some reflection, the wife considered that there was some utility, from her perspective, in the court making a departure order in her favour, ancillary to these proceedings, which would have the affect of fixing a lump sum of child support payable to her by the husband until [Y] should reach the age of eighteen. Such a sum could be quarantined from the husband’s financial entitlements pursuant to these property proceedings which would have the effect of guaranteeing the payment of the child support to her.
As a consequence of these matters, at a late stage in the proceedings, after she had in fact closed her case and was cross-examining the husband, counsel for the wife made an oral application pursuant to section 116(1B) of the Child Support (Assessment) Act 1989 for such a departure order. The wife’s oral application was that for the period between 18 June 2006 and 1 June 2008 (when [Y] attains the age of eighteen) the child support payable by the husband should be fixed in a lump sum of $10,000.00 together with an amount equal to one half of [Y]’s school fees at [S] School.
The husband opposed the making of such an order and argued that he was prejudiced by the wife’s late application, which was not supported by any details in respect of the basis of her calculation of the lump sum involved. In any event, the husband argued that there was no need for such a departure order. As has already been indicated, it is his evidence that he will abide by any future decisions of the Child Support Agency and will utilise whatever funds he receives as a result of these proceedings for that purpose. He asserted that his only grievance in respect of the current assessment was that it did not properly reflect the fact that overtime would not be available to him if he was still employed at [O]. The wife is sceptical about the husband’s evidence in this regard.
The wife commenced these proceedings on 25 March 2004. Accordingly, they have taken more than two years to be finalised. The proceedings have been fixed for final hearing on at least three occasions. Initially, the matter was listed for final hearing on 17 January 2005. It did not proceed on that date.
Later again, the proceedings were fixed for final hearing on 28 and 29 June 2005. These dates coincided with dates scheduled for the husband to sit examinations [omitted]. It was the husband’s evidence that these examinations could not be rescheduled. On his application, the trial date was vacated.
Further difficulties have arisen in that the husband has objected to Federal Magistrate Lindsay hearing the matter and, as a result, Federal Magistrate Lindsay has disqualified himself from hearing the matter. I have not been advised as to the specific basis of the husband’s objection in this regard.
As a result of these delays, the wife has deposed as follows in her affidavit material:
“I have been clearly disadvantaged by the slowness of this legal process that was originally set down for January 2005. [Mr Herbert] has adjourned it on 2 occasions. This has been at no fault of mine.
The Trial was firstly adjourned because Federal Magistrate Mead was cruelly afflicted with hip injuries and I ask that the Commonwealth provide me with $3000 towards my legal costs.”[7]
[7] See wife’s affidavit of evidence filed 19 April 2006 at paragraphs 90-91
I take it that the wife’s application is brought pursuant to section 10 of the Federal Proceedings (Costs) Act 1981, which reads as follows:
“(1)This section applies to the High Court, the Federal Court, the Family Court, the Federal Magistrates Court and a court of a Territory.
(2)Subject to this Act, where any proceedings in a court to which this section applies are rendered abortive by reason that the person, or a person before whom the proceedings are being conducted dies, resigns, or is removed or dismissed from, his or her office, suffers a protracted illness or otherwise becomes unable to continue with, or to give judgment in, the proceedings, the court may, on the application of a party to the proceedings, grant to that party a costs certificate in respect of the proceedings.
(3) Subject to this Act, where:
(a)the hearing of any proceedings in a court to which this section applies is discontinued and a new hearing is ordered; and
(b)the discontinuance and new hearing are not attributable to the neglect, default or improper act of any party to the proceedings;
the court may, on the application of a party to the proceedings, grant to that party a costs certificate in respect of the proceedings.
(4)The certificate that may be granted under subsection (2) or (3) by a court to a party to proceedings that have been rendered abortive or the hearing of which has been discontinued, as the case may be, is a certificate stating that, in the opinion of the court, it would be appropriate for the Attorney-General to authorize a payment under this Act to that party in respect of such part as the Attorney-General considers appropriate of any costs incurred by that party in relation to those proceedings.
(5)A reference to this section to proceedings in a court includes a reference to proceedings by way of an appeal to that court.”
Orders sought
In her case outline filed at the commencement of the hearing before me, Ms Ross indicated that her client sought the following orders:
“1.1 The wife do pay to the husband 30 days from the date of these orders the sum of $42,000.
1.2Contemporaneously with the said payment the husband do transfer to the wife all his interest, right and entitlement to the former matrimonial home at Property B, SA.
1.3The wife do discharge the mortgage over the former matrimonial home and indemnify the husband for all mortgage instalments and other outgoings in relation to the said property.
1.4Immediately upon receipt of the payment under 1.2 of these orders the husband do pay the sum of $10,877 to [S] School being all monies owed by the parties either jointly or severally to the said college as at 5 February 2004.
1.5The parties do each retain the motor vehicles, furniture and effects and other personal property including investments, shares and superannuation entitlements in their respective possession or to which they are entitled, free from any claim hereafter by the other party, subject to 1.6 below.
1.6That there be a splitting order in relation to the wife’s superannuation interest in the [H] Super Fund and that the husband be allocated a base amount of $6,400.”
In his amended response filed 20 May 2005, the husband indicated that he seeks the following orders:
“3.3That there be effected between the parties a settlement of property namely:
3.3.1That the Applicant and the Respondent do all things acts and things and sign all necessary documents in order to effect a sale of the property situate at Property B, [B] in the State of South Australia (called “the former matrimonial home”) and being the whole of the land comprised and described in Certificate of Title Register Book Volume [omitted] and that the net proceeds of sale, after payment of the outgoings referred to in numbered paragraph 3.1.2 below be divided as to 50% to the Applicant and 50% to the Respondent.
3.3.2That the following amounts be deducted from the proceeds of sale before any money is paid to either the Applicant or the Respondent pursuant to these orders:
3.3.2.1The costs, expenses and commission of the real estate agent or agents acting on the sale of the former matrimonial home,
3.3.2.2The costs, fees and disbursements of the conveyancer and or lawyer acting for either party in relation to the sale of the former matrimonial home,
3.3.2.3The whole of the principal and interest outstanding to Adelaide Bank [branch omitted] pursuant to the registered mortgage in respect of the former matrimonial home.
3.3.2.4 Adjustment of water rates and council rates.
3.3.2.5The sum of $10,844.10 outstanding to [S] School.
3.4That the furniture, goods and chattels in the former matrimonial home be divided as to 50% to the Applicant and 50% to the Respondent,
3.5That the respective superannuation interests held by the Applicant and the Respondent be divided as to 50% to the Applicant and 50% to the Respondent and such orders be made as are necessary to give effect to this order,
3.6That the other personal property of the parties be hereafter declared the joint property of each of the Applicant and the Respondent and either be divided 50% to the Applicant and 50% to the Respondent or sold and the net proceeds therefrom divided as set out between the parties,
3.7That the Applicant pay the Respondent the costs of and incidental to these proceedings,
3.8Further or such other orders as this Honourable Court shall deem just and proper in all the circumstances.”
It is common ground between the parties that each of them now accepts that there has been an appropriate adjustment of their personal marital property. Accordingly the husband no longer wishes to proceed with his application in order 3.6 above.
Clearly, if the court makes an order directing the sale of the [B] property by public auction, it will put beyond doubt the market value of the property. In final submissions, counsel for the husband, Mr Morcombe indicated that his client had no great objection whether the property was sold or not. From the wife’s perspective, the sale of the property would constitute a considerable hardship and emotional wrench, as it has been her and the children’s sole home for many years. In opposing any suggestion that the property be sold in order to realise its value, she points to the delay in these proceedings being brought and submits that it would be oppressive to her for the property to be sold at this stage.
The documents relied upon
The wife relies on the following documents:
i)two affidavits sworn by her and filed on 22 December 2004 and 19 April 2006 respectively;
ii)a statement of her financial circumstances filed on 19 April 2006;
iii)an affidavit of her solicitor David Peacock filed on 26 April 2006, to which is attached the valuation report of Mr W in respect of the [B] property.
The husband relied on the following documents:
i)three affidavits of himself filed on 23 April 2004, 2 March 2005 and 29 March 2006 respectively;
ii)a statement of his financial circumstances filed on 24 April 2006.
In addition the husband relied on a valuation report provided by Mr P. Both Mr W and Mr P gave additional oral evidence during the proceedings.
The evidence
The parties themselves and Mr W and Mr P were the only witnesses who gave evidence in these proceedings. The hearing of the case occupied two days, most of which was taken up with evidence from the husband and wife. As a result, I had the opportunity to observe them both in the witness box and form some impression of their respective credibility and temperament.
The parties separated many years ago. Initially it seems that both wished to manage the perplexing financial and parenting issues, which arose as a consequence of their separation, in a co-operative and mutually respectful way without recourse to the legal process. Unfortunately, the intervening years have not seen this spirit of co-operation being continued. Rather the parties’ ability to communicate effectively with one another has broken down to a point where they now can no longer speak to one another. Currently their relationship is one characterised by mutual suspicion and hostility.
In such an environment, it is hardly surprising that the parties have very different views about what was or was not agreed about the management of the ongoing financial matters between them and in particular in respect of the payment of the children’s school fees. One thing the parties share in common is that neither of them has any particular facility in regards to the keeping of financial records. Both agree they regularly discarded bank statements without reading them. Neither has been able to provide any comprehensive financial records, which would put beyond dispute what sums each of them has paid in the past. The husband has not put in a tax return since the end of the financial year in 2001.
As is often the case in proceedings such as these, both the husband and the wife feel hard done by as a result of what has occurred between them since they separated. The husband feels the wife has retained most of the parties’ assets and has been unreasonable in her demands for ongoing financial support from him in his straightened financial circumstances since he moved out of the former matrimonial home. It is his position that he has done his best to provide financial support for the wife, [Y] and [X] but this has not been good enough for the wife.
From the wife’s perspective, she believes the husband has abrogated both his financial and filial responsibilities to the children and left all these responsibilities to her. A belief which has undoubtedly been intensified since the husband elected to resign from his employment at [O]. Currently she regards the husband as selfish and, as a result of the stance he has adopted in these proceedings, both dishonest and manipulative. She believes that he has failed to outline properly his financial circumstances and is determined to prolong the proceedings unnecessarily to cause her the utmost expense and difficulty.
As a result of their respective perceptions of each other, the parties have reconstructed their financial relationship in the long period since their separation through a distorting prism of hostility. In addition, each party has displayed the common tendency to recall his or her own contributions, in this period, with more clarity than each has recalled the contributions of the other.
In these circumstances, and in the absence of comprehensive financial records, it is difficult to determine who of the parties is likely to be the more reliable witness. Generally speaking, I consider both parties to be honest citizens. However, it is my impression that the husband has displayed a cavalier attitude to these proceedings and his sense of feeling aggrieved towards the wife has consequences for the weight which can be given to his evidence, and its objectivity generally. Where there is a conflict between his evidence and that of the wife, I prefer the evidence of the wife. Overall, I consider that the wife is likely to be a more reliable historian than the husband.
In these reasons for judgment, findings of fact are made on the balance of probabilities, following my observations of the witnesses concerned. In what follows, statements of fact constitute findings of fact.
a) Background
Ostensibly the parties agree their various contributions during the marriage itself should be regarded as being essentially equal. However, it is the wife’s position that her financial contributions are substantially superior to those of the husband. It is clear that she was involved in paid employment, as a [omitted], during the vast majority of the parties’ marriage, taking time off only immediately before and after the birth of each of the parties’ children.
The husband is a [omitted] by trade. During the marriage he was engaged in self-employment from time to time, operating various businesses as a [omitted]. He was also a [omitted]. These various endeavours did not generate the same amount of income as the wife’s employment. The husband became a paid employee, when he joined [O] in the mid 1990’s and continued there until July of 2005. As a result of these factors, the wife currently has significantly more superannuation than the husband does.
The parties mutually agreed that their children should have the benefit of a private education. As a result, both [X] and [Y] were enrolled at [S] School from early age. It cannot be said that this was the exclusive choice of the wife alone. However, it is my impression that the wife worked very hard, taking weekend and shift work as a [omitted], during the marriage and after it, to ensure that the children would be able to continue at [S] School. My impression is that the husband was not as committed to the children attending the school as the wife was. Certainly, this has been a major bone of contention between the parties in the period since they separated.
After the parties separated in early 1999, they seemed to have hoped to be able to manage their financial affairs on an ad hoc basis. They continued to maintain a joint bank account, into which their respective salaries were paid and from which major expenses were paid, including the children’s school fees. Responsibility for other recurrent expenses, such as the family’s health insurance and insurance on the former matrimonial home were divided between them.
The wife retained the Hyundai motor vehicle, which she continues to possess. This vehicle had been purchased on favourable terms due to the husband’s employment at [O]. The purchase was financed by a loan from [G] Finance and was registered in the husband’s name. Prior to separation, the arrangement with [O] and [G] was that the required monthly repayment instalments would be deducted from the husband’s wages.
During 1999, relations between the parties became increasingly strained. The wife believes the husband broke into the former matrimonial home and removed items of property without authorisation from her. The husband believes that the division of chattels and household items, at the time the parties separated, unduly favoured the wife. At the present time, given the effluxion of time since they separated, it is now not useful to explore this issue. However, at the time it rankled with the parties and it became apparent to them that they should separate their finances and close the joint bank account. The wife seems to have taken the leading role in this regard.
The parties operated an offset account in respect of the mortgage on the former matrimonial home. In November of 1999, this account had some equity in it. This fund and the parties’ other jointly held savings were divided equally between the parties. Thereafter the wife assumed ongoing responsibilities for the payment of the monies due under the mortgage. On balance, it seems more likely to me that she resumed responsibility for the recurrent payments to [G] in respect of the Hyundai motor vehicle.
It was also agreed that the wife would continue to pay the family’s health insurance. This included Mr Herbert. From the wife’s point of view, the quid pro quo for this payment was that the husband would pay the recurrent household insurance premiums. The difficulty at this point is that, whatever agreement was reached between the parties about the issue, it was not formally memorialised. The parties now have very different views about what was agreed, if anything, between them. Actual financial records are scarce for the period. In addition, relations between the parties continued to deteriorate, culminating in the wife seeking a domestic violence restraining order against the husband in the Magistrates Court of South Australia.
At separation, the parties owed approximately $89,000.00 to the Adelaide Bank in respect of the mortgage on the former matrimonial home. As at 24 April 2006, the balance on the mortgage stood at $84,379.00. The wife has been largely responsible for reducing the mortgage and, certainly since late 1999, has been responsible for paying the required monthly instalments of about $750.00. In January of 2000, the sum of $4,884.00 was owing to [G] in respect of the Hyundai motor vehicle. I accept that the wife continued to pay the monthly repayments of $222.58, until the loan was paid out.
The arrangements in respect of the household insurance and the family’s health insurance has been a bone of contention between the parties. I accept that it was not an act of great financial largess, from the husband’s perspective, for the wife to continue to allow the husband’s name to remain on the family’s health insurance policy. The premiums concerned would have remained more or less the same if he was included or not.
The wife discovered in November of 2003 that the husband had apparently reneged on his agreement to pay the household insurance. It is the husband’s position that he overlooked the necessary payments. I find this difficult to believe. At any event, this episode deepened suspicions and hostility between the parties and the wife retaliated by removing the husband’s name from the health insurance policy.
It is against this difficult and conflicted background that the major issue of dispute between the parties – the arrangement of the payment of the children’s school fees and its inter-relationship with the issue of child support – must be considered.
b) The school fees
It is the wife’s position that, in early 1999, the parties made an agreement that the husband “would pay for the school fees and tuition of [Y] and [X] at [S] School instead of [Mr Herbert] paying me child support for [X] and [Y].” On the other hand, it is the husband’s position that he agreed that he would pay one half of the school fees.
As has already been indicated, there is no formal written record of this agreement. In addition, for all of 1999, the fees were paid from the parties’ joint bank account. In such circumstances, it is difficult to ascertain whether the wife’s perception of the purported agreement was ever actually put into effect.
In addition, it is somewhat misleading to speak of the school fees as being a homogeneous item. In addition to the tuition fees, there are a number of significant payments which must be made for a pupil to continue to attend at the school. The most significant of these is a charge referred to as a “resource fee”. The parties are in dispute as to how these additional charges are now to be taken into account.
The major area of dispute between the parties involve the payment of the school fees for the years 2000, 2001 and 2002. It is common ground between the parties that a sum of about $10,500.00 remains outstanding to the school for this period. It is the wife’s position that this sum in its entirety, together with a sum of about $1,500.00, which relates to 2003, is the sole responsibility of the husband.
The parties are also in significant disagreement as to the involvement of the school’s administration in regards to the purported agreement between them in respect of the payment of the fees. It is the wife’s position that the school clearly understood that Mr Herbert was responsible for all the children’s tuition fees and Mr Herbert did nothing to dissuade them of this fact because, by necessary implication, it was what had been agreed.
On the other hand, it is the husband’s position that Ms Herbert acted unilaterally and certainly without consulting him in regards to the school fees by directing the school to forward accounts directly to him. Now, many years later, in the absence of any evidence from the school itself and in the absence of comprehensive financial records, these are difficult matters to determine.
The wife has provided a schedule of the entire amount of fees levied for [X] and [Y] to attend [S] School between 1999 and 2003.[8] It should be noted that [Y] was withdrawn from [S] School, when he was in Year 6, in 2002 and thereafter he attended a state primary school for 2002 and 2003.
[8] See wife’s affidavit of evidence filed 19 April 2006 at W2
[X] completed Year 12 at [S] School in 2003. [Y] returned to [S] School to start Year 8 at the beginning of 2004. The wife has provided correspondence between her and the business manager of the college which relates to 2004 only. It seems clear that the college’s administration was discomforted at the prospect of [Y] returning to the school when a considerable sum of money in respect of previous school fees remained outstanding.
In 1999, all but $228.25 of the required school fees were paid. This accords with the evidence of the parties that they were operating a joint account and the school fees were paid from it routinely. From there onwards, the record is as follows:
2000
2001
2002
2003
Tuition fees
$ 8,412.00
$ 9,220.00
$ 7,070.00
$ 6,276.00
Resource fees
$ 1,184.00
$ 1,628.00
$ 1,013.00
$ 903.00
Other fees
$ 444.00
$ 377.60
$ 285.00
$ 217.50
Total Fees
$10,040.00
$11,225.60
$ 8,368.00
$ 7,396.50
Cash received
$ 3,790.00
$ 3,600.00
$ 6,600.00
$ 6,000.00
Other credits
$ 806.25
$ 3,227.00
$ 1,391.00[9]
nil
Balance owing
$ 5,672.00[10]
$ 4,398.60
$ 377.00
$ 1,396.50
[9] This fee seems to relate to a refund of fees calculated in respect of [Y] and his withdrawal from the college.
[10] This includes the sum of $228.25 carried over from 1999
The total amount owing in school fees for the period from 1999 to 2003 is $10,844.10. Clearly, the most significant elements of this amount accrued in 2000 and 2001. I have not been provided with a [S] School account for any of the relevant periods. Accordingly, I do not know if the resource fee is included on the regular accounts or not. It is the wife’s position that she paid all the resource fees and the other fees for the years in question. I am unable to resolve this issue. It is however clear that substantial funds of cash were received by the college from time to time.
At a late stage in the proceedings, the husband provided some documentary evidence to indicate his payments of school fees for the years in the relevant period. These indicate that during 2000 he paid $2,790.00; in 2001 $600.00; in 2002 $4,800.00; and in 2003 $6,000.00. I accept this record is not complete.
It is also clear that the wife did not seek an assessment of child support, in respect of either of the children, until December of 2003. This period seems to accord with the time when it was proposed that [Y] would return to [S] School and the question of the arrears of fees became an issue so far as both the parties themselves and the college were concerned.
In these circumstances, I accept that the wife was largely ignorant of the fees situation in the period from 2000 to the end of 2003. Certainly I accept that she did not receive any accounts from the college. However, she was undoubtedly aware that, from the husband’s perspective, he found paying all of the school fees onerous. That is the only explanation for why [Y] was withdrawn from the school in 2002. It is the wife’s position that this withdrawal occurred on the unilateral action of the husband alone.
The husband’s solicitors wrote to the wife’s then solicitor in mid 2000 indicating their client’s unhappiness with any arrangement whereby he paid all the school fees. In response, the wife indicated that she was considering approaching the Child Support Agency for a formal assessment of child support. She also indicated she was being pushed by the college for payment of the fees. Why, at this stage, the wife did not seek an assessment of child support is a mystery to me.
In January of 2004, Mr Herbert wrote to the business manager at [S] School informing him that he (Mr Herbert) had been paying school fees “in lieu of child support”. He went on to inform the college that as Ms Herbert had now applied for child support, he would no longer take “responsibility for any costs incurred at [S] School as a result of [Y]’s attendance. I also withdraw any permission for [Y] to attend the school”.
The wife points to this letter as being an admission on the husband’s part of the existence of an agreement whereby he would pay all the school fees for the children to attend at the school. Thereafter the college seems to have accepted that the arrears of the fees should be regarded as Mr Herbert’s responsibility alone. From 2004 onwards, the college has split the accounts between the parties. The record also shows that for 2003, the husband paid nearly all the school fees for [X]’s last year at the college.
All in all, the skein of evidence of what was or was not agreed between the parties, so far as the payment of the children’s school fees was concerned, is extremely tangled. It cannot be said that the husband has totally abrogated all his responsibilities for the payment of the fees in the period in question. However, in 2000 and 2001, he has not approached a situation where it could be said he has paid anywhere near half of the fees. In contrast, in 2003, he paid nearly all of the tuition fees involved for [X]’s attendance at Year 12.
It is also clear that, from time to time, the husband raised his dissatisfaction at the suggestion he should pay all the fees and invited the wife to bring a child support application. She did not do so. It seems to me that, in the acrimonious circumstances which prevailed between the parties, their lines of communication, including those which passed through their respective solicitors, became hopelessly tangled.
In such circumstances, I believe that it would be imprudent of me to conclude that there was a settled agreement that the husband would pay all the children’s school fees in lieu of child support. In my view, the most equitable outcome is to regard the amount of $10,844.10 outstanding to [S] School as being a joint marital debt.
At the second stage of the court’s deliberation, it will be necessary to assess the parties’ various financial contributions in the period between separation and now, including the greater financial burden which fell upon the wife as a result of her failure not to seek child support from the husband until December of 2003 and, in general terms, the amounts each have paid to the college by way of payment of fees. I am satisfied that both parties have made significant payment to the college, over time, in respect of those fees.
c) Child support issues
The wife first applied for child support in December of 2003. In May of 2004, she applied for a departure from the administrative assessment which had been made, on the basis of the extra costs involved in [Y] attending [S] School. Mr Herbert had earlier been assessed to pay child support on the basis of an income of $58,000.00 per annum, which had resulted in a monthly payment of child support by him of $416.83.
Ms Herbert was successful in her departure application and for the period from 1 January 2004 to 31 December 2004, Mr Herbert’s rate of child support was increased by $294.00 per month.
In October of 2004, the wife again applied for a departure from the relevant child support assessment. Ms Herbert applied for the change on the basis of the costs of [Y]’s education and also some orthodontic treatment he was required to undergo. In addition, Ms Herbert asserted that the assessment was not based on Mr Herbert’s actual income. Again Ms Herbert was successful in her application and the assessment was changed so that for the period from 1 November 2004 to 31 December 2005 Mr Herbert’s child support income was set at $67,650.00.
Most recently, in May of 2005, both parties lodged departure applications. Both sought to argue that the assessment did not reflect Mr Herbert’s proper child support income. In addition, Ms Herbert once again sought a departure on the basis of the costs involved in [Y]’s private school education. The husband was unsuccessful in his application. The wife was successful in her application.
The review officer concerned wrote as follows in her decision dated 18 July 2005:
“In determining a parent’s capacity to pay child support I am not limited to a consideration of taxable income. I can also take into account a parent’s earning capacity, financial resources and property. I do not consider that Mr Herbert is utilising his earning capacity by returning to study. I consider that he has an earning capacity equivalent to the income he earned from a full year of employment. His last full year of employment was in the 2003/04 financial year and his gross earnings were $65,806. From 1 January 2006 he is assessed on a deemed income of $60,175. As his earning capacity is significantly higher than this amount, I am satisfied that the assessment result in an unjust and inequitable level of child support.”
By the time of this decision, Mr Herbert had resigned from his employment at [O] and had confirmed his decision to undertake fulltime tertiary studies in [omitted]. The case officer concerned did not consider that, in these circumstances, Mr Herbert was fully utilising his income earning capacity and accordingly set his child support income at an amount of $65,000.00 for the period from 1 January 2006 until 17 June 2006. This assessment continues to be in force, although the husband has indicated his decision to challenge it in court proceedings. A sum of $5,760.00 is owing by the husband in respect of arrears pursuant to this determination.
d) The parties’ current financial situations
The wife’s current salary is about $68,000.00 per annum. From this sum she has arranged a “salary sacrifice” with her employer.
Ms Herbert’s employer pays about $330.00 per fortnight in respect of the mortgage on the former matrimonial home and pays the family’s health insurance. The total amount of the salary sacrifice is $8,999.00, which is included in the wife’s remuneration. The salary sacrifice arrangement saves the wife some income tax.
In the past the wife’s income has been higher. Because of her profession, she has been able to work for up to three employers at a time. She has done [occupation omitted] and has worked nights and on weekends to attract higher wages. Her main motivation for this seems to be so that the children may be supported and their school fees paid. She is now working a more conventional Monday to Friday schedule in a [omitted] position. This is so that she will be available to [Y] after school and on weekends. I do not believe that this can be regarded as unreasonable.
[X] lives with the wife. He is in the third year of a four year course in [omitted] at the [university omitted]. He has a part-time job earning about $220.00 per week. He does not directly pay board, although he does pay for the cable television, which he watches. I accept that he is far from being self-supporting and, as a result, a large proportion of his financial support falls on the wife. This is a situation which is unlikely to change until the end of 2007 at the earliest.
In March of 2004 the wife had accumulated savings of about $30,000.00. I accept that this sum was saved by her, after the parties separated, by dint of the wife’s hard work and frugality. The wife wished to have a nest egg to protect her from the exigencies of life. This sum has now largely been consumed, mostly in payment of [Y]’s school fees in 2004 and 2005 ($8,000.00). She has also had a tax bill of $4,000.00; paid car repairs of $4,000.00; and paid $2,200.00 for orthodontic treatment for [Y]. The wife estimates that her legal expenses in these proceedings will be about $8,000.00.
In contrast the husband is being represented [relationships omitted], both solicitors and does not pay them any professional fees. He is however liable for counsel’s fees for the hearing before me.
The wife concedes that the former matrimonial home is in a poor state of repair. It is in need of painting. The garden needs attention. More importantly, the roof is leaking and the gutters are not working. This has led to some water damage in the house itself. I do not consider that these things are as a result of any wilful negligence or waste on the wife’s part. Rather I accept that she has not had sufficient funds to make the repairs or the necessary skills to do them herself. The husband has not volunteered any assistance, either directly or financially, in this regard.
The husband has not put in a tax return since 2001. He attributes this to his “slackness”. This may be so but I am concerned that, in part at least, he believes it will be to his advantage to maintain some opacity about his financial circumstances, so far as the wife is concerned. I also have little doubt that the husband has felt resentful about the level of financial support the wife expected him to provided for the children, particularly so far as school fees were concerned. However, I have no difficulty in concluding that the parties jointly agreed that [X] and [Y] would attend [S] School from an early stage in their development. In such circumstances, it is not reasonable for the husband to abrogate responsibility for those fees.
[Y]’s school fees for 2004 and 2005, including the additional fixed charges were approximately $7,400.00 per annum. The fees for 2006 – 2008 are likely to be slightly higher. In order to ensure that [Y] could be re-enrolled in the college at the start of 2004, Ms Herbert reached an accommodation with it that she would pay [Y]’s school fees at the rate of $663.91 per month. As has already been indicated, the relevant assessment of child support from 1 January 2004 onwards reflects that the husband has a liability to contribute towards the cost of these fees.
Mr Herbert worked for [O] for nine and a half years. He was a [occupation omitted] at [O]. He worked as a [omitted]. I am satisfied that in the past two or three years of his employment at [O] he earned a sum in the mid $60k’s. In 2002 and 2003, I accept that the husband paid a substantial amount of the school fees at [S] School. These fees related to [X] only. It remains a considerable source of bitterness to the wife that [Y] was withdrawn from the school in 2002. On balance, it seems more likely than not that this was done as a result of the unilateral action of the husband alone. This reinforces my view that the husband has been resentful about the level of financial support expected from him by the wife.
The husband resigned from his employment at [O] in June of 2005. The reason the husband gives for his resignation is that he “saw the writing on the wall”, so far as his future employment at [O] was concerned. He asserts that [details of occupation omitted]. Mr Herbert deposed that these were matters that were reported in the media and were well known around the [omitted] at which he worked. However, apart from his own oral evidence in this regard, he produced no other evidence.
Mr Herbert conceded that he was not asked by [O] to leave. He also confirms that [O] had not formally announced any intention to retrench any portion of its workforce and there had been no formal offer of redundancies. Mr Herbert also conceded that, if he had remained at [O] and hypothetically at some stage in the future the company had terminated his employment, in all likelihood he would have been entitled to a redundancy payment.
Mr Herbert began to study [omitted] at the beginning of 2005. Initially he took sick leave from [O] and then took long service leave. By June of 2005, he had consumed all his accumulated leave and other entitlements. These amounted to at least $9,000.00. However, during the period, he also continued to pay child support. His arrears have accumulated only in the period since his resignation.
It is the husband’s evidence that he reached the view that it was better for him to re-train sooner rather than later, given his age. He concedes that it might have been possible for him to have another three or four years employment at [O] and then have had the opportunity to negotiate a considerable redundancy payment. However, he asserts that it would have been considerably more difficult for him to undertake a course of study at the age of 52 or 53. Needless to say the wife is highly sceptical about the husband’s evidence in this regard.
The reasons the husband gives for leaving [O] are not particularly compelling and are not independently corroborated. I can understand why the husband would feel insecure in the [omitted] industry and why he would want to obtain tertiary qualifications to provide for his long term financial security. However, in the short term, his resignation from [O] was not particularly financially astute and has come at the cost of [Y]’s financial security. From [Y]’s point of view, it would have been better if Mr Herbert had worked for as long as possible, certainly until [Y] had completed his secondary education or until Mr Herbert had the opportunity to negotiate some form of redundancy package.
At the present time Mr Herbert has no significant savings. It is his position that he has borrowed a sum of approximately $13,000.00 from his girlfriend, Ms F, largely to pay school fees. He is currently living in rented accommodation at a cost of $110.00 per week. His major source of income is an Austudy allowance of $167.00 per week. In the past he has worked as a casual [omitted]. He was earning approximately $16.00 per hour and working on average 6 to 7 hours per week. He ceased this employment when his accumulated earnings reached $6,000.00, the point at which Centrelink would begin reducing his level of benefits.
At the present time Mr Herbert is engaged in fulltime study. He attends approximately 15 hours of lectures and tutorials per week. He is progressing satisfactorily in his studies but finds them intellectually challenging. He concedes that, if he receives a lump sum from the wife as a result of these proceedings, it is likely that his Austudy benefits will be terminated. In such circumstances, he deposed that he would have no alternative but to seek some form of employment. As has already been indicated, it is the husband’s position that he will pay the arrears of child support, which he currently owes, together with his on-going liability for child support from the monies he receives from these proceedings.
e) Valuation issues
Mr W has been a licensed valuer since 1970. Mr P has been a licensed valuer for “over thirty years”. Both witnesses hold equivalent qualifications as valuers pursuant to the South Australian Valuers Act. Both are members of the Australian Property Institute.
Mr W has a background in valuing rural properties but for the last 11 years his practice has also included a significant emphasis in valuing residential property in the Adelaide metropolitan area. Mr P’s practice has been largely based in Adelaide throughout his career. In completing their respective valuations in this matter, both Mr W and Mr P had access to a number of comparable sales. Mr W used four sales, which occurred between September 2005 and February 2006. Mr P used four different sales again, which also occurred between September 2005 and February 2006.
It was regrettable that the parties were unable to agree on a common valuer for the former matrimonial home and the issue of valuation was left until the last minute. Mr W conducted his valuation on 18 April 2006. Mr P his on 20 April 2006. The witnesses were able to exchange their valuations and confer about their respective opinions by telephone on 25 April 2006. Prior to this conference, Mr W believed the former matrimonial home was worth $225,000.00 and Mr P believed it was worth $290,000.00. After their conference, Mr W revised his valuation to $250,000.00 and Mr P revised his to $270,000.00.
The property at Property B, [B] consists of [omitted]. Some additions and renovations have been done to the property at some time in the 1970’s or 1980’s. The valuers agreed the property is currently in a poor state of repair and any potential prudent purchaser would factor into his or her deliberations regarding a reasonable price to pay for it, the cost of the necessary repairs to bring the property up to a reasonable standard.
It is the likely cost of those repairs, which is the main bone of contention between Mr W and Mr P. Mr W believes that a sum of between $60,000.00 and $100,000.00 is required to bring the property up to a standard where it could easily be sold. On the other hand,
Mr P believes that a sum of between $22,000.00 and $25,000.00 is required in this regard. However it is important to note that neither valuer is a qualified building inspector, quantity surveyor, engineer or builder. Though both undoubtedly have extensive experience in inspecting residential property, including those which need renovations or repairs.
In addition, the witnesses disagree as to the likely appeal to prospective purchasers of the “renovation potential” of the property. [B] is a suburb [location omitted]. In the past it has been an industrial area. Currently it is experiencing what Mr P describes as a “rejuvenation” in which “older period properties are becoming increasingly sought after.” In Mr P’s view, although the property concerned is in poor repair, its original features and its location still make it a desirable property. Mr W is not so sanguine in this regard.
Mr W deposed that he took “a very hard view” about the likely fair market value of the property because of its poor condition. He was concerned because he had been told by the wife that the property had its original electric wiring; the gutters were leaking; and the internal walls exhibited signs of water damage. He was further concerned that the property’s roof might need replacing. He also considered that a prudent purchaser would most likely take the view that there were likely to be hidden expenses involved in any renovations required on the property and this would lead to such a purchaser taking a conservative view in regards to its value.
These factors led Mr W to take a prudent view of the value of the property. He was concerned that renovations to the extent proposed by Mr P would be “window dressing”. The valuers also disagreed as to the appeal of the more recently completed additions to the property. It being Mr W’s view that the type of purchaser likely to be interested in the [B] property would not find renovations from the 70’s or early 80’s particularly appealing.
Mr P agreed that the [B] property needed “some money spent on it”. He emphasised the period appeal of the property and the fact that it retained its original 19th century character. Both valuers agreed that it was unlikely that a prospective purchaser would wish to purchase the property for its land value alone. Mr P emphasised the appeal the property would have to a purchaser who wished to renovate a period cottage in the area. He was also of the view that the renovations done in the 1970’s or 80’s were unlikely to impact negatively upon a purchaser’s desire to acquire the property.
The witnesses agreed that the most relevant comparable sale was that of a property located at [omitted]. This sale occurred on 6 February 2006 and resulted in a sale price of $323,000.00. The property concerned was described as an “upgraded villa” on approximately 534 square metres of land. The property concerned in this case is on 470 square metres. Neither valuer inspected the interior of this property but both anticipated from its external appearance that it was likely to have been fully renovated inside. Given his view in regards to the likely renovations on this property, considerations of the comparison did not cause Mr W to change his opinion.
In his evidence, Mr Herbert deposed that it was untrue that the property concerned still had its original wiring. He indicated that prior to the parties’ separation he had had cause to inspect some of the wiring in the roof and believed that it had been replaced when the property was renovated. Further, it was his understanding that the roof of the property had been replaced prior to he and the wife purchasing it in 1994. The import of this evidence was that it was likely that Mr W had taken an unduly pessimistic view the value of the property, which structurally was in better condition than its external aspect indicated.
The difficulty in this case can be easily expressed. The valuers concerned each have extensive and similar experience. In my estimation they are both persons of integrity, who have properly gone about the process of valuing the property concerned. They have essentially adopted the same methodology in regards to the process of valuation. Both visited the property and viewed recent comparable sales.
Valuation is as much an art as a science. The valuation of items that have intrinsic characteristics is often a particularly difficult task. 19th century cottages are not necessarily a homogeneous category. It is necessarily difficult to value “character and charm” and “renovation potential”. Clearly, in the case of the [B] property, prospective purchasers are likely to have a different view as to the value of the more recently completed renovations. Obviously an infallible means of ascertaining the current market value of the property would be to place it on the market and see what price it commands.
This was the approach approved by the Full Court in Smith & Smith[11], where the court said as follows:
“…where the state of the evidence makes the process of valuation hazardous or uncertain, or where there are wide differences between legitimate valuations because of a volatile market or peculiarities relating to the specific property or otherwise, the ascertainment of value by judicial process may become too uncertain and the preferable course is to order the sale of the property so that its real value can be revealed by market forces.”
[11] Smith & Smith (1991) FLC 92-261 at 78,759
In this particular case, the husband does not seek a transfer of the property to him and has no objection to its sale. On the other hand, the wife seeks to retain the property. She has lived in the property, with the parties’ children, since the parties separated. Neither party has provided any evidence as to the probable costs involved in the realisation of the property.
In all these circumstances, I am concerned that to order the sale of the property, at this stage, would not be a just and equitable outcome. In my view, it is a significant matter that the husband chose not to pursue any application for a division of the parties’ marital assets, particularly the sale of the property concerned, for so many years.
Accordingly a court ordered sale would not be a proper means, in my view, to resolve the valuation issue. The High Court outlined the approach to be taken to resolve such valuation disputes in Commonwealth v Milledge[12] when it said as follows:
“…by a common sense endeavour, after consideration of all the material before the court to fix a sum satisfactory to the mind of the court as representing the value contained in the land…”
[12] Commonwealth v Milledge (1953) 90CLR 157
Approaching what I believe to be such a common sense approach, I have determined to accept Mr W’s valuation. The evidence of both valuers is that the subject property is problematic. It is in a poor state of repair. Its current defects, in the form of the broken gutters; rotted facia timbers; and water damage; are obvious, even to the lay observer. It is not a property with immediate appeal like [omitted].
Both Mr W and Mr P believe the costs of the repairs required to be done to the property need to be taken into account in its current valuation. Neither has the proper expertise to provide and estimate of the expenses likely to be involved in those renovations. In both their cases, it is a matter of conjecture.
In all these circumstances, in my view, it is appropriate for the court to take a conservative or cautious approach to the issue of the value of the property in this case. This is the approach which I find to be satisfactory in this case and leads me to prefer Mr W’s valuation. I also note that although he took a “hard line” about the property because of its poor state of appearance and repaid, Mr W was prepared to revise his valuation upwards after considerations regarding the existing period feature of the property.
The next valuation issue concerns the proper value to be given to the parties’ respective motor vehicles. These are a 1989 model Nissan Pulsar (the husband’s car) and a 1996 model Hyundai Coupe (the wife’s car). The husband asserts the Nissan is worth $1,200.00 and the Hyundai is worth $6,000.00. The mother asserts the Nissan is worth $5,000.00 and the Hyundai to be worth $3,000.00.
The difficulty is that neither party has provided an expert valuation in respect of either of these specific cars. The wife has no expertise in motor cars. As recently as March of 2004, she valued her vehicle at $9,000.00.[13] Since that time, she asserts the vehicle has had mechanical problems and been in a number of minor accidents, factors which have considerably reduced its value.
[13] See wife’s statement of financial circumstances filed 25 March 2004
The husband has provided “Red Book” values, from the internet, as the basis of his proposed valuations. The difficulty with these valuations is that they are generic and do not allow for any specific qualities the vehicles in question may or may not have. The Red Book gives a range of sale prices, depending on the circumstances of the sale. For example, in respect of the Nissan, the average for a private sale is said to be between $1,200.00 and $2,700.00. In regards to the Hyundai the trade-in price is said to be between $4,700.00 and $6,100.00 and the private sale price between $6,200.00 and $8,400.00.
In E & E[14] Roberts FM accepted such a Red Book value on the basis that it was the only evidence available in respect of the motor vehicles involved in the case. In the present case, Mr Morcombe urges me to accept these values on the basis that they are the best evidence available. In other cases, the court has adopted the process approved in Smith & Smith[15] and ordered the sale of the vehicles in question.
[14] E & E [2005] FMCAfam 204
[15] Smith & Smith (supra)
Neither party asks that I adopt this latter approach in respect of either the Hyundai or Nissan motor vehicles. As a result, no evidence has been provided as to the likely costs of such a sale and whether it would be likely to produce the best possible price. I suspect that this may not be the case, if the vehicles were sold at auction.
Pursuant to section 42 of the Federal Magistrates Court Act 2000 the court is directed to proceed without undue formality and must endeavour to ensure that the proceedings before it are not protracted. Neither party in this case has seen fit to provide an expert valuation in respect of either of the motor vehicles in question. The vehicles have been in the possession of their respective “owners” for many years and neither party seeks an order for sale. In any event such a sale is likely to be impractical. In such circumstances and given the ethos which the court is directed to have, it seems to me that the “Red Book” valuation provides the best and most pragmatic way of valuing these vehicles. I propose to adopt it.
The first step – the pool of assets
Having resolved the valuation issues, the parties’ pool of assets and liabilities can now be formally delineated. The parties agree on the value of their other major assets - their respective superannuation interests.
Given the very significant value of the superannuation assets and the dispute between the parties as to the manner in which their respective contributions to these various funds should be assessed, it is appropriate that the parties’ entitlement to superannuation should be placed in a separate pool to their other assets in accordance with the principles laid down by the Full Court in C v C.[16]
[16] C v C (2005) FLC 93-220
Sub-section (a) - Mr Herbert is 48 years old. He is in good health. Ms Herbert is 45 years of age, she is also in good health. These are not significant matters in this case.
Sub-section (b) - Both parties are intelligent and resourceful people. Currently the wife holds a responsible [omitted] position at [omitted]. She earns approximately $68,000.00 per annum and has the benefit of some level of “salary sacrifice” open to her. In the past, she has been able to earn a higher salary but only by virtue of doing [occupation omitted], involving shift and penalty rates. In all the circumstances of this case, I do not think that it can be said that she is not currently utilising her income earning capacity to its full extent.
The husband is a skilled tradesman. For nearly ten years he was employed as a [omitted] by [O]. In this capacity, he had an ability to earn a salary comparable to the wife’s present salary, in the low to mid $60k’s. He has voluntarily decided to forego this means of financial support. I also consider it likely that Mr Herbert would have been able to work at [O] for at least a few more years. In addition, if at some point in the future, [O] had considered his retrenchment, it is likely that Mr Herbert would have been entitled to a significant redundancy payment. Again, this is another financial benefit which Mr Herbert has foregone. I accept that Mr Herbert may not have found working at [O] particularly fulfilling. However, in his evidence, he did concede that, most likely, he would have been able to put up with it for at least a few more years.
The main thrust of Mr Herbert’s case is that he was part of an industry – [omitted] – which is becoming increasingly uncompetitive in this country and, as such, he was part of an industry in inevitable decline. In such circumstances, he argues that it was better for him to retrain sooner, rather than later, so that he might more easily rejoin the workforce in his early rather than late fifties.
I concede that there is considerable validity to the husband’s argument. However, I am also struck by the coincidence of his unilateral decision with the acrimonious circumstances of the parties and his dissatisfaction with the level of financial support, which the wife required him to provide. The husband’s decision to pursue tertiary studies until 2008 has implications not only for him, in terms of his reduced standard of living, but also for the wife, who is not in a position to abrogate her financial responsibilities to the parties’ children, particularly [Y]. As a result, she will only bear the short term burden of the husband’s decision to study and is unlikely to share in any of its long term benefits.
In all these circumstances, it is difficult to give much weight to the husband’s argument that he is entitled to some considerable credit because of the current discrepancy in the parties’ level of income. For the reasons provided, I accept that the discrepancy has come about, solely as a result of decisions the husband has made, independently of the wife. His employment at [O] may have been precarious in the long term but the husband alone decided to bring that employment to an end, at a considerable financial price to himself directly and so indirectly to the wife and children. In my view, it would not be an equitable outcome if the husband could turn this state of affairs to his advantage.
I am satisfied that the under utilisation of a party’s income earning capacity is a matter that can be taken into account in proceedings such as these. The Full Court has said as follows:
“In property proceedings, the Act empowers the court to make “such orders as it considers appropriate”. A party’s capacity to earn income is clearly relevant to that question. It is open to a court to give weight to the ability of a party to earn income especially where the opportunity clearly exists to utilise that ability. Whether it is or is not appropriate to require a party to work particular hours or work in a particular occupation is a question peculiarly within the province of a trial judge and needs to be measured on a case by case basis.”[24]
[24] See DJM v JLM (1998) FLC 92-816 at 85,272-3
In this case, on the evidence before me, I am satisfied that the husband could have continued to work at [O], up until the present time. I have not been provided with any evidence that the retrenchments which the husband believed to be imminent have recently occurred or are expected to occur in the near future. Given the high level of financial need, which [Y] presently has, it was not reasonably open to the husband to forego his assured but possibly uncongenial employment, whilst it was open to him. Certainly, it is not now open to turn this circumstance to his advantage.
Sub-section (c) - The wife presently has responsibility for the care of the parties’ child [Y], who is aged almost sixteen. He has at least two years of secondary education before him. He is attending a private school. Given his age and the level of his education, it seems likely that [Y] is presently passing through the years during which the cost of financially supporting him will be at its maximum.
Although I accept that the wife’s responsibilities for [Y] in this regard are unlikely to curtail her income earning capacity in future, her responsibilities for [Y] will remain a considerable drain on her resources for the next few years. I accept that both parties had an expectation that [Y] would be privately educated. In the acrimonious circumstances that prevailed between the parties in 2002, when [Y] was withdrawn from [S] School, to some extent, it seems that Mr Herbert resiled from this intention. However [Y] has been subsequently re-enrolled at the school and the husband has not sought to argue that this was as a result of a decision of the wife alone. I am satisfied that, at the very least, he has given his tacit consent to the re-enrolment. In such circumstances, I accept that he has some obligation to assist with the necessary school fees.[25]
[25] See Paradine & Paradine (1981) FLC 91-056 at 75,457
In my view, the factors which fall for consideration under this heading, particularly when combined with those falling under sub-section (na), are matters which clearly favour the wife.
Sub-section (d) - In my view, it would be open to the wife to bring an application for adult child maintenance for [X], pursuant to the provisions of section 66L of the Act. I am satisfied that the provision of ongoing financial support by the wife is required to enable [X] to complete his tertiary education. In this sense, the wife has both a moral and a legal duty to support [X], as does the husband. However, at the present time, that duty is being fulfilled only by the wife. Accordingly, the matters for consideration under this heading favour the wife.
Sub-section (e) - Neither party has any legal responsibility to support any other person apart from the children of the marriage.
Sub-section (f) - The wife is currently entitled to a modest family tax benefit. Due to his decision to leave the paid work force and commence tertiary studies, the husband is presently entitled to an Austudy allowance. If he subsequently receives a payment of cash, in settlement of these proceedings, it is likely that his entitlement to this allowance will be reviewed.
At the present time, the wife is much better prepared for retirement than the husband, due to her superior superannuation. However, both parties have ample time to make provision for their retirement. In particular, if the husband is successful in his efforts to become legally qualified, it is likely that he will be able to obtain secure and well remunerated employment in future. However, as has previously been indicated, when the husband has become so qualified, it will be most likely after [Y] has completed his secondary education and [X] has become largely self supporting. Otherwise, I do not think the matters which fall for consideration under this subheading are strongly relevant in this case.
Sub-section (g) – It is the usual corollary of the end of a long marriage that the parties to it suffer some measure of financial hardship. Two families cannot live as cheaply as one. The husband has had to move into rented accommodation. The wife has struggled to maintain the former family home and has not been able to allocate to it sufficient funds to keep it properly maintained. Both parties have struggled to ensure that their children are able to complete their private school education. From the wife’s point of view at least, this latter matter is an indispensable part of the family’s standard of living.
For understandable reasons, the wife wishes to continue to live in the former family home, which has been her home and the children’s home for many years. I have not been provided with any evidence as to the wife’s current ability to borrow against the security available in the property. At the same time, the husband has need of some supplies of cash to support himself and discharge his financial obligations towards [Y], whilst he is engaged in tertiary studies. He did not depose as to any aspirations he has to purchase accommodation for himself in future.
It is, I think, not unreasonable for the wife to aspire to [Y] completing his education at [S] School. As I have already indicated, from the wife’s point of view, this is an indispensable aspect of her standard of living. I take all these matters into consideration in the case.
Sub-section (h), (ha) & (j) - These sub-sections are not specifically relevant in this case.
Sub-section (k) – I do not think that the length of the parties’ marriage in this case can be said to have affected the earning capacity of either party.
Sub-section (l) – This subsection is directed towards the financial consequences of one party continuing in his or her role as a parent. To her great credit, Ms Herbert has been able to combine the responsibilities of being a parent with being a wage earner. Accordingly, I do not think that the matters for consideration under this sub heading are strongly relevant.
Sub-section (m) – Neither party is currently co-habiting with another person.
Sub-section (n) – As I have already indicated, it is a significant matter that a large proportion of the parties’ property, available to be divided between them, is in superannuation and, accordingly, its release to the parties is contingent on some future event. For obvious reasons, the wife wishes to minimise the amount of money she is required to pay to the husband to secure his interest in the former family home and so minimise the amount she must borrow.
Similarly, the husband wishes to maximise the amount he will receive, as he currently has a pressing need for cash. I take these matters into account. It will be necessary for me to determine what is the just and equitable outcome in regards to the disposition of the parties’ assets, in the next stage of the process.
Sub-section (na) – The matters for consideration under this subheading are most significant in this case. It is the wife’s position that the future payment of child support to her by the husband is likely to be problematic and fraught with difficulties. As a result, a greater financial burden will most likely fall on her shoulders, which will be exacerbated by the fact that she will have to pay [Y]’s school fees. In this regard, she points to the fact that the husband is currently in arrears in respect of his obligations to pay child support.
On the other hand, the husband asserts that there is no evidence, from which it can be concluded, that he will attempt to evade his proper liability to pay child support. In particular, if and when he does receive a sum of money in settlement of these proceedings, the current assessment of child support, which is based on his past level of earnings and is inclusive of a liability to pay school fees, will be met, either voluntary by himself or forcibly by the agency itself. Accordingly, he argues that if some great store is placed by the court on the matters for consideration under this subsection, it has the potential to work an injustice on him as the wife will have “double dipped”.
In “Clauson & Clauson”[26] the Full Court said as follows:
“The weight to be attached to a child support assessment will vary with the circumstances of each case, including the amount of the assessment, the financial circumstances of the parties, the needs of the children, whether the assessment is being paid regularly, and whether it is likely that it will continue to be paid at a regular and adequate rate in the future.”
[26] Clauson & Clauson (1995) FLC92-595 at 81,911
In the present case, due to his decision to cease employment at [O], a decision which the review officer concerned believed could not be justified pursuant to a proper reading of the relevant provisions of the Child Support (Assessment) Act, Mr Herbert’s level of child support is fixed at a level which he cannot possibly meet from his recurrent income, unless he ceases his tertiary studies and re-enters the workforce. I consider it unlikely that Mr Herbert will choose to follow such a course. In my view, rightly or wrongly, he is determined to complete his legal studies.
Because of the expense involved in his private school education, approximately $17,000 in total for 2007 and 2008,[27] [Y]’s financial needs are likely to be at their greatest, whilst Mr Herbert is least well placed to supply them because of his own tertiary studies and diminished income.
[27] See exhibit W3
It is true that Mr Herbert will receive at least some cash in exchange for his transfer to the wife of his interest in the former family home and this could be quarantined by him to satisfy future child support assessments. The husband has deposed as to his willingness to meet future child support assessments, when he is in funds. However, in my view, the likelihood of whether or not the husband will choose to follow such a course must be judged against his conduct to the present time.
In my view, to a large extent, the husband has shown himself to be resistant to providing financial support for the children and has demonstrated a propensity to put his own financial needs before those of the children. In such circumstances, I do not think that it can be guaranteed that it is likely that the husband will continue to pay child support at a regular and adequate rate in the future, particularly whilst he is not a regular member of the paid workforce.
In all these circumstances, I consider that the matters which fall for consideration under this subsection strongly favour the wife. In all the circumstances, I think it likely that the husband will not meet his proper future responsibilities to pay child support until [Y] turns 18 years of age.
Sub-section (o) & (p) - I do not consider that these subsections are relevant.
Conclusions on Section 75(2) factors
After having considered the various section 75(2) factors, it seems to me that the most significant considerations for the court, under the section’s ambit, are the fact that the wife will have primary financial responsibility for supporting the parties’ two children, particularly [Y] but, due to his decision to leave his employment at [O], this heavy financial responsibility will fall primarily on the wife’s shoulders. In all the circumstances, I am satisfied that these various matters strongly favour the wife and a further distribution of 7.5% of the parties’ net assets, should be made in her favour at this stage of the proceedings.
Section 79(2) - Is this a just and equitable outcome?
The final step in determining property matters is to stand back and consider whether the proposed result is just and equitable. In this particular case, in order to ensure that the outcome is just and equitable, it is not open to the court to consider what the outcome should be merely in percentage terms. It is necessary for the court to consider the actual effect of the orders that will be made. This is of particular significance in a case such as this one, where a large amount of the property available to be distributed between the parties is in the form of superannuation and both parties would prefer to minimise the extent of the superannuation they ultimately either receive or retain.
In any event, it is all very well to talk in percentage terms as far as orders are concerned, but what matters to the parties is what the orders mean in dollars and cents and what effect they have on their long term aspirations. In cases, such as this one, where the pool of actual assets is small and so outweighed by the financial needs of the parties, the effect of orders becomes more critical.
65% of the parties’ total nett assets (including superannuation) is represented by the sum of $194,366.83 and 35% by the sum of $104,659.07. The husband has in his possession assets to the value of $35,850.00 in the form of his motor vehicle and superannuation. This means that the wife must transfer to him property to the value of $68,809.07 to effect a 65/35% division of property.
The next question concerns the composition of this sum – what component should be represented by cash and what by a split from the wife’s superannuation. These were issues that were considered by Moore J in Levick and Levick.[28] In that case, Her Honour considered that the relevant factors that should apply to a determination as to what percentage of the actual assets and what percentage of the superannuation each respective party to a marriage should receive were as follows:
·the purchase price of appropriate accommodation and re-housing costs for both parties;
·the need for a financial buffer for ordinary exigencies of independent living;
·the current level of the parties’ superannuation;
·the probability that the wife would be able to acquire appropriate superannuation benefits from her own future income;
·the husband’s substantial earning capacity and ability to borrow significant sums at favourable rates (from his employer).
[28] Levick and Levick unreported decision of Moore J delivered 31 January 2003
Mr Herbert is a student. For the time being he has no pressing need to purchase accommodation for himself. He does however have some need for cash to fund his living expenses in the next two to three years. He also has not inconsiderable liabilities in respect of arrears of child support and his share of the outstanding school fees.
As has previously been noted, the wife is currently much better placed than the husband so far as retirement income is concerned. In addition, the wife also needs some buffer to protect herself from unforeseen circumstances. It would be inappropriate that she be forced to borrow all the monies required to acquire the husband’s interest in the former family home.
Considerations of these matters dictate that the husband should receive a considerable portion of his entitlements by way of a superannuation split. I propose making a split of $34,000.00 from the wife’s [H] superannuation fund and ordering her to pay the husband a further sum of $35,000.00, within 60 days of today’s date, in consideration of the transfer to her of the husband’s interest in the [B] property.
I will also direct that the parties pay the outstanding [S] School fees in the sum of $10,844.10 at this time and, to this end, the wife is authorised to deduct 50% of this sum ($5,422.05) from the monies she is due then to pay the husband.
Taking into account the arrears of child support, which the husband owes and which are continuing to accrue, this leaves the husband with the modest amount of less than $24,000.00 available to him now in cash. He also has some liability in respect of his counsel’s fees.
The wife leaves the marriage with her home, likely to be subject to a mortgage in a range of between $120,000.00 and $135,000.00, depending on how she chooses to pay her share of arrears of school fees and her legal costs. She has no other immediate assets of any significant value. The payment of the mortgage will be a significant burden for her for many years to come. She does however have security of accommodation for herself and [X] and [Y] and a significant amount of capital in the property.
The superannuation split order I propose will leave the parties with a roughly equivalent amount of superannuation. Both will have the opportunity to replenish this superannuation in the remaining years of their working careers.
Clearly neither party is left in a strong financial position as a result of these proceedings. The most significant difference between the parties at present is that the wife has a substantial, reliable income earning capacity, which she is willing to utilise. Whereas the husband has elected to hold his income earning capacity in abeyance until mid 2008. That is his choice alone. He asserts that in the longer term, he will be able to acquire skills which will safeguard his financial future. He is apparently prepared to live in a state of comparative poverty whilst he acquires those skills. All things considered, I am satisfied that the result I propose is a just and equitable one.
Other matters
I do not think it is appropriate for the court to accede to the wife’s orally made application for a departure order pursuant to the provisions of the Child Support (Assessment) Act 1989. The application was made at an extremely late stage in the proceedings and was not properly pleaded. The husband had no notice of it.
Almost as a “throw away” comment, the husband indicated that he proposed bringing his own departure application. Precisely what form that application will take and indeed what future assessments of child support will be, whilst Mr Herbert is not fully employed in the paid workforce, is unclear. To a large extent, I have taken into account the problematic nature of Mr Herbert’s ability to pay child support in the section 79 aspect of these proceedings. Accordingly, I propose to dismiss the wife’s application for a departure order.
The final matter which I must consider is the wife’s application for a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981. Section 10 of the Act provides such a certificate is available only if proceedings are rendered abortive as a result of the presiding judicial officer dying or otherwise becoming unable to continue a proceeding to judgment. This is not the case here. No proceedings have been rendered abortive. The proceedings may have been delayed in commencement but that is not a sufficient basis, in my view, for the issue of the relevant certificate. For those reasons, the wife’s application in this regard must fail.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding two hundred and seventeen (217) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate:
Date: 31 May 2006
and Clauson v Clauson (1995) FLC 92-595
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