HKL & HCB
[2002] FMCAfam 257
•23 August 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HKL & HCB | [2002] FMCAfam 257 |
| FAMILY LAW — Property settlement – inheritances – modest asset pool – child support – inadequate grounds for variation/departure – contact – minor variation – spousal maintenance. |
| Applicant: | HKL |
| Respondent: | HCB |
| File No: | (P)MLM 2595 of 2001 |
| Delivered on: | 23 August 2002 |
| Delivered at: | Melbourne |
| Hearing s: | 27 & 28 February 2002 |
| Judgment of: | Walters FM |
REPRESENTATION
| Counsel for the Applicant: | Ms Treyvaud |
| Solicitors for the Applicant: | Holt & Macdonald Solicitors |
| Counsel for the Respondent: | Mr Pinner |
| Solicitors for the Respondent: | Mackinnon Jacobs Horton & Iriving Pty |
ORDERS
(1)The wife do pay to the husband the sum of $23,500.00 within 60 days from the date of the making of the within orders.
(2)Upon receipt of the said sum of $23,500.00 referred to in (1) above, the husband do forthwith do transfer and assign the wife all his right, title and interest in the former matrimonial home.
(3)The husband do forthwith transfer and assign to the wife all his share and interest (if any) in the following:
(i)the wife’s motor vehicle;
(ii)the furniture, chattels and effects presently in the wife’s possession;
(iii)all moneys standing to the credit of the wife in any account in any bank, building society or other financial institution; and
(iv)the wife’s superannuation entitlements.
(4)The wife do forthwith transfer and assign to the husband all her share and interest (if any) in the following:
(i)P Services Pty Ltd, including any business conducted by the said company (including the goodwill, plant and equipment, trading stock, work in progress, bank accounts, debtors, intellectual property and all other assets whatsoever of the said business);
(ii)the husband’s motor vehicle;
(iii)the furniture, chattels and effects presently in the husband’s possession;
(iv)all moneys standing to the credit of the husband in any account in any bank, building society or other financial institution; and
(v)the husband’s superannuation entitlements.
(5)The wife do forthwith:
(i)transfer to the husband, or to his nominee, her shareholding (if any) in P Services Pty Ltd;
(ii)resign any office she may hold in the said company (including, but not limited to, the office of director of the said company); and
(iii)transfer and assign to the husband the whole of her share and interest in any loan account or indebtedness;
(iv)due or owing by her to the said company; or
(v)due or owing to her by the said company.
(6)The husband do indemnify the wife and keep her indemnified from all debts, liabilities and obligations of the wife relating to or arising out of:
(i)P Services Pty Ltd;
(ii)the business formerly known as P Services;
(iii)any security, charge, promise, personal guarantee or undertaking given by the wife to any bank, building society or other financial institution or commercial entity in relation to the said company and/or the said business;
(iv)the property dealings, loans, undertakings, business or affairs of the said company or the said business, including all taxation liabilities or duties (including income tax, capital gains tax and stamp duty and all penalties and interest not yet paid) assessed or hereafter assessed against the wife in respect of income (if any) derived by the wife from, or allocated to the wife by, the said company or the said business;
(v)any loan account or indebtedness due or owing by the wife to the said company or the said business;
(vi)the creditors of the said company and the said business;
(vii)all charges or other encumbrances affecting the plant and equipment or other property of the said company and/or the said business,
and from all actions, proceedings, costs, claims and expenses in respect thereof.
(7)The wife do indemnify and keep indemnified the husband from all debts, liabilities and obligations of the husband relating to or arising out of the mortgage to the Commonwealth Bank currently encumbering the former matrimonial home, and from all actions, proceedings, costs, claims and expenses in respect thereof.
(8)The wife’s form 63 application filed 17 December 2001, the wife’s further amended application filed 21 February 2002, the husband’s amended response filed 22 February 2002 and the husband’s form 63 application filed 27 February 2002 otherwise be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
(P)MLM 2595 of 2001
| HKL |
Applicant
And
| HCB |
Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court are the parties’ competing applications for property settlement (and spousal maintenance), for variation of certain contact orders (which were made on 15 October 2001) and for orders in relation to child support.
The orders sought by the wife are set out in her “Further Amended Application” filed 21 February 2002, and in her form 63 application filed on 17 December 2001. The orders sought by the husband are set out in his amended response filed 22 February 2002, and in his own form 63 application filed in Court on 27 February 2002.
During the course of the trial, both parties varied the orders sought by them in the documents filed on their behalf.
Documents Relied Upon
The wife relied upon her affidavits sworn 12 and 20 February 2002, and her financial statement sworn 12 February 2002.
The husband relied upon his affidavit and financial statement sworn 20 February 2002.
Neither party filed a Case Outline.
Each of the parties gave evidence at the hearing, and two exhibits were tendered and received into evidence.
Previous Orders
Certain procedural orders were made in this Court on 5 March 2001.
An Order 24 Conciliation Conference was held on 27 June 2001.
On 15 October 2001 final orders were made — by consent — dealing with children’s issues. Procedural orders were made to enable financial issues to be determined at trial.
In broad terms, the orders made on 15 October 2001 were to the effect that the parties were to retain joint responsibility for the long term care, welfare and development of the two children of the marriage, that the children were to reside with the wife (and that she be solely responsible for their day to day care, welfare and development) and that the husband have certain defined contact with them.
The trial took place on 27 and 28 February 2002.
Background
The husband and the wife were married on 29 March 1986. According to the wife, the parties commenced cohabitation in September 1984. According to the husband, they commenced cohabitation in or about March 1985. In my opinion, it is unnecessary for me to determine which of the parties is correct.
The husband was born in September 1958. He is now aged 43 years. The wife was born in November 1963. She is now aged 38 years.
There are two children of the marriage — D born 24 April 1991 (now aged 11 years) and J born 11 February 1993 (now aged 9 years).
The parties separated in September 1995. They reconciled in or about May 1998, but separated again in either April or May of 2000. The have lived separately and apart since that time.
D and J live with the wife in the former matrimonial home in Knoxfield in the state of Victoria. D and J lived with the wife at all relevant times during the parties’ initial period of separation (which lasted approximately two and a half years) and have lived with her since the date of final separation.
The parties acquired their first home in 1987. The purchase price was $61,000.00. $49,000.00 was borrowed from a financial institution. The borrowing secured by a mortgage over the property. The balance of the purchase price (amounting to approximately $12,000.00) was funded from the parties’ financial resources.
According to the husband, the amount of $12,000.00 referred to in the preceding paragraph was “funded from (the parties’) joint savings”[1]. According to the wife, approximately $2,000.00 comprised savings accumulated by the parties jointly, and $10,000.00 comprised moneys inherited from her mother’s estate. The wife’s mother had died in 1986.
[1] See paragraph 7 of the husband’s trial affidavit.
The husband did not dispute that the wife had received an inheritance from her mother in 1986 — but asserted that he did not know how much it comprised, or how much of it was left by the time the parties purchased their first home.
I observed both parties carefully as they gave their evidence. I considered and assessed both the presentation and content of their evidence. In doing so, I was aware that allowance should be made for the fact that witnesses (and, in particular, parties to proceedings) may experience tension or anxiety during the course of giving their evidence — and at other times during the course of the proceedings. Generally speaking, I prefer the wife’s evidence to that of the husband — notwithstanding that there were inaccuracies and instances of exaggeration in her evidence.
Relevantly, I find the wife’s evidence in relation to the inheritances she received (of which the inheritance that was received in 1986 was simply the first), and the manner in which they were expended, to be truthful and accurate. Thus, I find that the wife contributed $10,000.00 — or very close to that amount — towards the purchase price of the parties’ first home in 1987. Given that both parties were engaged in paid employment between the date of commencement of their cohabitation and the date of birth of their first child, D, in 1991, I find that the wife also contributed approximately one half of the other moneys contributed by the parties to the purchase.
During the period that the parties resided in their first home, they carried out certain renovations. The home was sold in 1994 for approximately $88,000.00.
Upon the sale of their first home, the parties purchased the home in which the wife currently resides (“the Knoxfield home”). The purchase price of the Knoxfield home was approximately $142,000.00. The parties borrowed approximately $113,000.00 from a financial institution to enable the purchase to proceed. The balance of the purchase price (amounting to $29,000.00) comprised (in large part, at least) the net proceeds of sale of their first home.
The parties’ first child, D, was born in 1991. The wife did not return to paid employment after D’s birth. Instead, she became a partner in a business operated (principally) by the husband.
At the time that the parties commenced cohabitation, the husband was employed as an electronics technician repairing photographic machines. In early 1993, the parties agreed that the husband would set up his own business, devoted to the repair of photographic equipment. The husband worked from home.
Clearly, the husband’s role in the business was to carry out the repairs to and maintenance of the photographic equipment. According to the wife, her role in the business was to be the receptionist, do the accounts payable/accounts receivable and attend to banking, correspondence and “chasing debtors”. She estimates — and I accept — that she spent approximately 10 to 15 hours per week in that role.
At the same time, the wife was primarily responsible for running the household and — as she put it — “raising the children”.
In February 1995 the wife received a second inheritance — being $7,000.00 from the estate of her maternal grandmother.
According to the husband, the wife “commenced an internet affair” in 1995. I accept the husband’s evidence in this regard. Thus, in September 1995, and no doubt largely as a result of what the wife described as her “non-contact affair over the internet”, the parties separated. The wife moved out of the Knoxfield home, together with the children. They lived in rented accommodation.
In approximately May or June of 1996, the wife’s “internet friend” (“W”) commenced living with her. The relationship ended some 3 or 4 months later, after W failed to repay an amount of approximately $3,000.00 that he had borrowed from the wife. These moneys had been provided to the wife by her father and by friends. W had requested financial assistance because he owed money for legal fees connected with certain criminal charges he was facing.
In approximately October or November of 1997 (and approximately one year after the wife’s relationship with W had come to an end) the parties began exploring the possibility of a reconciliation. I find that they resumed cohabitation in approximately March, April or May of 1998.
During the period that the parties were separated (being the period from September 1995 to approximately April 1998):
a)the husband continued to reside in the former matrimonial home;
b)the wife lived elsewhere, with D and J;
c)the husband had substantial contact with the children;
d)the husband continued to conduct the photographic repair business set up in 1993 as a partnership;
e)the husband changed the structure of the business by (presumably) dissolving the partnership and incorporating a company known as P Services Pty Ltd (which took over the business of the [presumably defunct] partnership);
f)the wife ceased to play any active role in the business (irrespective of its structure);
g)the husband continued to pay the instalments due under the mortgage encumbering the former matrimonial home;
h)the husband failed or refused to pay assessed child support, to the extent that at the time that the parties reconciled the husband owed approximately $6,850.00 in child support arrears (which arrears were discharged — at the request of the wife — at the time of the parties’ reconciliation);
i)the wife received a further inheritance, being $27,500.00 from her father’s estate (in November 1996);
j)the wife used the moneys received from the inheritance to pay debts (some of which the wife asserts were joint debts), purchase furniture and assist in living expenses;
k)the wife lived with W for approximately 3 months (with the children);
l)the wife was not engaged in paid employment; and
m)the husband did not pay spousal maintenance.
The reconciliation that was effected in early 1998 was not successful, and the parties separated again (on a final basis) in April 2000. This time, the husband moved out of the Knoxfield home and obtained rental accommodation elsewhere.
In May 2000 (at the time of or shortly before the parties’ final separation) the wife received a further inheritance. This comprised $30,000 from her paternal grandmother’s estate. According to the wife, these moneys were used “for living expenses since separation, to purchase a car, furniture and items for the children and loan payments”.
Notwithstanding the parties’ reconciliation in 1998, the wife did not again involve herself in the husband’s business. It would appear that he conducted all aspects of the business himself. Further, it would appear that the wife resumed her role as home maker and principal care giver for the children.
In paragraph 17 of his trial affidavit the husband said:
When I moved out (in April 2000) I continued to pay the mortgage until the wife’s pension payments started. I also gave the wife cash cheques of approximately $1,200.00 to help tide her over. I had agreed verbally with the wife that she would report these payments to child support in reduction of any child support assessment when it came in. When the formal child support assessment came in, however, the wife denied receiving those payments and accordingly I was wrongly listed for arrears of child support.
In paragraph 9 of her trial affidavit, the wife said:
…(the husband) has refused to pay the assessed child support since our separation. He paid one mortgage payment on the house and one car payment immediately following separation ($600 in total) and (since then has paid)…a total of $4,062.73. The amount he should have paid during this period is $11,458.47, resulting in arrears which now total $6,795.74…Accordingly, I have had to support the children and make the housing loan payments with minimal assistance from (the husband).
The husband did not accept the quantum of arrears referred to in paragraph 9 of the wife’s trial affidavit. He asserts that he made certain payments over and above the amounts conceded by the wife. That may well be the case, but I am comfortably satisfied that there remain significant arrears in child support — which are likely to be in the order of $5,000.00 (at least).
The husband has continued to conduct the business (P Services Pty Ltd) since the date of separation. He asserts, however, that — for various reasons — the business is struggling.
In paragraph 18 of his trial affidavit, the husband said:
My business…essentially involved repairing photographic equipment at various photo labs. The introduction of digital technology in recent years has severely affected my business. Labs were gradually fading (sic.) out the equipment I could fix such as enlargers, photographic paper processors and photographic film processors and introducing the new digital equipment. The companies will not give me access to the technical data so I can fix the digital equipment, and accordingly, the work available for me was slowly reducing. I was reliant on “breakdowns” for my work, and as companies replaced their old machines with digital equipment my work dried up.
The husband continued in paragraphs 20 and 21:
In July 2000 the GST was introduced and this also had a substantial effect on my business. The work dropped off dramatically. As a result of my drop in income I was unable to keep up the child support payments I was assessed at as well as maintain my own accommodation.
By Spring of 2001, the business was really struggling and I was unable to generate enough income to meet my GST and PAYG taxation liabilities.
I accept the husband’s evidence to the effect that the introduction of digital technology has severely, and adversely, affected his business. I do not accept, however, that the GST had any significant impact on the business.
According to the husband, he was telephoned by an officer of the Australian Taxation Office in October 2001. As a result of that telephone call, the husband obtained advice and ultimately placed the business in liquidation on 2 November 2001.
After what the husband describes as the “collapse” of his business, he was unemployed for a period of time. He later obtained casual maintenance work with certain photographic studios or laboratories. In paragraph 36 of his trial affidavit, the husband added:
I also do the odd repair job from home.
The wife is currently working on a part-time basis, packaging children’s jewellery. She earns — on average — approximately $75.00 per week. She is studying Information Technology at a college of TAFE. It is likely that she will complete her course at the end of 2003.
In November 2001 the wife applied to the Child Support Agency for a review of the then current child support assessment on the ground that it did not take into account the income, earning capacity, property and financial resources of the parties. The Case Officer’s decision was handed down on 11 January 2002. The effect of the decision is that the husband’s child support income amount was altered from approximately $29,000.00 to $40,000.00 for the period 11 January 2002 (being the date of the decision) to 31 December 2003. The husband’s child support liability increased from approximately $407.00 per month to $646.00 per month.
The wife has not received any payments of child support from the husband since the decision was handed down in January 2002.
In paragraph 14 of her trial affidavit, the wife said:
…on 3 February 2002 I received a telephone call from Centrelink advising me that it had received notification (presumably from [the husband]) of the number of hours he was having contact with the children. As a result, Centrelink advised me that it would reduce my Family Assistance payments by $93.00 per fortnight. This was confirmed by letter…This reduction in Family Assistance payments will cause me severe financial hardship.
In paragraphs 18 and 19 of her trial affidavit, the wife said:
…since separation I have paid for, without any assistance from (the husband), the children’s school fees, cub and scout fees, swimming fees, school books, school uniforms, school camps and excursions, birthday parties, dental expenses and all other related expenses.
…I have used up all of my inheritance money since separation. Our living expenses have been cut back drastically in recent months to try to make ends meet…
The husband’s response to the above matter was as follows:
I am not sure what exactly the wife has paid for, but the children do not attend scouts and have not had swimming lessons since 1999[2].
[2] See page 7 of the husband’s trial affidavit.
The husband continued:
…I accept that the child support agency has assessed my liability at $646.00 per month. My current income is limited and I am barely able to cover my cost of living and maintain myself and the children during the substantial periods I have contact with them. I have no ability to pay child support at the assessed rate but would be more than happy to pay regular child support at a realistic rate assessed on my current income and taking into account the substantial contact I have with the children.
I turn now to consider the parties’ competing applications for property settlement.
The Law — Property Settlement
The general approach that should be adopted by the court in relation to a property settlement application has been described in a great many cases (see, for example, Pastrikos (1980) FLC 91-987, Lee-Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595 and Whitely (1996) FLC 92-684). The court must first identify the assets of the parties. It must then attribute a value to each of those assets — usually as at the date of the hearing. Thereafter, it must assess the extent of each party’s contributions under the various subheadings described in section 79(4) of the Family Law Act 1975. Finally, the court must consider the financial resources, means and needs of the parties, and the other matters set out in section 75(2) so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment take place. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means.
In relation to the contribution of the parties under section 79(4) generally, it has been held that a “global” approach will usually be more convenient than an “asset by asset” approach — although the application of an asset by asset approach does not (of itself) amount to an error of law (see Norbis (1986) FLC 91-712).
Section 75(2) is concerned with the process of arriving at a just and equitable result. It follows that there may be circumstances in which the justice and equity of the case, and the specific provisions of section 75(2), support an adjustment in a party’s favour for matters which can not comfortably be described as being of financial or economic significance (see McMahon (1995) FLC 92-606 at 82,043).
Under section 79(2), the court is required to be satisfied that the order to be made is just and equitable — not simply that the underlying percentage division of the net value of the parties’ assets is appropriate. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders, and not of the percentage distribution, which must be considered (see Russell (1999) FLC 92-877).
Property of the Parties at Trial
During the course of the trial, the identity and value of each item of property was agreed. Thus, the parties’ assets and liabilities at trial were as follows:
Former Matrimonial Home (Knoxfield)
Less: amount owing on mortgage
$
$
200,000.00
(108,000.00)
$
92,000.00
Husband’s motor vehicle — Minimal equity
$ 0.00
Wife’s motor vehicle
$ 2,000.00
Furniture, chattels and effects and husband’s tools and equipment (not taken into account by agreement)
$ 0.00
Total $ 94,000.00
Each of the parties has superannuation entitlements. The value of the husband’s entitlements is approximately $5,500.00. The value of the wife’s entitlements (under the two policies referred to in her financial statement) is approximately $4,900.00.
It was agreed that the Court should ignore the value of the furniture, chattels and effects retained by each of the parties (or acquired by them since the date of separation) and the value of the husband’s tools and equipment. In any event, there was no admissible evidence of the value of these items.
I find that the total net value of the assets presently available for distribution between the parties is $94,000.00.
Contribution
It is clear that neither party had assets of any significant value at the date of commencement of cohabitation.
The parties lived together from either late 1984 or early 1985 until September 1995 — a period of approximately ten and a half or eleven years. During this period:
a)both parties were engaged in paid employment — until the birth of their first child, D, in April 1991;
b)the wife was the principal home maker and care giver for both children (the second child, J, having been born in February 1993);
c)the husband was the sole “breadwinner” for the family from the time that D was born in April 1991;
d)although the husband conducted the business during the period subsequent to D’s birth, the wife assisted the husband in the conduct of the business in the manner described by her in paragraph 6 of her trial affidavit; and
e)the wife received two inheritances — the first comprising $10,000.00 from her mother’s estate (which moneys were received in 1986 and used to assist in the purchase of the parties’ first home), and the second comprising $7,000.00 from the estate of the wife’s maternal grandmother (which moneys were received in February 1995 and used to pay off joint credit cards and loans).
The parties were separated during the period from September 1995 to May 1998 — a period of approximately two and a half years. During that period:
a)the husband continued to reside in the former matrimonial home;
b)the wife obtained rental accommodation elsewhere;
c)the children lived with the wife;
d)the husband had frequent contact with the children;
e)the husband continued to pay the instalments in respect of the mortgage encumbering the former matrimonial home;
f)the husband provided only modest financial assistance for the wife and children, and was in arrears of his child support obligations to the extent of approximately $6,850.00 at the time that the parties reconciled (and I note that the wife has since “forgiven” this debt);
g)the husband continued to conduct the photographic repair business without assistance from the wife — and altered the structure of the business from a partnership to a company;
h)the wife lived with W, for approximately three months; and
i)the wife received a further inheritance — comprising $27,500.00 from her father’s estate (which amount was received in November 1996 and was used to pay off loans, purchase furniture and assist in living expenses). Clearly, some of the wife’s expenses (or loan repayments) had their genesis in the conduct of W — who borrowed some $3,000.00 from the wife, which he failed to repay.[3]
[3] See also paragraph 31 above.
It was suggested by the husband that the wife “emptied out” the parties’ bank accounts prior to the September 1995 separation and that she had — in some way — inappropriately dealt with moneys that she had withdrawn from the business. To the extent that it may be relevant to the matters in issue in these proceedings, I find that the husband’s allegations in this regard are without foundation. I accept the wife’s evidence that any moneys withdrawn by her from the business at that time were used for the parties’ joint living expenses. Similarly, I find that the only amount taken by the wife at the time of separation in September 1995 was an amount of approximately $200.00, and I accept and rely upon her evidence in that regard.
The parties reconciled and lived together for a further two years (approximately) from May 1998. During that period:
a)the wife continued to be the home maker and principal care giver for the children;
b)the husband continued to be the “breadwinner” for the family; and
c)the wife did not involve herself in the running of the photographic repair business.
Since the parties’ separation in April or May 2000:
a)The wife has continued to reside in the former matrimonial home.
b)The wife has continued to be the principal care giver for the children.
c)The wife received a further inheritance (although it may have been received shortly before separation) — comprising $30,000.00 received from her paternal grandmother’s estate. These funds have been used for living expenses, to assist in the purchase of a motor vehicle, furniture and items for the children and loan payments.
d)The husband continued to operate the business, but placed the corporate entity into liquidation in November 2001.
e)The husband made some payments in respect of the mortgage encumbering the former matrimonial home (until, according to the husband, “…the wife’s pension payments started”).
f)The husband paid some additional amounts to the wife (totalling something in the order of $1,200.00 or $1,400.00).
g)The wife reduced the mortgage payments to “interest only” in or about June 2000, and has made the relevant payments since that time.
h)The husband has accrued substantial arrears in respect of child support — which arrears now total something in the order of $5,000.00 (and perhaps as much as $6,850.00).
i)The husband asserts that he was unemployed for a period of time after “…the collapse of (his) business in October 2001”.
j)The husband now does casual photographic maintenance or repair work for two businesses in the inner metropolitan area of Melbourne. According to the husband her earns approximately $500.00 per week from this source.
k)In relation to part of this period at least, the husband said, during the course of his oral evidence, that he could not recall why he had not paid child support at the appropriate rate, and agreed that he had had the capacity to pay the child support that he was obliged to pay.
It is the case that a court is not necessarily inclined to give greater weight to financial contributions than to other forms of contribution. In my opinion, considerable weight must be given to the various inheritances received by the wife — without which the wife would not have been able to support herself and the children during the initial separation and subsequent to the parties’ final separation. In addition, the wife’s first inheritance either enabled or contributed substantially towards the acquisition of the parties’ first home. It was also, it seems to me, a “springboard” leading to or facilitating the eventual acquisition of the Knoxfield home. Significant weight should also be given to the wife’s role as home maker and parent — which role continued during the initial separation and has continued since the final separation.
I take into account, as well, that the husband remained in the former matrimonial home during the first separation (as the wife has remained in the home since the final separation). I also take into account all the other contribution factors referred to in the preceding paragraphs of this Judgment.
In general terms, I find that the husband’s financial contributions within the meaning and contemplation of section 79(4)(a) have clearly outweighed those of the wife (given that he was the primary “breadwinner” throughout their relationship). I have given considerable weight, however, to the financial contribution made by the wife to the acquisition of the parties’ first home. Some $11,000.00 out of the total of $12,000.00 initially provided by the parties was sourced in the wife’s first inheritance and, to a lesser extent, in moneys earned by her. Moneys received by the wife from other inheritances were used to retire debt.
The non-financial contributions of the parties, within the meaning and contemplation of section 79(4)(b) were not emphasised during the course of the proceedings. I am aware that the husband was principally responsible for the conduct of the business, that the wife played a less significant role in its operation and that she ceased to involve herself in it completely when the parties were separated in September 1995. The corporate entity comprising the business is now in liquidation.
The wife’s contribution to the welfare of the family (including her contributions made in the capacity of home maker or parent) significantly outweighed that of the husband (including his contribution made in the capacity of home maker or parent). The wife remained the principal care giver for the children at all times, including during the parties’ first separation, and the children have remained with her since the final separation. I also have regard to the fact that both parties made financial contributions to the welfare of the family — but that the wife’s financial contribution to the welfare of the family was significantly greater than that of the husband during the first separation. It has also been greater than that of the husband since the final separation. A significant part of the inheritances received by the wife (in particular, the last two inheritances) was used to enable the wife to support herself and the children during the periods that they were not or have not been living with the husband[4].
[4] See Ashton (1986) FLC 91-777 at 75,658-9 and Ferraro (1993) FLC 92-335 at 79,581.
Taking into account the various aspects of the parties’ contributions discussed above, I conclude that an appropriate division of the parties’ assets available for distribution between them at the present time — on the basis of contribution alone — is two thirds to the wife and the balance to the husband. I am satisfied that this is an appropriate (preliminary) division, notwithstanding the submissions of Counsel for each of the parties.
Section 75(2) Factors
So far, in considering the question of property settlement, I have addressed the question of contribution only. Quite clearly, the court is entitled to make an adjustment to a party’s property settlement entitlement on the basis, inter alia, of both parties’ respective means and needs.
The Family Court has been critical of “short hand terms” being used to describe the last step in the property settlement exercise — preferring to refer to it simply as “the section 75(2) factors” (see Clauson (1995) FLC 92-565). In essence, section 75(2) is concerned with the process of arriving at a just and equitable result (see Waters& Jurek (1995) FLC 92-635).
I have already recorded the age of each of the parties. It is not asserted that either is other than in a satisfactory state of health.
The husband currently earns a very modest income from the casual work that he obtains from the two laboratories or studios that he now services. The husband is content to derive a lesser income whilst he works on a casual basis — because part of his current work enables or may enable him to improve his skills to the extent necessary to permit him to compete for work on equipment utilising the latest technology. During the course of his oral evidence, the husband expressed some confidence that his earning capacity would return in the not too distant future.
The financial statements for P Services Pty Ltd were annexed to both parties’ trial affidavits. The profit and loss statements reveal that the company’s total income for the years 1999, 2000 and 2001 (including “interest received”) was approximately $67,000.00, $83,000.00 and $51,000.00 respectively. Included within the expenses for each of those years were “salaries — ordinary” of $27,000.00 (1999), $38,580.00 (2000) and $35,222.00 (2001). It appears that these were moneys paid to the husband. In addition, superannuation expenses of between $1,890.00 and $3,170.00 were included.
It is apparent that the husband also derived other benefits from P Services Pty Ltd (for example, within the expenses described as “motor vehicle expenses” and “telephone”).
After discussing various aspects of the husband’s recent work history and pay rates, the Senior Case Officer dealing with the review application in January 2002[5] made the following determination:
It is not practical to determine (the husband’s) precise income. I consider his earning capacity would be in the vicinity of the average weekly earning level, presently $45,417.00 per annum. At the very least there seems no reason why (the husband) could not generate the average employee wage level of $35,012.00 per annum.
As a compromise between those two levels, I propose that (the husband) be assessed on a “child support income” of $40,000.00. That figure seems more consistent with his work skill and demonstrated earning rate.
[5] See the Notice of Decision of Senior Case Officer Siegel dated 11 January 2002 — a copy of which is attached to the wife’s trial affidavit.
The conclusion of the Senior Case Officer as to the husband’s earning capacity is a conclusion with which I concur — for the reasons explained by the Senior Case Officer and having regard to the matters already discussed in this Judgment.
The wife is currently working part time. She earns approximately $75.00 per week on average. She is studying Information Technology at a College of TAFE. She is likely to have to study for a further two years before receiving a Diploma. Her aim is to obtain employment “…and try to achieve financial independence from (the husband)”.
The wife conceded during the course of her oral evidence that she could be working longer hours and earning more — and in this regard it would appear that availability of work is the principal impediment from the wife’s point of view.
I find that the wife is not presently exercising her earning capacity to the full and that she could work longer hours without diminishing the quality of the care that she provides for the children. For the next two years at least, however, I find that her earning capacity is no more than one third of that of the husband.
I have dealt with the property and financial resources of the parties elsewhere in these Reasons.
The wife has the care and control of the children of the marriage — neither of whom has obtained the age of 18 years.
I have had regard to the parties’ financial statements when considering the commitments of each of them that are necessary to enable them to support themselves. Neither party was cross examined to any extent upon the expenditure set out in his/her financial statements.
I am conscious that each of the parties is entitled to a standard of living that is reasonable in the circumstances of the case now before me. The reality is, however, that the children reside with the wife, the husband is not paying any or any adequate child support (although it is likely that, as a result of the orders that I shall be making in these proceedings, the arrears of child support will be paid to the wife — by offset or otherwise) and the value of the assets available for distribution between the parties is modest indeed.
The duration of the marriage is as I have described it elsewhere in these Reasons. In my opinion, the duration of the marriage has not affected the earning capacity of either party.
Neither party is cohabiting with any other person.
I take into account the husband’s failure to pay child support in the past. I emphasise, however, that I am aware of the fact that, as a result of the orders that I am about to make, the husband’s current child support arrears may well be paid — by offset or otherwise. The quantum of the arrears has not been taken into account as a section 75(2) factor. In my opinion, it is the improbability of the wife receiving from the husband an objectively realistic contribution to the overall cost of maintaining the children in the future that I should take into account and weigh in the balance (or add to the mix, as it were). I can only predict the husband’s future attitude to this subject by considering his attitude or actions in the past. Like the wife, I have concerns about the husband’s willingness to provide child support to the wife in the future.
I have already recorded details of the parties’ superannuation entitlements.
I am not aware of any other fact or circumstance which should be taken into account in order to do justice to the parties.
Having regard to the evidence before me, I conclude that the most significant of the section 75(2) factors are the following:
a)the children of the marriage reside with the wife;
b)the husband’s earning capacity is not being exercised to the extent of which the husband is capable;
c)the husband’s earning capacity is significantly greater than that of the wife (at least in the short to medium term);
d)the husband’s future provision of a reasonable or adequate level of financial support for the children is problematical; and
e)the husband’s present standard of living is unlikely to be improved as a result of the receipt of a modest amount of money from the wife, but the requirement that the wife pay more than a modest amount of money to the husband would probably or could possibly result in an appreciable reduction in her and the children’s present standard of living.
On the basis of the evidence before me, and having regard to the fact that the purpose of the section 75(2) adjustment is to assist the Court with the process of arriving at a just and equitable result, I conclude that an adjustment should be made to the wife’s entitlement (on the basis of contribution alone) by increasing that entitlement from two thirds to 75 percent. On the basis of the figures set out in paragraph 58 above, this means that the wife should receive by way of property settlement assets to the total value of $70,500.00 (being 75% of $94,000.00). The value of the assets currently in the wife’s possession or otherwise to be retained by her, is as follows:
a) Net Value of former matrimonial home $ 92,000.00
b) Wife’s motor vehicle $ 2,000.00 Total $ 94,000.00
It follows that, if the wife is entitled to assets to the total value of $70,500.00, then she should be obliged to pay to the husband the amount of $23,500.00 — in order to ensure that she retains or receives assets totalling 75 percent of the value of the asset pool as I have found it to be.
One of the most difficult aspects of the present case is the very modest size of the asset pool. The Full Court has cautioned against assessing section 75(2) factors in percentage terms without considering the real impact of any proposed adjustment. In other words, the real impact in money terms is “the critical issue” (see Clauson (1995) FLC 92-595). In the present case, the section 75(2) adjustment equates to $7,833.00. I am satisfied that that adjustment is proper — even taking into account (as I do) the differential between the value of the assets to be retained by the wife and the moneys to be received by the husband.
I am satisfied that the property settlement orders that I propose to make are just and equitable (to both parties), in all the circumstances.
Contact
The wife sought an order that paragraph 3(b) of the orders made in this Court on 15 October 2001 be discharged. This paragraph provides that the husband have contact with the children from after school Monday to the commencement of school on Wednesday in each alternate week.
The orders of 15 October 2001 were made by consent, at a time when both parties were represented by Counsel. In broad terms, the orders state that the parties are to have joint responsibility for the long term care, welfare and development of D and J, that the children reside with the wife and that she be solely responsible for their day to day care, welfare and development. The husband is to have contact with the children each alternate weekend from 5.00 p.m. Friday to 7.00 p.m. Sunday and each other week from after school on Monday to the commencement of school on Wednesday. The orders also provide for other contact arrangements, including one week during each school holiday period (on condition that the husband not be working and be available to look after the children).
The wife seeks to vary the contact orders because she “…believe(s) that this arrangement is no longer appropriate for the following reasons:
a)(the husband) is sending the boys to school in the same clothes and underwear for those three days;
b)the boys are not doing any homework during this period despite (the wife’s) requests of (the husband) to ensure that they do their homework”[6]
[6] See paragraph 3 of the wife’s affidavit sworn 20 February 2002.
In addition, the wife asserts that D and J “…need a routine during the week giving them ample time to do their homework…”
During the course of her oral evidence, the wife confirmed that the husband’s place of residence is approximately one and a half kilometres from the former matrimonial home. She said that she did not know of her own knowledge that the children wear the same underwear during the period that they are with the husband from after school on Monday to the commencement of school on Wednesday, and that she “goes by what the children tell (her)”. She conceded that the boys like to see the husband and that they miss him. She also confirmed that the husband has always had regular contact with them.
It was the wife’s view, however, that the contact regime is disruptive and that the boys “haven’t settled”. It is her view that the current contact regime causes disruption to their schooling — but her main concerns relate to their clothing and homework problems.
For his part, the husband’s oral evidence was to the following effect:
a)the boys are anxious to see him and get distressed when they can not;
b)he was unaware “that homework was an issue”;
c)he wants the children to be with him for part of the school week because he feels that such an arrangement is “more normal” for the boys;
d)he has a close emotional bond with the boys and wants to be able to nurture that bond and be part of their life in all ways — not “…just someone they see each weekend”.
I am conscious of the fact that the parties consented to the orders made on 15 October 2001. Clearly, they were of the view — at that time — that the arrangements embodied in the orders were likely to be in the best interests of D and J. The husband has exercised contact in accordance with those orders since that time. To that extent, a status quo has clearly been established. It is the case, however, that no legal onus rests upon the husband to show that a change would be detrimental to the children or either of them, and no legal onus rests upon the wife to justify the change (either by establishing that it would be positively advantageous for the children, or either or them, or in any other way). An existing status quo is simply one factor to be weighed with all other factors relevant to determining the case. When weighing that factor, the quality of the status quo must be examined — and if a long standing status quo is to be disturbed, then the factors which influence the Court to reach that conclusion should be clearly identified. In this regard, see Burton (1978) 4 Fam LR 783; Re G: Children’s schooling (2000) 26 Fam LR 143; see also Saad (1992) 16 Fam LR 55 and Rice & Asplund (1978) 6 Fam LR 507, and A & A: Relocation Approach (2000) 26 Fam LR 382.
I now remind myself of the provisions of section 60B of the Family Law Act 1975, the terms of which are as follows:
60B Object of Part and principles underlying it
(1) The object of this Part is to ensure that children receive adequate and proper parenting to help them achieve their full potential, and to ensure that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children.
(2) The principles underlying these objects are that, except when it is or would be contrary to a child's best interests:
(a) children have the right to know and be cared for by both their parents, regardless of whether their parents are married, separated, have never married or have never lived together; and
(b) children have a right of contact, on a regular basis, with both their parents and with other people significant to their care, welfare and development; and
(c) parents share duties and responsibilities concerning the care, welfare and development of their children; and
(d) parents should agree about the future parenting of their children.
I am very conscious of the fact that the welfare or best interests of the boys is/are the paramount consideration in this case, and I bear in mind that no onus is to be placed on either party in relation to the position taken by them regarding the proposed variation of the contact regime.
I have re-read and bear in mind the provisions of section 68F of the Family Law Act — but do not propose to review the provisions of section 68F(2) in any detail. That is so because I am unable to clearly identify a preponderance of factors which would cause me to conclude that the existing status quo should be altered. Relevantly:
a)the parties consented to the orders that were made in October 2001, at a time when they were both legally represented;
b)the husband’s desire to care for and parent the boys during periods that they are at school is understandable and wholly within the principles set out in section 60B(2) of the Act;
c)I am not satisfied that the husband is indeed sending the children to school in the same clothes and underwear for the period that they are with him and, indeed, I find that that is not the case;
d)the wife made no serious criticism of the husband as a care giver for the children, and I find that he is a sensible and responsible parent who — now that the problem has been brought to his attention — will ensure that the boys will complete their homework whilst they are with him;
e)the boys have a close and loving relationship with the husband (as they do with the wife) and enjoy being with him as a contact parent;
f)I find that the boys would be distressed if the current arrangements were to be altered without good reason; and
g)the current arrangements are not unduly disruptive for the boys given that their parents both live close to their school, and to each other.
I propose to dismiss the wife’s application to the effect that paragraph 3(b) of the October 2001 orders be discharged.
Child Support
It is apparent that the wife’s form 63 filed 17 December 2001 has several deficiencies. For example, it refers to the date of separation as 21 September 1995, and no reference is made to the parties’ subsequent reconciliation in or about May 1998. The orders sought in the form 63 include a variation of the annual rate of child support payable by the husband for the financial years 1999 and 2000, during which the parties lived together or substantially lived together. As well, although the application is expressed to be brought under (inter alia) sections 116 and 123 of the Child Support (Assessment) Act, 1989 (“the Assessment Act”) it is apparent that the provisions of Order 31B Rule 12 of the Family Law Rules was not complied with.
In her further amended application filed 21 February 2002, the wife sought an order that “…the husband pay to the wife the sum of $10,000.00 being for lump sum child maintenance”. Again, this application is clearly in an inappropriate and inadequate form.
The husband’s form 63, which was filed in court on 27 February 2002 is also expressed to be brought under sections 116 and 123 of the Assessment Act. Leaving aside the provisions of Order 31B Rule 12, the application is expressed to be made on the following grounds:
(1) The applicant is the liable parent in respect of an assessment for child support due to the respondent
(2) The administrative assessment of child support does not accurately reflect the applicant’s current income, earning capacity and financial position nor does it accurately reflect the respondent’s financial circumstances.
The evidence relating to child support matters presented by the husband in his trial affidavit was as follows:
30. I initially paid the wife several cash cheques following separation which she did not report to child support and which resulted in the accrual of various arrears.
31.As my business wound down over the last few years, I have struggled to make ends meet. With the drastic reduction in my income in 2001 I have not been able to pay any child support since June 2001 and I understand that there are now arrears of approximately $6,000.00 due to the Child Support Agency. I have absolutely no assets available to meet any such arrears.
The husband continued (at page 7 of his affidavit):
I accept that the Child Support Agency has assessed my liability at $646.00 per month. My current income is limited and I am barely able to cover my cost of living and maintain myself and the children during the substantial periods I have contact with them. I have no ability to pay child support at the assessed rate but would be more than happy to pay regular child support at a realistic rate assessed on my current income and taking into account the substantial contact I have with the children.
The Law — Child Support
The Commonwealth’s legislative scheme for assessment and enforcement of child support liabilities is contained in the Assessment Act and the Child Support (Registration and Collection) Act 1988. Certain aspects of this scheme were considered by the High Court in Luton v Lessels (2001) FLC 98-015. In that case, Gaudron and Hayne JJ said (at page 95,659):
The Assessment Act records that the “parents of a child have the primary duty to maintain the child”. This duty is said, by the Assessment Act, (a) to be not of lower priority than the duty of the parent to maintain any other child or another person: (b) to have priority over all commitments of the parent other than commitments necessary to enable the parent to support himself or herself and any other child or another person the parent has a duty to maintain: (c) to be not affected by the duty of any other person to maintain the child or any entitlement the child or another person may have to an income tested pension, allowance or benefit. …The principal object of the Assessment Act is said to be “to ensure that children receive a proper level of financial support from their parents”.
Part 5 of the Assessment Act (ss 35-79) provides for the administrative assessment of child support. “Child support” is defined as “financial support under [the Assessment] Act, including financial support under [the] Act by way of lump sum payment or by way of transfer or settlement of property”. An administrative assessment of child support requires the application of one or more of several statutory formulae that is, or are, apposite in the particular circumstances. Section 79 of the Assessment Act provides that “an amount of child support due and payable by a liable parent to a carer entitled to child support is a debt due and payable by the liable parent to the carer”…
Where there has been an administrative assessment, both the liable parent and the carer may lodge with the Registrar an objection against the assessment. A person aggrieved by a decision on the objection may, pursuant to section 110 of the Assessment Act, appeal to a court having jurisdiction under that Act.
In the same case, Gleeson CJ said (at page 95,653):
The objects of the Assessment Act are set out in section 4. The principal object is to ensure that children receive a proper level of financial support from their parents. To that end, the Act provides for a level of support to be determined in accordance with legislatively fixed standards, and permits carers of children to have the level readily determined without the need to resort to court proceedings.
…It may be observed that, although the legislation is enacted in furtherance of a clearly defined public policy, it creates a distinctly personal liability. The natural and moral obligation of the parent to support a child becomes, by force of the legislation, a legal obligation reflected in a debt, calculated in accordance with the Assessment Act, owing by a parent to a carer of the child.
Gaudron and Hayne JJ continued (at page 95,663):
Part 7 of the Assessment Act (ss 99–146) deals with the jurisdiction of courts under the Act. In particular, provision is made for applications to a court for a declaration about the applicability of the administrative assessment provisions. Provision is made for what are called “appeals” against incorrect administrative assessments and for orders for departure from administrative assessment. (The reference to “appeal”, although similarly used in other contexts, may mislead. The proceeding which is so described is the first application of judicial power; it is an exercise of original, not appellate jurisdiction.) An order by a court for departure from an administrative assessment may be made on the grounds on which the registrar may make a departure determination…
The process involved in the consideration of an application for departure from the administrative assessment of child support was explained by the Full Court in Gyselman (1992) FLC 92-279 at 79,064-5, under the heading “Division 4 — Orders for Departure from Administrative Assessment in Special Circumstances”. The Full Court said (inter alia):
Section 117 is the critical provision.
The structure of that section is that s.117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in subsections (2) to (9). Section 117(1)(b) identifies a clear three-step process:
1. Whether one or more grounds of departure in s.117(2) is established.
2. Whether it is ‘just and equitable’ within the meaning of s.117(4) to make a particular order.
3. Whether it is ‘otherwise proper’ within the meaning of s.117(5) to make a particular order.
It is clear from the careful way in which s.117 has been structured that the Court must address each of those three separate issues...
…Each of those grounds (in s.117(2)) is prefaced by the words, "in the special circumstances of the case". Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases. (It has been held) that "special circumstances" were "facts peculiar to the particular case which set it apart from other cases". The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.
In Hides v. Hatton (1997) FLC 92-759, the Full Court said this (at 84,352):
It was also made clear in Gyselman that when the Court is considering whether it is just and equitable within the meaning of s.117(4) to make a particular order, the Court is required to undertake the task of considering the matters set out in paragraphs (a) to (g) of that sub-section, and in this regard the Full Court said as follows (at 79,078):
‘However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).’
The Full Court also made it clear in its decision in Gyselman that similar considerations apply to the Court’s determination as to whether it is ‘otherwise proper’ within the meaning of s.117(5) to make a particular order (see at 79,080), and furthermore and very relevantly for present purposes the Full Court emphasised the importance of trial Judges providing adequate reasons for judgment in order to ensure a proper exercise of the discretion under s.117 (see at 79,080).
In the same vein, a differently constituted Full Court…in Ross and McDermott (1998) 23 FamLR 613 at 623-4 (paragraph 39) said this:
In our view a practical and flexible approach should be adopted to the task of considering these s 117(4) and (5) matters, that is an approach similar to that which this court has long adopted to the ‘s 68F(2) matters’… in child-related proceedings under the Family Law Act 1975 (Cth), and to the ‘s 79(4) matters’ and ‘s 75(2) matters’ in property settlement proceedings under that Act. Accordingly, we consider it is unnecessary to make any reference to those s 117(4) and (5) matters which have no real relevance in the circumstances of the particular case. We also consider that it would be permissible to group together and consider as a whole, those relevant matters which by their nature lend themselves to such an approach in the circumstances of the particular case, and in the case of those matters which are required to be considered under more than one subsection of s 117, to examine such matters only once, although they may need to be taken into account under more than one subsection.
In Hallinan v. Witynski (1999) FLC 98-009, the Full Court said:
As the judgment of the Full Court…in Hampson v. Lightfoot (1997) FLC 92,775 at 84,560-1 demonstrates, the reasons for answering the two questions posed by s.117(1)(b)(ii) need not be elaborate, but the task of considering, at least broadly, the matters referred to in s.117(4) and 117(5), respectively, and then making a finding as to satisfaction or otherwise in relation to the relevant matter, must be undertaken as a necessary part of the exercise of discretion imposed on the Court by s.117(1).
Insofar as the wife’s application for lump sum child support is concerned, such an application must fall within Division 5 (Orders for Provision of Child Support otherwise than in Form of Periodic Amounts Paid to Carer) of the Assessment Act. Section 121 of the Assessment Act provides that additional particular objects of Division 5 include ensuring:
a)that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both their parents; and
b)that parents share equitably in the support of their children.
Section 124(1)(b) of the Assessment Act provides that the Court may make an order for child support otherwise than in the form of periodic amounts paid to the carer where it is satisfied that it would be:
c)just and equitable as regards to the child, the carer entitled to child support and the liable parent; and
d)otherwise proper,
to make the relevant order.
Section 124(2) provides that, in determining the application, the Court must have regard to:
e)the administrative assessment which is currently in force;
f)any order in force under Division 4; and
g)whether the applicant is in receipt of an income tested pension, allowance or benefit (and certain matters consequent thereupon).
Section 124(2) states that there is a further matter to which the Court must have regard in determining the wife’s application, but that matter is not presently relevant.
Sections 124(3) and (4) refer the Court back to the relevant provisions of section 117 to guide it in determining whether the “just and equitable” and “otherwise proper” tests have been met. Section 124(5), however, states that sub-sections (2), (3) and (4) do not limit the matters to which the Court may have regard.
Section 125 obligates the court — where it is minded to make an appropriate order under section 123 and section 124 — to state in the order whether the child support is to be credited against the liable parent’s liability under any relevant administrative assessment.
Section 126 of the Assessment Act deals with the Court’s obligation to give reasons for any orders that it may make under section 124 (or statements included in the order under section 125).
The manner in which the case was presented to the Court makes it effectively impossible to apply the complete process required by law. It is my view, however, that neither party has established a ground for departure within the meaning and contemplation of that term in section 117(2) of the Assessment Act. Further, neither party has established that it would be just and equitable to make any particular order in relation to child support within the meaning and contemplation of sections 117(4) and 124(1)(b) of the Assessment Act.
Insofar as the husband’s application is concerned, I have found that his earning capacity is in the order of $40,000.00 per annum. I concur with the decision of the Senior Case Officer dated 11 January 2002 and am unable to identity from the material before me any cogent reason why the decision should not stand — as it will if I dismiss both parties’ child support applications. To the extent that the husband asserted that he does not have sufficient funds to pay the arrears, the reality is that the effect of the decision that I have made in relation to property settlement is that the husband will receive some $23,000.00 from the wife. He will be able to pay the arrears of child support from the lump sum that he is to receive from the wife.
I am aware that, earlier in these Reasons, I found that the arrears of child support due by the husband are likely to amount to a minimum of some $5,000.00. The evidence before me, however, does not permit me to calculate the arrears within any degree of precision. In those circumstances, I am not prepared to make any order which would have the effect of technically or artificially fixing arrears in any particular amount. It will be for the husband to approach the Child Support Agency with a view to persuading it that the offsetting sums which he considers are appropriate should be credited to his account.
Similarly, I have not been able to identify any ground which would support the making of an order for lump sum child support as (apparently) sought by the wife.
The decision of the Senior Case Officer adheres until 31 December 2003. In my view, that is an appropriate period. Given that there will be no change to the current contact regime, the child support formula (as varied by the Senior Case Officer) should “lie where it falls” to the extent that the husband may have “substantial contact” with the children.
Overall, I find that there are no “special circumstances” — being facts peculiar to the present case which set it apart from other cases.
I have re-read and considered the provisions of section 117(4) and (5) of the Assessment Act (which are also made relevant by the provisions of section 124 of the Act). I have also re-read and considered the other provisions of section 117 and the various “objects” provisions of the Assessment Act to the extent that they are relevant to the matters now before me. I have discussed all relevant aspects of these provisions in this Judgment and conclude that any reduction in the current level of child support would cause unreasonable and undue hardship to the children and the wife. Similarly, any order to the effect that the husband pay lump sum child support would cause unreasonable and undue hardship to the husband, who will be receiving a very modest capital sum as a result of the property settlement proceedings (particularly in the light of the likelihood that some part of it will be provided to the wife — by an appropriate offset — to reflect the arrears of child support now owing).
It follows from what I have written above that the parties’ competing applications in relation to child support will be dismissed.
Spousal Maintenance
The distinction between property settlement and spousal maintenance orders was drawn in Anast & Anastopolous (1982) FLC 91-201. Relevantly, the Full Court distinguished a parties’ entitlement to a property settlement based on contributions and the general factors arising under section 75(2) on the one hand, and a parties’ entitlement to be maintained within the meaning of section 72 on the other. It held that an entitlement to an order under section 79 (including the section 75(2) factors) should be assessed before the question of entitlement to maintenance within the meaning of section 72 is considered. In some cases, a parties’ property settlement entitlement (under section 79) will “exhaust” that party’s claim for spousal maintenance. In other cases, a maintenance entitlement under section 72 may remain even after property entitlements under section 79 have been determined.
In Clauson (1995) FLC 92-959, the Full Court was at pains to clarify the distinction between a claim for spousal maintenance (properly so called) and that component of section 79 property settlement order which attracts the terms of section 75(2).
After describing the general approach which should be adopted in property settlement applications, the Full Court went on to say (at page 81, 907):
The result of the 79 order may be such that the applicant for maintenance can no longer be described as being “unable to support himself or herself adequately” because he or she may have sufficient assets which, with or without income arising from the investment or use of those assets, will provide an adequate level of support. It also defines the other party’s capacity to meet any order.
The Court has broad powers in considering what may be a proper or appropriate order for spousal maintenance. Although periodic maintenance is the most common form of spousal maintenance, section 80 makes it clear that in exercising the powers under Part VIII of the Family Law Act, an order may take a variety of different forms. It follows that the Court may make an order for periodic spousal maintenance, lump sum spousal maintenance, or a combination of both. In making such an order, it is to be borne in mind that maintenance is not confined to a subsistence level of support, but is intended to provide such assistance as is reasonable in the circumstances of the particular case[7].
[7] See Mitchell (1995) FLC 92-601.
In Vautin (1998) FLC 92-827, the Full Court said:
…in the exercise of the power to order lump sum maintenance caution is usually appropriate because of the apparent finality of lump sum orders and the difficulties in making predictions into the future. However, it is a power, the exercise of which may be appropriate in particular cases. It may be ordered, amongst other reasons, to meet non-periodic expenditure for the maintenance of that person where there is an established need and a capacity to pay. It is not confined to cases of the capitalisation of periodic maintenance and/or where periodic maintenance is unlikely to be paid because of concerns about the capacity or willingness of the liable parent to pay…
In Bevan (1995) FLC 92-600, the Full Court stated that an award of spousal maintenance requires:
a)a threshold finding under section 72;
b)a consideration of sections 74 and 75(2);
c)no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit; and
d)discretion exercised in accordance with the provisions of section 74 with “reasonableness in the circumstances” as the guiding principle.
I do not propose to deal with the wife’s application for spousal maintenance (which is contained in paragraph 7 of her “further amended application” filed 21 February 2002) in any detail. Even if I were to be satisfied that the wife is unable to support herself adequately for one of the reasons set out in section 72 of the Family Law Act (and I am not necessarily persuaded that that is the case), then having regard to my finding regarding the wife’s present earning capacity, the fact that she is presently studying and is likely to rejoin the workforce in approximately 18 months, and the effect of the property settlement orders that I propose to make (coupled with the quantum of child support payable by the husband and the effect that the offsetting of the arrears in child support against the amount that the wife would otherwise have had to pay to the husband by way of property settlement will have on the overall comparative financial position of these parties), I am not satisfied that it would be “reasonable in the circumstances” to order the husband to pay either periodic or lump sum spousal maintenance. Having regard to the overall effect of the orders which I propose to make in relation to property settlement and child support, I conclude that the husband is not reasonably able to meet any order for spousal maintenance (until, at least, 31 December 2003 — when the current child support period ends). The significant imbalance in the capital positions of the parties that will necessarily (and properly) result from the orders which I propose to make in relation to property settlement clearly mitigates against the making of any spousal maintenance order.
I am conscious that the wife has utilised her inheritances to support herself and the children during the periods that the parties have not resided together. She may or may not be able to obtain appropriate gainful employment when she completes her present course. On the other hand, the husband must now take steps to properly and effectively exercise his earning capacity and must commence to rebuild his business. He will have very few funds available to him to form a capital base upon which he can commence to rebuild his financial life. At the same time, he must maintain the children whist they are with him and meet the child support obligation which I have determined is fair and appropriate. In my view, he should not have the “sword of Damocles” — in the form of a potential liability for spousal maintenance — hanging over his head. That would be the effect of any order that I may be minded to make adjourning the wife’s application for spousal maintenance.
In the circumstances, and having regard to the duty of the Court described in section 81 of the Family Law Act, I propose to dismiss the wife’s application for spousal maintenance.
Orders
Having regard to the findings that I have made, I propose to make orders to the following effect:
(1)The wife do pay to the husband the sum of $23,500.00 within 60 days from the date of the making of the within orders.
(2)Upon receipt of the said sum of $23,500.00 referred to in (1) above, the husband do forthwith do transfer and assign the wife all his right, title and interest in the former matrimonial home.
(3)The husband do forthwith transfer and assign to the wife all his share and interest (if any) in the following:
(a)the wife’s motor vehicle;
(b)the furniture, chattels and effects presently in the wife’s possession;
(c)all moneys standing to the credit of the wife in any account in any bank, building society or other financial institution; and
(d)the wife’s superannuation entitlements.
(4)The wife do forthwith transfer and assign to the husband all her share and interest (if any) in the following:
(a)P Services Pty Ltd, including any business conducted by the said company (including the goodwill, plant and equipment, trading stock, work in progress, bank accounts, debtors, intellectual property and all other assets whatsoever of the said business);
(b)the husband’s motor vehicle;
(c)the furniture, chattels and effects presently in the husband’s possession;
(d)all moneys standing to the credit of the husband in any account in any bank, building society or other financial institution; and
(e)the husband’s superannuation entitlements.
(5)The wife do forthwith:
(a)transfer to the husband, or to his nominee, her shareholding (if any) in P Services Pty Ltd;
(b)resign any office she may hold in the said company (including, but not limited to, the office of director of the said company); and
(c)transfer and assign to the husband the whole of her share and interest in any loan account or indebtedness:
(i)due or owing by her to the said company; or
(ii)due or owing to her by the said company.
(6)The husband do indemnify the wife and keep her indemnified from all debts, liabilities and obligations of the wife relating to or arising out of:
(a)P Services Pty Ltd;
(b)the business formerly known as P Services;
(c)any security, charge, promise, personal guarantee or undertaking given by the wife to any bank, building society or other financial institution or commercial entity in relation to the said company and/or the said business;
(d)the property dealings, loans, undertakings, business or affairs of the said company or the said business, including all taxation liabilities or duties (including income tax, capital gains tax and stamp duty and all penalties and interest not yet paid) assessed or hereafter assessed against the wife in respect of income (if any) derived by the wife from, or allocated to the wife by, the said company or the said business;
(e)any loan account or indebtedness due or owing by the wife to the said company or the said business;
(f)the creditors of the said company and the said business;
(g)all charges or other encumbrances affecting the plant and equipment or other property of the said company and/or the said business,
and from all actions, proceedings, costs, claims and expenses in respect thereof.
(7)The wife do indemnify and keep indemnified the husband from all debts, liabilities and obligations of the husband relating to or arising out of the mortgage to the Commonwealth Bank currently encumbering the former matrimonial home, and from all actions, proceedings, costs, claims and expenses in respect thereof.
(8)The wife’s form 63 application filed 17 December 2001, the wife’s further amended application filed 21 February 2002, the husband’s amended response filed 22 February 2002 and the husband’s form 63 application filed 27 February 2002 otherwise be dismissed.
I now propose to hear the parties as to the precise form of the orders to be made, and as to any other relevant matters. In particular, I shall hear Counsel as to the manner in which the child support arrears are to be paid by the husband and whether they are to be offset (if possible) against the moneys otherwise payable by the wife to the husband. Having regard to the matters dealt with elsewhere in these Reasons, it is to be hoped that the parties can reach agreement as to the precise quantum of the arrears.
I certify that the preceding one hundred and forty eight (148) paragraphs are a true copy of the reasons for judgment of Walters FM
Associate: Date: 23 August 2002
0
0