Hofte & Gilmour
[2023] FedCFamC1F 919
•28 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hofte & Gilmour [2023] FedCFamC1F 919
File number(s): BRC 1692 of 2020 Judgment of: JARRETT J Date of judgment: 28 September 2023 Catchwords: FAMILY LAW – PARENTING – Where only minor differences in parties’ proposals – Where independent children’s lawyer’s proposal would see a return to previous arrangements – Orders made in terms of independent children’s lawyer’s proposal.
FAMILY LAW – PROPERTY – Where contributions are agreed – Where respondent has significantly greater earning capacity – Where respondent was unclear in his evidence – 30% adjustment made – Where applicant established a need for spousal maintenance – Respondent ordered to pay spousal maintenance.Legislation: Family Law Act 1975 (Cth) ss 62G, 75, 79, 106A Division: Division 1 First Instance Number of paragraphs: 76 Date of hearing: 26 & 27 September 2023 Place: Brisbane Counsel for the Applicant: Mr Walsh Solicitor for the Applicant: Turnbull Mylne Counsel for the Respondent: Mr Polley Solicitor for the Respondent: Beck Legal Group Counsel for the Independent Children’s Lawyer: Mr Bunning Solicitor for the Independent Children’s Lawyer: C M Bint Family Lawyers ORDERS
BRC 1692 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HOFTE
Applicant
AND: MR GILMOUR
Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
JARRETT J
DATE OF ORDER:
28 SEPTEMBER 2023
THE COURT ORDERS THAT:
The applicant and the respondent have equal shared parental responsibility for decisions concerning the major long-term issues for the children X born 2010 and Y born 2014.
The children live with the respondent for a period of four weeks from the date of this order.
During the period of four weeks that the children live with the respondent pursuant to paragraph 2, the children shall communicate with the applicant:
(a)on the Wednesday in weeks 2 and 3 by telephone between 5:30pm and 6:00pm with the applicant to initiate the call and the respondent to facilitate the call and ensure that the children have privacy during such communication; and
(b)on the Wednesday and Saturday in week 4 by telephone between 5:30pm and 6:00pm with the applicant to initiate the call and the respondent to facilitate the call and ensure that the children have privacy during such communication.
Thereafter, commencing on the Wednesday in week 5, the children live with the applicant.
Upon the commencement of paragraph 5 hereof, the children shall live with the respondent during the school term as agreed between the parties in writing and failing agreement each alternate week from after school Thursday until before school on Wednesday.
During all gazetted school holiday periods, the children shall spend time with the respondent as agreed between the parties in writing and failing agreement for one half of each school holiday period, being with the first half in even-numbered years and the second half in odd-numbered years and all other times with the applicant.
For the purposes of paragraph 6:
(a)school holiday periods are calculated as commencing at the conclusion of the final day of the school term of whichever child’s school term finishes the latest and concluding at 5:00pm on the afternoon before the first day of the next school term of whichever child’s school term commences the earliest;
(b)the number of nights in each school holiday period is to be used to calculate one half of the school holiday period and if there is an uneven number of nights, the children shall spend the additional night with the parent in whose care they are for the first half of the school holidays; and
(c)the times that the changeovers are to occur during school holidays are 5:00pm on the day determined pursuant to these orders to be the mid-point of the holidays.
The children’s school term time with the respondent shall recommence on the first Thursday in each school term.
Unless otherwise agreed between the parties in writing, the children shall spend time with each party on the following occasions:
(a)if not otherwise spending time with the respondent, with the respondent from 5:00pm on the evening before Father’s Day until the commencement of school on the Monday immediately following Father’s Day with the respondent to be responsible for the collection of the children from the applicant’s residence at the commencement of the time and delivery of the children to school at the conclusion of the time; and
(b)if not otherwise spending time with the applicant, with the applicant from 5:00pm on the evening before Mother’s Day until the commencement of school on the Monday immediately following Mother’s Day with the applicant to be responsible for the collection of the children from the respondent’s residence at the commencement of the time and delivery of the children to school at the conclusion of the time.
Unless otherwise agreed between the parties in writing, the children shall communicate with each party by telephone or Facetime:
(a)at all times the children reasonably request; and
(b)between 5:30pm and 6:00pm on Wednesdays and Saturdays with the party with whom they are not spending time with to initiate the call.
In relation to communication by telephone or Facetime, each party shall:
(a)ensure that the children are available to receive the telephone call;
(b)arrange for the children to telephone the other party on the following night if, for any unforeseen circumstance, the children miss the telephone call from that party; and
(c)ensure that the children have privacy during the conversation.
Except as otherwise agreed between the parties in writing, changeover for the children shall occur as follows:
(a)if the children are attending school, at the children’s school or schools;
(b)if the children are not attending school, at the car park of B Shop, Suburb C;
Save for attending ceremonial occasions or sporting events or fixtures in which one or other of the children is involved, each party is hereby restrained and an injunction hereby issues restraining each party by themselves, their servants or agents from attending the school upon any day where they are not required to collect the children pursuant to these orders.
Each party shall deliver and return the children’s clothing, school supplies, sports uniforms, sports equipment and belongings at changeover, other than each party’s own uniforms, equipment and supplies.
The parties shall:
(a)take all steps and do all things necessary to ensure the children are ready and available for collection at the commencement of their time with the other party;
(b)keep the other party informed at all times of their residential address and contact telephone number;
(c)keep the other party informed of the names and addresses of any treating medical or other allied health practitioner who treats the children and authorise those practitioners to provide to the other party information that they are lawfully able to provide about the children; and
(d)inform the other party as soon as reasonably practicable of any medical condition, significant health issue or significant illness suffered by the children.
This order authorises any school or treating medical practitioner attended by the children to give either party information about the children’s health, education, progress and other related activities and supply them with copies of relevant documentation relating to the children including but not limited to referrals, reports, photographs, certificates and awards, at the requesting party’s cost.
During the time the children spend with each party, that party shall:
(a)respect the privacy of the other party and not question the children about the personal life of the other party;
(b)speak of the other party respectfully;
(c)not denigrate or insult the other party to any third person in the presence or hearing of the children and use their best endeavours to ensure that others do not denigrate or insult the other party in the presence or hearing of the children;
(d)not discuss the family law proceedings or other adult issues with the children;
(e)not use profane, vulgar, obscene, threatening, bullying or irreverent language; and
(f)not expose the children to bullying conduct.
Both parties are prohibited and an injunction hereby issues retraining them, from:
(a)using illicit substances at any time;
(b)consuming any alcohol whilst the children are in their care and for the period eight hours prior to the children coming into their care.
The applicant is prohibited and an injunction issue restraining her by herself, her servants or agents from:
(a)telephoning the children outside the arrangements provided for in these orders;
(b)texting, emailing or otherwise messaging the children or responding to messages from the children:
(i)on any day where they are moving from the applicant’s care into the respondent’s care; and
(ii)on more than two occasions in each 24-hour period they are in the respondent’s care; and
(c)recording the children at changeover or during any time that they are communicating with the respondent.
Within 14 days of the date of this order, each of the parties attend upon their general practitioner to obtain a referral to a suitably qualified psychologist and attend counselling as is recommended in paragraph 127 of the family report dated 19 August, 2020.
The parties each have leave to provide to their general practitioner and referred psychologist a copy of the following:
(a)family reports of Mr D dated 19 August, 2020 and 3 July, 2023;
(b)a copy of this order.
The parties facilitate the children’s attendance:
(a)in the event that it is so recommended by the children’s general practitioner, for therapeutic counselling with a qualified psychologist nominated by that general practitioner; and
(b)with a school counsellor, if requested by either child.
The applicant do all acts and things to facilitate the children’s time with the respondent.
Forthwith upon the making of these orders, the applicant shall vacate the Sir Harry Gibbs Commonwealth Courts Building, Brisbane and its immediate vicinity.
Forthwith upon the making of these orders, the children may be removed from the presence of the court child services only by the respondent, his servants and/or agents.
Within three business days of the date of these orders, E Lawyers are to pay from the funds held on trust for the parties:
(a)the sum of $110,000 into the F Lawyers Trust Account No 2, BSB …, Account Number …74 with description … as the solicitors for the liquidator;
(b)the sum of $16,853.00 to G School on account of the parties; and
(c)the balance to the applicant.
Except as otherwise provided for in these orders, the applicant is entitled to be the sole legal and beneficial owner of the following:
(a)Motor Vehicle 1;
(b)any bank accounts in her sole name;
(c)the furniture and contents in her possession;
(d)the balance of the funds remaining in the E Lawyers Trust Account and
(e)her superannuation interests.
Except as otherwise provided for in these orders, the respondent is entitled to be the sole legal and beneficial owner of the following:
(a)Motor Vehicle 2;
(b)any bank accounts in his sole name;
(c)the furniture and contents in his possession; and
(d)his superannuation.
The applicant is appointed trustee for sale for the property located at H Street, Suburb J in the State of Queensland more particularly described as Lot … on Registered Plan … Title Reference … (“the Suburb J property”) and the property hereby vests in her for that purpose.
Within seven days of the date of these orders, the applicant appoint an agent for sale of the Suburb J property.
The applicant cause the Suburb J property to be listed for sale by private treaty within 14 days of the date of these orders at a sale price as recommended by the agent.
If the Suburb J property has not sold by private treaty within 60 days of being listed for sale, it be listed for sale by auction by the listing agent with a reserve price as recommended by the agent.
The proceeds of sale of the Suburb J property (whether sale is by private treaty or auction) shall be paid in the following manner and property:
(a)discharge of the A Bank home loan secured by mortgage over the Suburb J property with mortgage number …;
(b)payment of the agent’s commission and advertising and other expenses payable in respect of the sale;
(c)payment of reasonable legal costs and outlays relating to the sale; and
(d)the balance to the applicant.
The parties shall each be responsible for the liabilities incurred in each of their names including all borrowings, personal loans, claims by third parties, liability associate with any asset either party is retaining and shall indemnify and keep indemnified each other against any liability that may occur in respect thereof.
The applicant and Turnbull Mylne Solicitors immediately destroy all documents, communications and/or any other information whatsoever, whether electronic or in hard copy, including paragraphs 163 to 175 inclusive of the affidavit of the applicant filed 14 September, 2023 in the possession or control of the applicant relating to K Company, L Pty Ltd and/or any clients of K Company that have not been provided to the applicant on behalf of the respondent as part of these family law proceedings.
The applicant and respondent do all things and sign all documents as may be necessary to give effect to the terms of these orders and that in the event the applicant or respondent refuses or neglects to sign such documents and do all such acts as may be necessary to give effect to these orders and that default continues for a period of three days from the date of any request to sign any such document, then:
(a)the Registrar or Deputy Registrar of the Brisbane Registry of the Federal Circuit and Family Court of Australia (division 1) is hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute all deeds and any documents in the name of the party failing to sign any such document as is required of them upon presentation of such document and an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal by the defaulting party;
(b)the execution of such documentation by the said Registrar or Deputy Registrar shall have the same force and validity as if the document had been executed by the defaulting party or parties; and
(c)an affidavit by the lawyer acting for the non-defaulting party shall be sufficient proof of the other party’s default.
Until further order or until the applicant obtains full-time employment or its equivalent, the respondent pay the applicant spousal maintenance in the sum of $583 per week in the manner prescribed by the order of Austin J made on 19 July, 2022.
The applicant’s trial affidavit filed 14 September, 2023, the reasons for judgment delivered on 28 September, 2023 and the whole of file BRC1692/2020 be referred to the Marshal of the Federal Circuit and Family Court of Australia (division 1) for consideration of making an application pursuant to r 11.71 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 for contempt by the applicant of the orders made on 9 September, 2020.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JARRETT J:
This case involves competing applications for parenting and property adjustment orders. The applicant also applies for periodic spousal maintenance. The respondent seeks that application be dismissed.
The parties commenced cohabitation in 2008. They separated on a final basis in June, 2018. They have two children, X who is currently 13 years old and Y who is currently nine years old. This proceeding was initially commenced in 2020, has been on foot ever since and exhibits the worst characteristics of litigation in this court.
The parties’ relationship history demonstrates longstanding and entrenched parental conflict that clouds the judgment and decision-making of both of these parents. The evidence demonstrates that whilst both of them are focused on the best interests of their children, neither has been able to divorce their conflict with the other from their decision-making for those children so as to be truly able to say that they are acting in their children’s best interests. Neither party demonstrated a child‑focused approach to their decision-making for their children and their evidence belies a focus on what each considers are their own rights and entitlements to spend time with and communicate with these children. For example, the applicant saw it as her role to permit the respondent to spend time with and communicate with the children, to let him have “his” time with the children and the like, while all the while outwardly suggesting that she is supportive of the children’s relationship with him.
The resolution of the competing applications in this case has been unduly hampered by the parties focusing upon endless disputes about minor matters between them and failing to recognise the important issues and dealing with them. The difficulty is compounded by the way the parties’ evidence was presented, both in terms of its form and its substance.
The preparation made by each party and their lawyers prior to trial has been woeful. That played out in what was the chaos of the first day of this trial. On 30 May, 2023 the applications were set down for trial commencing on 25 September, 2023. Trial directions were made on 10 July, 2023 requiring the parties to file and serve on each other no later than 4 September, 2023 one consolidated affidavit of evidence-in-chief, an updated financial statement and one affidavit of each witness intended to be relied upon at trial. A direction was made for the filing of case outlines.
I have been very troubled by the state of the evidence presented by each of the parties in this case. The affidavits are of an atrocious quality. Each party frequently elaborates at length about matters that are either irrelevant, scandalous or both. It is clear from reading the affidavits of evidence-in-chief relied upon by each of the parties that they are documents that, for the most part, have been prepared at a much earlier point in time and simply regurgitated for this trial without much thought being given to whether the evidence contained in the affidavit is now apposite. It is tolerably clear that most parts of each party’s trial affidavit were drafted in 2020 and have not been updated since.
The respondent’s affidavit traverses several pages about the financial position of his business pre-COVID and during the start of COVID. The company operating the business has since been liquidated and the respondent is employed at another business. The business’ profitability during COVID is now largely irrelevant. However, the applicant goes on at length about the practice and contends (in her affidavit) that the respondent hides income and that the practice is more profitable than he suggests. Even if she made out that claim, again, it is largely irrelevant because the company that conducted the practice has been liquidated, the practice has ceased to exist and she does not seem to attempt to trace any hidden profits into any assets presently held by the respondent or the liquidator.
The drafting of parts of the affidavits seemingly in 2020 without edit also makes it difficult to identify the relevant time periods associated with the purported evidence. Where some paragraphs use terminology such as “recently” or “of late” in the context of the rest of the affidavits it is impossible to tell if that means now (2023 or some proximate time) or 2020.
Moreover, and most concerningly, a part of the applicant’s evidence was led in clear breach of an earlier order of the court. In September, 2020 the applicant had filed an affidavit in which she swore to many details about the respondent’s business. She had access to confidential client materials that she disclosed in the affidavit in order to secure orders for disclosure of certain other documents. However, instead of resulting in the orders she sought, the use of the information in her affidavit resulted in orders made on 9 September, 2020 that restrained her from, amongst other things:
(a)further accessing or obtaining information about the respondent’s clients; and
(b)requiring her to immediately destroy all documents, communications and other information whatsoever, whether electronic or in hard copy, in the possession or control of the applicant relating to the respondent’s business or any clients of that practice that she had not otherwise received from the respondent as part of the proceeding.
Additionally, she was required to forthwith personally contact any person or entity that she had disclosed all or any part of the information with respect to the respondent’s legal practice and use her best endeavours to:
(a)compel them to return and delete any and all copies of that material to the applicant;
(b)direct them not to distribute or use the material in any manner whatsoever;
(c)cause them to confirm in writing that they have destroyed all copies of such material.
Notwithstanding those orders, however, the offending affidavit remained upon the court file and the very same material that caused the making of the orders to which I have just referred appears in the applicant’s evidence-in-chief for this trial. Paragraphs 162 to 177 are a complete duplicate of the earlier affidavit filed by her for the hearing of 9 September, 2020. In cross‑examination the applicant accepted that the offending part was a “cut and paste” from the earlier affidavit. Lest there be any doubt about that, the offending part of her trial affidavit ends with this paragraph, 177:
177. I therefore do not accept that the gross fee revenue of the [business] contended by [Mr Gilmour] and reflected within the financial statements of the entities provided by [Mr Gilmour] by way of disclosure is an accurate reflection of the actual gross fee revenue. I therefore seek orders for further disclosure.
Clearly, the last sentence is a reference to the disclosure orders she was seeking on 9 September, 2020.
Each party’s trial affidavit exhibits signs that it has not been proof-read. For example, there was considerable duplication in the applicant’s affidavit – not just repetition of evidence in a different way, but many paragraphs which are exactly the same text. This duplication could not possibly have been intended. Although the blame for this falls initially at the feet of the applicant’s solicitor who has drawn the document, ultimately the blame rests with the applicant; it is, after all, sworn by her.
Whether she intended it to be in the form that it currently takes or not, the impact is the same. She was so clearly disinterested in the content of her affidavit that she was happy to swear to anything.
The respondent’s trial affidavit is no better. Take paragraph 314 as but one example of many.
314.I say that I have complied with my obligations of disclosure. Notwithstanding, the 36 subpoenas that have been filed in this Court and which have both have mostly been returned
The paragraph abruptly ends without completing the sentence; it is a grammatical nonsense.
Rather than affidavits of evidence-in-chief, what I have are sworn statements of contention by each party. There is little, although some, particularisation or corroboration of important matters. What there is, is assertion, speculation, statements of belief unsupported by any evidence of the facts upon which the belief is said to be based, unsubstantiated conclusion and, last but not least, “concern”.
The poor drafting of the affidavits in this matter, coupled with the way in which the parties, but particularly the applicant, have run their case, has wasted time for the parties and increased costs and blood pressures. The parties’ oral testimony was no better. My firm impression is that the applicant would only say in her oral evidence what it was that she thought would help her case and exonerate her from any blame for the wretched position in which the parties’ daughter Y now finds herself. She went to lengths to avoid answering questions, directly or at all and needed to be reminded to address questions that were put to her. She made very few concessions. She could not identify any positive attributes about the respondent as a parent. None.
The respondent was also a difficult witness but more polished than the applicant. That is hardly surprising given his occupation. Even so, he needed to be reminded to address himself to the questions asked of him from time to time. He was defensive on occasions and disingenuous on others. Notwithstanding the polish that he exhibited in giving his evidence, the content of his evidence beggared belief at times.
For example, the cross-examination about significant cash deposits to his banking account made only three months ago seemed to test his memory. He could not remember where the deposits came from. I reject that he could not remember where the money came from. I have no doubt he knows full well the source of the deposits about which he was cross-examined; he just did not want to say.
Fortunately, the outcome of these competing applications do not hinge so much on findings of credit. The important issues can be largely determined by reference to undisputed matters. Indeed, having regard to the final submissions made by each of the parties after three and a half years of difficult and sometimes vicious litigation, little remains in dispute. As to what remains in dispute there are some issues concerning the parenting orders and there are the property adjustment orders to be made. I will deal with the property adjustment orders first.
As to the pool of assets available for distribution I make the following findings. The parties have the Suburb J property which has a value agreed between them of $925,000. The respondent has some bank accounts with a value of about $9,562. There is some money in a solicitor’s trust account, E Lawyers, $132,458. The respondent has Motor Vehicle 2; there is a dispute about its value, however, there was no valuation evidence about it before me. I have treated his assessment of value set out in his financial statement as a statement against interest and I find that the vehicle is worth at least $44,000; it is probably worth more, but I do not know. The respondent has home contents of $3,000.
The applicant has bank accounts with a value of about $7,000. She has a motor vehicle with a value of about $25,000 and she has home contents of about $3,000. To the extent that each of those values is not vouched for by proper valuation evidence and is not otherwise agreed, I have relied upon the statements made by the party owning the assets in their statements of financial circumstance as statements against interest.
It was contended by the applicant that I ought also include in the assets available for distribution between the parties a sum of $90,000 which is resident in a solicitor’s trust account. I decline to take that amount into account as an asset available for distribution between the parties for reasons that I will explain shortly.
The parties have liabilities. There is a home loan secured by mortgage over the Suburb J property which has an indebtedness of $477,159. The liquidator of the company that conducted the respondent’s business, L Pty Ltd in liquidation, is owed $110,000. There is a debt to N Finance of $92,970. There is a debt to P Finance of $41,079. There is a debt to Mr M, I am satisfied, of $28,500. There is a debt to Q Company of $11,000 and there is a debt to G School of $11,881. The last debt is a joint debt. The other debts are all debts owed by the respondent. He is the borrower under the home loan. He has the liability to L Pty Ltd. He is the debtor in respect of the other matters.
I have not included or referred to what the respondent claims is a loan from his mother of $5,500, being an amount that he says was put towards the sum of $90,000 presently resident in the trust account of F Lawyers. That is because I do not accept that it is a loan. The other two loans are, in some senses, vouched for, although the loan from Q Lawyers is less so than the loan from Mr M. But the respondent’s evidence in cross-examination about the amounts received into his A Bank account and R Bank account demonstrate that he was given to receiving amounts of money from his mother regularly and so why this particular amount is singled out as a loan, whereas the others are not, is not explained. I am not satisfied that it is a loan and I have discounted it entirely.
The parties both have superannuation. The respondent’s is $262,300; I am told that that is agreed. The applicant has $77,000; I am told that is agreed. Thus, in terms of assets, including superannuation assets, the parties have property totalling $1.48 million or thereabouts and liabilities of $772,589. There is a net amount available for distribution between the parties of $715,731.
The applicant argued for the respondent to be solely responsible for the debt to the liquidator and for the debt to N Finance. In my view, those debts ought to be shared by the parties.
In respect of the debt to the liquidator, it arises out of a judgment obtained by the liquidator against the respondent earlier this year for a sum far in excess of $200,000. The amount sued for by the liquidator was the balance of some loans described in the material as “Division 7A loans” that had arisen over the course of three financial years. The loans came about, as Division 7A loans usually do, by access being made to the company’s money by the parties for their own purposes. The money so accessed was not declared by the company to be a dividend and, therefore, it was taxable in the hands of the parties. The operation of Division 7A was attracted.
Unless there is a loan agreement entered into between the company and the relevant directors at the conclusion of each financial year the amounts accessed are deemed to be dividends that attract tax at the recipient’s highest marginal rate. Here there were relevant loan agreements. The applicant says that she should not be liable for any of it because she did not know what was going on, but that is hardly an answer. It is hardly an answer because while she may not have known what was going on, she enjoyed the largess of the money. Her evidence in cross‑examination demonstrated that she accessed the company’s funds, just as the respondent did; it might be that he accessed them more than she did, but the access is what was important. I do not accept her evidence and the submissions made on her behalf that, at the very worst for her, she simply concluded that the money she was using was the respondent’s salary. I do not accept that these debts should fall solely at the feet of the respondent. Both parties enjoyed the fruits of the legal practice via the company and so both should bear responsibility for the Division 7A debts.
So too, the debt to N Finance; it, arose out of the parties’ use of two motor vehicles. The applicant complains in her material about the way in which that debt crystallised, but, on any view of it, it seems unlikely that the ongoing payments to the finance company were able to be met. Something needed to happen and it did. The vehicles were sold for less than what was owed on them and a residual debt to the financier remains.
The debts to Mr M and Q Company are also debts that need to be considered in assessing the parties’ net property. That is because they are part and parcel of the Division 7A indebtedness. If I were not to take those into account, then it would seem to me that I should take into account not $110,000 owing to the liquidator, but, rather, the full $200,000.
On that point, it is worth remarking that whilst the applicant complains in her affidavit material that the calculation of the Division 7A loans is inaccurate because, on her view, at least $110,000 of the amount included in the Division 7A loans was money that was in fact used by the company for company purposes, what has in fact occurred this year is that the respondent has been able to reduce the Division 7A indebtedness from something over $700,000 (for which judgment was obtained against him) to $200,000. So, even if the applicant is right in terms of the calculation of the Division 7A liability, what has occurred in fact means that the parties have the benefit of a much-reduced liability in that respect. That is something that, as a question of contribution, sounds in the respondent’s favour.
I turn then to the question of contributions. That is a matter which on the submissions is not particularly at issue; it is necessary, though, to record some short reasons about it. Shortly prior to the parties’ relationship the respondent had purchased a property at Town S in Region T. Although the respondent asserts that he had about $50,000 in equity in that property at the time that the parties commenced their relationship in 2008, I do not accept that is so. I do not know what the equity was and I am not prepared to accept the respondent’s estimate about it; in any event, it does not much matter. He purchased the property for $620,000 using funds secured by mortgage. He also had his own business from which he drew a salary of about $80,000 per annum and he had a superannuation interest in the order of $80,000.
The applicant, I accept, had about $20,000 and a motor vehicle. The $20,000 was soon spent purchasing a recreational vehicle and painting the Town S property internally. At the time, she worked in the service industry and at her parents’ business. During the parties’ relationship the respondent, through U Pty Ltd until 2017 (which was subsequently liquidated in 2019) and by L Pty Ltd since 2017 conducted his own business. The applicant in her evidence described him as very good at his job; at least she could say one thing positive about him. She helped out in the practice in various administrative roles. The income from the business funded the parties’ lifestyle. They used money from the business to meet their living expenses and the renovation costs for the Town S property.
Following separation, the parties continued to reside in the Town S property until late 2019. The evidence is not entirely clear about that, but I do not need to make clear and distinct findings about this point. In late 2019 the respondent purchased another property at Suburb J, calling upon the equity in the Town S property. The property was purchased for the applicant and children to live in. Something was made of the fact that he said he had purchased it for her. I am not sure what is to be made of that. The submission was not developed. In any event, it is probably irrelevant.
The property was registered in the respondent’s name. The purchase price was raised on the security of mortgages over both Town S and Suburb J. From that point the respondent met the mortgage payments and the outgoings for both properties. He also paid, it seems, child support. He gave other money to the applicant, although he ceased paying her electricity costs at one point and her health insurance premiums. There was also some argy-bargy about the motor vehicles. The respondent threatened to withhold funds if the applicant did not make the children available to him from time to time. Money, it seems, was the control.
The Town S property was sold earlier this year for over $1,000,000. The funds were applied to discharge the mortgage secured over that property and to meet conveyancing fees and the costs of sale. The balance is retained in the E Lawyers trust account and forms part of the assets available for division between the parties in this case. The mortgage and outgoings for the Suburb J property have been met from those funds ever since.
The applicant devotes much of her affidavit of evidence-in-chief to what she would do in the respondent’s business when the parties were together and how the respondent would treat her, but ultimately all of this is for naught because the parties agreed before me in submissions that they each contributed to the acquisition, conservation and improvement of their property equally but in different ways – the respondent through his work and income and the applicant through her assistance and her contribution as the primary homemaker for the family.
Both also agreed as to the nature and extent of the post-separation contributions made by the parties, such that each submitted that I should conclude that overall, the parties’ contributions to the acquisition, conservation and improvement of their property should be seen as equal. As I put to Mr Polley in the course of his submissions, that really what occurred post-separation was exactly what was occurring pre-separation. That proposition seemed to be accepted.
The conclusion of an overall equality of contribution is consistent, in my view, with the evidence, such as it is. I find that the parties’ contributions to the acquisition, conservation and improvement of their property should be seen as equal. On the net assets available for distribution between the parties, as I have found them to be, that means that the applicant and the respondent are each entitled to $357,731.
I now turn to the matters required to be considered by s 79(4)(d), (e), (f) and (g), although not necessarily in that order.
The applicant is 44 years of age. The respondent is 51 years of age. The applicant suffers from pain from time to time. Contrary to her counsel’s submissions, there is no evidence before me that she will require surgery or that the surgery will cost $20,000. The applicant’s evidence is that the pain she experiences will not prevent her from working as a healthcare professional, although she may have to pick an area that will let her manage her condition. The respondent’s health is good.
There is a real issue about the parties’ earning capacity. On the one hand it is not in contention that the applicant does not work. She is unemployed, although she has spent years since separation and perhaps even before, training to become a healthcare professional. Her evidence about all of that is confused and confusing because it suffers from (a) not being updated from the 2020 affidavit and (b) repetition. But it seems tolerably clear that as at now she is either qualified or almost qualified; it seems to be her intention that she will work as such. Just how much she will earn when she works as such is not clear from the material before me and I can make no finding about it. What I do find is that she is either qualified or very soon to be qualified as a healthcare professional and she intends to take-up employment in that regard.
The respondent remains a professional; he swears in his financial statement that he is employed as such; he swears in his affidavit of evidence-in-chief that he is employed as such. He says in his cross-examination that he is not employed as such, but that he is a consultant. There is a difference. Some might say it is more a technical difference than anything else, but there is a difference. Whatever the case might be, the difficulty lies in figuring out what it is that he earns; it is not clear. I have struggled with his evidence about this because it makes no sense. He swears in his financial statement that he earns a wage of something a little over $5,000 gross per week. His cross‑examination revealed that he has been banking into a bank account which was only recently disclosed, apparently, a sum over $6,560 per week.
When taxed with this anomaly in cross-examination the respondent’s evidence was very unclear. He suggested that because he was a consultant he was also paid PAYG tax, GST and superannuation and that it was then left to him to remit those amounts, it seems, to the Tax Office and perhaps to his superannuation organisation. But when one does the figures it does not add up; I think the respondent knew that in the witness box because whilst he seemed to suggest that he was doing the maths in his head, he did not call for a calculator and even doing the maths unaided demonstrates that the figures cannot be right.
Nonetheless, even if one takes at face value his financial statement which says that he has an average weekly income as an employed, full-time solicitor of $5,404 per week and adds to that the tax that he says he pays of $1,976 per week, as well as the superannuation of $592 per week, the result is well in excess of that which is being banked. The figures are substantially different. Trying to work backwards does not work either so the conclusion that I have come to, and the finding that I make, is that the respondent’s wage as an employed professional of Q Company is $6,568.38 per week – the amount that seems to land in his bank account each week.
That is a significant income over and above the amounts that the applicant might earn, even if she was fully employed. There is a significant disparity in income-earning capacity between these parties. There is one qualification to that. Presently, as I understand the evidence, there is a show-cause notice pending against the respondent from the relevant professional authority. Just what might happen if things do not go the way he wishes them to go with that is not clear. Whether that will mean he will be lose his qualifications or whether that means he will be sanctioned in some other way is not clear to me and I was not addressed on the potential consequences. It is a contingency that I have, nonetheless, considered under s 75(2)(o).
Other matters to be taken into account under s 79(4)(e) are the debts for which the respondent is personally liable. He is liable for the debts to which I have earlier referred and the applicant is not. That is something of significance. He has the capacity, it seems, to be provided with money from his parents or at least his
applicant. That is something to be taken into account as well, although I give it not very much weight.There is also the question of childcare responsibilities. In the parenting case, the respondent contends for an equal-time arrangement. The independent children’s lawyer asks for an order that the children spend six nights in the respondent’s care and the balance in the applicant’s and she says it should be five nights. There is not much difference between the three positions, although I accept immediately that if they spend more time in the applicant’s care than they do in the respondent’s, there will be something of a slightly greater financial impost on her because of that.
Another matter to be taken into account is child support. This is another vexing issue. The evidence is all over the place. It seems clear enough, I think, that the respondent has been paying child support of something over $400 per week; just how long it has been happening is not clear. However, I think I can confidently find and I do, that he has discharged that obligation of about $400 a week. On top of that there is an obligation to pay spousal maintenance and in the applicant’s financial statement she seems to have lumped the two together, as has the respondent. In terms of collection by the Child Support Agency, they seem to have been lumped together. That is not surprising. But what is surprising is the inability to dissect the two payments so that I can figure out whether the child support commitments are met, something that I am required to specifically take into account under s 79(4)(f), as opposed to an obligation to meet an order for spousal maintenance. Be that as it may, the respondent’s evidence in cross‑examination was that he has not paid any of the spousal maintenance since the order was made by Austin J (on an appeal) in the middle of last year. I am told the arrears are about $17,000. However, I do not understand how that works either, because since the orders were made by Austin J there have been 62 weeks pass and the amount to be paid is $538 per week. Do the maths. That is about $32,000, not $17,000. So, I do not know what the position truly is regarding spousal maintenance and child support.
What I do know is that the respondent does have a proclivity for using money as control – so much appears from his own text messages in the applicant’s evidence – and so it is highly likely, it seems to me, that in the future there might well be some difficulty between these parties in terms of financial support for the applicant if the respondent sees some advantage in withholding financial support. That is something I take into account.
Having regard to all of those matters, I consider that an appropriate adjustment under s 79(4)(d), (e), (f) and (g) is 30 per cent, that is, there should be a differential between these parties of 80:20; I will explain my reasons why.
Thirty per cent of this property pool is about $210,000, give or take a few dollars. The respondent, on his own evidence earns $280,000 a year; on the findings I have made about his income it is much higher than that. The applicant earns nothing at the moment. In those circumstances the differential will be expunged by the respondent after a year of work – hardly an impost on him and notwithstanding that he will have the personal responsibility for some of the liabilities to which I have earlier referred.
A division between the parties of 80 per cent of the net property to the applicant and 20 per cent of the net property to the respondent, I find, is appropriate. That means that the applicant should receive $572,584.80 and the respondent the balance of $143,146.20.
The real issue is how to effect that division. It seems to me that it is appropriate and important that the debt to the liquidator be discharged immediately. There is evidence about the agreement between the liquidator and the respondent and it is important that that $110,000 be paid to discharge the liability forthwith. The first order will be to that effect.
That will leave a balance of about $32,000. The parties have a joint liability for G School that should be paid from that amount as well.
The balance, then, can remain in the applicant’s hands. The applicant will retain her bank accounts, her motor vehicle, her home contents and her superannuation. The respondent will retain his bank accounts, Motor Vehicle 2, his home contents and he will retain responsibility for the debt to N Finance, P Finance and the liabilities to Mr M and Q Company. He will also retain his superannuation.
That then leaves the Suburb J property. There is no evidence before me about the realisation costs of that property. I would only be guessing at figuring out what the realisation costs will be and so I have worked on the admittedly false basis that the net equity will be the difference between the parties agreed value and the home loan liability. That is demonstrably artificial, I accept, because the ultimate sale price of that property might not be what the parties’ agreed value is and the costs of sale are not known. But if the applicant receives all of the equity from the Suburb J property, then that will complete her 80 per cent entitlement.
How she might receive that equity is something that troubles me and I have had difficulty fashioning an order that might provide for that in the sense that it seems tolerably clear that the property will have to be sold. There seems little point in providing the applicant with the opportunity to refinance the debt on that property and retain it in her possession. If the property is to be sold, then an order for sale as suggested by the respondent seems cumbersome and unwieldy.
I have also wondered about the proposition that the applicant should simply be appointed trustee for sale of the property so that she can organise its sale forthwith. As an incentive to ensure that the sale occurs swiftly, the respondent would be relieved of any obligation to make mortgage payments in the meantime. The parties need to consider how the property might be sold and what might be the best form of order. I will refrain from pronouncing the property adjustment orders until the parties have had an opportunity to either confer about that issue or make further submissions about it to me.
I return to the question of spousal maintenance. I have already made some findings about the respondent’s income. The applicant’s income is set out in her financial statement. She has government benefit income and the child support income. No submissions were addressed to me as to whether all of the government benefit income received by the applicant is income which might be characterised as an income-tested pension benefit or allowance for the purposes of s 75(3) of the Act. I have therefore assumed that they are. They usually are, although Family Tax Benefit Part B does not usually fall within that description, but how much is Part B and how much is Part A is not revealed by the evidence.
The applicant’s income for the purposes of her spousal maintenance application is about $400 a week by way of child maintenance or child support. She was taken to task on some of her expenses; some of them perhaps might be seen to be a little unreasonable. I do not accept that the amount for food and groceries is unreasonable given that on his own case the respondent says that food costs for he and the children equate to something like that spent by the applicant. But, in any event, even if the amounts chipped away at by Mr Polley in cross‑examination are accepted as unreasonable, the applicant still clearly establishes a need well in excess of $1,000 a week for maintenance: I so find.
The respondent’s income is, as I have already found, $6,568.38 per week. His expenses sworn to in his financial statement are $6,907. One of those expenses, he says, is superannuation. That must be a voluntary contribution on his part. I say it “must be” because if he truly is a consultant, then he is not obliged to pay any superannuation on his behalf. I was taken to no law that suggests otherwise and if he is an employee, then the obligation is on his employer and not him. So it must be a voluntary contribution and in circumstances where the applicant is in need of maintenance, that is not an appropriate expense.
Further, included in his expense schedule is the amount of $583 for spousal maintenance, the very amounts he tells me he does not pay. So that can be deducted as well. If one deducts that, his expenses are $5,732 per week. He has a surplus of $836.38 per week. He can clearly continue to afford to pay the spousal maintenance ordered by Austin J, which is the amount sought by the applicant. That order will continue until further order or until the applicant secures full‑time employment or its equivalent.
I turn then to the question of parenting. The parenting orders were, by and large, agreed. There are some issues that remain to be determined, however. The major issue is how much time these children will live between their parents. The independent children’s lawyer, as I have already indicated, suggests that it should be a six/eight arrangement, the applicant says a nine/five arrangement and the respondent says an equal-time arrangement. The submissions made by each of the parties seemed to hinge upon what they considered was in their own best interests. With respect, I did not hear much that fell from anybody about what was in the children’s best interests.
The independent children’s lawyer’s submissions highlighted that the orders that she suggests would see these children return to a regime with which they were familiar. That is as good a reason as any to pick six/eight and that is what I pick. It is in the children’s best interests for them to spend significant time with each of their parents; there is no doubt about that. These are people who have much to offer their children. There is no doubt that there will be a benefit to these children from a meaningful relationship with each of them, if only these parents could see that.
There is no risk to these children in the care of each of their parents. The applicant’s confected concerns about risks in the respondent’s care are just that - confected. There is not a scintilla of evidence of any probative value before me that would suggest that they are at risk in his care. The applicant’s response to Y’s prevarication about going to spend time with her respondent is simply a sign that she does not value the relationship between the respondent and Y. Mr D, a consultant social worker engaged to prepare a report pursuant to s 62G(2) of the Act identified the real issue; the applicant’s willingness to facilitate and ensure a relationship between Y and the respondent, rather than any risk to Y from the respondent. It was Mr D’s opinion that the applicant has appropriate parenting capacity to enforce parenting decisions and she has done so with respect to X and when it suits her, with respect to Y. Here what she had done is that she has chosen not to do something, not that she cannot. She has the capacity; she has just been unwilling to exercise that capacity.
For the respondent’s part, no doubt, there are many matters about which one can complain. I have mentioned some of them already but none of it responds to the amount of time that these children should spend with their parents. For those reasons, therefore, the time will be as the independent children’s lawyer suggests. There is a dispute between the parties about proposed paragraph 23. I do not propose to make that order; I think it is an unreasonable requirement in the circumstances. Children are entitled to know that their parents work. Children are entitled to experience what it means and subject to them being exposed to unacceptable risk of harm, of which there is no evidence, there is no reason why that order is necessary. The order about therapeutic counselling is in dispute. I have determined to make this order about therapeutic counselling.
The respondent says he does not want an order like that. He wants to be able to at least provide a panel to the applicant, because he does not trust her to choose the medical professionals. That he would have such a poor view of a medical professional’s independence is sad. I see no difficulty with the proposed order. The order will be as I have suggested. In addition to the orders that the independent children’s lawyer has suggested, there are three other matters to be dealt with:
The first is whether there should be a recovery order. A recovery order will be unnecessary.
The second is whether the children can go to the school counselling. The short answer to that is of course they can and that was, I think, agreed at the bar table.
The third is a condition about alcohol and drug testing. I do not intend to make that order, either. In my view, the evidence is insufficient for the purposes of imposing such an obligation on a parent.
There are some minor variations to these orders handed up by the independent children’s lawyer that I consider are in the best interests of these children. I do not intend to have these orders explained by a Court Child Expert. They are in terms of the moratorium of a fairly short duration. The independent children’s lawyer suggested that the text messaging that might occur between the applicant and the children when the children are in the respondent’s care should be limited to four occasions each 24-hour period. In my view, that is far too much. It should be two occasions, only, each 24-hour period unless the respondent otherwise agrees. Text messaging has the real potential to be undermining of a parent’s relationship with children, disruptive and secretive. It ought to be limited.
There was some contention about the order suggested by the independent children’s lawyer that each of the parties should stay away from the children’s school unless they were collecting them from the school or delivering them to the school. The order that I propose is in these terms.
An order in that form preserves the ability of the parents to attend ceremonial occasions, like speech night and special assemblies, like sporting carnivals and fixtures where team sports are involved, but otherwise stay away. I do not think there are any other significant changes to the forms of the orders that the independent children’s lawyer has proposed.
I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett. Associate:
Dated: 29 September 2023
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