JAMESON & NEALE
[2017] FCCA 3006
•7 December 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JAMESON & NEALE | [2017] FCCA 3006 |
| Catchwords: CHILD SUPPORT – Applicable principles – power of court to grant departure order – relevant criteria – consideration of what may constitute special circumstances – sub-s 117(2) grounds not made out – power not engaged as criteria not satisfied – child maintenance application dismissed. SPOUSAL MAINTENANCE – Respondent seeks spousal maintenance – relevance of alteration of property interests upon application – requirement of para 90SF(2)(b) that the applicant for spousal maintenance demonstrate an inability to support herself adequately – whether, by reason of orders adjusting property interests, this could no longer be established – whether, by reason of those orders, respondent to application for spousal maintenance was no longer reasonably able to do so – threshold criteria in paras 90SF(1)(a)-(b) not satisfied – finality of relief – spousal maintenance application dismissed. |
| Legislation: Child Support (Assessment) Act1989 (Cth), ss.3, 4, 5, 99, 114, 115, 116, 117, 118, 121, 123, 124 |
| Cases cited: Aleksovski & Aleksovski (1996) FLC 92-705 |
| Applicant: | MR JAMESON |
| Respondent: | MS NEALE |
| File Number: | MLC 1718 of 2016 |
| Judgment of: | Judge A Kelly |
| Hearing dates: | 1, 2 May 2017 |
| Date of Last Submission: | 2 May 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 7 December 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Potter |
| Solicitors for the Applicant: | Scammell Black Mileo |
| Counsel for the Respondent: | Mr Skerlj |
| Solicitors for the Respondent: | M K Steele & Giammario |
ORDERS
The applicant shall retain the following property:
(a)any amount standing to the credit of his bank accounts including, without limitation, all amounts earned in the conduct of the business, ‘(omitted business)’ that have been deposited to such accounts;
(b)his Ford (omitted) motor vehicle;
(c)his boat and trailer;
(d)the parties’ interest in the (omitted) time-share resort;
(e)his superannuation;
(f)all of the assets and undertaking comprised in the business ‘(omitted business)’ including, without limitation, the tools of trade, (omitted) employed in that business;
(g)the interim distribution of $30,000 paid pursuant to the consent order made on 26 April 2016 (as amended on 7 July 2016);
(h)his (omitted) Bank credit cards (omitted);
(i)the shares held in (omitted);
(j)his personal effects and any chattels in his possession.
IT IS DECLARED THAT the value of the personal property referred to in paragraph (1) of this order is $193,578.
The respondent shall retain the following property:
(a)any amount standing to the credit of her bank accounts including, without limitation, the amount paid to the respondent in settlement of her claim for damages;
(b)her Ford (omitted) motor vehicle;
(c)her superannuation;
(d)the interim distribution of $60,000 paid pursuant to the consent order made on 26 April 2016 (as amended on 7 July 2016);
(e)the amount standing to the credit of the parties’ (omitted) Bank offset account (omitted) ((omitted) Bank offset account);
(f)her personal effects and any chattels in her possession.
IT IS DECLARED THAT the value of the personal property referred to in paragraph (3) of this order is $321,637.
Subject to paragraphs (6) – (9) of this order, the amount (inclusive of interest), standing to the credit of the controlled moneys account held by the solicitor for the respondent, together with the said sums of $193,578 and $321,637 be divided so as to effect an overall division of the parties’ property as to:
(a)38 per centum, to the applicant, and;
(b)62 per centum, to the respondent.
By 4.00pm on 12 January 2018, the applicant deliver to the respondent any necessary instrument so as to transfer his interest in the amount standing to the credit of the (omitted) Bank offset account.
By 4.00pm on 12 January 2018, the respondent deliver to the applicant:
(a)a duly executed instrument of transfer to the applicant (or his nominee) of her interest in all of the assets and undertaking comprised in the business, ‘(omitted business)’;
(b)a duly executed instrument of transfer to the applicant (or his nominee) of her shares in (business omitted) [ACN (omitted)];
(c)a duly executed instrument relinquishing her office as director and secretary of (business omitted);
(d)a duly executed instrument relinquishing her interest in the trust styled the (omitted) Family Trust;
(e)a duly executed instrument relinquishing her office as trustee of the (omitted) Family Trust;
(f)a duly executed instrument relinquishing her interest in the (country omitted) time-share resort.
Delivery of all instruments pursuant to paragraphs (6) and (7) of this order be effected by exchange of those respective instruments.
Contemporaneously with exchange of the instruments pursuant to paragraph (8) of this order, the amount standing to the credit of the said controlled moneys account be divided and paid in the proportions necessary to give effect to paragraph (5) of this order.
Save for the purposes of enforcing any orders made above:
(a)each party is solely entitled, to the exclusion of the other, to all and any other property in the possession of such party as at the date of this order;
(b)each party foregoes any claims that they may have as to any superannuation, compensation, insurance, employment or any other benefits belonging to, earned or receivable by the other;
(c)all insurance policies remain the sole property of the named owner;
(d)subject to paragraph (e) below, each party is solely liable for and indemnifies the other against any liability encumbering any item of property to which that party may be entitled pursuant to this order, and in respect of any other liability that may be incurred in their name;
(e)paragraph (10)(d) of this order shall not extend or operate so as to confer indemnity upon either party respecting their liability (if any) upon any assessment (or re-assessment) of income tax, interest or penalties payable upon income derived from the conduct of the undertakings comprised in the business ‘(omitted business)’, the company (business omitted) or the trust styled the (omitted) Family Trust in any year of income up to 30 June 2016, whether pursuant to the Income Tax Assessment Act 1936 (Cth), the Tax Administration Act 1953 (Cth), the Trust Recoupment Tax Assessment Act 1985 (Cth) or otherwise;
(f)any joint tenancy of the parties in any real or personal property is severed.
The parties do and abstain from doing all such acts and things (as the case requires), and sign all necessary instruments and documents as may be reasonably necessary so as to give effect to these orders.
Notwithstanding paragraph (11) above, and the court considering it necessary to exercise the powers of the court under s 106A(1) of the Family Law Act 1975 (Cth), a Registrar of the Federal Circuit Court of Australia is appointed, in default of the performance or observance of the obligations in paragraphs (5)-(9) and (11) above, to execute any documents in the name of the parties or either of them and do all acts and things necessary so as to give validity and operation to this order.
The respondent’s application for spousal maintenance be dismissed.
The respondent’s application for:
(a)a departure order pursuant to Division 4, Part 7 of the Child Support (Assessment) Act1989 (Cth) be dismissed;
(b)a substitution order pursuant to Division 5, Part 7 of the Child Support (Assessment) Act1989 (Cth) be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Jameson & Neale is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 1718 of 2016
| MR JAMESON |
Applicant
And
| MS NEALE |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain the orders that have been made in a defended application for adjustment of property interests as between parties to a de facto relationship of long duration. At the hearing, the parties adopted positions that were quite polarised. The applicant sought orders as to the retention of certain personal property (by each of the parties), and that the balance of the proceeds of sale of the parties’ property situate at Property A and other monies be paid to him. Ancillary orders were sought respecting the parties’ interests in their associated company, (business omitted), their family trust, the (omitted) Family Trust, and their business, ‘(omitted business).’ The respondent sought orders that she retain substantially all such monies, certain personal property and orders for both spousal maintenance and by way of child support.
In substance, I have concluded that the parties’ property interests should be adjusted as to 38% in favour of the applicant and 62% in favour of the respondent. I have further concluded that the respondent’s application for spousal maintenance and the application for child maintenance should be dismissed.
Background
As each of the parties’ trial affidavits was sworn on 18 April 2017, a deal of their evidence on contentious issues was exposed only in the course of cross-examination. The following background is based upon an analysis of the parties’ affidavits and their evidence at trial. The matters set out below include both matters that were common ground and my findings of fact upon particular issues. Where issues of dispute arose, I have addressed them separately in a later section of these reasons. Where it has been necessary to decide disputed issues of fact I have applied the civil standard of proof to the resolution of that issue.
The applicant, who is aged 48 years, has worked as an (occupation omitted). Although the applicant was incapacitated for a period of some years, he is now self-employed. The applicant has a child from another relationship, A, who was born shortly before the parties to this proceeding commenced cohabitation. A has lived with his mother and the applicant has paid child support for his care.
The respondent is aged 51 years. The parties had a child from their union, X, who was born on (omitted) 2001 and will soon be aged 17 years. The respondent had worked in sales before the birth of the parties’ child in 2001 and did not then work in paid employment until the parties’ separation. The respondent now works as a (occupation omitted).
The parties commenced cohabitation in early 1997 and separated in late 2015. When they commenced cohabitation, the parties moved into the respondent’s rental accommodation in (omitted). The respondent deposed that her flat was fully furnished and that she owned those chattels. She did not identify any of those furnishings in detail.
When the parties commenced cohabitation, the respondent had a child, Mr J, who was then aged 7 years and is now aged 26 years. The applicant deposed that Mr J was treated by him as his son. The applicant gave evidence that Mr J’s biological father paid no child support for his son and that he was cared for and supported financially by the applicant.
On the applicant’s case, at the commencement of their relationship, the respondent had accumulated savings of ~$20,000. The applicant deposed that he too had savings of ~$15,000. However, the respondent’s trial affidavit adopted a pleading approach to the evidence and ‘did not admit’ that the applicant had contributed such savings.
At the commencement of the relationship the applicant had worked as a (occupation omitted), while the respondent had worked in (employment omitted) as a permanent part time employee at (employer omitted) and then for another company, on the same basis until the imminent arrival of the parties’ child.
In late 1999, the applicant sustained injuries in a trucking accident in consequence of which he was in receipt of payments from the Transport Accident Commission (TAC). He also received some payments under a personal accident insurance policy. The applicant underwent surgery for his injuries on several occasions including for operations to effect repairs to his knees, hip, shoulder and back. In addition to his periodic payments, the applicant was also paid $22,000 by way of lump sum on account of his injuries and disability.
The respondent deposed that by reason of the applicant’s accident, she had been the primary income earner for the year before the birth of X in (omitted) 2001. The respondent did not return to work after the birth of the child and, apart from her contribution as administrative assistant in the parties’ (omitted) business, did not resume paid employment until after the parties’ separation.
The applicant was unable to work for a period of about four years and in that time he stayed at home caring for X while the respondent was engaged in part-time work. The applicant accepted that during this period he also lent assistance to a mate a couple of days per week by working at his (omitted) business. The applicant explained that his mate, who has since died, ‘was on dialysis’ and needed help.
The applicant had been the primary carer of X and also undertook most of the home duties.
In late 2003, the applicant returned to work in (employment omitted). He decided to establish himself in self-employment and outlaid some $75,000 to acquire a truck, (omitted) and various tools. The applicant borrowed monies to acquire those assets which loans he has repaid. In cross-examination it was suggested to the applicant that it would have been difficult to secure borrowings of this magnitude at a time when the applicant had not been earning income. I accept that the applicant had obtained such loans and has repaid them. The applicant’s evidence was that although he had obtained a line of credit from his bank for the purpose of establishing his business, the loan had been secured by mortgage over his property such that, when the property was sold, the bank had refused to discharge its mortgage until that loan was repaid.
The applicant’s business was initially operated as a ‘basic start-up’ but in due course was conducted through a family trust styled the (omitted) Family Trust (family trust). A company (business omitted) (of which the respondent was sole director and shareholder), acted as its trustee. The trust structure employed to establish the (omitted) business was adopted upon the advice of the parties’ accountant. It appears that this structure was chosen in part because of the applicant’s need to meet qualifying criteria when tendering for larger job prospects. He agreed that the respondent was the sole director but had no idea of the identity of the shareholder[s] in (business omitted). The family trust and company were, in effect, single purpose vehicles. Their only function was to operate the (omitted) business.
Contrastingly, the respondent deposed that originally, the parties had been joint trustees of the trust but that by a deed dated 8 December 2008, they had resigned as joint trustees and the respondent was appointed as, and has since that time been, the sole trustee of the trust. The deed was not adduced in evidence and the respondent’s evidence that she had been appointed sole trustee was at odds with the evidence that their company had been incorporated and appointed as trustee.
Income derived by the trust was distributed to the parties as follows:
Year
Trust
Applicant
Respondent
2011
30,914
12,571
14,990
2012
34,841
19,438
15,050
2013
36,352
18,346
17,994
2014
37,506
18,653
18,643
2015
56,201
27,941
27,940
For the most part, the total income derived by the trust was divided equally between the parties – that is to say, the trust income represented the total income of the business in each respective year.
The business model employed by the applicant was straightforward. He would quote for jobs, perform the works and be paid. As a matter of practice, he would frequently arrange for the customer to pay in advance for the cost of materials which he would then purchase at a trade discount, passing that cost and discount to the customer. The applicant was paid in cash or by cheque. The respondent had responsibility for banking (cheques and cash), and for paying accounts.
The respondent said that the applicant provided her with sufficient cash to cover expenses and would instruct her to pay off their credit card, business and personal debts. Otherwise, the respondent eschewed any knowledge of how or what the applicant did with the cash proceeds of his business. The respondent did suggest that the applicant had used a (omitted) Bank account to deposit cash into and also said that he put cash in a drawer. She deposed that the applicant had at all times been in effective control of the (omitted) business. However, while the respondent showed herself ever willing to make allegations against the applicant, the respondent agreed that she had been largely responsible for the books and accounts of that business. As the applicant explained of his role, “I don’t do much paper work mate.” From other evidence, the respondent observed the applicant in collating invoices and receipts so as to be able to provide the parties’ accountant with the source data necessary to prepare quarterly BAS statements. In concluding her evidence, the respondent said that she had observed the applicant working at the kitchen table doing the paperwork for the accountant to prepare the BAS statements and writing up his invoices.
The respondent stated repeatedly that she had been unwise and simply signed whatever had been put in front of her. The respondent gave this evidence in several contexts including in relation to the conduct of the business, the preparation of accounting and tax records by the parties’ accountant, their many property transactions and loan applications which were made for these various purposes.
The respondent said that the applicant was paid for 80% of his work in cash and the other 20% was by way of cheque. The respondent agreed that she had done the banking.
In 2007, at age 17 years, Mr J moved out of the parties’ home to live with the respondent’s mother. In the intervening period, Mr J spent time regularly with his biological father, including on school holidays. Part of the respondent’s case was that the applicant’s relationship with her son, Mr J, had been strained and uneasy. The respondent’s trial affidavit addressed these matters in some detail and in turn they were met by the applicant in the course of trial. The applicant’s trial affidavit countered that Mr J had not left home until after he was aged 19 years (he having both a car and driver’s licence at the time), and while admitting to disputes on occasions, said that they had got on well. In cross-examination, the respondent agreed that the applicant had made a gift of $10,000 to Mr J so as to assist him to buy a house. Although she corrected herself, at another point the respondent spoke of Mr J in the context of the applicant and herself as being ‘our son’.
Properties
In the course of their relationship, the parties acquired a series of properties. In many cases, the parties acquired vacant lots upon which they erected a home and, after improving the property with landscaping and in other ways, sold each such property before acquiring the next. The applicant, with the assistance of friends, would undertake the excavation and other ground works required for the house construction. The respondent disputed the extent to which the applicant undertook work but deposed that she too had done work on the properties such as painting and landscaping. Their property dealings were as follows:
(a)First property: in 1998, the parties purchased vacant land in Property B for $55,000. They borrowed ~$130,000 which was secured by mortgage to construct a dwelling. Following construction, the parties lived there for a time until it was sold in 2001 for $233,000. Copies of the mortgage raised in relation to this purchase were adduced in evidence and showed that the mortgage had originally been stamped to a value of $108,000 and then up-stamped to a value of $130,000. Following this sale the parties lived in rented accommodation for a time;
(b)Second property: in 2002, the parties purchased a property in Property C for $190,000. In relation to the purchase of that property, the parties borrowed ~$120,000 which was secured by mortgage. The parties renovated that property and lived there for a time until it was sold in 2003 for $226,000. The evidence suggests that, at best, the parties broke even on this acquisition and sale. There was a suggestion in the applicant’s evidence that the respondent had purchased the property at auction without first referring to the applicant. The respondent denied that this was so, and described convincingly, the manner of that purchase and the holiday which they took immediately following that auction;
(c)Third property: in 2003, the parties purchased vacant land in Property D for $119,000. To construct a dwelling, the parties borrowed ~$130,000 which was secured by mortgage and repaid. During the period of construction the parties lived, rent free, with the applicant’s mother. In 2003, the parties moved into the Property D property until it too was sold in 2012 for $410,000. The applicant constructed an in-ground pool at this property. At settlement in 2012, the net proceeds of sale of this property amounted to about $275,000 (see below);
(d)Fourth property: in 2006, the parties purchased an investment property in Property E for $259,000. The whole of the purchase price was funded using bank finance. The property was negatively geared. The respondent stated that the parties had made a profit of ~$35,000 on the sale of this property;
(e)Fifth property: in January 2011, the parties purchased vacant land in Property A for $185,000. The parties were registered as joint proprietors of this property. As to the completion of this purchase, it may be noted that settlement of the Property D property was not completed until 2012. There was no mortgage on the fifth property until October 2011. Yet it was said that the parties financed the purchase of this property using borrowed funds. In addition, to pay for the costs of constructing a dwelling on this property, the parties borrowed ~$300,000 which was secured by mortgage. This property was sold by agreement following the parties’ separation. On 31 March 2016, the parties entered into a contract to sell the Property A property for $800,000. The net proceeds of sale (being $445,771.58) is held in an interest bearing account in their joint names.
In sum, all properties have been sold and the remaining proceeds of sale from the Property A property are now held on account.
Three other features of the parties’ property acquisitions may be noted.
First, the parties were able to acquire the second and third properties at a time when the applicant had been injured and was not working. He was dependent upon payment of benefits from TAC and his personal accident insurer from the date of his accident in 1999 until at least late 2003. Moreover, in the period after January 2001, the respondent was not working in paid employment. Those circumstances raise, but do not answer, the question as to how those properties were purchased.
Secondly, the parties also appeared to have been able to complete the purchase of some properties without resort to mortgage finance.
Thirdly, the sale of the Property D property was not completed until 2012; the net proceeds of this sale amounting to about $275,000. There was some evidence that those proceeds were paid into a mortgage offset account (offset account) that was opened with (omitted) Bank. The respondent deposed that this account was established following the settlement of the sale of the Property D property and that the applicant had made three deposits to that account as follows:
(a)on 17 September 2012, the sum of: $100,000
(b)on 18 September 2012, the sum of: $100,000
(c)on 19 September 2012, the sum of: $ 45,000
If some part of the net proceeds of sale had not been deposited to that account, the applicant was unable to account for such part.
However, the respondent contended that she was unsure whether the source of those funds represented the net proceeds of sale of the Property D property on the stated basis that “this account was generally operated by [the applicant].” The applicant denied that the offset account was generally operated by him. Copies of (omitted) Bank statements were adduced in evidence. The offset account was held in the names of both parties. If the respondent’s evidence was adduced so as to support an inference that those funds had come from a source other than the sale of the Property D property, a submission to that effect was never advanced.
While those three considerations raise the spectre of a possibility that the parties applied cash toward payment of the purchase price for the second and third properties, this was not put directly to the applicant and in all the circumstances, I am unable to make more definitive findings about these aspects of the matter.
In addition to their various property purchases, in 2013 the parties purchased an interest in a time share resort located in (country omitted) which confers an entitlement on the parties to occupy accommodation in that resort for a period of up to four weeks annually. The applicant has a particular interest in (hobbies omitted). The parties were agreed that this interest has a value of $10,000. The applicant gave evidence that the time-share investment confers rights of usage which are not confined to (country omitted) but may be used worldwide, including in Victoria. The applicant has used his time-share entitlements on a trip to the (country omitted). The time-share investment also attracts an annual fee.
The parties’ loan obtained for the purpose of their fifth property purchase (i.e. Property A), was serviced from their offset account. Monies standing to the credit of that account were drawn upon so as to effect repayments of the principal and interest due on their mortgage.
The applicant deposited his income to the parties’ offset account. The applicant was taken to the (omitted) Bank statements which indicated, for example, that over a period of twelve months, deposits exceeding $228,000 had been paid into that account. Those deposits had been made in the financial year ended 30 June 2015. By contrast, the accounts of the family trust for that same financial year disclosed income of only $124,000. The applicant was pressed to explain this apparent anomaly. As to this, the applicant:
(a)did not accept that his earnings for a particular month should be extrapolated as being representative of his annual earnings;
(b)explained that many of his customers pre-paid for materials and that many of the deposits appearing in the (omitted) Bank account were properly attributed to such pre-payments (and did not therefore represent income). It was pointed out that the applicant had volunteered this explanation on the second day of trial, only after having filed his current financial statement (having been recalled to give evidence and then been cross-examined a further time);
(c)was also asked to explain the wide disparity between the expenses as stated in the trust accounts and the quantum of pre-paid expenses as had been suggested by the witness by reference to the (omitted) Bank statements. To this suggestion, his counsel agreed that because customers pre-paid for the costs of the materials, those costs had not been included in the trust account at all;
(d)was taken to a number of entries in the bank statements which, he said, demonstrated the payment by customers for those materials costs. Notably, when asked about this in cross-examination, the respondent conceded that the applicant had paid a great many materials suppliers using his credit card. She said that it was by this means that she and X had been able to travel interstate to attend (hobby omitted) matches. She explained that the parties used the frequent flyer points that were earned from spending large sums on the applicant’s (omitted) Bank credit card when purchasing materials, ‘All the points on our (omitted) card went to Sydney for – X and I used to go to Sydney’. (omitted) Bank credit card statements, which were in evidence, corroborated the applicant’s evidence. Statements were produced for three such cards; vis, (omitted) Bank credit cards (omitted), (omitted), and (omitted).
While an examination of the family trust accounts may have indicated that the disclosed income was not derived solely from the applicant’s (omitted) business, this issue was not explored.
When it was pointed out that the deposits ceased being made to the offset account following separation, the applicant responded that the account had been frozen by the respondent. Further, following separation the applicant ceased conducting his business via the family trust and has operated as a sole trader.
Separation
The parties separated on about 1 November 2015.
The respondent deposed that upon separation the applicant had taken $14,000 from a drawer telling the respondent that he had accumulated ‘too much’ cash and that he had to take it to the casino to launder it. In cross-examination the applicant contended that she was a law abiding citizen who had known the applicant was being paid in cash for his work. The respondent stated that the applicant was paid predominantly in cash and also by cheque. Her evidence was that, while the amount varied, the applicant received cash payments of between $1,500 and $5,000 from week to week. She also stated that the applicant issued receipts to customers when they paid for their jobs. The respondent conceded that she had access on a weekly basis to this cash and would take it as and when needed to meet expenses for herself, the applicant or for X. The respondent accepted that she did the banking.
Somewhat belatedly, near the close of her cross-examination, the respondent volunteered that apart from the cash kept in a drawer in the parties home, that the applicant also kept money in the garage, ‘there was more money in the garage than there was in the home. That’s for sure. And I didn’t get any of that . . .’
The respondent agreed that she did hate the applicant. She denied that she had been motivated by vindictiveness in raising tax fraud allegations against the applicant in the proceeding. When it was put to the respondent that the deposits made to the offset account were more or less consistent in the period before and post separation, the respondent was non-responsive.
The suggestions that the applicant had retained large sums of cash (whether in a drawer or the garage) were somewhat inconsistent with the objective contemporaneous evidence of the (omitted) Bank statements. Those statements indicated that deposits exceeding $228,000 had been paid into that account in the financial year ended 30 June 2015. This sum far exceeded the income recorded in the accounts of the family trust of $124,000. Whether or not the parties have properly declared their income, the manner of those deposits appears to be at odds with the case that the applicant habitually retained large sums of cash in the home.
The respondent deposed that before and since separation, the applicant had taken various overseas holidays including as follows:
(a)since 2011, the applicant had taken the respondent and X on three trips, each of 3 ½ weeks duration, to (country omitted), the last of which involved travel to (country omitted) and (country omitted);
(b)in 2015, the applicant had taken the respondent and X on a two week trip to (country omitted) (albeit that this had been purchased for $5,000 at a charity auction). At the conclusion of this trip the applicant had continued onto the (country omitted) while the respondent and their son returned to Melbourne;
(c)in (omitted) 2016, the applicant had travelled to (country omitted) for 10 days;
(d)in (omitted) 2016, the applicant had travelled to (country omitted) for 10 days;
(e)at the date of trial, the applicant had again been to the (country omitted).
In relation to the last trip, the applicant said that he had stayed at the accommodation of his girlfriend and that they had also stayed for a week using a resort that was available from his time-share investment. The applicant said that he had gone (hobby omitted) on this holiday.
The applicant agreed to having taken those holidays and was asked to reconcile the lifestyle represented by such trips with the income disclosed by the tax returns and other statements. The applicant rationalised that the holidays to (country omitted) were cheap and, as to the travel to the (country omitted) and (country omitted), he replied simply that, ‘We managed’.
In a similar vein, the respondent agreed in cross-examination that following separation, she had taken a trip with X to the (country omitted). In addition, the respondent agreed that on (omitted) 2017 she had paid $1,100 by way of deposit on a trip booked with (travel agent omitted). The respondent agreed that her account records also disclosed a number of other holidays that she had taken since separation.
Following the parties’ separation, the respondent, acting on the advice of her lawyers, ‘froze’ the offset account with the result that the mortgage fell into arrears. The applicant deposed that, in a series of further transactions, the bank appropriated the arrears together with certain prepayments of mortgage instalments and refroze the account.
In addition, the parties’ credit card liabilities were serviced from their offset account. In consequence of the respondent’s decision to freeze the offset account, the parties’ credit card liabilities were not being repaid and those liabilities accumulated to a sum of ~$30,000 following the parties’ separation. The applicant deposed that he had also repaid those credit card liabilities (which were not quantified).
It was the applicant’s case that, despite request, the respondent refused to allow the mortgage or credit card liabilities to be repaid from funds accumulated in the offset account, suggesting that those liabilities should be repaid from the applicant’s own funds.
At the date of trial, the balance of the offset account was $158,454.60
Since separation the applicant has continued his (business omitted) work. He deposed that he had not completed his taxation return for the financial year ended 30 June 2016. He estimated that his taxation liabilities for the years ended 30 June 2016 and 2017 would be ~$15,000 each. The applicant was not challenged on those estimates.
The applicant, who is the only employee, now operates his business as a sole trader and contends that the business has no goodwill.
Each of the parties complained about the inadequacy of the financial disclosure that had been made by, and other conduct of, the other.
In particular, the applicant complains that:
(a)the respondent has received payment of compensation on account of a claim for damages arising from injuries she sustained in an accident at a restaurant on (omitted) 2014. The injuries were sustained when the respondent tripped at the reception centre on the occasion of Mr J’s wedding. The respondent was initially not forthcoming about her receipt of compensation. The respondent signed a release dated 28 February 2017 pursuant to which she was to be paid the sum of $90,000 plus agreed costs and disbursements subject to an obligation to indemnify the defendant in relation to any payments due to Centrelink, Medicare or otherwise. The respondent also signed a pre-settlement authority pursuant to which she acknowledged that she would receive $70,000 in clear funds;
(b)despite request, the respondent declined to provide details of her disability insurance. For the purposes of filing her response, the respondent had produced a copy of her Pensioner Concession Card, which is current to 31 March 2018. The applicant deposed that she was on a disability pension on account of her suffering from rheumatoid arthritis and emphysema. She gave evidence that this pension had been replaced with a NewStart allowance;
(c)the respondent concealed that she had opened an account with the (omitted) Bank into which she has made certain cash deposits, the source of which deposits were not disclosed. In cross-examination the respondent agreed that a deposit of $8,000 represented the proceeds of sale of some of the parties’ furniture (other furniture having been retained by the respondent after the parties sold the Property A property);
(d)the respondent further stated that the chattels which she took with her upon moving from Property A were worth about $5,000;
(e)immediately following a motor vehicle accident in which the applicant and X had been involved on (omitted) 2016, the respondent had revealed to the applicant that she had already cancelled the policy of comprehensive motor vehicle insurance. In the result, the vehicle was uninsured at the time of the accident and the value of that asset was lost to the parties. The respondent refused the applicant’s demand that she ring the insurer and rectify the situation, notwithstanding she agreed that it was still possible to have done so. In cross-examination the respondent volunteered that she had in fact telephoned the insurer and informed it that the applicant planned to ‘do an insurance job’ in claiming for the value of this car. The applicant’s evidence was that this vehicle, a Nissan (omitted), was not worth more than $8,000.
Equally, the respondent complains that:
(a)the applicant conducted a good deal of his (business omitted) work for cash which, the respondent asserts, has not been disclosed;
(b)the applicant has failed to make proper disclosure of the monies paid to him by the TAC on account of his accident in 2000;
(c)the applicant had failed to pay child support. The respondent provided details of the applicant’s arrears which she quantified at $1,138.86 shortly before trial;
(d)their son, X, had not spent time overnight with his father since the parties’ separation;
(e)after the (omitted) 2016 motor vehicle accident, the applicant had purchased a (omitted) Ford vehicle but had not disclosed the cost of this acquisition;
(f)after separation the applicant had allowed the respondent to use her credit cards for a period but had, in the period December 2015 – March 2016, cancelled her access to those facilities.
As to the tax allegations, the applicant counters that the respondent was largely responsible for the accounting side of the (omitted) business and that on the occasions he was paid in cash, he gave it to the respondent to record, bank or to spend as needed. The applicant also points up that it was the respondent who had been able to make cash deposits to her accounts following the parties’ separation. The applicant also deposed that he had ‘self-reported’ to the Australian Taxation Office in relation to the respondent’s allegations of tax fraud.
As to the non-disclosure of receipts from the TAC, the applicant responded that he had no records as to the payment of a lump sum following that accident in 1999 and deposed he would not contend such payment ought be included as a contribution by him in this property settlement proceeding.
As to child support, the applicant deposed that he had paid such support and that, in addition, he had also paid X’s school fees and provided him pocket money. He contends that the respondent is refusing to pay for their son’s school expenses.
As to the time spent with X, the respondent agreed that the applicant and his son spent a few hours each week pursuing their interest in (hobbies omitted). She also contended that X spent time working for his father being paid cash for doing so. The respondent asserted that the applicant paid X $150 to $200 per day for his work but instructed him not to bank those monies. In cross-examination, the respondent volunteered that she would now ring WorkCover and report the work which X was performing.
As to the (omitted) Ford vehicle, the applicant agreed to, and did, produce a receipt for the purchase of this vehicle for $15,000. In addition, his counsel noted that the vehicle had been valued at $16,000.
As to his relationship with the respondent, the applicant accepted that this had been volatile on occasions. The evidence was as follows:
(a)he agreed to an incident in 1998 in which he had pulled the respondent from their bed and thrown her to the floor. The applicant agreed he had been required by the police not to sleep at the respondent’s flat that evening and denied he had regained entry via a window, insisting he had slept in his car and not returned until the following morning;
(b)he denied that he spoke abusively towards the respondent or in derogatory or derisive terms;
(c)he agreed that there had been an incident in (omitted) 1999 when the parties had attended a social gathering at a neighbour’s home. He denied that he had become enraged or dragged the respondent from the gathering resulting in her sustaining a tear to her (omitted) tracksuit. He said that the incident had not happened, “Not on that particular day, no”;
(d)he agreed that in 2007 he had smashed the respondent’s CEPAP machine. He agreed that following this incident the police had attended the premises and removed him and detained him at the (omitted) Police station overnight. He denied having head-butted the respondent but accepted that she had attended a clinic where her cheekbone had been x-rayed and also that Police had taken photos of her face. He denied that X had witnessed the incident. He also accepted that following this incident in 2007 the respondent had obtained an intervention order and that the applicant’s gun licence had been revoked. He also accepted that he had been required to undertake, and had undertaken, an anger management program. The applicant considered this to have been a serious incident and accepted that the parties had reconciled afterwards. In due course the respondent had applied for the discharge of the intervention order and the applicant’s gun licence had been reinstated;
(e)it was suggested to the applicant that after completing the anger management course his conduct had improved for some years, but that in 2010 he had ordered the respondent to get out of his house. The applicant could not remember the ‘particular incident.’ He gave evidence that he had found the anger management course to be particularly helpful and had gone back and undertaken several such courses over a period of some four years;
(f)it was also suggested that the applicant was abusive and critical of the respondent for the manner in which she paid, or failed to pay, outstanding accounts, describing her as useless at the one job that she had the responsibility to discharge;
(g)in September 2015, the applicant arrived at the Property A home with a friend, Mr D. When the respondent provided a cup of coffee to the applicant he had spat it out and abused the respondent for serving him coffee that was so hot. The applicant denied he had spat the coffee at the respondent, explaining that it was so hot that he had dropped it. Yet he said that he did not lose his temper, stating that he had been burned by the hot coffee;
(h)in (omitted) 2015, the parties had an argument over dinner. There was disagreement about the subject of the dispute. The respondent contended that the applicant had become angry when plans for the weekend had changed. The applicant said that the dispute had nothing to do with weekend plans but was related to the non-payment of accounts. The applicant’s basic point was that he was responsible for undertaking the (business omitted) work and the respondent was responsible for the administration of the business and he was angry at the state of the accounts, ‘Damn oath I was.’ He agreed that he had thrown his meal on the hallway floor and told the respondent to leave. He accepted that his conduct had been appalling. He agreed that the respondent and X left that day and returned the following morning.
In re-examination the applicant said that the respondent had left the home on only two occasions.
Financial positions
The parties have sold their Property A home and agreed that the net proceeds of sale be retained in a joint interest bearing account. The parties agreed also that an interim distribution be paid to each of them. The applicant was paid $30,000 and the respondent was paid $60,000.
Each of the parties made two financial statements.
The applicant’s financial statements were made on 26 February 2016 and 1 May 2017. Cross-examination on those documents was complicated by reason of the applicant not having finalised or filed his latest financial statement until the second day of trial. A comparison of those statements is as follows:
Item
$ 2016
$ 2017
Average weekly income
1,750
1,900
Personal expenditure
959
1,548
Property owned
576,750
476,382
Superannuation
10,000
17,828
Liabilities
170,000
28,000
Financial resources
Nil
Nil
The reduction in liabilities between 2016 and 2017 is explained by the parties having completed the sale of the Property A property and repaid their mortgage so as to give the purchaser clear title at settlement.
As the applicant agreed, on either view of his financial position, those statements demonstrated that the applicant had a weekly surplus of income over expenditure. There was a paucity of detail in the most recent statement as to the applicant’s expenses and objection was taken, rightly, to an attempt to rectify this omission in re-examination.
As concerned his sporting interests, the applicant agreed that he had some six firearms all of which, he insisted, were registered. He also agreed that he had game fishing rods and reels which he used on his boat to fish in the waters off (omitted). Equally he agreed that he enjoyed (hobby omitted). He denied that he was away (hobbies omitted), on average, for some 20 out of 52 weekends each year.
In relation to the savings which he had accumulated since separation, the applicant maintained that the stated sum of $83,000 included the interim distribution of $30,000 which had been paid to him pursuant to court orders made by consent on 26 April 2016. The erroneous duplication of that distribution was corrected, before trial, in a letter from the applicant’s lawyers dated 21 April 2017.
While the respondent had arranged for a valuation of the plant and equipment employed in the business, she agreed that she had obtained no such valuation of the contents of the garage where the applicant’s assets had been stored. Yet she asserted that the applicant’s chattels were very expensive and worth $15,000.
The respondent’s financial statements were made on 21 April 2016 and 18 April 2017. A comparison of those statements is as follows:
Item
$ 2016
$ 2017
Average weekly income
261
319
Personal expenditure
1,585
1,410
Property owned
539,702
508,856
Superannuation
10,000
10,181
Liabilities
178,378
30,000
Financial resources
Nil
Nil
The respondent was cross-examined in relation to her expenditure as disclosed by her most recent financial statement. She was examined about her use of the interim distribution of $60,000 that had been paid in April 2016. As to this, the respondent deposed that those monies had been defrayed by her for her living and legal expenses such that she now had ~$30,000 of that distribution remaining in her account. The respondent agreed that since February 2017, she had: (a) prepaid rent for six months; (b) made a ‘transfer’ of some $18,000 to a (omitted) Bank account; (c) paid her lawyers some $14,000. The respondent agreed that following separation she had taken a trip to the (country omitted) and had also expended part of her interim distribution on this trip. Otherwise, it was demonstrated that the respondent had largely preserved that interim distribution up to the date of trial.
From this platform the respondent was asked to explain how she had preserved that distribution when her financial statement indicated her weekly expenses exceeded her stated weekly income. The respondent agreed that she did (omitted) work but denied that her income was not being disclosed. She stated that she was required to disclose her income each fortnight to myGov, failing which her NewStart Allowance would be withheld. Pressed for a candid disclosure of the amount of work that she performed, the respondent stated that she did perhaps two to three (omitted) jobs each week.
The respondent was taken to her (omitted) Bank account that had been opened on 4 March 2016 and asked to explain various deposits that had been made to that account. While the respondent had a distinct recollection of an item that related to the sale of a (omitted) by X for $80, the respondent generally had no recall of a series of far more sizeable deposits that had been made to her account. I have concluded that her evidence on this topic was evasive.
Concerning her current circumstances, the respondent also deposed that she is required to work 15 hours per week but has been unable to obtain further employment. The respondent says that she works as a casual (occupation omitted) earning on average about $150 per week. Otherwise, the respondent deposed that she had no capacity to support herself adequately. To this end, the respondent stated that shortly before trial (on 3 March 2017), she had authorised the release of all of her tax returns for the period 1999 to date, including in respect of any distributions made to her as a beneficiary of the family trust.
The respondent conceded that her bank statements indicated she had received on average, $347.45 by way of government benefits each week in the period 9 March 2016 – 18 February 2017. In addition, the respondent’s bank statements indicated that the respondent derived average weekly income of $224.45 per week from her (employment omitted) works. She stated that her income had dropped from $350-$450 per week to around $225 per week. I accept that since separation her income has varied. Like the applicant, the respondent agreed that X had assisted her in her (omitted) duties but and that she had ‘slipped him a bit of cash . . . [paying her son about] $20 per hour.’
The respondent conceded she may not have disclosed all her income.
The respondent accepted one integer in the formula for the calculation of the child support payment was the respondent’s own income.
The respondent agreed in cross-examination that the parties had been less than attentive to their book keeping.
Since separation, the respondent has continued to be the primary care giver to X. In consequence, the respondent has also carried the bulk of the financial responsibility for his care. At the same time, the applicant gave evidence that X would now spend perhaps three – four nights per week and some time on weekends with the respondent.
The respondent stated that X loved his father. The applicant said that he and X spent a lot of time (hobbies omitted). While the applicant has only had X to stay overnight once or twice since separation, this was to be understood in the context that the applicant continues to reside at a friend’s home (for which he pays rent). He expressed confidence that as soon as he had his ‘own place’ X would spend a lot more time with him there. In relation to his most recent financial statement, the applicant said that of the $50 per week which he had allocated for hobbies and entertainment, this should be understood as being for the use of both himself and X.
Procedural History
On 1 March 2016, the applicant filed an initiating application by which he sought final orders for the sale of the Property A property and, (after payment of sale costs, secured liabilities and outgoings), that the balance be paid to the parties in a proportion that would achieve “a 50/50 split of the parties’ assets.” By her response, the respondent joined in the application for the sale of that property and the application of the sale proceeds, save that an order was sought that the balance, including any interim distribution, be applied in such manner as the court deemed meet.
In addition, orders were sought that the respondent transfer any interest that she held in the business, (omitted business), and her shares in (business omitted) and that she relinquish any interest in the (omitted) Family Trust. Upon these matters, the respondent claimed interim relief that the applicant file all outstanding tax returns for his business, the company and family trust from 30 June 2015.
Further, the applicant sought orders that he retain his boat, motor vehicle and his excavator. The applicant also sought orders that the respondent retain her motor vehicle and the household chattels. In addition, the applicant sought to retain his Visa card liability and his superannuation. The respondent was silent as to each of these matters.
By her response, the respondent also advanced claims for lump sum spousal maintenance and for periodic or lump sum payments by way of departure and/or substitution under the Child Support (Assessment) Act 1989 (Cth) (CSAA) in respect of their child X.
Interim orders were sought concerning certain bank accounts and the retention of the proceeds of sale pending determination of the matter. While the respondent was essentially agreed in those orders, she sought orders that the balance of monies in all accounts be paid to her and that the applicant pay her spousal maintenance of $1,000 per week.
The respondent sought interim relief for the valuation of the applicant’s business and of his tools, plant and equipment. She also claimed relief restraining the applicant from encumbering any of the parties’ assets. Pursuant to those orders, in August 2016, the plant and equipment in the applicant’s business was valued at $89,000.
On 26 April 2016, consent orders were made providing the parties to withdraw $90,000 from their offset account, such sum to be applied by way of interim distribution as to:
(a)$30,000 to the applicant, and;
(b)$60,000 to the respondent.
Orders were also made setting the proceeding down for trial, including orders that would regulate the arrangement of valuations.
In addition, on 26 April 2016, the parties agreed in the retention of the net proceeds of sale of the Property A property pending trial.
On 20 July 2016, the respondent made a request for disclosure by the applicant. In light of the response to that request, the respondent issued a series of subpoenas including to the (omitted) Bank, (omitted) Bank, the applicant’s accountant and the Department of Immigration and Border Protection. The respondent also made a request for documents of the Australian Taxation Office.
Shortly before the appointed trial date, the applicant filed an application in a case which was determined on 12 April 2017. The applicant sought an order to adjourn the trial. The application was dismissed.
The application for an adjournment was made on the basis that the respondent’s trial affidavit had raised a series of allegations concerning the manner in which the applicant had conducted his ‘tax affairs’ including that a deal of the applicant’s income was paid to him in cash and that he laundered that income at a casino. The applicant denied those allegations but contended that, as the allegations had been made, he had instructed his solicitor to communicate with the Australian Taxation Office and requested that that office conduct an investigation into the matter. Any response to that request was not in evidence. The progress of any such investigation is unknown. The respective potential liabilities of either party are therefore a matter of speculation.
Adjustment of property interests
The property settlement proceeding is governed by the Family Law Act 1975 (Cth) (Act).[1] Part VIIIAB of the Act concerns Financial matters relating to De Facto relationships, and is comprised of ss 90RA – 90WA. Division 2 of Part VIIIAB concerns amongst other things, alteration of property interests of parties to a de facto relationship.
[1]A reference to a provision of legislation in these reasons is a reference to the Family Law Act 1975 unless otherwise indicated.
Subdivision C of Div’n 2 in Part VIIIAB, which concerns declarations and alterations of property interests, is comprised of ss 90SK – 90ST. The power of the court to make orders respecting the property of such parties is subject to a number of constraints that differ from parties to a marriage. First, by para 90SB(a) the court may only make an order for the alteration of property interests where it is satisfied that the period of the parties’ de facto relationship endured for a period exceeding two years. Secondly, by s 90SK a geographical requirement is placed upon engagement of the power to alter property interests of such parties.
The alteration of property interests of parties to such a relationship is provided for by s 90SM. In proceedings with respect to the property of parties to a de facto relationship, the court is authorised by para 90SM(1)(a) to make such order as it considers appropriate.
The power conferred by s 90SM is engaged only in a property settlement proceeding, being a proceeding with respect to the property of the parties or either of them. The power extends only to an adjustment of interests in the property of the parties. Where one or both of the parties have instituted property settlement proceedings, para 90SM(1)(a) confines the ambit of the power to the making of orders that “alter the interests of the parties to the marriage in the property.”
Structurally, sub-s 90SM(1) first requires the court to identify the parties’ existing interests in property (as defined) and then authorises that the court may make orders that alter those existing interests.
Sub-section 90SM(3) proscribes the making of such property orders unless a certain criterion is satisfied. It reads:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
The operation of this provision is of pivotal importance (see below).
Further, sub-s 90SM(4) requires that in the consideration of what order (if any), should be made in the alteration of property interests of parties to a de facto relationship, the court must take into account each of the seven matters contained in paras 90SM(4)(a)-(g).
However, sub-s 90SM(2) cannot be side-stepped. The analogue provision for alteration of property interests between parties to a marriage is found in sub-s 79(2) of the Act. The scope and operation of sub-s 79(2) was given detailed consideration in the seminal decision of Stanford v Stanford (2012) 247 CLR 108. The plurality held in relation to sub-s 79(2) that the determination of whether it was just and equitable to make an order under sub-s 79(1), was an essential inquiry to be undertaken before any consideration was given to the matters prescribed by sub-s 79(4) (here, sub-s 90SM(4)). The plurality emphasised that the issues raised by sub-s 79(2) and (4) were not to be conflated or merged: (2012) 247 CLR 108, [35], [40], [51]. Parity of reasoning supports the conclusion that a like approach is required here.
The criterion ‘just and equitable’ is a criterion that does not admit of exhaustive definition: Stanford at [36] citing Mallet v Mallet (1984) 156 CLR 605, 608 (Gibbs CJ). Rather the expression is to be understood as being a “qualitative description of a conclusion reached after examination of a range of potentially competing considerations.” Confirming that the power conferred by s 79 was not to be exercised by the application of fixed rules, the plurality identified three propositions that it regarded as being of fundamental importance to the determination of whether it was just and equitable for the court to make an order adjusting property rights: (2012) 247 CLR 108, [37]-[40]:
(a)first, the consideration of whether it is just and equitable to make an order must begin by the identification of the existing legal and equitable interests of the parties in the subject property;
(b)secondly, the broad discretion conferred by s 79 is not unfettered;
(c)thirdly, the analysis of whether it is just and equitable to make an order adjusting property interests does not begin from an assumption that either party has the right to have the property of the parties divided.
Sub-s 90SM(4) factors
As stated above, when considering what order (if any) should be made in a property settlement proceeding, sub-s 90SM(4) requires the court to take into account each of the seven matters addressed in paras (a)-(g). The circumstances to be taken into account have been identified as falling within three broad categories: (1) the parties’ contributions of all kinds; (2) the parties’ present and future needs, means and resources, earning capacity, actual and potential; (3) any other fact or circumstance which justice requires be taken into account: cf Mallet v Mallet (1984) 156 CLR 605, 608 (Gibbs CJ).
I address paras 90SM(4)(a)-(g), so far as relevant, below. Before doing so, it is necessary to identify the settled principles for the determination of an application for adjustment of property interests.
Until Stanford, the settled approach to be taken to the determination of a claim for adjustment of property interests under s 79 entailed a four-stage process as articulated by the Full Court in Hickey & Hickey; the Attorney General for the Commonwealth of Australia (2003) FLC 93-143. There, Nicholson CJ, Ellis and O’Ryan JJ at [39] held the four-stage process under s 79, although interrelated, was as follows:
(a)first, identify the parties’ assets, liabilities and financial resources at the date of hearing; calculating the net value of their property;
(b)secondly, ascertain the parties’ contributions (both financial and non-financial), within the meaning of paras 79(4)(a)-(c) inclusive and then “determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property”;
(c)thirdly, give consideration to the other factors prescribed by paras 79(4)(d)-(g), including the matters, so far as relevant, as referred to in sub-s 75(2) to decide if any further adjustment to the percentage assessment of contributions is warranted;
(d)fourthly, consider the overall effect of those findings and determinations and resolve what order is just and equitable in all the circumstances of the case.
The four-stage process articulated in Hickey need not be followed rigidly: Bevan & Bevan [2014] FamCAFC 19, [18]-[19] (Bryant CJ and Thackeray J), [97] (Finn J agreeing). The Full Court has affirmed that a holistic approach should also be made when deciding an application under s 79: Wallis & Manning [2017] FamCAFC 14, [23]; citing Dickons & Dickons (2012) 50 Fam LR 244, [24]. Where it is said that a holistic approach should be made this is to be understood as permitting that in some cases a global assessment is appropriate. It is also to be understood as reinforcing the need to move beyond an assessment that is expressed purely in percentage terms and to consider the real impact, in money terms, as the critical issue in the case. In particular, where an additional allowance is to be made in favour of one party by reason of sub-s 75(2) factors, regard may be had to the disparity in money terms of the effect of that additional allowance: Clauson & Clauson (1995) FLC 92-595, 81,911 (Barblett DCJ, Fogarty and Mushin JJ).
A global assessment may be appropriate where the asset pool is small. In short, where the net pool is relatively modest it is often preferable to express an adjustment as a lump sum rather than as a percentage: see Kilpatrick & Kilpatrick [2017] FamCA 432, [94] (Austin J) citing Parrott v Public Trustee of NSW(1993) 17 Fam LR 785 at 790-791.
In Bulleen & Bulleen, Cronin J recognised the caution of adopting an over-zealous ascertainment of the parties’ contributions and held that what is required is the ascertainment and weighting of the parties’ contributions; a process which his Honour described as follows:
The weighting process is not a simple mathematical calculation based upon financial contributions. It is the disparity in contributions which is important. The disparity is traditionally expressed in percentage terms: [2010] FamCA 187 at [19].
Cronin J recognised that one underlying difficulty which is to be confronted in an evaluation of parties’ contributions arises from the need to make comparisons between fundamentally different activities: at [20]ff. Thus, while financial contributions were capable of objective assessment, the non-financial contributions were much more difficult of assessment. His Honour held that it would have been wholly inappropriate to retrospectively allocate non-financial contributions according to some monetary worth. On the facts as found in Bulleen, Cronin J characterised the relationship as one in which the parties had regarded their respective roles as important and as being one in which they had contributed to a common goal. At the same time, his Honour acknowledged that there could be some contributions outside of their partnership which identifiably affected the parties’ wealth: at [26], [40].
In short, the evaluation requires consideration of contributions both tangible (i.e. financial) and intangible (i.e. non-financial).
These principles are applicable in the present case.
Consideration
The parties were agreed that the claim for adjustment of property interests should be determined first and then be followed by the claim for child support and finally the claim for spousal maintenance: see Clauson & Clauson (1995) FLC 92-595, 81,907 (Barblett DCJ, Fogarty and Mushin JJ); Anderson & Anderson [2014] FamCA 766, [21]-[22] (MacMillan J).
Where there were inconsistencies in the evidence, the parties were required to prove their claims to the requisite standard of proof: sub-s 140(1) Evidence Act 1995 (Cth). Equally, the more serious their allegations, the more inclined I was to take into account the gravity of the allegation in deciding whether that allegation had been made out: cf sub-s 140(2) Evidence Act; Johnson v Page (2007) FLC 93,344, [72]; Briginshaw v Briginshaw (1938) 60 CLR 336. Where the evidence does not permit the court to make an affirmative finding either way on a particular issue, the court is not bound to do so and may find that the party which bears the onus of proof has failed to discharge it: Kuligowski v Metrobus (2004) 220 CLR 363.
Moreover, determination of the present case has been complicated by reason of the parties’ disclosure of their respective financial positions.
By rule 24.03 of the Federal Circuit Court Rules 2001 (Cth), a party who is required to file a financial statement is obliged to make full and frank disclosure of their financial position as detailed in that rule.
In proceedings for an adjustment of property interests, parties do not stand in the same relation as those conducting inter partes litigation. Parties to a marriage or a de facto relationship are not strangers who owe no duties to the other respecting disclosure of information relating to property which was acquired, improved or augmented in the course of their relationship. For this reason, each party is obliged to make financial disclosure. The need for each party to have an accurate understanding of their true financial positions lies at the heart of a property settlement application: Oriolo v Oriolo (1985) FLC 91-653, at 80,256 (Emery, Fogarty and Murray JJ), approving In the marriage of Briese & Briese (1986) FLC 91-713 (Smithers J).
Where there has been a failure to comply with the obligation to make full and frank financial disclosure, the court may nonetheless make a finding as to the existence and value of the parties’ property even though it be necessary to do so in the most general terms: Giunti & Giunti (1986) FLC 91-759 (Fogarty, Murray and Nygh JJ) at 75,555 citing Monte & Monte (1986) FLC 91-757 (Simpson, Murray and Frederico JJ). Thus a parties’ design of obfuscation and evasion with respect to their disclosure obligation is not an insuperable barrier to the determination of what orders are just and equitable in the adjustment of property interests: see also Black & Kellner (1992) FLC 92-287.
As a result, where there has been financial non-disclosure, “the Court need not shy away from a robust exercise of discretion . . .”: McDermott & McDermott [2017] FamCA 376, [301] citing Kannis and Kannis (2003) FLC 93-135; see also Jacks & Parker [2011] FamCAFC 34, [62], [122]; Weir & Weir (1993) FLC 92-338. More recently, in Elkhouri & Amatullah and Anor [2017] FamCA 688 at [121], Gill J reasoned that where non-disclosure impeded the identification of what property comprised an asset pool or the determination of the true value of such assets, the court was entitled to anchor property orders by reference to what it considered to be just and equitable.
As required by para 90SB(a), I am satisfied that the parties’ de facto relationship endured for a period exceeding two years. Further, the geographical requirements posed by s 90SK are met. Accordingly, it is open to determine their competing property settlement applications.
Asset pool
Only minor issues arose as to the identity or ownership of assets. While a primary task of the court is to identify the legal or equitable interests in any property that a party may seek to introduce to, or exclude from, the asset pool, those issues were largely agreed. Insofar as there was a claim that the applicant or respondent had concealed particular sums of money, I address those issues below. Here, the parties’ dispute centred upon the value of certain items of property.
In this case, I make no finding that either party has failed to make disclosure of any relevant item of property. To the contrary, although they may have been dilatory in making such disclosure, the evidence sufficiently identified the property comprised in their asset pool. Where issues of disclosure have intruded upon the application, they have had an impact upon my consideration of the parties’ financial resources. This is a matter that I consider further below.
As outlined in my findings upon the evidence above, the parties were in dispute upon the value as to some of the items of property comprised in the asset pool. Before setting out my overall conclusions as to the asset pool that is the subject of this proceeding, it is convenient to give my findings upon the items of property where value was disputed:
(a)Property A property – proceeds of sale: while those proceeds are held by the respondent’s solicitor in a controlled monies account, it needs to be recognised that those monies are earning some interest. Although the parties were agreed that the balance of that account at the date of trial was $446,321 the total value of accrued interest is not known;
(b)(omitted) Bank account: there was no evidence whether interest was accruing on the monies standing to the credit of this account, or simply whether the balance of the account was ‘offset’ against the balance outstanding on the mortgage from time to time;
(c)interim distributions: by the consent orders made on 26 April 2016 the parties agreed that the ultimate characterisation of those distributions should be reserved to the trial judge. I conclude that it is appropriate to characterise each of those payments as forming part of the net asset pool (and accordingly, as assets that fall for consideration in determining the property settlement proceeding). Neither party made a submission to the contrary;
(d)savings – concealment of cash: I have concluded that there is insufficient evidence upon which I can find affirmatively that the applicant (or for that matter, the parties), retained cash from the conduct of the (omitted) business. Some of the respondent’s evidence on this topic was implausible. As to this issue:
(i)the suggestion that, at the time of separation, the applicant had produced $14,000 then told the respondent he had ‘too much’ cash and was taking it to the casino to launder it, struck me as flying in the face of human nature – a person on the verge of separation seems hardly likely to make disclosure of cash of that magnitude at such a time. Indeed, on one view, the respondent’s evidence that the applicant had described $14,000 as being ‘too much’ cash to have at home itself may undermine the case theory that the parties retained very large sums of cash at home;
(ii)equally, the respondent’s evidence (given near the close of cross-examination), in which she volunteered that there was more cash stored in the garage than in the home struck me as recent invention and was implausible;
(iii)the submission that the applicant had retained (i.e. not banked), the cash payments that had been made to him was somewhat inconsistent with the evidence that the (omitted) Bank statements indicated that deposits exceeding $228,000 had been paid into that account in the financial year ended 30 June 2015. By contrast, the accounts of the family trust for that same financial year disclosed income of only $124,000. The contemporaneous records are instructive;
(iv)the practice of banking cash was confirmed by both parties. So too, was the habit of repaying debt on each of the properties that they acquired between 1998-2011;
(v)I take into account the number of properties that the parties were able to purchase, pay for and resell;
(vi)I also recognise that the parties were accustomed to take (and continue to take) holidays both in Australia and internationally.
While I do find that the parties’ lifestyle was incompatible with the income that was disclosed by the trust accounts, it does not follow that the applicant had hidden away cash (whether in a drawer, in the garage or otherwise) or laundered it at a casino. In light of the matters set out above, I find that it is more probable that the parties habitually paid off their debts and enjoyed the lifestyle to which they progressively became accustomed. Those conclusions do not deny that the applicant’s current financial resources may be better than those of the respondent. They only support a conclusion that the existing property has been disclosed;
(e)savings – applicant: while the applicant made disclosure of his savings, his evidence (which I accept), was that he has unpaid contingent tax liabilities that he estimated to be $15,000 for each of the two financial years ended 30 June 2016 and 2017;
(f)savings – respondent: quite apart from her personal injury settlement and the interim distribution, on the issue of savings, the respondent was less than forthcoming. I find that the respondent had some savings including, for example, the $8,000 that was paid on the sale of some of the furniture in the Property A property. In addition the respondent conceded that she may not have made full disclosure of the income which she was earning. This concession is to be gauged in the context that the respondent had not defrayed the total sum of $60,000 that was paid to her by way of interim distribution. Apart from the balance of her interim distribution, I consider that I am entitled to be somewhat less cautious in quantifying the value of the respondent’s savings;
(g)personal injuries settlement: in relation to this capital receipt it was submitted that the payment made to the respondent should be quarantined from the net asset pool. As to this I note:
(i)the respondent received a payment of $70,000 from the settlement of the claim that she made arising from her accident on 10 May 2014. The respondent signed a release dated 28 February 2017 and so received this payment after separation but before trial;
(ii)there is no general presumption that an award of damages should be left out of account in determining what order should be made in a property settlement proceeding: Williams v Williams (1985) 61 ALR 215. However, it may be relevant to give consideration to the date at which an award of damages was paid; in particular, whether it was received early or late in the parties’ relationship: Aleksovski & Aleksovski (1996) FLC 92-705;
(iii)in Sinclair & Sinclair [2012] FamCA 388 at [23], Cronin J noted the following caution, “Isolating or quarantining an inheritance must be cautiously done to ensure that earlier important contributions to the family in particular, are not ignored.” His Honour recognised that there was “a distinct possibility of that happening if the focus is entirely on the assets received by the wife from inheritances and gifts.” I agree. On the facts of that case, his Honour distinguished between contributions that were unrelated to, and not directly made by, the parties themselves (which formed 75% of the asset pool) and held that the remaining 25% comprised assets to which the parties had contributed equally. Cronin J allowed 12.5% (or $912,000) of that asset pool to the husband based upon an assessment of the factors in paras 79(4)(a)-(c) and then, upon consideration of sub-s 75(2) factors allowed an additional sum of $200,000 to the husband: [100]-[103]. His Honour rejected submissions that the wife’s inheritances should be quarantined, and so excluded it from the pool, preferring to assess the parties’ contributions and the weight of each: [89]-[93];
(iv)more recently, in Holland & Holland [2017] FamCAFC 166 the parties had separated in 2007 following which the respondent husband received a capital payment before trial by way of an inheritance. The appellant wife contended that the inheritance should have been included in the asset pool and treated merely as a financial resource. Ainslie-Wallace, Murphy and Aldridge JJ held at [25]-[31], citing Stanford, that there was no basis for excluding from consideration any property in which either party had an existing interest.
I reject the submission that this asset should be treated separately from the other property of the parties which existed as at trial. To say as much is not to suggest that this property should not be given some different weighting by reason that it was received following separation. At the same time, the respondent suffered those injuries during the course of the relationship. Regrettably, no evidence was adduced to enable me to distinguish what part of the damages was attributable to any particular head of damage. In my view, the respondent’s settlement should be evaluated in the overall context of the parties’ contributions – financial and non-financial – and a holistic assessment must then be made of the entire position. The ultimate question is whether the orders are just and equitable: JEL v DDF (2001) FLC 93-075, [152(i)];
(h)plant and equipment: the parties were at odds about the value of plant and equipment. The issue was complicated in these respects:
(i)first, the ownership of these items were contested but were not the subject of any cogent evidence. While the applicant described these assets in a proprietary manner, he made no effort to prove their ownership. The respondent asserted, in equally adjectival terms, that these items were owned by the parties jointly. No consideration was given to whether the plant and equipment comprised trust assets. For present purposes, I cannot decide more than that these assets were owned by these parties or were trust assets;
(ii)secondly, one item of plant was a (omitted) excavator, to which the applicant attributed a nil value while the respondent maintained that the excavator had a value of $30,000. The applicant’s first financial statement included the excavator as an asset while the second did not. No separate value was attributed to this item. The applicant’s first affidavit also referred to the excavator and attributed a value of $10,000 to it. His second affidavit attributed a value of $8,000. In the parties’ valuation, the excavator was valued at $3,500 and it was described as being towed on account of it not working. At trial, the applicant gave evidence that the (omitted) had been scrapped. The respondent agreed that the applicant only purchased second hand equipment. On this issue, I accept the applicant’s evidence. In the result, I have concluded that a nil value should be attributed to the excavator;
(iii)thirdly, the parties treated the valuation of these items somewhat differently. The applicant detailed each item of plant and equipment separately, whereas the respondent attributed a global value to them of $89,000;
(iv)fourthly, the global figure employed by the respondent was erroneous in that there was conceded to be a duplication on account of the inclusion of the applicant’s boat – on this basis the global figure of $89,000 was reduced by $20,000;
(v)fifthly, as the valuation was not in evidence, it was not possible to safely adopt the respondent’s global figure. Instead, it was preferable to assign values to specific items.
(i)goodwill: I accept that the applicant’s business has no goodwill greater than the value of the plant and equipment. The applicant is self-employed and has no employees. Should he cease work, his business will not generate any income;
(j)motor vehicles: I accept that, following the accident in which his vehicle was written off, the applicant purchased a Ford (omitted). He produced a receipt for the purchase for $15,000. In addition, the vehicle had been valued at $16,000. However this vehicle has depreciated since the dates of purchase and valuation. To similar effect, the parties asserted that the respondent’s vehicle had a value of $8,000-$10,000. I have adopted a broad assessment of the value of both vehicles;
(k)other motor vehicle: as considered above, one of the assets that has been lost to the parties was the motor vehicle written off as a result of an accident on (omitted) 2016. The vehicle was uninsured at the time of this accident and was so uninsured in the circumstances described above. It need not have been uninsured. However, on the respondent’s own evidence she had telephoned the insurer to inform it that the applicant intended to ‘do an insurance job’ on the car and claim indemnity for its value. As events have occurred, the vehicle has been written off, that property no longer exists and no indemnity has been granted. While those circumstances might lend some support for a conclusion that an allowance should be made for waste, I conclude that it is more appropriate to give this issue distinct consideration as the loss of a financial resource;
(l)boat and trailer: the values of these items were not in contest;
(m)chattels: the values of these items were contested. An attempt was made to suggest that the applicant’s chattels as stored in the garage were very expensive. While the respondent did arrange for a valuation of the plant and equipment, no attempt was made to value the contents of that garage. Nonetheless, I accept that the applicant did have a gun collection and an interest in fishing. I adopt a broad assessment of the value of those assets. I accept that the respondent’s chattels had a value of $5,000;
(n)(country omitted) time share – each of the parties seemed prepared to accept a value of $10,000. Equally, they also accepted that a fee was payable annually to renew the rights attaching to it (and in that sense the investment was also a liability);
(o)(omitted) shares: the values of these items were not in contest. However, it was also common ground that these shares (which are of nominal value), are held by the applicant.
(p)liabilities: somewhat curiously each party was prepared to attribute a value of nil to the liabilities as at the date of trial. By contrast, the applicant was not challenged on his estimate of a tax liability of $15,000 for the years ended 30 June 2016 and 2017. I gave consideration to whether those contingent liabilities ought to be included in a determination of the asset pool and concluded that in light of the uncertainty surrounding the potential for re-assessment of the parties’ tax liabilities, it was preferable not to engage upon a piecemeal assessment of these issues. Should the revenue authorities conclude that the parties or either of them (or their trust) is subject to additional tax, interest or penalties, that is a matter best left to that investigation. Likewise, although the applicant gave evidence that he had paid off all credit card debt, each of the parties has used a credit card but chose not to include such liability in the asset pool. I have accepted that common position as detailed in the parties’ outlines;
(q)superannuation: the values of these items were not in contest.
Division 4 of Part 7 concerns Orders for departure from administrative assessment in special circumstances, while Division 5 concerns Orders for provision of child support otherwise than in the form of periodic amounts paid to carer (and so provides for orders to pay a lump sum). Before hearing an application for payment of child support as a lump sum under Division 5, the court must hear and determine any application that is made under Division 4: sub-s 123(3).
Sections 114 and 121 (which are found in Divisions 4 and 5 respectively), express additional objects of those Divisions as follows:
(a)that the children have their proper needs met from reasonable and adequate shares in the income, earnings capacity, property and financial resources of both of their parents; and
(b)that parents share equitably in the support of the children.
It is readily apparent that, structurally, CSAA emphasises the mutuality of the parents’ obligations to provide support for their children.
Division 4 of Part 7 applies only in the circumstances that are provided for by s 115. Relevantly, sub-s 115(c) renders Division 4 applicable where the child support is for a period beginning on or after 1 July 1992 and: (i) the carer entitled to child support (or the liable parent) is party to an application pending in a court having jurisdiction under CSAA, and; (ii) the court is satisfied that it would be in the interests of the carer and the parent for the court to also consider whether an order should be made which order would have the effect that:
. . . the provisions of [CSAA] relating to administrative assessment of child support will be departed from in relation to the child in the special circumstances of the case; or . . . (emphasis added)
In this case, child support is sought from May 2016 and continuing. An application was pending in this court which has jurisdiction under CSAA. The requirements of para 115(c)(i) are satisfied as both of the parties are parties to this proceeding. I will assume it to be in the parties’ interests to consider this application at the same time as the application for property settlement and spousal maintenance. On that basis, the requirements of para 115(c)(ii) also are taken to be satisfied.
By operation of sub-ss 116(1)-(2), a carer may (in the circumstances which that section prescribes), apply for an order under Division 4 of Part 7. Sub-section 116(1) provides that the application may be made to a court for an order under Division 4 in relation to a child in the special circumstances of the case.
Once a valid application for departure has been made, the question of departure from the administration assessment provisions of CSAA in respect of any future years may also be considered: Dwyer v McGuire (1993) FLC 92-420, 80,316 (Lindenmayer J).
Section 117 prescribes the matters of which the court must be satisfied before making a departure order and expresses a requirement that the application is one that has been made in the special circumstances of the case: see paras 117(1)(a), 117(2)(a), 117(2)(b), 117(2)(c).
Sub-section 117(1) confers power to make a departure order. It reads:
(1) Where:
(a)application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b)the court is satisfied:
(i)that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii)that it would be:
(A)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B)otherwise proper;
to make a particular order under this Division;
the court may make the order. (emphasis added)
The text of sub-s 117(1) makes clear that the power to make a departure order is not engaged unless each of its requirements is met.
Putting to one side certain of the requirements that are expressed in sub-s 117(1), two features of the sub-section should be noted. First, it is apparent that the departure application must be made in circumstances which are properly characterised as being ‘special’. Secondly, the power to make a departure order is only engaged where one or more of the grounds for departure mentioned in sub-s 117(2) exists or exist.
The grounds on which the court may make a departure order are those prescribed by sub-s 117(2). Satisfaction of the existence of one or more of those grounds is essential to the existence of power to make an order. This conclusion is reinforced by sub-ss 117(2B), (2C), (3A), (3B) and (3C), each of which prescriptively define those circumstances which may or will not (as the case requires), meet the designated criteria for ‘high costs’ and ‘high child care costs’.
Paragraphs 117(4)(a)-(g) contain certain criteria to which a court must have regard in its determination whether it would be just and equitable to make an order. Paragraphs 117(5)(a)-(b) contain certain criteria to which a court must have regard in its determination whether it would be proper to make an order.
When considering whether it is just and equitable to make a particular order and whether it is otherwise proper to do so, sub-ss 117(6)-(8) respectively prescribe certain matters which the court must have regard to (or which it must disregard), in: (a) considering the proper needs of the child; (b) evaluating one or more of the income, earning capacity, property and financial resources of the child or a parent of the child, and; (c) considering the income and earning capacity that may be foregone by the carer entitled to child support.
Notably, by sub-s 117(9), the matters in sub-ss (4) to (8) are not to be taken to limit the matters to which the court may have regard. Contrastingly, sub-s 117(9) is not cast in terms which would also allow an expansive construction of the grounds addressed by sub-s 117(2). Sub-section 117(9) contains no reference to sub-s 117(2). In my view, the ambulatory effect of sub-s 117(9) operates to permit the court to have regard to matters beyond those prescribed by sub-s 117(4)-(8) but to do so only when deciding whether it is just and equitable or proper to make a departure order. Sub-section 117(9) does not expressly or by implication permit an applicant for such an order to rely upon a ground other than those prescribed by sub-s 117(2). This reinforces a conclusion that the grounds expressed in paras 117(2)(a), (aa), (b) and (c) constitute the only grounds which may be relied upon in satisfying the requirements of sub-para 117(1)(b)(i).
A three phase process must be followed in determining an application for a departure order. First, special circumstances for bringing the application before a court must be established upon one or more of the grounds in sub-s 117(2). Secondly, if so, it must be just and equitable to make a particular order having regard to the matters in paras 117(4)(a)-(g). Thirdly, it must otherwise be proper (within the meaning of sub-s 117(5)), to make a particular order: Gyselman & Gyselman (1992) FLC 92-279 (Nicholson CJ, Fogarty and Nygh JJ); Beklar & Beklar [2013] FamCA 327, [237] (Ryan J); Anderson & Anderson [2014] FamCA 776, [23] (MacMillan J).
As noted, engagement of the power to make a departure order depends, in part, upon sub-para 117(1)(b)(i) being satisfied. Sub-section 117(2) identifies the grounds which must be satisfied for the purposes of sub-para 117(1)(b)(i). The text of each of paras 117(2)(a)-(c) employ the phrase ‘in the special circumstances of the case’ when identifying the grounds of which the court must be satisfied. Contextually, ss 4(2), 115, 116 and 117 further emphasise that special circumstances must be established when making an application for a departure order. In my opinion, properly construed, these provisions constrain and confine the entitlement to bring an application for a departure order to cases in which special circumstances are demonstrated: cf CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ), 412 (Gaudron J agreeing).
In Gyselman (1992) FLC 92-279 at 79,065, Nicholson CJ, Fogarty and Nygh JJ held that although the meaning of the phrase ‘special circumstances of the case’ was not amenable to precise definition, it was clearly intended to emphasise that, properly characterised, the case was both special and out of the ordinary: see also at 79,068.
In its ordinary meaning, the adjective ‘special’ means ‘of such a kind as to exceed or excel in some way that which is usual or common; exceptional in character, quality or degree.’ There is nothing novel in the imposition of a statutory requirement that special circumstances be demonstrated. In some instances the rules of court will permit a party to take a step in a proceeding as of right. In other situations, the party will be required to obtain leave before doing so. It other cases, special leave may be required before a party may proceed.
As the Full Court’s analysis in Gyselman illustrates, one of the most common examples of special circumstances is the case in which a party would incur the high costs of interstate travel for the purposes of access. Particularly high school fees may be another example. Special circumstances may be shown as where a parent has deliberately left their employment for the purposes of sterilising the operation of CSAA: In the marriage of Bolton and Bolton (1992) FLC 92-309. So too, special circumstances may be shown as where a parent continued to deny the paternity of a child, such issue having been affirmatively established: Dwyer v McGuire (1993) FLC 92-420. Such circumstances may be shown when a Nil assessment has been issued under the administrative assessment process: Hartnett v Baker (1995) FLC 92-620. The examples cited serve to underscore the types of case which will constitute special circumstances and, conversely, indicate those which do not.
Are special circumstances established in this case?
Having regard to the matters prescribed by sub-s 117(2), I find that:
(a)the capacity of neither party to provide financial support is significantly reduced by reason of any factor prescribed by sub-s 117(2)(a);
(b)the ground identified by sub-s 117(2)(aa) is not relevant;
(c)there are no matters to which my attention was drawn which support a conclusion that costs of maintaining X are high or significantly affected by reason of any matter in sub-paras 117(2)(b)(i)-(ii);
(d)it was not said that in the circumstances of this case, the application of CSAA to an administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by reason of the child’s income, earning capacity or financial resources: see para 117(c)(i);
(e)it was, however, said that in the circumstances of this case, the application of CSAA to such an administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by reason of the applicant’s income, earning capacity or financial resources: see para 117(c)(ia). I consider this issue below;
(f)it was not suggested that an administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by reason of the respondent’s earning capacity: see para 117(c)(ib);
(g)it could not be said that (within the meaning of para 117(c)(ii)), special circumstances were established by reason of the property settlement orders that have been made such that an administrative assessment of child support would result in an unjust and inequitable determination. No such submission was made.
As I understood the submission based upon para 117(c)(ia), the respondent was to be believed that the applicant had concealed his true income and thus, so the argument ran, the use only of the applicant’s disclosed income as an integer in the formula for calculation of child support necessarily distorted that calculation and produced a result that was unreasonably or artificially low.
As I have found, the parties to this relationship deposited the income generated from the operation of the (omitted) business, repaid their secured debt and bought and sold property with a view to improving themselves. I do not ignore that they travelled (nor do I ignore that they continue to do so). However, since 2016, the applicant has banked his income and disclosed it in his financial statement. As I have also found, the respondent’s evidence with respect to the alleged retention of cash (whether in a drawer or in the garage), and of money laundering, was exaggerated.
I agree in the submissions of the applicant father that there is nothing in the circumstances of this case which qualifies as special circumstances. Upon that basis, the application for a departure order must fail. Further, it is apparent that unless the grounds prescribed by sub-s 117(2) are not made out, the second and third issues calling for consideration under sub-s 117(4)-(5) do not arise.
Having regard to those matters, I am not satisfied that any of the grounds prescribed by sub-s 117(2) are made out. Nor am I satisfied that the application for a departure order otherwise demonstrates the existence of special circumstances in this case. In all of those circumstances, the court cannot be satisfied that any one of the grounds mentioned in sub-s 117(2) exists or exist.
The power to make an order under sub-s 117(1) is not engaged. The application for a departure order pursuant to Division 4, Part 7 must be dismissed. It necessarily follows that the application for a substitution order pursuant to Division 5, Part 7 must likewise be dismissed.
The parties’ rights and obligations with respect to child support fall for determination pursuant to the administrative scheme of CSAA.
Unless and until an investigation of the Australian Tax Office is concluded, I also consider that it would not be in the parties’ interests that an application for a departure order should be heard by this court. The relative liabilities of the parties (if any), may have some bearing on the question of whether it was just and equitable to make any order, and if so, what order was proper. The administrative assessment of those matters may well be sufficient to provide an evaluation of the level of child support that was appropriate.
Spousal maintenance
The entitlement of a party to a de facto relationship to claim maintenance from the other party is also regulated by Part VIIIAB, Division 2 of the Act and is subject to the requirements contained in ss 90SB and 90SD. As stated above, I have found that those requirements are satisfied. In addition, unless leave be granted to institute an application for maintenance out of time, such application must be made within two years after the de facto relationship has ended: sub-s 44(5).
Section 90SE confers power on the court to make a spousal maintenance order. Sub-section 90SF(1) delineates the circumstances in which that power may be exercised. In short, spousal maintenance may be ordered only where an applicant is unable adequately to support themself and the respondent is reasonably able to do so (or is to some extent, able to do so). The power to make a maintenance order is also to be considered in the context that the court must, as far as practicable, make such orders as will finally determine the parties’ financial relationship and avoid further proceedings between them: s 90ST.
Although no submissions were made upon this issue, an application for periodic maintenance should be considered before an application for lump sum maintenance and I proceed on that basis. However, I note that lump sum spousal maintenance of $208,000 was sought. Self-evidently an order of that magnitude would largely eradicate the applicant’s share in the net asset pool pursuant to the orders that are made in the property settlement proceeding. As to this, I was troubled by the respondent’s attitude to this application. In the course of giving evidence, the respondent stated that she only wanted what was ‘fair’. The asymmetry of the respondent’s position was of some note.
Section 90SE provides that the court may make such order as it considers proper for maintenance. An order which is either excessive or insufficient cannot be characterised as being ‘proper’: see Moller & Moller [2017] FamCA 841, [23] (Hannam J) citing Robinson & Willis (1982) FLC 91-215, 77,157 (Asche SJ). In the context of s 90SE, the content of the term ‘proper’ should be understood as meaning properly appropriate to the circumstances; it is not to be determined as against an ideal objective standard: Brown & Brown (2007) FLC 93-316, [85]-[86] (Kay, Warnick and Boland JJ).
As concerns the power to make an order for maintenance respecting parties to a marriage, the analogue provision to s 90SE is found in s 74. In Clauson & Clauson (1995) FLC 92-595 at 81,907 Barblett DCJ, Fogarty and Mushin JJ explained that the reason a spousal maintenance application must be considered following the determination of a property settlement proceeding is because the orders made in the latter application necessarily establish the background against which s 74 must operate; namely, the financial circumstances of the parties. The Full Court held that:
The result of the s 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. (emphasis added)
Although, in Tyson v Tyson (1996) 70 ALJR 285, the High Court considered that there were worrying aspects of the Full Court’s reasoning in Clauson (insofar as it related to the approach to be taken in an application for lump sum maintenance), I do not consider that those observations detract from the statements of principle above.
As concerns spousal maintenance, Clauson identifies two important considerations which arise from the making of an order in a property settlement proceeding: (1) the applicant for spousal maintenance may not be able to establish an inability adequately to support themself; (2) the capacity of the respondent to the application may be such that they may not reasonably be able to provide or afford spousal maintenance. To deal with such an application without consideration of the impact of the orders made in the property settlement proceeding entails error: In the marriage of Bevan and Bevan (1995) FLC 92-600 (Nicholson CJ, Lindenmayer and McGovern JJ).
The adequacy of a person’s ability to support themself is a central tenet upon which an entitlement to maintenance depends: Brown (2007) FLC 93-316, [92]ff. The requirement of para 90SF(2)(b) that the applicant for spousal maintenance demonstrate an inability to support themself adequately is to be considered having regard to any relevant matter in sub-s 90SF(3): cfN & N (1997) FLC 92-782, 84,643. (Mullane J). The test whether an applicant for spousal maintenance is able to support themself adequately should not be equated with a question of whether they are in need. The proposition that an inability to support one-self adequately is synonymous with subsistence has been firmly rejected. Nor is it necessary that a party must deplete all of their capital in order to demonstrate an inability to support themself.
Rather, the focus is upon whether the applicant for spousal maintenance is in a position to finance themself adequately from their own resources. The test is whether “by reason of earning capacity, by reason of capital or other sources of income which have accrued independently to the applicant, the applicant is in a position to look after herself”: see Moller [2017] FamCA 841, [23] citing Eliades & Eliades (1981) FLC 91-022, 76,232, Clauson, supra.
By sub-s 90SF(2), the exercise of the power to award spousal maintenance under s 90SE is constrained by sub-s 90SF(3). The “Court shall take into account only the matters referred to in sub-section (3).” By this means, sub-s 90SF(2) defines the scope of matters that may be considered in the exercise of power to order spousal maintenance.
As the question of inability to support oneself adequately is to be considered having regard to any relevant matter in sub-s 90SF(3), I adopt without repetition, my earlier consideration of those matters.
The relevant and overarching consideration which I see as being of determinative significance to this application, is the effect which the orders made under s 90SM have had both upon the respondent’s financial resources and upon the applicant’s capacity to pay maintenance. To this end, I examine the implications of the orders made in the property settlement proceeding.
It will be recalled that the respondent sold some of the parties’ furniture and received the sum of $8,000 from those sales. I note that the respondent submitted that I should characterise this sum as spousal maintenance. It seemed to be the case that, having sold the furniture and taken the proceeds, the respondent wished to quarantine that money from the asset pool. A similar submission had been made in relation to receipt of the damages settlement (see above at [115(g)]).
An interim distribution of $60,000 was made to the respondent in April 2016. Evidence demonstrated that the respondent had preserved that fund, including by prepayment of rent and of her lawyer’s fees.
As is set out below at [227], pursuant to the orders made in respect of property settlement, the respondent will retain the whole of the (omitted) Bank account (being a sum of $158,455 and any accrued interest).
For the purposes of evaluating the claim for spousal maintenance, it is necessary also to consider what proportion of the controlled moneys account the respondent is likely to receive (putting aside the question of what interest has accrued on the controlled moneys account). I have held that the respondent will receive 62% of the asset pool. This equates to a sum of $596,152. I have identified below at [227] the items of personal property which the respondent will retain. The value of that personal property is $321,637. Allowing for personal property of $321,637, I assess that the respondent will receive ~$274,515 from the controlled moneys account (i.e. $596,152 – $321,637 = $274,515).
The respondent will also retain the moneys standing to the credit of her bank accounts (~$10,000) and her superannuation (~$10,182).
The respondent retains liquid capital of ~$583,152 from the asset pool:
Respondent Asset Value (omitted) Bank account (omitted) 158,455 Interim distribution 60,000 Savings 10,000 Personal injuries settlement 70,000 Superannuation 10,182 Share of controlled monies account 274,515 Total $583,152
I have set out a summary of the respondent’s financial statements above. I have had regard to the respondent’s income and her evidence that ‘may be’ she hadn’t declared all of her income. In observing the respondent giving that evidence, I was fortified in a conclusion that, as a matter of probability, her earnings were higher than she had disclosed to the court. A clear dissonance was demonstrated between the respondent’s expenses as stated in her financial statement and the fact that she had been able to preserve so much of the interim distribution of $60,000 made to her in April 2016. These matters notwithstanding, the court must disregard any income tested pension, allowance or benefit to which the respondent is entitled: sub-s 75(3).
However, the applicant will receive 38% (or $365,384), from the asset pool of $961,536. As stated below at [227], the items of personal property which the applicant will retain are valued at $193,578. Allowing for the applicant’s entitlement to that share of $365,384 from the total asset pool and, after making allowance for the value of the personal property that the applicant will retain ($193,578), I assess that he will receive ~$171,806 from the controlled moneys account (i.e. $365,384 – $193,578 = $171,806).
Upon those entitlements, the liquid capital that will be retained by the applicant from the net asset pool will be comprised of:
Applicant Asset Value Interim distribution 30,000 Savings 53,000 Superannuation 17,828 Share of controlled moneys account $171,806 Total $272,634 Save for the items of property that will be retained by the applicant, together with the share that he will take from the controlled moneys account, there is no other asset against which the applicant could draw upon by way of security for any borrowings to provide maintenance.
In evaluating a claim for spousal maintenance it cannot be ignored that, in the current context, assets and resources that were formerly available to these parties have now been divided between them: cf Moller [2017] FamCA 841, [47] citing In the Marriage of Bevan (1995) FLC 92-600. As was recognised in those authorities, consideration of an entitlement to be maintained requires an evaluation of all the circumstances that are prescribed by sub-s 90SF(3) and this includes the circumstance that, where orders have been made under s 90SM, the assets and resources of the parties have been divided. There is no principle that the respondent is entitled to the same standard of living as had been enjoyed before separation.
The respondent’s possession of a capital sum of the magnitude which has been awarded to her supports a conclusion that she does not satisfy the threshold criterion in para 90SF(1)(b) of now being unable adequately to support herself: cf Clauson (1995) FLC 92-595, 81,912. Further, in light of the orders made in the property settlement proceeding it should not, in my opinion, be concluded the applicant is reasonably able to maintain the respondent within the meaning of para 90SF(1)(a). The respondent is not entitled to be maintained by the applicant to the same standard which the parties had enjoyed prior to separation (including their predilection for holidays and travel).
Accordingly, I conclude that it would not be proper to make an order that the applicant pay the respondent any sum by way of periodic maintenance. In light of my conclusion that the threshold criterion for an entitlement to maintenance is not established, it follows that the application for lump sum maintenance should also be refused.
Conclusion
As concerns the framing of orders that are required to give effect to those conclusions, I note that s 90SS, which concerns general powers of the court, confers a range of specific powers to make orders under Part VIIIAB, including orders: (a) for the payment of a lump sum; (b) imposing terms and conditions, and; (c) as may be necessary to do justice between the parties: see para 90SS(a), (i) and (k): cfKennon v Spry (2008) 238 CLR 366, [200] (Kiefel J). The section does not, in or of itself, provide an independent source of power to make orders otherwise than in accordance with s 90SM: cf Hickey, (2003) FLC 93-143, [41]-[48]. What orders should be made?
By s 90ST, the court is obliged as far as is practicable, to make orders so as to achieve two objects: (1) to finally determine the financial relations of the parties; (2) to avoid further proceedings between them.
As noted at [165], a property adjustment of the asset pool should be made as to 38% to the applicant and 62% to the respondent. The net value of their asset pool is $961,536. Translating those conclusions to an adjustment of the parties property interests results as follows:
(a)38% of $961,536 being the sum of: $365,384
(b)62% of $961,536 being the sum of: $596,152
It is then necessary to frame orders to give effect to those conclusions.
In the making of final property orders, it is well recognised that it is desirable to make orders that avoid the sharing of particular assets: Norbis v Norbis (1986) 161 CLR 513, 521 (Mason and Deane JJ). Each of the parties identified particular assets which, they contended or agreed, should be rertained by them respectively. I have concluded that their assets should be allocated or transferred as follows:
Applicant Asset Value Interim distribution 30,000 Savings 53,000 Truck 30,000 (omitted) 5,500 Excavator Nil Ford (omitted) Motor vehicle 15,000 Boat 20,000 Trailer 6,500 Chattels 5,000 (country omitted) time-share 10,000 (omitted) Credit cards Unknown (omitted) shares 750 Superannuation 17,828 Total $193,578
Respondent Asset Value (omitted) Bank account (omitted) 158,455 Interim distribution 60,000 Savings 10,000 Personal injuries settlement 70,000 Ford Motor vehicle 8,000 Chattels 5,000 Superannuation 10,182 Total $321,637 I note that by his outline, the applicant proposed that the respondent should retain the amount standing to the credit of the offset account.
In the result, from the net asset pool, the items of property identified above will be retained by the applicant and respondent respectively. The orders provide accordingly.
Next, each of the parties is entitled to payment of a proportion of the sum retained in the controlled monies account (upon which interest is accruing). This is being held by the solicitor for the respondent.
I make declarations that identify the value of the property which is to be retained by each party and direct that the balance of the amount standing to the credit of the controlled moneys account (together with any accrued interest), be divided so as to effect an overall division of the parties’ asset pool in the proportions as determined above.
Payment from the amount retained in the controlled moneys account in the stipulated necessary proportions will be conditioned upon each of the parties executing and exchanging the necessary instruments of transfer in any of the interests in property as relate to the assets and undertaking comprising the business, ‘(omitted business)’, the company, (business omitted), the family trust and the (omitted) Bank account. The respondent must resign or relinquish, as the case requires, her shareholdings in that company and her beneficial interest in that trust (together with any appointment as trustee). Transfers of the interests in the (omitted) shares and the (country omitted) time-share resort will be required. The parties retain their superannuation and no other orders are required as to this. Orders pursuant to s 106A are made.
The respondent’s evidence in this case served as the catalyst for the applicant to ‘self-report’ to the Australian Taxation Office. I cannot speculate as to the result of any investigation that may occur. Nor can I speculate as to the implications for the parties, their company or trust. As discussed in closing submissions, I decline the application for orders that the parties should have any right of indemnity in respect of any re-assessment of their potential taxation liabilities in relation to the income of the business in any year up to 30 June 2016. As events evolved, the respondent did not press this application.
The orders that are to be made in this proceeding in the exercise of the court’s discretion under s 90SM recognise the broad principle that orders made under that section should, so as far as is practicable, finally determine the parties’ financial relations. I am satisfied that those orders are just and equitable: JEL v DDF, supra, [152(i)].
I acknowledge the assistance of counsel in this matter.
I certify that the preceding two hundred and thirty-four (234) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 7 December 2017
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