JANEIRO & JANEIRO
[2019] FamCA 949
•10 December 2019
FAMILY COURT OF AUSTRALIA
| JANEIRO & JANEIRO | [2019] FamCA 949 |
| FAMILY LAW – CHILDREN – Best interests of the child – Where the parties agree that the child shall live with the mother – Where the parties agree that they should have equal shared parental responsibility for the child – Where the realm of the dispute is the father’s time with the child – Where there is no concern as to risk of harm in either parties’ care – Orders made as proposed by the Independent Children’s Lawyer and adopted by the father. FAMILY LAW – PROPERTY – Where the wife seeks that she receive 65 per cent of the matrimonial property and the husband receive 35 per cent – Where the effect of the orders sought by the husband would result in a 55 per cent distribution to him and 45 per cent to the wife – Dispute as to contributions – Weight to be given to initial contributions – Where both parties contend that joint funds used by the other party post separation should be added back as a premature distribution of matrimonial assets or a reckless dissipation of assets – Where both parties provided inadequate financial disclosure in the proceedings – Where each party seeks to retain particular items of matrimonial property – Orders made the parties each receive half of the matrimonial property – Orders made that the husband retain a significant matrimonial asset and buy out the wife’s interest. |
| Family Law Act 1975 (Cth) ss 60B , 60CA, 60CC, 65D, 65DAA, 75, 79 |
| Aleksovski & Aleksovski [1996] FLC 92-705 Bevan & Bevan [2013] FamCAFC 116 Brandt & Brandt (1997) FLC 92-758 Dickons & Dickons [2012] FamCAFC 154 Janeiro & Janeiro (No.2) [2016] FamCA 913 Janeiro & Janeiro [2018] FamCA 1154 Marker & Marker [1992] FamCA 42 Pierce & Pierce [1998] FamCA 74 Stanford v Stanford (2012) 247 CLR 108 Trevi & Trevi [2018] FamCAFC 173 Williams & Williams [2007] FamCA 313 |
| APPLICANT: | Mr Janeiro |
| RESPONDENT: | Ms Janeiro |
| INDEPENDENT CHILDREN’S LAWYER: | Legal Aid NSW |
| FILE NUMBER: | PAC | 4764 | of | 2015 |
| DATE DELIVERED: | 10 December 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Hannam J |
| HEARING DATE: | 3 December 2018 - 5 December 2018, 29 March 2019, 26 April 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Picker |
| SOLICITOR FOR THE APPLICANT: | James Papas Solicitors |
| COUNSEL FOR THE RESPONDENT: | Ms Snelling |
| SOLICITOR FOR THE RESPONDENT: | CM Lawyers |
| COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: | Mr Alexander |
| SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: | Legal Aid NSW Parramatta |
Orders
Parenting
All prior parenting orders are discharged excluding orders 1, 2, 3(a)(ii) and (iii)(A) and 4 – 19 of the consent orders marked Exhibit 27 made on 29 March 2019.
That B spend time with his father as agreed between the parties and failing agreement as follows:
(a) In 2019:
(i)During end of Term 4 school holidays in 2019 (the Christmas school holidays in 2019) as follows:
(A)From 5.00 pm on 27 December 2019 to 9.00 am on 31 December 2019;
(B)From 5.00 pm on 10 January 2020 to 9.00 am on 14 January 2020;
(b) From the commencement of Term 1 2020 school term as follows:
(i)During school terms, from the conclusion of school on the first Thursday of each school term and each alternate Thursday thereafter until 5.00 pm Sunday; and commencing on the second Thursday of each term and continuing each alternate Thursday thereafter until the commencement of school Friday;
(ii)During the end of Terms 1, 2 and 3 school holidays for one week from 9.00 am on the first Saturday after school concludes until 5.00 pm on the second Saturday of the school holiday period;
(iii)During the end of Term 4 school holidays (the Christmas school holidays) as follows:
a) When Christmas Day is in odd years as follows:
(i)From the conclusion of school on the last day of Term 4 to 2.00pm on Christmas Day;
(ii)From 5.00pm on the first Saturday of the New Year until 5.00pm on the second Saturday of the New Year;
(iii)From 5.00pm on the third Saturday of January to 5.00pm on the fourth Saturday;
b) When Christmas Day is in even years as follows:
(i)From 2.00 pm on Christmas Day to 5.00 pm on New Years’ Day;
(ii)From 5.00 pm on the second Saturday of January to 5.00 pm on the third Saturday of January;
(iii)From 5.00 pm on the fourth Saturday to the earlier of 5.00 pm on the fifth Saturday and the commencement of school.
Property
Sale of K Street, Suburb L
That forthwith the parties do all acts and things necessary to cause the property known as K Street, Suburb L, NSW, Certificate of Title Folio Identifier … (“K Street”), to be sold by way of private treaty within 90 days at a price to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute of New South Wales or their nominee and that the proceeds of the said sale be disbursed as follows:
(a)Payment of agent’s commission, advertising expenses and legal expenses of the sale;
(b)Payment of any money due and owing to the mortgagee to discharge the mortgage secured over the property;
(c)The net balance of the proceeds of sale be divided between the parties as follows:
(i)As to fifty per cent (50%) to the applicant husband; and
(ii)As to fifty per cent (50%) to the respondent wife.
(d)That in the event that the K Street property fails to be sold by private treaty within a period of 90 days hereof then each party takes necessary steps and execute all necessary documents to cause the said property to be sold by auction within 30 days from the expiry of the 90 day period, at a reserve to be agreed upon between the parties and failing such agreement either party is at liberty to appoint M Valuations Pty Ltd to obtain a valuation for the purposes of ascertaining the reserve price and once the valuation is provided that is to be the reserve price, and that the net proceeds of the said sale be disbursed as follows:-
(i)Payment of agent's commission, advertising expenses and legal expenses of the sale;
(ii)Payment of any money due and owing to the mortgagee to discharge the mortgage secured over the this property;
(iii)The net balance of the proceeds of sale be divided between the parties as follows:
(A) As to fifty per cent (50%) to the applicant husband; and
(B)As to fifty per cent (50%) to the respondent wife.
(e)The parties are to follow all recommendations provided to them by the agent, including but not limited to the items which need to be removed from the home, how the property is to be styled and advertised and they are to act upon those recommendations with seven (7) days thereafter.
(f)The parties will use their best endeavours to ensure they obtain the highest possible price.
Plant, Equipment and vehicles
That the wife be declared the sole owner of the motor vehicles in her possession namely the Motor Vehicle 1 Rego … and the Historic vehicle.
That forthwith the parties do all acts and things necessary to cause the following items be sold and the proceeds of sale be divided as to 50 per cent to the husband and 50 per cent to the wife:
(a)Work vehicle 1;
(b)Work vehicle 2;
(c)Motor vehicle 2;
(d)Work equipment 1;
(e)Work equipment 2;
(f)Work equipment 3; and
(g)Work equipment 4.
That the husband and wife do all acts and things and give all consents and execute all documents necessary to give effect to these orders.
The D Street, Suburb E property and plant, equipment and vehicles to be retained by the husband
That within three months from this date the husband pay to the wife, or as she may otherwise direct in writing, the sum of $1,160,335 with interest to accrue on that sum from the due date.
Upon payment of the sum in order 7 the wife do any things necessary to transfer to the husband her right, title and interest in the property at D Street, Suburb E and in any of the plant and equipment to be retained by the husband as specified in order 9.
Upon payment of the sum in order 7 the wife is to transfer to the husband on or before the expiration of ninety (90) days hereof her right, title and interest, if any, in the following items of plant and equipment and the husband is to be declared the legal and beneficial owner free from any claim or demand by the wife:
(a)Motor vehicle 3;
(b)Work equipment 5;
(c)Work equipment 6;
(d)Work vehicle 3;
(e)Work equipment 7;
(f)Work equipment 8; and
(g)Work equipment 9.
The parties do all things required of them to make arrangements for the items referred to in order 9 to be delivered to the husband upon compliance with order 7 or 11.
That in default of the husband paying the sum in order 7 to the wife by the due date, the parties shall do all things necessary to sell the property at D Street, Suburb E for the best price reasonably obtainable and after payment of selling costs pay the net proceeds of sale in the following manner:
(a)As to the wife 50 per cent of the balance remaining;
(b)As to the wife a further payment of $60,335; and
(c)As to the balance then remaining to the husband.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Janeiro & Janeiro has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 4764 of 2015
| Mr Janeiro |
Applicant
And
| Ms Janeiro |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings concern long term parenting and financial arrangements arising from the breakdown of the parties’ 15 year marriage. The applicant is referred to as “the father” in relation to parenting and “the husband” in relation to property and the respondent is referred to as “the mother” in relation to parenting and “the wife” in relation to property. There is one child of the relationship, a boy named B (“the child”), aged 11.
The parties largely reached agreement as to the parenting issues in dispute by the conclusion of the hearing in March 2019. There remain many unresolved matters concerning a just and equitable settlement of their property interests.
Parenting
The father maintained a fairly consistent position as to the future parenting arrangements for the child throughout the proceedings. He initially sought orders that would see the parents have equal shared parental responsibility for the child and the child live with the mother and spend time with him each alternative week. His proposal at the commencement of the trial was for his time with the child to increase incrementally until the child spends time with him each alternative weekend. At the final hearing date in March 2019, the father adopted the position of the Independent Children’s Lawyer (“ICL”) which was in very similar terms to his own.
The mother dramatically changed her position as to parenting in the course of the proceedings. She had initially sought sole parental responsibility for the child and orders for the father to spend time with the child for three hours each fortnight which she proposed was to be supervised. At the commencement of the trial she was no longer opposed to overnight time and by the end of the hearing on 29 March 2019, the mother agreed to orders that the parties share parental responsibility for the child and that he begin to spend overnight unsupervised time with the father. The only matter upon which the parties could not agree relates to the father’s time with the child from Term 1, 2020 and during school holidays.
Property
The effect of the wife’s proposed orders are that she will receive 65 per cent of the matrimonial property and the husband will receive 35 per cent.
In final submissions it was identified that the effect of the orders sought by the husband would result in a 55 per cent distribution to him with 45 per cent to the wife.
Both parties agree that they will each retain their own superannuation interests given that they each have accrued similar modest amounts.
The main matter in dispute relates to contributions of the parties as both parties contend that the 75(2) factors justify an adjustment to the parties’ contribution based entitlement in favour of the wife of 15 per cent.
Background
The dispute between the parties is so entrenched that there are very few matters of common ground. The parties cannot agree about when they met or when the relationship began with the wife asserting that this occurred in 1996, and the husband contending it was 1998. They cannot agree about when the husband separated from his first wife but there is no dispute that this occurred around the time that their relationship began. They also cannot agree about the circumstances in which the wife left her earlier administrative position and began undertaking a similar role with the husband in his business.
For reasons which will become clear, these matters in dispute are of little significance and do not require resolution for the purposes of determining the property settlement dispute.
There is no dispute that whenever it was that the relationship began the husband owned a property in Suburb N (“the Suburb N property”) which he had retained in a property settlement with his former wife, and that he had been engaged in the business for some time.
It is also common ground that sometime during this same period and prior to their marriage the parties purchased a property which became their family home (“the family home”) for about $275,000.
The parties also agree that around the time of their marriage, the wife became involved in the business. The husband engaged in the physical activities related to the business and the wife became a director of the company through which the business was operated and took on an administrative role.
The parties married in 1999 and began living together at this time. It would appear that they mingled their finances from around this time and operated as a single financial unit including through joint bank accounts.
From the time the parties were married the husband’s son from his first marriage lived with the parties each alternate weekend.
In about 1999 or 2000, the Suburb N property was sold.
In about 2000, the parties purchased a factory (“the factory”) in joint names using the funds from the proceeds of the sale of the Suburb N property. They jointly borrowed the balance required for the purchase.
In 2005 the parties set up another business (“the business”). Once again, the husband was engaged in the business in a practical way operating the machinery and equipment and the wife was responsible for the administrative side of the business which the parties continued to operate throughout their marriage. It was profitable business and supported a comfortable lifestyle for the parties.
Various items of valuable plant and equipment were accumulated for the purposes of the parties’ business over the years.
The wife also claims that the parties conducted a partnership together. Details about this partnership, including its relationship with the business (if any) and the parties’ respective roles in that partnership are unclear.
In 2008, the parties’ only child was born. Although both parents played a role in the home and the business, the wife was primarily responsible for the care of the child until at least his commencement at childcare from about the age of four while the husband was engaged in the business full time.
At some point after the child commenced at childcare there were apparently some concerns held by staff at the childcare centre about the child’s behaviour. These matters were investigated and it was subsequently confirmed that the child presented with Attention Deficit Hyperactivity Disorder (“ADHD”), Oppositional Defiance Disorder (“ODD”) and Sensory Processing Disorder (“SPD”). The level of the child’s disability however was somewhat unclear until the last days of the hearing.
In 2010 the husband received a gift from his family of $36,000 which was deposited into the parties’ joint bank account.
In 2010 the parties purchased a Historic Vehicle which both seem to regard as an important item of property. This car was registered in the name of the wife.
In around 2010 the parties sold the factory for approximately $1,100,000. They used the proceeds of sale and obtained a loan to buy warehouse premises (“the warehouse”) in 2011 for roughly $1,600,000. The loan was secured by a mortgage over the family home and at the time of the final hearing the amount outstanding on this loan was $314,848.
There are two buildings at the warehouse premises. The parties operated their business from the rear warehouse building and the front building at those premises was leased.
A wall of one of the warehouse buildings collapsed in about 2013, but no action was taken to rectify the damage other than obtain quotes for the cost of the repair. At the time of the final hearing, the warehouse also remained subject to a council order for rectification. The impact of damage to both buildings and upon the parties’ business is unclear and in dispute but it appears that they continued to operate the business from these premises for some time after the collapse of the wall.
For many years throughout the relationship the parties had managed their finances through three bank accounts which they treated as joint bank accounts. One account was held in the name of the business (“the business account”) another was in the parties’ joint names (“the joint account”) and the third was in the name of the child (“the child’s account”). When the relationship was intact the income generated in the parties’ business in which they both continued to be employed was paid into one or more of these bank accounts and was applied to support the family, repay the mortgage secured over the family home and accumulate assets. The rent from the leased part of the warehouse was deposited into the parties’ joint bank account.
Due to difficulties in the marriage, the parties separated in February 2014. They each continued to live with the child in the family home after separation.
The financial arrangements of the parties after separation in February 2014 and their respective contentions about the conduct of each other is central in this dispute.
One of the only matters of common ground is that the parties had acquired various items of plant and equipment during their relationship which were used in the operation of their business. A few months after separation, in August 2014 they sold some items of plant and equipment and proceeds from the sale were deposited into one of their joint bank accounts. There is a significant dispute between the parties concerning the sum realised from this sale and its disposal which is a matter to which I will return.
In February 2015, the husband met his current partner (“the husband’s partner”). The wife has not re-partnered.
On 8 May 2015, the parties physically separated after there was an incident to which police attended and subsequently sought an Apprehended Domestic Violence Order (“ADVO”) for the protection of the wife against the husband. The husband was also charged with intimidating the wife with the intention of causing she and her brother to fear physical or mental harm.
The application for ADVO was subsequently dismissed and the charge against the husband withdrawn. Contentions about family violence were not pursued in the proceedings.
The husband had been a collector of model cars from the time of his first marriage and he continued to do so throughout the parties’ relationship. At the time of separation, the husband had approximately 320 cars on display and another 150 cars in boxes at the family home. The parties agree that this collection is valuable though there is no evidence of valuation.
The husband has not returned to the family home since collecting his personal items from it on 8 May 2015. He maintains that he had no choice but to leave behind valuable items in a safe including cash and his model car collection. He also says he was “locked out” of the business premises at the warehouse from this date. The wife denies that she locked the husband out but there is no dispute that the rear of the warehouse from which the parties had operated their business was not utilised by either party after this date for at least 18 months.
Following separation the husband withdrew or withheld at least $35,000 from joint monies which he says he used to re-establish a home, purchase household goods and meet his day to day expenses. He claims that he was unable to operate the business or utilise items left at the warehouse including tools worth about $80,000 from May 2015 due to the wife refusing him access to the business premises. This is in dispute and is a matter to which I will return.
On 11 May 2015 the local council issued a notice to the parties requiring them to carry out significant repairs on the warehouse, relating to, as I understand it the collapsed wall. The parties’ positions as to costs associated with such repair vary considerably and are considered later in these Reasons. There is no dispute however that the rectification had not been carried out by the time of the final hearing.
Events since commencement of the proceedings
The father commenced proceedings on 29 September 2015.
On 24 November 2015, interim parenting orders were made following a defended hearing for the child to spend supervised time with the father.
In January 2016, the parties and the child attended upon a Family Consultant under the Child Responsive Program.
On 1 February 2016 orders were made with the consent of the parties that the wife pay the husband $100,000 as she retained control of the parties’ joint bank accounts. No specific timeframe was stipulated in these orders but it was understood by the parties that this would occur forthwith. The wife subsequently did not make this payment resulting in the husband filing an application on 9 May 2016 seeking to enforce the order. In response, the wife sought to set aside the order for her to pay this amount to the husband.
In March 2016 the husband began living with his partner and her two children in rented premises.
Following another defended interim hearing on 27 July 2016 further interim parenting orders were made for the father to spend unsupervised time with the child each alternate Saturday for six hours and for defined daytime periods in the school holidays.
On 15 August 2016 the husband’s enforcement application came before the Court for hearing. In the course of that court event it became clear that the parties disagreed about the nature of the $100,000 payment and the purpose for which it was to be paid to the husband. The wife asserted that she consented to the order on the basis that the funds were to be used to rectify the warehouse in accordance with the council’s requirements whereas the husband contended that it was an interim property distribution to be used at his discretion. I determined that I could not be satisfied there was an agreement that the funds be used for the any particular purpose[1] and made orders on 31 October 2016 by way of enforcement that the wife transfer $100,000 to the husband.
[1]Janeiro & Janeiro (No.2) [2016] FamCA 913
On 31 October 2016 I made further orders restraining the parties from disposing of or encumbering various assets and granted the husband exclusive occupation of the rear of the warehouse and exclusive use of particular items of plant and equipment so that he could operate his business. A further order made that day granted the husband the exclusive right to arrange for repair to the warehouse buildings in compliance with the council notice and the cost was to be equally borne by the parties.
There was little progress in advancing the matter to final trial after October 2016 for a period of almost two years.
At a court event on 22 May 2017 family therapy was foreshadowed and it was ordered the parties subsequently participate in mediation. It appears there were delays in implementing the family therapy and the ICL requested the proceedings be relisted. On 18 October 2017 it was ordered with the consent of the parties that they participate in family therapy with a nominated therapist. There were then some further difficulties in relation to the progression of family therapy noted in subsequent court events resulting in further delays.
As to property, it was noted on 18 October 2017 almost a year after the interim orders were made that there had been no progression in relation to preparing the property proceedings for final hearing. In particular there were major delays in obtaining expert evidence concerning valuation.
Ultimately the final hearing was fixed to commence in December 2018.
In September 2018, the wife filed an application seeking orders that she receive $75,000 from one of the parties’ joint accounts to pay for repairs arising from termite and other damage to the family home. She also sought orders that the husband carry out rectification of the warehouse using the $100,000 interim property payment. On 22 October 2018 orders were made to provide for mortgage repayments for the family home to be made. The balance of the wife’s September 2018 application was consolidated with issues for determination at the final hearing.
The final hearing proceeded over three days in December 2018.
On 5 December 2018 when the proceedings were adjourned part-heard further interim parenting orders were made. Up until this time the child who was then aged 10 had not spent any overnight time with his father since separation in May 2015. There was by this stage no longer any dispute about the child’s developmental disorders and the expert who had been cross-examined considered that the father’s proposal for overnight time was appropriate.
On the basis of this evidence and for reasons given at the time[2] interim orders were made for the child to spend time with the father on weekends which was then to increase to include overnights. It was also ordered that the father immediately make appointments with the child's doctor to receive information in relation to the child’s diagnoses, management and treatment and that a full paediatric report be obtained from the child’s treating paediatrician.
[2]Janeiro & Janeiro [2018] FamCA 1154
During the subsequent adjournment, the child attended upon the paediatrician and a report was prepared.
On 29 March 2019, cross-examination of the mother was completed and final orders were made with the consent of the parties that the parents equally share parental responsibility for the child and that he live with the mother and spend time with the father each alternate weekend during 2019 and over the 2019 Christmas period. Orders were also made for the child to have telephone communication with each parent while in the other parent’s care. It was also ordered that child continue to see the paediatrician and engage with a child psychologist to assist with the implementation of a behavioural management plan.
On 26 April 2019, after the filing of written submissions, the parties made final oral submissions as to property and judgment was subsequently reserved.
As I explained to the parties at the time I was then absent for some months due to pre-arranged extended leave.
Parenting
Expert Evidence
The expert appointed in the proceedings met with the family members in September 2016. She interviewed the mother, the father, the child and the father’s partner and observed the child with the mother and the father and his partner together. She read the many affidavits filed in the proceedings, the Child Responsive Program Memorandum and various Judgments that had been delivered. The expert also considered documents produced on subpoena by various treatment providers for the child and records from the child’s schools and the supervision reports in relation to his time with the father.
At the time the expert interviewed the parties the father was spending unsupervised time with the child during the daytime. The father then proposed that the parties equally share parental responsibility for the child who was to live with the mother and spend time with him after school one day per fortnight for a few hours, on alternate weekends and at other times as agreed. The mother at the time sought an order for sole parental responsibility for the child and that the child spend limited supervised time with the father each alternate Saturday. Although the mother acknowledged that the reports from the supervision service had been favourable and that the child was enjoying the time with his father she was reluctant to consider overnights or an extension of the father’s time.
The expert had a telephone conversation with the child’s treating paediatrician who informed the expert that she did not see any concerns with the child spending overnight with his father provided that the parties were compliant with the child’s medication and consistent in using similar behaviour management strategies.
In the affidavits filed by the parties in the proceedings and when they met with the expert both parents made allegations against the other that raised concerns about the child being subjected to physical or psychological harm in the other parent’s care. The expert had much to say about the use of harsh discipline and limitations of both parents in this regard.
Neither of the parents ultimately contended at trial that the other parent posed any risk of harm to the child and at the end of the hearing both agreed to orders providing for the child to spend substantial and significant time in each parent’s care. The ambit of the dispute is thus very limited and no further details about these matters need be included here.
A matter of significance in these proceedings is that the child has a number of special needs as a result of the various conditions with which he has been diagnosed.
The expert made the following observations regarding the child and his special needs:
[The child] has, since 2013 when he was four years and five months, been identified as a vulnerable and complex child. While he is capable of being quite personable and empathic, when placed under stress and in situations where he has experienced frustration, [the child] has displayed a wide range of externalising symptoms including attention seeking, oppositional behaviour, rude language, aggression to property and people (adults as well as children), impulsivity and poor emotional regulation in a range of settings…
…
…[The treating paediatrician] wrote a rather alarming report about the seriousness of [the child’s] mental health prognosis if intervention did not happen immediately. This intervention seems to have occurred largely in the context of [the child] being prescribed medication which has been monitored by [the treating paediatrician] and he is receiving ongoing occupational therapy and counselling. Additionally, in the educational setting, [the child] has received educational support and has been referred to a school for children with special needs. There clearly seems to be some developmental pathology, and with the interventions that have been instated, considerable progress has apparently occurred in [the child’s] capacity to manage behaviour. However, it would be foolhardy for the parties to expect that [the child’s] issues will be resolved with intervention directed at him alone.
The expert opined that the behaviour of both parties in response to the child’s difficulties was concerning and that the parents needed to work with the child’s treating practitioners to develop a consistent approach to managing his behaviour.
The expert opined in this context that it was heartening to see that the father had been proactive in making contact with the child’s treating practitioners and had expressed a desire to co-operate with any recommendations they may make which the expert hoped may allay some of the mother’s fears that he is an uninvolved and disinterested parent.
By the time the expert saw the family there had already been two interim hearings in relation to the child’s time with his father. By the second interim hearing the mother appeared to have retracted her contention that the father was potentially an abusive parent and the need for supervision had been removed in accordance with my assessment at the time that there was no evidence that the child was at risk of abuse or neglect or may be exposed to family violence in the father’s care. Notwithstanding this, the mother appeared to the expert to seem to harbour fears about the child’s safety in the father’s care and in particular when spending time with him overnight.
The expert noted that the child’s time with his father had only moved from supervised time to unsupervised time during the day “with nudging from the court” and that “there continues to be a considerable level of mistrust between the parties and reservations by the mother of the father’s motivations”. The expert explained in her report that if this situation continues it is likely to inhibit the parents from being able to co-parent in the interests of the child and places the child in an ongoing difficult position.
Of particular significance in my view is the following opinion of the expert:
The parties need to appreciate that [the child]’s sense of stability and security is more likely to be derived by constancy in his parents’ responses to him rather than restricting his time with [the father].
The expert’s concluding remarks in relation to this issue are as follows:
In conclusion, it is important for the parties to realise that [the child] is much more likely to flourish in his psychosocial development if he is able to maintain relationships with both parents. The onus is on them to work on arrangements which facilitate [the child] spending regular time with each parent, during the day as well as overnight and block periods during school holidays rather that curtailing his movements between the two households. Considerable stability can be infused into [the child]’s life by the introduction of a regular routine which allows him to spend time with each parent, preferably on a weekly basis and overnight time at least fortnightly.
The expert opined that the child’s views had become quite central to the progress of the proceedings and observed that the child had generally echoed the views of his mother about his parenting arrangements. When interviewed the mother stated that the child’s views needed to be given weight which the expert found to be “puzzling” in that the mother was willing to hand so much authority over to the child when she otherwise argued she is a parent who is in charge. While the expert acknowledged the importance of the voice of a child being heard she was concerned about the extent of his empowerment given his age, numerous developmental challenges which render him somewhat emotionally immature and that he is not cognitively equipped to be accorded this level of decision making. The expert was of the view that this places a heavy burden on a child to choose whether he spends overnight time with his father in the context of hostility between the parents. The expert also gave other reasons for this being an inappropriate burden for the child to bear.
In her report dated 8 March 2017, the expert also recommended that the parties engage with a family therapist who understands family law and the needs of children with developmental challenges. A family therapist was named in the report as an appropriate person to provide such a service and the parties subsequently engaged in three family therapy sessions.
In relation to the orders sought by the father which are similar to those now proposed by the ICL, the expert opined:
The Orders which [the father] seeks are not onerous and are consistent with what would be recommended in the light of [the child]’s disabilities and the level of conflict between the parties. What is more of the essence is that they be introduced with caution. The Court has taken this approach thus far. As for the future, it would be recommended that the time [the child] spends with his father be progressively increased…
The expert gave evidence that there was a strong correlation between the fear experienced by the mother and what the child has experienced in this case and that the child and mother are “quite enmeshed”. The expert opined that there was not a “parent system” and “child system” and that “[the child] and his mother move in each other’s space. So when one is upset the other is upset. When boundaries are permeable, children feed off their parents’ kind of fears and parents feed of their children’s fears.”
The expert also opined that part of the difficulty with the child may have been the way his behaviour had been managed. She opined that it was in the child’s interests that his behavioural difficulties be managed consistently by the two parents.
The expert is a highly qualified professional with extensive experience. She was cross-examined by each of the parties and the ICL. The expert remained quite firm in her opinions and recommendations as contained within the expert report under cross-examination. These opinions and recommendations were formed from meeting with the child and parents, interviews and observations of the parents and child and from perusing a significant number of documents filed in the proceedings and produced on subpoena including documents from the child’s paediatrician. Further, following the preparation of her report the expert communicated with the psychologist engaged by the parties for the purpose of family therapy. In these circumstances I attach significant weight to her findings and conclusions
The Paediatric Report
The paediatric report provides details of how the child’s previous impulsive behaviour and inability to regulate his emotions had improved following the use of stimulant medication. The paediatrician indicated that as transitions can on occasion be difficult for the child, the child’s parents would need to ensure they give due warning to the child about changes to his routine and provide him with a schedule regarding parental care. The paediatrician was not cross-examined.
The Areas of Dispute
There is no dispute between the parties that it is in the best interests of the child to live with the mother and for both parties to share parental responsibility for him and orders have been made to this effect. The parameters of the dispute are limited to the amount of time the child is to spend with father during the school terms from 2020 and during school holidays.
The orders proposed by the mother would see the child’s arrangements for spending time with the father in 2019 continue in the same pattern for the future. That is, she proposes that the child continue to spend time with the father from after school Friday to 5.00pm Sunday each alternate week and for a few hours after school on a Thursday in the “off” week.
The father adopted the ICL’s proposal that from 2020 he spend time with the child from after school Thursday until 5.00pm Sunday each alternate week and on the “off” week overnight on a Thursday.
In relation to school holiday time from 2020, the mother proposes that the child spend four nights with the father in the holiday period at the end of term 1 and that his time increase incrementally by one additional day for the holiday periods at the end of terms 2 and 3 and thereafter including the Christmas school holiday period be as ordered by the Court.
The ICL proposes that the child spend one week with the father during the holiday periods at the end of Terms 1, 2 and 3 and for defined periods during the Christmas school holidays including half of Christmas Day with each parent and three one week periods with the father.
The Law & Discussion - Parenting
The objects of Part VII of the Family Law Act 1975 (Cth) (“the Act”) and the principles underlying it set out in s 60B, form the framework for the part of the Act dealing with parenting.
The Court is to make such parenting orders that are considered proper (section 65D of the Act). According to s 60CA of the Act, in deciding whether to make a particular parenting order in relation to a child, a Court must regard the best interests of a child as the paramount consideration.
Section 60CC sets out the primary considerations and additional considerations to be considered by a Court in determining what is in a child’s best interests.
The primary considerations (under s 60CC(2)) are:-
a)The benefit to the child of having a meaningful relationship with both of the child’s parents; and
b)The need to protect the child from physical or psychological harm, from being subjected to or exposed to abuse, neglect or family violence.
The additional considerations are set out in s60CC(3) of the Act.
Each of the proposals foster the child having a meaningful relationship with both of the child’s parents which will undoubtedly be of benefit to the child. In the circumstances of this case there is no concern that the child is at risk of harm from being subjected to, or exposed to, abuse, neglect or family violence in either household.
For the reasons given by the expert in her report, I do not attach significant weight to the views expressed by the child. He has been somewhat empowered to date to speak his mind but is not equipped psychologically or emotionally to bear the burden of exercising power in relation to his parenting arrangements.
The additional considerations which in my view have particular relevance in determining this dispute are the likely effect of a change in the child’s circumstances as a result of each of the parent’s proposals and the capacity of each parent to provide for the child’s needs. In this regard, I attach weight to the following evidence of the expert.
Prior to orders being made on 5 December 2018 the child had not spent any overnight time with the father subsequent to the parties’ separation. The mother had been highly resistant to an increase in the father’s time and it had only occurred as explained by the expert with the “nudging of the court”. Following the completion of the expert’s oral evidence that there was no reason why the child should not be spending much more time with the father, I made orders that the child spend overnight time with him.
When the matter came back before the Court in March 2019, the mother initially sought to contend that the change in the child’s circumstances brought about by the commencement of overnight time with the father had resulted in behavioural changes observed by the child’s school. However, by the end of this further day in the proceedings she had resiled from this position and accepted as I understand it that there had been no detrimental impact upon the child of an increase in time with the father. The mother agreed to orders for the child to continue spending overnight time with the father, and orders were made with the consent of the parties to this effect.
The other remaining issue in relation to an increase in the child’s time with his father at the final hearing related to the question of the father’s capacity to manage the child’s special needs and the child’s capacity to manage change. Up until the last day of evidence no expert evidence had been adduced in relation to the needs of the child and the connection between any diagnoses and his exhibited behaviours. On the last day of evidence a report prepared by the child’s paediatrician (after the commencement of overnight time with the father) was tendered. This report records the child’s diagnoses as ADD, ODD, SPD as well as Social Communication Disorder, and that the child is overweight. In her report the paediatrician reviewed the child’s symptoms and medication and reported that at the time of assessment the child was currently doing “well” and that no additional assessments were planned in the foreseeable future.
The paediatrician in her report also opined:
[The child’s] parents are aware that transitions can on occasions be difficult for him. Inadequate warning about change can be met with anger and defiance. It is important that due warning is given about changes to his routine. There should be strong commitment to providing [the child] with a schedule regarding parental care and wherever possible this schedule should be adhered to.
The changes to the child’s current circumstances that will flow from the proposal of the ICL and father will see the child spend overnight time on a school night with the father each alternate week and an increase in time with him on weekends of one night each fortnight as well as increased time during school holidays. The mother’s proposal will see the child continue to have no overnight time with his father on a week night during term time and overnight time remain at two nights per fortnight. She also proposes a very gradual increase in school holiday time.
The mother’s position in relation to the child’s overnight time with his father is based on her contentions about the child’s historical reaction to changes in his routine. She cannot point to any particular evidence however as to why it is in the child’s interest to limit the time with his father to only two nights per fortnight.
The expert was not challenged under cross-examination about her observations concerning the interactions between the father and child or about her assessment as to the father’s parenting capacity. The expert gave oral evidence that she considered the father had some strategies for managing the child’s needs and that he was in an environment where he would be supported by his new partner in the parenting of the child. Moreover the general tenor of the expert’s evidence which was unchallenged was that the child’s stability and security is more likely to be derived by consistency in his parents’ responses to him than by restricting his time with the father.
The child has already been introduced to overnight time and some time after school in alternate weeks with the father. The paediatrician who assessed him after this regime had been introduced opined that the child was currently doing well. The mother also resiled from the position that there had been some negative changes in the child’s behaviour as a result of the introduction of overnight time.
In these circumstances the proposal of the ICL and agreed to by the father is more akin to a pattern of care that according to the expert is in the child’s best interest. There is no current evidence to suggest that the child will not manage an increase in time with his father so long as there is sufficient warning given and the parents remain committed to the orders in relation to supporting the management of the child’s behaviour.
Further, as an order has been made for the parties to have equal shared parental responsibility for the child, under s 65DAA(1) of the Act, I must consider whether the child spending equal time with each of the parents would be in his best interests, and whether such an order is reasonably practicable.
Equal time is not sought by either of the parties nor is it proposed by the ICL. I accept the ICL’s submission that given the relationship between the child and mother and the child’s special needs, it would be inappropriate in terms of the child’s emotional comfort for the mother not to continue as the child’s primary caregiver.
It would also appear that an equal time arrangement would not be practicable due to the father’s work commitments.
I am then required consider under s 65DAA(2) whether the child spending substantial and significant time with each of the parents would be in his best interests and reasonably practicable.
Subsection 65DAA(3) sets out that a child will be taken to spend substantial and significant time with a parent only if the time the child spends with a parent includes both days that fall on weekends and holidays and days not falling on weekends and holidays, and allows the parent to be involved in the child’s daily routine and occasions and events of particular significant to the child and/or the parent.
The proposal of the ICL as adopted by the father does amount to substantial and significant time whereas the mother’s proposal does not.
The evidence from the child’s paediatrician and the expert indicates that routine and stability are important aspects of the child’s development. In light of this the ICL submitted that an arrangement whereby the child is collected from school every Thursday and either returned Friday morning or Sunday would be a consistent pattern for him.
The child’s paediatrician and the expert in the proceedings agree that the most important issue for the child is the behaviour of the parties in response to the child’s difficulties. The parties have already agreed to manage the child’s behaviours with a psychologist. I am satisfied that doing so in conjunction with providing the child with adequate warning about changes to his routine and a schedule of parental care as recommended by the paediatrician, should address the difficulties with his behaviour. In my view there is no other reason that requires a particularly cautious approach in making orders for the parenting of the child except for the comfort of the mother. There is no suggestion however that the mother’s parenting would be adversely affected if the orders proposed by the ICL were made.
The father’s time with the child has already been increased extremely slowly and with great caution, having begun with limited supervised time, graduating to limited day time. Overnight time was slowly introduced in a manner recommended by the expert. Considering that by 2020 the child will be 11 and a half I consider it appropriate that his time with his father be as close as possible to substantial and significant time as proposed by the ICL.
The mother’s proposal for a very gradual increase in the child’s time with his father is also in my view not supported by any evidence that such an arrangement is in the child’s best interest. Given the child’s age and the fact that all increases in his time with his father have already been introduced very cautiously and gradually there is no reason why that degree of caution ought to continue. Given the unchallenged evidence of the expert as to the pattern of care that is most beneficial for the child in my view the proper proposal which is in the best interests of the child in relation to both school holiday time and the father’s time during the school term is that proposed by the ICL.
Property
The wife seeks property settlement orders that would see her receive 65 per cent of the property of the parties after the payment of outstanding liabilities.
The husband seeks orders that would result in him receiving 55 per cent of the parties’ property.
Importantly both parties seek to retain the warehouse which is the major matrimonial asset and neither seek to retain the family home. Both parties also seek to retain the Historic Vehicle which appears to be an item of significant sentimental value to each of them. The wife originally proposed that she also retain various pieces of machinery but in oral submissions in April 2019 conceded that the husband could retain these items. She also consents to him retaining a number of other items of machinery identified in the proceedings.
The approach to the determination of an application for property settlement is set out in Stanford v Stanford[3], which was considered in detail by the Full Court in Bevan & Bevan[4].
[3] (2012) 247 CLR 108
[4] [2013] FamCAFC 116
The starting point is a consideration of “whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles the existing legal and equitable interests of the parties in the property”[5].
[5] Stanford & Stanford (2012) 247 CLR 108 at [37].
This involves identifying the parties’ existing interests and then considering whether having regard to the particular circumstances before me, it would be just and fair to make orders for the alteration of those interests.
I should next consider the matters set out in s 79(4)(a) to (c) of the Act, that is the financial and non-financial contribution made by the parties to the property and to the welfare of the family constituted by the parties.
I must then consider the remainder of the matters in s 79(4) including the matters referred to in sub-section 75(2) so far as they are relevant, and determine on this basis whether there should be a further adjustment to the parties’ contribution-based entitlements.
Finally, I must then consider the justice and equity of the proposed orders. As was said in Bevan (supra) at [86], the just and equitable requirement is “not a threshold issue, but rather one permeating the entire process”.
What are the existing interests of the parties?
The contentions of each of the parties as to their assets and liabilities have changed over time. The parties did not comply with trial directions to file a joint balance sheet which necessitated discussion at the commencement of the final hearing about items to be included in the balance sheet.
There has been no dispute at any stage that the family home, warehouse, plant, equipment and vehicles to the value of $462,800, and a Historic Vehicle are assets of the parties and that the only relevant liability is the amount outstanding on a loan secured by a mortgage over the family home. Each of the parties has also always intended that their respective superannuation entitlements should form part of the balance sheet but neither party seeks an adjustment of superannuation interests.
There was extensive discussion at the commencement of the trial and in final oral submissions about whether items described as “work equipment/tools” which the parties had agreed have a value of $80,000 and furniture with an agreed value of $25,000 should be included in the balance sheet. Up until final oral submissions in April 2019 each of the parties sought that these items be included and that the other party retain all or some of them in part satisfaction of that party’s entitlement. It became apparent however, at the end of the proceedings that each party contended that the other had control over these items which was denied by each other party. Ultimately it was agreed that it could not be determined that these items were still in existence or under the control of either party.
In her trial affidavit the wife also “requests” that the husband pay various accounts for telephone, water, land tax and tax in relation to the warehouse and the business through curiously she does not seek any orders to this effect. Further, she did not include any amounts in respect to these items in any draft version of the balance sheet and in interchanges between counsel and myself concerning the balance sheet at various times during the final hearing it was never suggested on her behalf that they were current liabilities.
It was common ground in the proceedings that the parties treated three bank accounts as their joint accounts throughout their relationship. These are an account in joint names, an account in the name of the child and a business account. However, it was agreed between the parties that the balances in each account at the time of the final hearing were either unable to be ascertained or were negligible.
There were also at least two bank accounts in the wife’s name which assumed some significance in the proceedings and another account in the name of the wife and her mother but there was no evidence about current balances in these accounts. The parties also did not seek to include any balances in bank accounts in the husband’s name in the balance sheet.
As a result of the various positions of the parties in the proceedings the agreed existing interests of the parties are set out in the following table:
ASSETS AND LIABILITIES
ASSET HUSBAND WIFE JOINT Family home $1,800,000 Warehouse $2,200,000 Plant equipment and vehicles (as per O Valuers) $462,800 Historic Vehicle (car registered in wife’s name)
$70,000
Super Fund
$106,631
Super Fund
$125,000
Total Assets $125,000 $176,631 $4,462,800 TOTAL $4,764,431
The question to be determined is whether it would be just and equitable to leave the parties’ property rights intact having regard to there currently being total assets to the value of $4,764,431 with the husband’s interests totalling $2,356,400 and the wife’s interests totalling $2,408,031 amounting to each party holding roughly half of the net assets available for distribution, and with the vast majority of the property held in joint names.
As was indicated in Stanford (supra) the requirement that it would be just and equitable to make an order is in many cases readily satisfied by observing that at [42]:
… as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. … any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marriage relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the Court make a property settlement order.
In this case, the parties were married for just over 14 years before separating under the one roof with the husband moving out of the family home 15 months later. The parties conducted a business together throughout their relationship with both parties assuming important roles in that business. The wife also assumed the role as the primary homemaker and caregiver for their only child. The wife and child continue to reside at the former matrimonial home but wish it to be sold. The wife is seeking that the warehouse be transferred to her. The husband also seeks orders transferring ownership of the warehouse to him. All of the significant items of property are jointly owned.
The parties have accepted since physical separation there has not been common use of their property and they accept that this will continue in the future. They both seek adjustment orders but are unable to agree to the adjustment. In these circumstances I am satisfied that it is just and equitable to make orders under s 79 of the Act.
Addbacks
Both parties agree that $15,000 of the $100,00 interim payment used by the husband for the payment of legal fees, and $48,000 for the legal fees paid for by the wife from jointly owned funds, should be added back to the pool of assets for the purposes of adjustment.
There was a great deal of confusion and shifting positions adopted by both parties in relation to other sums which each a various times contended should also be “added back”. The husband ultimately contended that $171,555 (rounded up) which he says was at one point “located in” two bank accounts in the wife’s sole name and one account held jointly with the wife’s mother be brought to account in the proceedings by adding this sum back as joint property in the hands of the wife.
The wife sought ultimately to addback withdrawals said to have been made by the husband following separation from three bank accounts which she says totalled $161,068, the sum of $8,982 relating to cheques said to have been drawn by the husband from the parties’ business account and the entirety of the $100,000 paid to the husband pursuant to the partial property settlement orders.
The authorities[6] make it clear that the Court has the discretion to add back certain sums in particular circumstances.
[6] See Trevi & Trevi [2018] FamCAFC 173 (“Trevi”) particularly at [27] – [30] and the cases cited therein.
In Trevi, a recent Full Court decision, at paragraph [27] Murphy J said:
The Full Court held in Omacini and Omacini that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets. (footnotes omitted)
The Full Court went on to affirm “the fundamental precept that addbacks are exceptional”, the “fundamental premise” that adding back is a discretionary exercise and that in cases which are not “exceptional” justice and equity can be achieved not by adding back but by other means such as through the exercise of a different discretion “such as under 75(2) or as part of the assessment of contributions.”
The wife’s counsel confirmed in final oral submissions that she had reversed the earlier position taken at the commencement of the proceedings and pressed for withdrawals made by the husband from joint bank accounts and cheques drawn by him shortly after separation to be added back. She also said that her position as to this matter is addressed in final written submissions filed on the wife’s behalf. I am however unable to discern from those submissions any argument as to why I should adopt the exceptional position and add these sums back as joint funds in the hands of the husband.
As will be explained more fully later in these Reasons there is insufficient clear evidence concerning the husband’s use of joint funds following separation for a finding to be made that he prematurely distributed matrimonial assets or that he wastefully, negligently or recklessly dissipated those assets or to identify with accuracy the amounts said to have been used for his own purposes. In my view the more appropriate approach to be taken to this issue is that which the wife’s counsel outlined at the commencement at the final hearing that is, consider this matter when assessing the contributions of the parties, or under s75(2)(o)
A similar approach should be taken to the husband’s submission that joint funds said to have found their way into bank accounts solely in the wife’s name or operated jointly with her mother should be added back. In my view justice and equity can be achieved by taking those matters into account as part of the assessment of the contributions of the parties, or under s75(2)(o).
I am of the view however that the entire $100,000 paid to the husband pursuant to orders made on 1 February 2016 and enforced through orders of 31 October 2016 should be treated in a different manner that is added back into the asset pool for distribution and credited to the husband.
It is the husband’s case that he utilised this sum in the payment of necessary living expenses. In this regard he relies upon the principle in Marker & Marker[7] that there is no appropriate basis to add back monies that existed at separation but which have subsequently been spent on meeting reasonably incurred necessary living expenses.
[7] [1992] FamCA 42.
In this regard the husband points to the large sum of money expended by the wife following separation which he contends is more than reasonably incurred necessary living expenses. He submits that as the wife’s living expenses are not being added back then it would be unjust to addback his expenses of a similar nature.
The husband adduces very little evidence concerning his employment, income and expenditure following separation and for reasons I will come to I cannot be satisfied that the $100,000 contended to have been spent on reasonable living expenses was utilised for these purposes. I will also explain why I find that he had other sources of income available to him that he utilised for his reasonable living expenses.
As explained the position of the parties with respect to the items that should be considered as comprising the pool of assets for distribution shifted between the Case Outlines filed just prior to the commencement of the final trial, concessions and submissions made at the commencement of the final trial and at other points during the ensuing hearing days and in written submissions and final oral submissions.
I have dealt with each of the varying positions and on the basis of the foregoing discussion find the assets and liabilities of the parties for the purposes of property adjustment to be as set out in the following table.
ASSETS AND LIABILITIES
ASSET HUSBAND WIFE JOINT Family home $1,800,000 Warehouse $2,200,000 Plant equipment and vehicles (as per O valuers) $462,800 Historic Vehicle (car registered in wife’s name)
$70,000
Wife’s legal fees 48,000 $48,000 Husband’s legal fees (from $100,00 interim property distribution) $15,000 Balance of Interim property distribution $85,000 Total Assets $100,000 $118,000 $4,462,800
LIABILITIES HUSBAND WIFE JOINT Mortgage family home $319,318 Total Liabilities $319,318 SUPERANNUATION HUSBAND WIFE JOINT Super Fund $106,631 Super Fund $125,000 NET ASSETS $225,000 $224,631 $4,143,482 TOTAL NET ASSETS $4,593,113
Contributions
Under s 79(4) of the Act, in considering what order should be made in property settlement proceedings, I am to take into account the financial and non-financial contributions directly or indirectly made to the acquisition, conservation or improvement of any of the property of the parties and the contributions made to the welfare of the family and the child, including contributions as a homemaker or parent.
The husband contends that his contributions to the property of the parties and welfare of the family should be assessed as amounting to 70 per cent and the wife’s amounting to 30 per cent.
It is the wife’s contention that the parties’ financial contributions should be seen as equal and that she made a greater non-financial contribution than the husband to the welfare of the family.
In assessing her non-financial contribution, the wife says that regard must be had to her greater involvement in the care of the child and home making. She does not quantify in percentage terms her non-financial contributions.
There is no dispute between the parties that when their relationship began the husband owned the Suburb N property that he had retained in a property settlement from his former wife. The husband who had worked as a machine operator and driver in businesses for some years owned a business engaged in these activities prior to the time that the relationship began in which the wife subsequently became financially involved and was appointed a director. It would appear that the parties otherwise had few assets other than a small amount in savings and each owned a motor vehicle.
Shortly before their marriage, the parties purchased the family home. There is some dispute about contributions made by each of them to the purchase price with the husband asserting that he paid for the deposit out of money lent to him by his mother and using funds from the business account whereas the wife deposes to giving the husband $20,000 towards this deposit which he firmly denies. It is difficult to resolve this dispute but I consider it more likely that the wife made some financial contribution as this was at a stage of their relationship where they had begun to pool their financial resources, jointly meet their financial responsibilities and save for their future together.
The question of the wife’s initial contribution to this asset is not however a matter of great moment in circumstances where there seems to be no dispute that around 90 per cent of the purchase price of $275,000 was borrowed by the parties. There is also no dispute that the loan repayments for the mortgage were paid for out of one of the accounts that the parties operated as a joint account.
In summary, I am satisfied that from the early stages of the parties’ relationship they operated as a single financial unit and the wife made a slightly greater contribution to the purchase of the family home. Otherwise they each made roughly equal contributions to their finances. They worked together in their business and the income from that business paid the mortgage on their family home and provided for their financial support.
It appears to be suggested on the wife’s behalf that the Suburb N property owned by the husband at the time the relationship began should be treated in a similar vein, effectively as a jointly owned asset which just happened to be registered in the husband’s name. The wife also appears to suggest in her affidavit that both parties provided a benefit to the paternal grandmother in permitting her to live in the Suburb N property and that the husband’s sister also lived at the same premises and only paid a minimal rent for about 12 months prior to the sale of this property.
I am of the view that the wife did contribute indirectly in a minor way to repayments for the loan secured by a mortgage over the Suburb N property as those repayments were paid out of income from the business in which the wife became involved just prior to or around the time of their marriage. I am not satisfied however that on this basis the Suburb N property should be treated as an asset to which she made anything more than a very minor contribution. This is particularly so if the husband’s evidence is to be accepted that the Suburb N property was sold in 2000.
The wife deposes that the Suburb N property where the parties lived together with the paternal grandmother and a paternal aunt was sold in about 2003 so on her case her indirect contribution to this property continued for a further three years.
In circumstances where neither party adduces any further evidence in relation to the sale of the Suburb N property and purchase of the factory I am unable to determine when this sale occurred. As the parties intermingled their funds and operated their financial matters jointly from at least the time of their marriage (December 1999), I am satisfied that from this time both contributed through the income from the business they operated together to the mortgage payments on the Suburb N property. This does not however discount the significant contribution of the husband to the property of the parties through his considerable equity in the Suburb N property at the commencement of the parties’ relationship.
There is no dispute between the parties that when the Suburb N property was sold and the outstanding loan paid, the funds from that sale were used to purchase the parties’ factory from where their business then operated. The husband deposes that $458,000 from the sale of the Suburb N property was used to purchase the factory. He says that the purchase price for the factory was about $600,000. The wife deposes that the purchase price for the factory was about $680,000 of which $400,000 came from the net proceeds from the sale of the Suburb N property.
On either case the proceeds of the Suburb N property represented between 59 and 76 per cent of the purchase price of the factory.
There is no dispute between the parties that when the factory was sold (in 2010 according to the husband and 2011 according to the wife) it realised at least $1.1 million (or on the wife’s case $1.15 million) and that this sum was used to purchase the warehouse for $1.6 million in June 2011. It is also common ground that the parties borrowed about $400,000 for the purchase of the warehouse and that this loan was secured by a mortgage over the family home.
The warehouse has been a valuable financial resource for the parties as it comprises two separate buildings. The front premises were rented for approximately $80,000 to $90,000 per year for a number of years and parties’ was operated from the rear.
According to the written submissions made on behalf of the wife it is contended that the parties’ initial financial and non-financial contributions could be treated as equal. Attention was drawn to the Full Court decision in Dickons & Dickons [2012] FamCAFC 154 where the Full Court was critical of an approach in which percentages are attached to components of the parties’ contributions. I am mindful that the task of assessing contributions is holistic and in this context am considering the nature, form and extent of the contributions of all types made by the parties.
The wife also relies on the principle in Aleksovski & Aleksovski [1996] FLC 92-705 that “less weight may be given to a contribution made by one of the parties to the marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties’ assets or has been used up in payment of family expenses.”
It is submitted on behalf of the husband that he made a substantial initial financial contribution through his ownership of the Suburb N property as the proceeds of sale from that property were used to purchase the factory and subsequently on the sale of the factory to purchase the warehouse. He contends that the majority of the funds used to purchase the warehouse flowed directly from his ownership of the Suburb N property.
In accordance with the principles in Williams & Williams[8] (“Williams”) the Court must not simply have reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time of the hearing as this may not give adequate recognition to the importance of the contribution at the time of the hearing.
[8] [2007] FamCA 313.
In my view substantial weight must be attached to the fact that at least $400,000 from the sale of the Suburb N property was used to purchase the factory and this amounted to at least 59 per cent of that purchase price. The factory increased significantly in value while it was held by the parties and was sold for at least $1.1 million in 2011. The increase in value of this asset and any reduction in the mortgage occurred at a time when the parties were both making contributions through the conduct of their business and in the case of the wife to the welfare of their family as homemaker.
The funds from the sale of the factory in turn represented the vast majority of the purchase price of the warehouse for $1.6 million in June 2011 (as the parties were only required to borrow about $400,000) and that warehouse has a current value of $2.2 million. The increase in value of this asset and reduction in the mortgage also occurred at a time when the parties were making equal contributions through the conduct of their business and to the welfare of their family and must therefore must be treated as joint contribution during this period.
Even though the parties must be considered as having both contributed to the increased equity in the factory and later the warehouse this does not in my view diminish the significance of the husband’s initial contribution through his ownership of the Suburb N property. The parties’ capacity to purchase the factory and later the warehouse is due largely to the initial capital contribution almost entirely made by the husband of at least $400,000. I treat this initial contribution of the husband as a valuable contribution to the parties’ property and do not accept the wife’s contention that due to the length of the marriage and other factors it has eroded over time such that the financial contributions of the parties can be regarded as equal.
The wife contends that she made greater direct and indirect non-financial contributions to the increased equity in the parties’ property and the welfare of the family during the relationship. I am satisfied that the wife did make a greater non-financial contribution to the welfare of the family in that she had a more extensive role as home maker and in the care of the parties’ only child.
The wife also relies on a matter that cannot be treated as a contribution to the welfare of the family pursuant to section 79(4)(c) but is in the nature of a contribution being the care she provided of the husband’s son from his previous marriage who spent each alternate weekend with the husband from the time the parties began living together. Although the husband challenges the wife’s evidence that she had any extensive involvement with the care of this son, he does concede that she did care for this child when he was working during the school holidays. I am satisfied that the wife did provide some care for this child for whom she was not responsible but this contribution is equally balanced by the support given by the husband to the wife’s mother for whom he had no responsibility and who according to his unchallenged evidence lived in the parties’ home for five years between 2000 and 2005.
Taking all of the foregoing into account, I assess the respective financial and non- financial contributions up until the time of separation as favouring the husband.
Contribution of parties and other relevant matters following separation
Both parties provide only limited evidence in their respective affidavits in relation to their financial situation or arrangements following separation.
The wife deposes only that the parties’ business “ceased trading in 2014”. Under cross-examination she confirmed that this occurred about two weeks after separation in February of that year. It appears to be common ground that only part of the business was undertaken by the parties just prior to separation.
The only other matter related to the cessation of the business addressed by the wife in her affidavit is that the parties sold some plant and equipment in about 2014 which she deposes realised a sum of $180,600. The wife says that this was deposited into the joint bank account. Although she annexes various documents to her affidavit which includes bank records for the joint account, those records do not relate to this period.
Under cross-examination when shown further records the wife agreed that there was $254,118 in the joint account at around the time of separation. Although the point was not taken at the time this was in fact the balance some months later, as at 4 September 2014. The rent from the leased part of the warehouse of $8650 each month was also deposited into the parties’ joint account and this continued after the date of separation. The wife also agreed that up until 3 September 2014 the balance in the joint account had been generally between about $115,000 and $130,000 for some time. On 3 September 2014 $154,000 was deposited into this account. This is consistent with the wife’s evidence concerning the sum received at around that time for the sale of equipment in the course of the winding down of the business. The wife agreed that this balance comprised the earnings of the business and proceeds of the sale of some plant and equipment.
There is no documentary evidence to support the wife’s other evidence concerning the sale of plant and equipment such as that the total realised on the sale in around August 2014 was $180,600. The total of the amounts she deposes to receiving for each of the individual items is actually $243,600 (rather than $180,600) but there is no evidence in the bank records of this total being deposited in the parties’ joint account at about this time. There is also no record of individual deposits being made in accordance with her evidence of the individual item’s sale price other than the $154,000 which she says was realised for the sale of the equipment deposited on 3 September 2014.
Although the wife does not depose to any other transaction on the joint bank account at around this time, the bank records relating to this account indicate that the day after the $154,000 was deposited, $254,118 was transferred out of this account. Under cross-examination, the wife agreed that she transferred this sum from the joint account into an account she opened in her sole name (“the wife’s first sole bank account”). She claimed that her purpose in making this transfer was to “garnish” more interest which I understand to mean that she intended to obtain a greater rate of interest. The wife categorically denied transferring that amount so that the husband could not have access to it.
It is also apparent that on 11 May 2015 a few days after physical separation the council issued a notice requiring the parties to undertake structural repair to the western wall and provide certification from a structural engineer as to other parts of both buildings.
On 23 November 2015 the council issued an order to the parties requiring them to carry out various structural repairs to both buildings. At one stage the husband agreed under cross-examination that he did not take any steps to obtain quotes for the rectification and was going to attempt to undertake the work himself. He later agreed that he received a quote from the wife in February 2016 for structural and rectification works to the wall only in the sum of $101,360 and that although the tenants had moved out in October 2016 nothing had been done to the building since that date.
The husband’s application to the Court for sole occupation to the rear of the warehouse was made on the basis that he needed to have exclusive occupation for the purposes of carrying on his business.
Each party blamed the other for the state of the building and subsequent loss of income through the tenancy. Although it was the husband’s case that the wife’s rejection of a further lease by the tenant after October 2016 resulted in the parties losing between $80,000 - $100,000 a year he subsequently agreed that the parties would not have been able to lease the building to anyone after October 2016 given its state of disrepair. As the husband also conceded that the building continued after October 2016 to be in the same state it had been up until that time it was difficult to know what to do with this evidence. It is also his case that he used the rear portion of the building for the purposes of his business after gaining exclusive occupation of it in October 2016 regardless of its state.
Adding to the confusion about the fitness of the building to be utilised for the purposes of the business or to be leased and the cost of repairs, the husband relied upon a report dated October 2018 from a consulting engineer (but that engineer did not file an affidavit and was not cross-examined) in which the engineer opined that the building required urgent attention, could not be occupied in its current condition and that “the repairs required to bring this structure up to an acceptable building standard may be cost prohibitive”. The engineer’s recommendation was that it would be less expensive to demolish the building than the attempt to fix it to the level of compliance with current building standards.
The valuer also notes in his report that although he is not a building construction expert the property “may only represent land value with a minimal or nominal improvement value.” This position does not sit well with the husband’s contention that he wishes to retain the building for the purposes of operating his business nor is the totality of the evidence concerning the building consistent with the wife’s case that she wishes to retain the warehouse for the purposes of earning income.
Given the unsatisfactory evidence concerning the state of the building and doing the best I can I am satisfied that the building was damaged in 2013 and has significantly deteriorated since that date. Although I consider it more likely than not that the building has not been fit for purpose for some years the tenants were prepared to continue to lease it up until September or October 2016. I cannot be satisfied to the requisite standard in these circumstances that any rent has been foregone by the parties since this date as I cannot be satisfied that a new tenant could have been found given the state of the building. Further, even if it were the case that the rent has been foregone I cannot make any finding as to who should bear responsibility for this. I also consider it likely that the cost to either of the parties to repair the property on the basis of the unchallenged evidence would exceed the cost of building new premises.
The wife’s use of joint funds after separation
The wife deposes that after separation the husband did not provide her with any funds and she “had to” utilise “the rental account” for day to day household expenses and other outgoings. It appears from the context of this evidence in her affidavit and the general tenor of her evidence that it is her case that the husband did not provide her with any funds after the initial separation in February 2014 and that she utilised the joint account to support herself and the child from this time.
There is no dispute between the parties that the husband did not pay any child support until April 2018.
As noted previously, from a short time after separation, even when the parties continued to live in the same home, the wife had control over the three joint accounts being the business account, the child’s account and the joint account. Apart from the withdrawals made by the husband in May 2015 totalling $35,000 there is insufficient evidence upon which I can make a finding that the husband withdrew any funds from these accounts after separation. Although the wife relies upon numerous lists and schedules in the proceedings in relation to her contention that the husband wrote cheques from one of the accounts for his own purposes these documents do not amount to anything more than a mere assertion as to these matters.
As also previously discussed I am satisfied that there was a balance of just under $550,000 in total in these three bank accounts between June and September 2014. The wife also agreed that between February 2014 and the end of the lease period $259,530 was paid into the joint account by way of rent.
Although the wife agreed under cross examination that she had made a number of significant withdrawals from each of these accounts after separation (such as a $150,000 withdrawal on 3 September 2014 from the joint account, $254,118 from joint account on 21 July 2017 and $138,087 from the account in the child’s name) there is no evidence to suggest that any of the joint funds of the parties under the wife’s control at the time of separation are still in existence.
Further in an application made shortly before the commencement of the final hearing the wife was seeking an interim payment on the basis that the vast majority of the monies left under her control in the various bank accounts had been spent.
There was extensive cross-examination in relation to accounts opened by the wife in her sole name, a further account in the child’s name and in an account she held jointly with her mother following separation. The wife was unable to shed any light upon the source of the monies to open some of these accounts such as an account opened on 25 September 2015 with a cheque deposit of $88,000. In other instances, when asked about accounts opened in her sole name such as one opened in August 2015 with a deposit of $51,161 the wife agreed that the sum came from the parties’ joint account. She said that she was concerned that she would run out of money to pay the mortgage and wanted to put it in an account in her own name so that the husband could not utilise it.
The wife was also asked about transactions on the second account opened in the child’s name. She gave evidence that some transactions such as a withdrawal on 26 October 2017 in the sum of $8,934 was transferred to the parties’ joint account to pay the mortgage and that a withdrawal four days later of $8,824 was used to pay off a credit card that she alone used. She agreed that between 21 July 2017 and 20 January 2018 she withdrew $78,529 from the child’s second account.
Other cross-examination indicated the level of the wife’s expenditure at particular times. For example, she agreed that her credit card expenditure for two one month periods in 2018 in the sums of $6,806 and $4,511 respectively related to the monthly expenses of herself and the child.
The effect of the wife’s evidence relating to her expenditure and income from the date of separation in summary is that she earned no income herself, received no funds from the husband and was responsible for payment of all expenses relating to herself and the child, the house, the business premises and to some extent the business itself. She also gave clear evidence that the sole source of the funds for this expenditure was the three accounts treated as joint accounts by the parties at the date of separation albeit that she opened numerous other accounts and transferred money into them at various stages.
It is difficult to ascertain with any certainty the total amount of joint funds expended by the wife following separation and up until the date of the hearing. Although it was put to her under cross-examination that a schedule of expenditure she had prepared indicated she had spent $939,351 in just over four and a half years (and no objection was taken to this cross-examination at the time) this document does not purport to be a summary of her expenses alone. It includes for example two sums totalling just over $305,000 in withdrawals said to have been made by the husband. The wife does however assert in this document that she had a total of $886,782 available to her in that period which includes the rent, the balances in the business account and the child’s account and proceeds of sale of equipment of all which are joint funds and she curiously claims that $110,656 were “personal” funds.
On the basis of the undisputed evidence as discussed I am satisfied that the parties had at least around $546,000 in the three bank accounts a few months after separation in February 2014 and received around $260,000 in rent following separation. On this basis the wife had available to her at least $806,000 in joint funds which she utilised in the post separation period.
Although the husband appears to some minor extent to take issue with some expenses for which he says he was responsible after separation he generally does not dispute the wife’s evidence relating to her expenditure and source of funds.
It is the husband’s contention that while he does not dispute that the wife legitimately used joint funds for the purposes of supporting herself, the child and paying debts for which the parties were jointly responsible, the magnitude of the wife’s personal expenditure far exceeded reasonable living expenses and amounts to a significant dissipation of joint funds following separation or use of joint funds for her own purposes for which she has not accounted.
As indicated previously, the husband had sought that at least part of the joint funds used by the wife alone be added back as a premature distribution of matrimonial assets or a reckless dissipation of assets. I determined not to take that course as in my view justice and equity could be achieved by taking this expenditure into account when considering contributions or under s 75(2)(o).
Of the funds totalling at least $806,000 under the wife’s control in bank accounts following separation she was ordered to release $100,000 to the husband. The balance has now been spent.
In my view there is some weight to the submission made on behalf of the husband that the amounts the wife deposes to having spent on herself and the child are either exaggerated or extravagant and unreasonable. There were three Financial Statements filed by the wife in November 2015, May 2018 and November 2018 in evidence in the proceedings. Only the two Financial Statements filed in 2018 set out the details of weekly expenditure. In the wife’s most recent Financial Statement filed November 2018 she deposes to almost $2,000 per week in expenditure for herself and the child including $150 per week for the child’s clothing, $135 for children’s activities and a further $135 in extra-curricular activities, $56 per week on gifts and $100 per week for pets. She also deposes to credit card payments of $1200 per week. The wife’s total personal expenditure (excluding mortgage repayments) is $3,168 or an annual amount of just under $165,000. Curiously, she deposes to the mortgage payments more than doubling between May 2018 and November 2018.
There are large discrepancies between Exhibit 23 (a table prepared by the wife of her income and expenditure), her various Financial Statements filed in the proceedings, concessions made under cross-examination and banking records in relation to the expenditure of joint funds following separation. Further, Exhibit 23 itself is in my view an unreliable document and also has no evidentiary value. For example, in Exhibit 23 the wife refers to having personal income in the sum of $110,656 as at 20 February 2014 but there is no evidence to support this contention. She also records that she received $230,600 for the sale of equipment but there is only evidence to support $154,000 for the sale of some items. She asserts that the husband’s withdrawals and other withdrawals amount to $305,000. She also lists her own expenses over four and a half years as totalling $96,213 whereas the level of personal expenditure revealed in her most recent Financial Statement suggests a sum far exceeding this amount if it were averaged out over the post separation period. A comparison of the wife’s most recent Financial Statement which indicates total personal expenditure of almost $4000 per week is a very significant increase on her personal expenditure of $1437 per week deposed to as at November 2015. In general it can be said however, that the wife’s expenditure in Exhibit 23 exceeds the funds to which she deposes to having access to and she had no other source of income.
In summary, I am unable to make any finding other that over the almost five year period between separation and the date of hearing the wife used at least $800,000 in joint funds for personal expenditure of herself and the child and in mortgage repayments and some other payments associated with the warehouse and home.
I am unable to ascertain with any accuracy the amounts she spent on each of these components or any of the other expenses that she claims to have met as the documents upon which she relies in support of these claims are inconsistent with each other, incomplete or do not have any evidentiary value. I am satisfied however that following separation the wife treated the joint funds in the parties’ accounts and the rent that continued to be paid into the joint account as her personal financial resource which was not to be shared with the husband.
For the reasons given, I find that the wife transferred significant funds out of joint accounts and into accounts in her sole name for the purposes of ensuring the husband could not access these funds.
Other than the $35,000 withdrawn shortly after physical separation the husband’s only other access to the joint funds was through his successful application that the wife pay him $100,000, an order with which she initially did not comply and which required enforcement action.
Wife’s contentions about the husband’s post separation use of funds and conduct post separation
The wife originally contended that the amounts of $35,035, $108,213, $17,820 and $8,982 (totalling $170,050) should be added back as joint funds prematurely distributed to the husband. At the commencement of the trial when discussing the balance sheet it was agreed on behalf of the wife that these amounts could be taken into account when determining the parties’ overall entitlements. By the time final submissions were made, the wife had once again shifted her position and sought to have $170,050 added back as joint funds in the hands of the husband.
As indicated earlier in these reasons, I was not satisfied that the exceptional position should be adopted to add back these sums as sought by the wife.
It is submitted on the wife’s behalf that the husband received further amounts which are said to amount variously to $105,000 and/or $170,000, evidence of which is said to be contained in Exhibit 23. Exhibit 23 is the wife’s schedule of income and expenditure between February 2014 and the date of final hearing. It does not amount to anything more than the wife’s assertions in table form. It is not evidence upon which I can find as the wife asserts that the husband made “withdrawals” during an unspecified period of $135,014 and “further withdrawals” of $170,000.
I am unable to be satisfied that the wife has made out her case that the husband received anything more than the $35,000 which he admits to withdrawing from joint funds shortly after physical separation, and the $100,000 interim payment.
Conclusion and findings- post separation use of joint funds
The sum of $100,000 in joint funds is clearly able to be quantified as having been distributed to the husband and used by him for his own purposes (at a time where he was in addition earning an income) and for this reason was added back to the property pool and credited to him.
It is not possible however to quantify with any accuracy the amount in joint funds utilised by the wife for her own purposes during the post separation period as opposed to money she paid out in relation to joint expenses.
In summary, I can do no more than be satisfied that the wife utilised for her own purposes a significant sum of the joint funds under her control for which she has not accounted while the husband supported himself on his own resources in the post-separation period. On this basis justice and equity requires an adjustment in favour of the husband.
Other matters relevant to contributions in the post-separation period
The husband alone utilised the jointly owned warehouse property of the parties for the purpose of his own business after October 2016 and the wife had use of the family home for the purposes of herself and the parties’ child for the entirety of the post separation period.
I accept the husband’s evidence that he withdrew $35,000 from the parties’ joint funds immediately following physical separation in May 2015. I have also found that he was excluded from the business premises after May 2015 and that the wife otherwise had sole control over the bank accounts and had at that stage already moved large sums into accounts in her sole name. Although I am satisfied that some months later in 2015 the husband was operating a business, and from this point in time that he was able to support himself I accept that in the few months initially following separation the joint funds he withdrew were used for his reasonable living expenses.
Conclusion- Contributions
The contributions of the parties are to be considered holistically over the entire period from the commencement of cohabitation to the date of final hearing.
I have assessed the contribution of the husband up until the time of separation as greater than the wife due to his substantial initial contribution through ownership of the Suburb N property. Although the wife was responsible for actually dispersing the necessary funds to meet the personal expenditure of herself and the child, and she met mortgage payments and some business expenses after separation the source of all of this expenditure was the parties’ joint funds. While the wife’s personal expenditure was also made from joint funds, she earnt no income herself during this period while the husband did earn an income which he utilised to support himself. The wife also did not share the ongoing joint income by way of rent with the husband and had the benefit of continuing to live in the jointly owned family home. While the wife clearly made greater non-financial contributions in the care of the child (especially as the husband spent limited time with the child following separation) this cannot be considered to equalise her use of all of the parties’ funds (other than the $100,000 she was required to pay the husband) as her own. I am satisfied that there was some extravagance and waste in the wife’s expenditure which dramatically increased as the final hearing date approached and had she not completely utilised all of the parties’ joint funds there would have been at least some joint funds available for distribution.
I am unable on the limited and contradictory evidence available to make any other specific findings. Doing the best I can I assess in totality the husband’s contributions to the property of the parties and welfare of the family as 65 per cent and the wife’s contributions as 35 per cent.
Section 75(2) factors
It is the contention of each of the parties that there should be an adjustment of 15 per cent in favour of the wife having regard to the matters to be taken into account under section 79(4)(e), that is, the matters referred to in 75(2) so far as they are relevant. It is the wife’s case that if an order is made for her to retain the warehouse as she seeks, a nine per cent adjustment in her favour would result in a just and equitable distribution.
Having regard to the relevant section 75(2) matters as will be explained I am satisfied that an adjustment of 15 per cent is proper.
The wife is 47 and so far as I am aware is in a good state of health. The husband who is 48 also appears to be in a reasonable state of health. The husband attempts to paint a picture in his affidavit of diminished capacity to work due to problems with his mental and physical health and he deposes to some specific workplace injuries he said he suffered in the past. However he adduces no recent evidence to support his contention that he is unable to be gainfully employed currently or in the future.
The wife also raises some minor health issues but there is no evidence to suggest that this is an impediment to employment.
I am satisfied that each of the parties has the physical and mental capacity to be gainfully employed and that the husband has a capacity to earn a greater income than he earned at the time of the hearing as well as access to greater financial resources than the wife.
In his amended Financial Statement of May 2018 relied upon in the proceedings the husband deposes to an average weekly earning of $400 which he confirmed was roughly correct when cross-examined in December 2018. He claimed a total personal expenditure of $475 a week. Under cross-examination he conceded that he and his partner paid $650 a week in rent alone. When cross-examined in further detail about his Financial Statement the husband agreed that nothing about his week to week financial position or income could be obtained from that document. After some obfuscation he agreed that at the time of the hearing he was only working between two and half to three days per week as a machine operator. Although he seemed to suggest that he was medically unfit for further work having been diagnosed with depression there was no medical evidence to support this assertion.
The wife also suggests that her need to care for the child is so great she is also unable to or has limited capacity to earn an income. According to her evidence, she returned to work at the parties’ business when the child was about four and thereafter balanced employment outside the home and care for the child and household. It is also agreed between the parties that the wife was a capable administrative manager of the parties’ business. Against this background the wife proffers no explanation for not undertaking any further employment after the parties’ business wound down shortly following separation. The parties’ only child is now aged 11 and will soon commence high school. Although the child has been diagnosed with various conditions, his level of disability was not an impediment to the wife being employed when he was much younger and there is no evidence to suggest that this changed. I do not accept her evidence that her need to care for the child means that she has no capacity to earn an income though I accept that this capacity is somewhat reduced for this reason.
The wife will continue to have the majority of the care or control of the parties’ only child for the next seven years which the husband acknowledges is a significant matter to be taken into account. However, as a result of the parenting orders made, the child will spend time with the husband four nights per fortnight during the school term and half of the school holidays which means that he also has the child in his care and control for a significant period.
Although the husband did not pay child support for many years following separation, there is no evidence to suggest that such an assessment was sought by the wife. The husband has paid child support since 2018 and it will be expected he will pay it in the future. It has been assessed as an extremely modest amount, though this is likely to increase should he take on more work and increase his income in the future as I anticipate.
The child also has special needs requiring a higher level of care and greater health related expenses, including occupational therapy and paediatric costs.
Further when evaluating section 75(2) factors the Full Court in Brandt & Brandt[10] said:
It is proper to take into account the economic ramifications of having responsibility for the children and the quasi-economic contributions involved in raising children which include washing, ironing, cooking and the like. It is appropriate to bear in mind salary and income opportunity forgone because of responsibilities to children. It is appropriate to recognise that such responsibilities involve sacrificing leisure and recreation time.
[10] (1997) FLC 92-758.
Each of the parties also seeks to retain the warehouse on the basis that it is potentially a financial resource to the party who owns that property as potentially two businesses are able to operate from those premises. The wife goes so far as to suggest that if ownership of the warehouse is transferred to her, her adjustment on the basis of matters to be considered under 75(2) is nine percent rather than 15 per cent.
In my view the warehouse will not be a valuable financial resource to the party retaining it in the short term having regard to the evidence concerning the state of the buildings and the likely considerable cost in repairing them to comply with a counsel notice or in the alternative demolishing and rebuilding them. Either the repair or rebuilding will involve considerable expenditure by the party retaining the warehouse prior to occupation or letting. Once repaired or rebuilt however, the warehouse will be a valuable financial resource available to the party owning the premises.
So far as who should retain the warehouse is concerned I am somewhat sceptical of the wife’s claimed intention to run a business from the former business at that location given that she did nothing to develop this to fruition throughout the period from when the parties’ business wound down in early 2014 until October 2016 a period in which she had control over that part of the premises. The husband has been able to conduct his business from the rear of the warehouse premises notwithstanding its condition, by utilising it to store vehicles and equipment. There is in my view a more obvious connection between the premises and his business than with a hypothetical or potential business which the wife says she will conduct at some time in the future. On this basis orders will be made for the husband to retain the warehouse.
Non-disclosure
Each of the parties contends that the other failed to provide financial disclosure in the proceedings and that an adjustment should be made to the contributions based entitlement pursuant to section 75(2)(o) on this basis. The extent to which each of the parties provided disclosure as to financial matters as required and the respective contentions concerning this matter were extremely hard to follow. There were many discursive submissions, references to evidence in previous affidavits, statements from the bar table about inadequate responses to Notices to Produce and the like occurring throughout the proceedings right up until final submissions made on the last day.
In my view, financial disclosure made by both parties in the proceedings was inadequate and has presented a real challenge in determining this dispute. Doing the best I can with the limited and at times contradictory information available, I am of the view that the husband did not provide adequate disclosure as to his financial circumstances and particularly as to his income following separation and the wife did not provide adequate disclosure about the way in which she dealt with a large sum of joint funds that she treated solely as her own following separation and the source of funds transferred into accounts in her name. Ultimately, I was required to determine the matter on the few reliable documents produced in the proceedings such as bank records. As I am of the view that as neither party assisted the other or the Court as required in these proceedings there will be no further adjustment on this basis.
Conclusion
The 15 per cent adjustment in favour of the wife which is contended for by both parties will bring about an equal distribution of the parties’ property which in my view is just and equitable. This distribution recognises the greater initial contribution made by the husband, and the significant sole use by the wife of joint property following separation including dissipation of those funds which in my view would otherwise have been available for distribution. This distribution also has due regard to the husband’s greater earning capacity, the financial resource available to him through ownership of the warehouse and the wife’s greater role in the care of the parties only child.
Final property orders
For the reasons earlier explained, the $100,000 already received by the husband will be deducted from his share. Further, his entitlement will also be satisfied in part by his proposal to retain various items of plant and equipment to the value of $126,800 to which the wife agrees.
So far the wife’s share is concerned, she seeks that this in part be satisfied by her receiving the Historic Vehicle which the parties agree is valued at $70,000. Although both parties seek to retain this vehicle, apparently on some sentimental basis, neither party has made any particular submission as to why it should be retained by one over the other. As this vehicle has always been registered in the wife’s name I propose including it in her entitlement.
It also became apparent in the course of closing submissions that in addition to the Historic Vehicle the wife wished to retain another vehicle in her possession which has an agreed value of $6,500. The wife’s $48,000 spent on legal fees is also to be deducted from her share.
Each party is also to retain their respective superannuation interests which is $125,000 in the case of the husband and $106,631 in the case of the wife.
Both parties unfortunately approached the matter in a manner that I consider problematic as each proposed that the other receive certain items in satisfaction of their entitlement but neither party wished to retain those items identified to be retained by the other. All of the orders were structured by each of the parties to ensure that they retain the warehouse and in the case of the husband he proposed that his entitlement be satisfied by his retention of the warehouse without requiring any payment to the wife. As the foregoing discussion which is based on the final submissions indicates, each party ultimately came to accept that their respective percentage entitlement could not be satisfied by the other party retaining property which could not be established was still in existence or which the other party did not wish to retain. Both parties appeared to have accepted that a payment would be required to be made by the party seeking to retain the warehouse.
As I observed earlier there is in my view more obvious connection between the husband’s business and the warehouse than with the wife’s hypothetical business. For this reason orders will be made that will see the husband retain the warehouse and he will be required to buy out the wife’s 50 per cent interest.
The family home and some plant and equipment that neither party wishes to retain[11] (“the surplus plant and equipment”) will be sold and the mortgage discharged which is expected to realise $1,810,182 ($1,480,682 [$1,800,000 - $319,318] + $329,500 = $1,810,182). The husband will receive 50 per cent of the net proceeds and the wife 50 per cent.
[11] The plant and equipment neither party seeks to retain:
Work vehicle 1 ($23,500)
Work vehicle 2 ($11,000)
Motor vehicle 2 ($125,000)
Work equipment 1 ($30,000)
Work equipment 2($30,000)
Work equipment 3($35,000)
Work equipment 4($75,000)
The remaining assets[12] are to the value of $2,782,931 (net asset pool [$4,593,113] – net proceeds of sale of home and surplus plant and equipment [$1,810,182])
[12] These are the assets other than the family home and surplus plant and equipment.
Of the remaining assets, the husband will retain or has already received:
Warehouse: $ 2,200,000
Plant & Equipment[13]: $ 126,800
Husband’s legal fees: $ 15,000
Balance of interim property distribution: $ 85,000
Husband’s superannuation $ 125,000
Total: $ 2,551,800
[13] The plant and equipment to be retained by the husband (as agreed between the parties) consists of:
Motor vehicle 3 ($32,000)
Work equipment 5 ($14,000)
Work equipment 6 ($27,000)
Work vehicle 3 ($20,000)
Work equipment 7 ($25,000)
Work equipment 8 ($8,000)
Work equipment 9 $800
The wife will retain or has already had the benefit of:
Wife’s legal fees: $ 48,000
Wife’s superannuation: $ 106,631
Historic Vehicle: $ 70,000
Motor vehicle 1: $ 6,500
Total: $ 231,131
The husband will be required to transfer to the wife the following sum:
Remaining assets: $ 2,782,931
50 per cent thereof: $ 1,391,466
Less (already received): $ 231,131
Total: $ 1,160,335
It is appropriate that orders be made facilitating the husband paying the wife a cash sum with default provisions in the event he is unable to make the required payment to purchase her interest in the remaining assets.
It is proper that if the husband is unable to pay the wife the value of her interest the warehouse is to be sold and the wife’s entitlement be converted to her percentage interest in that property with a consequential adjustment as between the parties for the other assets remaining in their respective possession.
The items comprising the remaining assets other than the warehouse total $582,931 ($2,782,931 - $2,200,000). Of this the wife is entitled to 50 cent being $291,466. Allowing for the assets she is to retain or has already received $231,131, the husband will need to pay her an adjusting payment of $60,335 from the proceeds of sale.
If the husband defaults in making payment to the wife within three months as set out above and the warehouse is required to be sold both parties will incur a significant Capital Gains Tax liability. No orders were sought by either party to address this eventuality.
The orders that I make are as set out at the forefront of these reasons for Judgment.
I certify that the preceding two hundred and eighty nine (289) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hannam delivered on 10 December 2019.
Associate:
Date: 10 December 2019
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Consent
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Remedies
0
7
1