Jia & Yong
[2022] FedCFamC1F 591
Federal Circuit and Family Court of Australia
(DIVISION 1)
Jia & Yong [2022] FedCFamC1F 591
File number(s): DGC 2707 of 2020 Judgment of: WILLIAMS J Date of judgment: 18 August 2022 Catchwords: FAMILY LAW – PROPERTY – Division of property interests – Where it is just and equitable to adjust the parties property interests – Marriage of around 14 years – Contributions – Where the extent of the husband’s greater initial contributions is disputed – Consideration of weight to be accorded to husband’s contribution of vacant land at the commencement of the relationship – Retrospective valuation of vacant land – Expert report of land not of probative value and unable to be relied upon – Consideration of the composition of the asset pool including the extent of a mortgage and which party is to retain it – Where the husband’s claim the drawdowns on the mortgage were applied to construction costs is disputed – Contributions during the relationship – Significant increase in value of vacant land due to rezoning characterised as a windfall – Whether the husband or wife retain particular properties including income earning commercial properties – Where the wife remains the primary carer of the children – Contributions assessed at 47.5 per cent to wife and 52.5 per cent to husband – Consideration of s 75(2) factors – Where the husband has failed to comply with his obligations to make full and frank disclosure – Consideration of future needs – Adjustment of 1.5 per cent made in favour of the wife – Child Support – Where both parties sought a departure from the administrative assessment of child support – Where the wife seeks payments greater than the administrative assessment – Where the husband seeks payment of the children’s private school fees to be credited against administrative assessment – Orders for child support made in accordance with the administrative assessment and for the husband to pay the children’s private school fees. Legislation: Child Support (Assessment) Act1989 (Cth) ss 111, 112, 116, 117, 118, 123A, 124
Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 75, 79
Cases cited: Bevan & Bevan [2013] FamCAFC 116
Brodie & Brodie [2009] FamCAFC 6
Chancellor & McCoy [2016] FamCAFC 256
Chang & Su [2002] FamCA 156
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Dickons & Dickons [2012] FamCAFC 154
Dwyer v McGuire (1993) FLC 92-420
Gould & Gould [2007] FamCA 609
Hartnett v Baker (1995) FLC 92-620
Hides & Hatton (1997) 21 Fam LR 855
In the Marriage of Hickey [2003] FamCA 395
Jabour & Jabour (2019) FLC 93-898
Kannis & Kannis [2002] FamCA 1150
Kennon v Kennon (1997) FLC 92-757
Lightfoot v Hampson (1996) FLC 92-663
Lovine & Connor (2012) FLC 93-515
Manolis & Manolis (No. 2) [2011] FamCAFC 105
Pierce& Pierce (1999) FLC 92-844
Prpic & Prpic (1995) FLC 92-574
Snipper & James [2022] FedCFamC1F 266
Stanford v Stanford (2012) 247 CLR 108
Steinbrenner and Steinbrenner [2008] FamCAFC 193
Varnham & Moses [2021] FLC 94-007
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447
Division: Division 1 First Instance Number of paragraphs: 205 Date of hearing: 23–25 May, 9 & 17 June 2022 Place: Melbourne Counsel for the Applicant: Mr Puckey QC Solicitor for the Applicant: JK Lawyers Counsel for the Respondent: Mr Mellas Solicitor for the Respondent: Hope Earle Lawyers ORDERS
DGC 2707 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS JIA
Applicant
AND: MR YONG
Respondent
order made by:
WILLIAMS J
DATE OF ORDER:
18 AUGUST 2022
THE COURT ORDERS THAT:
Procedural
1.The following entities be joined as parties to these proceedings:
(a)B Pty Ltd ACN … as trustee for B Trust;
(b)C Pty Ltd ACN … as trustee for C Trust.
PROPERTY
D Street property
2.Within 90 days of the date of this Order:
(a)The husband and/or B Pty Ltd do all such acts, pay all monies and sign all documents necessary to cause B Pty Ltd to procure the discharge of the mortgage with instrument number … secured in favour of National Australia Bank (“D Street mortgage”) against the real property situate at and known as D Street, Suburb E Victoria and being the whole of the land more particularly described in Certificate of Title Volume … Folio … (D Street property), at the expense of the husband, and the husband and B Pty Ltd shall indemnify and keep indemnified the wife against all payments and liability pursuant to the D Street mortgage;
(b)The husband and B Pty Ltd do all such acts and things and sign all necessary documents to cause B Pty Ltd to transfer to the wife and/or her nominee, at the expense of the wife (not including the transferor’s legal fees in relation to the property conveyance), all right, title and interest in the D Street property, unencumbered.
3.Pending transfer of the D Street property:
(a)The husband and B Pty Ltd shall be jointly and severally liable to pay all instalments pursuant to the D Street mortgage and all rates and taxes and like apportionable outgoings of the D Street property as and when they fall due up to and including the transfer date;
(b)The parties hold their respective interests in the D Street property upon trust pursuant to these orders;
(c)Neither party further encumber the D Street property without the consent in writing of the other party;
(d)Any rental monies received from the real properties held by B Pty Ltd less costs, commissions and expenses shall be paid to the husband.
4.The husband and/or B Pty Ltd shall hand over all documentation in their possession in relation to the D Street property to the wife on or before the date of transfer, including but not limited to:
(a)Current lease agreements for the property, if any, and an assignment of the transferor’s interest in the same to the transferee, signed by the transferor, prepared by the transferor’s solicitor;
(b)All keys, codes, or devices for all locks, gates, doors and security systems on the property;
(c)All records and documents relating to the purchase of the property together with any improvements carried out on the property since that acquisition such documents being necessary to be retained for the calculation of the index cost base of the property to assess any future capital gains tax liability.
Suburb G property
5.Within 60 days of the date of this Order, the husband and/or C Pty Ltd do all such acts and things and sign all documents necessary to cause C Pty Ltd to transfer to the wife and/or her nominee, at the expense of the wife (not including the transferor’s legal fees in relation to the property conveyance), all right, title and interest in the real property situate at and known as F Street, Suburb G and being the whole of the land more particularly described in Certificate of Title Volume … Folio … (Suburb G property), unencumbered.
6.Pending transfer of the Suburb G property:
(a)The husband and C Pty Ltd shall be jointly and severally liable to pay all rates and taxes and like apportionable outgoings of the Suburb G property as and when they fall due up to and including the transfer date;
(b)The parties hold their respective interests in the Suburb G property upon trust pursuant to these orders;
(c)Neither party encumber the Suburb G property without the consent in writing of the other party;
7.The husband and/or C Pty Ltd shall hand over all documentation in their possession in relation to the Suburb G property to the wife on or before the date of transfer, including but not limited to:
(a)Current lease agreements for the property, if any, and an assignment of the transferor’s interest in the same to the transferee, signed by the transferor, prepared by the transferor’s solicitor;
(b)Current agreements for the site establishment or development of the property, and an assignment of the transferor’s interest in the same to the transferee, signed by the transferor, prepared by the transferor’s solicitor;
(c)All keys, codes, or devices for all locks, gates, doors and security systems on the property;
(d)All records and documents relating to the purchase of the property together with any improvements carried out on the property since that acquisition such documents being necessary to be retained for the calculation of the index cost base of the property to assess any future capital gains tax liability.
H Pty Ltd
8.Within 60 days of the date of this Order, the husband do all such acts and things and sign all necessary documents to transfer all his right, title and interest in H Pty Ltd to the wife, including to:
(a)Resign as an officeholder of H Pty Ltd and appoint the wife as sole director;
(b)Transfer all his shareholding in H Pty Ltd to the wife;
(c)Relinquish all beneficial entitlements and/or loan accounts in H Pty Ltd in favour of the wife;
(d)Assign to the wife any debt or debts owing to the parties either jointly or severally by H Pty Ltd.
9.Pending transfer of H Pty Ltd:
(a)The husband and H Pty Ltd shall be jointly and severally liable to pay all rates and taxes and like apportionable outgoings of H Pty Ltd as well as the real property situate at and known as J Street, Suburb K and being the whole of the land more particularly described in Certificate of Title Volume … Folio … (J Street property) as and when they fall due up to and including the transfer date;
(b)The parties hold their respective interests in the H Pty Ltd upon trust pursuant to these orders;
(c)Neither party encumber H Pty Ltd or the J Street property without the consent in writing of the other party;
(d)Any rental monies received from the J Street property less costs, commissions and expenses shall be deposited into the bank account of H Pty Ltd.
10.The husband shall hand over all documentation in his possession in relation to the J Street property to the wife on or before the date of transfer, including but not limited to:
(a)Certificate of Title for the property;
(b)All keys, codes, or devices in the possession of the husband for all locks, gates, doors and security systems on the property;
(c)Current lease agreements for the property, if any, and an assignment of the transferor’s interest in the same to the transferee, signed by the transferor, prepared by the transferor’s solicitor;
(d)Current lease agreements for the property, if any, and an assignment of the transferor’s interest in the same to the transferee, signed by the transferor, prepared by the transferor’s solicitor;
(e)All records and documents relating to the purchase of the property together with any improvements carried out on the property since that acquisition such documents being necessary to be retained for the calculation of the index cost base of the property to assess any future capital gains tax liability.
11.The husband shall indemnify and keep indemnified the wife against any liability present and contingent including tax and bank liabilities in respect of H Pty Ltd up to and including the date of transfer to the wife.
Country O Property
12.Within 60 days of the date of the Order, the husband shall do all acts and sign all documents as are necessary to transfer to the wife at the expense of the wife (not including the husband’s legal fees in relation to the property conveyance) all of the husband’s right, title and interest in the property situate at L Street, City M, Country O (Country O property).
13.Pending transfer of the Country O property:
(a)The wife shall have the sole right to occupy the Country O property and during such right of occupation the wife shall pay all rates and taxes and like apportionable outgoings in respect of the Country O property as and when they fall due;
(b)The parties hold their respective interests in the Country O property upon trust pursuant to these orders;
(c)Neither party encumber the Country O property without the consent in writing of the other party.
Payment
14.Within 90 days of the date of this Order, the wife pay to the husband the sum of $178,517.
Funds in Trust Account of Hope Earle Lawyers
15.The funds held in the Trust Account of Hope Earle Lawyers being the balance net sale proceeds from 1 N and 2 N Street, Suburb P be distributed as follows:
(a)$115,099 to the husband for payment of his capital gains tax liabilities;
(b)$15,444 to the wife for payment of the Suburb G property establishment costs;
(c)Any balance remaining to be distributed between the parties in the proportions of 49% to the wife and 51% to the husband.
Entities
16.Upon the transfer of assets being completed in accordance with Orders 2 to 10 above, the wife shall do all acts and sign all documents as are necessary to:
(a)Transfer the wife’s shareholding in R Pty Ltd to the husband as at the date of the transfer, if any;
(b)Relinquish all beneficial entitlements and/or loan accounts in R Pty Ltd in favour of the wife;
(c)Assign to the husband any debt or debts owing to the parties either jointly or severally by R Pty Ltd.
17.Contemporaneously with the transfer of assets being completed in accordance with Orders 2 to 10 above, the wife shall do all acts and sign all documents as are necessary to assign all the wife’s right, title and interest in the following assets to the husband at the expense of the husband:
(a)Loan accounts in C Trust and B Trust;
(b)Allocated but undistributed profits in C Trust and B Trust;
(c)Undistributed profits in C Trust and B Trust.
18.The husband shall forthwith do all acts and things and sign all such documents as are necessary to release the wife from and indemnify and keep indemnified the wife against any liability present or contingent including tax and bank liabilities, in respect of:
(a)S Pty Ltd;
(b)T Pty Ltd;
(c)R Pty Ltd;
(d)C Pty Ltd and C Trust;
(e)B Pty Ltd and B Trust.
Motor Vehicle
19.The husband forthwith do all acts and sign all documents as are necessary to transfer to himself, at his expense, all of the wife’s right, title and interest in the 2009 Motor Vehicle 1 with registration number …, including signing and submitting to Vic Roads the transfer form already provided to him by the wife.
20.The wife shall retain her interest in the 2017 Motor Vehicle 2 with registration number ….
Capital Gains Tax
21.The wife be solely liable for and indemnify the husband with respect to any capital gains tax assessed on any asset being transferred to or received by the wife pursuant to these orders.
22.The husband be solely liable for and indemnify the wife with respect to any capital gains tax assessed on any asset being transferred to or received by the husband pursuant to these orders.
Debts
23.The wife be solely liable for and indemnify the husband against any liability in her name including but not limited to taxation, credit card and loans.
24.The husband be solely liable for and indemnify the wife against any liability in his name including but not limited to taxation, credit card and loans.
General
25.Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)monies standing to the credit of the parties in any bank accounts are to become the property of the party in whose name such bank account is held;
(c)monies standing to the credit of the parties in any joint bank account are to become the property of the wife;
(d)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(e)insurance policies remain the sole property of the owner named thereon;
(f)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled to pursuant to these orders;
(g)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
26.The parties do all such things and sign all documents necessary so as to cause:
(a)The wife and husband to resign from any directorship they hold in the any company or trust that the other is to retain; and
(b)Them to forego any beneficial interest or entitlement in any company or trust that the other is to retain.
27.All property applications be otherwise dismissed.
CHILD SUPPORT
28.The husband pay periodic child support to the wife for the children X born 2006 and Y born 2010 in accordance with an administrative assessment.
29.Pursuant to section 124 of the Child Support (Assessment) Act 1989 (Cth), the husband shall pay all school fees for the children X and Y at U School or such other private school as may be otherwise agreed by the parties in writing, with such payment to be in addition to periodic child support as assessed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jia & Yong has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILLIAMS J
INTRODUCTION
This is an application for property adjustment pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) and a dispute about child support for the two children of the marriage. The parties were previously in dispute about the children’s parenting arrangements. During the trial, the parenting dispute was resolved and consent orders were made at the conclusion of the trial.
Issues in dispute
The following issues were in dispute in the proceedings:
(a)composition of the asset pool, including the extent of a mortgage encumbering one of the properties;
(b)the extent of each party’s contribution to the asset pool at the commencement of and during the relationship;
(c)the weight to be accorded to the husband’s contribution of vacant land at the commencement of the relationship;
(d)the retrospective valuation of the vacant land;
(e)the s 75(2) factors in relation to both parties;
(f)the respective percentage distribution of the asset pool;
(g)which party should retain specific income earning commercial properties;
(h)the extent of any order for departure from administrative assessment of child support;
(i)whether there be an order for lump sum child support.
Synopsis
In relation to property, I have determined that:
(a)the asset pool is as set out in paragraph 63 hereof;
(b)the asset pool be divided 49% in favour of the wife and 51% in favour of the husband;
(c)child support be paid by the husband, in accordance with the administrative assessment, and he will additionally be responsible for payment of private school fees for the children;
(d)there should not be any order for lump sum child support.
The reasons for my determination follow.
background
The applicant wife is aged 50 years and the respondent husband is aged 63 years. The husband operates a business and has skills in property development. The wife is a homemaker and parent, who previously carried out administrative roles in the family businesses.
The wife was born in Country O and moved to Australia in 1998. In 1999 she obtained a diploma from a TAFE in Melbourne and from 2013–2014 she undertook postgraduate studies at YY University.
From 2003 until 2014 she worked for the husband’s business in various capacities including administration and customer service, and was a director of some of the family companies.
The husband was born in Country V. At around 16 years of age, he moved to Europe and then later Country W where he obtained a bachelor’s degree. He worked in Country W prior to moving to Australia in 1984. He then commenced work as a self-employed tradesperson under the name S Company.
Both parties were previously married, with the wife’s divorce occurring in 2003 and the husband’s divorce in 2003. The wife resolved property matters with her former husband in 2003. The husband and his first wife were embroiled in protracted litigation about their property matters which did not resolve until 2009.
In 2003, the wife commenced working for the S Company in administration and customer service. The parties commenced a relationship sometime thereafter and in late 2003 they commenced cohabitation prior to marriage in 2005.
There are two children of the marriage, X born in 2006 and Y born in 2010. Both children attend U School, where the husband has paid the private school fees since separation.
The husband has three older children from his first marriage aged 34, 32 and 29. Two of the husband’s children lived with the parties during their marriage for a number of years.
During the marriage, the husband operated a number of businesses and the parties bought and sold a number of residential properties. From 2014 onwards, the parties developed a vacant block of land in Q Street, Suburb P, which was subdivided into residential lots. The husband purchased the block of land in 1997, which was the subject of a hotly contested property dispute between himself and his first wife, which resolved in 2009.
The profits from the subdivision were applied, via three corporate entities, to the acquisition and development of various properties, including commercial developments.
In 2014, the wife and children moved to Brisbane where they remained prior to returning to Melbourne in 2016. The wife asserts she moved to avoid family violence which was perpetrated by the husband.
Subsequent to resuming cohabitation, the parties separated under the same roof in January 2019 prior to the husband moving out of the family home in about April 2020.
The wife commenced the current proceedings in 7 August 2020. The trial was initially scheduled to commence on 4 April 2022, but was unable to be reached and was rescheduled to commence on 23 May 2022.
THE PROPOSALS OF THE PARTIES
The applicant wife's proposal
The orders which the wife sought from the Court are contained within the wife’s minute of proposed final orders document emailed to my chambers on 17 June 2022.
They are in summary as follows:
(a)B Pty Ltd and C Pty Ltd be joined as parties to the proceedings;
(b)the husband and/or B Pty Ltd, at his expense, discharge the mortgage on the D Street property and transfer the property to the wife or her nominee unencumbered. Pending transfer, the husband and B Pty Ltd be jointly liable to pay all mortgage instalments and rates with any net rental proceeds distributed 55 per cent to the wife and 45 per cent to the husband;
(c)the husband and/or B Pty Ltd, at his expense, discharge the mortgage on the Suburb G property and transfer the property to the wife or her nominee unencumbered. Pending transfer, the husband and B Pty Ltd be jointly liable to pay all mortgage instalments and rates with any net rental proceeds distributed 55 per cent to the wife and 45 per cent to the husband;
(d)the husband transfer his right, title and interest in H Pty Ltd to the wife, including resigning as an officeholder of H Pty Ltd and appoint the wife as sole director, transferring all his shareholding in H Pty Ltd to the wife, relinquishing all beneficial entitlements and/or loan accounts in H Pty Ltd in favour of the wife and assigning to the Wife any debt or debts owing to the parties either jointly or severally by H Pty Ltd. Pending transfer, the husband and H Pty Ltd shall be jointly and severally liable to pay all rates and taxes and like apportionable outgoings of H Pty Ltd as well as the J Street property and any rental monies received from the J Street property less costs, commissions and expenses shall be deposited into the bank account of H Pty Ltd;
(e)the Husband transfer to the wife at the expense of the wife (not including the husband’s legal fees in relation to the property conveyance) all of the husband’s right, title and interest in the Country O property. Pending transfer, The wife shall have the sole right to occupy the Country O property and during such right of occupation the wife shall pay all rates and taxes and like apportionable outgoings in respect of the Country O property as and when they fall due, the parties hold their respective interests in the Country O property upon trust and neither party encumber the Country O property without the consent in writing of the other party;
(f)within 30 days of the date of this Order, the husband pay to the wife the sum of $963,200;
(g)the funds held in the Trust Account of Hope Earle Lawyers being the balance net sale proceeds from 1 N and 2 N Street, Suburb P be distributed as follows:
(i)$115,099 to the husband for payment of his capital gains tax liabilities;
(ii)$15,444 to the wife for payment of the Suburb G property establishment costs;
(iii)any balance remaining to be distributed between the parties in the proportions of 55 per cent to the wife and 45 per cent to the husband.
(h)upon the transfer of the D Street property, Suburb G property, H Pty Ltd, the wife shall assign all her right, title and interest in the following assets to the husband at the expense of the husband:
(i)loan accounts in C Trust and B Trust;
(ii)allocated but undistributed profits in C Trust and B Trust;
(iii)undistributed profits in C Trust and B Trust;
(i)the husband shall release and indemnify the wife against any liability present or contingent including tax and bank liabilities, in respect of:
(i)S Pty Ltd;
(ii)T Pty Ltd;
(iii)R Pty Ltd;
(iv)C Pty Ltd and C Trust;
(v)B Pty Ltd and B Trust;
(j)the husband transfer to himself all of the wife’s interest in the 2009 Motor Vehicle 1;
(k)the wife shall retain her interest in the 2017 Motor Vehicle 2;
(l)the wife shall retain her interest in the Suburb AA and Suburb K property free from any claim of the husband;
(m)the wife be solely liable for and indemnify the husband with respect to any capital gains tax assessed on any asset being transferred to or received by the wife pursuant to these orders;
(n)the husband be solely liable for and indemnify the wife with respect to any capital gains tax assessed on any asset being transferred to or received by the husband pursuant to these orders;
(o)the wife be solely liable for and indemnify the husband against any liability in her name including but not limited to taxation, credit card and loans;
(p)the husband be solely liable for and indemnify the wife against any liability in his name including but not limited to taxation, credit card and loans;
(q)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(r)there be a departure from the administrative assessment of child support payable for the children as follows:
(i)for the period from 18 April 2020 to 25 July 2028, the annual rate of child support be set at $46,280 per child by payments of $3,857 per month for both children;
(ii)the annual rate of child support payable by the husband to the wife shall be adjusted each year in accordance with variations in the consumer price index;
(s)the husband shall pay all school fees for the children in addition to the periodic support;
(t)the husband is to forthwith pay a lump sum of $850,100.31 to the Trust Account of the wife’s solicitors JK Lawyers & Co, or an interest bearing account managed by JK Lawyers & Co, from which the wife can draw all monies pursuant to the previous two orders, as and when they fall due.
Documents relied upon by the applicant wife
The wife relied upon the following documents:
(a)Amended Initiating Application filed 8 March 2022;
(b)Affidavit of the wife filed 10 March 2022;
(c)Financial Statement of the wife filed 10 March 2022;
(d)Outline of Case document filed 28 March 2022;
(e)Documents tendered during the course of the trial.
The respondent husband's proposal
The orders which the husband sought from the Court are set out in husband’s minute of proposed final orders document emailed to my chambers on 17 June 2022.
They are in summary as follows:
(a)the husband transfer to the wife all of his interest in the 1 BB Street and 3 N Street properties with the husband to pay property outgoings pending transfer;
(b)the wife remove the caveats encumbering the following properties;
(i)1 BB Street, Suburb P VIC;
(ii)3 N Street, Suburb P VIC;
(iii)2 BB Street, Suburb P VIC;
(iv)3 BB Street, Suburb P VIC;
(v)4 BB Street, Suburb P VIC; and
(vi)5 BB Street, Suburb P VIC.
(c)the husband transfer to the wife his interest in H Pty Ltd;
(d)the Suburb G property be transferred to the wife with the husband to be responsible for outgoings pending transfer;
(e)the D Street property be transferred to the wife and she refinance the mortgage in her sole name at her sole cost;
(f)the husband shall otherwise retain the following for his sole use and benefit to the exclusion of the wife:
(i)real properties:
(A) 2 BB Street, Suburb P VIC;
(B) 3 BB Street, Suburb P VIC;
(C) 4 BB Street, Suburb P VIC; and
(D) 5 BB Street, Suburb P VIC.
(ii)his interest in:
(A) R Pty Ltd;
(B) C Trust; and
(C) B Trust.
(iii)all monies standing to his credit in any bank account, his motor vehicles being the 2018 Motor Vehicle 3 and 2017 Motor Vehicle 4, his household contents, recreational boat and diamond rings;
(iv)the sum of $115,099 of the trust funds held by Hope Earle Lawyers be disbursed to pay the Capital Gains Tax from the sale of 1 N and 2 N Street, Suburb P; and
(v)his superannuation.
(g)the wife shall otherwise retain the following for her sole use and benefit to the exclusion of the husband:
(i)real properties:
(A)Z Street, Suburb AA VIC;
(B) CC Street, Suburb K VIC; and
(C) L Street, City M.
(ii)all monies standing to her credit in any bank account her motor vehicles being the 2009 Motor Vehicle 1 and 2017 Motor Vehicle 2, her household contents;
(iii)the sum of $15,444 of the trust funds held by Hope Earle Lawyers be disbursed to the Wife for establishment costs of the Suburb G property; and
(iv)her superannuation.
(h)the husband shall indemnify the wife in respect to:
(i)B Trust;
(ii)C Trust; and
(iii)the capital gains tax from the sale of 1 N and 2 N Street, Suburb P VIC.
(i)the wife shall indemnify the husband in respect to her Westpac credit card debt and establishment costs of the Suburb G property.
(j)the parties do all such things and sign all documents necessary so as to cause:
(i)the wife and husband to resign from any directorship they hold in the any companies or trust that the other is to retain; and
(ii)them to forgo any beneficial interest or entitlement in any company or trust that the other is to retain.
(k)there be a departure from the administrative assessment of child support payable by the husband as follows:
(i)for the period 9 June 2022 to 26 July 2028, and the annual rate of child support be set at $9,000 per child by payments of $750 per month;
(ii)the annual rate of child support payable by the husband to the wife shall be adjusted each year in accordance with variations in the consumer price index.
(l)in addition to periodic child support, the husband pay for the children’s private school fees, with the children to attend U School for the remainder of their high school education unless agreed otherwise by the parties in writing;
(m)the payments made by the husband be credited as to 100 per cent of his administrative assessment.
Documents relied upon by the respondent husband
The respondent relied upon the following documents:
(a)Further Amended Response to Initiating Application filed 23 March 2022;
(b)Affidavit of the husband filed 23 March 2022;
(c)Financial Statement of the husband filed 23 March 2022;
(d)Affidavit of Mr DD filed 23 March 2022;
(e)Affidavit of Ms EE filed 23 March 2022;
(f)Affidavit of Ms GG filed 12 November 2021;
(g)Outline of Case document filed 30 March 2022;
(h)Documents tendered during the course of the trial.
The following documents were tendered during the course of the trial:
Exhibit Number Description W-1 Bundle of documents including loan agreement dated 28 July 2016 and bank statements of the wife’s Westpac Classic Account from December 2015 to 29 May 2017 and letter to both solicitors from HH Accountants dated 12 May 2021 (Pages 1–10 of bundle) W-2 Letter from Westpac to wife in October 2008 regarding the $12,000 term deposit and letter to wife from Westpac dated 15 January 2018 regarding the $16,744 term deposit (Pages 11–14 of bundle) W-3 Wife’s notices of assessment from 2008 to 2021 (Pages15–28 of bundle) W-4 Q Street, Suburb P land title search – title history historical search (pages 112–118 of wife’s bundle of 25 May 2022) W-5 Bundle of documents filed in husband’s previous Family Court proceedings … (Pages 1–83 of wife’s tender bundle of 25 May 2022) W-6 Pages 1–3 of husband’s affidavit filed 19 December 2008 in proceedings with his first wife (Pages 84–86 of wife’s tender bundle of 25 May 2022) W-7 Documents produced subpoena to subpoena by JJ Council demonstrating rezoning dates (Pages 136–140 of wife’s tender bundle of 25 May 2022) W-8 Letter from husband’s solicitors to wife’s solicitors dated 4 May 2022 (Pages 132–134 of wife’s tender bundle of 25 May 2022) W-9 Email from U School dated 24 June 2021 (Page 245 of wife’s tender bundle of 25 May 2022) W-10 Husband’s Bank Statements
J-1 Joint Table of Assets and Liabilities dated 23 May 2022 H-1 Loan agreement dated 28 July 2016 H-2 Contract of Sale of T Business (Pages 69–76 of Bundle) H-3 Valuation by Mr LL in January 2009 of the Q Street, Suburb P Property (tendered by consent) EVIDENCE
The standard of proof in this case is the balance of probabilities (s 140 Evidence Act 1995 (Cth)).
Section 140 of the Evidence Act 1995 (Cth) provides:
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject matter of the proceeding; and
(c) the gravity of the matters alleged.
The husband and wife relied upon their respective affidavits. The affidavits exhaustively recounted the history of the parties’ relationship in regard to the dispute. I have examined that evidence and do not propose to repeat it in these reasons. It is not necessary for a trial judge to refer to every piece of evidence or argument presented during a trial.
In Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62], Gleeson CJ, McHugh and Gummow JJ said:
…A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.
Credibility of Witnesses
The wife gave evidence and was cross-examined by counsel for the husband. She generally impressed as a truthful witness, although she rarely directly answered questions. At times she sought to exaggerate her case in a manner she perceived would be advantageous to her. For example, she claimed that she had made the majority of financial contributions to the properties acquired during the relationship, which were registered in her name because she made the mortgage payments, without considering the husband’s contributions to the household finances. I prefer the evidence of the wife to that of the husband, for reasons explained in my comments about the husband.
The husband gave evidence and was cross-examined by senior counsel for the wife. He was not an impressive witness. His answers to questions were seldom responsive to what he was actually asked and he did not provide credible explanations for his change of substantial evidence during the trial. For example, in his trial affidavit he described gifting each of his adult children a block of land in the Q Street, Suburb P subdivision and the wife’s awareness and lack of objection. In reality, the husband gifted each of his adult children $800,000 cash, a total of $2.4 million cash, which he disclosed for the first time in correspondence from his solicitors to the wife’s solicitors dated 4 May 2022, about 6 weeks after the date of swearing his trial affidavit. Similarly, the husband did not disclose in either his trial affidavit or his Case Outline that a mortgage with NAB secured against one of the properties had increased from $1.8 million to $2.25 million. The mortgage increase was also disclosed in the letter of 4 May 2022.
RELEVANT LEGISLATION
Property proceedings between parties to the marriage are governed by the provisions of s 79 of the Act.
Section 79(1) of the Act provides that the court may make such orders as it considers appropriate altering the interests of the parties in the property.
Section 79(2) provides as follows:
The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
If the Court is satisfied that it is just and equitable to make an order altering the interests of the parties in property, s 79(4) of the Act sets out the matters which the court must take into account when considering what order (if any) should be made.
Section 79(4) provides as follows:
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
Prior to the decision of the High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), the preferred approach to determine property matters was set out by the Full Court in the matter of In the Marriage of Hickey [2003] FamCA 395 (“Hickey”).
The approach, as set out in Hickey may be summarised as follows. Firstly, the court should make findings as to the identity and value of the property pool. Secondly, the court should determine the contributions of the parties both direct and indirect, including financial and non-financial contributions and then determine the contribution based entitlements of each of the parties, as a percentage of the value of the property of the parties. Thirdly, the court should determine whether any further adjustment should be made to the contribution based entitlements of the parties, after giving consideration to the relevant matters referred to in s 75(2) of the Act. Fourthly, the court should consider the effect of those findings and decide what order for division of property is just and equitable.
In Stanford, the High Court noted that s 79(1) enables the court to make such orders as it considers appropriate. However, prior to making any orders for the adjustment of parties interests in property, the court must determine whether it is just and equitable to make any property orders, or to alter the parties interests in property.
At [36] of Stanford, the High Court said:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
In Bevan & Bevan [2013] FamCAFC 116 (“Bevan”), the Full Court considered which matters might be taken into account in determining whether it is just and equitable to alter existing property interests.
At [84] and [85], Bryant CJ and Thackray J said:
84.Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79(4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s 79(4) which make clear that in considering “what order (if any) to make, the court must take into account the matters referred to in that subsection.
85.This requirement to consider the s 79(4) matters, in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, we determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.
In Bevan, Finn J stated at [169]:
Findings of fact concerning of the parties financial history (i.e. the contributions) and their present circumstances and future prospects made in the context of s 79(4) will also assist, but such findings cannot (according to Stanford) be conclusive in determining whether or not it is just and equitable to make an order altering any particular property interest.
The Full Court in Chancellor & McCoy [2016] FamCAFC 256 said at [42]:
In adopting the approach she did, her Honour proceeded in accordance with what the Full Court said in both Bevan and Chapman, namely that it is open to a trial judge to take into account the matters stated in s 79(4) (or s 90SM) of the Family Law Act 1975 (Cth) ("the Act") when determining whether it is "just and equitable" to adjust existing property interests. However, consistent with Stanford, her Honour also recognised that it was not open to her to decide that issue merely by reference to those matters.
The High Court stated in Stanford at [37]:
First, it is necessary to begin consideration of whether it is just and equitable to make 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… The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order."
At [40] of Stanford, the High Court stressed that the question of whether it is just and equitable to make property settlement orders should not be answered by starting with an assumption:
…that one or other party has the right to have the property of the parties divided between them, or has the right to an interest in a marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down". To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4) without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
The High Court further stated at [42] that in most cases:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, 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. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, 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 marital 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. What order, if any, should then be made is determined by applying s 79(4).
In summary, in the majority of matters the decision as to whether or not it is just and equitable for the Court to make property orders is resolved by the breakdown of the marital relationship and the mutual applications of the parties to the Court for orders altering their respective.
Is it just and equitable to alter the parties’ property interests?
In this matter the parties have separated and both parties have made applications to the Court seeking orders altering their respective property interests.
The parties are no longer living in a marital relationship, and as stated at paragraph [42] of Stanford, there will not “thereafter be the common use of property by the husband and the wife”.
I am satisfied that it is just and equitable to alter the parties’ property interests.
Having satisfied myself that it is just and equitable to make an order altering the interests of the parties in the property, the approach and considerations I must make are as follows:
(a)determine the assets comprising the property pool and attribute value to them;
(b)identify and give weight to the various contributions of each of the parties as set out in s 79(4)(a)–(c) and make an assessment as to the entitlements of the parties based on their respective contribution;
(c)identify the relevant considerations as set out in s 79(4)(d)–(g), including the matters set out in s 75(2) so far as they are relevant, and then decide whether any further adjustment is appropriate;
(d)consider whether the proposed orders are just and equitable.
THE PARTIES’ EXISTING INTERESTS IN PROPERTY
The Joint Balance Sheet of assets and liabilities of the parties, which is Exhibit J-1 identifies agreed and disputed assets and liabilities. At the commencement of the trial, the parties agreed to exclude from the asset pool funds received by way of partial property settlement, motor vehicles, some bank accounts and liabilities which would be discharged from funds held in a trust account by the husband’s solicitors.
ASSET POOL Description Wife’s value Husband’s value Assets Real Property 1 Z Street, Suburb AA VIC $1,220,000 $1,220,000 2 CC Street, Suburb K VIC $1,540,000 $1,540,000 3 2 BB Street, Suburb P VIC $1,180,000 $1,180,000 4 3 BB Street, Suburb P VIC $665,000 $665,000 5 4 BB Street, Suburb P VIC $740,000 $740,000 6 5 BB Street, Suburb P VIC $740,000 $740,000 7 Real property (Country O) - L Street, City M $400,000 $400,000 8 1 BB Street, Suburb P VIC $660,000 $660,000 9 3 N Street Suburb P VIC $520,000 $520,000 Real Properties Total $7,665,000 $7,665,000 R Pty Ltd 10 Stock $349,109 $349,109 11 Directors Loan $174,749 $174,749 H Pty Ltd 12 Cash $22,807.30 $22,807.30 13 Property - J Street, Suburb K (unencumbered) $1,190,000 $1,190,000 C Pty Ltd ATF Family Trust 14 Cash $2,263 $2,263 15 Property - F Street, Suburb G (unencumbered) $1,400,000 $1,400,000 16 Property - NN Street, Suburb P (unencumbered) $2,920,000 $2,920,000 B Pty Ltd ATF B Trust 17 Cash $131,372 $131,372 18 Property –D Street, Suburb E $3,385,000 $3,385,000 19 Property – MM Street, Suburb ZZ (unencumbered) $950,000 $950,000 20 Machinery $35,744 $35,744 Add Backs agreed by husband 21 Cash gifted to husband’s children $2,400,000 $2,400,000 Assets Total $20,626,044.30 $20,626,044.30 Liabilities 22 NAB Loan attaching to D Street, Suburb E $2,000,000 $2,250,000 Liabilities Total $2,000,000 $2,250,000 Net Assets Total $18,626,044.30 $18,376,044.30 Superannuation 23 Super Fund 1 $344,730 $344,730 24 Super Fund 1 $57,838.98 $57,838.98 Superannuation Total $402,568.98 $402,568.98 Net Total Assets including superannuation $19,028,613.28 $18,778,613.28
At the commencement of the trial, the husband sought to exclude from the asset pool the value of Lots 6, 7 and 8 BB Street, Suburb P, which he claimed had been gifted to his adult children. He later conceded he had actually advanced cash of $800,000 to each of his three adult children, had not transferred blocks of land directly to them and the asset pool should be increased by $2.4 million, which he had gifted to the adult children.
The remaining issue about the composition of the asset pool was the extent of a mortgage secured against a property, D Street, Suburb E, which was registered in the name of a company, B Pty Ltd.
In his trial affidavit, at [77], the husband deposed:
In or around June 2017, I purchased commercial property situated at [D Street Suburb E] for $3,775,000. This was funded through a combination of $1,525,000 cash deposit and a $2,250,000 loan through NAB.
The husband asserted the full extent of the NAB mortgage, $2.25 million should be included in the asset pool as a liability, whereas the wife initially sought the extent of the mortgage, as at 30 June 2020, $1.8 million, should be the liability included in the asset pool. She later modified her position, so that the mortgage liability to be included in the pool was $2 million.
Without the wife’s knowledge or consent, the husband increased the mortgage by two redraws on 18 August 2020 and 16 October 2020 for $400,000 and $50,000 respectively, which were deposited into the husband’s personal NAB account ending #...96. The husband claimed the redraw funds were applied to construction costs, which was reflected in the valuation of the completed property.
On 4 May 2022, a month after the date on which the trial was originally listed (4 April 2022), the husband’s solicitors forwarded a letter to the wife’s solicitors (exhibit W-8) which advised the mortgage had increased from $1.8 million to $2.25 million, as at the date of trial and the application of the funds.
According to the husband, the $400,000 was transferred into four accounts by series of transfers which occurred between 21 August 2020 and 4 February 2021:
(a)$94,000 to the husband’s CBA account (#...39);
(b)$100,000 to Westpac account (#...52) which he held jointly with two of his older children;
(c)$200,000 to Westpac account (#...37);
(d)the balance was applied to council and utility rates.
The $50,000 redraw was ostensibly applied as follows:
(a)on 16 October 2020, $5,000 was transferred to the husband’s CBA account (#...39) prior to a transfer to the B account and applied towards business expenses;
(b)on 22 October 2020, $1,000 was paid towards the Suburb P development;
(c)on 22 December 2020, $9,817.41 was paid towards the Owners Corporation fees for the D Street property;
(d)on 15 January 2021, $20,000 was transferred to the husband’s CBA account (#...39);
(e)on 28 January 2021, $15,000 was transferred to the Suburb P development account (#...23) for construction costs.
Senior Counsel for the wife cross-examined the husband about transfers from the CBA (#...39) account. The husband was unable to provide an explanation how many of the transfers referred to had anything to do with construction costs and in particular, $13,500 which was garnisheed by the Child Support Agency on 17 February 2021, $21,365 which was paid to U for school fees on 10 November 2021 and $25,446.59 which was garnisheed by the Child Support Agency on 14 January 2022. The husband could not explain the various narratives in the transfers in bank account Westpac #...52 which he held with two of his older children, nor the nexus with construction costs as claimed by him.
At the conclusion of cross-examination of the husband, the wife conceded that $200,000 of the redraw which was deposited into Westpac account #...37 should be included as a liability in the asset pool. Senior Counsel for the wife concluded, and I agree that the husband has failed to discharge his obligation to prove the remaining funds were applied towards construction costs. During cross-examination, the husband’s evidence did not satisfy me all funds from the redraw were applied to construction, as asserted by him. There were no documents tendered on his behalf to prove expenditure on construction costs.
The asset pool as determined by me is as is follows:
ASSET POOL Description Value Assets Real Property 1 Z Street, Suburb AA VIC $1,220,000 2 CC Street, Suburb K VIC $1,540,000 3 2 BB Street, Suburb P VIC $1,180,000 4 3 BB Street, Suburb P VIC $665,000 5 4 BB Street, Suburb P VIC $740,000 6 5 BB Street, Suburb P VIC $740,000 7 Real property (Country O) - L Street, City M $400,000 8 1 BB Street, Suburb P VIC $660,000 9 3 N Street Suburb P VIC $520,000 Real Properties Total $7,665,000 R Pty Ltd 10 Stock $349,109 11 Directors Loan $174,749 H Pty Ltd 12 Cash $22,807.30 13 Property - J Street, Suburb K (unencumbered) $1,190,000 C Pty Ltd ATF Family Trust 14 Cash $2,263 15 Property - F Street, Suburb G (unencumbered) $1,400,000 16 Property - NN Street, Suburb P (unencumbered) $2,920,000 B Pty Ltd ATF B Trust Trust 17 Cash $131,372 18 Property – D Street, Suburb E $3,385,000 19 Property – MM Street, Suburb ZZ (unencumbered) $950,000 20 Crane $35,744 Add Backs agreed by husband 21 Cash gifted to husband’s children $2,400,000 Assets Total $20,626,044.30 Liabilities 22 NAB Loan attaching to D Street, Suburb E $2,000,000 Liabilities Total $2,000,000 Net Assets Total $18,626,044.30 Superannuation 23 Super Fund 1 $344,730 24 Super Fund 1 $57,838.98 Superannuation Total $402,568.98 Net Total Assets including superannuation $19,028,613.28 CONTRIBUTIONS
I will consider the contributions of the parties by reference to the assets of each party at the commencement of cohabitation, the financial and non-financial contribution of the parties during the relationship and the contributions of each party post separation.
Section 79(4)(a)(b) and (c)
Assets at the commencement of the relationship
At the commencement of the relationship, the wife asserts that she had the following assets:
(a)$100,000 cash including her financial settlement from a previous marriage;
(b)a Motor Vehicle 5, then worth about $20,000;
(c)superannuation of $20,000.
Except for the husband deposing in his affidavit the wife’s superannuation entitlements were $3,500 and not $20,000, the wife was not challenged about her initial contributions and I accept her evidence. I prefer her evidence to the husband’s about this issue because of the husband’s lack of candour, contradictory evidence and his complete reversal of evidence about gifting blocks of land to his adult children.
At the commencement of the relationship in 2002, the husband asserts he had an interest in vacant land situated at Q Street, Suburb P (“the Q Street property”). In his Case Outline, the husband asserts the Q Street property was unencumbered at the time of the relationship and was worth approximately $2.5 million. He also contends, in 2002, he began developing the land which was eventually subdivided and sold the lots to establish the parties’ current wealth. He also had his interest in a business and two Suburb OO properties, both of which were retained by his first wife, at the conclusion of their property dispute in 2009.
In his trial affidavit, the husband deposes to having purchased the Q Street property in 1997 which comprised 40,468 m² of green wedge farmland. The land was purchased jointly with his first wife and was initially encumbered by a mortgage in favour of Westpac Bank. According to the husband, he paid down the mortgage using income received during his first marriage and by 2002 the land was unencumbered. He deposes in 2002, planning regulations had changed which enabled subdivision of the property for residential use, and by the commencement of his relationship with the wife, the process of subdividing a land was well “in effect”.
The value of the Q Street property as at 2002 was highly contentious during the trial and the husband was extensively cross-examined about this issue.
On 12 March 2021, the wife’s solicitors requested a copy of the husband’s family law file with his first wife including copies of all court documents and valuations of the Q Street property. The litigation continued over five or six years between 2004 and 2009. On 2 June 2021, an order was made for the husband to provide a copy of the court file, including affidavit material, valuation reports and all final property orders made. The husband did not comply with either the request from the wife’s solicitors nor the orders of the Court.
On 21 March 2022, the husband provided a copy of his previous family law file which did not include valuations from the then appointed valuer, Mr LL. The documents in the court file were Exhibit W-5. The file included three Financial Statements sworn by the husband. The first Financial Statement filed on 31 March 2004 stated the value of the Q Street property was $1 million. The second Financial Statement filed on 22 March 2007 stated the value of the Q Street property was $1.2 million. The third Financial Statement filed on 12 December 2008 stated the Q Street property was $2 million.
The husband’s evidence about this issue during cross-examination was contradictory and unbelievable. Despite agreeing he had sworn to the truth in his court documents, he denied the estimates of value of the Q Street property were based on documents prepared during those proceedings. He even denied he had instructed his then lawyers, KK Lawyers, who wrote to the wife’s solicitors, on his behalf on 5 September 2007, advising their client (the husband) accepted the valuation of $2 million prepared by Mr LL on 29 May 2007. The husband agreed he had located the January 2009 valuation of Mr LL, which valued the property at $4 million, which he found the weekend before the original trial date, in a storage box in the garage of the MM Street property.
He thought the first Mr LL valuation was carried out in 2003 and the property was valued at $2.5 million. He was unable to explain why he thought the property was valued at $2.5 million in 2003, when a 2004 valuation (which is referred to subsequently), valued the property at $1 million and the 2007 valuation valued it at $2 million.
It was not controversial the January 2009 valuation of the property was $4 million because the property had been rezoned as residential in September 2008, which would permit subdivision into housing lots.
After the trial was unable to proceed in April 2022 as initially listed, the husband proposed the parties jointly engage an expert to retrospectively value the Q Street property, with the cost to be shared equally between the parties, or alternatively they could agree the retrospective value of the property was $3.5 million. According to the husband, he had not been able to source the original valuation report of Mr LL as he was retired, and his previous solicitor no longer held any records. The husband’s denial of the 2004 valuation at $1 million was extraordinary as in the first proceedings, he relied on a letter dated 12 August 2005 from his accountants, PP Accountants, which referred to a valuation of the Q Street property, at $1 million, prepared by Mr LL as at 2 July 2004 (Exhibit W-5, Page 50). The letter from his accountants provided a calculation of CGT referable to the Q Street property which was relied upon during the husband’s proceedings with his first wife.
The wife declined both options and the husband proceeded to obtain a retrospective valuation of the property, which he sought to rely on at trial, which was annexed to the affidavit of Mr QQ filed on 20 May 2022. The retrospective valuation of the property as at 1 October 2003 was $2.1 million, a significantly lower valuation than the $3.5 million proposed by the husband.
Senior Counsel for the wife made an application to strike out the affidavit of Mr QQ and prevent the husband from relying on the valuation annexed to the affidavit. The basis of objection was the valuer’s assumption at paragraph 5.3 of the report, “that the land is not contaminated”. The husband’s evidence during cross-examination was that the land was contaminated and the remediation costs were in excess of $700,000.
Senior Counsel for the husband relied upon the statement of Heydon J in Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588, as to the function of proof of assumption rule in expert evidence. At [90], his Honour said:
Function of the proof of assumption rule. The function of the proof of assumption rule is to highlight the irrelevance of expert opinion evidence resting on assumptions not backed by primary evidence. It is irrelevant because it stands in a void, unconnected with the issues thrown up by the evidence and the reasoning processes which the trier of fact may employ to resolve them. If the expert’s conclusion does not have some rational relationship with the facts proved, it is irrelevant. That is because in not tending to establish the conclusion asserted, it lacks probative capacity. Opinion evidence is a bridge between data in the form of primary evidence and a conclusion which cannot be reached without the application of expertise. The bridge cannot stand if the primary evidence end of it does not exist. The expert opinion is then only a misleading jumble, uselessly cluttering up the evidentiary scene.
(Citations omitted)
Quite appropriately, there was little resistance by counsel for the husband to the submissions of the wife’s Senior Counsel.
In this instance, the valuer clearly assumed the land was not contaminated, whereas in October 2003 the land was contaminated and was not remediated until much later when the subdivision occurred. The underlying assumption of the valuer was not supported by primary evidence, and indeed was contrary to the husband’s own evidence. For this reason, the opinion of the retrospective value of the land was not of any probative value as it was not based on a correct factual assumption. I did not permit the husband to rely on the retrospective valuation.
Having considered the matters referred to in the preceding paragraphs and in particular relying on the husband’s accountant’s letter dated 12 August 2005 (Exhibit W-5) which referred to the valuation of Mr LL as at 2 July 2004, and the value of the Q Street property deposed to by the husband in his Financial Statement sworn 31 March 2004, I find that the value of the Q Street property shortly after the commencement of the relationship was around $1 million.
My finding as to valuation is not the end of my consideration about the extent of the husband’s initial contribution.
The husband asserted he had paid off the mortgage encumbering the Q Street property by 2003/2004, although a mortgage remained registered on the title to the property. His evidence was the loan account had been paid out by him notwithstanding a series of refinances of mortgages which were registered on the title to the property (Exhibit W-4). These include the first mortgage to the HH Bank registered on 9 April 1998, a mortgage to Westpac registered on 14 January 2003, a refinance to the CBA registered on 25 May 2009 and a refinance to NAB registered on 19 July 2016. There were no documents produced by the husband, and indeed it would have been difficult to obtain any such documents given the length of time which has passed since the husband claimed he paid out the underlying debt. Neither the husband’s first or second Financial Statement’s in the proceedings with his first wife disclosed any mortgage liability. Relying on the two earlier Financial Statements, I consider it unlikely there was any debt attached to the property as at the date of either of the financial statements.
As raised by the husband’s own accountant in the letter of 12 August 2005 (Exhibit W-5), at that time, the property had an uncrystallised CGT and other tax liabilities, which were estimated at $141,385. There is no calculation of the estimated CGT at the commencement of the relationship and that figure is unable to be calculated with precision. The property was also contaminated, with the husband estimating the eventual remediation costs in excess of $700,000. The property was also subject to a claim by the husband’s first wife, which as at 2009 when the proceeding was resolved, was $1,280,000.
Because of the various liabilities attaching to the property which are referred to in the preceding paragraph, I am unable to quantify the exact value of the Q Street property contributed by the husband.
There was no evidence of the value of the husband’s business at the commencement of cohabitation other than the reference to the business, S Pty Ltd at paragraph 41 of the husband’s first Financial Statement sworn in March 2004. The value of the business was described as “minimum”. I accept the husband’s sworn evidence as to the value of his business consistent with his evidence during cross-examination.
Similarly, there was no expert evidence of the value of the two Suburb OO properties the husband referred to in his trial affidavit. These two properties were eventually retained by his first wife. During cross-examination, the husband conceded he had sold the RR Street, Suburb E property and had applied the proceeds of sale to his business prior to the commencement of the relationship.
I accept the husband had a motor vehicle valued at approximately $15,000 and some superannuation entitlements which he valued at $12,000. During cross-examination, he thought he and the wife had similar amounts of superannuation.
Contribution during the relationship
The wife’s evidence was she contributed $100,000 she had at the commencement of the relationship to the purchase of a property in SS Street, Suburb AA for $360,000 in 2003. The balance of the purchase price was obtained by a mortgage from Westpac. Following settlement in 2004, the family lived in that property until it was sold in 2011 for $560,000.
In 2008, the wife purchased a property in TT Street, Suburb AA for $500,000, with the deposit paid from her savings and the balance funded by a mortgage with Westpac. The property was sold in 2015 for $930,000. In 2011, the wife purchased a property in Suburb K for $962,000, which was financed by $450,000 from the proceeds of sale of the SS Street property and the balance with a mortgage from Westpac. The family lived in the Suburb K property from 2011 until February 2019. The property is currently vacant and requires repairs.
In 2014, the wife purchased a property in Suburb UU, Queensland for $652,000, which was financed with the deposit of $15,000 from his savings and the balance with a mortgage from Westpac. The property was sold in the year later in 2015 for $735,000.
In 2019, the wife purchased a property in Z Street, Suburb AA for $1,150,000 which she funded from her savings and the balance by way of a mortgage from Westpac. The stamp duty of $67,000 was contributed by the husband. The family moved into the property in 2019 and remained living together until the husband moved out in April 2020. The wife and children remain living in the property.
According to the wife, she paid the mortgage instalments on the SS Street property, TT Street and CC Street properties from her personal bank account and the husband paid his personal loan repayments of about $4,000 per month from his earnings, from about 2009.
The family used a credit card in the wife’s name for the joint household expenses to pay for utilities, outgoings groceries and other living expenses. During the relationship, the husband transferred $5,000 to the wife’s bank account each month to cover these expenses. He stopped doing so as from April 2020, after he left the family home.
The wife was employed in the husband’s business until the birth of their first child. Thereafter, she looked after the child during the day and worked for the businesses at night. Her duties included administrative work, networking and business development, which she continued when she was hospitalised for three months prior to the birth of the first child. Although the wife ceased receiving a salary from R Company in 2014, she continued to assist with administrative duties for the company.
During the relationship, the husband worked in their various businesses. At the commencement of cohabitation in 2003, the husband’s business was S Pty Ltd. In 2004, the husband set up another company T Pty Ltd and in 2007, he established R Pty Ltd. The respondent was responsible for the running of his business operations.
I accept each party made financial contributions to the household and the acquisition of the purchase and sale of properties in the wife’s name to the best of their ability. It is axiomatic that the wife was able to contribute her income to the payment of various mortgages because of the financial support she received from the husband during the relationship.
As to his contributions during the relationship arising from the Q Street property, in his trial affidavit the husband deposed at paragraph 27:
The process of subdividing the land was well in effect before the commencement of my relationship with [Mr Yong].
During cross-examination, the husband’s evidence was he had meetings with VV Company, a developer and owner of adjoining properties, before confirming that prior to 2002 he hadn’t taken any steps to subdivide the land other than paperwork. He initially agreed the value of the land had increased significantly with rezoning, before changing his evidence that it did not. The husband agreed there were no formal or physical works for the subdivision until 2014.
The wife issued a subpoena to the relevant municipality, JJ Council. The documents produced pursuant to the subpoena (Exhibit W-7) demonstrate that the land was rezoned from rural to farming in 2007 and from farming to residential in 2008. The increase in valuations accords with the rezoning of the land. Mr LL’s valuation in 2007 was $2 million, an increase of $1 million from the 2004 valuation, and his valuation in 2009 whilst $4 million, an increase of $2 million from the 2007 valuation.
The increase in value as a result of rezoning cannot be seen as a contribution by the husband during the course of the relationship, but rather a windfall for both parties or a contribution by both of them, which resulted in a dramatic increase in the value of the property, which then enabled them to subdivide it and accumulate their significant wealth. In reaching that finding, I have regard to Jabour & Jabour (2019) FLC 93-898 (“Jabour”) at [84]:
84.Finally, in relation to a sudden increase in the value of an asset unrelated to the efforts of the parties, such as a rezoning by the council or a lottery win, the authorities point to that increase being a contribution by both parties (or neither – it matters not which it is) (Zappacosta at 75,421; Wells at 76,529–76,530; Zyk at 82,515–82,516; and Hurst at [26]).
It was common ground the formal and physical development work of the Q Street property commenced around 2014, some 10 or 11 years after the commencement of the relationship. The land was divided into 73 saleable lots and is known as the Location WW. The majority of lots were sold, although the husband still retains some of the lots. In his trial affidavit, the husband attempted to portray the wife as negative and obstructive about the subdivision and the work was effectively carried out by him with the assistance of two of his adult children. The husband deposes his son Mr DD, who assisted him was paid a 3% management fee on development ongoing costs, although his daughter was not paid for her asserted assistance. Those statements must be seen in the context of the husband gifting $800,000 to each of the three adult children, including Mr FF who had little input in the project.
I place little weight on the husband’s attempt to discredit and minimise the wife’s contribution to the development of the Q Street property and consider the development was a joint endeavour between the parties during the course of their relationship. To some extent, both parties sought to emphasise their contributions and to minimise the contributions of the other.
In his trial affidavit (at [57]), the husband deposes to the application of the proceeds of sale of the subdivision which up to 30 June 2019, realised a profit of around $14.5 million.
Some of the proceeds of sale were invested in three corporate entities, C Pty Ltd, B Pty Ltd and H Pty Ltd, which in turn purchased various properties which are included in the asset pool. The parties carried out some development to the properties, the most recent of which was completion of three factories and a café on the NN Street, Suburb P property. The acquisition of the various properties and their development was not a controversial issue, other than the application of $450,000 of the increased mortgage funds secured against the D Street, Suburb E property.
Another issue relevant to contribution was the payment of the husband’s legal fees arising from the protracted litigation with his first wife. The litigation commenced in 2004/2005 and continued until final orders were made by consent on 9 February 2009.
According to the wife, the husband spent hundreds of thousands of dollars on legal fees during the course of the litigation, which were paid from the income from the business. The husband was cross-examined about the extent of legal fees and his evidence was the wife in this proceeding, arranged for his legal representation and he had little knowledge of her activities nor the legal fees he incurred. He eventually conceded that his legal costs were around about $67,000, but he could not provide any documentary evidence or explanation how he calculated the legal fees. It is impossible to quantify the quantum of the husband’s legal fees incurred in the dispute with his first wife. However, I prefer the evidence of the wife to that of the husband because I regard her evidence as more truthful and accurate than the husband’s and because it seems highly unlikely that legal fees spanning five or six years, even at that time would only amount to $67,000. In any event, I take into consideration the family expenditure on the husband’s legal fees throughout that period.
As to the respective contributions as a parent and homemaker the wife’s unchallenged evidence was that although the parties never explicitly discussed their respective marital roles, subsequent to the birth of the children, she assumed most of the parenting, daily home chores and household responsibilities. She has been responsible for the care of the children including changing nappies, comforting, feeding and getting up during the night, with no family or outside help. The husband prepared breakfast and occasionally assisted her with dinner preparations. He carried out repairs around the house although they had a gardener who mowed the lawns.
The husband would typically spend time with the children during dinner at about 6.00 pm and play with them for a short while prior to bedtime. The wife’s responsibilities included school pickup and drop-offs, overseeing the children’s homework, looking after the children when they were sick, attending school interviews, organising the children’s birthdays, taking the children to karate and language classes on the weekend and a parent helper at extracurricular activities.
In addition to her responsibilities to the children of the marriage, from 2005 the husband’s daughter Ms EE lived with the family for a period of two years while she was doing her VCE exams. Between 2003 and 2007, the husband’s son Mr DD lived with the family. The wife is responsible for housework for the children including cooking and laundry, which enabled the children to focus on their education.
The husband agreed that the wife was primarily responsible for the children’s care, although when they were younger he assisted them with meals, cleaning up after them and helped put them to bed. As the children grew older he assisted them with educational and extracurricular activities, including sports. His evidence was that he was intimately involved in the children’s upbringing and would ensure his work arrangements were flexible to spend quality time with the children each day. He was also fortunate to take months off at a time from work which enabled him to spend longer periods of time with the children and enjoy family holidays together.
I accept the evidence of both parties that the wife was primarily responsible for the care of the children. I also accept the wife’s evidence that her care of the children also involved being primarily responsible for the running of the household and domestic duties. I also accept the husband’s evidence that he assisted with the care of the children, when he was able and some household chores, subject to his work commitments.
Contributions post the relationship
The wife’s evidence about post separation contributions was that she has undertaken substantial works and repairs on the Z Street, Suburb AA property and also intends to rectify the imbalanced foundations of the house. She estimated that she has spent approximately $50,000 on repairs to the property. She has also paid for lawn mowing and back yard levelling at the CC Street, Suburb K property. I accept her evidence.
Having regard to my comments as to contribution and weighing up and assessing the myriad of contributions of the parties, both financial and non-financial, direct and indirect, at the commencement of the relationship, during the relationship and post, and their contributions as homemaker and parents, I assess those contributions as 47.5 per cent to the wife and 52.5 per cent to the husband.
Discussion and Conclusion as to future needs and section 75(2)(o)
Paragraphs 118–136 hereof refer to the future needs of the parties and paragraphs 137–146 refer to s 75(2)(o) and my determination that there should be a minor adjustment for future needs of the parties, as the resources and income of each party and the child support I intend to order, will substantially cater for the future needs of each party. I determine the adjustment should be 1.5 per cent in favour of the wife.
Adjustment of Interests
As a result of my conclusions and findings made relating to contributions, future needs and factors to be considered pursuant to s 75(2)(o), I am satisfied that it is just and equitable to divide the asset pool, as determined by me as to 49 per cent to the wife and 51 per cent to the husband. This division will result in the wife receiving $9,324,020 and the husband receiving $9,704,593. That equates to a differential of $380,573 in favour of the husband.
Which property should be allocated to which party?
Another contentious issue during final submissions was which party should receive which properties.
The wife’s proposal was for her to retain the following properties:
(a)Z Street, Suburb AA (her home);
(b)CC Street, Suburb K (a residential property);
(c)L Street City M, Country O;
(d)J Street, Suburb K (a residential property);
(e)F Street, Suburb G (vacant land);
(f)D Street, Suburb E (industrial property).
The husband’s proposal was for him to retain the following properties:
(a)2 BB Street, Suburb P (vacant residential land);
(b)3 BB Street, Suburb P (vacant residential land);
(c)4 BB Street, Suburb P (vacant residential land);
(d)5 BB Street, Suburb P (vacant residential land);
(e)NN Street, Suburb P (commercial properties);
(f)MM Street, Suburb ZZ (commercial property where husband operates R Company).
Both parties sought the properties at 1 BB Street, Suburb P and 3 N Street, Suburb P be retained by the other party.
The husband proposed and the wife agreed he would also retain his interest in R Pty Ltd, cash in B Pty Ltd and some machinery.
At the conclusion of the final submissions of counsel for the husband, the dispute had narrowed to whether the wife should receive the D Street, Suburb E property unencumbered or subject to the mortgage secured against it.
The wife sought the husband either discharge or transfer the mortgage to another property, and the husband sought the existing mortgage should remain encumbering the property. The wife accepted the extent of the mortgage should be $2 million, whereas the husband contended it should be $2.25 million. I have found that the extent of the mortgage liability to be included in the asset pool is $2 million.
The reason for the position of both parties was the income each party would receive in the future generated by the properties they each sought to retain.
In relation to the $2 million mortgage, the wife’s position was that part of the mortgage drawdown had been used to fund the construction of the buildings on the NN Street, Suburb P property and the mortgage should be transferred to encumber either the NN Street, Suburb P property or the MM Street, Suburb ZZ property.
If the wife received the D Street, Suburb E property unencumbered she would then receive rental income of approximately $4,021 per week, some rental income from CC Street, Suburb K, subject to carrying out of repairs and leasing of the property, as it is currently uninhabitable, and rental income of $360.92 per week from J Street, Suburb K. Her annual gross income would be roughly equivalent to $228,000, with income of $18,768 from J Street and $209,092 income from D Street, Suburb E. She would have no substantial liabilities.
The husband would receive rental income from the NN Street, Suburb P property and income from his business. In his trial affidavit, the husband deposed to having leased some buildings at the NN Street, Suburb P property and was currently looking for tenants for the two other warehouses. The weekly income from the property so far is $1,994 per week. There was no evidence of the anticipated income from the lease of the other two warehouses, although counsel for the husband in his final submissions suggested that each of them would be tenanted at $38,700 per annum and the retail space at $65,000 per annum, which would provide an annual income of $181,000 per annum. After payment of the mortgage interest of approximately $66,000 per annum, the husband’s income would be approximately $115,000 per annum. This calculation does not include the income generated by the husband’s business, nor the potential income from the MM Street, Suburb ZZ property, if he were to vacate the property.
The husband did not provide an estimate of his income from the business, nor any evidence about the likely income from the MM Street, Suburb ZZ property, when he wound up his business, which he anticipated would occur in two years. It is therefore not possible to ascertain with any accuracy the husband’s ultimate income position, other than he has two commercial properties, from which he would eventually be able to receive rental income. The husband proposed that the wife could receive a transfer of two of the vacant blocks of land in Location WW as part of her property settlement. It is self-evident why she would not want to retain those blocks of land, as the husband and two of his adult children live on the estate.
I consider it appropriate that each party will retain their respective homes and a mixture of income and non-income producing properties, including the commercial properties which produce significant rent. According to the valuations of the NN Street, Suburb P and MM Street, Suburb ZZ properties, there is more than sufficient equity to secure a mortgage of $2 million. As to the husband’s capacity to service the mortgage, paragraph 21 of his Financial Statement filed in this proceeding states that the mortgage payments referable to the D Street, Suburb E property are $1,268 per week. I consider the additional income which he will receive after the leasing of the two other factories on the NN Street, Suburb P property will enable the husband to service the existing mortgage with considerable surplus to be applied as he deems fit. That income is in addition to the current income from his business and if he chooses to wind up his business, commercial income from leasing the MM Street, Suburb ZZ property. I intend to make orders providing for the wife to retain the D Street, Suburb E property unencumbered.
The division of assets will result in the wife retaining her home, various investment properties, both income and non-income producing properties, together with a modest cash payment to the husband.
The husband will also retain his home, his business and various other investment properties, some of which are income producing and some which are not and will receive a modest cash payment from the wife.
I am required to assess the overall outcome not only from a percentage basis, but also from the dollar value the percentage represents to assess whether it is just and equitable (Brodie & Brodie [2009] FamCAFC 6 at [90]; Lovine & Connor (2012) FLC 93-515 at [81]; Varnham & Moses [2021] FLC 94-007 at [60]). It is evident from the table of assets and liabilities at paragraphs 175–176 the wife will receive $9,502,537 and the husband will receive $9,526,076 and that the mix of assets to be retained by both of them includes their respective homes, residential property, commercial property, income producing and non-income producing property. I have also endeavoured to provide an income from the properties as I am satisfied the proposed division of assets is just and equitable and I intend to make orders accordingly.
From a percentage basis, I have determined the asset pool be distributed 49 per cent to the wife and 51 per cent to the husband. The total asset pool available for division is $19,028,613. The wife’s 49 per cent share of this totals $9,324,020 and the husband’s 51 per cent share totals $9,704,593. To meet this figure from assets which the wife will retain from the table below, she will be required to make a payment to the husband of $178,517.
The orders I will make will provide for the husband to have 90 days to discharge the mortgage on D Street, Suburb E and transfer it to the wife, and otherwise 60 days to transfer the properties which are unencumbered. The wife will have 90 days to make a payment to the husband.
The assets and liabilities of the wife will be:
Assets retained by wife Description Value Z Street, Suburb AA VIC $1,220,000 CC Street, Suburb K VIC $1,540,000 Real property (Country O) - L Street, City M $400,000 J Street, Suburb K (H Pty Ltd) $1,190,000 F Street, Suburb G (C Pty Ltd) $1,400,000 D Street, Suburb E (B Pty Ltd) $3,385,000 Cash (H Pty Ltd) $22,807.30 Assets Total $9,157,807.30 Liabilities Payment to husband $178,517 Liabilities Total $178,517 Superannuation Super Fund 1 $344,730 Superannuation Total $344,730 Net Total $9,324,020.30
The assets and liabilities of the husband will be:
Assets retained by husband Description Value 2 BB Street, Suburb P VIC $1,180,000 3 BB Street, Suburb P VIC $665,000 4 BB Street, Suburb P VIC $740,000 5 BB Street, Suburb P VIC $740,000 1 BB Street, Suburb P VIC $660,000 3 N Street Suburb P VIC $520,000 NN Street, Suburb P (C Pty Ltd) $2,920,000 MM Street, Suburb ZZ (B Pty Ltd) $950,000 Stock (R Pty Ltd) $349,109 Directors Loan (R Pty Ltd) $174,749 Cash (C Pty Ltd) $2,263 Cash (B Pty Ltd) $131,372 Crane (B Pty Ltd) $35,744 Cash gifted to husband’s children (add back agreed by husband) $2,400,000 Payment from wife $178,517 Assets Total $11,646,754 Liabilities NAB Loan $2,000,000 Liabilities Total $2,000,000 Net Assets Total $9,468,237 Superannuation Super Fund 1 $57,838.98 Superannuation Total $57,838.98 Net Total $9,704,592.98 Child Support
I will now turn to the issue of child support, which was the final dispute between the parties.
Both parties sought orders that there be a departure from administrative assessment of child support pursuant to sections 116 and 118 of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”), although for different reasons and outcomes.
Section 116 of the Assessment Act sets out circumstances in which a party may apply to the court for a departure from an administrative assessment of child support. In this case there is no dispute that there is an administrative assessment in force.
Section 117 of the Assessment Act provides guidance about what are special circumstances which enable the court to be satisfied that it is appropriate to make a departure order.
Section 117(4) sets out the factors to which a court must have regard, in determining whether it would be just and equitable to the child, the payer and payee to make a particular order under the division.
Section 117(5) sets out the matters the court must have regard to, in determining whether it would be otherwise proper to make a particular order under the relevant division.
The Full Court in the matter of Hides & Hatton (1997) 21 Fam LR 855 said as follows:
[T]he jurisdiction to make an order under s 117 departing from an administrative assessment of child support is a discretionary jurisdiction. But as was made clear by the Full Court in In the Marriage of Gyselman (1991) 15 Fam LR 219; (1992) FLC 92–279, it is a highly structured discretion with the court being required to adhere to the following strict three-step process and to consider (at Fam LR 224; FLC 79,064):
(1)Whether one or more grounds of departure in s 117(2) is established.
If so:
(2)Whether it is “just and equitable” within the meaning of s 117(4) to make a particular order.
(3)Whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.
The wife sought a departure from administrative assessment to enable the court to fix a rate of periodic payments greater than the current assessment. She sought periodic child support be fixed at $46,280 per child per annum, which is equivalent to periodic payments for each child of $3,857 per month, and such payments be adjusted from 1 January each year, in accordance with variations in the consumer price index for Melbourne.
Additionally, she sought an order pursuant to s 124 of the Assessment Act, the husband pay all school fees for the children in addition to periodic support and an order pursuant to s 123A of the Assessment Act, the husband pay lump sum child support of $850,100.31 to the trust account of the wife’s solicitors, with the lump sum to be credited against 100 per cent of the husband’s child support liabilities.
According to Senior Counsel for the wife, the husband’s application for departure seeks that the court revisit child support obligations beyond the 18 month period pursuant to s 111 of the Assessment Act so that:
(a)the school fees, garnisheed amounts and other child support paid by him post separation is appropriate and he should not have to pay any more child support for that period;
(b)a retrospective figure is sent for that period equivalent to the amounts he has paid, so that he has no more past liability for child support.
There was no reference to s 111 of the Assessment Act in the minute of final orders proposed by the husband and there were no specific submissions addressing the relevant criteria to exercise my discretion. I do not intend to exercise my discretion to depart from administrative assessment beyond an 18 month period.
The wife sought her proposed departure from administrative assessment commence as from 18 April 2020, more than 18 months ago. I am not satisfied the wife specifically addressed the relevant considerations in s 111 of the Assessment Act and I am not persuaded there is any reason at all to depart from administrative assessment for that period.
In terms of future child support, the husband’s application is to fix the annual rate of child support from 9 June 2022 until 26 July 2028 at the rate of $9,000 per child per annum, equivalent to monthly payments of $750 per month per child, and the rate be adjusted each year from 1 January in accordance with variations in the consumer price index for Melbourne.
In addition to periodic child support, the husband seeks to pay the children’s private school fees, with the children attending U School for the remainder of their high school education, unless agreed otherwise by the parties in writing, with the payment of those fees to be credited 100 per cent against his child support liabilities.
Senior Counsel for the wife submitted that the wife’s approach to the departure application is to identify the reasonable needs of the children, identify the care arrangements and apportion the children’s reasonable needs between the parents.
It was submitted that the children’s reasonable needs were reflected in Part N of the wife’s Financial Statement which was $1,780 per week, excluding housing and education. As the children had been in the wife’s care for 12 nights a fortnight, the children’s reasonable weekly needs according to her were $2,077.
In Part N of the husband’s Financial Statement, he estimated he spent $973 per week for the two nights a fortnight when the children were in his care. As the husband’s estimate of the children’s reasonable needs vastly exceeded the wife’s estimate, it was reasonable to accept the wife’s evidence of the children’s reasonable needs.
The care arrangements for the children provide for the wife to care for them six nights in a week and the husband to care for them one night a week which was equivalent to an 85/15 per cent care arrangement. If holidays were included the care percentages, it would be reduced to 80 per cent which would mean that the husband already pays 15 per cent of the estimated $2,077 per week.
The income earning capacity and the financial resources of the parties should be factored in as to how to apportion the reasonable needs of the children. If the children’s needs were divided equally between the parties that would result in each party paying approximately $1,000 per week or approximately $50,000 per child per annum. If the actual care arrangements were factored in, the husband should be responsible for at least 75 per cent of the children’s care which would be equivalent to $1,558 per week per child.
Whilst I consider it preferable for the future child support for the children to be fixed to provide certainty to both the husband and the wife, as I intend to provide for the mortgage on the D Street, Suburb E property to be assumed by the husband, his income will obviously be reduced to the extent of the differential between the income from that property and the current obligation for mortgage payments, although he will receive additional income from the two factories yet to be leased at the NN Street, Suburb P property. It is also not possible to predict how much longer the husband intends to continue with his business, which will obviously have an impact on his future income and capacity to pay child support, even though he would then be able to obtain rent for the MM Street, Suburb ZZ property.
I also intend to make an order that the husband pay the private school fees of both children at U School, but such payment not be credited against any administrative assessment.
I am not, however, satisfied there should be a departure from administrative assessment of future periodic child support. The submissions of the wife’s Senior Counsel were predicated on the husband paying the private school fees and additional periodic support. Because of the uncertainty of the husband’s future income and earning capacity and the division of property to ensure both parties receive an income from investment properties, child support should be administratively assessed in the future and the husband should additionally pay the private school fees. The payment of the private school fees by the husband will go a long way to sharing the financial support of the children between the parents in a just and equitable manner.
It could not possibly be said that requiring the husband to pay private school fees for both children and periodic child support as contemplated by the wife equitably shares the cost of support of the children. That would equate to the husband paying periodic support of $92,560 per annum plus private school fees of around $70,000 to $80,000 per annum for two children.
I intend to make orders that the periodic child support of the husband is in accordance with the administrative assessment, which is currently paid and that he will additionally be responsible for payment of private school fees for the children, as proposed by him. I am confident these parents prioritise their children’s educational and extracurricular activities and consider it likely each will continue to ensure the children participate in their chosen activities and meet the associated costs, as they have previously done, as is reflected in their respective Financial Statements.
I do not intend to make an order for lump sum payments of child support or future school fees. Although I accept that there have been times in the past when the husband has been tardy with payment of school fees, the wife has had to seek reimbursement from the husband for payments she has made and the child support agency has garnisheed the husband’s bank accounts with the husband eventually meeting his child support obligations, there was no evidence of the circumstances required to warrant payment of lump sum child support.
In Snipper & James [2022] FedCFamC1F 266, Harper J said at [27]:
Sections 123A(1)(a) and (b) of the Assessment Act provide that the court may make an order for lump sum child support if the carer makes an application under s 123(1)(b), and the court is satisfied it would be “just and equitable as the regards the child” and “otherwise” proper”. In determining what is just and equitable, s 123A(5) requires the Court also to have regard to the matters mentioned in ss 117(4), (6), (7), (7A), and (8) of the Assessment Act. These include the needs of the child or children, the income, property and financial resources of each parent who is a party to the proceeding, the earning capacity of each parent who is a party to the proceeding, and hardship to the carer parent or liable parent, caused by the refusal or making of a lump sum order.
The provision of child support by way of a lump sum payment is clearly not the preferred method of maintaining children (Prpic & Prpic (1995) FLC 92-574) and is usually considered in situations where there are difficulties in enforcement and where liable parents are asset rich and income poor (Dwyer v McGuire (1993) FLC 92-420; Lightfoot v Hampson (1996) FLC 92-663). It cannot be said that the husband has done everything he can to avoid paying child support (Dwyer v McGuire ) nor does the evidence establish that he will not voluntarily provide any child support for the children (Hartnett v Baker (1995) FLC 92-620). Here, while there have been difficulties in obtaining and enforcing child support payments from the husband, those difficulties are not so significant to warrant periodic payments being substituted wholly or partly by a lump sum.
To make such an order may also impose unintended consequences on the husband arising from sale of assets with uncrystallised capital gains tax liabilities.
I will make orders accordingly.
I certify that the preceding two hundred and five (205) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Williams. Associate:
Dated: 18 August 2022
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