Kanelos and Kanelos and Ors
[2018] FamCA 524
•13 June 2018
FAMILY COURT OF AUSTRALIA
| KANELOS & KANELOS & ORS | [2018] FamCA 524 |
| FAMILY LAW – CHILDREN – Parenting – Undefended final hearing – Where the mother seeks sole parental responsibility, for the children to live with her, and to spend time with the husband as agreed in writing between the parties – Where the wife seeks an order enabling her to apply for passports for the children without consent of the husband and to retain the children’s passports – Where the husband has disengaged from spending time with the children for various periods and communication between parents is difficult – Where the Court has concern about the husband’s capacity to provide for the children’s needs – Presumption of equal shared parental responsibility should not be applied – Orders made for the wife to have sole parental responsibility, for the children to live with her and to spend time with the husband as agreed in writing between the parties. FAMILY LAW – PROPERTY – Undefended final hearing – Adjustment of property – Where the respondent is the Trustee in Bankrupcty – Where the husband and the wife jointly contributed to maintaining their household during the marriage and are jointly responsible for the mortgages on the former matrimonial home – Where the husband failed to comply with orders in respect to paying spousal maintenance – Where ordering the husband to transfer his share of properties owned jointly with his parents and sister to the wife would be futile – Where a caveat is registered on the former matrimonial home and the wife sought to have it removed – Court finds it is just and equitable to make an order altering the parties property interests – Order made for the Trustee in Bankruptcy to transfer his interest in the former matrimonial home to the wife. | |
| Bankruptcy Act 1966 (Cth) s. 58, 131, 132, 156A Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth) Child Support (Assessment) Act 1989 (Cth) s. 79(4) Evidence Act 1995 (Cth) s. 50 Family Law Act 1975 (Cth) s. 4(1), 4AB, 60B, 60B, 60CA, 60CC, 61DA, 65DA, 65DAA, 65DAC, 65Y(2), 75, 79, 90AF Family Law Rules 2004 – rr. 11.02, 13.01, 13.04 | |
| AM and MM [2005] FamCA 443 Petruski & Balewa [2013] FamCAFC 15 Residential Housing Corporation v Esber & Ors (2011) 80 NSWLR 69 Sigley v Evor (2011) 44 Fam LR 439 Revised Explanatory Memorandum, Bankruptcy and Family Law Legislation Amendment Bill 2005 (Cth). Anthony Dickey QC, Family Law (Lawbook Co, 6th ed, 2014) 44.810 |
| APPLICANT: | Ms Kanelos |
| RESPONDENT: | Mr Kanelos | |
SECOND RESPONDENT: | Mr T Kanelos | |
THIRD RESPONDENT: | Ms U Kanelos | |
INTERVENOR: | Ms Sellers as trustee of bankrupt estate of the husband Kanelos | |
| FILE NUMBER: | SYC | 6320 | of | 2013 |
| DATE DELIVERED: | 13 June 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 13-14 November 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Christie |
| SOLICITOR FOR THE APPLICANT: | Watts McCray Lawyers |
No appearance for the Respondent
No appearance for the Second Respondent
No appearance for the Third Respondent
| SOLICITOR FOR THE INTERVENOR: | Mr Wilkinson of Brown Wright Stein Lawyers |
Orders
Property
That within 28 days of the date of these orders, the husband or if he remains subject to the existing bankruptcy, the Trustee and the wife, shall do all acts and pay all such monies necessary to cause the following to occur simultaneously:
1.1.Transfer of the property situated at and known as B Street, Suburb C in the state of New South Wales (“the Suburb C property”) to the sole name of the wife at the wife's cost, such that the husband, or if he remains subject to the existing bankruptcy, the Trustee, shall sign all documents presented to him by the wife and the wife shall do all other things necessary for such transfer to occur; and
1.2.Discharge of all mortgages and encumbrances including the Trustee’s caveat presently registered over the Suburb C property at the cost of the wife, such that the husband, or if he remains subject to the existing bankruptcy, the Trustee, shall sign all documents presented to him by the wife and the wife shall do all other things necessary to cause such discharge; and
1.3.The wife shall thereafter indemnify and keep indemnified the husband and the Trustee in respect of all liabilities in relation to the property, whenever and however arising.
That subject to the Orders above, that the wife shall retain sole legal and beneficial ownership of:
2.1.All personal property in her respective possession or control;
2.2.All real property in her names;
2.3.All shares, debentures, units in unit trust, accounts held at any bank, building society, credit union or financial institution standing in her sole name respectively; and
2.4.Any interest in any life insurance policy or superannuation policy fund standing in her sole name respectively.
That the wife shall indemnity and keep indemnified the husband in respect of:
3.1.The $100,000 owed by the parties to the Wife's parents;
3.2.E's outstanding school fees; and
3.3.S's outstanding school fees.
That the wife shall remain solely liable for all debts standing in her sole name and the wife shall indemnify, keep indemnified and hold harmless the husband from any liability in relation thereto howsoever arising.
That the husband shall remain solely liable for all debts standing in his sole name and the husband shall indemnify, keep indemnified and hold harmless the wife from any liability in relation thereto howsoever arising.
That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
Parenting
Parental Responsibility
That the wife have sole parental responsibility for:
7.1.E, born … 2001; and
7.2.S, born … 2003.
(herein collectively referred to as 'the children'.)
Lives with / spends time with
That the children live with the wife.
That the children spend time with the husband as agreed between the parties in writing. That:
9.1.The husband be at liberty to telephone the children at any reasonable time when they are with the wife; and
9.2.Each of the children be at liberty to telephone the husband at any reasonable time.
Travel
That E's Passport presently held by the Family Court of Australia be released to the wife forthwith.
Pursuant to section 11(1)(b) of the Australian Passports Act 2005 (Cth) (or any Act replacing that Act and making like or similar provision) the wife be permitted to apply for and have issued to her an Australian passport for each of the children, or renew any such passport in the absence of consent or otherwise of the husband and the wife thereafter retain the children's passports, and it is requested that the Department of Foreign Affairs and Trade provide whatever assistance is necessary in relation to the issue or renewal of any such passport.
That pursuant to section 65Y(2) of the Family Law Act, the wife be permitted to travel interstate or overseas with the children, provided that she gives the husband written notice of the proposed travel at least thirty (30) days in advance of any travel commencing, including providing details of where the children will be travelling to, details of flights, accommodation, contact telephone numbers and the like.
That the wife retains the children's passports.
General
That both parents are restrained from:
14.1.Denigrating the other parent or members of the other parent's family in the presence or hearing of the children.
14.2.Discussing these proceedings, including any matters associated with the proceedings or the outcome or consequences of the proceedings, with the children, in the presence or hearing of the children, or showing the children any document connected with these proceedings, including telling the children that the parent wants more time with the child.
14.3.Passing information or messages through the children to the other party.
That both parents do all things necessary and sign all documents to ensure that any medical or allied health professional attended on by the children is authorised to provide both parents with information about issues relating to the children's health and treatment.
That both parents shall immediately notify the other party of any significant illness or medical condition or injury that would involve the children requiring medical intervention.
That each party shall do all things necessary including providing all consents to give effect to these orders in the time periods prescribed in these orders.
That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to Section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
The parties have liberty to apply on 48 hours’ notice to the court and other parties in respect to the issue of costs of the proceedings.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Kanelos & Kanelos & Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 6320 of 2013
| Ms Kanelos |
Applicant
And
| Mr Kanelos |
Respondent
And
Mr T Kanelos
Second Respondent
And
Ms U Kanelos
Third Respondent
And
Ms Sellers as trustee of the bankrupt estate of Mr Kanelos
Intervenor
REASONS FOR JUDGMENT
introduction
This matter involves both parenting and property disputes arising from the marriage between the applicant Ms Kanelos (“the wife”) and the respondent Mr Kanelos (“the husband”). There are two children of the marriage, namely E born in 2001, currently aged 16, and S, born in 2003, currently aged 14.
At the final hearing, there was no appearance by the respondent husband, or his father or mother who are the second and third respondents in these proceedings. For reasons given on 13 November 2017,[1] in the absence of the first, second and third respondents, the proceedings continued on an undefended basis.
[1] Kanelos & Kanelos & Ors [2017] FamCA 1026
As the husband has been declared bankrupt, the property proceedings are between the wife and Mr Sellers in his capacity as Trustee of the Bankrupt Estate of the husband (“the Trustee”). At the hearing, Mr Wilkinson appeared on behalf of the Trustee as intervenor in this matter.
At the Hearing, the Trustee indicated that he did not intend to make submissions and that he neither consented nor opposed the wife’s application. Mr Wilkinson advised the Court that the Trustee was prepared to abide by the outcome of the proceedings save and except for an application for costs against the Trustee. On that basis, the Trustee then made an application to be excused from attending the hearing. That application was not opposed and the Trustee was so excused.
Also, on the first day of the hearing there was an appearance by Mr Saab on behalf of a third party creditor Z Pty Ltd (“ZPL”). ZPL alleges that the husband is indebted to the company in the sum of $42,047.68. The wife disputes the debt and questions the validity of a caveat lodged by ZPL over the former matrimonial home. Mr Saab, on behalf of his client, and the wife agreed to the following consent orders to facilitate the adjudication of that aspect of the dispute:
a)On or before 9:00am Thursday, 15 November 2017 ZPL ("The Company") will comply with the Subpoena.
b)On or before 4:00pm Monday, 13 November 2017, The Company be provided with paragraphs of the Wife's Affidavit referrable to The Company.
c)On or before 4:00pm 1 December 2017 The Company file any evidence upon which it wishes to rely.
d)On or before 4:00pm 6 December 2017 the Wife and The Company provide notice as to whether any party is required for cross-examination.
e)If no person is required for cross-examination then the Wife and The Company shall file written submissions by 15 December 2017.
f)If cross-examination is required the Wife and The Company shall send a joint letter to the Judge's Associate to relist the matter.
g)The parties have liberty to relist the matter.
On the basis that written submissions would be provided in respect to the interests of ZPL, Mr Saab was excused from further attendance at the hearing. ZPL and the wife provided written submissions to my Chambers on 15 December 2017. No party was required for cross-examination.
The husband, who did not appear in these proceedings, provided a case outline document directly to Chambers on 7 December 2017. The trial directions made on 16 June 2016 required parties to file and serve case outline documents 7 days prior to the hearing. The hearing proceeded on 13 and 14 November 2017. Case outline documents were therefore required by 7 November 2017. The document provided by the husband to chambers on 7 December 2017 was provided well beyond the time specified in the trial directions and after the completion of the hearing. Pursuant to rule 11.02 of the Family Law Rules the document is therefore of no effect. Accordingly I have not had regard to the document in the preparation of these reasons for judgment.
Facts
In the absence of an appearance by the respondents, the evidence adduced by the wife was not challenged. The evidence was plausible and I accept the wife’s evidence as being accurate and truthful. Based on that evidence the following background facts are relevant to the consideration of this matter.
The wife was born in 1974 and is currently 43 years of age. The wife currently works as a consultant. The husband was born 1970 and is currently 47 years of age. The husband is a healthcare professional. Between approximately 2005 and 2012 the parties ran a business.
The husband is a specialist. The husband advertises his speciality on the internet. The wife is a consultant, currently employed with the Company DD. The wife currently works full time.
The husband and the wife commenced cohabitation in late 1994 or early 1995 and were married in 1996. The husband vacated the former matrimonial home on about 9 September 2013.
There are two children of the marriage:
a)E, born in 2001. E is currently 16 years of age; and
b)S, born in 2003. S is currently 14 years of age.
E attends H School and as at the date of the hearing was in Year 10. S recently commenced attending FF School and as at the date of the hearing was in Year 8.
In or about 2006, the parties purchased the former matrimonial home at B Street, Suburb C.
In 2013, the husband completed a certificate course at GG University.
For the last financial year prior to the parties’ separation, the financial year ended 30 June 2013, the husband’s taxable income was $189,007.
As noted, in about the first week of September 2013 the parties separated. On 29 October 2013 the wife filed an Initiating Application in the Family Court.
In December 2013, the wife obtained full time employment.
On 17 January 2014, the husband sent an email to his financial advisers, the HH Group advising;
I need the tax return to be as low as possible for my custody/divorced [sic] case…
On 7 March 2014, husband’s parents sought to intervene in the proceedings and were subsequently joined as parties.
On 20 June 2014, the Child Support Agency commenced garnishing the husband’s wages payable by his employer II Pty Ltd. Subsequently, the husband resigned from II Pty Ltd on or about 12 July 2014.
On 18 July 2014, the husband sent a further email to his financial advisers HH Group in the course of which he stated “we need to do my tax return as soon as possible to lower csa payments. So far it appears that taxable income below [sic] 100K.”
On 21 September 2016, the Husband became bankrupt and Mr Sellers of Sellers Accountants was appointed as Trustee pursuant to Section 156A of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”).
On 11 April 2017, a Family Report was issued by Ms JJ. The Husband declined to participate in the assessment for the report.
On 10 May 2017, orders were made formally joining the Trustee for the Bankrupt estate of the husband as a party to these proceedings in respect to property issues.
E and S live with the wife and currently do not spend any time with the husband. The wife’s parents and sisters provide assistance to the wife in caring for the children, as required. The Husband last spent time with the children on 14 August 2017.
The husband is currently in arrears in respect of child support in the amount of $210,092.14. Further details are set out below.
As at the date of hearing the husband was in arrears in respect of spouse maintenance orders in the amount of $48,419.90.
The child support assessment, for the period 1 January 2017 to 31 December 2017, provides the child support payable by the husband to be $639.07 per week. As at the date of the hearing that was not being paid.
There is presently a Departure Prohibition Order in place, preventing the husband from leaving Australia as a result of non-payment of child support.
The wife is currently in a relationship with Mr KK. She does not reside with him and the wife and Mr KK are financially independent.
Parenting arrangements prior to final hearing
There were no parenting orders in place prior to the final hearing. The children were living with the wife and are spending time with the husband as and when the husband requests such time.
Application
This matter has been dealt with on an undefended basis. Accordingly, I only consider the wife’s application. The minute of orders sought by the wife are set out in Exhibit 14W as follows:
Property
1.That within 28 days of the date of these orders, the Husband or if he remains subject to the existing bankruptcy, the Trustee and the Wife, shall do all acts and pay all such monies necessary to cause the following to occur simultaneously:
1.1. Transfer of the property situated at and known as [B Street, Suburb C] in the state of New South Wales (“the [Suburb C] property”) to the sole name of the Wife at the Wife's cost, such that the Husband, or if he remains subject to the existing bankruptcy, the Trustee , shall sign all documents presented to him by the Wife and the Wife shall do all other things necessary for such transfer to occur; and
1.2. Discharge of all mortgages and encumbrances including the Trustee’s caveat presently registered over the [Suburb C] property at the cost of the Wife, such that the Husband, or if he remains subject to the existing bankruptcy, the Trustee, shall sign all documents presented to him by the Wife and the Wife shall do all other things necessary to cause such discharge; and
AND the Wife shall thereafter indemnify and keep indemnified the Husband in respect of all liabilities in relation to the property, whenever and however arising.
2. That within 28 days the 2nd and 3rd Respondents remove their caveats on title to [1 W Street, Suburb V] and [2 W Street, Suburb V].
3. That within 28 days the Trustee transfer to the Wife, the interest of the Husband, vested in his Trustee, in [1 W Street Suburb V] (folio identifier …) and [2 W Street Suburb V] (folio identifier …) (“the [Suburb V] Units”).
4. That subject to the Orders above, that wife [sic] shall retain sole legal and beneficial ownership of:
4.1. All personal property in her respective possession or contro
4.2. All real property in her name;; [sic]
4.3. All shares, debentures, units in unit trust, accounts held at any bank, building society, credit union or financial institution standing in her sole name respectively; and
4.4. Any interest in any life insurance policy or superannuation policy fund standing in her sole name respectively.
5. That the Wife shall indemnity and keep indemnified the Husband in respect of:
5.1. The $100,000 owed by the parties to the Wife's parents;
5.2. [E's] outstanding school fees; and
5.3. [S's] outstanding school fees.
6. That the Wife shall remain solely liable for all debts standing in her sole name and the Wife shall indemnify, keep indemnified and hold harmless the Husband from any liability in relation thereto howsoever arising.
7. That the Husband shall remain solely liable for all debts standing in his sole name and the Husband shall indemnify, keep indemnified and hold harmless the Wife from any liability in relation thereto howsoever arising.
8. That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these Orders, the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
Parenting
Parental Responsibility
9. That the Mother have sole parental responsibility for:
9.1. [E], born … 2001; and
9.2. [S], born … 2003.
(herein collectively referred to as 'the children'.)
Lives with / spends time with
10. That the children live with the Mother.
11. That the children spend time with the Father as agreed between the parties in writing. That:
11.1. The Father be at liberty to telephone the children at any reasonable time when they are with the Mother; and
11.2. Each of the children be at liberty to telephone at the Father at any reasonable time.
12. That [E's] Passport presently held by the Family Court of Australia be released to the Mother forthwith.
13. Pursuant to section 11(4)(b) of the Australian Passports Act 2005 (Cth) (or any Act replacing that Act and making like or similar provision) the Mother be permitted to apply for and have issued to her an Australian passport for each of the children, or renew any such passport in the absence of consent or otherwise of the Father and the Mother thereafter retain the children's passports, AND IT IS REQUESTED that the Department of Foreign Affairs and Trade provide whatever assistance is necessary in relation to the issue or renewal of any such passport.
14. That pursuant to section 65Y(2) of the Family Law Act, the Mother be permitted to travel interstate or overseas with the children, provided that she gives the Father written notice of the proposed travel at least thirty (30) days in advance of any travel commencing, including providing details of where the children will be travelling to, details of flights, accommodation, contact telephone numbers and the like.
15. That the Mother retains the children's passports.
General
16. That both parents are restrained from:
16.1. Denigrating the other parent or members of the other parent's family or in the presence or hearing of the children.
16.2. Discussing these proceedings, including any matters associated with the proceedings or the outcome or consequences of the proceedings, with the children, in the presence or hearing of the children, or showing the children any document connected with these proceedings, including telling the children that the parent wants more time with the child.
16.3. Passing information or messages through the children to the other party.
17. That both parents do all things necessary and sign all documents to ensure that any medical or allied health professional attended on by the children is authorised to provide both parents with information about issues relating to the children's health and treatment.
18. That both parents shall immediately notify the other party of any significant illness or medical condition or injury that would involve the children requiring medical intervention.
19. That each party shall do all things necessary including providing all consents to give effect to these orders in the time periods prescribed in these orders.
20. That in the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these orders, then the Registrar of the Court shall be appointed pursuant to Section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.
Costs
21. That the Father pay the Mother's costs of and incidental to this application on an indemnity basis.
(Original emphasis)
Trustee’s application
The Trustee made the following submissions in his Outline of Case Document:
The intervenor acknowledges that the Family Court can, under section 79 of the Family Law Act, alter the interest of the Intervenor in vested bankruptcy property if it is just and equitable to do so.
The intervenor is unfunded and, in those circumstances:
a) is not in a position to make submissions to the Family Court;
b) neither consents nor opposes the application by the Applicant;
c) is prepared to abide by the outcome of the proceedings other than in respect of costs (to the extent that any costs are sought against the intervenor or the bankrupt estate); and
d) wishes to be excused from attending the hearing.
Evidence and witnesses
The wife relied upon the following documents:
a)Case Outline Document provided 6 November 2017;
b)Amended Minute of Order received 7 November 2017;
c)Further Amended Minute of Order provided 14 November 2017 (exhibit 14W);
d)Financial Questionnaire filed 26 May 2016;
e)Parenting Questionnaire filed 26 May 2016;
f)Case information Document filed 14 June 2016;
g)Undertaking as to Disclosure filed 14 June 2016;
h)Schedule of Debt filed 21 September 2017;
i)Updated Schedule of Debt (Exhibit 3W);
j)Proof of Evidence (Exhibit 3W);
k)Affidavit of Ms Kanelos filed 18 October 2017;
l)Affidavit of Ms LL filed 24 October 2017;
m)Affidavit of Ms MM filed 24 October 2017;
n)Financial Statement filed 18 October 2017;
o)Family Report of Ms JJ dated 11 April 2017;
p)Report of Mr NN (valuer) dated 2 November 2017; and
q)Report of Mr OO (valuer) dated 24 April 2015.
The Trustee relied upon an affidavit of Mr Sellers dated 7 November 2017. The purpose of that affidavit was to assist the court by setting out the position of the bankrupt estate.
parenting matters
The Law - Concepts and Principles
The relevant statutory provisions applicable to proceedings in relation to children are set out in Part VII of the Family Law Act 1975 (Cth) (“Family Law Act”). Section 60B sets out the objects and principles of Part VII. These are to ensure that the best interests of children are met by:
(a) ensuring that children have the benefit of both of their parents having a meaningful involvement in their lives, to the maximum extent consistent with the best interests of the child; and
(b) protecting children from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence; and
(c) ensuring that children receive adequate and proper parenting to help them achieve their full potential; and
(d) ensuring that parents fulfil their duties, and meet their responsibilities, concerning the care, welfare and development of their children.
The presumption of equal shared parental responsibility
Section 61DA (1) of the Family Law Act provides that the Court must apply a presumption that “it is in the best interests of the child for the child’s parents to have equal shared parental responsibility for the child”. Section 61DA(4) provides that the presumption “may be rebutted by evidence that satisfies the court that it would not be in the best interests of the child for the child’s parents to have equal shared parental responsibility for the child”.
I respectfully agree with and adopt the submission of Ms E, counsel for the wife, that:
The allocation of parental responsibility is not reward for good parenting or punishment for bad parenting; it is a decision to be taken only having regard to the way in which the allocation of parental responsibility might impact on the children.
In her recommendations, the Family Consultant raised the issue as to whether the level and nature of communication between the parties are such that it would be in the interests of the children for there to be an order for equal shared parental responsibility. For reasons that I explain I am satisfied that such an order would not be in the children’s best interests.
The wife was unchallenged in her evidence that she has had difficulty in communicating with the husband with respect to the children and on occasions when she has attempted to do so he has responded inappropriately.
An example of the husband’s inappropriate response to the wife’s legitimate concerns is set out at paragraph 162 of the wife’s affidavit. In that paragraph the wife attests to the husband taking the children to Brisbane without her consent. The wife set out the terms of a text exchange between the parties as follows:
I sent a text message to [Mr Kanelos] asking: “Where will [E] be so I can pick her up?”
[Mr Kanelos] replied, “You can pick her up in Queensland”.
I sent a further text message asking, “where is she?”
[Mr Kanelos] replied, “Brisbane.”
I asked, “What time are you returning the kids, [Mr Kanelos]?”
[Mr Kanelos] replied, “Wednesday night.”
I asked, “What about their schooling?”
“They have school [Mr Kanelos]. This is totally irresponsible as a father.”
[Mr Kanelos] replied, “I’ll sort it. End of conversation.”
Further, since approximately June 2017, the husband has essentially disengaged from spending time with his children, being involved in their education or being involved in their sporting and extra-curricular activities.
In one instance where the husband was involved in a decision as to whether the party’s daughter would travel overseas on a school excursion the husband played a particularly unhelpful role. I will refer to that incident in greater detail below.
The wife has been and continues to be the primary carer of the children and is the parent who attends to their needs and is solely responsible for providing for their physical and emotional support. As will be discussed she is also the parent who is involved in their education and sporting and extra-curricular activities.
Sub-sections 65DAC(2) and (3) of the Family Law Act provide that, in the event of an order being made for the parents to have shared parental responsibility, then, in circumstances where that responsibility involves making a decision about a major long-term issue in relation to the child:
(2) The order is taken to require the decision to be made jointly by those persons.
…
(3) The order is taken to require each of those persons:
(i)to consult the other person in relation to the decision to be made about that issue; and
(ii)to make a genuine effort to come to a joint decision about that issue.
As a result of the matters to which I have referred, I am of the opinion that the parents lack that capacity to make decisions in accordance with section 65DAC. Accordingly, in all the circumstances to which I have referred, I am satisfied that the presumption of equal shared parental responsibility should not be applied.
In those circumstances, it is unnecessary to apply 65DAA of the Family Law Act and the Court is not obliged to consider whether orders should be made for the children to spend equal or substantial and significant time with the husband. As will be discussed, the orders will, however, be informed by the considerations set out in 60CC of the Family Law Act as to what orders are in the best interests of the children.
As proposed by the wife, the orders will, however, include a general positive injunction to require that, if the children are treated by a medical or allied health professional, information concerning that treatment is made freely available to both parents. Similarly, it is appropriate for the orders to require each of the parties to notify the other party of a significant illness or medical condition or injury suffered by the children if, unfortunately, that was to occur when the children are in the care of either parent.
Paramount consideration in making parenting orders
Section 60CA of the Family Law Act provides that, in deciding whether to make a particular parenting order in relation to the child, the Court must regard the best interests of the child as the paramount consideration. This is also confirmed in section 65DAA.
Section 60CC of the Family Law Act sets out the list of matters that the Court must consider in determining what is in the child’s best interests. The primary considerations are set out in section 60CC(2). Those considerations are:
(a) the benefit to the child of having a meaningful relationship with both of the child’s parents; and
(b) the need to protect the child from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence.
Additional Considerations
Section 60CC(3) sets out additional considerations in determining what is in the child’s best interests. At this point it is sufficient to note that, broadly, those considerations deal with the following matters:
· Issues relating to the children – their views, level of maturity, culture and relationships;
· Issues relating to the parents – decision making, time spent with children, fulfilled obligations, attitude, capacity and exercise of responsibility;
· Issues of family violence;
· Effect of change;
· The practical difficulty of implementation of orders;
· Avoiding further proceedings; and
· Other relevant matters.
Applying Section 60CC Considerations
In this matter, to ensure that all section 60CC considerations are taken into account it is appropriate to address the additional considerations set out in section 60CC(3) prior to addressing the primary considerations set out in section 60CC(2).
Issues Relating to the Children - Their Views, Level of Maturity, Culture And Relationships
Any views expressed by the child
Section 60CC(3)(a) requires the Court to have regard to any views expressed by the child and any factors (such as the child’s maturity or level of understanding) that the Court thinks are relevant to the weight it should give to the child’s views.
Despite considerable periods when the children have not spent time with their father, the wife acknowledged that the children continue to have “an affection for their father and a desire to spend time with him.”[2]
[2] Transcript 13 November 2018, p.12
The children both have mobile phones and ready access to a computer. I am satisfied that they communicate with their father as they wish.
The views of the children are referred to in the Family Report. The wife acknowledged that S wishes to spend more time with his father. In fact, S wishes to spend more time with his father than his father is currently prepared to spend with him.
The Family Report notes that E regards her mother’s household as being her stable base and, at the time of the interview for the report, she expressed some reservations at the possibility of having a second dinner with her father during the week. I accept that E’s attitude was substantially due to the fact that, at nearly 16 years of age, she was engaged in a number of other activities rather than an election on her part as to whether she preferred to spend time with her mother or father.
As will be discussed below, the wife seeks orders that the children spend time with their father as agreed between the parties in writing. At the time she was interviewed for the purpose of preparation of the family report, E expressed concern with that outcome. At paragraph 22 of the family report E’s views are recorded as follows:
[E] said that she does not think it appropriate to have orders that she live and spend time with her parents ‘in accordance with her wishes’ because she would find it difficult to leave each parent to go to her other parent. She describes herself as being ‘sympathetic’ and ‘easily guilt tripped’, and seems to worry that each of her parents would make her feel guilty if it were up to her to decide when she should spend time with each of them on a fortnightly basis.
The nature of the relationship of the child with each of the child’s parents and other persons
Relationship with parents
Section 60CC(3)(b) requires the Court to consider the nature of the relationship of the child with each of the child’s parents and other persons, including any grandparent or other relative of the child.
The wife has been the children’s primary carer since their births. I accept the submission of counsel for the wife that the children clearly have a close relationship with their mother and that she has been a support to them in the period post separation. I also accept that considerable support has been provided by the wife’s extended family.
The children also have a good relationship with their father. However, as noted by the Family Consultant, particularly in the case of E, that relationship is not as emotionally close as it is with their mother.
As noted above, there are currently no parenting orders in place. Other than for a period of time that I will set out below, from the time of the parties separation until June 2017, the children would usually spend time with the husband during one weekend each fortnight.
Between August and October 2015, the parties’ son, S lived with the wife and the husband on a week-about basis. That arrangement proved to be unsatisfactory with S having 20 days off school in that two month period. The arrangement was terminated at the request of the husband.
In the period from late November 2015 until April 2016, the husband did not spend time with the children and he has not spent time with the children since 14 August 2017.
The wife’s unchallenged evidence is that “both children have a close relationship with their maternal grandparents, the maternal aunts and their respective families. The children spend time with these family members at family functions on weekends and the like.”
The maturity, sex, lifestyle and background of the child and either of the child’s parents
Section 60CC(3)(g) requires the Court to consider the maturity, sex, lifestyle and background (including lifestyle, culture and traditions) of the child and either of the child’s parents and any other characteristics of the child that the Court thinks relevant.
E attends H School and is currently in Year 11. S currently attends FF School and is currently in Year 9.
Both children are at an age and level of maturity such that their views should be carefully considered by their parents in reaching agreement as to when the children should spend time with the husband.
I am satisfied that the wife has, in the past, attempted to facilitate the children spending time with the husband and I accept the submission of Ms E on behalf of the wife, that she would, in the future, continue to do so.
Further, given the age and level of maturity of the children and their familiarity with and use of electronic communication, it is appropriate for an order to be made ensuring that the children continue to have the right of liberal communication with their father.
The culture of the child if the child is Aboriginal or a Torres Strait islander
Section 60CC(3)(h) requires the Court to consider issues pertaining to the culture of the child if the child is Aboriginal or Torres Strait Islander and is not a relevant consideration in this matter.
issues relating to the parents – decision making, time spent with children, fulfilled obligations, attitude, capacity and exercise of responsibility
Long term decision making, time and communication
Section 60CC(3)(c) requires the Court to consider the extent to which each of the child’s parents has taken, or failed to take, the opportunity to participate in making decisions about major long-term issues in relation to the child, to spend time with the child, and to communicate with the child.
Immediately after each of the children’s birth the wife took maternity leave. During this period the wife was primarily responsible for E and S's day to daycare. This included feeding, bathing, playing with the children, reading and attending to their early education.
After the wife returned to work her parents assisted her with child caring responsibilities.
After the children turned two years of age they attended childcare two days per week. The wife acknowledged that the husband would assist her with child caring responsibilities as his work and study commitments permitted.
However, the wife’s unchallenged evidence was that the husband “rarely attended any of the children's schooling and extracurricular activities, this included [E's] music concerts, parent teacher interviews and [S’s] sporting matches.”
The children now live with the wife and currently do not spend any time with the husband. The husband has not availed himself of the opportunities that have been available to him to participate in making decisions about major long-term issues in relation to the children, to spend time with the children, and to communicate with the children.
This is shown by the following text message exchange.
In a text message sent to the wife in November 2015 the husband stated that he would not see the children for three to six months.
In a text message sent to the husband on December 2015 the mother responded:
The kids are on holidays now. They really want to see you. Do you have anything planned for tomorrow or are you okay to have them from tomorrow?
The husband responded:
I told you. Can’t see them for 3-6 months. I can talk to them over the phone but somehow something tells me that is unlikely. Regardless, you can tell them any reason you wish. You’ve clearly become the master of false statements.
In March 2016, the husband sent a text message to the wife indicating he would like to see the children. Arrangements were then made for the children to spend regular time with the husband from April 2016 and that arrangement continued until June of 2017.
However, even in respect to the period from April 2016 until June 2017 the husband did not spend time with the children on significant occasions. At paragraph 169 to 172 of the wife’s affidavit, she attests that the husband didn’t attend any school events, concerts, parent teachers, did not see S for his birthday in 2017 and he did not see E for her birthday in 2017.
The husband was due to spend time with the children on 12 August 2017 however that did not occur as result of the husband advising that he was “sick.” Further, the children did not spend time with their father on Father’s Day.
The parent’s obligations to maintain the child
Section 60CC(3)(ca) requires the Court to consider the extent to which each of the child’s parents has fulfilled, or failed to fulfil, the parent’s obligations to maintain the child.
The father has failed to fulfil his obligation to maintain his children.
As at the date of the hearing the child support assessment issued by the Child Support Agency applied in respect to the period 1 January to 31 December 2017. Pursuant to that assessment the husband is required to pay child support in the sum of $639.07 per week. Since 3 April 2014 the wife has received the total amount of just $2100 from the husband. As at the date of hearing the husband was in arrears in respect of child support in the amount of $210,092.14. As a result, there is presently a Departure Prohibition Order in place, preventing the husband from leaving Australia.
The husband has also failed to pay the children’s school fees in the period subsequent to 28 May 2014.
The wife has lacked the financial resources to sustain those school fees in the absence of assistance from the husband. As result the parties son, S, was requested to leave I School and, after a period at PP School he now attends FF School.
On 28 May 2014, the husband sent an email to the Son’s school which read:
Dear Accounts Receivable,
Thank you for the fees.
[Ms Kanelos] is now responsible for the school fees as I am contributing through child support.
[Ms Kanelos], can you attend to these fees.
As noted, the husband has not fulfilled his child support obligation.
The capacity of each of the child's parents
Section 60CC(3)(f) requires the Court to consider the capacity of each of the child's parents, and any other person, to provide for the needs of the child, including emotional and intellectual needs.
The wife has been the children’s primary carer since birth. She has demonstrated her capacity to provide for the children’s needs including their emotional and intellectual needs. This includes in trying circumstances where, since separation, she has received a negligible amount in the way of financial support from the husband.
The wife attests to having a close and loving relationship with E and that they enjoy listening to and composing music together, walking their dog and seeing movies together.
It is clear that the wife is attentive to E’s educational and intellectual needs. In that respect, in her trial affidavit, the wife attests:
[E] currently attends [H School] and is in Year 10. She is on a partial music scholarship at [H School] and currently they have agreed not to enforce payment of her outstanding school fees. There is currently approximately $10,000 owing in respect of those school fees.
I am informed by [E's] teachers , and I believe, that [E] is continuing to do well at school. In 2016 [E] was awarded for her academic progress.
[E] is interested in music and languages. She plays and composes music and spends time listening to music. She speaks French and likes to go to the French film festivals. She likes drawing, going to galleries and the like. She reads Manga and plays video games. She plays with our 2 dogs regularly. She often goes to the movies and to the beach with her friends. She also has friends stay over at our home and she sometimes stays over at her friends [sic] home.
[E] has [music] lessons, and is part of the school choir, [music] ensemble and [school] band, which are all arranged through her school. On Friday mornings, before school, [E] attends [music] ensemble practice in [Suburb EE]. On Friday afternoons, [E] participates on [sic] [school] band at her school.
Unfortunately S’s education has been disrupted as a result of the inability of the wife to attend to payment of his school fees in circumstances where she has received very little assistance from the husband. As a result, it was necessary for S to leave I School after Term 2 in 2015. At I School, S was the captain of the Under 11's rugby team and was on the Student Representative Council. He was in both the school band. He was also in the honours stream for Maths and in stream one for English.
After leaving I School, S completed year 6 at FF Public School.
From the beginning of 2016 S attended PP School and the wife states that he was doing well particularly in Mathematics, PDHPE and Science. Shortly prior to the hearing, S commenced attending FF School.
It is clear that the wife is attentive to S’s needs including his emotional and intellectual needs. In that respect the wife relevantly attests that:
[S] likes playing soccer and regularly plays soccer with five or so other boys who live in our street. [S] likes playing with computers and playing computer games. Like [E], [S] also has friends stay over at our home and he sometimes stays over at his friend's homes. … During the week, [S] and I "kick around" at the local park.
It was noted, in the course of these proceedings, that the husband states that he has had a recurrent melancholic depression which causes him not to take joy in life. There is no indication, however, that the husband’s mental health adversely impacts upon his parenting capacity.
I do have serious concerns regarding the husband’s capacity to provide for the children’s needs. In that respect, in interviews conducted in February 2017 the children advised the Family Consultant, who has provided a report in this matter, that on those more recent occasions when they stayed with their father, the children would sleep on the couch in his apartment. They stated that the husband advised them that he cannot afford to buy them beds.
Attitude and parental responsibility
Section 60CC(3)(i) requires the Court to consider the attitude to the child, and parental responsibilities, by each of the child’s parents.
In late August 2015, without the wife’s consent, during a period that the son was spending week about time with him, the husband removed the daughter from the wife’s care and took both children to Brisbane for a week. The husband did not advise the wife or the children's schools as to where they were or when they would return.
Further, as part of E's education at H School, she was provided with an opportunity to travel overseas from 2 October 2016 to 13 October 2016.
On 24 August 2016, orders were made for the husband to do all acts and things and sign all documents necessary for E to undertake that travel.
In the period subsequent to those orders being made and the date of the child travelling, the husband made representations to the school objecting to the child travelling. This is confirmed in a letter sent on 20 September 2016 by H School to the husband which, relevantly noted:
Dear [Mr Kanelos],
I have received your letter of 18 September 2016 in which you inform us of your strong objection to E's desire to travel [overseas] as part of our Year 9 Community Service Program ...
As a result of the husband’s failure to engage in these proceedings he was not questioned on the reason for his objection or, as raised by counsel for the wife, whether that objection was related to the fact that he is himself precluded from travelling overseas as a result of failure to pay child support. Accordingly I do not draw an inference to that effect. Nevertheless the husband’s conduct was contrary to the orders made by the court which permitted the child to travel. The husband’s conduct was irresponsible. Regrettably E was unable to attend the trip overseas.
I also have concerns that there is evidence the husband has inappropriately drawn the children into his disquiet about being involved in these proceedings. In that respect, at paragraph 18 of the Child Responsive Program Memorandum it is noted that the husband agreed that he sent a text message to his son S saying “see you at family gold-digger court.”
As noted, the husband declined to participate in these proceedings and was not the subject of cross examination. However, a reasonable inference of the husband’s text message to S was to convey the imputation that his mother was a “gold digger.”
On 11 April 2017, a Family Report was issued by Ms JJ. The husband declined to participate in the assessment for that report.
The above incidents reflect poorly on the husband’s attitude to his parental responsibility.
I am satisfied that both during and subsequent to the parties marriage, in addition to working, the wife was and is responsible for arranging for the children's attendance at their various extra-curricular activities, social events and school functions.
I am also satisfied that the wife has been the parent who has and continues to care for the children at times that they are unwell.
Issues of family violence
Any family violence involving a child or a member of the child’s family
Section 60CC(3)(j) requires the Court to consider any family violence involving a child or a member of the child’s family.
At paragraph 154 of her affidavit, the wife attests that, during the course of the parties relationship that the husband engaged in acts that, if established, would constitute family violence as defined in section 4AB of the Act. In that respect the wife stated:
I say that [Mr Kanelos] was controlling throughout our relationship, both financially and mentally. I asked [Mr Kanelos] before I made any substantial purchases from the joint account. He would call me names, for example “Fat”, “ugly”, “prostitute” and “dumb”. He attempted to control my food intake, told me to follow a special nutrition plan during our pregnancy, would question my whereabouts or daily activities and often say that I was unable to spend time with my friends and family.
In this matter, I have determined that, due to the fact that the husband has disengaged, from spending time with his children and the wife plays the central role in the children’s lives that the wife should have sole parental responsibility in respect to the children.
Further, the wife does not contend that the children are at risk of psychological or physical harm in the care of the husband.
In those circumstances, it is unnecessary for me to make any findings in respect of the wife’s allegations that the husband has engaged in conduct that, if established, could constitute family violence as defined in the Act. Indeed, appropriately in my view, in the circumstances of this case, counsel for the wife did not ask the court to make any findings in respect to the occurrence of family violence.
Whether any family violence order has or continues to apply
Section 60CC(3)(k) requires the Court to consider any family violence order that applies or has applied involving the child or a member of the child’s family and if applicable, taking into account a number of stated matters.
This consideration is not relevant.
Effect of change
Section 60CC(3)(d) requires the Court to consider the likely effect of any changes in the child’s circumstances, including the likely effect on the child of any separation from either of his or her parents, any other child or other person (including any grandparent or other relative) with whom the child has been living.
The children currently reside with the wife in the former matrimonial home and spend time with the husband when it is arranged. The orders sought by the wife do not change that situation.
Practical difficulty of implementation
Section 60CC(3)(e) requires the Court to consider the practical difficulty and expense of a child spending time with and communicating with a parent and whether that will substantially affect the child’s right to maintain personal relations and direct contact with both parents on a regular basis.
As noted, the children reside in the former matrimonial home with the wife. The husband resides in Suburb QQ.
S is now attending FF School which is located in close proximity to the former matrimonial home.
As the parents reside in relatively close proximity there are no particular practical difficulties in implementing the orders as proposed by the wife.
Avoiding further proceedings
Section 60CC(3)(l) requires the Court to consider whether it would be preferable to make the order that would be least likely to lead to the institution of further proceedings in relation to the child.
This consideration is not relevant.
Other relevant matters
Section 60CC(3)(m) requires the Court to consider any other facts or circumstances the Court considers relevant.
In circumstances where the husband has not availed himself of the opportunity to spend time with the children including for several months in late 2015 and early 2016 and in the period since June 2017, the wife seeks orders for the children to spend time with the husband as agreed between the parties in writing.
I am satisfied that the wife has attempted to encourage the husband to spend time with the children and the reason that they have not done so is as a result of decisions made by the husband.
Having regard to the text exchange set out in paragraph 262 of the wife’s affidavit, to which I have referred earlier, I am satisfied that the wife would encourage the children and the husband to spend time together.
I note that E expressed concern about being placed in a situation where she was required to make an election as to whether she wished to spend time with her husband and, having regard to those views I do not propose to make such an order. Nevertheless, It would be a futility to make orders requiring the children to spend time with the husband in circumstances where the husband did not want that to occur.
Accordingly, in the circumstances of this case, the orders proposed by the wife are appropriate in so far as they would relieve the children of the burden of having to choose when they spend time with the husband but would provide sufficient flexibility such that they only spend time with the husband at those times that the husband wishes for that to occur.
As noted above, an unfortunate event occurred when the husband declined to provide permission for E to travel overseas on a school excursion. To avoid a similar episode occurring in the future I accept the validity of the submission made on behalf of the wife that the wife should be permitted to obtain a passport for her children with herself being the sole signatory and that she determine when it is appropriate for the children to travel overseas. In making that order, as sought by the wife, I note that there has been no suggestion that the wife is a flight risk in terms of seeking to permanently remove the children from the jurisdiction.
Primary considerations
Meaningful relationship
In Sigley v Evor (2011) 44 Fam LR 439 , the Full Court confirmed that the concept of a meaningful relationship is one which is “important, significant and valuable to the child”[3].
[3] Citing Mazorski & Albright (2007) 37 Fam LR 518at [26].
The wife acknowledged that the husband has much to offer the children and there is no issue in these proceedings that the children would benefit from having a meaningful relationship with both of their parents.
Despite the extended periods of time that have occurred when the husband has not spent time with the children, the orders proposed by the wife will facilitate the children spending face-to-face time with the husband when the husband is prepared to facilitate that occurring.
The orders will also provide for the children to have liberal telephone communication with the husband.
The children have both expressed a desire to spend time with their father and it is hoped that the opportunity will be taken up by their father.
Unacceptable risk
In this matter, I have expressed concern that the husband has, on occasions, inappropriately drawn the children into issues relating to the dispute between himself and the wife and these proceedings. While that is regrettable, the husband’s conduct does not go so far as to create a risk of the children facing psychological harm as result of his conduct. Indeed, the Family Consultant notes that, despite being drawn into their parent’s conflict, both children appear happy, well-adjusted, and to have a good relationship with each parent.
There is no suggestion that the children are at risk of physical harm and or neglect when they spend time with either parent.
Summary and conclusion in respect to parenting order.
For the reasons set out above I am satisfied that the parenting orders sought by the wife are appropriate.
Property Matters
The Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth)
The Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth) (No. 20 of 2005) (“the 2005 Amendment Act”) enhanced the powers of the Court in respect to proceedings in which a party to a marriage was bankrupt or had become bankrupt after proceedings were commenced. Most relevantly, section 79(1) of the Family Law Act was amended to include a paragraph (b) which empowers the Court to make an order altering the interests of the Trustee in Bankruptcy in the vested bankruptcy property. A new paragraph (d)(ii) was also included to empower the Court to make an order against a Trustee in relation to the settlement or transfer of property. Incorporating those amendments, section 79(1) now provides:
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d)an order requiring:
(i)either or both of the parties to the marriage; or
(ii)the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
Significantly, the 2005 Amendment Act also included a new sub-section 75(2)(ha) which requires the Court to take into account “the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant”.
The obligation to consider the effect of any proposed order on creditors is relevant to property proceedings. Paragraph 52 of the Revised Explanatory Memorandum to the 2005 Amendment Act summarised the position in the following terms:
By virtue of paragraph 79(4)(e) the matters referred to in subsection 75(2) are also matters that the court is required to take into account, so far as they are relevant, in considering what property adjustment order should be made under section 79. The matters mentioned in paragraph 75(2)(ha) will therefore become matters to be taken into account in family property proceedings, so far as those matters are relevant to the property proceedings.[4]
[4] Revised Explanatory Memorandum, Bankruptcy and Family Law Legislation Amendment Bill 2005 (Cth).
The Trustee represents the interests of creditors of the husband. As noted by the learned author, Anthony Dickey QC:
There is no provision in the Family Law Act 1975, or indeed the Bankruptcy Act 1966 (Cth.), which prescribes the way in which the Court is to take into account the competing interests of the non-bankrupt spouse and the bankrupt’s creditors. As a consequence in proceedings under s. 79, the court must simply take into account the ordinary considerations of s. 79(4), along with the requirements of justice and equity in subs.(2).[5]
(footnotes omitted)
[5] Anthony Dickey QC, Family Law (Lawbook Co, 6th ed, 2014) 44.810.
A point of distinction, in circumstances where a party to the marriage has become bankrupt, is the fact that sub-section 79(1)(b) empowers the Court to make an order altering the interests of the Official Trustee in Bankruptcy “…in the vested bankruptcy property.” This is in contrast to the Court’s general power, where bankruptcy is not an issue, to alter the interests of the parties in the property of the marriage. The jurisdiction granted by the 2005 Amendment Act therefore enables a Trustee to join proceedings for the purpose of resisting claims by a non-bankrupt spouse to vested bankruptcy property. The legislation does not, however, empower the Trustee to utilise the provisions of the Family Law Act to enlarge the vested bankruptcy property available to the bankrupt spouse’s creditors.
With the differences noted above, the Court’s task, in these proceedings, is nonetheless to apply the ordinary considerations set out in section 79(4) of the Family Law Act.
Adjustment of Property
Subject to sections 79(1) and 79(2) the Family Law Act empowers the Court, in property proceedings, to “make such order as it considers appropriate”.
Section 79(2) requires the Court to be satisfied that “in all the circumstances, it is just and equitable to make the order.”
In exercising its discretion, the Court must take into account the matters set out in section 79(4). Section 79(4) is divided into two limbs. The first limb is in respect to those matters set out in paragraphs (a) to (c), which deal with what are commonly known as the “contribution” factors. Contributions can, in turn, be direct or indirect, financial or non-financial contributions to the matrimonial property. The second limb is in respect to those matters set out in paragraphs (d) to (g), which primarily relate to the future needs of each of the parties but can include any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account.
As noted, section 79(4) applies once the Court has determined that it is just and equitable to make an order adjusting the matrimonial property. The section is a legislative guide to assist the Court in considering how its broad discretion should be exercised to make appropriate orders to adjust the matrimonial property. This is to be contrasted, for instance, with section 75(1) which provides that in exercising jurisdiction in respect to spousal maintenance the Court “shall take into account only the matters referred to in subsection (2).”[6] in other words, section 79(4) sets out a non-exhaustive list of matters to be considered in order to do justice between the parties. Those matters will be discussed in detail below.
[6] Emphasis added.
In considering those matters relevant to the second limb, section 79(4)(e) requires the Court to have regard to those matters set out in section 75(2) insofar as they may be relevant. Those matters that are considered to be relevant to the facts of this matter are discussed in detail below.
Approach to proceedings under section 79
For reasons which I have set out previously in Stoddard & Glover [2016] FamCA 674 at paragraphs 79 to 87, I intend to take the following approach to these proceedings:
·Assess whether or not it is just and equitable to make an order, as is required by section 79(2).
·Identify the parties’ existing legal and equitable interests in property.
·If it is just and equitable to make an order, undertake an assessment of the parties’ direct and indirect, financial and non-financial, contributions according to section 79(4).
·Undertake a further assessment of each of the parties’ circumstances, including their future needs by applying section 79(4) including, as required by section 79(4)(e), having regard to those matters set out in section 75(2) insofar as they may be relevant.
·After making the above assessments according to sections 79(4) and 75(2), take a “holistic” overview by ensuring that any orders for the alteration of property interests are appropriate, just and equitable.
Further, in assessing the parties’ contributions under section 79 of the Act, I am also guided by Petruski & Balewa [2013] FamCAFC 15 where the Full Court said at paragraph 49:
The task of assessing contributions under s 79 of the Act is an holistic one; what is required is to evaluate the extent of the contributions of all types made by each of the parties in the context of their particular relationship (Dickons & Dickons [2012] FamCAFC 154). As was also said by the Full Court in Lovine & Connor and Anor [2012] FamCAFC 168, at paragraphs 40 and 41 such an evaluation “inevitably involves value judgments and matters of impression”, and accordingly it cannot be treated as “a mathematical exercise”
Impact of inadequate disclosure
An important aspect of Family Law proceedings is the necessity to comply with the obligation of disclosure. That obligation exists both at common law and pursuant to statute.
In Briese and Briese (1986) FLC 91-713 Smithers J applied the House of Lords decision in Livesey and Jenkins (1985) 1 All ER 106 in determining that:
In financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that the full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion.
(Emphasis added)
His Honour further stated:
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesy v Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need to make full and frank disclosure by the parties”
(Emphasis added)
Rule 13.01(1) of the Family Law Rules 2014 relevantly provides that:
…each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner.
Rule 13.04(a) confirms that the parties’ obligation to make a “full and frank disclosure” of the parties’ financial circumstances includes disclosing “the party’s earnings.”
Schedule 1, Part 1, Clause 6 of the Family Law Rules relevantly provides:
(6) At all stages during the pre-action negotiations and, if a case is started, during the conduct of the case itself, the parties must have regard to:
…
(i) the duty to make full and frank disclosure of all material facts, documents and other information relevant to the dispute
Note: The duty of disclosure extends to the requirement to disclose any significant changes (see clause 4 of this Part).
(Emphasis added)
It is also significant that the obligation of disclosure includes an obligation to disclose “any disposal of property” that may “affect, defeat or deplete a claim” (rule 13.04 (g)).
The fact that the obligation of disclosure exists as a duty to the court as well as the other party is significant. It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute” not simply one that attaches to the production of documents.
In this matter the first, second and third respondents have disengaged from the proceedings. As will be discussed there is a significant issue of inadequate disclosure by the first, second and third respondents.
As noted by Walters J in Graf-Salzmann and Graf [2015] FCWA 68:
…a judge is entitled to take a "robust view" in relation to findings regarding a party's financial position (including party's capacity to meet any proposed order) where that party has failed to make full and frank disclosure of his /her financial position: see Chang v Su [(2002) FLC 93-117] at [71] and [72]
Is it just and equitable to make an order for the alteration of the parties’ property interests?
It is just and equitable to make an order altering the parties property interests for the following reasons;
·There is currently one property in which the wife and the Trustee have a joint interest. That property is the former matrimonial home.
·The Trustee has an interest in three other properties as a result of property of the husband vesting in him.
·The husband and the wife are jointly responsible for the mortgages on the former matrimonial home.
·During the course of their marriage the husband and the wife jointly contributed to maintaining their household and that is no longer the case.
·With the breakdown of the party’s marriage it is appropriate that there be a severing of their financial relationship.
·It is appropriate for the parties to be in a position where they can move on with their lives.
·It is appropriate that the wife has some financial security for herself and the children.
Identification of the parties property
Having determined that it is just and equitable to make orders pursuant to s 79, the High Court in Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) and the Full Court in Bevan & Bevan (2013) FLC 93-545 (“Bevan”) confirmed that the starting point for the Court in any property proceedings is the identification of the legal and equitable interests of the parties in assets, liabilities, superannuation and financial resources as at the date of hearing.
What is the “vested bankruptcy property” for the purposes of section 79(1)(b)?
As noted, the first task of the Court is to identify the existing property interests of the parties. Significantly, in the property aspect of this case, the parties are the wife and the Trustee in bankruptcy, not the wife and the husband.
Section 4(1) of the FLA defines "vested bankruptcy property" in relation to a bankrupt, as meaning “property of the bankrupt that has vested in the bankruptcy trustee under the Bankruptcy Act 1966.” The definition states that the term "property" in this context has the same meaning as in the Bankruptcy Act.
Sections 132(1) and 132(2) of the Bankruptcy Act 1966 relevantly provide:
(1) Subject to this section, and to section 158, where a trustee is appointed by the creditors, the property of the bankrupt passes to and vests in the trustee so appointed on the day on which the appointment takes effect.
(2) Subject to this section, the property of the bankrupt passes from trustee to trustee and vests in the trustee for the time being during his or her continuance in office or, if the Official Trustee becomes the trustee, in the Official Trustee, without any conveyance, assignment or transfer.
In the absence of participation in these proceedings by the husband, I accept the wife’s evidence that there are four properties that require determination as to value. I also accept the valuations according to evidence as presented by the wife in respect to those properties as follows:
a) B Street, Suburb C: $1,550,000[7];
[7] Valuation report of Mr NN Valuer dated 2 November 2017 assessing the value of that property as at that date.
b) unit 1 W Street, Suburb V: $640,000[8];
[8] Valuation report of Mr NN Valuer dated 2 November 2017 assessing the value of that property as at that date.
c) unit 2 W Street, Suburb V: $620,000[9]; and
d) X Street, Y Town, Greece: $455,000[10].
The Trustees interests in the real property
[9] Valuation report of Mr NN Valuer dated 2 November 2017 assessing the value of that property as at that date
[10] Report by Ms Mr OO dated 27 April 2015, valued that property at 24 April 2015 as being approximately $455,000 (Au) and as referred to in paragraph 145(d) of the Wife’s affidavit
B Street Suburb C
In Sistrom v Urh (1992) 117 ALR 528, the Full Court of the Federal Court held that the joint tenancy of Torrens Title property is severed upon the bankruptcy of one of the registered proprietors. After the joint tenancy is severed, as a result of the husband becoming bankrupt, the interests of the wife and the Trustee in the matrimonial property are held as “tenants in common in equal shares.” In other words, severance of the joint tenancy occurs on the declaration of bankruptcy.[11] As a result, the Trustee initially has an equitable interest in 50 per cent of the matrimonial property. That interest vests at law when the statutory requirements of registration are met.[12]
[11] Re Francis; Ex parte Official Trustee (1988) 82 ALR 335.
[12] Bankruptcy Act 1966 (Cth) section 58.
Accordingly, the total value of the B Street property will be included in the balance sheet.
The Trustee’s interests in the Suburb V Properties
The wife contends that, at the time of cohabitation, the husband had a 25 per cent interest in two commercial properties being Unit 1 and 2 of W Street Suburb V (the Suburb V Properties). The wife contends that the husband’s mother, father and sister each own a 25 per cent share in the Suburb V properties.
The wife’s assertion in that respect is consistent with the representation of the husband in his financial questionnaire dated 18 May 2016 in which the husband states that, as at cohabitation, he had an interest in the Suburb V properties. It is noted that the parties commenced cohabitation in 1994 or early 1995.
The wife’s evidence to that effect is also consistent with the fact that the husband was recorded as one of the owners of the properties on the certificate of title.
The fact that, in the period subsequent to the parties separation, the husband has failed to declare income received from the Suburb V properties does not displace evidence as to his ownership. The affidavit of Mr Sellers, the Trustee in bankruptcy, attests to the husband’s 25 per cent share in both 1 and 2 W Street Suburb V vesting in the Trustee in bankruptcy as at the date of bankruptcy.
The Court has not received evidence that displaces the presumption that the husband was, at the date of bankruptcy, both the legal and beneficial interest holder of that percentage of the Suburb V properties for which he was on the title of those two properties.
Accordingly, I determine that the Trustee, by virtue of the vesting of the husband’s property, has a 25 per cent interest in each of the Suburb V properties.
The Greek Property
The wife was not challenged on her evidence that the husband’s parents gifted him an 80 per cent share in a commercial property at X Street, Y Town, Greece ("the Greek property”), with the remaining 20 per cent being owned by his parents, the second and third respondents. The document which is Exhibit 8W confirms the husband’s title in the property.
Again, the court has not received evidence that displaces the presumption that, until becoming bankrupt, the husband was both the legal and beneficial interest holder of the Greek property to the percentage for which he is recorded on the title of that property, which is 80 per cent.
Accordingly, I determine that the Trustee, by virtue of the vesting of the husband’s property, has an 80 per cent interest in the Greek property.
Additional property
In the absence of the wife being challenged, I accept her evidence that, as at 18 October 2017, there existed the following additional property:
·Commonwealth Bank account in the name of the wife ending #...54: $1502;
·Westpac bank account in the name of the wife ending #...35: $2086; and
·Ring owned by the wife: $2500.
The draft balance sheet relied upon by the wife also included the following;
·motor vehicle owned by the husband: $32,200; and
·motor vehicle owned by the wife: $18,000.
However, in the absence of expert evidence as to the value of those motor vehicles, I do not propose to include either of them in the balance sheet.
Section 75(2)(d) requires the Court to consider the commitments of each of the parties that are necessary to enable the party to support himself or herself, and a child or another person that the party has a duty to maintain.
Section 75(2)(e) requires the Court to consider the responsibilities of either party to support any other person.
As noted the wife is responsible for supporting herself and, since the parties separation, has effectively been solely responsible for supporting the parties’ children.
The husband has been responsible for supporting himself.
Neither party is responsible for supporting any other person.
Eligibility for a pension
Section 75(2)(f) requires the Court to consider subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party.
On 13 November 2017, the wife gave oral evidence that in or about 2011 her superannuation was transferred into a self-managed superannuation. That fund was managed by the husband. The wife stated that the amount she transferred was approximately $50,000. The husband also rolled over a portion of his own superannuation into that self-managed fund. The wife stated that the amount rolled over by the husband was approximately $15,000.
The wife stated that the husband invested the funds so transferred, into shares. That investment proved to be unsuccessful and the money was lost.
In Kowaliw & Kowaliw (1981) FLC 91-092 (“Kowaliw”), Baker J said at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above, having economic consequences is clearly, in my view, relevant under sec. 75(2)(o) to applications for settlement of property instituted under the provisions of section 79.
There is, however, insufficient evidence before the court for me to determine that the husband’s investment of those funds was intended to deplete the matrimonial property or that he otherwise acted recklessly, negligently or wantonly in terms of the principle adumbrated in Kowaliw.
The evidence is such that the wife has a relatively small pool of superannuation totalling $10,754. This represents an insufficient amount to enable the wife to support herself in her retirement. While I acknowledge that there is the possibility of the wife enhancing the amount of her superannuation during the remaining period of her working life the relatively small amount that she holds by way of superannuation is a factor to consider in respect to the wife’s future needs.
Reasonable standard of living
Section 75(2)(g) requires the Court to consider, where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable.
The husband has been made bankrupt and his standard of living will be impacted by his financial circumstances. Nevertheless, it is relevant that the husband resides at a property in Suburb QQ which is owned by the husband’s parents. This provides some security in terms of accessing appropriate accommodation despite becoming bankrupt.
The wife has two children in her care one of whom has approximately a year and a half years of high school remaining and the other has approximately four and a half years of high school remaining.
Without the assistance of family members it would not have been possible for the wife to have maintained a reasonable standard of living for herself and the children. However, they have not lived in luxury. For instance, the wife and the children have not had a holiday together since the parties separated as a result of the wife’s restricted finances.
The wife submits that, in order to maintain a reasonable standard of living for herself and the children, she requires suitable accommodation for herself and the children. I accept that to be the case.
In considering section 75(2)(o) I set out my reasoning as to why, in the circumstances of this case, I consider that it is appropriate for the wife to be able to retain the former matrimonial home.
Further training
Section 75(2)(h) requires the Court to consider the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income.
In her affidavit, the wife stated that:
At the time of separation I was studying part-time my honours degree …, whilst working as a contractor. At this time I was unable to complete my degree and since then I have been unable to continue this degree due to limited resources and time. I wish to pursue completion of this degree
The wife’s desire to pursue that honours degree is a relevant consideration in determining whether there should be an adjustment in the wife’s favour pursuant to section 75(2).
Creditors
Section 75(2)(ha) requires the Court to consider the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant.
The husband is bankrupt and the ability of the husband’s creditors are a relevant consideration in this matter. The interests of those creditors are represented by the Trustee.
The interests of the husband’s creditor’s do not, however, justify an adjustment against the interests of the wife nor, for that matter, do those interests justify an additional adjustment in favour of the wife.
Contribution to the income, earning capacity, property and financial resources of the other party
Section 75(2)(j) requires the Court to consider the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party.
I have previously discussed the wife’s role as the primary homemaker and the party who has primarily been responsible for the care of the children. The fact that the wife has focused upon those matters has enabled the husband to devote attention to his career.
It is reasonable to infer that the wife’s role as primary carer of the children has impacted upon her career progression.
I accept that the husband has a greater earning capacity than the wife and this will include enabling the husband to make the greater contributions to his superannuation with a view to sustaining himself during his retirement.
Duration of the marriage
Section 75(2)(k) requires the Court to consider the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration.
The parties were married for approximately 18 or 19 years. During this period, other than for maternity leave the wife continued to work.
Role as a parent
Section 75(2)(l) requires the Court to consider the need to protect a party who wishes to continue that party’s role as a parent.
I note that the wife wishes to continue in her role as the parent who has the primary responsibility for caring for the children. Orders will be made to that effect.
Financial circumstances of a new partner
Section 75(2)(m) requires the Court to consider if either party is cohabiting with another person, the financial circumstances relating to the cohabitation.
This is not a relevant consideration.
Terms of an order to adjust property
Section 75(2)(n) requires the Court to consider the terms of any order made or proposed to be made under section 79 in relation to the property of the parties, or vested bankruptcy property in relation to a bankrupt party.
As noted, having regard to the considerations set out in section 79(4) I am of the view that an adjustment of marital property of 10 per cent in favour of the wife would be appropriate on the facts of this case. It is appropriate to have regard to that assessment in considering whether there should be any additional adjustment pursuant to section 75(2).
Declaration under Part VIIIAB
Section 75(2)(naa) requires the Court to consider the terms of any order or declaration made or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii).
This consideration is not relevant.
Child support
Section 75(2)(na) requires the Court to consider any child support under the Child Support (Assessment) Act 1989 (Cth) 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.
As noted above, the husband has failed to meet his child support obligations. I have earlier taken that matter into consideration and will not replicate consideration of that issue under section 75(2).
Any other fact or circumstance
Section 75(2)(o) requires the Court to consider any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
Attached to the affidavit of Mr Z, which has been filed in these proceedings, is a photograph which is explained by Mr Z to be photographs of the area that the husband leases from his company and from which the husband conducts his business. That photograph shows the presence of certain equipment. That equipment has not been identified by the husband or the Trustee and it has not been valued. It is nonetheless a factor that I have regard to pursuant to section 75(2)(o).
Until the parties separated the husband declared an income by way of rental receipt in respect to the Suburb V properties and the Greek properties. No such income has been declared in the period since the parties separated. The potential for the husband to receive income from those properties is also a matter that I have regard to pursuant to section 75(2)(o).
The wife and the children have retained two dogs and a cat, which were acquired during the parties’ marriage. The wife attests that the children have a loving bond with the animals and because of this she has endeavoured to maintain the animals, their upkeep and the costs associated with them. I am satisfied that, in the period since separation, the wife has met and continues to meets the costs associated with maintaining the family pets.
As well as coping with the cost of the litigation and supporting the children the wife has been required to attend to payment of the mortgage on the former matrimonial home where she lives with the parties children. This is so even though interim orders have been made requiring the husband to assist in making those payments, as they have been ignored by him. Specifically, on 4 February 2014 interim orders were made that provide for the husband to:
(a)Pay one half of all mortgage repayments (Principal and Interest) in respect of the former matrimonial home;
(b)Pay all of the rates and insurances in respect of the former matrimonial home; and
(c)Sell the motor vehicle and apply the proceeds to discharge the Chattel Mortgage to D Finance.
Other than for a payment of $2071 made on 7 April 2014 the husband has failed to comply with his obligations to share the cost of the mortgage on the former matrimonial home.
In addition, despite the interim orders of 4 February 2014, the husband has failed to make payments in respect to rates and insurance applicable to the former matrimonial home.
The husband’s failure to comply with orders requiring him to assist the wife by paying spousal maintenance and assisting the wife to pay the mortgage and outgoings in respect to the former matrimonial home has placed a significant financial burden on the wife. This has impacted the entire family. The impact is demonstrated most profoundly by the fact that S was forced to change schools as a result of the non-payment of school fees. In respect to that matter the wife’s unchallenged evidence was as follows:
Up until Term 2, 2015 [S] attended [I School]. I was unable to continue to pay [S's] [I School] fees and he was asked to leave. For a period, I borrowed money so that I could meet [S's] [I School] fees but it was something I could not maintain. At the time I was not aware that [S] was about to be suspended from school for non payment of fees. I recall that one morning [S] was denied access to the school bus by the bus driver who said to him, "Sorry you can't come on the bus as you no longer have a bus pass." It was after this I contacted the School and was informed that [S] was unable to attend [I School] until payment of the outstanding fees . I recall at the time I asked [Mr Kanelos] to pay [S's] fees for the remainder of that term, so [S] could complete year 6. [Mr Kanelos] refused. [S] was unable to complete his final year of primary school at [I School] and I was forced to enrol him in the local primary school, [FF] Public School, for the remainder of the year.
[S] was the captain of [I School] [a sports team]. He was on the Student Representative Council. He was in the school band ... S was in the honours stream for Math and is in stream one for English.
At the time, I observed that [S] was really upset. He asked me, "Why can't I go to school?" 'Why can't I just be with my friends?"
In seeking final orders to retain the former matrimonial home the wife has been motivated by a desire to provide stability for the children. In that respect, in her affidavit, the wife attests:
The final relief sought by me, includes for [E] and [S] to live with me and spend time with [Mr Kanelos], in accordance with their wishes and safety and wellbeing. I wish to continue my role as the children's parent and primary carer. I require suitable accommodation for the children and myself. I seek to retain the former matrimonial home. The children have lived in the former matrimonial home for their whole lives. It is a constant and comfort for them in what I view has been a unstable and emotionally difficult period for them. My sister and her children reside in the same area, a few streets away. The ·children have support from my extended family all within the area.
An additional consideration of relevance is that, as a result of financial pressure caused by the failure of the husband to provide appropriate financial support to the wife, S now attends FF School. That school is in close proximity to the former matrimonial home.
These additional considerations have influenced my decision to make orders providing for the wife to retain the party’s former matrimonial home.
Finally, it is relevant that the wife has outstanding costs orders which have not been paid and, as a result of the husband’s bankruptcy are likely to remain unpaid.
These costs have been incurred in circumstances where the husband has demonstrated cavalier attitude to these proceedings. This is demonstrated by the husband’s failure to appear at the final hearing and also in the husband’s failure to comply with orders in respect to the payment of spousal maintenance as set out above.
The husband has also failed to comply with orders in respect to disclosure and he has also failed to pay costs to the wife in respect to interim applications where he has been wholly unsuccessful. This includes in respect to orders made on:
(a) 22 September 2014 - $1,144.00 payable by 31 October 2014;
(b) 12 November 2014 - $285 .00 payable by 12 December 2014;
(c) 10 December 2014 - $449.00 payable by 19 December 2014;
(d) 6 February 2015 - $112.25 payable by 6 March 2015.
Costs have been reserved on the following occasions:
(a)16 December 2013;
(b)7 April 2014;
(c)28 April 2014;
(d)10 June 2014;
(e)20 June 2014;
(f)13 October 2014, with costs for Counsel certified;
(g)26 November 2014;
(h)16 December 2014; and
(i)17 December 2014.
A relevant consideration in this matter is therefore the unrecovered costs that the wife has incurred in seeking reasonable financial assistance for herself and her children.
Binding financial agreement
Section 75(2)(p) requires the Court to consider the terms of any financial agreement that is binding on the parties to the marriage.
This consideration is not relevant.
Part VIIIAB financial agreement
Section 75(2)(q) requires the Court to consider the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
This consideration is not relevant.
Evaluation of section 75(2) considerations
I have had regard to all of those s 75(2) considerations to which I have considered relevant in determining whether there should be a further adjustment of the distribution of the parties’ property.
Most relevantly, I have had particular regard to the disparity in the parties’ earning capacity in the context of the wife’s ongoing responsibility as the primary carer of the parties’ children. This is in circumstances where I have determined that the husband is unlikely to provide any assistance to the wife in that respect into the future.
I am of the view that, having regard to all of the section 75(2) matters to which I have referred, it would be appropriate for there to be an additional adjustment of 15 per cent, in favour of the wife, over and above those section 79(4) considerations to which I have referred.
Orders and Overall Evaluation
While I am of the view that an adjustment of 25 per cent of marital property in favour of the wife would be appropriate, regrettably, on the facts of this case, that is not practical. This is because of the complexity of issues associated with the transfer of the Suburb V and Greek properties to which I have earlier referred.
For the reasons provided above I propose ordering that the Trustee transfer his interest in the former matrimonial home to the wife. This represents a gross value of $1,550,000.
From that, however, the wife would be responsible for meeting liabilities totalling $1,008,686.50.
This leaves a balance of $541,313.5, that will be distributed to the wife. In addition, the wife would retain her own superannuation of $10,754. The wife would also retain a motor vehicle which she estimates to be valued at $18,000 as well as house contents in her possession, jewellery, and a small amount of savings.
The task of the Court pursuant to section 79 of the Act is to make orders that are appropriate, fair and equitable. As previously noted the adjustment of property in favour of the wife is less than what I would have ordered had it been practicable to make an order for the transfer of the Suburb V and Greek properties.
In those circumstances, I am, however, satisfied that such an order requiring the Trustee to transfer his interest in the former matrimonial home to the wife is appropriate fair and reasonable.
Caveat by Z Pty Limited (ZPL)
The wife has sought an order requiring ZPL to remove the caveat it has registered over the former matrimonial home. ZPL and the wife provided written submissions in that respect in accordance with the directions made on 13 November 2017.
In this matter I have rejected the wife’s argument that the husband is not indebted to ZPL as alleged by that Company. However, I have held that the debt is the debt of the husband and not that of both the husband and the wife. Accordingly ZPL must look exclusively to the husband and now the Trustee in bankruptcy for satisfaction in respect to payment of that debt.
I recognise that the orders I make in these proceedings for the Trustee to transfer his interest in the former matrimonial home may adversely impact upon the interests of ZPL in so far as the husband and the Trustee will no longer have an interest in the former matrimonial home.
Nonetheless, noting the principles adumbrated in Biltoft’s Case, in the circumstances of this case, it is appropriate to make orders for the Trustee to transfer his interest in the matrimonial property to the wife. The result will be that the husband will continue to be indebted to ZPL and that company is no better and no worse off than any other creditor of the husband.
Section 90AF(3) of the Family Law Act precludes the Court from making an injunctive order against a third party unless the Court is satisfied of all the matters referred to in s 90AF(3). Sections 90AF(3) and (4) provide:
(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:
(a)the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b)if the order or injunction concerns a debt of a party to the marriage--it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and
(c)the third party has been accorded procedural fairness in relation to the making of the order or injunction; and
(d)for an injunction or order under subsection 114(1)--the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and
(e)for an injunction under subsection 114(3)--the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and
(f)the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).
(4) The matters are as follows:
(a)the taxation effect (if any) of the order or injunction on the parties to the marriage;
(b)the taxation effect (if any) of the order or injunction on the third party;
(c)the social security effect (if any) of the order or injunction on the parties to the marriage;
(d)the third party's administrative costs in relation to the order or injunction;
(e) if the order or injunction concerns a debt of a party to the marriage--the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;
Note: See paragraph (3)(b) for requirements for making the order or granting the injunction in these circumstances.
Example: The capacity of a party to the marriage to repay the debt would be affected by that party's ability to repay the debt without undue hardship.
(f) the economic, legal or other capacity of the third party to comply with the order or injunction;
Example: The legal capacity of the third party to comply with the order or injunction could be affected by the terms of a trust deed. However, after taking the third party's legal capacity into account, the court may make the order or grant the injunction despite the terms of the trust deed. If the court does so, the order or injunction will have effect despite those terms (see section 90AC).
(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters--those matters;
Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.
(h) any other matter that the court considers relevant.
In this matter, I am satisfied that ZPL has been afforded procedural fairness. However, it remains the case that the matters set out in section 90AF(3) have not been addressed, and there is insufficient evidence to enable the Court to be satisfied of the matters set out in that subsection by reference to s 90AF(4).
While I do not consider the wife to be indebted to ZPL, I do not, therefore, make formal orders in respect to ZPL.
Orders
For all these reasons I make the orders sought by the wife other than in respect to the transfer of the Suburb V properties as it is my view that any such order will be of little practical utility to the wife and such an order would be likely to result in further litigation.
I certify that the preceding four hundred (400) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 13 June 2018
Associate:
Date: 13 June 2018
9
8