Knight and Knight (No.2)
[2017] FCCA 2613
•17 November 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KNIGHT & KNIGHT (No.2) | [2017] FCCA 2613 |
| Catchwords: FAMILY LAW – Property – spousal maintenance- child support departure – credit. |
| Legislation: Family Law Act 1975 (Cth) ss.72, 75(2), 79(2), (4) Child Support (Assessment) Act 1989 (Cth) s.117 |
| Cases cited: Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143 In the marriage of Gyselman (1992) FLC 92-279 |
| Applicant: | MS KNIGHT |
| Respondent: | MR KNIGHT |
| File Number: | MLC 5778 of 2014 |
| Judgment of: | Judge McGuire |
| Hearing dates: | 15 & 16 March 2016, 25 May 20 15 & 16 March 2016, 25 May 2016, 29,30 & 31 August 2016, 4 November 2016, 19 December 2016, 16 March 2017, 13 & 15 June 2017 & 26 October 2017 |
| Date of Last Submission: | 7 November 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 17 November 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Salamanca |
| Solicitors for the Applicant: | Julie Andritsos |
| Counsel for the Respondent: | Appeared in Person |
ORDERS
That the real property situate at Property A in Victoria and Property B in Victoria both be forthwith placed on the market for sale as follows:
(a)by an agent(s) as agreed between the parties but failing agreement then by an agent(s) nominated by the President of the Real Estate Institute of Victoria or delegate thereof:
(b)by private treaty or by auction as agreed between the parties or failing agreement then as recommended by the agent(s);
(c)at sale or reserve prices as agreed between the parties or failing agreement then as recommended by the agent(s);
(d)with the parties to accept any reasonable offer of purchase as agreed or failing agreement then as recommended by the agent(s).
That the proceeds of sale of the said properties be disbursed as follows:
(a)to the reasonable costs and disbursements on sale;
(b)to the satisfaction of any registered mortgages secured by the said properties;
(c)to the payment of any capital gains tax liability incurred on the sale;
(d)the balance so as to give effect to a division of the net tangible assets of the parties as to 60% to the wife and 40% to the husband pursuant to the findings in my reasons herein.
That the parties or either of them have liberty to apply in respect of the option of either party retaining either piece of real property at value as found in my reasons herein.
That the parties or either of them have liberty to apply in respect of the orders for sale of the real property herein.
That the husband be solely entitled, to the exclusion of the wife, to his sporting memorabilia collection and to the bank account in the name of X.
That the husband’s portfolio of shareholdings be sold forthwith at value and the proceeds realised for the purposes of the alteration of the parties total tangible assets as to 60% to the wife and 40% to the husband but that the parties or either of them have liberty to apply in respect to this order.
That in all other respects, each of the parties be solely entitled to the exclusion of the other, but subject to these orders, to all items of personalty, chattels, motor vehicles, balances of bank accounts or like investments in the name of or to the benefit of that party, and superannuation entitlements in the possession or control of that party as at the date of these orders.
That each party be solely responsible for and indemnify the other in respect of any liability attaching to any asset retained by that party pursuant to these orders and only liabilities personal to that party.
That paragraphs 9 to 16 (inclusive) of these orders are binding on the (omitted) Fund Pty Limited ('the Trustee') as Trustee of (omitted) Superannuation Fund ('the Fund').
That the base amount of $44,484.00 is allocated, as required by section 90MT(4) of the Family Law Act 1975 (“the Act”), to the Wife out of the interest of the Husband’s (member number (omitted)) interest in the Fund ('the base amount').
That in accordance with section 90MT(1)(a) of the Act:
(a)the Wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 ('the Regulations');
(b)the Wife’s entitlement (and the entitlement of such other person to whom a splittable payment may be made) to payments out of the Husband's interest in the Fund is correspondingly reduced.
That the Trustee do all such acts and things and sign all such documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Act and the Regulations, the entitlement created by paragraphs 9 and 10 of these orders;
(b)Pay the entitlement whenever a splittable payment within the meaning of section 90ME of the Act becomes payable from the Husband’s interest in the Fund.
That paragraphs 14 to 16 inclusive hereof have effect from the operative time which is four business days after the date of service of a sealed copy of this Order upon the Trustee of the Fund.
That pursuant to section 90MZD of the Act the Trustee of the Fund is bound by, and shall from the date of service upon the Trustee give effect to these Orders.
That until the happening of any of the following:
(a)The establishment of a separate account in the name of the Wife;
(b)The transfer or rolling over into another superannuation fund of the payment created by these Orders;
(c)The Wife satisfying a condition of release and being paid the payment split created by these Orders;
(d)The Wife executing a waiver of rights within the meaning of section 90MZA of the Act relation to the payment created by these Orders;
the Husband be and is hereby restrained by himself, his servant or agents from drawing upon, encumbering or executing a death benefit nomination in favour of any other person, or doing any other act or thing that would have the effect of defeating, diminishing or otherwise reducing the allocated amount or rendering part of his interest in the Fund ‘a not-splittable payment’ within the meaning of Regulation 12 or 13 of the Regulations.
That the Applicant, the Respondent and the Trustee have liberty to apply in relation to the implementation of these Orders affecting the Applicant's superannuation interests.
That each party do all such things including the signing of all documents to give effect to these orders.
That the wife’s application for spousal maintenance be dismissed.
That the wife’s application for a departure from child support assessment be dismissed.
That the parties or either of them have liberty to apply in respect of the division of or transfer of chattels and personalty between the parties.
IT IS NOTED that publication of this judgment under the pseudonym Knight & Knight (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 5778 of 2014
| MS KNIGHT |
Applicant
And
| MR KNIGHT |
Respondent
REASONS FOR JUDGMENT
Property
The background to this matter is set out in my reasons towards the child’s orders handed down 14 November 2017. Suffice to say that the conduct of the financial side of this application was even more convoluted and cumbersome than the parenting issues. Witnesses were not available. Experts had not conferred. Witnesses were introduced after the start of the proceedings. Interlocutory orders were sought. Cross-examination was lengthy. Orders were sought without any direct supporting evidence or submissions in support or against. The reasons should therefore be read in conjunction with my reasons in the parenting proceedings litigated together with financial matters but by necessity were handed down earlier due to delays in the parties finalising their evidence in relation to financial matters. My orders in the parenting proceedings see X living primarily with the wife but spending substantial and significant time with the husband and the parents sharing equal parental responsibility.
Orders sought by the husband
Leaving aside the detail, the husband seeks Orders for a 50/50 property settlement in respect of the parties’ tangible assets.
He proposes a 50% splitting Order in his favour from the wife’s superannuation entitlement. His helpful written submissions are silent in respect of his own superannuation and the rationale of such a proposal is not immediately apparent.
He proposes that the parties’ investment property at Property B, be sold and that any capital gains tax be paid from the sale proceeds. He wishes to retain the former matrimonial home situate at Property A, but only if he achieves at least 45% of the tangible assets pursuant to my Orders. He otherwise asks for its sale.
Orders sought by the wife
The wife’s Counsel’s written financial submissions set out no less than 6 pages of property Orders sought by the wife.
She proposes a splitting Order from the husband’s superannuation in her favour of either $70,000 or $75,000 (the Orders sought are ambiguous in this respect).
She seeks 75% of the value of the parties’ tangible assets.
The ancillary Orders sought by the wife are too numerous to articulate in these reasons and, in any event, many were not supported by any evidence and not, in fact, argued.
Issues – property
Besides the percentage alteration of the property, the issues between the parties exposed during the trial can be summarised as follows:
i)Should an amount of $40,000 be added back to the property pool as a liability, where the husband alleges there to be an outstanding loan in this quantum owing to his parents? The wife says that either the debt has been repaid or, alternatively, it was never a “loan” requiring repayment.
ii)How the Court should treat the husband’s collection of sporting memorabilia? He says that the value is minimal and comprises primarily of (omitted) or (omitted) posters of little value. The wife alleges substantial value where she says the husband has long operated a profitable business trading in such memorabilia. Further, the wife alleges that the husband has not disclosed or made available for valuation the entirety of his collection.
iii)Whether the husband “wasted” the property pool value in refusing or neglecting to rent out the Property B property following separation?
iv)Whether the husband caused the mortgage liability to increase by $29,240.00 following separation?
v)Whether the husband’s paid legal costs should be added back to the pool or, more particularly, whether the partial property settlement of $30,000 received by each of the parties in about December 2014 should be treated differently in respect of the husband and the wife.
vi)How the Court should deal with chattels of the parties where the wife alleges that the husband retains greater value and including items of sentimental value to her.
Relevant law – property division
Section 79 of the Family Law Act 1975 (“the Act”) provides for settlement or alteration of parties’ interests in property.
Section 79(2) provides that the Court should not make an Order under this section unless, in all the circumstances, it is just and equitable to make that Order.
Relevantly, section 79(4) provides:
(4)In considering what Order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed Order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other Order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
It was previously thought that trial judges were to follow a rigid four-step approach to the considerations of interests and the alterations of those interests in property.[1] However, the High Court in Stanford v Stanford[2] made it clear that the consideration under s.79(2) as to whether it be just and equitable to make any Orders for alteration of property interests is a preliminary question for the court and one not to be simply conflated with the considerations of contributions under s.79(4). Their Honours said at [40]:
…the question of whether it is just and equitable to make a property settlement Order should not be answered by starting with an assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s.79(4). The power to make a property settlement Order must be exercised in accordance with legal principles including principles which the Act itself lays down. To conclude that making an Order is “just and equitable” only because of and by reference to various matters in s.79(4) without a separate consideration of s.79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
[1] Hickey & Hickey & Attorney General for the Commonwealth of Australia [2003] FLC 93-143
[2] (2012) 247 CLR 108
Nevertheless, and as their Honours observed, the task of determining whether justice and equity would be served by the alteration of property interests is often a simple one. In the matter now before me, it is clear that the parties’ relationship has irretrievably broken down. There is a child of that relationship. The parties are the joint registered proprietors of property. Further, and as observed by Thackray CJ in Fielding & Nichol[3], that whilst contributions are not necessarily a determinative answer to the s.79(2) question, such contributions can be a factor in determining justice and equity under that subsection. In the matter now before me, prima facie, the many and varied contributions by these parties together with their joint interests in real property serve to satisfy me that it would be just and equitable to alter their property interests.
[3] [2014] FCWA 77 at [42]
Consequently, and pursuant to long standing authority, the Court is firstly to establish the content and value of the property pool as at the date of the trial. Property is inclusive of assets, liabilities, financial resources and, for these purposes, superannuation is to be “treated as property” although it is often prudent and permissible to deal with the property on a “two pool” basis of firstly, tangible assets and secondly, superannuation entitlements.
Having made the determination under s.79(2), the Court must then consider the contributions of the parties to the attaining, maintaining and improvement of the contents of the property pool in accordance with the subsections set out in s.79(4).
After considering the contributions, the Court then determines whether it is appropriate, just and equitable to make any further adjustments of entitlement between the parties after evidentiary reference to the factors set out in s.79(4)(d)-(g) including any relevant considerations under s.75(2) of the Act.
Property pool issues – husband’s sporting memorabilia
After many days of evidence, protracted cross-examination and interlocutory argument as to the extent and value of the husband’s ‘sporting memorabilia’ collection, the wife in her Counsel’s final submissions asked for an item to be included in the pool thus:
Funds received by the husband from the sale of sporting memorabilia since separation not accounted for including amounts credited to Paypal/estimated over $200,000.
The wife’s counsel’s helpful and lengthy written final submission supported by oral submissions offer no further particularisation of this order sought. I was pointed to no particular evidence in support of a “value” attributed “over $200,000”. Whilst the discretion for trial judges under s.79 is a broad one, to do justice and equity between the parties, it must always be one supported by evidence of some particularity and should never be simply an exercise of pure inference and speculation.
The wife also asks for a value to be attributed to the husband’s current collection of sporting memorabilia. Counsel’s final written submissions do not, however, offer a value.
The husband has a collection of sporting memorabilia. It is primarily composed of (omitted) “(omitted)” or “(omitted)” ((omitted)) (omitted). These are apparently prepared and offered for sale immediately post each year’s (sporting event omitted). They sell for only a couple of dollars. The husband’s posters primarily involve his own preferred team (omitted) and date from 1961. Some are framed. Some are not framed. It is clear that the husband has engaged in a form of business in on selling a number of annual posters which he apparently buys in bulk. He does so on E-bay or the internet. In addition, the husband says that a number of items of his memorabilia were gifted to him by family.
The evidence in respect of this dispute is left in an unsatisfactory state despite the time and effort expended on the issue during the course of the trial.
Put simply, the wife argues that the husband’s collection is of considerable value based on her assertion that he has failed to disclose the majority of his collection and not make the totality available for valuation. The husband was cross examined at considerable length in respect of this allegation and at all times maintained denials and asserted that all of his collection was made available for valuation. The husband did not cross examine the wife in respect of the allegation that she makes against him of failure to disclose all posters.
Two witnesses gave what was purported to be expert evidence. Firstly, Mr M was engaged as a ‘joint expert’. The obtaining of his evidence was difficult and convoluted. He, with a high degree of reluctance, provided a form of valuation. These values were not accepted by the wife who also maintained that the husband had not made full disclosure. She engaged her own expert being Mr A. Both Mr A and Mr M claim their expertise through their own experience as retailers in the purchase and sale of memorabilia.
After some difficulty and considerable delay, the Court, during the course of the trial, ordered a conference between Mr M and Mr A. That conference resulted in substantial agreement as to the value of the items made available for inspection by Mr Knight.
In respect of the agreed existing items and after their conference, Mr M proposes a value of $18,641 whereas Mr A’s value of the same items sits at $19,220. Although the difference is relatively minimal, I am prepared to accept Mr A’s higher value of $19,220 noting that he actually inspected the items whereas Mr M did not and gave his valuation from an inventory only. It is fortunate that the “valuations” were proximate as neither witness was impressive in their evidence and I am left thinking that the sale of sporting memorabilia operates more in some type of hidden clandestine market rather than any system regulated by an open normal market.
The remaining issue in respect of the memorabilia is the wife’s assertion and allegation that the husband has either disposed of or not made available for valuation numerous items. She provides a photograph annexed to an affidavit of a pile of posters although in such form and without better evidence I consider this evidence to be of minimal, if any, weight. Indeed, the best evidence is that Mr A actually viewed these posters but only in their bulk form rather than specifically.
The wife also prepared a ‘list’. Each of the valuers had provided an estimated value in respect of the wife’s list. There is some apparent overlap in the wife’s “list” in that she includes those items disclosed and made available by the husband. Essentially the wife’s “list” is said to comprise from her memory the extent of the husband’s collection at the date of separation in 2014.
Notably, the wife’s “list” provided to Mr A for valuation is highly particularised as to quantity and description of each item. The husband maintained in cross-examination that the wife’s list was “fantasy” and that he did not retain items other than those disclosed and made available for inspection. The husband agreed that he had operated a form of small business in respect to the purchase and sale of these posters. He called it a “hobby.” He agreed that he purchased posters after each (sporting event omitted) in bulk. He agreed he operated a PayPal account and made disclosures to the wife’s lawyers of the last three years of PayPal transactions and statements. He maintained in cross-examination that he had ceased trading in August 2014 although his reasons for doing so were not convincingly disclosed, if at all. I did not find the PayPal statements to be corroborative of the wife’s assertions in respect of the extent of the husband’s trading and retention of items of memorabilia and despite the valiant efforts of the wife’s Counsel in cross-examination of the husband.
It was agreed, however, that at times there would be credits of $400-$700 per month into his PayPal account. The husband noted, however, the expenses involved including stamps which would be purchased in bulk. The husband volunteered that his income from this process was “not declared income” as he had received tax advice that the process was “hobby” rather than business income.
Whilst I understand and accept the difficulty confronting the wife in proving on the balance of probabilities the alleged existence of undisclosed items of memorabilia, she does still carry an onus to prove her assertion to the requisite standard. I repeat that the husband was skilfully cross examined but made no admissions or retreat in respect of his evidence that he had made full disclosure. Further, I give some weight to the husband’s submission that I should take the wife’s “list” and her assertions as to the extent of his collection with some caution where the wife in her affidavit sworn 22 February 2016 at [186] deposed:
The husband has refused to disclose the sports memorabilia accumulated during the marriage. This is of significant worth but I had no idea of its extent…(my emphasis).
I, therefore, have some difficulty reconciling this sworn evidence with the wife having later prepared a detailed inventory of what she says was not disclosed to the valuers by the husband.
The wife’s valuer, Mr A, references in his affidavit that his inspection of the memorabilia was conducted in the presence of the husband’s father, Mr G. Mr A indicates that he requested full inspection including items in the “wife’s list”. He says that he was provided with items for inspection in one room but denied further access to the house. He was not provided with items on the wife’s list other than those which the husband concedes to be in his possession. The implication from Mr A’s affidavit was that he was suspicious of there being further memorabilia in the house but not made available to him. Mr A was, however, engaged by the wife and from my observations of him in the witness box, sympathetic to and engaged in her allegations of non-disclosure. There is no evidence other than his mere suspicion. Given the husband’s consistent denials of the allegation of non-disclosure, the lack of further probative corroborative evidence together with the sworn statement made by the wife set out above, I cannot be satisfied that the wife has proven her allegation and assertion on the balance of probabilities and I am not satisfied that the husband has, in fact, hidden away memorabilia from the valuer and the court process. Consequently, the husband’s sporting memorabilia will be included in the property pool at Mr A’s valuation of $19,220 being in relation to the items actually inspected by him.
Further, it is impossible for me to attribute any value to the husband’s trading in memorabilia since the parties’ separation. I accept the husband’s evidence that his income is designated as “hobby” by the taxation office and infer therefore that it has not been a substantial source of income. Nevertheless, there seems to have been some benefit to him from sales of posters since separation, being items in his possessions at separation. I will consider this issue under s.75(2)(o) of the Act.
Husband’s assertion - $40,000 debt to his parents
The husband asserts that the parties are indebted to his parents for a loan of $40,000 which remains unpaid. The wife’s evidence-in-chief was to the effect that the monies were repaid within 12 months of receipt as the husband’s parents needed the money for their overseas trip. The wife says, in any event, and even if her recollection is incorrect, that there was no discussion during the marriage about any requirement for repayment which supports her view that the monies, have in fact been paid, or alternatively, that the advancing of these monies, (which she concedes) was not a loan requiring repayment but, rather, a gift to the parties.
The husband’s father, Mr G, gave evidence and was cross examined. He agreed that no formal demand has previously been made for repayment although he says he “raised the matter in 2007 or 2008”. Mr G swore an affidavit on 11 March 2015 which referenced children’s matters but when financial issues were before the Court. He did not then refer to the alleged loan. However, in his affidavit affirmed 8 September 2015 Mr G deposes:
In November 2005, they decided to buy the larger home at Property A to which my wife and I lent them approximately $40,000 to finalise the purchase.
At no time was the $40,000 loan considered to be a gift and there was always an expectation that the parties repay the amount in full without interest.
The husband is a chartered accountant and financial controller and, from my observations, he is very particular about matters of a financial nature. In his first affidavit in these proceedings of 7 August 2014 he sets out the parties’ assets and liabilities at [24]. He was at that time represented by solicitors. At [27] he deposes:
In 2005 my parents gave us $40,000.
The husband, in that affidavit, does not list a liability of $40,000 at all to his parents. His affidavit does not assert that the $40,000 was a “loan”. The affidavit does not detail any requirement for or terms of repayment.
In a particularised sworn financial statement of the same date, the husband does not reference the alleged loan as a liability. Subsequently, he swore two further financial statements on 8 September 2015 and 23 February 2016 without referencing any liability to his parents although making reference in those documents to numerous other, sometimes minor, liabilities. Other than his father’s evidence, the husband has not provided any corroborating evidence of the alleged loan, such as loan agreements or formal demands for repayment.
In all of the circumstances, and where the husband makes the assertion of the fact of an outstanding loan to his parents, I am not satisfied on the balance of probabilities that he has proven such a current liability although I am satisfied that the money was advanced. I am not satisfied, given the vague recollection of the wife, that the advancement has been repaid. It is proper, therefore, that I consider these monies to be a contribution by or on behalf of the husband[4] but not as a liability to be included in the property pool.
[4] Crawford & Crawford (1979) FLC 90-647
Bank account in X’s name
The husband holds a bank account in the name of or to the benefit of the parties’ son, X. Its current balance is $11,966.74. The husband is the sole signatory on the account. He has made weekly instalment payments since X’s birth in 2011.
The wife says that this account is an asset of the parties. The husband says that the balance of the account should be “quarantined” as being the property of the child. Despite the altruistic intentions of the parties in establishing the account, I am satisfied and accept the wife’s argument that the balance of this account is an asset of the parties and should be included in the property pool at its current balance of $11,966.74 but noting that the husband has continued to make the payments since separation and that this represents a contribution by him.
Paid legal costs – partial property settlement
The wife in her trial affidavit at [152] – [156] raises the issue of the parties’ paid legal costs. She asserts, with some authority, that the husband paid legal costs of $29,305 on or before 1 December 2014. She agreed that each party received $30,000 on or later than
4 December 2014. She argues, therefore, that the husband, having paid the sum of $29,305, prior to the Order of 4 December, must have done so from joint funds and that these paid legal costs should therefore be “added back” to the pool.
By consent Order of 4 December 2016 the parties agreed inter alia:
That the husband forthwith do all such acts and things and sign all necessary documents to sell or realize the assets of his share/cash portfolio to pay each of the husband and wife the sum of $30,000 by way of partial property settlement which shall be deducted from their respective property settlement entitlements.
Prima facie, I understand this to mean that the sum of $30,000 x 2 be included in the property pool.
The husband disputes the wife’s contention and says that he met these legal costs to his former solicitors by three instalment payments from savings accrued from his income following the engagement of solicitors post separation and/or from credit card payments.
Not unusually in this matter, I have little or no documentary evidence from either side to support their arguments. I do know, however, that the husband enjoyed a substantial income at the time. I note that the husband says that the payments were made in three instalments rather than one lump sum. I note that he references the use of credit cards. The wife has not referred me to any particular bank statements showing withdrawals by the husband for the payment of legal costs. Consequently, I cannot be satisfied on the balance of probabilities that the husband did make the payments from joint assets as asserted by the wife. I prefer that the husband made the payments from monies accrued following separation or by credit card and that he utilised his $30,000 to “repay” or “reimburse” those credit cards as he says was the case. I will include the amounts of $30,000 received by each of the parties by partial property settlement in the pool of property.
Wife’s savings at separation
At separation the wife had a personal bank account balance of $13,641.00. She agrees that she transferred an amount of $12,000 (or on occasions she said $15,000) to her brother. She says that these monies were subsequently used to pay her legal costs in about February 2016.
Leaving aside the husband’s assertions that the wife had somehow attempted to hide-away these monies from scrutiny of the court, it seems clear to me that she has paid her legal costs in a sum of at least $12,000 from joint assets existing at the date of separation. As such it would be proper to add-back those paid legal costs to the property pool.
Husband’s severance payment – (employer omitted)
The wife urges that I include in the property pool an amount received by the husband in his final severance pay from his previous employment with (employer omitted) in December 2016 of $24,446 gross. This payment was received almost three years after the parties’ separation. The wife offers no explanation as to when the husband’s entitlements were accrued. She does not adduce evidence from the husband’s former employer as to the breakdown of the payment. The husband says that it compromises substantially of leave entitlements accrued since separation. I find that his explanation is plausible in the absence of any other evidence. I do not consider it just, equitable or proper to include this final payment as an asset of the parties when it was received at such a considerable time after separation. I have no evidence of the current existence or whereabouts of these monies. As such, I am not troubled in this regard by the requirement in Stanford to establish the content of the property as at the date of the trial.
The parties have only now, some months after the taking of oral and affidavit evidence and some three years after the commencement of these proceedings, agreed a contingent liability of capital gains tax on the agreed sale of their Property B property at $64,162.
Property pool
Taking into account the above findings together with the substantial agreement between the parties as to content and values otherwise of their property, I find the property pool of the parties for my consideration to comprise of the following:
Assets
Property situate at Property A
$1,240,000
Property situate at Property B
$565,000
Shareholdings portfolio (to be sold)
E$121,909
Wife’s bank account at separation / paid legal costs
$12,000
Husband’s sporting memorabilia collection
$19,220
Husband’s bank account – X
$11,966
Partial property settlement – husband (4 December 2014)
$30,000
Partial property settlement – wife
$30,000
Wife’s (omitted) Ford motor vehicle
$4,000
Household furniture and contents
Not Known*
Total assets
$2,034,095
Liabilities
Mortgage – Property B property ((omitted))
-$289,844
Mortgage – Property A ((omitted))
-$172,127
Capital gains tax (anticipated on sale of Property B property and to be paid from the proceeds of sale from that property
-$64,163
Total Liabilities
$526,134
Net Tangible Assets
$1,507,961
Superannuation
Husband's (omitted) Super
$204,258
Wife's (omitted) Super
$115,290
Total Superannuation
$319,548
Given the length of this relationship and the quantum of the superannuation entitlements, I prefer to adopt a “two pool” process of consideration being firstly as to the tangible assets of the parties and then in respect of their superannuation entitlements.
I comment here again as to the preparation and prosecution of this case, that where there remains active dispute as to the distribution of chattels and furniture then, after more than three years litigation, a Court should reasonably be able to expect evidence in proper form from suitably qualified experts. Alternatively, and as is frequently the case, litigants, on a “cost-benefit” basis will properly dispose of these issues by compromise and consent. Such is the nature of this bitterly fought litigation, that I have no such confidence here. There remains considerable dispute between the parties as to the distribution of furniture and contents. They have been unable to agree as to which party should retain which item and/or arrangements to effect a distribution. The Court has been provided with no evidence in proper form of an inventory or valuation of the furniture or contents. I will, in my orders, allow the parties leave to bring further evidence or submissions in respect of the distribution of chattels.
Contributions
The relationship here endured some fifteen years. Both parties were employed although the wife became the primary carer of the child from 2011 and the relationship then became a more traditional one with the husband being the major financial provider and the wife assuming a homemaker role.
The husband owned the Property B property as at the date of commencement of cohabitation in 1999. He purchased the property in 1997 for $80,000 plus costs. He then had a mortgage loan of $50,000. That property now has an agreed value of $565,000. It has, however, been significantly improved including with contributions by the wife. The parties jointly obtained an historical valuation of the property as at 1999 at $150,000. The wife disputes that valuation but concedes a value of at least $110,000-$120,000 at that time. She did not bring the historical valuer to Court. Although it has now been some 18 years since the commencement of the parties’ relationship, this property still sits in their pool of assets at considerable value relative to the total quantum of the pool and in line with the principles in Pierce & Pierce,[5] being directly traceable from 1999, it should be given some weight as an initial contribution by the husband but only when viewed against the numerous other contributions of various types and weight by each of these parties subsequently.
[5] [1999] FLC 92-844
I have previously found that the sum of $40,000 provided by the husband’s parents to the parties toward the purchase of the Property A home is not a ‘loan liability’ requiring repayment. It does, however, constitute a contribution by or on behalf of the husband and should be given some weight accordingly.
The husband completed some of his professional qualifications during the marriage. The wife’s unchallenged evidence is that she supported the husband generally and emotionally. I accept this to be a contribution by the wife.
Since separation the husband has continued to contribute to the bank account in X’s name and he should be given some credit accordingly. The best evidence is the balance of that account increases at about $1,600 per annum.
The wife has been virtually the sole carer of X since separation if only by reason of the stance that she has taken in respect of X’s living arrangements. The husband has, however, paid child support in accordance with his assessment which currently obligates him at $378.00 per week. I note that these monies are tax free in the wife’s hands given that tax is paid by the husband. Mr Knight has also paid spousal maintenance towards the support of the wife since soon after separation.
In addition to the Property B property, the husband entered the relationship with a motor vehicle valued at $20,000. I accept that the wife had some debt at the time of commencement of the relationship including a credit card debt, a HECs debt and a car loan. The husband’s evidence, which I accept, is that these liabilities were paid out soon after commencement of the relationship by use of available equity in the Property B equity.
The wife’s evidence, however, which I also accept, is that she received significant financial benefits by accrued leave and other work related entitlements in or about 2011 when she moved onto maternity leave. A proportion of these, at least, were accrued during the relationship which had commenced in 1999. I do, however, give some weight to this contribution by the wife.
The wife says, and I accept, that the mortgage liability on the Property B property as at the date of separation in 2014 was $249,729. It seems that repayments then were considerably in advance. The husband assumed the management of this rental property. I understand that the mortgage loan related at least in part, to an ‘investment loan’ for the husband’s diversion into the share market. The property was vacant for 11 months during this period in which the husband concedes that he was not actively seeking tenants. His explanation in the witness box for this inaction was spurious and unconvincing. His own contributions, if any, to the mortgage liability during this period were minimal. The mortgage liability on the property now sits at $289,000 or more. The husband concedes that the loan has been increasing monthly as interest only on the loan has been drawn from the advance available. I accept that the loan is, in effect, a line of credit used to invest in stocks and shares. As such, where the husband has had the control of this asset and liability since separation and the liability in real terms has increased by more than $40,000 in the relevant period, I view this as a “negative contribution” or wastage by the husband[6]. A prudent management and letting of the property would have alleviated this situation to a large degree if not totally. I am comfortably satisfied that the husband has enjoyed some benefit from his share market dealings during the relevant periods. Consequently, I am satisfied that the husband effectively let the mortgage run out by $40,000 and this is a ‘negative’ contribution by him.
[6] Kowaliw & Kowaliw (1981) FLC 91-092
In summary as to contributions, I note this relationship being of some length and that the contributions by the parties are many and varied. I place some weight on the husband’s superior initial contribution particularly his equity in 1999 in the Property B property which has had the ‘slingshot’ benefit for the parties in now accruing some considerable wealth. I also place some weight on the more recent “wastage” by the husband in respect of the mortgage liability on that property. The husband’s family’s advancement of $40,000 in 2005 is also deserving of weight with the credit to the husband as are the wife’s employment benefits.[7] Finally, weight is given to the fact of the wife’s care of X in the years since separation whilst also recognising the husband’s financial contribution during this period. Taking all of these matters into account and all contributions generally, I am of the view that the property should be adjusted as to 52.5% to the husband and 47.5% to the wife on account of contributions.
[7] Crawford & Crawford (1979) FLC 90-647
At page 3, paragraph [6] of his written submissions, the wife’s Counsel says:
“…the wife’s home making and parenting duties were performed under the pressure of significant hostile treatment of her by the husband, she having the exclusive care of X from the date of separation to date.”
I understand this to be what is colloquially known as a Kennon[8] submission. I do not, however, consider this submission to be made out. The approach of the Family Court in Kennon effectively restricts the consideration of family violence to assessment of impact on the spouses contributions under s.79 or, arguably, to an adjustment considerations under s.75(2)(o). I have made findings of fact and credit in the parenting reasons as to the veracity of the wife’s allegations of family violence. In any event, I am not of the view that she has properly made out a nexus of connection between the husband’s alleged behaviour and her own contributions. Consequently, I give no weight to those submissions.
[8] (1997) FLC 92-757
Section 75(2) factors
This is a relationship of some duration. The husband achieved professional qualifications during the relationship and presumably with the actual and emotional support of the wife such that now allows him to enjoy an income and benefits potentially in the range of $190,000 per annum. It is income capacity rather than ‘income by choice’ that I consider here. Whilst the husband’s choice to live in the (omitted) area is understandable in respect of his desired relationship with X, it came at the expense of a drop in income and benefits for him.
The wife is a qualified (occupation omitted). My understanding is that her lengthy maternity leave concludes at the end of 2017. X is full time at school and I am satisfied that the wife is now in a position to return to her profession. Indeed, in the earlier interim stages of these proceedings, the wife expressed a desire to return to (occupation omitted) when X achieved school age. Nevertheless, and realistically, the wife cannot expect to achieve an income anywhere near that of the husband which in turn gives him the superior ability to re-establish himself financially following the property settlement Orders. The wife will remain the primary carer for X although Mr Knight will now provide her with some respite for what has been virtually been her full time responsibility and, I expect, assist her therefore in her anticipated return to the workforce. By reason of the child’s Orders I intend to make pursuant to the above reasons, I assume that both the husband and wife will need to be able to provide similar accommodation and facilities for the care of X. Mr Knight, by reason of his superior income, will continue to pay child support to the wife for X despite my Orders for X to spend “substantial and significant time” between his parents.
There is no evidence before me that either party has re-partnered to an extent of financial benefit or dependency.
I also take into account pursuant to s.75(2)(o) the husband’s income from his hobby in dealing with sporting memorabilia.
Taking all of these matters into account but with considerable weight on the income discrepancy of the parties and within the quantum of the tangible property pool, I am of the view that an adjustment of 12.5% to the wife of the tangible assets set out above on account of the relevant s.75(2) factors would be just and equitable.
Consequently, I am satisfied that the tangible property pool of the parties should be distributed as to 60% to the wife and 40% to the husband.
I note the husband’s submission to me that he would not seek to retain the Property A property if he did not achieve at least 45% of the property pool. Taking him at his word in this respect, I will Order the sale of that property together with the Property B property but will give the parties or either of them liberty to apply in respect of that Order should there be a change of heart.
Superannuation
Neither party is yet near an age where they will be able to crystallise their superannuation entitlements. Consequently, I think it proper to consider the property pool of a two-pool basis. I am comfortable in concluding that the bulk of their entitlements were achieved during their relationship which commenced in 1999. I am satisfied, therefore, and given the distribution of tangible assets and the various contribution factors mentioned above, that there should be an equalising of the parties’ entitlements to superannuation. On the material before me, this would require a splitting Order of the husband’s policy in favour of the wife with a base amount of $44,484.00. The orders I make will be conditional upon the provision of procedural fairness on the husband’s superannuation fund.
Spousal maintenance
The wife asks for an Order in the following terms:
That the husband pay $500 per week by way of periodic spousal maintenance or such lump sum spousal maintenance as this Honourable Court deems appropriate with respect to spousal maintenance for a period of five years. Further or in the alternative, that the husband pay such further amount by way of lump sum capitalized spousal maintenance or such further or other sum as this Honourable Court deems fit.
The wife has received interim spousal maintenance of $305 per week since my Orders of 29 August 2014. The husband has also paid the insurance on the wife’s motor vehicle. As noted, and emphasised above, it was anticipated that the substantive issues between these parties would go to trial as long ago as July 2015. The delays in the matter coming to trial and the length of the trial itself have been substantial.
The Act at s.72 provides:
(1)A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
Section 74(1) of the Act provides:
(1)In proceedings with respect to the maintenance of a party to a marriage, the court may make such Order as it considers proper for the provision of maintenance in accordance with this Part.
The wife’s current income comprises of Centrelink benefits and minimal work for 6 hours per week as a (occupation omitted). This part time employment brings her $144 per week gross. She and X continue to live with her mother but understandably the wife anticipates obtaining independent accommodation.
The Act provides that means tested Centrelink benefits are not to be treated as ‘income’ for the purposes of my consideration as to the wife’s entitlement for spousal maintenance. In her trial affidavit at [29] the wife deposes:
I wish to return to (occupation omitted) but as I am classified as an experienced (occupation omitted) I will find it extremely hard to get a permanent position as the (employer omitted) have to pay me more and there is a large crop of younger graduates I am competing with.
Notably, in the wife’s application for interim spousal maintenance in 2014, she argued that she wished to be able to care for X during his pre-school aged years and then anticipated a return to the workforce. X is now 6 years of age and at full time school.
The wife, neither in her many affidavits nor in any of her evidence in Court, provides evidence of any attempts by her to obtain employment other than her current part time employment, such as to mitigate her own financial situation.
The wife has not given or adduced evidence to show employment in her profession is not available to her other than the unsubstantiated comment above. She is a qualified (occupation omitted) with substantial experience. Put simply, she has now been in receipt of spousal maintenance for some 3 years but references no attempt to mitigate her position. There is no evidence of any attempts by her to re-enter the workforce. It is the wife who asserts a need for spousal maintenance. She, therefore, carries an onus to convince a Court and thus cross the “threshold”.
The wife volunteered in her evidence that whilst receiving spousal maintenance she enjoyed a cruise to (omitted) with fares of some $2,500. The wife, of course, is not expected to live a “spartan” lifestyle but such matters are relevant to a consideration generally of her circumstances. Neither is she required to “deplete” her own assets or the fruits of her s.79 litigation in order to support herself,[9] although Ms Knight will have the benefit of a substantial cash amount from my orders under s.79 with which she will have to prudently determine between asset-purchase (such as a home) and/or investment.
[9] Bevan & Bevan (1995) FLC 92-600
Consideration
The Act at s.72 provides a ‘threshold’ of consideration as to spousal maintenance. That is, the wife seeking spousal maintenance must firstly show a need for maintenance or, more properly, an inability to support herself. The wife’s financial statement adequately sets out her needs. There is, however, a second limb. That is, the applicant must show she is unable to meet her own needs before the Court need consider the ability of the husband to contribute to her needs. It is at this second limb that the wife’s application must fail. She initially argued that she only required spousal maintenance until X was of school age. Courts have traditionally been understandably sympathetic to ordering spousal maintenance for sole carers of pre-school age children. X now attends school on a full time basis. The wife herself is a (occupation omitted) and I can assume that the hours of work, particularly as to school holidays, are sympathetic to the care of a school aged child. There is no evidence in proper form or of any probity to suggest that the wife has attempted to obtain employment. There is no evidence of any job applications. There is no evidence in proper form as to the availability or unavailability of positions for (occupations omitted) of her considerable experience. Inaction is not synonymous with inability. There remains an onus within reasonable practical considerations, to mitigate the damage. The wife here does not cross that evidentiary threshold.[10] It follows, in my view, that the wife has not crossed the ‘threshold’ test imposed by s.72 of the Act and the application for ongoing spousal maintenance must be dismissed.
[10] Taguchi & Taguchi (1987) FLC 91-836
Departure from child support
So far as I can understand the wife’s position from the Orders sought in her Counsel’s final address, she asks for a departure Order from child support assessment such that:
17.The husband pay in addition to child support as assessed and collected by the child support agency…one half of the following:
(a)all state/catholic or primary and secondary college school fees, uniforms, books and expenses;
(c)(sic) all university fees, uniforms books and experiences;
(d)all extracurricular of the primary school or secondary or catholic college;
(e)all fees and costs associates with any cultural or sporting activity additional to their schooling such as soccer, swimming, music lessons and such.
(f)all medical and other health related expenses including but not limited to hospital, physiotherapy, dental, orthodontic (including but not limited to braces), psychological expenses.
18.That pursuant to s.116, 117, 118 & 123 of the Child Support (Assessment) Act 1989 there be a departure from the administrative assessment of child support payable by Mr Knight (the father) for the child X born (omitted) 2011 as follows:
18.1.(1)For the period from the date of these Orders to
1 July 2017 Mr Knight’s child support income amount is to be fixed at the annual rate of $190,000 or is to be as assessed by the Child Support Agency…whichever results in the greater child support income amount of Mr Knight.
18.2.For each year thereafter Mr Knight’s child support income amount for the children (sic) is to be fixed at the annual rate of $190,000 with CPI increases on the first of July of each year, commencing 1 July 2017 or is to be assessed by the Child Support Agency whichever results in the greater child support income amount for Mr Knight.
The husband currently pays child support assessed at $378.00 per week. He declares a gross income of $144,560 per annum. He receives a benefit through his employment of the use of a motor vehicle.
Section 117 of the Child Support (Assessment) Act 1989 (“the CSA Act”) gives power to the Court to make departure Orders in special circumstances. Subsection 117(1) provides:
(1) Where:
(a)application is made to a court having jurisdiction under this Act for an Order under this Division in relation to a child in the special circumstances of the case; and
(b) the court is satisfied:
(i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that it would be:
(A)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B)otherwise proper;
to make a particular Order under this Division;
the court may make the Order.
For the purposes of subsection 117(2) provides:
(2)For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
(a)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
(i) the duty of the parent to maintain any other child or another person; or
(ii) special needs of any other child or another person that the parent has a duty to maintain; or
(iii) commitments of the parent necessary to enable the parent to support:
(A)himself or herself; or
(B)any other child or another person that the parent has a duty to maintain; or
(iv) high costs involved in enabling a parent to spend time with, or communicate with, any other child or another person that the parent has a duty to maintain; or
(aa)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of the responsibility of the parent to maintain a resident child of the parent…;
(b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(i)because of high costs involved in enabling a parent to spend time with, or communicate with, the child; or
(ia)because of special needs of the child; or
(ib)because of high child care costs in relation to the child; or
(ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i)because of the income, earning capacity, property and financial resources of the child; or
(ia)because of the income, property and financial resources of either parent; or
(ib)because of the earning capacity of either parent; or
(ii)because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.
The Full Court In the marriage of Gyselman[11] considered the term ‘special circumstances’ as follows:
Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise the facts of the case must establish something that is special or out of the ordinary. That is, the intention of the legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases.
[11] (1992) FLC 92-279
Consideration
My reading of the wife’s trial affidavits discloses only one reference to her application for departure from child support being at [200] of her affidavit of 22 February 2016 as follows:
The husband is earning in excess of $180,000 through his employment when one includes additional benefits and is also obtaining or also able to obtain rent from the Property B property. The husband is well able to afford a departure from the child support assessment to assist in paying for half educational expenses and other expenses identified in my application.
The wife’s Counsel’s copious written final submissions do not reference at all the issue of child support assessment or departure.
My recollection and notes do not disclose any evidence in chief from the wife in respect of departure from child support and/or any cross-examination of the husband in respect of this issue.
Whilst the wife also seeks a final Order in respect of X being educated in the (omitted) school system, her affidavit does not reference this issue save and except for a vague and ambiguous reference at [198] of her trial affidavit.
No evidence was given or adduced with any particularity, or at all, in respect of the costs of X’s education including fees, uniforms, levies and/or extracurricular activities.
No evidence was given or adduced as to any historical agreement (or even discussions) between the parties as to the form of the education preferred for X.
The wife’s own historical position, together with my property Orders and my Order dismissing her spousal maintenance application all assume that the wife will re-enter the workforce and that she will derive an income which will, of course, be relevant for determination of the husband’s child support assessment. Further, and equally obviously, my Orders in respect of X sharing his time between his parents will also be relevant to any child support assessment.
I feel obliged to comment at this point that it seems, at the very least, disingenuous of the wife to formally prosecute an application where no probative evidence is given or adduced in support of the application noting that this part of her application was at no time formally discontinued. That being the case, the application for child support departure is dismissed.
I certify that the preceding ninety eight (98) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Date: 17 November 2017
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