MALONE & MALONE

[2017] FamCA 1157

FAMILY COURT OF AUSTRALIA

MALONE & MALONE [2017] FamCA 1157

FAMILY LAW – CHILDREN – Dispute is about number of days for husband to have children during school terms.

FAMILY LAW – PROPERTY – Dispute about adjustment for earning disparity but also husband’s wanton behaviour.

Family Law Act 1975 (Cth)

Kowaliw and Kowaliw (1981) FLC 91-092
Saunders v Vautier (1841) Cr and Ph 240

APPLICANT: Ms Malone

RESPONDENT: Mr Malone

FILE NUMBER: MLC 5462 of 2015

DATE DELIVERED: 17 April 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 26, 27 & 28 March 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Smallwood

SOLICITOR FOR THE APPLICANT: Berry Family Law

COUNSEL FOR THE RESPONDENT: Ms Mariole

SOLICITOR FOR THE RESPONDENT: Rebecca Bailey & Associates

Orders

1. That the children X, Y and Z spend time with the husband during school terms from the conclusion of school on the Thursday until 4.00pm on the following Sunday in each alternate week with the first of such periods commencing when it coincides with the weekend that the husband’s partner is attending Melbourne.

2. That pursuant to s.65DA(2) and s.62B, the particulars of the obligations these orders create and the particulars of the consequences that may follow if a person contravenes these orders and details of who can assist parties adjust to and comply with an order are set out in the Fact Sheet attached hereto and these particulars are included in these orders.

3. The wife as trustee of the Malone Family Trust do all things necessary to:

   (a)Distribute to the husband as a beneficiary of the trust, the shares in B Pty Ltd; and

   (b)Distribute to herself as a beneficiary of the trust, the property at C Street, Suburb D and contemporaneously with any such transfer, she discharge the mortgage to the ANZ Bank encumbering the C Street property from her own resources.

BY CONSENT OF THE PARTIES

1. That within 30 days, the husband and the wife jointly do all things necessary to terminate the Malone Family Trust.

2. Upon completion of the termination of the trust and, after the distribution of other assets pursuant to these orders, the net proceeds of the sale of the E Street property (held in the joint account with the ANZ Bank), be applied to satisfy any costs of the termination of the trust and the proceeds thereafter, be divided between the husband and the wife as to 70 per cent to the wife and 30 per cent to the husband.

3. That the wife forthwith place the property at F Street, Suburb D on the market for sale upon terms and conditions to be agreed, and failing agreement, by order of the court and upon the settlement of the sale, the proceeds be applied:

   (a)       To pay all costs, commissions and expenses of the sale;

   (b)       To discharge the mortgage encumbering the property; and

   (c)To apply the balance thereafter to the list of assets and liabilities referred to in paragraph [36] of the reasons for judgment in substitution for the amount there shown to be divided as set out in paragraph [50] of that judgment.

4. That upon the receipt of his entitlement to any monies arising from these orders, the husband discharge the joint ANZ Equity Loan account.

5. Pursuant to s 90MT(1)(a) of the Family Law Act 1975 (Cth), whenever the trustee of the One Path Master Fund (Account No 4982146) makes a splittable payment from the interest held by the husband in the said fund, the trustee pay to the wife the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there be a corresponding reduction in the entitlement that the husband would have had but for these orders and the base amount to be allocated to the wife from the husband’s interest in the said fund is fixed at $131,712.

6. That the provision of paragraph (8) of these orders has effect from the fourth business day after these orders are served upon the trustee.

7. Each party be otherwise entitled to the exclusion of the other, to all other property in the possession of such party as at this date save that the wife hand to the husband those items about which there is agreement and if there is any dispute otherwise as to proposed Order (11) of the minutes dated 28 March 2018, the husband has liberty to apply.

8. That save as to any issues of costs, the application of the wife filed 17 November 2017 and the response of the husband filed 5 December 2017 are otherwise dismissed.

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 Malone & Malone 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 MELBOURNE

FILE NUMBER: MLC 5462  of 2015

Ms Malone

Applicant

And

Mr Malone

Respondent

REASONS FOR JUDGMENT

1. Ms Malone (“the wife”) seeks both parenting and property alteration orders.  Mr Malone (“the husband”) also seeks orders but of a different nature.  When the proceedings began, there were a number of disputes but ultimately in final address, those were narrowed to the following:

   (a)How to determine the husband’s time with the three children of the parties during school term time where each child is of a different age, different temperament and each has different needs?

   (b)How to treat a pension interest in the United Kingdom held by the husband where it is asserted by the wife that it is property?

   (c)Whether to make an immediate distribution of the net proceeds of the sale of a property currently held in an ANZ Bank joint account or whether they should only be distributed after the costs and expenses of the termination of a family trust are known?

   (d)How, if at all, an adjustment should be made to the parties’ respective entitlement to property where a number of matters have to be taken into account such as significant expenditure by the husband on a sexual relationship outside the marriage prior to separation?

2. This property case began with an argument about “add-backs” but upon its conclusion, the husband conceded that money he had used including for the purposes of paying his legal costs, had diminished the equity in assets to be divided and therefore should be included as a premature distribution to him. 

3. Throughout their relationship, the parties conducted financial activities through a family trust under which they obtained taxation benefits that have contributed to the equity they now have to divide.  How to deal with that trust was initially controversial but in the end, there was common ground, which I have interpreted as a consensual arrangement, to terminate the trust and distribute the assets in specie as part of the overall division of property.

4. Another issue that was controversial but became less so at the end of the trial, was how to divide the parties’ total superannuation entitlements.  There was a dispute right up to until the final day about the date to be used for a valuation.  The husband had conducted the case initially on the basis that his superannuation had risen subsequent to the parties’ separation but when that was contemplated, the increases were as a result of his employment rather than any voluntary contributions by him as well as the effluxion of time and interest.  That produced an agreement as to the total value and then the dispute became one of whether the husband should have 55 per cent of that total or whether it be divided equally.  Counsel for the husband in final address was not able to put any serious argument to say that the husband should be given a greater share because of contributions subsequent to separation.  Whilst he continued to work on a daily basis, his contribution was just one of the factors to be taken into account.  The wife too worked after separation and her superannuation interest grew.  The husband was able to work at a higher level to accrue those emoluments because the wife took on a greater responsibility for the children during the relationship but also after it ended.  Whilst he proposed 55 per cent, as I shall address below, there is no basis to depart from the wife’s proposal of equality.

5. In the final proposals of the parties, the wife sought an order restraining both of them from making withdrawals from any mortgage accounts pending the sale of the former matrimonial home.  In the husband’s case, he sought an order that the wife in her capacity of the trustee of the family trust, be restrained from making distributions to any beneficiary.  There is no evidence to support either of the two orders and whilst there had been unilateral action previously, nothing would suggest that the court needs to intervene now.  It is also questionable whether the court has power to restrain a trustee of a discretionary trust from acting as required by the trust deed.  I do not intend therefore to deal with those two matters any further.

6. In his outline of case document filed as the hearing began, the husband sought an order that he be provided with a number of chattels.  He repeated that order in his counsel’s final proposed orders.  The issue had not been mentioned during the hearing but the husband’s written evidence was that he owned chattels which were in the wife’s possession.  In her reply affidavit, the wife said she agreed to the husband taking the items with the exception of two.  Absent those issues being addressed in any detail, I am not in a position to make any findings about ownership or how the items were purchased.  The only way that I can deal with the matter efficaciously is to make an order, as I will, that each party retain the assets in their respective possessions save that if there is a dispute over the two items named by the wife, the parties can come back with appropriate evidence on a specific application and the matter can be dealt with.  In other words, the jurisdiction in respect of those disputed items is deemed by the court not to have been exhausted by the orders that I have otherwise made.

A percentage conclusion

1. The orders that should be made in this case reflect a division (save as to superannuation) as to 70 per cent to the wife and 30 per cent to the husband.  I explain below why those orders are just and equitable.  The overall division in this case was of narrow compass.  As the trial began, the husband sought 60 per cent of the assets and in final address, his counsel conceded that the appropriate order was 65 per cent.  It is common ground between the parties that what the court is being asked to divide has a value of approximately $2.5 million.  Thus, this dispute was over about $125,000 in equity.  It is sad that the parties have spent much more than that to achieve this result.

Background

1. Both parties are intelligent, articulate and educated people.  In respect of their parenting skills, there was a limited dispute.  I find both have their children’s interests at heart notwithstanding strong criticism of the husband in final address by counsel for the wife.  I am very conscious that these parents have to raise the children together and in my view, there are a number of ways one could look at what the husband has done in terms of parenting.  I find that he has had a much less significant role than has the wife and that she fulfilled tasks that he could have, and probably should have, undertaken.  However, I am equally conscious of the fact that the husband is an earner of substantial income as he was throughout the parties’ relationship, and accordingly, both parties and the children have benefited from the respective roles they fulfilled. 

2. That said, while the parties do not communicate successfully, when the hearing began, they agreed on a suite of orders about their children including that the court should make an order for equal parental responsibility.  How successful that will be remains to be seen after two bruising days in court. 

The parties

1. The parties began living together in 1995 in the UK where both had been born. They married in 1999 and shortly thereafter moved from the UK to Asia to follow the husband’s career opportunities.  Both parties at that stage had been university graduates but the wife chose to follow the husband’s career path and ultimately, benefited.  However, she did so to her own career disadvantage which is something that I intend to take into account when working out a just and equitable outcome. 

2. In 2000, the parties moved from Asia to Australia to live.  They had no family in Australia.

3. The husband is 44 years of age and a qualified professional.  He has repartnered but his companion lives in New South Wales.  That requires him to commit to significant travel and as I understand what was proposed in relation to parenting orders, his companion will come to Melbourne to spend time with him.  The orders take that into account so that his new partner can have a role in the children’s lives in the future.  However, the travel gave rise to arguments about what money has been spent.  In my view, having examined the various trusts, bank records and tax returns, a lot of the husband’s earnings have been spent on his lifestyle subsequent to separation.  Having regard to the concessions made by the husband about “add-backs”, I need say no more.

4. The wife is 43 years of age and is employed by the state government. She is able to reduce her hours of contracted work and consequently is presently engaged on a .9 basis. That enables her to care for the children’s needs as and when they arise. However, it also means that her income is reduced from what she could otherwise earn and that is a s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) factor.

5. It cannot also be lost in this case that the wife has been able to successfully return to the workforce very recently and is earning $100,000 per year because of the assistance she receives from her parents who have come to live in Australia.  So too, the husband has relied upon the wife’s parents for assistance from time to time subsequent to separation.  Whilst there was an unseemly dispute involving the parents because the husband’s income had previously been put through a family trust with notional distributions made to reduce income tax, those monies were never paid to the wife’s parents but accrued as loans within the trust.  The net benefit to the parties lay in reduced tax on the husband’s earnings.  The dispute was whether or not the wife’s parents had had an “in kind” benefit because they had been assisted to move to Australia and had been provided with money from time to time but no debits had been made to their loan accounts in the trust.  In what could only be seen as a generous concession by the parents through the wife’s counsel, they agreed that they were not interested in, and would not pursue, any of the loan accounts in the trust.

The children

1. There are three children in this relationship.  X is 14 years of age, Y is 12 and Z is six.  All were born in Australia.  It is not contentious that the children will continue to live with the wife; the only issue for the court to decide is what time they should spend with the husband.

The cessation of the parties’ relationship

1. The final separation of the parties occurred in July 2013 and in respect of the parenting issue, it will be immediately apparent (and relevant) that Z was only 20 months of age when that occurred.  There were problems in the parties’ relationship prior to separation.  In 2009, the wife became aware that the husband had had a relationship with a person described as a “Cam girl”.  This became a contentious issue in the trial because something in the vicinity of $100,000 was spent by the husband on this extra marital relationship.  The expose of this activity coincided with the husband plunging into what was described as a depressed state and he had significant counselling thereafter.  Whilst there was initially some proposed evidence in relation to that counselling, the husband withdrew the affidavit.  However, it was the wife’s own evidence that he had psychological problems.  Most importantly, the wife continued the marriage for a further four years before the final separation. 

2. Now, well after the event, the wife wanted some recognition in the adjustment of assets for the fact that a substantial sum of money had been spent by the husband in this extra marital relationship.  That gives rise to the issue of what was asserted to be “wastage” and I shall deal with that below as a discrete topic but it is important to note that the wife was not including any such sum as an “add-back” but rather that the court should take into account as part of the ultimate adjustment that the money was no longer available to her.  I consider that is an appropriate way to deal with the matter.

3. In September 2015, the parties’ marriage came to an end with a divorce but I have chosen to continue to call them “husband” and “wife” only for my convenience.  I mean no disrespect to them. 

The proceedings

1. Finally by way of background, in many respects as I have already observed, it is most unfortunate that this case has taken almost five years to get to this point.  It is particularly unfortunate having regard to the dispute about how far apart the parties were in dollar terms to know that the husband spent over $200,000 in legal fees but at the same time, neither party could get on with their respective lives.  There were tax consequences and issues have festered rather than being easily resolved.

During the relationship

1. Both parties worked throughout the relationship and the wife took time out after each birth.  The husband travelled interstate frequently for his employment and accordingly, I find the wife has fulfilled the predominant parenting role.  The wife was not critical of the husband’s role, nor could she be, because of the financial benefits.

The trust

1. In 2010, the wife’s parents came to Australia and the husband and wife assisted them financially.  The husband was appointed a partner of a significant business in about 2006 and his income reflected the importance of that position.  To continue receiving his income in a tax-effective manner, a family trust was set up known as the Malone Family Trust.  The wife signed any necessary documents but she became the trustee of the trust.  I accept her unchallenged evidence that the husband controlled the operation of the trust.  She said she signed whatever documents were required of her.  It must not be forgotten therefore that the family benefitted from that arrangement in a very significant way through paying less tax on the high earnings of the husband. 

2. During the relationship, the husband completed further university qualifications and that no doubt added to his ability to earn income although there is no evidence of that detail nor how other responsibilities as a consequence fell to the wife.

3. The parties acquired their home in F Street and then upon the arrival of the wife’s parents, a two bedroom unit was acquired in C Street, Suburb D.  It was purchased by the family trust.  The purpose of the acquisition was to enable the parents to live as close to the parties but also the children’s schools but because it was purchased by the trust, the parties obtained a benefit.  It was purchased for $440,000 all of which was borrowed but the parties’ home was used as security.  That property has now acquired an agreed value of $725,000 against which there is a current mortgage of $441,000 leaving an equity of $284,000. 

4. It is agreed between the parties that although C Street is an asset of the trust, and the parents pay rent which does not cover all of the expenses of its maintenance, the trust will be terminated and this property will be taken in specie by the wife as a beneficiary of the trust so that her parents can continue to reside in it but she will have to enable the husband’s name to be removed from the security such that he is no longer responsible for it.  

1. The issue of what the role of the parents does not require a determination suffice to say the unchallenged evidence of the wife was that her father had contributed to improvements to the property as he was a handyman.  There is no specific evidence to which my attention was drawn, to show that those efforts increased the value of the property. 

2. In 2009, the parties purchased a second investment at E Street, Suburb D.  Again this was purchased through the family trust and funds were borrowed.  By agreement, E Street was sold and the net proceeds total $34,000. It was the husband’s view that upon the termination of the trust, that money should be paid to him.  It matters little because ultimately, all assets will be adjusted on a percentage basis.  However, the wife’s argument was that that money should not be released to the husband until such time as whatever is needed to conclude the trust by way of expenses, is covered.  I find that is the appropriate course of action because I do not know what expenses will arise and both parties should bear them. 

3. Whilst both parties approach the issue on the basis that the trust should be finalised, I am cautious about how that is done.  I was informed that issues of taxation consequences had been considered.  It is well known that the beneficiaries of a trust may terminate the trust by consent requesting any interest they might have be paid over to them to extinguish the trust.  The trust comes to an end here here because it is no longer needed to fulfil the purpose originally intended (see Saunders v Vautier (1841) Cr and Ph 240). 

4. The authorities of this court have looked generally at whether the trust is the alter ego of the parties and in this case, I am satisfied that although the wife is the trustee, the husband controlled all of the activities during the time that the parties were together.  The trust was set up mainly for tax purposes but the property is really owned by the parties.  Notwithstanding the primary source of the trust’s revenue was the husband’s income from employment, artificial arrangements such as the distributions to the wife’s parents were necessary to make the trust efficacious.  However, the court needs to be careful about ordering the winding-up of a family trust where there are potential beneficiaries other than just the parties.  Distributions were made to the wife’s parents and to the parties’ children and as such, the beneficiaries here are wider than the parties themselves.  Needless to say, neither party addressed the consequences of what each of them described as a winding up of the trust.  It was suggested on behalf of the husband that if there were any revenue implications, they could be addressed out of the proceeds of the sale.  There is no dispute that the trust is no longer necessary or required by either party as a vehicle for any purpose.  I have ordered what the parties desired.

5. In addition to the assets just described, the parties also had investments in a number of different companies for which the holding company was B Pty Ltd.  It is not contentious that the shares are currently worth $348,000 but there are debts either directly or indirectly associated with those shares of $446,000 leaving a shortfall of $98,000 or thereabouts.  It was the husband’s position that when the trust is terminated or wound up, the B Pty Ltd asset should be taken by him in specie and the wife agreed.

An assessment of contributions during the relationship

1. Counsel for the husband submitted that overall, the court should assess the contributions of the parties as being equal.  Counsel for the wife submitted that the wife’s contributions were greater than those of the husband.  She pointed to the fact that the wife gave up her career and followed the husband’s career path to assist him.  The wife had fulfilled her continuing parenting role after separation in circumstances where the husband returned the children on occasions to her even though he had been responsible for them because one was ill and he wanted to go to work.  It was the wife who took up that role of caring for the children presumably to her prejudice.  It was submitted that she lost holiday time entitlements in her employment by taking on that sort of role.  I accept that submission.

2. An assessment of contributions is subjective.  There is no doubt the wife gave up an earning capacity to assist the husband’s career but that is unquantifiable without some specific evidence.  Presumably, she chose to be a parent to the parties’ three children.  That in itself took her out of the workforce and may very well have prejudiced her career.  The wife could not have undertaken what she did without the assistance of her family.  Having taken on the various roles and which I recognise as both substantial and significant in this case, the wife enabled the husband to pursue his career and earn what he did.  The role that he had as a professional also enabled both parties to benefit because of the tax structures they were able to put in place.  I find her role as a homemaker and parent was significant.

3. However, it cannot be lost that the wife is walking away from this marriage with a much smaller capacity to earn an income than is the husband. Section 75(2) of the Act recognises that possibility and it is a factor that I propose to take into account in the adjustment. One of the difficulties in using a percentage is that whatever determination is made by the court, it must be the underlying value that must be just and equitable.

4. Here, the percentage adjustment urged by the husband from a position of equality (and thereby recognising the factors in s 75(2) of the Act) was 15 per cent. Fifteen per cent in a case such as this could not possibly recognise the disparity of earning capacity of the parties in this marriage if it is judged by some temporal means. For example, 15 per cent of the parties’ assets here is less than $400,000 and the disparity between the parties’ incomes is, on the husband’s figures, over $200,000 per annum. Thus 15 per cent represents less than two years income for the husband. Where an adjustment, as here, is unlikely to lead to an increase in income for the wife because she has to provide accommodation for the children, any percentage adjustment for an income disparity is relatively insignificant. That said, the husband promoted a division as to 65 per cent to the wife and 35 per cent to him. In other words, he says that the just and equitable outcome is that the wife should get almost double what he gets. From her perspective, the wife promoted an order that reflected 70 per cent of the net equity of the parties in their respective assets. That too sets the parameters of the dispute but it must be the underlying value of all of the factors to be taken into account that must be just and equitable.

5. Thus, in contemplating the submission of counsel for the wife as to what her client had done throughout the entire relationship and looking to the economic factors of the future, I can only deal with the assets that the parties have presented and in my view, that which is proposed by the wife (namely 70 per cent) is a just and equitable outcome in this case based upon what is available to be divided. 

The assets of the parties

1. The first step is to identify the legal and equitable interests of the parties in the assets of either of them and in this particular case, putting into that list, the assets of the trust which the parties have accepted belong to them. 

2. I find that those assets are:

   F Street (net)  $1,966,000

   Commonwealth Bank  14,000

   Shares  348,000

   Less encumbrances  446,000

   Net   (98,000)

   Wife’s car  10,000

   Husband’s agreed “premature

   distributions”  103,000

   The C Street property   725,000

   Less  441,000  284,000

   The E Street proceeds  34,000

   The G Investments  396,000

   Less debt  192,000  204,000

   Total  $2,517,000

3. The parties now agree that they have superannuation of $427,148.

The proposals

1. The husband proposes that the non-superannuation assets be divided as to 65 per cent to the wife and the balance to him which would mean that the wife would be entitled to $1,636,000.  The wife’s position was that she should have 70 per cent of that non-superannuation list of assets which would amount to $1,762,000.  As can be seen, I have rounded off the figures but in any event, the dispute between the parties is modest in dollar terms. 

The assessment

1. Notwithstanding the position adopted by counsel for the wife that arguments could have been raised about a much greater contribution because of giving up her career pathway and the assistance from family, it is difficult to see how globally, the contributions of the parties were other than equal.  To try and isolate particular contributions in a revisionist approach runs the risk of not comparing contributions appropriately but it also has the tendency to ignore such things as the fact that the husband worked long hours leaving the wife with the responsibilities largely on her own for managing the house and caring for the children.  But it cannot be ignored that she too benefited financially from that decision.

2. The most obvious disparity between the parties during the relationship can be seen in things that were unilateral or about which, one of them disagreed.  Such was the state of the parties’ relationship that the husband strayed from the marriage in a very significant way and spent a large amount of money.

The “Cam Girl” dispute

1. The husband’s conduct during the marriage was viewed differently by each of them.  Florid language was used to describe that conduct but in my view, it matters little.  The focus of attention must be on the financial aspects here because the wife accepted the husband’s behaviour and endeavoured to continue the relationship for a number of years after becoming aware of what he had done.  From a quantum point of view, the wife said that the husband had responded that he had spent “some” money in response to her allegation that it must have been in the vicinity of $100,000.  He had not denied her assertion in some email correspondence her assertion and unfortunately or otherwise, this became the focus of cross-examination.  He ultimately conceded that he had spent somewhere up to $100,000.  His conduct led to wider implications which were not addressed namely his loss of status within the business, many attendances on a psychologist for assistance and no doubt, the impact of his depressed state upon the wife’s capacity to continue fulfilling the roles that she had otherwise had to undertake. I find the evidence establishes the parties’ financial circumstances were affected by virtue of the money that had been spent on the “Cam Girl” but the wife continued the relationship and assisted the husband to return to working life.  As I have already observed, she did not seek to have this money included in the asset list as some form of “add-backs”. 

2. Counsel for the wife submitted that this behaviour was wanton.  In Kowaliw and Kowaliw (1981) FLC 91-092, Baker J observed that marriage for most couples is an economic partnership. They live together and work together to purchase a home, paying it off, acquiring other assets and with the overall object of attaining a higher standard of living. That is what happened in this case and the wife continued to maintain the economic partnership well-knowing that the husband had a problem because, as she acknowledged in her evidence, he had many attendances on medical health professionals.

3. In Kowaliw, Baker J said that losses should be shared in the same manner as gains except in circumstances, inter alia, where one of the parties had acted recklessly, negligently or wantonly with “matrimonial assets”, the overall effect of which was to reduce or minimise the value of those assets.  “Wanton” is described by the Macquarie Dictionary (2^nd edit) as something done maliciously or unjustifiably, deliberately and uncalled for or a reckless or disregardful action of someone’s right.  Other descriptions in the dictionary include “self-indulgent” and to “squander away as in pleasure” or undisciplined.

4. Notwithstanding the husband’s high earning capacity, there is no doubt that the parties lost equity that might otherwise have been available to them and that can only be as a result of the husband’s undisciplined behaviour amounting to a conscious disregard of the rights of the wife to share in the fruits of his employment. Bearing in mind their economic partnership, the wife had taken on the responsibility for the care of the children and had given up her career pathway to support his. In my view, the husband’s action was wanton but it is unnecessary for me to endeavour to precisely determine the quantum. In my view, the matter should be recognised under s 75(2)(o) of the Act as part of the adjustment that I propose to make in favour of the wife amounting to approximately 20 per cent to take her entitlement to 70 per cent.

Contributions subsequent to separation

1. It is unnecessary for me to deal with the monies taken and used by the husband that increased the parties’ indebtedness because they have been accepted by the husband as a premature distribution by him and included in the assets above.  Subsequent to the separation of the parties, the wife not only fulfilled her role in caring for the children under trying circumstances but the husband did assist.

Two other matters to be taken into account under s 75(2) of the Act

1. The husband has an entitlement to a pension in the United Kingdom from prior to the period when the parties came to Australia.  Whilst this case was wandering through the system, little attention was paid by either party to that entitlement.  It was only in the trial when the husband was pressed about it, he acknowledged that he had done little about it but I accept that that problem has now been overcome and that he has an entitlement.  There is no evidence as to how that pension system works nor how he could access it, if at all.  It is not a significant amount in relative terms to the other assets and with the respective ages of the parties, it is not an asset that should be treated as divisible.  I shall take into account however that the husband has it and may be able to use it in the future.

2. The second and most obvious disparity between the parties is the one I have already mentioned.  It lies in their future earning capacities.  The only evidence about the wife’s income is that she is on a contracted income of $120,000 per year but to enable her to fulfil the parenting role, she is now taking less than the full contracted sum.  Even if that were not so, her income is much less than that of the husband.

3. The husband’s income was controversial.  Various figures were used to endeavour to get a clear picture of the quantum.  Immediately after ceasing to use the Malone Family Trust, the husband began his own trust.  I accept his evidence that initially he was writing papers for his employer as a contractor and therefore was able to bill and take advantage of the trust.  That now seems to have ceased.  However, he does bill his employer on an hourly rate and to assist, he has relied upon his new companion to do work for him and he makes an adjustment to the hourly rates accordingly.  To achieve that however, he describes the new companion as an employee and pays her $550 per week but his financial statement would tend to suggest that he is supporting her in any event.  The minutiae of this exercise is largely irrelevant because on any view of the disparity between the husband’s income and that of the wife, it is large.  As I earlier observed, the percentage approach to the division of assets has to look at the underlying value of the percentages.  In other words, whatever is taken away from him now, can quickly be recovered not only by virtue of the structure that he has in place but also the potential tax implications that he can manipulate.  The wife is unable to do that.  However, the wife pitched her case at 70 per cent and in my view, that is an appropriate outcome in all the circumstances.

The legal issues

1. In making any calculations that I have, I have been largely guided by the evidence that the parties have provided. I have taken into account all of the matters set out in s 79(4) of the Act including being drawn into s 75(2) by virtue of s 79(4)(e) of the Act. I have contemplated all of the matters in s 75(2) insofar as they are relevant and as the parties did not highlight most of those matters, there is no need for me to do likewise.

2. In my view, the alteration as to 70 per cent is a proper, just and equitable outcome in this case.

The parenting dispute

1. The parenting dispute here was confined to what time the husband should spend with the children during school terms.  The parties have agreed upon an arrangement for holidays but that is heavily conditioned upon the husband giving notice that he will take the time and spend it with the children.  The wife was pessimistic that he would do so.

2. The time between the husband and the children has not been as simple as he would have the court accept and there have been problems.  Unfortunately, much of this evidence came out in the hearing itself.  The evidence given by the wife is plausible and was not seriously challenged in cross-examination and I accept it.  As a witness, I found her focused and very much wanting the husband to have a significant role in the children’s lives.  However, it is not that simple.

The husband’s proposals

1. In final address, the husband distinguished between X and Y as against Z.  In relation to X and Y, he proposed that until about October 2018, he have both of the boys from Wednesday after school until 4.00pm on Sunday but when the fourth term commenced, that time would be extended until the Monday morning or Tuesday if it was a public holiday.  In respect of Z however, he sought only from Thursday after school until 4.00pm on the Sunday until the commencement of Term 1 in 2019 and thereafter by extension to the Monday morning.

2. Nothing in the evidence indicates that there is a specific reason why X and Y would be suddenly ready to spend more time with their father on Sunday night into Monday morning at the commencement of Term 4.  Similarly, nothing in the evidence indicates that Z will be suddenly ready to commence overnight on the Sunday into the Monday morning at the start of next year.

3. What is distinctly noticeable however, is that the boys are always, under the husband’s proposal, to have more time with the husband than Z.  Nothing in the evidence justifies that structure and indeed, it was the wife’s evidence that the children feel much more comfortable all being together.  I accept that.

4. It is important to recognise that the parties have managed to work out arrangements up until now without significant involvement from the court but some of those arrangements have not been without difficulty.

The wife’s position

1. Counsel for the wife submitted that when one looked at the current arrangement for these children, it was disjointed.  I accept that submission.  At the moment, X has two nights but then went back to the wife and there were other problems to which I shall turn in a moment.

2. The wife’s position was that it was time to finalise the contact arrangement and she suggested from Friday through to Monday on alternate weekends with the husband collecting the children from the school and delivering them back there on the following Monday morning.  The difficulty with that proposal is that it is not what the husband wants and I would be reluctant to make an order that he have the children when his proposal is that the Monday morning arrangement not commence until the end of 2018 or early 2019.

Problems of late?

1. The wife gave evidence that there has been two occasions on which Z has been resistant to spending time with her father.  On one occasion, she was sufficiently distressed when being delivered to the husband, for the wife to take her home and it would seem, the husband accepted that.  Sadly, because of the nature of the relationship between the parties, he was told very little. 

1. It is hardly surprising that Z is not entirely settled bearing in mind that she was only 20 months of age when the parties separated and the structure thereafter has been one of a build-up.  The wife’s evidence was that Z very much relies upon her brothers.

2. Y, does not seem to have any real problems and on most occasions has attended the time allocated.  X, presents a different challenge.

3. The parties had a different view about a simple issue such as X getting to school from the husband’s home by public transport.  X is involved in music at school and that begins that curriculum before the general school day.  The husband took the view that X should travel by public transport but when pressed in cross-examination, he accepted that X was resistant.  He had unsuccessfully tried to cajole X into going even for a trial period.  He offered to take him to the tram stop but that was unsuccessful.  Sadly, it would seem that this innocuous incident blew up with X telling his mother a lot more than what he was telling his father.  Although this otherwise innocuous event might be seen as isolated, the combination of problems suggests that X is not as comfortable with any particular relationship with his father but is also beginning to flex his teenage intellectual muscles.

4. An incident occurred when the children were in the husband’s care and the wife received a message to come and collect X and when she attended in the street, she heard shouting.  Z had been separated from the boys and was with the husband’s new companion so the focus was very much on the boys.  Ultimately, arguments between the husband and the wife occurred about whether the boys should go home with her, and whether the police were to be called.  All of that missed the point that something was wrong in the relationship at that time between the husband and at least X.  Eventually, the boys went home with their mother but then, time between the husband and at least Y, resumed as the weeks went by.

5. It is not entirely clear what X’s position currently is.  He seems to be negotiating with the husband.  The husband gave evidence of a telephone conversation where X told him he had four things to raise.  In the course of the discussion, had forgotten one and was heard by the husband speaking to his mother.  The inference to be drawn from that was that the mother had influenced the situation in some way.  I would not necessarily draw that inference because it is conceivable that X at the age that he is, had raised the various subjects with his mother anyway.  The wife was not cross-examined about the issue nor could she have been, because it was not part of the evidence at that stage.  However, all of this points to the fact that there is a problem and as I observed at the time, the law has great difficulty in resolving problems which really belong to the province of the social scientist.

6. To the extent that it is necessary for me to make a finding, I accept that all is not well between the husband and the children including Z and that the parties would do well to get some expert help before any permanent damage is done.  The husband made clear that he has intentions of having his time with the children to coincide with the arrival of weekends of his companion, but in my view, that ought to be handled carefully to avoid further confusion and tension.

7. It is not necessary for me to make findings about a whole raft of other issues in contention because of the parameters of the dispute but it would be remiss not to mention that the wife has handled situations for the children in her role as a parent much better than has the husband.  He has had significant work obligations and when problems arose, he relied upon the wife to assist.  One difficult example of that was that Y plays lacrosse.  The husband has never attended but now says that he will.  Y raised the subject of his father’s absence with the wife.  Another simple issue relates to sports training by X.  The husband’s evidence was that it had been difficult for him on a cold, dark night to occupy the time of the two younger children whilst X was in training.  In other words, it was not viable for him to return to his home only then to have to go out again and collect X.  This too is a reflection on the husband’s capacity as a parent.  The wife’s view as that the children should be all together and that would necessitate occupying them whilst one of them was involved in sport.  The husband pointed to the fact that he now had that problem under control by organising a meal at a Japanese restaurant and they would then take a meal to X to consume after soccer training.  All of this points to difficulties in the parties’ relationship not to mention the husband’s difficulty in committing to significant involvement in the children’s lives because of his work commitments.

Conclusion relating to parenting matters

1. A comparison of the two positions indicates a clear overlap.  During her counsel’s final address, the wife indicated that she was not particularly concerned about what days should be set but rather, giving the children some certainty.  The husband’s position was that he wanted to be involved in the children’s lives and in particular, involved in their activities.  The clear overlap that both parties promote can be seen from the Thursday after school until 4.00pm on the Sunday.  I accept that the wife’s position is that if things settle down and can improve, a much more flexible approach can be taken.  The best evidence of that is what has happened in the past and the absence of court intervention.  In my view, the best way to solve the problem for these children is to ensure that they have a base from which to work and one which satisfies not just their needs but also the matters considered important by the law. 

The legal issues

1. Although not mentioned here, the parties agreed to an order for equal shared parental responsibility. There is no issue here raised by either party about s 61DA of the Act. I do not intend to deal with that presumption any further.

2. Section 65DAA of the Act however, requires that if there is an order for equal shared parental responsibility, the court must consider the children spending equal time with their parents providing it is in the children’s best interests and to consider whether equal time is reasonably practical. I do not need to address this any further because neither party suggested it as appropriate.

3. However, s 65DAA(2) provides that if equal time is not to be ordered, the court must consider the children spending substantial and significant time with each of the parents if it is in the best interests of those children and reasonably practical.

4. Substantial and significant time is defined in the Act in s 65DAA(3) as follows:

   3.For the purposes of subsection (2), a child will be taken to spend substantial and significant time with a parent only if:

   (a)      the time the child spends with the parent includes both:

   (i)       days that fall on weekends and holidays; and         

   (ii)      days that do not fall on weekends or holidays; and

   (b)the time the child spends with the parent allows the parent to be involved in:

   i.the child’s daily routine; and

   (ii)occasions and events that are of particular significance to the child; and

   (c)the time the child spends with the parent allows the child to be involved in occasions and events that are of special significance to the parent.

5. The husband wants to be involved in the activities of the children and at the moment, I could not find that it is reasonably practical for him to be so extensively involved because of his commitments.  That is not to say that he cannot change and make arrangements with the wife.  I accept she will be prepared to encourage greater time if it can be arranged and the children adjust comfortably to it.  Significant involvement in children’s schooling includes more than just attending to drop them off and picking them up.  It includes involvement in activities associated with a school and learning about how they are progressing.  That only occurs through dialogue with and attendance upon their teachers.  I find in this case, the husband’s involvement has been modest. That is not to say that that cannot change.

6. Nothing was specifically put to me to suggest that there are particular things important to the husband in which he would want the children involved but even if that was necessary, there is ample time in the agreed school holiday periods that I do not have to deal with further.  I am concerned that each of the holiday periods under the consent orders is prefaced by an agreement that it will occur and that seems very much affected by the husband’s working capacity.  The evidence does not permit me to make a finding about the full extent of the husband’s capacity during school term times such that I could be confident that he would be able to attend activities during school days that are important to the children or to care for them when they are sick because he has not done those things in the past.  It always seems to fall to the wife.

7. Accordingly, the definition of substantial and significant time is a nebulous one and the facts here do not assist me at all.

8. Section 60CA provides that in making an order, the court must consider the best interests of the children and that best interests’ principle, is determined by reference to s 60CC of the Act.

Section 60CC

1. There is no suggestion here other than that the children benefit from having a relationship with both of their parents and that, subject to all of the qualifications above about problems in the relationship between the husband and the children, their relationship otherwise seems to be meaningful.

2. Section 60CC requires the court to consider the views of the children. X is of an age where he is flexing his intellectual muscles and the parties need to be very conscious that they make the decisions for X not him albeit they have to take into account his burgeoning maturity. Z is pulling back at times and the parties need to address why that is so and work out a way to ensure that she is encouraged and excited about going to spend time with her father. That test will be faced in the school holiday periods ahead as Z has never been away from her mother for significant periods of time. The most sensible solution is that proffered by the wife that Z seems most comfortable when all children are together.

3. Section 60CC(3) requires the court to consider the nature of the relationship of the children with each of the parents, the extent to which the parents have (or have not) participated in decisions and spent time with the children and fulfilled their obligations to maintain them. The evidence shows that the husband had problems with the boys but made the appropriate decision to allow them to go home. In my view that was a sensible solution albeit that the longer term problem had not been worked out. So too, it was sensible that the husband did not press the issue about Z’s distress but that too, needs to be addressed.

4. I find that the wife is very child-focussed, acts responsibly and has the capacity to care for the children.  Apart from the isolated incidents highlighted in the evidence, the husband also seems to have a responsible and child-focussed interest but he parents differently from the wife.  The children do want to see him but they also appear to have some difficulty about being away from their mother for long periods of time.

5. There is no difficulty in terms of distance between the parents nor is there any indication of irresponsible behaviour by the husband in respect of their financial care. 

6. Whilst counsel for the wife was highly critical of the husband particularly in relation to parenting, I find that his attitude towards the children is responsible but the parties need to work out a way to bridge their communication gap and to accept that they have the responsibility for the care of these children not only because they have equal shared parental responsibility but because the children need them both working in the one direction.

7. There are no issues of family violence here which is comforting.

8. The final issue under s 60CC of the Act relates to the question of whether or not orders should be made that would be least likely to lead to further institution of proceedings. These children are very different from each other and Z has much longer to go to teenage years than the boys. Not knowing how changes will occur in Z’s life with or without the boys present, makes it very difficult to try and guess when she would be best able to go for long periods of time. The examples I have given about her distress from separation from her mother indicate that the court should be cautious about long periods of time during the week but also guessing as to when those periods of time can be extended. The latter is the province of the parents. In my view, the most appropriate course of action here is to set a base from which the parties can build a platform as and when changes in their children’s lives occur. The most logical solution therefore is to operate within the periods of time which I have described as the overlap where both parents agree the children will attend and I find in the circumstances, those periods are in the best interests of these children.

I certify that the preceding eighty-three (83) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 17 April 2018.

Associate:

Date:  17 April 2017