Mertz & Mertz (No 2)
[2024] FedCFamC1F 782
•19 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Mertz & Mertz (No 2) [2024] FedCFamC1F 782
File number(s): ADC 2893 of 2023 Judgment of: BERMAN J Date of judgment: 19 November 2024 Catchwords: FAMILY LAW – PROPERTY – Interim orders – Consideration of the application of funds in various offset accounts towards various mortgages – Where the parties propose to retain the mortgage to ensure redraw facilities are available – Where there is no opposition by the husband – Where the wife provided a proposed Minute of Order – Where the husband was given the opportunity to forward a schedule of the revised balances in the various accounts – Where no schedule was received – Orders made in terms of the wife’s proposed Minute of Order.
FAMILY LAW – CHILDREN – With whom a child lives with and spends time with – Best interests of a child – Where two children live with the wife and one child lives with the husband – Where the husband seeks orders for the children to live with him – Where there is no evidence as to whether the children will be beneficially or adversely impacted by the husband’s proposal – Where the matter has a trial listing date – Where the Court declines to change the current arrangements prior to trial.
Cases cited: Mertz & Mertz [2024] FedCFamC1F 704 Division: Division 1 First Instance Number of paragraphs: 60 Date of hearing: 8 November 2024 Place: Adelaide Counsel for the Applicant: Mr LL Solicitor for the Applicant: R Lawyers Counsel for the Respondent: Ms U Solicitor for the Respondent: T Lawyers Counsel for the Independent Children's Lawyer: Mr BB Solicitor for the Independent Children's Lawyer: V Lawyers ORDERS
ADC 2893 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MERTZ
Applicant
AND: MS MERTZ
Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
BERMAN J
DATE OF ORDER:
15 NOVEMBER 2024
UPON NOTING THAT:
A.All applications for final orders are listed for final hearing on 7 April 2025 as a 5-7 day matter; and
B.Reasons for judgment will be delivered within twenty-one (21) days of this order.
THE COURT ORDERS THAT:
1.The Response to Application in a Proceeding filed by Mr Mertz (“the husband”) on 27 September 2024 be dismissed.
2.Z born 2012 (“Z”) attend such secondary school as the parties may agree but in the absence of agreement, within fourteen (14) days of the date of this order, the parties do all things necessary to cause and enable Z to be enrolled in Suburb HH High School to commence as and from the beginning of the 2025 academic year.
3.The husband do all things necessary to cause Ms Mertz’s (“the wife”) number to be unblocked from Z’s iPhone and to change Z’s privacy settings such that Z can not place his phone number on “No Caller ID”.
4.The wife’s Further Amended Application in a Proceeding filed 1 November 2024 be dismissed.
5.The parties do all such things and sign all such documents as may be necessary to pay out the balance on the CBA Mortgage account ending #...02 currently registered over DD Street, Suburb Q in the state of South Australia (“the Suburb Q property”) in the following manner:
(a)The funds from the CBA Offset account ending #...97 are to be applied to the balance of the CBA Mortgage account ending #...02 such that the remaining outstanding balance is not less than one dollar ($1);
(b)The balance of funds in the CBA Offset account ending #...97 are be paid to the wife and transferred to her nominated bank account;
(c)The parties be restrained and an injunction granted restraining each of them from drawing down on the CBA Mortgage account ending #...02 without either the joint written consent of the parties or further order of the Court; and
(d)The wife pay all rates, taxes and other outgoings of and incidental to the Suburb Q property.
6.The parties do all such things and sign all such documents as may be necessary to pay to the CBA Mortgage account ending #15 currently registered over CC Street, Suburb F in the State of South Australia (“the Suburb F property”) in the following manner:
(a)Funds from the CBA Offset account ending #...62 to be applied to the balance of the CBA Mortgage with Loan account ending #...45 such that the remaining balance is one dollar ($1).
7.The parties be restrained and an injunction granted restraining each of them from depleting the remaining balance in the CBA Mortgage Offset account ending #...62 and Commonwealth Bank Everyday Offset account ending #...82 without either the written consent of both parties or further order of the Court.
8.The husband do pay all rates, taxes and other outgoings including but not limited to gas, water, energy fees and charges and he shall indemnify the wife in relation to same until such time as the parties agree in writing or as a result of a further order being made.
9.From the balance of funds transferred from the CBA Offset account ending #...97 transferred to the wife’s nominated bank account, the wife shall sign all such documents as may be necessary to pay the Health Insurance Policy on a family basis on the same table level as currently exists for a minimum period of six (6) months from the date of this order.
10.Within fourteen (14) days, the husband do all things required to register the household outgoings for the Suburb F property including gas, water, energy expenses in his sole name and shall indemnify the wife in respect of same.
11.Until further order, the monthly loan repayments pertaining to the CBA Mortgage account ending #...53 registered over the Suburb F property are to be paid by the husband.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BERMAN J
INTRODUCTION
Mr Mertz (“the husband”) and Ms Mertz (“the wife”) each seek interim orders, pending the resolution of the proceedings, as to the parenting arrangements for Z born 2012, X born 2015 (“X”) and Y born 2016 (“Y”) (collectively “the children”).
Pursuant to the orders dated 18 January 2024, X and Y live with the wife and spend time with the husband three nights each fortnight. The orders changed the primary care of Z such that he now lives with the husband and spends time with the wife as agreed which, in reality, is no time.
The husband’s Response to an Application in a Proceeding filed 27 September 2024 seeks a change to the operative orders made on 18 January 2024 such that X and Y transition into his primary care, whereas the wife’s Further Amended Application in a Proceeding filed 1 November 2024 seeks orders that Z spend time with the mother:
(a)From the conclusion of school each Wednesday (or 3.30 pm if a non-school day) to 7.30 pm; and
(b)For three (3) hours each alternate Saturday from 9.00 am to 12.00 pm to coincide with the mother’s time with X and Y together with her application to utilise funds in offset accounts held by the parties to discharge in whole or in part their mortgage liabilities, was listed for hearing on 8 November 2024.
Interim orders were made on 23 October 2024 which resolved some outstanding interim issues of discovery and production of documents and provided for an injunction restraining the parties from changing X and Y’s school without prior written consent of the other party and cancelling any of the children’s registration with any secondary school.
The parties were able to reach agreement as to the parenting arrangements over the Christmas and Easter periods. The question of time spending remained an outstanding issue that required judicial determination and was heard on 8 November 2024.
I rely upon the judgment of Mertz & Mertz [2024] FedCFamC1F 704 as an adequate consideration of the background to the litigation and the relevant history of the party’s relationship.
Notwithstanding my comments in the judgment delivered 23 October 2024, the parties appear intent on pursuing the litigation even though it would not be beyond their ability, given the assistance provided by their separate legal representatives, to resolve all outstanding issues.
Whilst the nature of the dispute may not upon first consideration justify an expedited hearing, the circumstances of high conflict in which the children find themselves, the current position where the siblings are split between the parties with Z affectively refusing to resume a relationship with the wife and the intractable dispute between the parties, supported a decision to list all applications for final orders to a trial date on 7 April 2025. Subject to unforeseen circumstances, the parties can have confidence that the matter will commence as listed.
As but only a part indicator of the significant financial and emotional toll that the litigation on the parties has taken, the wife’s costs to the conclusion of the proceedings has been estimated at between $701,546 to $780,036. The husband’s costs are likely to be in excess of $500,000.
The total of the costs incurred by the parties will equate to about 25 per cent of the pool of assets available for division.
Z
The parties have been in dispute as to where the children, in particular Z, will go to school commencing in the 2025 academic year.
At present Z remains in the primary care of the husband and but for some irregular, unplanned and unsatisfactory interaction between Z and the wife, it could not be said that there is an effective and qualitative relationship. That observation does not diminish the wife’s strong desire to re-establish a relationship with Z but it is an uncontroversial observation of the level of current dysfunction.
As at the hearing on 8 October 2024, the parties were able to reach agreement that Z would be enrolled in and attend Suburb HH High School in 2025.
Accordingly, paragraph 3(b) of the orders made 23 October 2024 provide for the parties to be restrained by injunction from cancelling the children’s registration with any secondary school. The purpose of the order was to ensure that the agreement reached between the parties that Z attend Suburb HH High School would not be altered or changed.
At the commencement of the hearing, an oblique reference was made to some uncertainty as to whether Z would continue with his enrolment at Suburb HH High School or be enrolled in N School. No application was before the Court and when the matter was raised by the wife’s senior counsel, counsel for the husband submitted that during the adjourned period, the husband had entered into negotiation with N School such that the school was now prepared to offer a 50 per cent reduction on Z’s tuition fees on the basis that the husband would provide promotion and publicity for the college.
The wife made clear her objection to any change in the previous arrangement and sought a direct order that ensured Z would be enrolled in Suburb HH High School and commence in 2025.
The husband provided little or no information in respect of either the proposed financial arrangement with the college nor did he give any information as to the nature of the services that he intended to render and the likely cost and consequences that would be attributed to the proposal.
Senior counsel for the wife argued that without full knowledge of the parameters of the proposed agreement, the wife could not be certain as to whether the proposed 50 per cent discount on the tuition fees for Z would be ongoing or would be conditional upon the husband continuing to provide media and publicity services to the college.
Moreover, it was not suggested that were agreement to be reached between the husband and the college in respect of Z, it would necessarily equate to Y and X gaining a similar benefit.
Inherent in the submission on behalf of the husband was a suggestion that N School was likely to provide a superior level of education to that of Suburb HH High School. No evidence was presented that supported a finding that N School was able to offer educational or sporting components which were likely to assist in the development of Z.
I am uncertain as to whether the husband hoped that the wife might be persuaded to resile from the previous agreement that Z would be enrolled in Suburb HH High School in favour of an enrolment at N School, however it does not appear that there was any serious negotiations between the parties. The husband has not provided any information as to the terms and conditions of any proposal for N School to favourably consider a 50 per cent deduction on tuition fees and possibly other school-based expenses.
It is a reasonable finding that in the agreement reached between the parties that Z would commence at Suburb HH High School, the decision was considered to be in his best interests.
In the absence of any evidence that would assist in understanding what advantage perceived or considered favourable to Z, I propose to order that the parties do all things necessary to enrol Z to commence at Suburb HH High School for the 2025 academic year unless, within a short time frame, they agree alternatively.
The wife seeks that Z spend four hours each Wednesday and three hours each alternate Saturday with the wife with such time to coincide with X and Y being in her care.
Whilst the husband supports Z having a relationship with the wife and agrees that it is in Z’s best interest, he also considers that more needs to be done to reconcile the differences between Z and the wife rather than force him to make Z spend time with the wife, a situation that the husband considers is likely to further alienate Z from the wife.
For her part, although the wife seeks orders that Z spend time with her, she concedes that she would not take enforcement or contravention proceedings if Z did not attend. The rationale for the orders sought is that whilst the wife recognises that Z cannot be compelled to spend time with her, the very existence of the orders would reinforce in Z that the wife is anxious to resume a meaningful relationship.
Z is currently 12 years of age and for reasons that are not well set out or understood, he has become highly resistant to spending time with the wife other than if he considers that there is some personal advantage to him in doing so.
The presentation of Z is troubling and his potential alienation from the wife is not easily understood. What is apparent is that Z has attained a level of confidence in his conduct that he is overt in his discourteous conduct to the wife such that he does not feel constrained in displaying a rude and offensive hand gesture to her, in public.
The Court had the advantage of hearing the husband’s evidence by way of examination in chief in response to the allegations made by the wife as to evidence of Z’s poor and oppositional behaviour.
The husband considered that it was not appropriate for Z to be demeaning and rude towards the wife although I do not discount the possibility that the husband was attempting to understate the depth of Z’s discourteous behaviour.
There are a number of competing factors at play that are not able to be determined on an interim basis. The concern of the husband is that if Z considers he is being forced to spend time with the wife against his wishes, this will only further alienate him from the wife and make any possibility of reconciliation a more difficult and fraught exercise.
I do not consider that the orders sought by the wife are unreasonable but given I am obliged to consider the advantages and disadvantages to a child of the orders sought by a party, whilst the advantage may be apparent namely, that no harm should arise from Z being required to spend time with the wife noting that the periods are relatively brief, I am not able to assess the disadvantage that might flow from the orders sought in the absence of expert evidence.
I propose to dismiss the orders sought by the wife in respect of Z spending time with her.
The wife seeks an order that the husband do all things necessary to cause the wife’s telephone number to be unblocked from Z’s iPhone and to require Z to change his privacy settings so that he cannot place his phone number on “No Caller ID”.
It was an intention of the parties, consequent upon the hearing before Judge Mansfield, that whilst there may be difficulty in Z being prepared to spend time with the wife, his access to a mobile phone would enable the lines of communication to remain open.
I consider that the request of the wife to be able to communicate with Z via his mobile phone is qualitatively different to her application requiring Z to spend time with her.
Z is not an adult and as such, the mobile phone contract is held by the husband. The mobile phone utilised by Z at age 12 years is not a right that he has but rather a privilege. It is not unreasonable that the ability of Z to utilise a mobile phone comes with certain terms and conditions. In the same way that it would be expected that the husband would ensure that Z uses his phone for proper purposes, remain vigilant in respect of inappropriate social media engagement it is therefore not unreasonable that the husband would insist that Z does not place his phone number on “No Caller ID”.
It may be that the husband will need to counsel Z so that he better understands that the stance adopted by him has consequences and that may be a restriction on the ability that he has to operate and utilise a mobile phone.
I propose to make the order as sought by the wife.
Y AND X
The husband seeks that Y and X transition into his primary care.
When challenged, counsel for the husband was not able to demonstrate the advantages and disadvantages of such a significant change in the parenting arrangements for Y and X particularly given that there is now a date for a primary listed trial.
What was apparent was that the husband did not have an expectation that orders would be made as sought by him but rather that there was a strategy adopted which provided that if the Court did not order the children to transition to the husband’s primary care then the first alternative would be equal time and the second alternative would be an extension by one or more days of the current arrangement.
The orders sought by the husband were opposed by the wife.
I do not propose to discuss the main issues raised by each of the parties. Not dissimilar to the Courts rejection of the orders sought by the wife in respect of Z, the issues between the parties are at such high conflict that there is no certainty as to how Y and X would be affected by the cascade of orders sought by the husband.
A meaningful relationship is likely to be an inherent goal in any proposed parenting orders. At present, the arrangements between the parties appear to be working tolerably such that Y and X are prepared to spend time with the husband and Z and then return to the care of the wife.
I do not consider it appropriate to put in place a significant change in the parenting arrangements for Y and X in the absence of any proper basis for doing so without understanding the extent to which the children may be beneficially or adversely affected.
I propose to reject the husband’s application for a change in the parenting arrangements for Y and X.
FINANCIAL ARRANGEMENTS
The parties prepared a joint balance sheet dated 29 August 2024 to assist the Court in respect of earlier interim proceedings.
The wife currently resides in a property at DD Street, Suburb Q, SA (“the Suburb Q property”) with an estimated value in the sum of $900,000 whereas the husband resides in the former matrimonial home at CC Street, Suburb F, SA (“the Suburb F property”) estimated to be valued at $2,700,000. The parties set up offset accounts with the intention that the interest earned on monies deposited into the offset account would then be utilised against the mortgage.
As part of earlier dispute between the parties, the connection between the offset account and the mortgage for the Suburb Q property was the subject of a freezing order and as such, the wife has paid the mortgage from her own financial resources whereas the arrangement in respect of the Suburb F property continued without change.
The wife relies on a Minute of Order (Exhibit “1”) that would see the funds currently held in the Suburb Q Offset account ending #...97 in or about the sum of $255,443 (as at 31 October 2023) to be offset against the CBA Mortgage account ending #...02 currently outstanding in the sum of $221,442 (as at 6 February 2024). The discharge of the mortgage would result in the wife retaining about $34,000 surplus. I propose to order that the wife will draw on the surplus to pay for the health insurance premiums for a six-month period.
The wife further proposes that the amount in credit in the Suburb F Offset account ending #...62 in the sum of $621,983 (as at 22 June 2024) be offset against the Commonwealth Bank Home Loan account ending #...45 in the sum of $681,286 noting that there would be a shortfall of about $60,000.
The Suburb F property is the subject of a second mortgage in the sum of $288,013 (as at 12 February 2024) which the wife considers should be offset by funds held in the CBA Everyday Offset account ending #...82 in the sum of $265,514.
It is not the intention of the parties to discharge the mortgage but rather to ensure that the mortgages have a residual balance of at least $1 in circumstances where they anticipate they may need to redraw funds for the purposes of the litigation and the payment of legal fees, costs and disbursements.
The husband was in agreement in respect of the proposed arrangement as to the discharge of the Suburb Q mortgage and was prepared to accept the offset account of $621,983 would be used to offset the first mortgage on the Suburb F property but a difficulty arose in respect of the accuracy of the amount outstanding in the CBA Everyday Offset account ending #...82.
It was suggested in submission by counsel that some of the $265,614 that the wife considered should be in that account has now either been spent or has been transferred to a different account.
The husband was given an opportunity to forward to chambers a revised schedule setting out the balances in the accounts with an explanation as to any diminution in the credit amount then an explanation should be provided. No schedule has been forwarded and as such, I consider it reasonable to make orders in terms of the wife’s proposed Minute of Order.
There would not appear to be any financial disadvantage to either of the parties and whilst it may interfere with their separate ability to freely access the offset accounts and the redraw facilities, I have indicated that an application to enable a redraw to occur can be listed for hearing at short notice.
I propose to make orders predominantly in terms of the Minute of Order that is comprised in exhibit “1”.
I make orders as appear at the commencement of these reasons.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman. Associate:
Dated: 19 November 2024
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