Mignone & Barton
[2024] FedCFamC2F 344
•20 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Mignone & Barton [2024] FedCFamC2F 344
File number(s): MLC 3380 of 2021 Judgment of: JUDGE BENDER Date of judgment: 20 March 2024 Catchwords: FAMILY LAW – PARENTING – the Husband’s application in relation to parenting arrangements for the parties’ two children aged 14 and 10 – the Husband seeks orders the parties have equal shared parental responsibility for the parties’ children save that he have sole parental responsibility in relation to decisions concerning education and extra-curricular activities - the Wife seeks the parties have equal shared parental responsibility - the Husband seeks the children spend four nights a fortnight with the Wife commencing in Term 2, 2024 - the Wife seeks the children spend five nights a fortnight with her.
FAMILY LAW – PROPERTY - whether the capital received by parties should be characterised as a partial property settlement and “added back” to the property pool in its entirety - whether the Wife’s interest in she and her sister’s business should be included in the asset pool – whether the Court should make a declaration pursuant to Section 78 of the Family Law Act 1975 that the Husband and Wife have a 50% interest in the Suburb B property – the Husband seeks orders he receive 72% of the parties’ realisable assets on the basis that he made a greater contribution at the commencement of the relationship and he has primary care of children –the Wife seeks she receive 60% of the parties’ realisable assets on the basis she made a greater contribution due to an inheritance of $480,000 received towards the end of the relationship and the Husband’s greater earning capacity.
FAMILY LAW – PARENTING – HELD – the parties have equal shared parental responsibility save for issues relating to the children’s education and extra-curricular activities for which the Husband is to have sole parental responsibility if parties are unable to agree – the children spend four nights a fortnight with the Wife.
FAMILY LAW – PROPERTY – HELD - there be a declaration the Husband and Wife have a 50% interest in the Suburb B property – the capital amounts received by the parties by way of part property settlement should not be “added back” to the pool for division between the parties – the Wife’s interest in the business should be included as an assets in the property pool – the parties respective contributions should be considered as equal and the parties’ s 75(2) contributions balance each other out – the parties’ available property assets should be divided equally between them.
Legislation: Family Law Act 1975 (Cth) ss 60B, 60CA, 60CC, 61DA, 65DAA, 75, 78, 79.
Property (Relationships) Act 1984 (NSW)
Cases cited: AJO & GRO (2005) FLC 93-218
AMS v AIF (1999) 199 CLR 160
Bevan & Bevan [2013] FamCAFC 116
Bosanac v Commissioner of Taxation (2022) 275 CLR 037
Boss & Permanent Trustee Co Pty Ltd (1999) 198 CLR 334
C & C [2005] FamCA 159
Candle & Falkner [2021] FedCFamC1A 102
Colburn v Cleese [2021] FamCAFC 278
DJM and JLM (1998) FLC 92-816
Hickey& Hickey [2003] FamCA 442
Kowaliw & Kowaliw (1981) FLC 91-092
Lam v Lam [2016] VSC 298
Marchant & Marchant (2012) FLC 93-520
Marley & Ormonde [2021] FAMCA 105
McF v Mc F (unreported Appeal No NA24 of 2004 delivered 25 October 2004)
Stanfordv Stanford [2012] HCA 52
Townsend & Townsend (1995) FLC 92-569
Trevi & Trevi (2018) FLC 93-858
U & U (2002) 211 CLR 238
Vass & Vass (2015) 53 Fam LR 373
Warbrick & Warbrick (2021) FLC 94-016
Division: Division 2 Family Law Number of paragraphs: 335 Date of hearing: 11-13 and 18-19 September 2023 Place: Melbourne Counsel for the Applicant: Ms Smallwood of Senior Counsel Solicitor for the Applicant: Khq Lawyers Counsel for the Respondent: Mr Puckey of King’s Counsel Solicitor for the Respondent: Taussig Cherrie Fildes ORDERS
MLC 3380 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR MIGNONE
Applicant
AND: MS BARTON
Respondent
ORDER MADE BY:
JUDGE BENDER
DATE OF ORDER:
20 MARCH 2024
THE COURT ORDERS THAT:
Parenting
1.The parties have equal shared parental responsibility for making decisions concerning the long-term care, welfare and development of X born 2009 (“X”) and Y born 2013 (“Y”), save that the Father shall have sole parental responsibility in relation to decisions concerning X and Y’s education and extracurricular activities and prior to making the sole ultimate decision on those issues the Father shall:
(a)advise the Mother in writing of the decision intended to be made;
(b)seek the Mother’s written response and input in relation to any decision, with the Mother to provide her response in writing within 7 days;
(c)consider by reference to the best interests of X and Y any response received from the Mother prior to making any decisions; and
(d)advise the Mother in writing as soon as reasonably practicable of the ultimate decision.
2.Should the Mother fail to provide a response to the Father within the seven (7) days as provided in order 1(b) herein, the Father shall make the decision without further consultation with the Mother.
3.X and Y live with the Father.
4.X and Y spend time with the Mother during school terms as follows:
(a)each alternate weekend from the conclusion of school Friday (or 9:00am if X and Y are not attending school) until the commencement of school Monday (or the commencement of school Tuesday if X and Y are not attending school on the Monday);
(b)from the conclusion of school Monday (or 9am if X and Y are not attending school) until the commencement of school Tuesday (or 4:00pm if X and Y are not attending school) on the Monday immediately following the weekend X and Y are with the Father and each alternate week thereafter; and
(c)as otherwise agreed between the parties in writing.
Long summer holidays
5.X and Y spend time with the Mother and Father during the long summer holidays at times to be agreed and failing agreement:
(a)from the conclusion of school on the last day of Term 4 until 9:00am seven days thereafter with one parent and each alternate week with each of the parties thereafter until the commencement of the new school year and
(b)with the parent entitled to the first week determined so as to ensure that X and Y’s time with the Mother in January includes a special occasion.
Term holidays
6.X and Y spend equal time with each of the parties during the Term 1, 2 and 3 holidays each year at times to be agreed and failing agreement:
(a)In even numbered years:
(i)with the Father from the conclusion of school on the last day of term until 4:00pm on the middle day of the holidays and where there are an odd number of days, the second middle day; and
(ii)with the Mother from 4:00pm on the middle day of the holidays and where there are an even number of days, the second middle day, until the commencement of school on the first day of school term.
(b)In odd numbered years:
(i)with the Mother from the conclusion of school on the last day of term until 4:00pm on the middle day of the holidays and where there are an odd number of days, the second middle day; and
(ii)with the Father from 4:00pm on the middle day of the holidays and where there are an even number of days, the second middle day, until the commencement of school on the first day of school term.
7.The time X and Y spend with the parties pursuant to Order 4 resume each school term in accordance with the usual cycle as if the school holiday period had not intervened.
Special occasions
8.Notwithstanding any other order herein, X and Y spend time with the Father for the purposes of celebrating special occasions at times to be agreed and failing agreement:
(a)for the Father’s birthday, if X and Y are not otherwise spending time with the Father, from the conclusion of school (or 4:00pm if X and Y are not attending school) until the commencement of school (or 4:00pm if X and Y are not attending school) on the following day;
(b)on Father’s Day weekend, from 4:00pm on the day preceding Father’s Day until the commencement of school (or 4:00pm if X and Y are not attending school) on the following Monday;
(c)on X and Y’s birthdays, if X and Y are not otherwise spending time with the Father that day, from the conclusion of school (or 4:00pm if X and Y are not attending school) until 7:30pm;
(d)for Christmas in 2024 and each alternate year thereafter from 10:00am Christmas Eve until 4:00pm Christmas Day; and
(e)or Christmas in 2025 and each alternate year thereafter from 4:00pm Christmas Day until 5:00pm on Boxing Day.
9.Notwithstanding any other order herein, X and Y spend time with the Mother for the purposes of celebrating special occasions at times to be agreed and failing agreement:
(a)on Mother’s Day weekend, from 4:00pm on the day preceding Mother’s Day until the commencement of school (or 4:00pm if X and Y are not attending school) on the following Monday;
(b)on X and Y’s birthdays, if X and Y are not otherwise spending time with the Mother that day, from the conclusion of school (or 4:00 pm X and Y are not attending school) until 7:30pm;
(c)for Christmas in 2024 and each alternate year thereafter from 4:00pm Christmas Day until 5:00pm on Boxing Day; and
(d)for Christmas in 2025 and each alternate year thereafter from 10:00am Christmas Eve until 4:00pm Christmas Day.
Hair follicle testing
10.The Mother’s time with X and Y pursuant to these orders, is conditional on the following:
(a)the Mother attending regular therapy with a psychiatrist specialising in addiction medicine (“psychiatrist”) for her mental health, drug rehabilitation and poly substance addiction issues and in relation to such attendances:
(i)attend upon the psychiatrist for no less than 12 months from the date of these orders unless otherwise recommended by the psychiatrist, and otherwise at a frequency recommended by the psychiatrist until such time as the psychiatrist recommends in writing that such engagement and services cease; and
(ii)the psychiatrist shall be provided with a copy of the Father and Mother’s trial affidavits filed in these proceedings and the family reports of Dr C.
(b)the Mother’s psychiatrist be authorised by the Mother and permitted to contact the Father in the following circumstances:
(i)should the Mother cease attending upon him/her in accordance with the recommendations or disengages from therapy;
(ii)should the Mother, in his/her opinion, have relapsed; and
(iii)should the Mother, in his/her opinion, pose a risk to X and Y’s safety or wellbeing.
(c)the Mother will authorise the psychiatrist, to respond to any enquiry by the Father as to whether the Mother is compliant with attending the recommended treatment and to enable the Father to seek a report from the psychiatrist as to the Mother’s attendance, treatment and prognosis at the conclusion of the 12‑month period at his own cost.
(d)the Mother shall undertake a hair follicle test at her sole expense within 7 days of a written request from the Father with such requests:
(i)to not be made more than once every three months for a 12 month period commencing the date of these orders and thereafter to not be made more than every 6 months for a further 12 month period;
(ii)subject to the Mother producing consecutive negative hair follicle tests pursuant to orders 10(d)(i) herein, the Father is not permitted to request any further Hair Follicle Tests at the conclusion of the 24 month period pursuant to order 10(d)(i);
(iii)written notice to undertake the hair collection for hair drug testing purposes may be sent to the Mother care of the Mother’s email address …@... and shall be deemed to have been received by the Mother at the date and time it is sent via email.
11.The Hair Follicle Test pursuant to order 10(d) are to be conducted as follows:
(a)for the detection of alcohol EtG, drugs of abuse including amphetamine-type substances and metabolites, cannabis and metabolites, cocaine and metabolites, opioids and metabolites and benzodiazepines;
(b)the testing shall occur at an Australian Workplace Drug Testing Service (“AWDTS”) Clinic or nominee for hair drug testing purposes;
(c)the testing is to be undertaken in accordance with chain of custody procedures at an approved laboratory which is accredited to conduct hair drug testing to the International Standard ISO/IEW 17025:2005 by the relevant accreditation body for that laboratory;
(d)the Mother shall not dye, bleach or colour her head hair;
(e)the Mother shall maintain hair length of at least 6cm;
(f)the cost of the testing is to be met solely by the Mother; and
(g)each party or their legal representative is at liberty to provide AWDTS with a copy of these orders.
12.The Mother provides to her psychiatrist and AWDTS:
(a)a copy of these orders;
(b)authority to confirm with the Father that engagement with her psychiatrist is continuing at the frequency recommended by psychiatrist; and
(c)authority to AWDTS that all hair follicle test results undertaken by the Mother is sent directly to the Father’s via email address …@....
13.Should the Mother do any of the following:
(a)test positive for illicit substances via a hair follicle test save for alcohol and medication used in accordance with order 26;
(b)refuse to take a hair follicle test within the time requested pursuant to order 10(d) herein;
(c)cease attending treatment with her psychiatrist in compliance with order 10(a) herein;
the Mother’s time with X and Y pursuant to Orders 4 to 9 herein be suspended.
14.In the event the Mother’s time with X and Y is suspended pursuant to order 13 herein, the Mother spend time with X and Y as follows:
(a)her time with X and Y will immediately revert to being supervised for the entire visit by the maternal Grandmother, Ms D or such other supervisor as agreed between the parties in writing, for a period of no less than six (6) months; and
(b)the Father shall be at liberty to request that the Mother undergo hair follicle testing on a regular basis, at her sole cost for the following 12-month period (being no more than 4 tests in one year).
(c)supervised time for all visits shall continue until such time as the Mother has produced two (2) consecutive clean hair follicle tests at approximate 3-month intervals at the Father’s request, after which time the Mother’s visits with X and Y shall revert to being unsupervised pursuant to Orders 4 to 9 herein.
Communication
15.The parents facilitate X and Y communicating with the other parent at all reasonable times when requested by X and/or Y.
16.The parties email to communicate about X and Y and their care, welfare and development.
17.The parties communicate by SMS text message or telephone in the case of emergency or urgent matters.
18.The parties must notify each other of any changes to their telephone numbers, email addresses or residential addresses within 48 hours of any change.
Changeovers
19.For the purposes of changeover:
(a)where changeover coincides with the commencement or conclusion of school changeover occur at X and Y’s school; and
(b)changeover otherwise occur at E Park in Suburb F unless otherwise agreed between the parties in writing.
Travel
20.The Father and Mother each be permitted to travel with X and Y interstate or overseas during any period X and Y are in their care pursuant to these orders or by agreement between them upon the following terms and conditions unless otherwise agreed in writing:
(a)should the intended travel be overseas the travelling party provide the other party with the details of the country or countries they are travelling to, with whom X and Y are travelling with and the dates of the travel, not less than thirty (30) days prior to the departure; and
(b)the parties each ensure that X and Y can be contacted by telephone and FaceTime for the purposes of communication with the other parent pursuant to these orders.
21.In relation to X and Y’s passports, unless otherwise agreed in writing:
(a)each of the Father and Mother do all such things and sign all documents necessary to obtain or renew X and Y’s passport within seven (7) days of receiving a request from the other party with the cost to be shared equally between them; and
(b)X and Y’s passports are otherwise to be held by the Father and are to be provided to the Mother within seven (7) days of receiving notice of overseas travel or as may be required to obtain visas for travel, and returned to the Father within seven (7) days of X and Y’s return to the Commonwealth of Australia.
Extracurricular activities
22.If X and Y are enrolled to attend extracurricular activities during the time they spend with the Mother, at least 24 hours prior to the commencement of the season, or at the request of the Mother in writing, the Father provide the Mother with the details of X and Y’s activities via text or email, in order for her to facilitate their attendance.
Health, education and information
23.Each party be and are hereby authorised to:
(a)provide a copy of these orders to G School (or such other school as attended by X and Y) and each of X and Y’s medical practitioners;
(b)obtain copies of each of X and Y’s medical, counselling, dental and health records directly from X and Y’s treating practitioners;
(c)attend all school events and extracurricular activities and events which parents normally attend and attend X and Y’s sporting events during the time X and Y are spending with the other parent;
(d)obtain copies of all school notices, reports, newsletters, photos and similar documents directly from X and Y’s school and administrators of extracurricular, sporting and other activities.
24.Each party do all acts and things and sign all such documents as may be required to:
(a)keep the other advised of any medical or health issues relating to X and Y or either of them including, but not limited to providing particulars of any medication that has been prescribed to X and Y and ensuring that the medication is provided to the other party at changeover, and the name and contact details of the treating practitioner who prescribed the medication;
(b)keep the other advised of any significant injury or medical condition suffered or treatment undergone while X and Y are in their respective care, as soon as is practicable, and each party be permitted to liaise directly with X and Y’s treating medical practitioner, dental or other health specialist in relation to X and Y’s health and welfare;
(c)provide the other party with all details in relation to extracurricular activities including details of the coaches, managers, other players and WhatsApp groups at the commencement of the season and thereafter it will be the responsibility of each parent to make their own enquiries as to the arrangements/fixtures of those activities.
Injunctions
25.Without admission as to necessity for same, the parties be and are each hereby restrained by injunction by themselves, their servants or agents from:
(a)denigrating or criticising the other parent or members of the other parent’s family to or in the presence of the hearing of X and/or Y;
(b)discussing any aspect of these proceedings or any associated proceedings to or in the presence of or within the hearing of X and/or Y; and
(c)showing any documents related to these proceedings or any associated proceedings directly or indirectly to X and/or Y, including through a third party.
26.For 24 hours prior to and during all periods of time X and Y spend time with the Mother, the Mother be restrained by injunction from ingesting, consuming of using or otherwise being under the influence of alcohol and/or drug or substance, save and except for:
(a)any legal medication prescribed for the Mother by a registered medical practitioner, and taken or used by the Mother strictly in accordance with such prescription; and
(b)any over the counter legal medication or pharmaceutical substance ordinarily sold in major supermarkets and taken or used by the Mother strictly in accordance with the directions appearing on such medication or pharmaceutical substance.
Property
27.Pursuant to Section 78 of the Family Law Act 1975 (Cth) (“The Act”) the Court declares that the Husband and Wife have a 50% interest in the property situate at H Street, Suburb B, in the State of Victoria more particularly described in Certificate of Title Volume … Folio … (“the Suburb B property”).
28.On or before 18 June 2024 (“the date”), the Husband do all things necessary to transfer to the Wife at the expense of the Wife all his right title and interest in the Suburb B property (“the Suburb B transfer”).
29.Contemporaneously with the Suburb B transfer, the Wife refinance the loan with J Bank secured by mortgage … over the Suburb B property (“the Suburb B property mortgage”) such that the Husband is removed as a party to the mortgage and, further to do all things to remove the Husband as a guarantor to that loan.
30.On or before 19 April 2024, the Husband advise the Wife in writing if he wishes to retain the real property situate and known as K Street, Suburb L in the state of Victoria more particularly described in Certificates of Title volume … folio … and volume … folio … (“the Suburb L property”).
31.In the event the Husband advises the Wife he wishes to retain the Suburb L property, the Husband shall pay to the Wife the sum of $822,234 (“the payment”) withing 30 days of the Wife’s compliance with Order 29 above (“the date”).
32.Contemporaneously with the payment the Wife transfer to the Husband at the expense of the Husband all her right title and interest in the Suburb L property and refinance the loan secured by mortgage … over the Suburb L property into his sole name.
33.If the Husband fails to make the payment by the date:
(a)The Husband pay interest on the Payment at the rate prescribed from time to time by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“Penalty Interest”) for the period of default compounding daily and payable weekly;
(b)The Husband forthwith do all things necessary and sign all documents as are required to transfer Suburb L to the Wife as trustee for sale (“Default Sale”) by public auction on the following terms:
(i)with the selling agent as the wife shall appoint (“Selling Agent”);
(ii)the costs of, and incidental to, the advertising, marketing and preparation of the Default Sale be paid by the husband as and when they fall due and the Wife be indemnified by him in respect thereof;
(iii)the contract of sale be unconditional, for cash and of no longer than 60 days duration;
(iv)the Husband do all things necessary to co-operate in every way with the Selling Agent, including but not limited to:
A.making the key available to the Selling Agent;
B.allowing inspection of M Street at all reasonable times requested by the Selling Agent;
C.signing all documents requested by the Selling Agency as authorised by the Wife ;
(v)upon the settlement of the Default Sale, the proceeds of sale be paid in the following manner and priority:
A.first to meet the Selling Agent’s commission;
B.secondly, in discharge the Suburb L Mortgage;
C.thirdly in adjustment of rates, taxes and like apportionable outgoings;
D.fourthly, in payment of the reasonable costs of the conveyance;
E.fifthly, to pay the wife so much of the Payment as remains outstanding together with any Penalty Interest accrued;
F.finally, the balance, if any to the Husband.
(c)the Husband by himself his servants and agents, be and is hereby restrained from doing anything or attempting so to do, which may have the effect of impeding or in any manner adversely affecting the successful Default Sale and/or the proceeds thereof being paid to the Wife.
34.If in accordance with Order 30 herein the Husband advises the Wife he does not wish to retain the Suburb L property then the parties are to do all things necessary to place the Suburb L property on the market for sale (“the sale”) and upon settlement of the sale the proceeds be paid as follows:
(a)to meet all sale costs;
(b)secondly to discharge the mortgage;
(c)thirdly to pay to the parties an amount such that they each receive an over-all equal split of the net non-superannuation assets.
and for the purposes of Order 34 (c) herein the parties net non-superannuation assets of the parties consists of:
·the net proceeds of sale of the Suburb L property;
·the parties 50% equitable interest in the Suburb B property being $431,982 (to be retained by the Wife);
·the monies held on trust for the parties after payment of the GST on the sale of the Suburb N property being $180,890 (to be retained by the Wife);
·the Wife’s interest in P Business being $218,500 (to be retained by the Wife); and
·the Husband’s Motor Vehicle 1 (to be retained by the Husband).
35.Pending the parties’ compliance with Order 34 or the Default Sale (whichever applies):
(a)The Husband have sole right to use and occupy Suburb L;
(b)The parties hold their respective interests in Suburb L upon trust pursuant to these orders; and
(c)Neither party encumber, further encumber, transfer or otherwise dispose of Suburb B or Suburb L.
36.The Husband pay all instalments pursuant to the mortgage repayments (principal and interest), rates, taxes, insurances and apportionable outgoings for Suburb L as they fall due and indemnify the Wife in relation to same.
37.On or before 17 April 2024, the funds held on trust for the parties KHQ lawyers in the controlled account with O Bank (account number …47) be paid as follows:
(a)the sum of $82,372.93 to the Husband on account of the capital gains taxation payable on the sale of the Suburb N property;
(b)the balance to the Wife.
38.The Wife retain all her interests in Q Pty Ltd which operates P Business and hereafter the Wife do indemnify the Husband from any and all past, present and future liabilities with respect to Q Pty Ltd including but not limited to:
·any and every tax liability; and
·any and every liability in relation to any loan accounts or debts.
39.The parties each remain solely liable for and indemnify the other for any past, present and/or future liabilities of whatsoever nature or kind including credit card debts, loans or taxation liabilities held in their own respective names.
Children’s Bank Accounts and Generation Bonds
40.On or before 3 April 2024, the Wife do all things and sign all documents necessary to remove her name as an account holder and/or joint signatory to the following accounts:
(a)R Bank accounts held for X account numbers ending …18 and …19; and
(b)S Finance Bond accounts held for X and Y respectively account numbers …21 and …22.
41.On or before 10 April 2024, the Husband do all things and sign all documents necessary to transfer the funds held for X in the R Bank online saver account ending …9.1 into X’s R Bank account ending …19.
42.Thereafter, the R Bank accounts held for X account numbers ending …18 and …19, R Bank accounts held for Y account numbers ending …18 and …19, and S Finance Bond accounts held for X and Y respectively account numbers …21 and …22:
(a)be held on trust for X and Y by the Husband until the children reach the age of 25 years;
(b)the Wife be at liberty to obtain statements in relation to the said accounts;
(c)pending the children attaining the age of 25 years the Husband be restrained from accessing or disbursing the monies held in the accounts other than by joint written agreement with the Wife;
(d)upon X attaining 25 years of age the Husband do all things necessary and sign such documents as required to disburse 100 per cent of the monies held in the R Bank accounts ending …18 and …19 and the S Finance Bonds to X; and
(e)upon Y attaining 25 years of age the Husband do all things necessary and sign such documents as required to disburse 100 per cent of the monies held in the R Bank accounts ending …18 and …19 and the S Finance Bonds to Y.
Superannuation
43.On or before 3 April 2024, the parties do all acts necessary to cause T Accountants (“the Accountants”) to prepare an updated set of accounts for the Mignone Superannuation Fund (“SMSF”) as at the date of the transfer of the Wife’s transferable benefits.
44.In accordance with section 90XT(1)(b) of the Act:
(a)the Husband is entitled to be paid the specified percentage being 100%, of each splittable payment from the Wife’s interest in the SMSF; and
(b)the Wife’s entitlement in the SMSF is correspondingly reduced.
45.Mignone Superannuation Fund Pty Ltd (“the SMSF Trustee”) do all things necessary to:
(a)calculate, in accordance with the requirements of the Act and the Family Law (Superannuation) Regulations 2001, the entitlement created for the Father in the immediately preceding order; and
(b)pay the entitlement whenever the Trustees make a splittable payment out of the Mother’s interest in the SMSF.
46.Orders 44 and 45 have effect from the Husband’s operative time and the Husband’s operative time is the end of the day upon which the transfer of the Wife’s transferable benefits occurs.
47.In accordance with section 90XT(4) the base amount is equal to the difference between the Husband’s current member entitlement in the SMSF and 50% of the parties' combined member entitlements less the sum of $4,101. In determining the 50% entitlement, the costs arising including tax payable or tax refunds receivable as a result of converting or liquidating assets of the SMSF for the purposes of effecting the transfer of the whole of the Mother’s transferable benefits, shall be taken into account.
48.In accordance with section 90XT(1)(a) of the Act:
(a)the Wife is entitled to be paid, using the base amount allocated in the immediately preceding Order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
(b)the Husband’s entitlement in the SMSF is correspondingly reduced.
49.The SMSF Trustee do all things necessary to:
(a)calculate, in accordance with the requirements of the Act and the Family Law (Superannuation) Regulations 2001 the entitlement created for the Wife in the immediately preceding order; and
(b)pay the entitlement whenever the Trustees make a splittable payment out of the Husband’s interest in the SMSF.
50.Order 49 has effect from the Wife’s operative time which is the time immediately following the Husband’s operative time.
51.Upon service by the SMSF Trustee of the payment split notice to the Husband and the Wife, the Wife do all such acts and things and sign all such documents as may be necessary to transfer the Wife’s transferable benefits from the SMSF to a complying superannuation fund of the Wife’s choosing (“the Wife’s New Superannuation Fund").
52.Within 14 days of receiving the Wife’s request for transfer pursuant to Order 51, the SMSF Trustee do all things necessary to effect the transfer of the whole of the Wife’s transferable benefits.
53.Within 7 days of upon compliance with Order 52, the Wife do all acts necessary to:
(a)sign in her capacity as a director of the trustee, the financial returns of the SMSF as required;
(b)resign as a director and secretary of the SMSF Trustee;
(c)transfer to the Husband (or as he directs) all her shareholding in the SMSF Trustee; and
(d)resign as a member of the SMSF.
54.Pending the transfer of the Wife’s interest in the SMSF pursuant to these Orders, each party:
(a)is restrained from dealing with, charging, encumbering or disposing of the SMSF's assets other than in accordance with the terms of these orders or by agreement in writing;
(b)shall immediately revoke any binding death benefit nomination already made; and
(c)is restrained from doing any such act or thing which would defeat, extinguish or reduce the entitlement of either party under these orders.
55.As at the date of these Orders, the Husband indemnify and keep the Wife effectively indemnified against all liability of and in relation to the SMSF, and contemporaneously with Order 53, secure a full release from any liability the Wife may have guaranteed in relation the SMSF.
Other Orders
56.The Husband shall otherwise retain for his sole use and possession the following:
(a)his Motor Vehicle 1;
(b)all his separate savings and investments;
(c)all his shareholdings including portfolios and accounts held with CommSec, U Finance, V Finance, NAB Trading account and W Finance;
(d)all the furniture and effects in his possession;
(e)all life insurance or assurance policies presented over his life;
(f)all his superannuation interests (subject to the split as provided in these orders);
(g)all his pension and employee entitlements; and
(h)all other personal property of the Husband in the Husband’s possession or any other assets not otherwise specified herein.
57.The Wife shall otherwise retain for her sole use and possession the following:
(a)her Motor Vehicle 2;
(b)all her separate savings and investments;
(c)all the furniture and effects in her possession;
(d)all life insurance or assurance policies presented over her life;
(e)all her superannuation interests (including the split as provided in these orders);
(f)all her pension and employee entitlements; and
(g)all other personal property of the Wife in the Wife’s possession or any other assets not otherwise specified herein.
58.Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other party to all other property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
(c)insurance policies remain the sole property of the owner named thereon;
(d)monies standing to the credit and debit of either party in any bank accounts are to become the property of that party;
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BENDER
INTRODUCTION
The applications before the Court are for both parenting and property orders following the breakdown of the parties’ lengthy relationship.
To the parties’ credit their parenting issues narrowed considerably during the running of the matter such that they were able to agree on most of the parenting orders they seek be made. The main areas where they remain apart are:
·Parental responsibility. The Husband seeks order the parents have equal shared parental responsibility for the parties’ children X born 2009 (“X”) and Y born 2013 (“Y”) save that he have sole parental responsibility in relation to decisions concerning X and Y’s education and extra-curricular activities. The Wife seeks the parties have equal shared parental responsibility for X and Y in relation to all long-term decisions relating to their care.
·Time with the Wife. The parties agree X and Y will live with the Husband but not the time they spend with the Wife. The Husband seeks X and Y spend each alternate weekend with the Wife from after school Friday to before school Monday in week one commencing Term 2 2024 and from after school Wednesday to before school Thursday in week two (four nights a fortnight). The Wife seeks X and Y spend time with her in week one from after school Thursday to before school Monday and from after school Thursday to before school Friday in week two (five nights a fortnight).
The parties agree to the value of their assets. They are apart however on a number of issues including how the monies already received and expended by them should be treated, whether the Wife’s interest in she and her sister’s business (“P Business”) should be included in the asset pool and whether there should be a declaration that the parties only have a 50% interest in the property at H Street, Suburb B (“the Suburb B property”).
Upon determination of these issues the Husband seeks orders he receive 72% of the parties’ realisable assets on the basis he made a greater contribution than the Wife at the commencement of the relationship, during the marriage and since separation and a further adjustment in his favour for section 75(2) factors given he has the primary care of X and Y and will receive minimal financial support for them from the Wife.
The Wife seeks orders she receive 60% of the parties’ realisable assets on the basis she has made the greater contribution due to an inheritance from her late Father of $480,000 received late in the marriage which was used in its entirety for the family’s benefit and that there be an adjustment in her favour pursuant to section 75(2) because of the Husband’s vastly superior earning capacity.
Both parties agree orders should be made equalising their superannuation entitlements.
BACKGROUND
The Husband was born in 1978 and is aged 45 years. He is a healthcare professional currently earning $260,000 per annum. He, X and Y currently live in the former matrimonial home at K Street, Suburb L (“the former matrimonial home”). He has re-partnered. The Husband and his new partner, Ms Z, do not live together and currently have no intention of so doing.
The Wife was born in 1981 and is aged 42 years. She is employed as a healthcare professional by the business owned jointly by she and her sister, P Business. She works four days a week and earns $60,000 per annum. She has not re-partnered.
The parties began a romantic relationship in 2001/2002.
In 2002, the Husband commenced employment as a healthcare professional at P Business, a business then run and owned by the Wife’s father.
In 2003, the Husband purchased AA Street, Suburb N (“the Suburb N property”) for $380,000. The purchase was funded by the Husband’s savings, the sale of some of the Husband’s shares, the First Homeowners grant and a home loan of $300,000 from BB Bank.
In 2004, the Wife purchased a half interest in a property at CC Street, Suburb DD (“CC Street”) with the Husband’s sister, Ms EE. The total purchase price was $380,000 and was financed in part by way of a mortgage. The Wife cannot recall how much was borrowed.
It is the Wife’s evidence the parties commenced co-habitation in 2005 when the Wife moved into the Suburb N property.[1]
[1] In paragraph 6 of the Wife’s trial affidavit sworn 30 August 2023 she states the parties commenced co-habitation in 2005. In paragraph 5 of the Husband’s trial affidavit sworn 16 August 2023 he states the parties commenced co-habitation in late 2006, early 2007. However, the Husband’s Initiating Application (and two further Amended Initiating Applications) all state co-habitation commenced in 2005.
It is the Husband’s evidence[2] that at the commencement of co-habitation (being late 2006/early 2007) the Suburb N property was valued at approximately $480,000, the mortgage was approximately $380,000, he had shares valued at approximately $46,000 and managed funds of approximately $120,0000. There is no independent evidence before the Court of the value of the Suburb N property at either of the parties’ date of commencement of co‑habitation.
[2] Paragraph 466 of the Husband’s trial affidavit sworn 16 August 2023.
Tendered into evidence by the Husband at the final hearing was documents from his financial advisor, Mr FF of GG Pty Ltd. The first is a letter dated 16 October 2007 addressed to the Husband from Mr FF and a statement from NAB Margin lending which states that as at 5 October 2007, the Husband had $274,212.83 in his investment account and a loan balance of $128,199.93, being a net amount of $146,012.90.
The second group of documents tendered into evidence by the Husband was a NetBank CommSec statement setting out the Husband’s share transactions from 18 July 2003 to 12 August 2008. These documents show that in late 2003 in the lead up to the purchase of the Suburb N property, the Husband sold $49,500 of shares. The statement shows no share trading from 2003 to 2005. Between late 2005 and early 2007, the Husband purchased shares for a total of $32,615.
It is the Wife’s evidence[3] that at the commencement of co-habitation in 2005 she had her interest in CC Street, shares valued at approximately $25,000 and some savings. She provided no independent evidence to support her alleged shareholdings and savings.
[3] Paragraph 88.4 of the Wife’s trial affidavit sworn 30 August 2023.
In 2007, the Wife sold her share in CC Street to the Husband’s sister. It is her evidence she received $50,000 for her interest in CC Street which she transferred to the Husband to be applied to the Suburb N property mortgage.[4] It is the Husband’s evidence that the proceeds of sale were paid to the Wife’s father in repayment of the monies he had advanced her to purchase CC Street.[5]
[4] Paragraph 96 of the Wife’s trial affidavit sworn 30 August 2023.
[5] Paragraph 468 of the Husband’s trial affidavit sworn 16 August 2023
The parties married in 2008.
In 2009, the Wife and her sister Ms HH purchased P Business from their father for approximately $480,000. The Wife’s father was paid this amount over time from the business profits. The Wife and Ms HH worked part time within the business (the Wife as a healthcare professional and the sister as the receptionist) and they received salary and income distributions from the business.
In 2010, the parties purchased JJ Street, Suburb KK (“JJ Street”) for around $1,200,000. It is the Husband’s evidence the deposit of around $120,000 and an additional payment to avoid lenders mortgage insurance of $144,000 came from his income, the sale of his managed funds and the sale of some of his share holdings.[6]
[6] Paragraph 471 of the Husband’s trial affidavit sworn 16 August 2023
It is the Wife’s evidence the purchase of JJ Street was funded from joint savings accumulated during the marriage, gifts from her parents and a loan from LL Bank.[7]
[7] Paragraph 98 of the Wife’s trial affidavit sworn 30 August 2023.
In 2013, the parties established a self-managed superannuation fund, Mignone Superannuation Fund (“the SMSF”). The Husband rolled $239,795 into the fund and the Wife $93,157.00.
In 2014, the parties purchased the property at MM Street, Suburb DD (“MM Street”) for around $500,000. The Husband’s evidence is the deposit of $80,000 was paid “from savings accumulated from my income”[8] plus a loan from LL Bank of $393,000. It is the Wife’s evidence the deposit of $80,000 was paid from “joint savings”.[9]
[8] Paragraph 474 of the Husband’s trial affidavit sworn 16 August 2023
[9] Paragraph 99 of the Wife’s trial affidavit sworn 30 August 2023.
In 2015, the property at H Street, Suburb B (“the Suburb B property”) was purchased. Whilst the “ownership” of this property is in dispute, the details of its purchase and subsequent management is not. That history is as follows: -
·In 2015, on the advice of P Business’s accountant, the Wife and Ms HH used savings held by the business to purchase a holiday home for the mutual benefit of both the Mignone family and Ms HH’s family.
·The Suburb B property was purchased for $780,000.
·A deposit of $228,529.51, made up of $168,529.10 from P Business, $30,000 from Ms HH and a loan of $30,000 from the Wife’s mother was paid. The monies to complete the purchase were provided from a loan of $576,256.74 from R Bank.
·R Bank required the Husband to be a party to the loan. The contract of sale and the mortgage were amended to include the Husband. The property was registered as to one‑third share each of the Husband, Wife and Ms HH.
·At the time of the purchase, it is the Wife and Ms HH’s evidence that they believed that the property was held as to one half share each with the Husband as a guarantor to the mortgage.
·It is unclear when the Wife and Ms HH realised the Husband was on the title.
·All outgoings on the property including rates, insurance and mortgage payments have been and continue to be made by P Business.
·From 2017 to 2019, the Husband claimed one-third of the allowable expenses for the Suburb B property in his tax return. The Husband ceased making this claim from 2020 when Ms HH told the Husband he could not do so as he was not paying any of those expenses.
·In March 2020, the mortgage was refinanced to $572,000 with J Bank. The Husband, Wife and Ms HH all signed the mortgage documents. The Husband was again guarantor for the loan.
In 2016, the Wife lost her license for drink driving having been picked up at 11:00am and blowing a positive result. She was driving with X and a friend of his when she was stopped by police. It is the Wife’s evidence she had been to a party the night before and got home at 4:00am. In her viva voce evidence, she conceded a long history of drinking to excess and binge drinking. It is her evidence she drank 1- 2 bottles of wine on average once to twice a week.
In 2018, the Wife’s father died and she inherited $480,000 from his estate. It is the Wife’s evidence these monies were applied as follows: - [10]
·$380,378.61 to the mortgage on JJ Street;
·$2,800 to the O Bank account held by the SMSF;
·$4,000 in payment of the AMEX in Mr Mignone’s name;
·$4,000 towards Q Pty Ltd;
·$50,000 to the SMSF;
·$4,000 to W Finance for investment in shares;
·$20,000 transferred to O Bank for the SMSF; and
·the balance on living expenses.
[10] Paragraph 118 of the Wife’s trial affidavit sworn 30 August 2023.
The Husband disputes any monies from the Wife’s inheritance were paid into the SMSF but agreed when giving his viva voce evidence that the monies were used in their entirety for the benefit of the family.
In 2018, the parties sold JJ Street for $2,000,000. The net proceeds of sale and a loan of $1,250,000 from NN Finance was used to purchase the former matrimonial home for around $2,600,000.
The Wife has a long history of alcohol and drug abuse, using both illicit drugs and prescription medication. In early 2019, she attended Dr OO, addiction physician. From early to mid-2019, she attended a program at PP Hospital to reduce her alcohol and drug use but did not complete the program.
It is the Husband’s evidence that the Wife’s substance and alcohol abuse increased significantly from 2018 and that this impacted negatively on her parenting capacity which resulted in him being primarily responsible for X and Y’s activities and their care since 2018, both prior to and since separation.
The parties separated in February 2021.
Because of his concerns about the Wife’s alcohol and substance abuse, the Husband kept X and Y in his care from early March 2021.
In early 2021, the Husband resigned from P Business. It is the Husband’s evidence he did so because it was untenable for him to continue to work with the Wife and Ms HH after he and the Wife separated and because of concerns he had in relation to the manner in which the Wife and Ms HH were conducting the business.
In March 2021, both parties withdrew $20,000 from the redraw facility on the home loan.
The Father filed an Initiating Application with the Court seeking parenting orders on 30 March 2021. The Mother filed her Response seeking both parenting and property orders on 15 March 2021.
On 20 April 2021, a Senior Judicial Registrar made interim orders that provided for: -
·The parties to have equal shared parental responsibility for X and Y;
·X and Y to live with the Husband;
·X and Y to spend time with the Wife two nights a week with the maternal grandmother to be in substantial attendance;
·the Husband have sole use and occupation of the former matrimonial home;
·the Wife undertake random supervised drug screens; and
·the Wife be restrained from consumption of alcohol and drugs 12 hours prior to or when X and Y spend time with her.
In early/mid-2021, the Husband sold some of his shares and retained the proceeds of $43,729.
On 4 May 2021, the Husband filed an Amended Initiating Application seeking both parenting and property orders.
On 6 May 2021, interim consent orders were made which provided, inter alia: -
·the Husband liquidate $160,000 from his U Finance Account and pay: -
·$100,000 to the Wife as partial property settlement; and
·$60,000 to the Husband as partial property settlement.
·the $70,000 withdrawn by the Wife from the NN Finance Account be characterised as: -
·$52,023.35 as partial property settlement; and
·the balance be determined by the Court.
In mid-2021, the Husband withdrew a total of $70,000 from the U Finance Account.
On 18 June 2021, interim consent orders were made for X and Y to spend four nights a fortnight with the Wife and that the Wife undergo hair follicle tests. The orders also provided that MM Street be sold and the net proceeds of sale be used to pay X and Y’s school fees at G School for 2021, any CGT from the sale of MM Street and the sale of shares and U Finance funds in accordance with the 6 May 2021 orders and the balance to be divided equally between the parties to be charactered as partial property settlement.
On 21 June 2021, the first family report prepared by Dr C was released. Whilst expressing concerns about the Wife’s mental health and substance abuse, noting any gains by the Wife to have been short lived, Dr C recommended that X and Y continue to live with the Husband and spend time with the Wife for up to four to five nights a fortnight in two blocks of two nights.
Between early 2020 to early 2022, the Wife fraudulently used scripts in the name of the Husband and his former colleague at P Business, on over 50 occasions to obtain prescription medications. Most of the fraudulent scripts were used by the Wife between mid-2021 and early 2022.
On 1 June 2021, the Wife undertook a hair follicle test which tested positive to an illicit drug.
In mid-2021, the Husband liquidated $43,255 from the V Finance account and retained same.
In mid-2021, the Wife again used an illicit substance. On the following day, she undertook a urine screen and rested positive to multiple substances.
On 25 August 2021, interim consent orders were made which provided, inter alia:
·X and Y continue to spend time with the Wife four nights a fortnight; and
·The Wife undergo three monthly hair follicle tests.
In late 2021, settlement of the sale of MM Street occurred. The sale proceeds were $225,605.45 and distributed in accordance with the orders made 18 June 2021. Each party received a partial property settlement of $100,973.57.
In 2021, the Wife was caught shop lifting on three occasions. She was charged in late 2021.
On 8 February 2022, Dr C released an updated family report. Despite Dr C again expressing concerns about the Wife presenting with “vulnerabilities around substance use, whether illicit or prescribed” and that he believes “that she needs to establish a longer period of abstinence, with ongoing professional supports before the Court can be totally assured that she has meaningfully addressed her problems with […] substances”,[11] he recommended X and Y spend several nights each week with the Wife (three nights one week and two nights the next) moving to week about once the Wife’s substance abuse concerns have been addressed evidenced by 12-months of clean routine drug screens.
[11] Paragraph 32 of Dr C’s Family Report dated 8 February 2022.
In early 2022, the Husband was advised by Victoria Police of the Wife’s fraudulent use of scripts under his name. This was the first time the Husband was made aware of the Wife’s fraudulent behaviour.
Later that month, the Wife was charged with over 50 counts of an offence.
The following day, the Wife was admitted to QQ Hospital for a substance use disorder. She was discharged from QQ Hospital after nearly one week and a few days later was admitted to RR Hospital for substance use disorder, anxiety and depression.
On 30 March 2022, the Husband filed an urgent Application in a Proceedings seeking orders for the discharge of the interim parenting orders made 25 August 2021. The Wife filed a Response on 31 March 2022 seeking supervised time with X and Y.
On 4 April 2022, after an interim defended hearing, the Senior Judicial Registrar ordered:
·X and Y’s time with the Wife be suspended;
·X and Y communicate with the Wife three nights per week;
·the Wife provide details/all charge sheets of all pending criminal charges;
·the Husband liquidate the balance of funds in the U Finance Account ($57,403.43) to be used to pay the costs of the Wife’s Drug Rehabilitation Program at RR Hospital, the balance to the Wife’s solicitors and such monies to be characterised as an interim property settlement to the Wife.
The Wife was discharged from RR Hospital in mid-2022.
After her release from RR Hospital, the Wife continued and continues to attend Dr SS, Addiction Psychiatrist. Dr SS has provided three letters to the Court in relation to the Wife’s treatment, diagnosis and prognosis which are annexed to her affidavit sworn 28 August 2023. She also gave viva voce evidence at the final hearing. Dr SS’s evidence will be set out in detail later in this judgment.
On 24 June 2022, the Senior Judicial Registrar made interim orders for X and Y to spend time with the Wife each Sunday from 10:00am to 4:00pm supervised by the maternal grandmother.
On 19 January 2023, interim orders were made by the Senior Judicial Registrar for X and Y to spend time with the Wife two nights a fortnight being each alternate weekend from 9:00am Saturday to 5:00pm Sunday and from after school Tuesday to before school Wednesday in the alternate week.
At the request of the Husband’s solicitors, the Wife underwent a hair follicle test in February 2023. The results of the test were provided to the Husband’s solicitors two weeks later. The Husband was suspicious of the results provided as they did not contain a result for use of a particular illicit substance which had been a result contained in previous tests. The Husband made direct inquiries of the testing agency who responded by email to the Husband in March 2023 indicating the result provided to him by the Wife did not reflect that which was issued by the testing agency. The testing agency advised that missing from the results forwarded by the Wife was the following:
[Illicit substance] UNABLE TO COMPLETE
On 16 March 2023, the Husband’s solicitor wrote to the Wife’s solicitors seeking an urgent explanation for the discrepancy between the information provided by the testing agency and the results provided by the Wife. A response was received from the Wife’s solicitors later on 16 March 2023 which explained the discrepancy on the basis the Wife failed to read a covering email from the testing agency. The email reads in part:
It is regrettable this oversight by our client has occurred but our client instructs she has not used [the illicit substance], nor any illegal substance, and it is simply an oversight in relation to reviewing her emails carefully. She also strenuously denies any suggestion, implied or otherwise, that she altered the results.
In February 2023, the testing agency forwarded a further email to the Wife which again provided the same results as those provided to her earlier in February 2023 with an additional statement which said:
•The hair sample submitted in an unsuitable specimen that a) appears to be heavily contaminated with drug beyond that which can be removed or accounted for, and/or, b) has drug present at or above the administrative cut off, but does not meet metabolite criteria that ensures accurate interpretation of results. If further testing is desired, please submit another sample. Please collect a new hair sample from a different body site if possible.
•Sample received with Chain of Custody Intact.
On 17 March 2023 the Wife’s solicitor wrote to the Husband’s solicitor stating: -
We are now instructed that our client did remove the words “[Illicit substance] UNABLE TO COMPLETE” from the results provided to your office [in] February 2023.
Our client has arranged for an appointment with AWDTS from […] March 2023 to undertake a further hair follicle test to include [other substances]. She will instruct AWDTS to send the results directly to us and your office.
The results of the Wife’s hair follicle test taken in March 2023 were negative for all substances.
The parties engaged Dr TT toxicologist for a report on the results and report from AWDTS on the hair sample collected in February 2023.
In Dr TT’s report of 19 May 2023 contained in his affidavit filed 17 July 2023 he posited that a hair sample is unable to be tested for a drug, that is the test is “unable to complete” if the hair sample becomes “heavily contaminated with a drug beyond that which can be removed” which can occur if there is contact between the hair and a contaminated surface e.g. by a finger that has been in contact with the drug or by exposure to smoke.
The Wife is adamant she had not used the illicit substance, touched the illicit substance or been around anyone using the illicit substance prior to undertaking the hair follicle test in February 2024. She continues to be unable to offer any explanation as to why the test results were as they were.
It is the Wife’s evidence that she “panicked” when she saw the test result, so she changed it and then lied that she had done so as she had only just recommenced unsupervised time with X and Y and was petrified all time would again stop.
One 17 February 2023, the Husband filed an urgent Application in a Proceeding seeking to adjourn the final hearing listed for 20 March 2023 given the Wife’s falsifying of the hair follicle test results.
On 23 February 2023, consent orders were made vacating the final hearing date and re-listing the final hearing to 11 September 2023, for the sale of the Suburb N property, for a further updated report from Dr C and for the Wife to be psychiatrically assessed by Dr UU.
After the Wife’s negative hair follicle test in March 2023, X and Y recommenced spending time with the Wife in accordance with the interim orders made 19 January 2023, that is two nights a fortnight.
The Suburb N property was sold in mid-2023 and the net proceeds of sale of $229,668 are held in trust for the parties.
The Wife’s criminal charges were heard in the Magistrates’ Court of Victoria. She was placed on a diversion program which concluded in mid-2023.
Because of the Wife’s criminal charges she resigned as director of Q Pty Ltd, the owner of P Business in mid-2023.
The Wife has undertaken regular hair follicle tests throughout 2023 and all have been negative other than for drugs legally prescribed to her by Dr SS.
It is the Husband’s evidence that in mid-2023 he was threatened by a man wearing a black hoodie who told him “you have 24 hours to accept the offer” and that the next day his car was broken into and ransacked. The Husband received an offer directly from the Wife two days later. It is the Husband’s evidence that he believes the man who threatened him resembles Mr VV, a former associate of the Wife and one of her drug dealers. Tendered into evidence by the Husband was a photograph of a gentleman named Mr VV who looked like the person who threatened him which he had located on Facebook.
The Wife denies having any contact with Mr VV since she undertook treatment at RR Hospital in 2022. It is the Wife’s further evidence that the Facebook profile picture of the gentlemen the Husband alleges threatened him that was tendered into evidence is not her former associate Mr VV. The Husband has never met the Wife’s former associate Mr VV.
At the conclusion of the final hearing and as a result of the parties evidence, the evidence of Dr C and the many parenting orders to which the parties had agreed, interim orders were made which made provision for family therapy to immediately commence for Y and the Wife to improve and support their relationship and that upon such therapy commencing X and Y’s time with the Wife increase to three nights a fortnight being alternate weekends from after school Friday to 5:00pm Sunday and from after school Monday to before school or 4:00pm Tuesday following the weekend X and Y were with the Husband. Detailed orders were also made for the Wife to continue attending regular therapy with her psychiatrist and for the Wife to undergo a hair follicle test in November 2023.
THE EVIDENCE
The Father relies on his trial affidavit sworn 16 August 2023 and his financial statement sworn 16 August 2023. The Father gave viva voce evidence at the final hearing.
The Father also relies on the affidavit of Dr WW sworn 18 March 2022 which details the Wife’s illegal use of prescriptions in Dr WW’s name. The Wife did not challenge Dr WW’s evidence and she did not require Dr WW for cross-examination.
The Mother relies on her trial affidavit and her Financial Statement sworn 30 August 2023. She also relies on the affidavit of her sister, Ms HH sworn 28 August 2023 and of her treating psychiatrist Dr SS sworn 28 August 2023. The Wife, Ms HH and Dr SS all gave viva voce evidence at the final hearing.
Parenting
The Husband
Whilst not without its difficulties, the Husband described his relationship with the Wife as reasonably happy and the Wife as a caring and competent parent to X and Y until 2018. This is when the Wife’s binge drinking and substance abuse issues became worse and started to seriously impact on her functioning and in particular her parenting of X and Y such that he was increasingly responsible for making daily arrangements and for their care.
After the parties separated, the extent of the Wife’s addictions and inappropriate behaviours become apparent to the Husband. His discovery of her use of forged scripts and in particular the extent of that behaviour was devastating to the Husband. Not only was it an enormous breach of trust but it had the potential to impact him professionally and jeopardise his career as a healthcare professional. That the Wife initially lied and denied this behaviour only reinforced the Husband’s lack of trust in the Wife.
The Wife altering the results of her hair follicle test and denying doing so for some seven weeks until she was found out was the last straw for the Husband. He was quite clear in both his affidavit material and in his viva voce evidence that he has no trust and never will have any trust in the Wife. He therefore will never believe the Wife is being truthful in relation to her mental health, drug use or at all.
The Husband has not and cannot forgive the Wife for what she did and he will always see her through the lens of her past behaviours even though there is a diagnosis that explains much of her behaviours as being a result of her then untreated mental illnesses.
For these reasons the Husband will always believe that the Wife presents a risk to X and Y. To his absolute credit, the Husband has shielded X and Y from most of the adult issues and he has at no time told them what the Wife did whilst she was most seriously ill. The Husband has supported X and Y having a relationship with the Wife. It is his evidence that his proposal for the time X and Y spends with the Wife will enable them to continue to have a relationship with her but at the same time ensure that the risks he believes the Wife poses to them are minimised.
It is the Husband’s evidence that X and Y each have a quite different relationship with the Wife.
The Husband describes X’s relationship with the Wife as being very close and that the Wife favours X over Y, something that Y is very much aware of.
In contrast, the Husband describes Y’s relationship with the Wife as being quite troubled and that Y expresses to him a real reluctance to spend time with the Wife, particularly overnight time. As noted, Y complains that the Wife favours X over her, that she has observed the Wife to shoplift and that the Wife is much harder on her than she is on X.
It is therefore the Husband’s evidence his proposal for the time X and Y spend with the Wife strikes a reasonable balance between the different relationship X and Y have with the Wife as well as safeguarding them against the risks she will always pose to them. It is the Husband’s belief that X and Y spending four nights a fortnight with the Wife, the additional night to be introduced gradually, will enable the Wife and Y’s relationship to improve such that Y is happy to spend increased time with the Wife rather than being distressed by the prospect of that happening and meets X’s wish to spend more time with the Wife.
In relation to parental responsibility, the Husband is seeking that he have sole parental responsibility in relation to educational and extra-curricular activities. He argues that education should be something that is decided by him as the Wife is not, at least financially, supportive of X and Y continuing to attend G School. X is a promising sports player, already competing at a high level. Y too is a keen athlete. The Husband is therefore most concerned that there be no disruptions to either X and Y’s education and extra-curricular activities going forward.
Because he and the Wife cannot communicate due to their history and his complete lack of trust in her, the Husband argues that if he and the Wife were unable to agree about X and Y’s education or extra-curricular activities, they would be unable to resolve same to the detriment of X and Y. He submits that as X and Y’s primary carer, those decisions should rest with him if the parties are not in agreement.
The Wife
The Wife spoke positively of the Husband’s parenting of X and Y and agrees that they have a close and loving relationship with him.
The Wife also indicated that she understood why the Husband did not trust her anymore and why he would struggle to do so in the future.
It is the Wife’s evidence that her admission to and subsequent treatment at RR Hospital was life-changing for her as her underlying issues with depression and anxiety were properly treated as was her serious addiction issue.
It is the Wife’s evidence that since she left RR Hospital she has not used any prescription or illicit drugs, other than in strict compliance with those that are prescribed for her by her treating psychiatrist Dr SS. She is not drinking alcohol.
Whilst the Wife conceded in cross-examination that she was binge drinking at least one or two times a week, using an illicit drug and abusing prescribed medication, particularly from 2018, she minimised the impact that these behaviours had on her parenting and availability to be present for X and Y. She suggested she would sleep after X and Y had gone to school and though perhaps she had fallen behind on things like the washing and emptying the dishwasher, she was otherwise a good parent to them.
The Wife agreed that she has a different relationship with X and Y but explains this as being because they are quite different children, with X being more easy-going and open and Y a more rigid young girl who likes to keep to a routine and who can be quite anxious.
The Wife agreed that she currently has a quite difficult relationship with Y but that Y still enjoys her time with her and that they are able to talk most things through. The Wife denies that she favours X over Y, stating that she loves both her children equally.
It is the Wife’s evidence that she believes that it is in X and Y’s best interests to spend five nights a fortnight with her as this accords with X’s wish to spend more time with her and it is the best way for she and Y to work through their difficulties and grow closer together.
The Wife also believes that there is no reason to delay increasing the time that X and Y spend with her and that it is in their bests interests that what is to be their final arrangements are put in place sooner rather than later.
In relation to parental responsibility, the Wife indicated she has no objection to X and Y continuing at G School. She explained that her only concern in relation to that school is that she does not have the income to contribute to the cost of that education.
Similarly, it is the Wife’s evidence that she is as keen as the Father to be involved in X and Y’s extra-curricular activities and has no intention other than to support them in their many pursuits.
Whilst acknowledging that she and the Husband have a very fractured relationship, she believes that they are able to communicate and make decisions jointly that are in the best interests of X and Y. She argues that in these circumstances there is no reason for there to be an order other than she and the Husband have equal shared parental responsibility for them.
Dr SS
Dr SS is a consultant psychiatrist who is registered with the Royal Australian and New Zealand College of Psychiatrists.
Dr SS swore an affidavit on behalf of the Wife in 28 August 2023 to which was annexed three letters she had written on behalf of the Wife dated 2 November 2022, 2 December 2022 and 15 August 2023. Dr SS also gave viva voce evidence at the final hearing.
Each of the letters from Dr SS respond to specific questions that were put by the Wife’s solicitors. I will only include the answers to those questions contained in Dr SS’s most recent correspondence of 15 August 2023. They are as follow:
1. A summary as to [Ms Barton RR Hospital] inpatient program;
[Ms Barton’s] treatment post discharge from the [RR Hospital] clinic inpatient AOD program has comprised of biological, psychological and social strategies.
[Ms Barton] has been prescribed [multiple medications].
These above psychotropic medications have been prescribed for management of [Ms Barton’s] depressive and anxiety symptoms.
[Ms Barton] also completed her 12-week psychological program aimed at relapse prevention for addictive behaviours. She also completed a 12 week distress tolerance program to implement healthy coping strategies when faced with stressors. [Ms Barton] continues to be reviewed by myself every 6 weekly to ensure medication optimisation, stabilisation of her mental state and relapse prevention.
2. Her level of engagement in her treatment;
[Ms Barton] engages in treatment in a consistent manner and is compliant with prescribed medications. Safescript has been also checked to ensure that she has only one prescriber and that she is not currently being dispensed any addictive medications.
3. The results of any examination, investigation or observation made in relation to [Ms Barton] by you;
[Ms Barton’s] mental state examination showed ongoing depressive and anxiety symptoms. There were no psychotic symptoms or formal thought disorder…She showed insight into her mental illness and the need to have ongoing consistent treatment.
4. The particulars of [Ms Barton’s] diagnosis;
[Ms Barton’s] symptoms are consistent with substance use disorder -remission and major depressive disorder with anxiety features; moderate subtype as per the DSM 5 diagnostic criteria.
5. A description of the treatment you have carried out or recommended to [Ms Barton], including medication prescribed;
[Ms Barton] is currently prescribed [multiple medications]. These above psychotropic medications have been prescribed for management of [Ms Barton’s] depressive and anxiety symptoms.
6a. Your opinion as to:
(a) the reasons for carrying out or recommending such treatment, including the reasons for particular prescribed medication
[Ms Barton] has been prescribed [a medication] to aid with her debilitating anxiety symptoms. Additionally, [another medication] has been prescribed to be taken when [Ms Barton] experiences significant insomnia due to anxiety and depression.
I have prescribed [Ms Barton other medications] due to the persistent depressive symptoms of amotivation and anhedonia.
As her depressive symptoms were inadequately managed by a single antidepressant agent, a second antidepressant was added per clinical guidelines.
[Another medication] has been prescribed […] to aid with [Ms Barton] emotional dysregulation stemming from childhood trauma.
(b) [Ms Barton’s] prognosis including risk of relapse;
Given [Ms Barton’s] consistent engagement, the risk of her relapse remains low if she continues to comply with medications and treatment. [Ms Barton] urine drug screens (that were done at 24-hour request) and previous hair follicle testing have returned clear of illicit drugs. Given these factors, her risk of relapse remains low.
In cross-examination, the Husband’s Counsel challenged Dr SS suggesting that when giving her evidence she was mindful of not compromising the Wife’s future treatment and was therefore being the Wife’s advocate. Dr SS denied this stating she was giving her professional opinion.
I did not find Dr SS to be an advocate for the Wife, but rather an impressive professional witness whose evidence was objective and a reflection of her professional assessment of the Wife, her diagnosis, treatment and prognosis.
Dr SS was asked to explain the diagnostic criteria for someone to be considered to be in remission in relation to their substance use disorder. Dr SS explained:
“so for a substance use disorder it (remission) would be three months – up to three months of sobriety would be considered remission. Anything from 1 year to 5 years would be sustained (remission) and anything more than 5 years is stable. So at the point of writing the affidavit, [Ms Barton] would have done approximately 18 month of sobriety and therefore would be considered in sustained remission according to the DSM criteria.”
When Dr SS was asked about the Wife’s illicit drug use, she expressed an opinion that the Wife did not experience an illicit drug use disorder as she did not show a tolerance to that drug, her use of it was not regular and she was not dependent on it. When challenged on this evidence, it was Dr SS’s response that using the illicit drug twice a week is not considered regular. Dr SS explained for the drug use to be considered regular the use would have to be daily, there would need to be an unsanctioned escalation of the quantity of the drug being used and the user would have to show a level of use such that they developed a tolerance, dependence and withdrawals.
It was Dr SS’s evidence that she believes the Wife to have been truthful when telling her the amount of prescription medications used by her. Further, Dr SS was able to verify what the Wife was telling her to some degree by checking SafeScript which showed the quantity of drugs prescribed to her accorded with the information being provided by the Wife.
Dr SS explained that addiction is not about personality but rather it is distress tolerance. She explained that addictive behaviours are driven by distress and the desire to have a reprieve from that distress and that accordingly the Wife’s drug usage arose directly from her distress intolerance.
Dr SS was asked that in the event the Wife was not able to manage her distress in the future, would she not be very vulnerable to again using drugs to alleviate that distress. Dr SS responded “there is always that risk.” It was then put to Dr SS that there is therefore a significant risk the Wife would relapse if she were again to become distressed. Dr SS responded, “in terms of mild, moderate and severe as in the last 18 months given [Ms Barton’s] engagement and the adequate treatment of her distress, I would say it would be low.”
Dr SS was challenged by the Father’s Counsel in relation to this answer and was asked “if there was a stressful situation where she was not able to manage, that would place her at peril of drug use, wouldn’t it?”. Dr SS responded “would she still be under treatment?... if she was under treatment her risk would remain low.”
It is Dr SS’s evidence that the Wife has learned the strategies to use to cope with her distress and further, she has enough biological medications to help her manage her distress. Dr SS confirmed that her current therapeutic drug intervention and her remission is very much dependent on those medications. She also stated that the Wife’s level of engagement with her addiction psychiatrist is just as important as compliance with medication in maintaining abstinence and remission.
It is Dr SS’s evidence that if the Wife did not continue to attend upon her, she would be at risk of re-using drugs. When asked how long Dr SS anticipates it is necessary for the Wife to continue to engage with her, Dr SS said it would need to be for 5 years, during which time she remained in remission. If she were to do so, the Wife would reach the criteria of stable. When that occurred, the Wife would be given the option to continue to engage with her if she so chose.
It is Dr SS’s evidence that if the Wife were to return a urine drug screen or hair follicle test positive for certain prescription medications that would set off alarm bells for her as the medication that she prescribes the Wife does not fall into that category of drug.
Dr UU
Dr UU is a consultant psychiatrist who undertook a psychiatric assessment of the Wife on 3 March 2023. That assessment is annexed to his affidavit sworn 28 August 2023 and filed 30 August 2023.
Having summarised the information provided to him by the Wife as well as the extensive material that was provided to him as part of the assessment, Dr UU concluded under the heading “Opinion & Recommendations” the following in relation to the Wife:
13. [Ms Barton] appears to have fully recovered from her addiction for a sustained period. Based on her self-report and reported negative urine drug screens and follicle hair tests. She is well supported by her treating psychiatrist and psychologist. She reported that she is functioning well at work as a [healthcare professional]. She also reported that she had enjoyed the contact time she had been granted thus far. She noted a subtle difficulty in recovering [Y’s] trust and confidence, but this is perhaps not unexpected given the circumstances of separation and the requirement for supervision until relatively recently.
14. [Ms Barton] would appear to be mentally well and stable enough for consideration of more extended unsupervised contact time with the children. She presented herself as a loving, caring and devoted mother. Based on her mental state in this assessment, combined with all of the relevant information she reported and accessed in the material provided, it is likely that she has returned to her baseline level of parenting capacity prior to the development of her complex mental health problems.
15. [Ms Barton] presented as suitably humbled by her experience, and remorseful that she contributed to such difficulties in her life, and that of her children and [Mr Mignone]. She maintained to some degree that marital issues contributed to the emergence of some aspects of her drug addiction, but she didn’t present as blaming of [Mr Mignone]. She appealed for understanding and forgiveness. She seemed to have reasonable insight into the impact of her addiction and problem behaviours had on [Mr Mignone] and the children, but perhaps not to the extent to be absolutely comforted.
The Husband further argues that the income tax return retained by him should not be added back to the pool as those monies too were expended on reasonable living expenses for the family.
The Husband further submits that in the period that he was using the monies retained by him to pay his, X and Y’s reasonable living expenses he was only in part-time employment and was not earning his current level of income. During this period, he was responsible for supporting himself, meeting all the expenses relating to the former matrimonial home and was solely financially responsible for X and Y.
As was stated by the Full Court in AJO & GRO, “the normal approach” is for the Court to nominally add back to the pool legal expenses a party pays from property prematurely distributed to them and that reasonably incurred living expenses do not usually come within the accepted category of “add backs”.
The question of whether and what amount of property should be notionally added back to the pool is a discretionary one that is to be determined on the particular facts of each case. The Court has the discretion to not add back the property distributions made and expended by the parties and, the Court can instead consider this, if relevant, as a factor under section 75(2) of the Act.
As has been set out in this judgment, both parties have received approximately the same amount of money by way of partial property settlement or otherwise from their capital assets. This includes the taxation return received by the Husband. They have both each paid $400,000.00 in legal costs in legal costs to date.
Not having recourse to other funds the Wife has had to utilise the monies received by her to meet her legal expenses. The Husband has utilised approximately $250,000 of the money received by him in payment of his legal fees and the balance of approximately $133,000 on what are reasonable living expenses. Unlike the Wife, whose income is measurably less than that of the Husband, the Husband was able to pay the balance of his legal costs from the income earned by him.
I am persuaded by the arguments of the Wife that it would not be an appropriate exercise of the Court’s discretion to add back all the capital received by the party in the weaker financial position and not add back all the capital received by the party in the stronger financial position. The imbalance in the parties’ respective financial positions meant that the Wife, unlike the Husband, did not have the ability to pay her legal costs other than from the capital received by her. Had the Husband been in the same financial position as the Wife, he too would have had to use all the monies received by him to pay his legal expenses. For this reason, I am of the view that this is one of the very rare matters where “the normal approach” to add back capital spent on legal fees but not that spent on reasonable living expenses should not be followed, and that in the exercise of my discretion, the amounts received and expended by the parties should be treated in the same way.
Where I differ from the submissions made by the Wife’s Counsel that the Court should deal with this issue by notionally adding back the entirety of the monies received by the parties to the pool is that I am of the view that the capital amounts received and expended by the parties should not be added back to the pool for division between the parties. I am of the view that in this particular matter, the amounts received should be noted when considering the relevant factors under section 75(2) of the Act as this will enable the Court to take into account that the parties had the benefit of the capital received by them and how it was used by them.
In treating the monies received by the parties in this way, I note I am not bound by the earlier characterisation of funds advanced as part property settlement (Marchant & Marchant (2012) FLC 93-520 at [42]).
P Business
It is argued on behalf of the Wife that her interest in P Business should not be included in the asset pool but rather considered as a relevant factor under Section 75 (2) of the Act.
By agreement, the parties obtained a joint business valuation of P Business. The valuer Mr XX of YY Pty Ltd valued the business in its entirety at $437,000, which means he valued the Wife’s 50% share at $218,500.
The methodology used by the valuer to value P Business was to use a multiple of estimated future earnings. The valuer determined the estimated future earning of P Business to be $152,000 per annum to which he applied a multiple of three. He determined the estimated future earning by looking at the profit the business generated over a period of 3 years which included a period when the Husband and another full-time healthcare professional was working in the business as well as its current earnings. The business generated considerably more profit when the Husband and other full-time healthcare professionals were employed than it is currently earning with only a single part-time healthcare professional working in it. When setting the figure of $152,000 the valuer excluded $40,000 representing wages paid to the Wife and Ms HH.
I understand the Wife’s Counsel’s argument as to why the Wife’s interest in P Business should not be included in the pool of assets for division between the parties but rather be considered under Section 75 (2) of the Act when considering the parties’ earning capacity, to be:
·The Wife is currently paid a salary of $60,000 per annum from the business, albeit it is called a business “drawing” in the financial statement. In the preparation of the valuation only a $40,000 salary for both the Wife and Ms HH was deducted by the valuer when he calculated the estimated future earnings of the business as being $152,000.00. Therefore $40,000.000 of the Wife’s current wage constitutes part of the estimated future earnings of the business.
·That part of the Wife’s income that is included in the determination of the value of P Business is capitalising the Wife’s income into an asset whilst the Husband’s income of $260,000 is not capitalised into an asset.
·Because the Wife’s salary forms part of the basis of the valuation of P Business it is “double-dipping” to include the value of the business in the list of assets as you “cannot say the Wife has got an interest in the [business] and it’s capitalised into the pool at a figure and then say she has got $50,000 earning capacity on top because you are counting them twice.”
·As the Court is not going to factor one cent of the Husband’s future income into the asset pool how is it just and equitable to do this for the Wife’s future income?
·In conclusion, Counsel for the Wife said:
•“Both parties have an earning capacity. There is no suggestion from anyone that you ought to capitalise into the asset pool an expectation of what [Mr Mignone] will earn next year, or for the next 10 or 15 years. No suggestion whatsoever. But that’s what you’re being asked to do if you add the capitalisation of my client’s expected income for the next 10 or 15 years into the pool. It can’t be just and equitable to treat each party differently, particularly in circumstances where the husband’s earning capacity is what underpinned the wife’s earning capacity until he departed the [business].”
In support of his submission that the Court cannot “double-dip” by including the value of the Wife’s interest in P Business and then take her income earned from that business into account under section 75(2) of the Act the Wife’s Counsel referred the Court to the Full Court decision of C & C [2005] FamCA 159 (“C & C”).
In that matter, the appeal to the Full Court was challenging an adjustment of 7.5% made in the Wife’s favour by the trial judge on the basis of the disparity in earning capacity of the parties that was created by the Husband retaining the parties’ business assets.
In paragraph 14, the Full Court in C & C supra summarised the argument of the Husband as follows:
14. Counsel for the husband argued before us that if it could be seen that the profit was generated not by the husband’s efforts but by the business itself then the wife, having received her share of the business by way of capital adjustment ought not be seen to be entitled to receive a further adjustment because the retention by the husband of the business left him in a stronger position to generate income:
“Notionally a line should have been drawn across the page at the date of the judgment. From there on it was up to each party what he or she did with the appropriate share of net property awarded to him/her.
If the wife chooses to invest in residential property…with its greater security and perhaps upside for capital growth but smaller return it is unfair that the husband should in effect subsidise that decision. If the husband earns at a higher rate from his assets tied up in the business it is because those assets are at greater risk. This [is] a fundamental of the correlation between risk and return and the assessment of the risk is represented by the capitalisation rate used for the assets in this case the business. Valuation of the assets is a function of that capitalisation rate…”
Their Honours then made reference to the matter of McF v McF (unreported Appeal No NA24 of 2004 delivered 25 October 2004) (“McF”) in which the Full Court disallowed an adjustment made for section 75(2) factors that included the difference in the parties earning capacities brought about by the Wife’s retention of the business that was producing wages of $44,000 plus profits of $36,000. At paragraph 17 Kay J, with whom Bryant CJ and Holden JJ agreed said:
The profit making capacity of the business was already factored into the valuation, and I perceive there is an element of double dipping, paying attention to the income it earnt. If the wife sold the business, she lost her greater earning capacity. Accordingly, whilst its value was appropriately included in the pool of divisible assets, the fact that she will be required to buy out the husband's half share immediately compensates him for that difference, while increasing her outgoings by borrowings necessary to finance the purchase. Once that factor is recognised, there is really very little difference between the parties' positions.
At paragraphs 18 and 19 their Honours highlight the difference between the facts in C & C and McF in the following terms:
18. The figures in [McF] were significantly different to those in this case. The total pool of assets was $470,000. The business had been valued at $128,650 by capitalising its future maintainable earnings. The contributions to the pool were considered to be equal. The wife’s retention of the business required her to effectively pay the husband a sum equal to half its value. In this case there was no finding that the value of the business directly reflected its earning capacity. The value reached was by the husband matching what some other purchaser was willing to pay for it rather than by reference to its earnings.
19.The point is not without difficulty. The key finding of the trial Judge was that the husband and the wife each had the same capacity to draw a wage of equivalent value through their personal effort, however, the husband retained a business which was generating not insubstantial profits of around $100,000 per annum. There was no valuation on the basis other than that a purchaser had been obtained for it and its premises in the sum of $160,000. There was no application of normal valuation principles concerning a capitalisation rate being applied to its maintainable profits.
Their Honours then state the following at paragraphs 24 and 25:
24.There is no general principle within the Act that supports the proposition being put by the husband, namely that if he buys the wife out of the business the judge is prohibited from taking into account the relative income positions of the parties brought about because of the husband’s retention of the business. Moreover, the husband's earning capacity is grounded not just on the capital investment in the business but upon his qualifications and experience.
25.While the trial Judge focused upon the income differential of the parties in determining an appropriate adjustment, his Honour seemingly overlooked the fact that for the husband to maintain the income differential represented by the business’s profits he has to keep invested $160,000 from his half share of the assets invested in the business whilst the wife has available to her an equivalent sum to invest as she sees fit. It can be assumed that those monies will securely return her a sum which will diminish the gap between the parties’ income and earning capacity either by way of income or capital growth. To the extent that the trial Judge has overlooked that factor in this case we feel it appropriate that we interfere in the outcome.
As can be seen, the facts of C & C are markedly different from the facts in this matter. The retention by the Wife of P Business, which is agreed between the parties, will not as was the case in C & C and McF result in the Wife having superior earning capacity to that of the Husband.
Nor do I accept the submissions of the Wife’s Counsel that the manner in which the business was valued reflects a capitalisation of the Wife’s income in part or in whole. There are a multitude of considerations that would have influenced the manner in which the valuer achieved the figure upon which he based the future maintainable earnings. How the figure of $40,000.00 was attributed by the valuer as the Wife and Ms HH’s joint salary is not known. It may well reflect the “average” salary payable to a healthcare professional working two days a week as was the Wife’s hours prior to the parties’ separation or the industry standard. Further, the $60,000.00 currently paid to the Wife is not her salary but rather a figure she and her sister have agreed she receive. The financial statements of P Business refer to this payment as “drawings”.
Counsel for the Wife was unable to refer the Court to any decision of this Court where a business with an agreed value was not be included in the pool of assets for division between the parties but rather was considered pursuant to section 75(2) in circumstances similar to this matter.
For these reasons I reject the submissions made on behalf of the Wife that her interest in P Business is not an asset for inclusion in the property pool. To not do so is inconsistent with the Court’s mandate to identify the parties’ existing legal and equitable interests in property.
That does not mean however the Wife’s ownership of P Business and its current circumstances are not factors be considered under section 75(2) of the Act.
The Property Pool
Having determined the issues in dispute between the parties in relation to the asset pool it is now possible to set out what that pool. The values in relation to the parties’ real estate, the liabilities relating thereto, their motor vehicles are agreed.
I understand the parties agree that the capital gains tax payable on the sale of the Suburb N property is to be paid from funds currently held in trust as a result of that sale before property settlement takes place. If the Court has misunderstood the parties’ position in relation to how the CGT on the sale of the Suburb N Property is to be paid, it is my view such amount is a joint liability that should be paid prior to the division of the parties’ realisable assets. This is because the proceeds of sale of the Suburb N property are agreed to be a joint asset and it is only equitable that the CGT arising from its agreed sale should be also considered a joint liability.
The property pool for division between the parties:-
ASSET/LIABILITY
VALUE
TOTAL
K Street, Suburb L
$3,450,000
$2,435,840
Less mortgage to NN Finance
$1,014,160
One-half interest in H Street, Suburb B
$712,500
$431,982
Less half mortgage
$280,518
Monies held in trust for parties
$263,217
$180,890
Less payment of CGT
$82,327
Wife’s interest in Q Pty Ltd trading as P Business
$218,500
Husband’s Motor Vehicle 1
$40,000
TOTAL
$3,307,212
SUPERANNUATION
Mignone Superannuation Fund - Husband
$620,416
Mignone Superannuation Fund - Wife
$258,393
Superannuation Fund 1 - Husband
$8,203
TOTAL
$887,012
Not included in the pool above but included in the parties’ jointly filed assets and liabilities table is the Wife’s motor vehicle. It is her evidence, not challenged by the Husband, that the purchase monies for this vehicle were borrowed from the Wife’s mother which the Wife is to repay. Also not included in the pool is the Father’s Amex credit card which post-dates separation and his tax liabilities from income earned post-separation.
The parties have agreed that their superannuation is to be equalised.
CONTRIBUTIONS
It is submitted on behalf of the Husband that his contributions to the marriage should be considered to be greater than that of the Wife. In support of that submission, it is argued:
·The Husband made a considerably greater initial contribution to the marriage being his interest in the Suburb N property which the Husband estimates to have been approximately $100,000, investments of $146,000 as at late 2007 as well as shares that he had purchased for a total of $32,615 as at early 2007. The Husband’s Counsel argued that whilst there is case law that supports these initial contributions being eroded overtime, the Court should approach the matter on the basis that the Husband’s initial contributions afforded the parties the opportunity for the future accumulation of their assets.
·From 2018 when the Wife’s alcohol use, use of recreational drugs and use of prescription drugs got out of control, the Husband’s responsibilities not only as the principal income earner of the household but as the person responsible for the welfare of the family as a whole became significantly greater as the Wife, to use the Husband’s Counsel’s words, “withdrew from her role within the family”.
·Since the parties separated, the Husband has been almost solely responsible for the care of X and Y not only practically, physically and emotionally but also financially given the Wife has provided no financial support whatsoever.
·The Husband’s contribution in relation to X and Y also includes him continuing to pay school fees so that they can remain at G School, again with no assistance from the Wife.
·The Husband’s financial responsibility for X and Y will continue as the Wife’s evidence in relation to her financial situation means he is unlikely to receive financial support from her.
·Whilst acknowledging the $480,000 inheritance received by the Wife in 2018 and that it was utilised for the benefit of the family, it is argued this contribution is off-set by the Wife’s drug addiction and withdrawal from the family and inability to provide care for them.
·Prior to separation, the Wife was earning in excess of $100,000 a year by way of salary and distribution of profits from P Business. From 2018, this was used by the Wife to support her lifestyle and drug habits and not for the benefit of the family.
·There should therefore be an adjustment in the Husband’s favour for contributions of 10 to 15%.
It is submitted on behalf of the Wife that there should be an adjustment in her favour for contributions on the basis of the $480,000 inheritance received by her late in the relationship in 2018 that was utilised in reduction of the mortgage on the former matrimonial home, for contributions to the SMSF and for the parties’ living expenses. In support of that submission and in response to the submissions made on behalf of the Husband it is argued on behalf of the Wife:
·The Wife challenges the veracity of the figures being stated by the Husband as reflecting his initial contribution. The figures used by the Husband are based on the documents that were tendered into evidence by him from his financial adviser. They were tendered into evidence after the Husband concluded his evidence and he was therefore not able to be cross-examined on them.
·Those figures showed a snapshot as at late 2007, well after the commencement of cohabitation which on the Wife’s evidence was 2005.
·Perusal of the CommSec share trading document which has a date range of 2000 to 2008 shows that the Husband sold the majority of his shares in or around 2003 when he purchased the Suburb N property. This accords with his evidence that in order to pay the deposit on the Suburb N property he sold his shares. The Husband commenced again buying shares in late 2005 and his share trading disclosed approximately $140,000 worth of share trading in this period. This accords with the amount held in his investments as at late 2007. Because there is no evidence of where the monies came from for these investments, it is quite possible that those monies came from his share trading and therefore they are not two separate amounts but in fact one and the same.
·Between the date of the purchase of the Suburb N property and the figures used by the Husband in relation to the value of the property in 2007, he increased the mortgage on the Suburb N property by $80,000. There is no evidence before the Court as to what those monies were used for and whether they too were used for share trading or for his other investments.
·The Wife had equity in the Suburb DD property of $50,000 which was used towards the Suburb N property when she sold her interest to the Husband’s sister. The Wife had $25,000 worth of shares which she sold and similarly contributed to the Suburb N property albeit it is conceded that she has no proof in relation to this given it is nearly 20 years ago that this occurred.
·When considering the initial contributions made by the parties, the Husband did not make a significantly greater contribution than did the Wife at that time.
·The Wife’s contribution of $480,000 must be considered as significant as it is more than 10% of the pool available for division between the parties at this time and must be afforded appropriate weight accordingly.
·That a party to the marriage is required to step up when the other is unwell is not the basis for making an adjustment against the unwell party. The Husband struggles to accept that the Wife’s behaviours were as a result of diagnosed mental health issues being major depressive disorder with anxiety features and substance abuse disorder. Whilst the Husband was required to step up during this period it does not support an argument that there should be an adjustment as a result.
·Whilst the Husband will have the primary care of X and Y, they will be spending substantial and significant time with the Wife and she will be contributing to their care in a positive and meaningful way. She does however concede that the Husband will be the primary carer and that that is a relevant factor under the Act.
·Considering these factors and particularly the late receipt by the Wife of her inheritance, there should be an adjustment in her favour of 5%.
It is difficult to quantify with any accuracy the initial contributions made by the parties at the commencement of co-habitation whether that be in 2005 or late 2006/early 2007, noting neither party was cross-examined on this issue.
On the evidence available to the Court, I am satisfied that the Husband’s financial position was superior to that of the Wife at the commencement of cohabitation but I cannot be confident that his contribution was as great as that which is being argued by the Husband.
It is common ground that from marriage until approximately 2018 the parties’ relationship was positive, with the Husband working hard as a healthcare professional in P Business earning a very good income and the Wife working part-time in the same business and performing the role of primary homemaker and parent.
Again, it is common ground that in 2018 the Wife’s alcohol issues and illicit substance use, and prescription drug abuse became worse and negatively impacted on her functioning as a partner, her parenting of X and Y and her ability to contribute fully to the household. The Husband had to and did step up and took on a lot more responsibility on the home front because of this.
In 2018, the Wife received an inheritance from the estate of her late father of $480,000. There is no dispute that $380,000 was used to reduce the mortgage on the former matrimonial home. Whilst the Husband disputes the Wife’s evidence that $72,800 was placed into the parties’ SMSF, it is agreed all the monies inherited by the Wife were used in support of the parties’ living expenses. Whilst the Husband submits that this contribution is diminished by the Wife’s escalating drug and alcohol issues and therefore should be discounted or diminished, that submission is difficult to support given that those funds were in no way dissipated or diminished by the Wife in supporting her then lifestyle but were used in their entirety for the benefit of the parties.
The Husband’s contribution as parent and caregiver both practically, emotionally and financially to X and Y since 2018, and particularly since the parties separated in February 2021 has been much greater than that of the Wife.
When I consider the respective contributions made by both parties, I am of the view that their respective contributions should be assessed as equal and no adjustment be made in either parties’ favour.
SECTION 75(2) FACTORS
It is argued on behalf of the Husband that there should be an adjustment in his favour for section 75(2) factors. In support of that submission, it is argued:
·The Husband is going to have the primary care of X and Y and is clearly going to bear the full responsibility for their financial support particularly in relation to their education and their extra-curricular activities. The latter is particularly relevant as X is playing representative sport which does not come cheaply. He is going to do that with minimal financial assistance from the Wife.
·The Wife used her earnings from P Business primarily to support her drug habit from 2018. This meant that those monies were not available to the family for its support.
·After the parties separated, the Wife did not have savings that she would otherwise have had to both support herself and to pay at least in part some of her legal costs. This meant that the totality of the funds received by her by way of partial property settlement had to be utilised in the payment of her legal costs rather than being available to her for her own support and to contribute to the support of X and Y.
·No submissions were made in relation to the disparity in the parties’ income earning capacity.
It is submitted on behalf of the Wife that there should be adjustment made in her favour on the basis of section 75(2) factors. In support of that submission, it was argued:
·Whilst noting that the Wife will also be caring for X and Y under the proposed orders, it was conceded that they will be primarily living with the Husband and that the Court is entitled to make an adjustment in his favour under section 75(2) on that basis.
·The Husband is currently earning $260,000 per annum and will continue to earn an income at this level or higher into the future. In comparison the Wife is currently receiving $60,000 a year from P Business. P Business is not currently generating sufficient income to continue to pay the Wife this amount. Because of this, the Wife’s earning capacity is at best $50,000. If P Business is sold, she may receive a capital sum of $200,000 (an amount less than what the Husband earns annually) but will in the process lose her earning capacity and have to obtain alternate employment.
·There should be an adjustment in the Wife’s favour of 5% which, because of the huge disparity in earning capacity between herself and the Husband, is a modest adjustment in the Wife’s favour of less than $200,000 which is only one year of the Husband’s after-tax disposable income.
There is no doubt that a factor relevant to section 75(2) is that the Husband will have the primary care of X and Y and that he will be bearing not only their practical care but the financial burden for their upkeep and particularly their education and extra-curricular activities.
Whilst the Wife argues that the decision to keep X and Y at G School is entirely that of the Husband and that she would support a change in school if that was the only financially viable outcome for the Husband, X and Y have attended G School all their lives and the Husband’s wish to allow them to continue at that school, particularly given the turmoil of their lives over the past several years, is both understandable and commendable.
There is a clear disparity in the parties’ earning capacity. When the Husband and another healthcare professional worked for P Business it was sufficiently profitable to not only pay the Wife and Ms HH a salary for the two days a week they both worked but it also generated sufficient profit such that the Wife received an income in excess of $100,000 per annum from when she and Ms HH purchased the business from their father.
At the moment P Business is not generating a profit, primarily because the Wife and Ms HH have not been able to or have not been genuinely proactive in finding replacement professionals for the Husband and the previous full-time professionals employed there. Ms HH’s evidence is that she is considering moving to Queensland and ceasing all hands-on involvement in the business. Therefore, the future of P Business is unclear.
Whilst the Wife’s Counsel made no submission in this regard, there is an argument that, if the principles of C & C supra are applied, the inclusion of the value of P Business in the asset pool off-sets the income she receives from it, thus increasing the difference in the parties’ earning capacities even further.
My decision to not add-back the almost $390,000 each party received by way of distribution of property prior to the determination of this matter means it is something I can consider under section 75(2)(o) of the Act. This is particularly so given the Husband used some of those funds to meet reasonable living expenses of himself, X and Y.
A further factor for consideration pursuant to section 75(2)(o) is the use by the Wife of her income between 2018 and separation in 2021 to support her lifestyle rather than for the support and benefit of the family. This also meant after separation she had no savings to use for her support or to assist in the payment of her legal costs which meant she had to use all of the monies received by her to meet her legal costs.
An adjustment under section 75(2) is not a precise mathematical calculation but rather a matter of looking at all the relevant factors and weighing them up to reach an appropriate conclusion as to what the appropriate adjustment, if any, should be. When considering all the competing factors under section 75(2) as set out above, I have formed the view that there should be no adjustments in either party’s favour as the factors of relevance of each party balance the other.
JUST AND EQUITABLE
As can be seen from this decision, I have determined that the parties’ available property assets should be divided equally between them.
It is agreed that the Wife will retain P Business and the parties’ 50% interest in the Suburb B property. On the basis the Wife retains the balance of the funds held in trust for the parties’ after payment of the capital gains tax, if the Husband wishes to retain the former matrimonial home he will need to make a payment to the Wife of $822,234.00.
The Husband’s capacity to borrow such an amount is unknown. It is accepted that it would place a considerable financial burden upon him and he will need to determine if this is a viable proposition for him. Orders will be made that allow him to make such a decision.
If the Husband decides he cannot retain the former matrimonial home, I am satisfied that the Husband will receive sufficient funds after its sale to be able to rehouse himself, X and Y in suitable accommodation. It may not be quite as grand as their current home but should still enable them to live comfortably in an area that will allow X and Y to continue to attend at G School.
This outcome will also ensure that the Wife receives sufficient funds to enable her to plan her own future and re-accommodate herself appropriately so that she has a home for herself and X and Y when they spend time with her.
I certify that the preceding three hundred and thirty-five (335) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Bender. Associate:
Dated: 20 March 2024
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