MORTON & GUEST

[2017] FamCA 658

FAMILY COURT OF AUSTRALIA

MORTON & GUEST [2017] FamCA 658

FAMILY LAW – CHILDREN – Where the husband seeks an order to change the School currently attended by the parties’ eldest child – Where there is evidence that the child is settled in at the current School – Where an order is made for the parties’ eldest child to remain enrolled at her current School.  

FAMILY LAW – PROPERTY – Where the parties disagree as to who should be responsible for the payment of a taxation liability owed by a partnership operated by the parties during their relationship – Where the parties’ contributions were equal during the relationship – Where there is a significant disparity in earning capacity between the parties and the husband has produced no evidence in relation to his current financial circumstances – Where an order is made for the husband to be responsible for the taxation liability and professional fees owing to accountants. 

Child Support (Assessment) Act 1989 (Cth)
Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

APPLICANT: Mr Morton

RESPONDENT: Ms Guest

FILE NUMBER: SYC 5408 of 2014

DATE DELIVERED: 23 August 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 14 August 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Apelbaume

SOLICITOR FOR THE APPLICANT: Finnane Family Law

COUNSEL FOR THE RESPONDENT: Mr Maurice

SOLICITOR FOR THE RESPONDENT: LBK Solicitors

Orders

1. By consent, B born … 2004 (“B”) and C born … 2007 (“C”) (collectively “the children”) spend time with their father each alternate Monday afternoon (on the Monday afternoon that is not immediately after the weekend that the children spend with their father) from after school until 7pm (or such later time as is necessitated by an extra-curricular activity in which either of the children are involved). The husband is to pick the children up from school and deliver them back to the wife’s residence at the conclusion of time.

2. Unless the parties otherwise agree in writing B shall remain enrolled in and attend D Town School until she completes her secondary education.

3. With regard to the partnership, Mr & Ms Morton ABN … the husband be solely responsible for and indemnify the wife in relation to:

   3.1.The outstanding taxation debt of the said partnership in the sum of approximately $22,696; and

   3.2.The balance of professional fees owing to accountants E Pty Ltd in the sum of approximately $4,458.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Morton & Guest has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 5408  of 2014

Mr Morton

Applicant

And

Ms Guest

Respondent

REASONS FOR JUDGMENT

1. At the commencement of this final hearing there were a large number of parenting issues between the parties that remained unresolved. As a result of consent orders made on 24 November 2016 and 14 August 2017, at the end of the day there was only one parenting issue and one financial issue that remained unresolved which required determination.

2. There are two children of the marriage, B born in 2004 (“B”) and C born in 2007 (“C”) (collectively “the children”).

SCHOOL

1. The husband seeks an order that B be enrolled in F School for 2018. The wife opposes that order.

2. B commenced year 7 at D Town School in 2017.

3. The husband acknowledges that F School is located further away from the wife’s home than D Town School and would require B to catch the bus or be driven to school as opposed to walking. D Town School is slightly more convenient and allows the child to get to and from school independently if required.

4. The wife says that she does not wish B to attend F School due to the various beliefs the school holds. She does not believe in a religious education and does not practice the faith taught at F School.

5. The husband submits that F School achieves better academically than D Town School. At paragraph [24] of the family report dated 17 December 2015 the mother told the family consultant that “[B] is struggling academically”. B was in year 5 at this time.

6. Annexure L to the husband’s affidavit filed 28 March 2017 are the 2014 and 2015 NAPLAN results for year 7 at D Town School and F School. Those results indicate that D Town School was below the national average in the areas of reading, persuasive writing, spelling, grammar and punctuation and numeracy in both 2014 and 2015 whereas F School was above the national average overall in those areas.

7. The husband has not produced any information about D School other than its year 7 NAPLAN results for 2014 and 2015. While those results indicate that F School rates significantly better than D Town School on the criterion measured by NAPLAN, I accept counsel for the wife’s submission that NAPLAN results are not conclusive or indicative of the opportunities a school provides for a child’s cultural development and social performance and do not measure the facilities and extra-curricular activities available.

8. In a letter dated 31 March 2017 B’s current year 7 Advisor and Deputy Principal advise that B has a 96.4 per cent attendance at school; has been awarded three Bronze Awards this year as well as two mentions of academic achievement for the term; was recently elected to be on the Student Representative Council by her teachers and peers and that her “teachers have verbally reported her as being an attentive, hardworking and pleasant student in class”.

9. Exhibit 5 is B’s half yearly report for 2017. That report indicates that B has achieved “Outstanding” results in Technology, Visual Arts and Sport; “High” results in Music, LOTE, Mathematics, English and PDHPE and “Sound” results in History and Science. Counsel for the husband, in a somewhat understated way, conceded B’s current school report does indicate that “things certainly aren’t disastrous”.

10. The wife points out that there is a Homework Centre available at D Town School for B to attend should she require any academic assistance.

11. At the interviews for the family report in 2015 B told the family consultant that she wanted to attend D Town School when she commenced year 7 in 2017. At paragraph [52] of that report the family consultant states that “significant weight” could be placed on both children’s views about wanting to remain living primarily with the wife. Counsel for the wife submitted that B’s views in relation to school should also be accorded significant weight. Counsel for the husband submitted that no weight could be placed on B’s views in 2015 as she was 11 years of age at the time and a decision in relation to school is best made by her parents or by the court. I place some weight on B’s views.

12. The wife says that B enjoys attending D Town School and is well settled there. She says B has continued with friendships from her primary school and made a number of new friends The wife gives evidence at paragraphs [14] to [15] of her affidavit filed 23 February 2017 of the activities that B participates in at D Town School some of which she says B would be unable to participate in at a private school such as F School including dance camps and performances which are activities the wife says B enjoys. I accept the wife’s evidence about those matters.

13. B’s reaction and the effect of changing the School she attends are unknown.

14. I acknowledge that the husband might feel aggrieved that the litigious process through the court is slow and no final consideration was able to be made before B started School but that said we now have a known situation in relation to her settling into her first year of School.  

15. The husband submitted from the bar table that he would pay the fees associated with F School and he did previously tell the family consultant at the interviews for the family report in 2015 that he and his partner, Mr G, would do so. I accept the wife’s evidence that she is unable to contribute towards a payment of private school fees.

16. The husband has not led evidence which would enable me to find that he will be able to fund a long term commitment towards B’s schooling. As indicated below I don’t have any information about his partner’s financial circumstances. He is silent in relation to C’s schooling and the wife proposes that C also attend D Town School and for the children to go to the same school. While I have found below that the husband has a comfortable earning capacity he is struggling to pay off his child support debt and any financial commitment he makes to B’s schooling would also need to be doubled to allow C to attend the same school as her sister.

17. Counsel for the wife correctly submitted that the court cannot compel the husband to pay school fees other than by way of Child Support departure. The husband has made no such application pursuant to the Child Support (Assessment) Act 1989 (Cth) and has not served the Child Support Registrar pursuant to Rule 4.23(1) of the Family Law Rules 2004 (Cth).

18. Given the matters discussed above and in particular the uncertainty as to how F School would be funded and the evidence of how B has settled at her current school I will make an order that unless the parties otherwise agree in writing B shall remain enrolled in and attend D Town School until she completes her secondary education.

OUTSTANDING TAX DEBT AND ACCOUNTANT’S FEES OWED BY THE PARTNERSHIP

1. The wife seeks the following orders:

   That with regard to the partnership [MR & MS MORTON] ABN … the husband be solely responsible for and indemnify the wife in relation to:

   a.The outstanding taxation debt of the said partnership in the sum of approximately $22,696; and

   b.The balance of professional fees owing to accountants [E] Pty Ltd in the sum of approximately $4,458.

2. The husband seeks an order that the parties pay those partnership debts equally.

3. Whilst this controversy was initially couched in terms of the court making a judicial determination about which party should pay these liabilities, the only way that controversy could be determined is to make a final order under s 79 of the Family Law Act 1975 (Cth) (“the Act”).

4. In that context, by consent, a partial property settlement order had been made on 24 November 2016 in the following terms:

   14. Pursuant to s 79 Family Law Act 1975 I make a partial property settlement order in the following terms.

   15. As soon as is practicable and within three months, the husband is to refinance the mortgage on the [D Town] property so that:

   15.1  He takes sole responsibility for the current mortgage of approximately $486,000;

   15.2  An amount of $120,000 is raised and paid to the wife’s parents;

   15.3  An amount of $37,000 is raised and paid to the wife.

   16. Upon the husband complying with order 17, the wife will transfer to the husband her right, title and interest in the [D Town] property and the husband will be responsible and indemnify the wife in relation to any outstanding liabilities in respect to the [D Town] property.

   17. Subject to matters which remain in dispute, each party to retain any assets and financial recourses that are currently in their respective names and possession and take over any liability in relation to any liabilities associated with any of those assets.

   18.The wife transfer to the husband her sole right, title and interest in the assets of the partnership known as [Mr & Ms Morton].

5. Both parties ask the court to determine this controversy without either of them relying upon any financial statement. This created problems which I will shortly discuss.

6. The husband was born in 1973 and is now 43 years of age. The wife was born in 1975 and is now 42 years of age.

7. The parties commenced their cohabitation in 1998 and married in 2001.

8. In early 2001 the parties purchased their first home at H Street, D Town for $56,000.

9. In March 2005 the parties purchased two investment properties at J Street, D Town for $91,000 and K Street, D Town for $234,000. The wife’s parents lent the parties $274,000 interest free for the purpose of renovating the K Street property. This was progressively paid back to the wife’s parents by the parties and by November 2016 the debt had reduced to $120,000. Interim orders made 24 November 2016 set out above provided for the repayment of those monies. Nonetheless, the parties received a contribution made on behalf of the wife of the advantage of interest free funds.

10. In January 2006 the parties sold the J Street property for $135,000. In 2006 the parties also sold the H Street property for $295,000 and the parties moved into the K Street property in December 2006.

11. The parties continued to reside in the K Street property until 28 September 2013 when the husband moved out of that home. This is the date of separation asserted by the wife. The husband on the other hand says that he informed the wife that the marriage was over on 28 April 2012 and thereafter the parties lived separately and apart under the one roof.

12. In March 2014 the wife commenced a new relationship and the husband commenced a de facto relationship with his current partner, Mr G with whom he lives.

13. The parties divorced on 19 May 2015.

14. Consequently the period of the relationship was somewhere between 14 and 15 years.

15. The parties had no significant assets at the date of the cohabitation.

16. Apart from the contribution made on behalf of the wife by her parents, no other contributions were made from outside the marriage.

17. The parties agree that the mathematical basis of the interim property order assumed a value of the K Street property in the sum of $680,000 and the interim orders affected an even division of the equity in that property. 

18. The parties agree that there were no other assets of any value apart from perhaps the husband having the advantage of depreciated plant owned by the Mr & Ms Morton partnership.

19. Counsel for the husband in final submissions said that the husband should receive more than 50 per cent of the assets based on contributions because of the husband’s post separation contributions. True it is the husband’s income post separation exceeded that of the wife’s and he continued to pay the mortgage and outgoings on the K Street property after separation. After the separation the wife had the use and occupancy of the K Street property for a greater amount of time than the husband. The husband asserted that there was a period of about three months where the wife received rent for the property but the wife denied that she received any rent from friends who stayed with her at her home. The wife had the primary responsibility for the support of the children post separation and was on a far lower income coming out of the marriage than was the husband.

20. When looking at the parties contributions overall and particularly having regard to the advantage the parties had from the wife’s parents’ interest free loan, I find that those contributions were equal.

21. Turning then to an assessment of s 79(4)(d) – (g) considerations, it is clear that there is a significant disparity in earning capacity of both the parties. It did not seem controversial that the wife’s income in casual employment is now at a level of $56,000 per annum.

22. The assessment of the husband’s income however is far more problematic. Counsel for the husband asserted from the bar table that the husband’s current income is $68,000. I can place little weight on that assertion given the other documents that were tendered in evidence. The husband did not tender any recent tax returns. The best evidence I have from a neutral source is annexure D to the wife’s affidavit sworn 23 February 2017. That annexure is a letter to the wife from (apparently) the Child Support Agency indicating that the agency had received “an updated 2014 – 2015 income for [the husband]. We have used this income to recalculate the amount [the husband] is to pay in child support.” The document discloses that the basis for the recalculated income was a taxable income in the husband’s hands for 2014/2015 of $127,985.

23. The husband tendered in evidence documents from the Australian Tax Office (Exhibit 6). The first is a running balance account which shows a closing balance as at 25 March 2017 of $111,031. The second is an income tax account as at 1 August 2017 which has a closing balance of $41,331.99 DR. Counsel for the husband asserted from the bar table that these were two separate debts and should be aggregated. The first difficulty with that submission is that the statement closing balances are at different dates. The documents are of little value to me in their current form. If however I assume that the husband has a current debt in the order of $152,000 to the Australian Tax Office, I infer, absent any different assertion by the husband, that debt has been generated since separation and is indicative of the husband having a very significant taxable income in that period. Given that is so I place little weight on the fact that the husband has this outstanding tax debt. The husband has not attempted in any way to give the court an overall picture of his current financial circumstances and has not attempted to provide tax returns which would indicate how and upon what income these debts were generated.

24. Counsel for the wife made submissions about the husband’s failure to keep up payments of child support pointing to the fact that there is a current outstanding liability of child support as at 11 August 2017 of $4,175. That submission is a little unfair to the husband because as Exhibit 7 demonstrates, as at 5 May 2016 the husband had a child support credit of $946. At that time the Child Support Agency became aware of the husband’s true level of income and retrospectively adjusted his child support by an amount of $10,304. That adjustment created a child support liability as at 13 May 2016 in the sum of $9,357. The husband has been progressively attempting to discharge that debt since that time.

25. Given the parenting orders which have been agreed, the wife will continue to have the primary responsibility for the day to day care of the children.

26. The husband is living in a de facto relationship. The husband has given the court no information about how he shares his financial arrangements with his partner. The court has no indication as to what his partner’s financial circumstances are save that the family report refers to the fact that his partner would assist in paying private school fees for the two children should the court make an order that the children attend private schools.

27. Looking at what would be a just and equitable outcome, I bear in mind that the remaining asset pool that I am dividing is a figure less than $47,000 ($37,000 + $37,000 – $27,000). Attempting to make an order based on percentage splits taking into account what the parties have already received by way of interim orders is not a realistic approach. The wife is seeking that the husband pay $27,000 before the $20,000 that remains is split evenly between them. If the wife’s order is made, the husband will receive $10,000 and the wife will receive $37,000.

28. Given the considerable disparity in the earning capacities of the two parties and the wife’s ongoing primary role as caregiver to the children, what the wife is seeking is a just and equitable outcome and I will make the order in accordance with the wife’s application.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 23 August 2017.

Associate: 

Date:  23.8.2017