NARVA & NARVA
[2020] FCCA 1707
•16 July 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NARVA & NARVA | [2020] FCCA 1707 |
| Catchwords: FAMILY LAW – Property settlement – parenting – stay of child support. |
| Legislation: Family Law Act 1975 (Cth), ss.60B, 60CA, 60CC(2) & (3), 75(2), 79(2) & (4) Evidence Act 1995 (Cth) s.140 Child Support (Registration & Collection) Act 1988 Child Support (Assessment) Act 1989 |
| Cases cited: Galea v Galea (1990) 19 NSWLR 263 Fox v Percy (2003) 214 CLR 118 Clauson & Clauson (1995) FLC 92-595 Jones & Dunkel (1959) CLR 298 Russell v Russell (1999) FLC 92-877 |
| Applicant: | MS NARVA |
| Respondent: | MR NARVA |
| File Number: | LNC 536 of 2019 |
| Judgment of: | Judge McGuire |
| Hearing dates: | 28 & 29 May 2020 |
| Date of Last Submission: | 29 May 2020 |
| Delivered at: | Burnie |
| Delivered on: | 16 July 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Verney |
| Solicitors for the Applicant: | Matthew Verney Lawyer |
| Counsel for the Respondent: | Mr G Williams |
| Solicitors for the Respondent: | Glynn Williams Legal |
ORDERS
Parenting Orders:
That the parties have equal shared parental responsibility for the children X born in 2007 and Y born in 2015 (“the children”).
That the children live with the wife.
That the children spend time with the husband as follows:
(a)each alternative weekend from after school on Friday (or 3.00p.m. if a non-school day) until 5.00 p.m. Sunday;
(b)for Y each Wednesday from after school (or 3.00 p.m. if not a school day) until the commencement of school on Thursday (or 8.40 a.m. if not a school day);
(c)for one half of each term school holidays as agreed between the parents but failing agreement then for the first half of such holidays being from the Friday at the end of school (or 3.00 p.m. until the second Saturday at 12 noon);
(d)that for one half of each summer school holidays with the children spending firstly blocks of two weeks with each of the parents and then blocks of one week with each of the parents alternating with the first two week block with the husband in 2020 and in each alternate year thereafter and with the wife in 2021 and in each alternate year thereafter;
(e)in any event the children are to spend time with the husband in 2020 and in each alternate year thereafter from 2.00 p.m. Christmas Eve until 2.00 p.m. Christmas Day and in 2021 and each alternate year thereafter from 2.00 p.m. Christmas Day until 2.00 p.m. Boxing Day;
(f)but in any event the children to spend time with the wife at Christmas in 2020 and in each alternate year thereafter from 2.00p.m. Christmas Day until 2.00 p.m. Boxing Day and in 2021 and each alternate year thereafter from 2.00 p.m. Christmas Eve until 2.00 p.m. Christmas Day;
(g)that should Easter not coincide with first term school holidays then in any event the children are to spend time with the father in 2020 and in each alternate year thereafter from 2.00 p.m. Good Friday until 2.00 p.m. Easter Sunday and in 2021 and in each alternate year thereafter from 2.00 p.m. Easter Sunday until 2.00p.m. Easter Tuesday;
(h)that should Easter not coincide with the children's first term school holidays then they spend time with the mother in 2020 and in each alternate year thereafter from 2.00 p.m. Easter Sunday until 2.00 p.m. Easter Tuesday and in 2021 in each alternate year thereafter from 2.00 p.m. Good Friday until 2.00 p.m. Easter Sunday;
(i)that in any event should the children not otherwise be with the mother on the Mother's Day weekend then the children spend time with the mother on Mother's Day from 9.00 a.m. until 5.00p.m. but should the children not otherwise be with the father on the Father's Day weekend then the children spend time with the father on Father's Day from 9.00 a.m. until 5.00 p.m.;
(j)that time for the children on weekends and Wednesdays be suspended during all school holidays; and
(k)such other times and variations of the above as may be agreed between the parties in writing from time to time.
That both parties, their servants and/or agents be and are hereby restrained by injunction from taking or sending or attempting to take or send the children X born in 2007 and Y born in 2015 from the Commonwealth of Australia. This order ceases to have effect 5 years after the date on which it is made.
The Marshal and all officers of the Australian Federal Police and of the police forces of the various States and Territories are requested and empowered to take all necessary steps to give effect to these orders.
The Court requests that the Australian Federal Police place the names of the children on the Airport Watch List at all points of international arrivals and departures in Australia for the purpose of preventing removal of the children from Australia in breach of these orders. This order ceases to have effect 5 years after the date on which it is made.
That each of the parents have liberty to apply in respect of overseas travel for the children.
That the children’s passports be retained by the Registrar of the Federal Circuit Court of Australia and held at the Launceston Registry of that Court and are not to be released without order of the Court or express written agreement of both parties and the parents each deposit such passports of the children currently in their possession with the Registry within seven (7) days of the date of these orders.
Stay Application:
The husband's application for a stay of collection of child support be dismissed.
Property Orders:
That within 42 days of the date of these orders the husband make a lump sum cash payment to the wife of $344,241.75.
That in all other respects each of the parties be solely entitled to the exclusion of the other to all real property, personalty, chattels, motor vehicles, balances of bank accounts and like investments and superannuation policies and entitlements (subject to these orders) currently in the possession of or under the control of that party as at the date of these orders.
That each of the parties be solely responsible for and indemnify the other in respect of the following liabilities:
(a)any and all liabilities attaching to any of the assets retained by that party pursuant to these orders; and
(b)any and all liabilities incurred by that party since separation in either joint names or in that party's name alone.
That within 42 days of the date of these orders the parties jointly bring in a settled order providing for superannuation splits from the husband's superannuation policies and entitlements with a quantum of $165,000 in favour of the wife and with evidence of procedural fairness on the relevant superannuation funds.
Pursuant to section 81 of the Family Law Act1975 the parties intend that these orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
IT IS NOTED that publication of this judgment under the pseudonym Narva & Narva is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT LAUNCESTON |
LNC 536 of 2019
| MS NARVA |
Applicant
And
| MR NARVA |
Respondent
REASONS FOR JUDGMENT
Applications
The wife is the applicant in proceedings involving property settlement and parenting issues. In his response the husband also seeks an order for a stay of collection of child support pending the administrative hearing of an objection to his assessment.
The parenting issues are discrete in respect of the parties’ two children being X born in 2007 and Y born in 2015. Firstly, the husband argues that the children's passports should be kept one with each of the parents. The wife proposes that the passports be held by a third party such as the Court Registry. Secondly, there is an issue in respect of the children's time between the parents during summer school holidays. The wife argues that the children spend a block of two weeks with the father being 'the time coincides with the respondent father's annual leave and the respondent father gives the applicant mother two weeks written notice'. The husband argues for a simple order that the children spend half of their summer holidays with each parent including a block of two weeks with each.
The applicant wife proposes a property settlement whereby she receives 65% of the non-superannuation pool and a split from the husband's superannuation entitlements so as to give equality in the parties’ superannuation entitlements.
The husband argues for a 50/50 division of the property pool inclusive of superannuation.
Issues
The parties are each of Country B origin. It is clear that they each suspect the other of being capable of removing the children from the jurisdiction of Australia and hence their argument in respect of retaining of the children's passports.
The wife proposes a two week block for the children with their father in the summer holidays due to his work commitments.
The husband’s stay application in respect of child support is based on his argument that his child support should be reduced due to him paying the older child's fees, including boarding, at C School. I am not asked to consider a Departure order but simply the stay in circumstances where the husband is seeking a review or objection in respect of his assessment.
The parties argue as to two issues in respect of the property pool which is otherwise as agreed. Firstly, it is agreed that the husband has sent a sum of at least $375,550 to Country B over a period of less than two years. He argues that the expenditure is either acquiesced by the wife and/or reasonable expenditure given cultural background considerations. Secondly, the husband says that he has an outstanding taxation liability of $126,166. The wife says that the liability should be included at $60,663.
Background
The husband was born in Country B. He is 48 years old. He is a health care worker employed in public service in Region D, Tasmania.
The wife is also from Country B and is 43 years of age. She is now employed as a health care worker.
The parties married in 2005. They separated on 11 June 2019.
X is a student at C School. She is a boarder during the week. Y attends E School at City F. Interim consent orders made 29 January 2020 provide that the children live primarily with the wife and spend alternate weekend time with the husband. Y also spends time each Wednesday between 3.00 p.m. and 7.00 p.m.
Both parties were born in Country B and are Australian citizens. There is no evidence before me that either party has re-partnered in the sense of support or dependency.
The Evidence
Both parties provided affidavits, sworn financial statements, gave evidence and were cross-examined.
Although a number of financial documents were tendered to the Court during the course of the evidence, neither party adduced further evidence. There are clearly issues between the parties in respect of disclosure of financial documents. It is proper to note that whilst the Rules of this Court oblige full and frank disclosure, it remains for a party to prove his or her own case on the balance of probabilities and it is not incumbent upon the other party to take on that evidentiary role and burden. Put simply, if a party makes an assertion of fact then they carry the onus to prove that fact. The process provides numerous tools including the issue of Subpoena, Notices to Admit, and Notices to Produce. In the matter now before me, the evidence given and put before the Court was seriously lacking in detail and corroboration. Issues which remain alive in respect of taxation liabilities and the husband's income might easily have been resolved. Similarly, the wife suggests that the husband is the actual or beneficial owner of properties in Country B purchased with the transfer of monies from Australia. Yet she adduced no evidence from available witnesses albeit those living in Country B. No title documents were produced by either party. All too often it seems that Counsel are left with a dearth of evidence and then are required to argue that failure to disclose should leave Courts to make negative inferences against that party. The forensic preparation of matters for trial remains crucial in the discharge of the evidentiary onus.
Given the state of the evidence, the Court’s determination of disputed fact effectively rests on credit.
The standard of proof in disputes before this Court is one of 'on the balance of probabilities'. Section 140 of the Evidence Act 1995 (Cth) provides:
s140(1)In a civil proceeding, the Court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
s140(2)Without limiting the matters that the Court may take into account in deciding whether it is so satisfied, it is to take into account:
(a)the nature of the cause of action or defence; and
(b)the nature of the subject-matter of the proceeding; and
(c)the gravity of the matters alleged.
The Court does have the advantage of being able to see and hear the parties give their evidence and be cross-examined. In this sense, I found the wife to be an impressive witness. She was able to make admissions against interest such as the fact that it is culturally common for those of Country B origin who have been financially successful overseas to send monies back to their families in Country B. The wife gave her evidence in a calm and informed manner.
To the contrary, the husband was not so impressive as a witness. He frequently prevaricated in his responses. His evidence in respect of his current income, his application for job-keeper payments, and in respect of the use of significant money sent back to Country B was at times vague and inconsistent. Again, the husband's evidence suffered to a large degree by his failure to adduce what would appear to have been available corroborating evidence. For example, he says that money sent to Country B was used for the wife's brother's wedding and the wife's father's medical expenses. He says that monies were provided to the wife's friends in Country B. He says that he has no interest in the properties purchased in Country B yet produces no titles. He adduced no corroborating evidence. In any event, questioning left serious doubt as to the proper accounting by the husband for the sum of at least $375,000 sent to Country B in a 22 month period where he himself suggests that a house can be purchased or built in Country B for about A$9,000 but indicates that the provision of a house for his family was a prime motivation. As mentioned above it remains that a party asserting a fact carries an onus to prove that fact. It is not for the other party to ‘prove the negative’. Indeed such would be a logical nonsense.
In Galea v Galea[1] Kirby ACJ considered issues of credit and the advantages available to trial judges including the following:
[1] (1990) 19 NSWLR 263
(a)the hearing of the evidence in its entirety;
(b)the hearing and seeing of all evidence in context, chronologically and logically advanced;
(c)having time during adjournments and during the running of the case to reflect upon the evidence and to weigh it against all other evidence while fresh;
(d)hearing and seeing interruptions, hesitations and delays in the giving of testimony; and
(e)observing body language, sometimes important for interpreting communication.
In all trials it is a crucial function of trial judge to assess the veracity of the parties and their witnesses and in this sense Courts of this type assume a role of the juror as determiners of fact. In this respect the judge has the benefit of directly hearing and considering any inconsistencies or contradictions in the evidence of a party/witness. Nevertheless, the Court should be cognisant of the pitfalls of giving too much credence solely to demeanour when considering the evidence of a witness.[2] In the matter before me, and whilst both parties are proficient in the English language, this is not their first language. The Court should also take into account circumstance and context of parties giving evidence in Courts where they are unfamiliar with the environment and likely to be nervous and restrained in case they fall into error or accidental disclosure. As such, and whilst it is permissible to make generalised findings on the basis of credit, the Court is at all times cautious but, in such as in the matter now before me, often unassisted by any corroborating or contradictory evidence.
[2] Fox v Percy (2003) 214 CLR 118
The Law – Parenting
Section 60CA of the Family Law Act 1975 (“the Act”) provides that the Court must have the child's best interests as its paramount consideration. In determining those best interests the Court is to reference the parties’ proposals and the probative evidence to the numerous factors set out in s.60CC(2) and (3) of the Act against a background of the objects and principles of the legislation set out in s.60B.
Firstly, the parents are in dispute as to who should hold the children's passports. It is clear that each is suspicious of the other and that, given their Country B origins, the other might remove the children from Australia. In such circumstances, I intend to make an Airport Watch List order. Both parents are dual citizens. There is an indication of money having been removed from Australia to Country B. It is consequently in the children's best interests that the jurisdiction be preserved. Further whilst the husband's proposal of each of the parents holding one child's passport has superficial attraction, it does not give complete protection. I am of the view that a third party should hold the children's passports. I will make an order that they be held at the Registry of the Federal Circuit Court at Launceston. I will, however, hear any argument specifically against the making of the Airport Watch List order.
Secondly, there is a discrete issue in respect of school holiday time. The thrust of the wife's argument is that the husband works extremely long hours and has limited holidays. Nevertheless, the wife is also in employment and, without further evidence, I assume that she herself would have limited holidays and may be not of such duration that she can accommodate the children at all times during school holidays. In any event, it is incumbent upon parents to make arrangements for the children's care and relationships between parents and children can be beneficial outside of work hours. I prefer the husband's proposal that the school holiday time be shared including summer school holidays. I agree that there are some benefits to both parents and the children in splitting the summer school holidays on blocks of two weeks with each of the parents and then blocks of one week.
Despite their differences and mutual mistrust, the parents each ask for an order for equal shared parental responsibility for their two children. I agree that such an order would be in the children's best interests.
Property – Relevant Law
It is well-established from Stanford v Stanford[3] that the first task for Courts in determining whether and what alteration of property there be, is to establish the property pool and to attribute value to it. ‘Property’ includes assets, liabilities, and financial resources of the parties or either of them. It is usually proper for such determinations to be made as at the date of the hearing. Amendments to the Act provide that superannuation is to be 'treated as property' for the purposes of this exercise although, of course, superannuation is not an 'asset' in the usual sense in that it cannot normally be immediately crystallised.
[3] (2012) 247 CLR 108
Pursuant to s.79(2) of the Act the Court is to determine whether it is just and equitable to make any orders altering the property interests of the parties. This is a determination to be made on the particular circumstances of the case and not one simply conflated with the later considerations of contributions. In the matter before me the parties have been in a relationship since 2005. There are two children of that relationship. The evidence suggests the relationship to have irretrievably broken down. The parties have legal or equitable interests in at least three real properties. The legal interests in those properties differ prima facie and substantially from the asserted equitable interests. In all of those circumstances I am of the view that it is just and equitable to proceed with a consideration of alteration of the parties’ property interests.
The Court is then, pursuant to s.79(4)(a)–(c), to consider the contributions of the parties and each of them to the acquisition, maintenance and improvement of the contents of the property pool. Contributions can be of a direct or indirect financial type or they can be of a non-financial type including as homemaker and parent.
After consideration of the parties’ contributions, the Court then considers whether there should be any further adjustment to either of them by reason of the factors set out in s.79(4)(d)-(g) including the factors set out in s.75(2).
Finally, it is generally accepted that the Court should then 'stand back' and consider whether the proposed orders themselves provide justice and equity and not simply by reason of the mathematical process of consideration of contributions and s.75(2) factors[4].
[4] Russell v Russell (1999) FLC 92-877
The Property Pool
To their credit the parties have substantially agreed the property pool and valuations. There remain two issues. Firstly, the wife argues that a sum of $375,550 sent by the husband to Country B between 10 May 2017 and 15 February 2019 be ‘added back' to the pool.
The Full Court in AJO & GRO[5] held that 'add-backs' fall into 3 clear categories being:
[5] (2005) FLC 93-218
(a)where the parties have expended monies on legal fees;
(b)where there has been a premature distribution of matrimonial assets;
(c)where there has been 'waste' in the form of wanton, negligent or reckless conduct resulting in a dissipation of the parties’ wealth.
The important High Court decision of Stanford (supra) ignited judicial and academic debate on the ability of trial judges to make 'add-backs' but it is now generally accepted that such a course is available to judges although the authorities suggest to do so is 'the exception rather than the rule’[6] but remains a discretionary exercise.
[6] Trevi & Trevi [2018] Fam CAFC 173
The husband here concedes that he has sent $375,550.83 from his own bank accounts to Country B during the period 10 May 2017 – 15 February 2019. It is accepted between the parties that the husband's income was substantial during that time and perhaps exceeded $800,000 per annum. The husband argues, therefore, that his largesse was both consistent with the affluent lifestyle enjoyed by the husband and the wife and also with the cultural tradition of family obligation by those who leave Country B and become financially successful. Further, the husband says that the payments were made with the full knowledge and consent of the wife and in all of these circumstances the Court should consider the payments to be reasonable and not be added back to the pool.
The husband in his affidavit at [16]–[17] deposes as follows:
16.Whilst recognising that it is customary to send money overseas, I believe I overdid it to please and impress Ms Narva. She and her family has been a beneficiary of this largess. She encouraged me to send money overseas whilst in the relationship as her family, friends and relatives all benefited from it. It was part of the lavish lifestyle that Ms Narva enjoyed and encouraged. In the last 13 years of marriage I have sent to Ms Narva’s parents, friends and relatives on occasions such as Christmas, Easter and birthdays. I was the sole sponsor of Ms Narva’s brother's wedding and Ms Narva’s father's medical expenses when he travelled to the UK. All these monies are usually sent via my mother. I paid 'bride price' immediately after marriage (as Ms Narva acknowledges) and again in 2018. My extended family has also been beneficiaries of my generosity and I have no regrets supporting them. I would also like to point out that my contributions to my parents is well-placed given that they were responsible in my upbringing, providing for me and also sponsoring my medical education in medical school. This has made me who I am today and will gladly continue to provide for my parents.
17.It is the height of insanity for Ms Narva to insinuate that monies sent overseas was to build properties. I supervised building of properties for my parents that belong to them.
The wife in her affidavit at [27] lists the payments now conceded by the husband from his bank account and totalling $375,550.83. Her affidavit continues at [28]–[34] as follows:
28.I am unaware of whether there have been further payments made after 13 February 2019 as the bank statements Mr Narva has disclosed do not go past that date.
29.In or about 2016 or 2017, Mr Narva told me that he was sending money to Country B to build the following properties for himself:
(a)2 units consisting of 2 bedrooms and 2 bathrooms; and
(b)Another piece of land consisting of an apartment complex of 4 units and a separate house.
30.I have photos from when the properties were being built in 2017.
31.In or about 2018, Mr Narva told me that the properties were built, but he was still sending money to his mother to pay off the debt for building the properties.
32.From my conversations with Mr Narva, I believe that Mr Narva is the owner of the above properties in Country B. Mr Narva is now denying he owns the property.
33.It is part of the culture in Country B for the person with the greatest income to look after their family. Mr Narva has told me that he sends monies back home for 3 families consisting of his parents, his older sister's family and his younger sister who is unmarried with a child.
34.When I lived in Country B, a family could live on 100,000 Country B currency a month. With the current exchange rate as at 19 February 2020, this is around $400.00 Australian dollars a month. Mr Narva has been sending much more than this. The conversion rate was similar in or about 2017.
As mentioned above, this significant issue in respect of the property pool revolves now around the credit of the parties. The wife asserts that the husband removed $375,500 from his own bank account in the period of 22 months. The husband now concedes this fact. It is the husband who asserts that the expenditure is reasonable and made with the knowledge and consent of the wife. It is he, therefore, who carries the onus to prove that assertion of fact. Generally in respect of issues of credit, the wife was a superior witness and for the reasons set out above. Specifically, the husband was unable to give any form of accounting in respect of the significant sum of $375,500. He says that the money was for the building of a house. He admitted, however, that the cost of building a house would approximate $9,000 Australian dollars. His other conceded expenditure is in relatively minimal amounts. Neither in his affidavit nor his evidence in Court was he able to give any satisfactory explanation for the expenditure of $375,500. He himself deposes at [16] of his affidavit that he ‘overdid’ the transfers of money. Further, there should be witnesses available to corroborate the husband's largesse. He says that the property built in Country B is registered in the name of his parents or other family members. He does not adduce evidence from them. He says that all of the monies from his bank account went through an intermediary of his mother's bank account. He does not adduce evidence from his mother. He says that he was generous to the wife's father and her brother by payment of medical expenses and wedding expenses respectively. He does not adduce evidence from those people. Similarly, he says that he made gifts of $1,500 to two friends of the wife. He does not adduce evidence from those persons. The husband gives no explanation for his failure to adduce what seems to be readily available corroborating evidence and as such it is open for me to draw an inference that such evidence given honestly might not have assisted his case[7].
[7] Jones v Dunkel (1959) 101 CLR 298
It is true that the wife generally agrees the cultural tradition of expatriate Country B people supporting their families in Country B. She argues, however, that the monies transferred by the husband are far in excess of any cultural tradition or the needs of those family members in Country B.
In circumstances of a dispute as to credit and where disclosure and the adducing of evidence might readily have resolved these issues but such were not brought to the Court, I can take a less cautious approach in determinations of disputed fact.[8] During his final submissions, Counsel for the wife agreed that in such circumstances of disputed fact being resolved solely by credit, it would be open for me to arrive at some 'compromised' figure between the sum of $375,500 asserted by the wife and a 'nil' add-back argued by the husband.
[8] Weir & Weir (1993) FLC 92–338
Consequently, and where the wife agrees that it would be considered reasonable generally for payments to be made back to the support of family members in Country B but where she disputes the reasonableness of the quantum and where the husband has failed to give or adduce evidence justifying such quantum, I intend to add-back the sum of 70% of the $375,500 to the pool. In doing so I consider the wife's agreement as to the cultural obligations but also the husband's and the wife's evidence generally as to the cost of living in Country B including the costs of the construction of a home and for the conduct of a wedding. As such, there will be a figure of $262,850 added back to the property pool.
The second issue in respect of the property pool is where the husband claims an outstanding Australian Tax Office (ATO) liability as at 25 May 2020 of $126,166. The wife says that the correct figure should be $60,663. Again, issues of credit are at the crux of this dispute. Specifically, the husband was given leave during the course of the trial to adduce evidence in an affidavit from his accountant who had apparently advised the figure of $126,166. No such evidence on affidavit was adduced. As such, the accountant was not made available for cross-examination. Yet again, and without explanation of the failure to call the accountant, I take an inference against the husband pursuant to the principle in Jones v Dunkel (supra). I do, however, have before me a document now tendered as “A3” being an ATO ‘Activity Statement 002' generated 22/05/2020. That document provides that the husband has overdue tax of $50,191.69 together with a figure of 'not yet due' of $65,503. A further document titled 'Income Tax 551' offers that the husband has further ‘overdue taxation’ as of 22 May 2020 of $10,471.04. The dispute, therefore, rests with the figure of $65,503 'not yet due'. The husband through his Counsel says that his accountant has deferred such payments until at least September 2020 with the implication that the tax debt has been struck but payment simply delayed. It is clear, however, that the husband and his accountant have structured the husband's employment through a trust and trustee company. As such, the husband’s income tax is advised by reason of BAS statements but, effectively, in advance. The husband's evidence to this Court is that his income has dropped substantially from the lodgement of his most recent income tax return and consequent assessment and particularly during the more recent Covid-19 crisis. Indeed, the husband suggested to this Court that his income had dropped to a stage where his accountant had advised that he might make application for the job-keeper payment. The husband's income for the previous three financial years have been:
(a)2016/2017 - $679,609;
(b)2017/2018 – $817,862; and
(c)2018/2019 – $873,423.
In all of that those circumstances and accepting the husband’s unchallenged evidence that his income has substantially decreased, it is realistic to conclude that that his tax liability will be reduced accordingly and this most probably explains the deferment by his accountant of the tax liability of the $65,503. Consequently, I prefer to accept the wife's view of tax currently payable at $60,663 to be the proper and realistic liability for inclusion in the pool.
Given the above, and that the remainder of the property pool is agreed as to content and value, that property pool comprises of the following:
ASSET
Value
G Street, Town H
Husband
$550,000
J Street, Town K
Husband
$265,000
L Street, Suburb M
Husband
$235,000
Motor Vehicle 1
Wife
$16,600
Motor Vehicle 2
Husband
$80,000
Motor Vehicle 3
Husband
$60,000
Shares O
Husband
$5,000
Watches – 20 & Paintings
Husband
$5,000
Commonwealth Bank account ending ...83
Wife
$329
Commonwealth Bank account ending ...04
Wife
$800
Commonwealth Bank account ending ...31 (trustee for daughter)
Wife
$700
Commonwealth Bank account ending ...31
Husband
$4,207
Commonwealth Bank account ending ...04
Husband
$2,272
Commonwealth Bank account ending ...66
Husband
$1,902
Westpac bank account ending ...54
Husband
$19,935
P Trust – Commonwealth Bank account
Husband
$44,349
Add-back – money sent to Country B
$262,850
Total Assets
$1,553,944
LIABILITIES
Commonwealth Bank loans – G Street, Town H
$394,553
Commonwealth Bank loans – J Street, Town K
$202,058
Commonwealth Bank loans – L Street, Suburb M
$163,588
Motor Vehicle 2 loan
$66,405
Bank Q loan (Motor Vehicle 2)
$33,047
Amex credit card
Husband
$5,454
MasterCard
Husband
$23,425
Bank R loan
Husband
$4,144
GO credit card
Husband
$404
Commonwealth Bank credit card
Husband
$18,541
ATO liability - 25 May 2020
Husband
$60,663
Westpac loan – Motor Vehicle 1
Husband
$23,707
Total Liabilities
-$995,989
NET TANGIBLE ASSETS
$557,955
Superannuation
Super Fund S
Wife
$12,202
Super Fund T
Husband
$134,794
Super Fund U
Husband
$136,559
Super Fund V
Husband
$72,017
Total superannuation
$355,572
TOTAL POOL OF ASSETS & SUPERANNUATION
$913,527
Contributions
The parties agree that neither had substantial assets as at the date of the marriage. Punctuated by times around the births of the two children, the wife worked in administrative roles until the end of 2010 when she assumed the primary home-maker and parent role. The husband is and has been employed in his profession which is highly remunerated. This was a marriage with delegated and distinct roles and in this sense the parties contributed equally. Since separation the children have lived mainly with the wife although the older child boards during school weeks at her school. The husband has been assessed to pay child support but is challenging his assessment on the basis that he has met the school and boarding fees for their daughter at C School. The husband's claims are set out at [1.7] of his Counsel’s case summary:
1.7 It is the contention of the husband at trial that with respect to the post-separation period the proper assessment of contributions overall results in a 60 per cent/40 per cent apportionment in his favour primarily by reason of:
a. The husband being the sole source of income despite deterioration of the husband's income earning and increasing liabilities including tax debts;
b. the reduced homemaker contributions where X attends C School as a boarder;
c. the children spending holiday and weekend time living with the husband; and
d. The wife's disinclination to pursue employment.
I do not accept the husband's argument. It is clear that the parties themselves agreed for the daughter to attend C School and to do so as a boarder. The husband’s superior and considerable income was obviously a factor in the making of that decision. Notably, the husband is arguing this same factor in another place, namely before the Child Support Registrar so as to reduce his child support assessment. The wife has since obtained employment but, in my view, the husband's post-separation contributions must be seen within the overall context of the parties continuing their pre-separation roles and contributions and where the husband himself candidly concedes that he has an income in which he can have an 'affluent lifestyle' and including the wife continuing as the primary parent for the children and, in particular, the younger child. The assets that he has retained in his possession post-separation, some of which are income producing, would tend to support that proposition.
I am not of the view that there should be any adjustment to either of the parties by reason of contributions. Significantly, the husband although assessed to pay child support is apparently not making any current payments. That assessment is $1,367 per fortnight and he has current arrears of $23,743.90. If the Court was inclined to give the husband any consideration for his post-separation payment of school fees (which I am not) then the Court might also be inclined to ‘set off’ the non-payment of child support. Overall, however, I am of the view that contributions have been many, varied and equal.
Section 75(2) Factors
The wife says that her income from her employment as a part-time health care worker might be as low as $30,000 per annum. Her financial statement filed 11 May 2020 discloses an income from all sources including from the husband to be around $80,000 per annum. Following these orders interim spousal maintenance from the husband will cease. This income is to be viewed against that of the husband which, from his taxation documents, varies anywhere between $600,000–$800,000+ per annum. There is no evidence that any circumstantial decrease in his income by reason of the Covid-19 virus will be permanent.
The husband meets the parties’ daughter’s school and boarding fees at C School and the relatively minimal current fees for their son. He does so pursuant to a pre-separation agreement for the education of the children. He does so in circumstances where he is not currently paying child support and there are substantial accrued arrears and where he is challenging the assessment of the quantum of child support.
There is a substantial income discrepancy between the parties. The wife retains the primary care responsibility for the four year old son and her unchallenged evidence is that this will affect her employability in relation to her current and other forms of employment. In any event, it is unlikely that the wife's potential income could achieve anywhere near that of the husband's actual and potential. The asset pool here is not considerable and it is established authority that the Court should give 'real' effect to a consideration under s.75(2) and not simply by some token percentage.[9]
[9] Clauson & Clauson (1995) FLC 92-595
The wife seeks an adjustment of 15% in her favour and, although the Court is not bound simply by a choice between the positions put by the parties, I intend to make an adjustment of 15% but where I see it as being at the lower end of the discretion available to me.
Consequently, and in respect of a two-pool approach, the tangible net assets of the parties will be divided as to 65% to the wife and 35% to the husband. I calculate, therefore, that the wife's entitlement in dollar terms is $362,670.75. The wife will retain the balances of three bank accounts ($1,829) and her Motor Vehicle 1 ($16,600). There will, therefore, be a cash adjustment to the wife from the husband of $344,241.75.
Both parties argue for equality of the parties’ joint superannuation entitlements. The wife's case summary document asks for a splitting order from the husband's policy of $165,000. This would seem to be mathematically the appropriate figure. On the material before me, this this will require 'splitting orders' from at least two of the husband's disclosed funds. I have no evidence from the parties of any procedural fairness on those funds. It will consequently be for the parties to bring in a settled order together with evidence of procedural fairness prior to me making final orders in respect of the splitting of superannuation.
Husband's Stay Application
The husband is assessed to pay child support to the wife for the two children of the relationship in a quantum of $686 per week. He is in arrears of those payments in a quantum of more than $23,000. The husband has been unsuccessful in a Review of his assessment. He has now lodged an Objection to Decision. I am unaware as to when that process will be heard and finalised. He now seeks a Stay of his obligation to pay ongoing child support pending the determination of his Objection. My understanding is that he bases the objection on the fact that he pays $36,000 per annum school and boarding fees to C School for the parties’ daughter.
The application for a stay is opposed. No argument was taken that I have the power to make a stay order which I assume is sought pursuant to s.111C of the Child Support (Registration and Collection) Act 1988.
The objects of the Child Support (Registration and Collection) Act 1988 are set out at s.3 as:
(a)that children receive from their parents the financial support that parents are liable to provide; and
(b)that periodic amounts payable by parents towards the maintenance of their children are paid on a regular and timely basis.
The objects of the Child Support (Assessment) Act 1989 are provided at s.4:
(1)The principal object of this Act is to ensure that children receive a proper level of financial support from their parents.
(2) Particular objects of this Act include ensuring:
(a) that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
(b) that the level of financial support to be provided by parents for their children should be determined in accordance with the costs of the children; and
(c) that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
(d) that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
(e) that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
(3) It is the intention of the Parliament that this Act should be construed, to the greatest extent consistent with the attainment of its objects:
(a) to permit parents to make private arrangements for the financial support of their children; and
to limit interferences with the privacy of persons.
The making of an order for a stay is discretionary. However, in circumstances where a party has a right to the ‘fruits of his/her litigation’ which in this sense, and as a matter of public policy, is the right of the wife to receipt of ongoing child support, it is my view that the discretion would only be exercised in favour of the husband if there are circumstances which justify an order for a stay. There is no argument from the husband here that the failure to grant a stay would render his successful application nugatory. Indeed, should the husband’s appeal be successful then the wife will be the recipient of a cash settlement pursuant to my property orders should rectification be required. Further, the husband is also currently substantially in arrears in a quantum in excess of $23,000. Therefore, he has not, in any event, been meeting his child support obligation without any 'stay'. Further, it is generally accepted that child support is payable for the ongoing day-to-day needs of children and in this sense there is a prima face hardship suffered by the children and vicariously by the wife. This hardship should be seen against the circumstances of the husband where he has an income from his profession as a health care worker of $600,000–$850,000. His financial statement discloses that he owns two luxury motor vehicles being a Motor Vehicle 2 and a Motor Vehicle 3 albeit with debts attached to each but where he has put himself in circumstances where he is required to meet payments for those two vehicles. Similarly he appears to own two pieces of real property that are utilised as investments.
In respect of the merit of his argument, I note that the husband has already been unsuccessful in the first stage of the 'Review’ process.
Section 111(C) of the Act says:
Pending the hearing and final determination of the proceeding, the court may make such orders as the court considers appropriate staying or otherwise affecting the operation or implementation of the Assessment Act and this Act if the court considers that it is desirable to do so, taking into account the interests of the persons who may be affected by the outcome of the proceeding.
In all of those circumstances and with weight given to the substantial arrears already accrued, together with considerations of public policy, I am not inclined to grant the stay and the husband's application is refused.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge McGuire
Associate:
Date: 16 July 2020
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Injunction
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Remedies
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Procedural Fairness
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Stay of Proceedings
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Costs
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